You are on page 1of 110

G.R. No.

L-22825

February 14, 1925

TESTATE ESTATE OF LAZARO MOTA, deceased, ET AL., plaintiffsappellants,
vs.
SALVADOR SERRA, defendant-appellee.
Eduardo
Gutierrez
Repide
for
appellants.
Hilado and Hilado, Fisher, DeWitt, Perkins and Brady, Araneta and
Zaragosa, Antonio Sanz and Jose Galan y Blanco for appellee.
VILLAMOR, J.:
On February 1, 1919, plaintiffs and defendant entered into a contract of
partnership, marked Exhibit A, for the construction and exploitation of a
railroad line from the "San Isidro" and "Palma" centrals to the place known
as "Nandong." The original capital stipulated was P150,000. It was
covenanted that the parties should pay this amount in equal parts and the
plaintiffs were entrusted with the administration of the partnership. The
agreed capital of P150,000, however, did not prove sufficient, as the
expenses up to May 15, 1920, had reached the amount of P226,092.92, as
per statement Exhibit B, presented by the administrator and O.K.'d by the
defendant.
January 29, 1920, the defendant entered into a contract of sale with
Venancio Concepcion, Phil. C. Whitaker, and Eusebio R. de Luzuriaga,
whereby he sold to the latter the estate and central known as "Palma" with
its running business, as well as all the improvements, machineries and
buildings, real and personal properties, rights, choses in action and
interests, including the sugar plantation of the harvest year of 1920 to
1921, covering all the property of the vendor. This contract was executed
before a notary public of Iloilo and is evidenced by Exhibit 1 of the
defendant, paragraph 5 of which reads as follows:
5. The party of the first part hereby states that he has entered into
a contract with the owners of the "San Isidro" Central for the
construction, operation, and exploitation of a railroad line of about
10 kilometers extending from the "Palma" Central and "San Isidro"
Central to a point known as "Nandong," the expenses until the
termination of which shall be for the account of the "San Isidro"
Central, and of which expenses, one-half shall be borne by the
"Palma" Central with the obligation to reimburse same within five
(5) years with interest at the rate of 10 per cent per annum to the
said "San Isidro" Central. The vendee hereby obligates himself to
respect the aforesaid contract and all obligations arising therefrom.

Before the delivery to the purchasers of the hacienda thus sold, Eusebio R.
de Luzuriaga renounced all his rights under the contract of January 29,
1920, in favor of Messrs. Venancio Concepcion and Phil. C. Whitaker. This
gave rise to the fact that on July 17, 1920, Venancio Concepcion and Phil.
C. Whitaker and the herein defendant executed before Mr. Antonio Sanz, a
notary public in and for the City of Manila, another deed of absolute sale of
the said "Palma" Estate for the amount of P1,695,961.90, of which the
vendor received at the time of executing the deed the amount of
P945,861.90, and the balance was payable by installments in the form and
manner stipulated in the contract. The purchasers guaranteed the unpaid
balance of the purchase price by a first and special mortgage in favor of
the vendor upon the hacienda and the central with all the improvements,
buildings, machineries, and appurtenances then existing on the
said hacienda.
Clause 6 of the deed of July 17, 1920, contains the following stipulations:
6. Messrs. Phil. C. Whitaker and Venancio Concepcion hereby state
that they are aware of the contract that Mr. Salvador Serra has with
the proprietors of the "San Isidro" Central for the operation and
exploitation of a railroad line about 10 kilometers long from the
"Palma" and "San Isidro" centrals to the place known as
"Nandong;" and hereby obligate themselves to respect the said
contract and subrogate themselves into the rights and obligations
thereunder. They also bind themselves to comply with all the
contracts heretofore entered by the vendor with the customers,
coparceners on shares and employees.
Afterwards, on January 8, 1921, Venancio Concepcion and Phil. C. Whitaker
bought from the plaintiffs the one-half of the railroad line pertaining to the
latter, executing therefor the document Exhibit 5. The price of this sale was
P237,722.15, excluding any amount which the defendant might be owing
to the plaintiffs. Of the purchase price, Venancio Concepcion and Phil. C.
Whitaker paid the sum of P47,544.43 only. In the deed Exhibit 5, the
plaintiffs and Concepcion and Whitaker agreed, among other things, that
the partnership "Palma" and "San Isidro," formed by the agreement of
February 1, 1919, between Serra, Lazaro Mota, now deceased, and Juan J.
Vidaurrazaga for himself and in behalf of his brother, Felix and Dionisio
Vidaurrazaga, should be dissolved upon the execution of this contract, and
that the said partnership agreement should be totally cancelled and of no
force and effect whatever.
So it results that the "Hacienda Palma," with the entire railroad, the
subject-matter of the contract of partnership between plaintiffs and
defendant, became the property of Whitaker and Concepcion. Phil. C.
Whitaker and Venancio Concepcion having failed to pay to the defendant a
part of the purchase price, that is, P750,000, the vendor, the herein

1

defendant, foreclosed the mortgage upon the said hacienda, which was
adjudicated to him at the public sale held by the sheriff for the amount of
P500,000, and the defendant put in possession thereof, including what was
planted at the time, together with all the improvements made by Messrs.
Phil. C. Whitaker and Venancio Concepcion.
Since the defendant Salvador Serra failed to pay one-half of the amount
expended by the plaintiffs upon the construction of the railroad line, that
is, P113,046.46, as well as Phil. C. Whitaker and Venancio Concepcion, the
plaintiffs instituted the present action praying: (1) That the deed of
February 1, 1919, be declared valid and binding; (2) that after the
execution of the said document the defendant improved economically so
as to be able to pay the plaintiffs the amount owed, but that he refused to
pay either in part or in whole the said amount notwithstanding the several
demands made on him for the purpose; and (3) that the defendant be
sentenced to pay plaintiffs the aforesaid sum of P113,046.46, with the
stipulated interest at 10 per cent per annum beginning June 4, 1920, until
full payment thereof, with the costs of the present action.
Defendant set up three special defenses: (1) The novation of the contract
by the substitution of the debtor with the conformity of the creditors; (2)
the confusion of the rights of the creditor and debtor; and (3) the
extinguishment of the contract, Exhibit A.
The court a quo in its decision held that there was a novation of the
contract by the substitution of the debtor, and therefore absolved the
defendant from the complaint with costs against the plaintiffs. With regard
to the prayer that the said contract be declared valid and binding, the
court held that there was no way of reviving the contract which the parties
themselves in interest had spontaneously and voluntarily extinguished.
(Exhibit 5.)
Plaintiffs have appealed from this judgment and as causes for the review,
they allege that the trial court erred: (a) In holding that Messrs. Whitaker
and Concepcion, upon purchasing the "Palma" Central, were subrogated in
the place of the defendant in all his rights and obligations under the
contract relating to the railroad line existing between the "Palma" and the
"San Isidro" centrals and that the plaintiffs agreed to this subrogation; (b)
in holding that the deed Exhibit A of February 1, 1919, had been
extinguished in its entirety and made null and void by the agreement
Exhibit 5 dated December 16, 1920; (c) in absolving the defendant from
the complaint and in sentencing the plaintiffs to pay the costs; and (d) in
not sentencing the defendant to pay the plaintiffs the sum of P113,046.46,
with legal interest at 10 per cent per annum from June 4, 1920, until full
payment, with costs against the defendant.

Taking for granted that the defendant was under obligation to pay the
plaintiffs one-half of the cost of the construction of the railroad line in
question, by virtue of the contract of partnership Exhibit A, the decisive
point here to determine is whether there was a novation of the contract by
the substitution of the debtor with the consent of the creditor, as required
by article 1205 of the Civil Code. If so, it is clear that the obligation of the
defendant was, in accordance with article 1156 of the same code,
extinguished.
It should be noted that in order to give novation its legal effect, the law
requires that the creditor should consent to the substitution of a new
debtor. This consent must be given expressly for the reason that, since
novation extinguishes the personality of the first debtor who is to be
substituted by new one, it implies on the part of the creditor a waiver of
the right that he had before the novation which waiver must be express
under the principle thatrenuntiatio non praesumitur, recognized by the law
in declaring that a waiver of right may not be performed unless the will to
waive is indisputably shown by him who holds the right.
The fact that Phil. C. Whitaker and Venancio Concepcion were willing to
assume the defendant's obligation to the plaintiffs is of no avail, if the
latter have not expressly consented to the substitution of the first debtor.
Neither can the letter, Exhibit 6, on page 87 of the record be considered as
proof of the consent of the plaintiffs to the substitution of the debtor,
because that exhibit is a letter written by plaintiffs to Phil. C. Whitaker and
Venancio Concepcion for the very reason that the defendant had told them
(plaintiffs) that after the sale of the "Hacienda Palma" to Messrs. Phil. C.
Whitaker and Venancio Concepcion, the latter from then on would bear the
cost of the repairs and maintenance of the railroad line and of the
construction of whatever addition thereto might be necessary. So the
plaintiffs by their letter of August 14th, submitted a statement of account
to Phil. C. Whitaker and Venancio Concepcion containing the accounts of
the "San Isidro" Central, as stated June 30, 1920, saying that they had
already explained previously the reason for the increase in the expenses
and since the retiring partner, Mr. Serra, had already given conformity with
the accounts, as stated May 15, 1920, it remained only to hear the
conformity of the new purchasers for the accounts covering the period
from May 15 to June 30, 1920, and their authority for future investments,
or their objection, if any, to the amounts previously expended. Neither can
the testimony of Julio Infante in connection with Exhibit 7 be taken as
evidence of the consent of the plaintiffs to the change of the person of the
debtor for that of Messrs. Phil. C. Whitaker and Venancio Concepcion. This
witness testified, in substance, that he is acquainted with the partnership
formed by the owners of the "Hacienda Palma" and Hacienda San Isidro"
for the construction of the railroad line; that the cost of the construction
thereof was originally estimated at P150,000; that the owner of the
"Hacienda Palma" would pay one-half of this amount; that when the
"Hacienda Palma" was sold to Messrs. Phil. C. Whitaker and Venancio

2

Concepcion, the latter agreed to pay one-half of the cost of P150,000; that
as the cost of construction exceeded P200,000, he, as an employee of
Messrs. Phil. C. Whitaker and Venancio Concepcion, could not O.K. the
accounts as presented by the plaintiffs, and suggested that they take up in
writing their points of view directly with Messrs. Phil. C. Whitaker and
Venancio Concepcion. Then the plaintiffs did as suggested, and wrote the
letter Exhibit 7 in which they asked the new owners of the "Hacienda
Palma" their decision upon the following three questions: 1. Will the
"Palma" Central accept the statement of account as presented by the "San
Isidro" Central regarding the actual cost of the railroad line "Palma-San
Isidro-Nandong?" 2. Is the "Palma" Central willing to continue as coproprietor of the railroad line for the exploitation of the sugar-cane
business of "Nandong" and neighboring barrios, and therefore to pay 50
per cent of the expenses that may be incurred in completing the line?
It was but natural that the plaintiffs should have done this. Defendant
transferred his hacienda to Messrs. Phil. C. Whitaker and Venancio
Concepcion and made it known to the plaintiffs that the new owners would
hold themselves liable for the cost of constructing the said railroad line.
Plaintiffs could not prevent the defendant from selling to Phil. C. Whitaker
and Venancio Concepcion his "Hacienda Palma" with the rights that he had
over the railroad in question. The defendant ceased to be a partner in said
line and, therefore, the plaintiffs had to take the vendees as their new
partners. Plaintiffs had to come to an understanding with the new owners
of the "Hacienda Palma" in connection with the railroad line "Palma-San
Isidro-Nandong." But in all of this, there was nothing to show the express
consent, the manifest and deliberate intention of the plaintiffs to exempt
the defendant from his obligation and to transfer it to his successors in
interest, Messrs. Phil. C. Whitaker and Venancio Concepcion.
The plaintiffs were not a party to the document Exhibit 1. Neither in this
document, nor in others in the record, do we find any stipulation whereby
the obligation of the defendant was novated with the consent of the
creditor, and as it has been held in the case of Martinez vs. Cavives (25
Phil., 581), the oral evidence tending to prove such a fact as this is not in
law sufficient.
As has been said, in all contracts of novation consisting in the change of
the debtor, the consent of the creditor is indispensable, pursuant to article
1205 of the Civil Code which reads as follows:
Novation which consists in the substitution of a new debtor in the
place of the original one may be made without the knowledge of
the latter, but not without the consent of the creditor.
Mr. Manresa in his commentaries on articles 1205 and 1206 of the Civil
Code (vol. 8, 1907 ed., pp. 424-426) says as follows:

Article 1205 clearly says in what this kind of novation must consist,
because in stating that another person must be substituted in lieu
of the debtor, it means that it is not enough to extend the juridical
relation to that other person, but that it is necessary to place the
latter in the same position occupied by the original debtor.
Consequently, the obligation contracted by a third person to
answer for the debtor, as in the case of suretyship, in the last
analysis, does not work as a true novation, because the third
person is not put in the same position as the debtor — the latter
continues in his same place and with the same obligation which is
guaranteed by the former.
Since it is necessary that the third person should become a debtor
in the same position as the debtor whom he substitutes, this
change and the resulting novation may be respected as to the
whole debt, thus untying the debtor from his obligation, except the
eventual responsibilities of which we shall speak later, or he may
continue with the character of such debtor and also allow the third
person to participate in the obligation. In the first case, there is a
complete and perfect novation; in the second, there is a change
that does not free the debtor nor authorize the extinguishment of
the accessory obligations of the latter. In this last hypothesis, if
there has been no agreement as to solidarity, the first and the new
debtor should be considered as obligated severally.
The provisions of article 1205 which require the consent of the
creditor as an indispensable requisite in this kind of novation and
not always that of the debtor, while not making it impossible to
express the same, imply the distinction between these two forms
of novation and it is based on the simple consideration of justice
that since the consequences of the substitution may be prejudicial
to the creditor, but not to the debtor, the consent of the creditor
alone is necessary.
The two forms of this novation, also impliedly recognized by article
1206 which employs the word "delegate," as applied to the debt,
are the expromission and the delegation. Between these, there is a
marked difference of meaning and, as a consequence, a logical
difference of requisite and another clear difference as to their
effects, of which we shall speak later.
In the expromission, the initiative of the change does not emanate
from the debtor and may be made even without his consent, since
it consists in a third person assuming his obligation; it logically
requires the consent of this third man and of the creditor and in
this last requisite lies the difference between novation and

3

payment, as the latter can be effected by a third person even
against the will of the creditor, whereas in the former case it
cannot.
In the delegation, the debtor offers and the creditor accepts a third
person who consents to the substitution so that the intervention
and the consent of these three persons are necessary and they are
respectively known as delegante, delegatario, and delegado. It
must be noted that the consent need not be given simultaneously
and that it may be given afterwards, as for example, that of the
creditor delegatario to the proposition of the debtor accepted by
the delegado.
Delegation notably differs from the mere indication made by the
debtor that a third person shall pay the debt; in this case, there is
no novation and the former is not acquitted of his obligation and
his relations with the third person are regulated by the rules of
agency. The French Code in article 1276 expressly provides for this
case, as well as the inverse one where the debtor points out
somebody else to answer for the payment, declaring that there is
no novation in either case. The same sound criterion is impliedly
accepted by our Code.
In the case of E.C. McCullough & Co. vs. Veloso and Serna (46 Phil., 1), it
appears that McCullough and Co., Inc., sold to Veloso a real estate worth
P700,000 on account of which Veloso paid P50,000, promising to pay the
balance at the times and manner stipulated in the contract. He further
bound himself to pay 10 per cent of the amount of the debt as attorney's
fees in case of litigation. To secure the unpaid balance of the purchaser
price he executed a first mortgage upon the property in favor of the
vendor. Subsequently, Veloso sold the property for P100,000 to Joaquin
Serna who bound himself to respect the mortgage in favor of McCullough
and Co., Inc., and to assume Veloso's obligation to pay the unpaid balance
of the purchase price of the property at the times agreed upon in the
contract between Veloso and McCullough and Co., Inc.
Veloso had paid on account of the price the amount of P50,000, and Serna
also made several payments aggregating the total amount of P250,000.
But after this, neither Veloso nor Serna made further payments and thus
gave cause for a litigation. The court in deciding the case said:
The defendant contends that having sold the property to Serna,
and the latter having assumed the obligation to pay the plaintiff
the unpaid balance of the price secured by the mortgage upon the
property, he was relieved from this obligation and it then devolved
upon Serna to pay the plaintiff. This means that as a consequence
of the contract between the defendant and Serna, the contract

between the defendant and the plaintiff was novated by the
substitution of Serna as a new debtor. This is untenable. In order
that this novation may take place, the law requires the consent of
the creditor (art. 1205 of the Civil Code). The plaintiff did not
intervene in the contract between Veloso and Serna and did not
expressly give his consent to this substitution. Novation must be
express, and cannot be presumed.
In Martinez vs. Cavives (25 Phil., 581), it was held that:
. . . The consent of the new debtor is as essential to the novation as is that
of the creditor . . . .
There is no express stipulation in any of the documents of record
that the obligation of the defendant was novated, and the parol
evidence tending to show that it was novated is not sufficient in
law to establish that fact.
The same doctrine was upheld in the case of Vaca vs. Kosca (26 Phil., 388):
A new debtor cannot be substituted for the original obligor in the
first contract without the creditor's consent.
The supreme court of Spain has constantly laid down the same doctrine
with regard to novation of contracts:
The obligations and rights in a contract cannot be novated with
regard to a third person who has not intervened in the execution
thereof. (Decision of June 28, 1860.)
Novation by the change of debtors cannot be effected without the
express approval of the creditor. (Decisions of February 8, 1862
and June 12, 1867.)
Novation should not be established by presumptions but by the
express will of the parties. (Decisions of February 14, 1876 and
June 16, 1883.)
In order that novation of a contract by subrogation of the debtor
may take effect and thus liberate the first debtor from the
obligation, it is necessary that the subrogation be made with the
consent of the creditor. (Decision of March 2, 1897.)
It is undeniable that obligations judicially declared, as well as those
acquired by any title, can be novated by substituting a new debtor

4

in place of the primitive, only when the creditor gives his consent
to the substitution. (Decision of November 15, 1899.)
Novation can in no case be presumed in contracts, but it is
necessary that it should result from the will of the parties, or that
the old and the new one be altogether incompatible. (Decision of
December 31, 1904.)
An obligation cannot be deemed novated by means of
modifications which do not substantially change the essence
thereof, nor when it is not extinguished by another obligation, nor
when the debtor is not substituted. (Decision of March 14, 1908.)
The consent of the creditor required in a novation consisting of the
change of debtors (art. 1205, Civil Code) must appear in an
express and positive manner and must be given with the deliberate
intention of exonerating the primitive debtor of his obligations and
transfer them wholly upon the new debtor. (Decision of June 22,
1911.)
In the decision in the case of Martinez vs. Cavives, supra, the following
decisions of the several courts of the United States are cited, wherein this
question was decided in the same manner:
In Latiolais, admrx. vs. Citizens' Bank of Louisiana (33 La. Ann.,
1444), one Duclozel mortgaged property to the defendant bank for
the triple purpose of obtaining shares in the capital stock of the
bank, bonds which the bank was authorized to issue, and loans to
him as a stockholder. Duclozel subsequently sold this mortgaged
property to one Sproule, who, as one of the terms of the sale,
assumed the liabilities of his vendor to the bank. Sproule sold part
of the property to Graff and Chalfant. The debt becoming due, the
bank brought suit against the last two named and Sproule as
owners. Duclozel was not made a party. The bank discontinued
these proceedings and subsequently brought suit against Latiolais,
administratrix of Duclozel, who had died.
The court said: "But the plaintiff insists that in its petition in the
proceeding first brought the bank ratified the sale made by
Duclozel to Sproule, and by the latter to other parties, in treating
them as owners. Be that so, but it does not follow in the absence of
either a formal and express or of an implied consent to novate,
which
should
be
irresistibly
inferred
from
surrounding
circumstances, that it has discharged Duclozel unconditionally, and
has accepted those parties as new delegated debtors in his
place. Nemo presumitur donare.

"Novation is a contract, the object of which is: either to
extinguish an existing obligation and to substitute a new
one in its place; or to discharge an old debtor and
substitute a new one to him; or to substitute a new creditor
to an old creditor with regard to whom the debtor is
discharged.
"It is never presumed. The intention must clearly result
from the terms of the agreement or by a full discharge of
the original debt. Novation by the substitution of a new
debtor can take place without the consent of the debtor,
but the delegation does not operate a novation, unless the
creditor has expressly declared that he intends to
discharge with delegating debtor, and the delegating
debtor was not in open failure or insolvency at the time.
The mere indication by a debtor of a person who is to pay
in his place does not operate a novation. Delegatus debitor
est odiosus in lege.
"The most that could be inferred would be that the bank in
the exercise of a sound discretion, proposed to better its
condition by accepting an additional debtor to be and
remain bound with the original one."
In Fidelity L. & T. Co. vs. Engleby (99 Va., 168), the court said:
"Whether or not a debt has been novated is a question of fact and
depends entirely upon the intention of the parties to the particular
transaction claimed to be novated. In the absence of satisfactory
proof to the contrary, the presumption is that the debt has not
been extinguished by taking the new evidence in the absence of an
intention expressed or implied, being treated as a conditional
payment merely."
In Hamlin vs. Drummond (91 Me., 175; 39 A., 551), it was said that
novation is never presumed but must always be proven. In
Netterstorn vs. Gallistel (110 Ill. App., 352), it was said that the
burden of establishing a novation is on the party who asserts its
existence; that novation is not easily presumed; and that it must
clearly appear before the court will recognize it.
Notwithstanding the doctrines above quoted, defendant's counsel calls our
attention to the decision of the supreme court of Spain of June 16, 1908,
wherein it was held that the provisions of article 1205 of Code do not mean
nor require that the consent of the creditor to the change of a debtor must
be given just at the time when the debtors agree on the substitution,
because its evident object being the full protection of the rights of the
creditor, it is sufficient if the latter manifests his consent in any form and at

5

any time as long as the agreement among the debtors holds good. And
defendant insists that the acts performed by the plaintiffs after the
"Hacienda Palma" was sold to Messrs. Phil. C. Whitaker and Venancio
Concepcion constitute evidence of the consent of the creditor. First of all,
we should have an idea of the facts upon which that decision was rendered
by the supreme court of Spain.
A partnership known as "La Azucarera de Pravia" obtained a fire insurance
policy from the company "La Union y Fenix Espanol," by virtue of which,
said company insured in consideration of an annual premium of
3,000 pesetas, the buildings, machinery and other apparatuses pertaining
to the "Pravia Factory" for ten years and for half their value, and another
insurance from another insurance company insuring the same property
and effects for the other half of their value.

1. While it is true that it cannot be strictly said that "La Azucarera
de Pravia" was merged with the "Sociedad General Azucarera de
España," the document whereby the property of the "La Azucarera
de Pravia" was ceded to the "Sociedad General Azucarera de
España" clearly and expressly recites that this company upon
taking charge of the immovable property of the "La Azucarera de
Pravia" accepted in general, with respect to the property ceded,
"everything belonging to the same," after making provisions about
active and passive easements, contracts for transportation and
other matters.
The supreme court held that by virtue of the words hereinabove quoted,
the "Sociedad General Azucarera de España" took over the obligation to
pay the insurance premiums of the "La Azucarera de Pravia" inasmuch as
said insurance pertained to the property that was ceded.

Later, "La Azucarera de Pravia," with other sugar companies, ceded all its
property to another company known as "Sociedad General Azucarera de
España," in which in consideration of certain amount of stock that the said
"Sociedad General Azucarera de España" issued to the "La Azucarera de
Pravia," the latter was merged with the former. After the cession, "La Union
y Fenix Expañol" sued the "Sociedad General Azucarera de España"
demanding the payment of the premium that should have been paid by the
"La Azucarera de Pravia," which payment the "Sociedad General Azucarera
de España" refused to make on the ground that the "La Azucarera de
Pravia" was not merged with the "Sociedad General Azucarera de España,"
but merely transferred its properties to the latter in consideration of the
stock that was issued to the "La Azucarera de Pravia." It was further
contended by the "Sociedad General Azucarera de España" that even if it
were true that in the contract of cession it appeared that the "La Azucarera
de Pravia" was merged with the "Sociedad General Azucarera de España,"
nevertheless, there was no such merger in law, for in truth and in fact, the
"La Azucarera de Pravia" had ceded only its property, but not its rights and
obligations; that the existence of the partnership known as "La Azucarera
de Pravia" was proven by its registration in the mercantile register, which
was not cancelled, did it contain any statement to the effect that the "La
Azucarera de Pravia" had been extinguished or had ceased to do business
even after the cession of properties to the "Sociedad General Azucarera de
España." Another argument advanced by the "Sociedad General" was that
at the time the "Azucarera de Pravia" ceded its properties to the "Sociedad
General Azucarera de España," the insurance company "La Union y Fenix
Espanol" did not assent to the subrogation of the "Sociedad General
Azucarera" into the rights and obligations of the "Azucarera de Pravia,"
assuming that there had been such a subrogation or substitution of a
debtor by another.

By comparing the facts of that case with the defenses of the case at bar, it
will be seen that, whereas in the former case the creditor sued the new
debtor, in the instant case the creditor sues the original debtor. The
supreme court of Spain in that case held that the fact that the creditor
sued the new debtor was proof incontrovertible of his assent to the
substitution of the debtor. This would seem evident because the judicial
demand made on the new debtor to comply with the obligation of the first
debtor is the best proof that the creditor accepts the change of the debtor.
His complaint is an authentic document where his consent is given to the
change of the debtor. We are not holding that the creditor's consent must
necessarily be given in the same instrument between the first and the new
debtor. The consent of the creditor may be given subsequently, but in
either case it must be expressly manifested. In the present case, however,
the creditor makes judicial demand upon the first debtor for the fulfillment
of his obligation, evidently showing by this act that he does not give his
consent to the substitution of the new debtor. We are of the opinion that
the decision of the supreme court of Spain of June 16, 1908, cannot be
successfully invoked in support of defendant's contention. Wherefore, we
hold that in accordance with article 1205 of the Civil Code, in the instant
case, there was no novation of the contract, by the change of the person of
the debtor.

The supreme court of Spain gave judgment in favor of the "La Union y
Fenix Español" insurance company for the following reasons:

Another defense urged by the defendant is the merger of the rights of
debtor and creditor, whereby under article 1192 of the Civil Code, the

2. While it is true that "La Union y Fenix Español" insurance
company did not give its consent to the contract of cession at the
moment of its execution, yet the mere fact that the said insurance
company now sues the "Sociedad General Azucarera de España" is
an incontrovertible proof that the said insurance company accepts
the substitution of the new debtor.

6

which has been annulled. 1919. This doctrine has been upheld by the supreme court of Spain in its decision of February 6. one of the partners instituted an action in the court of Badajoz. Whitaker and Venancio Concepcion had purchased something from Mr. as already stated. page 659. That the plaintiffs sold their rights and titles over one-half of the line. Salvador Serra. Whitaker and Venancio Concepcion were only those they had over the other half of the railroad line. denied the writ. holding that some corrections and liquidations asked by the actor were still pending. Whitaker and Venancio Concepcion. (11 Manresa. as shown by the document Exhibit 5.) The dissolution of a firm does not relieve any of its members from liability for existing obligations. 1903. By virtue of the contract Exhibit 5. Appellants assign also as a ground of their appeal the holding of the court that by the termination of the partnership. C. the partnership will be reputed as existing until the juridical relations arising out of the contract are dissolved. the present action is 7 . The partnership paid the purchase price and distributed among its members the lands so acquired." thus cancelling the contract of partnership of February 1. The court granted the petition. It is maintained in appellee's brief that the debt of the defendant was transferred to Phil. Counsel for appellee in his brief and oral argument maintains that the plaintiffs cannot enforce any right arising out of that contract of partnership. it will be seen that the credit which they had against the defendant for the amount of one-half of the cost of construction of the said line was not included in the sale contained in Exhibit 5.) Another question presented by appellee's counsel in his memorandum and oral argument is that as in the partnership articles of February 1. Exhibit 5. which judgment was affirmed by the Audiencia de Caceres. Whitaker and Venancio Concepcion is wholly untenable. the juridical relations between the contracting parties become extinguished and none of the parties has any right of action under the contract. Whitaker and Venancio Concepcion. This clearly shows that the rights and titles transferred by the plaintiffs to Phil. The argument would at first seem to be incontrovertible. no legal rights can be derived therefrom. the herein defendant. the credit that they had against the defendant. (30 Cyc. The purchasers. it was covenanted that the defendant would put up one-half of the cost of the railroad line within five years from the date. Phil. Salvador Serra. 1919. became extinguished. Whitaker and Venancio Concepcion refer only to one-half of the railroad line in question.. the allegation that the obligation of the defendant became extinguished by the merger of the rights of creditor and debtor by the purchase of Messrs. such as the right to claim now a part of the cost of the construction of the railroad line stipulated in that contract. but if we bear in mind that the rights and titles which the plaintiffs sold to Phil. pending the winding up of some incidents and obligations of the partnership. Defendant's contention signifies that any person. the plaintiffs and Phil. Phil. 1919. Whitaker and Venancio Concepcion mortgaged unto the plaintiffs what they had bought from the plaintiffs and also what they had bought from Salvador Serra. decided to dissolve the partnership between the "Hacienda Palma" and "Hacienda San Isidro. C. the fulfillment of which is demanded in the complaint. C. even after dissolution. It is often said that a partnership continues. is exempt from complying with his obligation by the mere fact of the dissolution of the partnership. page 312. C. when the contracting parties fulfill all the obligations arising therefrom and that by the payment of the money and the granting and distribution of the lands without any opposition. ruling that the articles cited were not infringed because a partnership cannot be considered as extinguished until all the obligations pertaining to it are fulfilled. since there was no novation of the contract between the plaintiffs and the defendant. for the reason that he had not been allowed all that he had a right to. to secure the payment of the price. C. and any of them may be discharged from old obligations by novation of other form of release. Salvador Serra. for the purpose of winding up its affairs. is evident from the very Exhibit 5. Therefore. In other words. evidenced by Exhibit 5. C. although it does save them from new obligations to which they have not expressly or impliedly assented. regarding the railroad line. thus the rights of the debtor and creditor were merged in one person. If Messrs. from February 1. by common consent. on the proposition that all contracts are reputed consummated and therefore extinguished. executed a mortgage in favor of the plaintiffs on the same rights and titles that they had bought and also upon what they had purchased from Mr. as regards the obligation of the latter to pay the former one-half of the cost of the construction of the said railroad line. Phil. that is. in the following case: There was a partnership formed between several persons to purchase some lands sold by the state. C.obligation. Phil. but in such case. praying that he be accepted as a partner with the same rights and obligations as the others. with interest at 10 per cent per annum. The dissolution of a partnership must not be understood in the absolute and strict sense so that at the termination of the object for which it was created the partnership is extinguished. From that decision the defendant sued out a writ of error alleging infringement of articles 1680 and 1700 of the Civil Code. who has contracted a valid obligation with a partnership. The supreme court. Whitaker and Venancio Concepcion by the document Exhibit 1. but after the lapse of some time. C. Defendant's contention is untenable. These in turn acquired the credit of the plaintiffs by virtue of the debt. and since the plaintiffs did not include in the sale. it was undoubtedly the one-half thereof pertaining to Mr.

concur. together with the agreed interest at the rate of 10 per cent per annum from the date of the filing of the complaint. Johns. cancelling the contract Exhibit A to all of which the defendant consented as evidence by his allegations in his answer. had not yet elapsed. plaintiffs-appellants.premature since. 1922.R. Street. the Testate Estate of Lazaro Mota. defendant-appellee.46. in the amount of P113. there is no reason for waiting for the expiration of the five years which the parties themselves had seen fit to stipulate and therefore the provisions of article 113. regarding the fulfillment of pure obligations. ET vs. et al. and said defendant is hereby sentenced to pay the plaintiffs the said amount. within which the defendant could pay his part of the cost of the construction of the line. Without special pronouncement as to costs. and we hold that the defendant Salvador Serra is indebted to the plaintiffs.. from the execution of the contract until October 25. JAIME HERNANDEZ.. it is so ordered. Ostrand. J. For all of the foregoing. Malcolm. the judgment appealed from is reversed. for appellants. REYES. dissolved the partnership on June 16. the five years. No. must be applied in this case. G. L-5837 May 31.046. Suffice it to say that the plaintiff and the successors in interest of the defendant. JJ. AL. Johnson. the date of the complaint. and Romualdez. 1954 CRISTOBAL BONNEVIE. by mutual consent. Ojeda and Vilgera Cea and Zurbano for appellee.: 8 . If this is so.. 1920.

at the option of the VENDOR. the corporation. Although defendant was the one named vendee in the deed of sale. the members who preferred to remain in the business went ahead with the formation of the corporation. after their withdrawal from the partnership. defendant was taken in as a member of the partnership so that he could push the deal through. all payments made by the VENDEE to the VENDOR by virtue of this contract shall be forfeited and retained by the VENDOR in full satisfaction as the liquidated damages sustained by said VENDOR. Two years from their withdrawal from the partnership.000. Defendant's answer denies that he has made any profit out of the assignment in question and alleges that in any event plaintiffs. Following the dissolution of the partnership. several partners.000. the partnership was then dissolved. In accordance with the terms of the resolution. giving them a book value of P365. ceased to have any further interest in the subsequent transactions of the remaining members.000 on or before January 31. estimated by plaintiffs to be P225. No formal articles were drawn for it was the purpose of the members to incorporate once the deal had been consummated. — hereinafter called the Meralco — in the provinces of Camarines Sur. plaintiffs brought the present suit against Jaime Hernandez. with the herein plaintiffs voting affirmatively. but as it made no headway.This is an action for the recovery of the sum of P115. of the partnership." Though business was losing during the first year. the defendant herein. even supposing that profit had really been made. Albay.312. Then trouble began for one of its big stockholders. which 9 . plaintiffs with other associates formed a syndicate or secret partnership for the purpose of acquiring the plants. It appears that prior to January. to the various subscribers to its capital stock. 1947. And defendant. and on that same day plaintiffs and Judge Reyes withdrew from the partnership. with the idea of continuing that company's business in that region.000 and assumed the obligation of paying what was still due the Meralco on the purchase price. the withdrawing partners were. one of them. Using partnership funds. franchises and other properties of the Manila Electric Co.312. in fulfillment of his trust. as plaintiffs' alleged share in the profits of a partnership. on his part. Judge Jaime Reyes. when the corporate business was already in a prosperous condition. with interests. in a meeting held on April 10. because he did not receive the consideration for the assignment. and to that end he was given the necessary power of attorney. But in the meantime they elected Pedro Serranzana and David Serrano general manager and secretary-treasurer.000 on or before July 31. not satisfied with the way matters were being run and fearful that the venture might prove a failure because the business was not going well and there was a possibility of their being assessed more than their original investments when the time came to meet the two installments of the unpaid purchase price due the Meralco. The new corporation was named "Bicol Electric Company. with interest at 6 per cent per annum and with a penalty clause which reads: (6) That in case the VENDEE fails to make the payment or payments of the balance due or any part thereof as herein provided. in return for which the corporation issued. made a formal assignment of the Meralco properties to the treasurer of the corporation. presented a resolution to the effect that those partners who did not want to remain in the association should be allowed to withdraw and get back their contributions. defendant was able to buy the Meralco properties for P122. to consider various matters connected with the business. expressed their desire to withdraw from the partnership and get back the money they had invested therein. and. in 1947. About the latter half of the following month the members of the partnership proceeded with the formation of the proposed corporation. paying P40. on the following day. Negotiation for the purchase was commenced.000 and their share of it to be P115. P41. thanks to a loan obtained from the RFC later prospered and made money. 1947. properties and rights which are the subject-matter of this contract. respectively. The resolution was approved. and Sorsogon. After trial the lower court found that the partnership had not realized any profit out of the assignment of the Meralco properties to the corporation and that. be annuled and. In accordance with this wish. taking in new associates as stockholders. that is. that is. defendant would not be the one to answer to plaintiffs for their share thereof. reimbursed their respective contributions to the partnership fund. 1947. But before the incorporation papers could be perfected.000 upon the signing of the deed of sale and agreeing to pay the balance in two equal installments. as admitted by both parties. this contract shall. claiming a share in the profit the latter is supposed to have made from the assignment of the Meralco properties to the corporation. there is no question that the transaction was in penalty made for the partnership so that the latter assumed control of the business the day following the sale. 1948. shares of stock of the total face value of P225. and the said VENDOR shall have the right to forthwith reenter and take possession of the premises. apportioning among themselves its shares of stock in proportion to their respective contributions to the capital of the partnership and their individual efforts in bringing about the acquisition of the Meralco properties.50. in such an event.50. and another P41.

for if there appears that the partnership had its general manager in the person of Pedro Serranzana.000. That Judge Reyes did not join the plaintiffs in this action is a clear indication that such was really the understanding. in the language of the court below. And this condition was fulfilled when on the following day they were reimbursed the respective amounts due them pursuant to the agreement.according to the court. and as will presently be explained no liquidation was called for because when plaintiffs withdrew from the partnership the understanding was that after they had been reimbursed their investment. For when plaintiffs and Judge Jaime Reyes withdrew from the partnership on that day they did so as agreed to by all the partners. it appears that a settlement was agreed upon on the very day the partnership was dissolved. and according to the evidence the company. In view of the foregoing. We find no merit in the appeal. they were no longer to have any further interest in the partnership or its assets and liabilities. As testified to by Judge Reyes. the real value of the shares of stock of a corporation depends upon the value of its assets over and above its liabilities.000 when the acquisition price was only P122. It does not appear that the Bicol Electric Company had any assets other than those acquired from the Meralco. But one should not jump to the conclusion that a profit. The case comes within our jurisdiction because of the amount involved. subject to the only condition that they were to be repaid their contributions or investments within three days from said date. consisting of the difference between the two sums was really made out of the transaction. this is not necessarily their real worth. this on the theory that as managing partner of the partnership. defendant did not receive the consideration for the assignment for. it was clearly understood that upon their withdrawal and return to them of their investment they would have nothing more to do with the association. as already stated. of their investment in the instant case was understood and intended by all the parties as a final settlement of whatever rights or claim the withdrawing partners might have in the dissolved partnership. aside from owing the Meralco. therefore. In the instant case. who upon the formation of the new corporation also became its vice-president and general manager.000 was. it was defendant's duty to liquidate its affairs upon its dissolutions. But certainly no liquidation is necessary where there is already a settlement or an agreement as to what the retiring partner shall receive. From this decision plaintiffs appealed. Moreover. we find plaintiffs' claim against defendant to be without legal basis so that the judgment of dismissal rendered by the court 10 . As stated in the decision below. Such being the case they are now precluded from claiming any share in the alleged profits." And.000. therefore. the Bicol Electric Company. at the time of the dissolution. and while those shares had a total face value of P225. due to defendant's failure properly to perform his duty as a liquidator of the dissolved partnership. indeed. Plaintiffs. in order to give color of legality to their claim against defendant. the assignment was made in payment for subscriptions of various persons to the capital stock of the new corporation. Because of these circumstances there is every reason to believe that plaintiffs together with Judge Jaime Reyes. for the assignment was not made for cash but in payment for subscriptions to shares of stock in the assignee. It is. And in that connection it should be recalled that nonpayment of that obligation would result in the partnership losing its entire investment because of the penalty clause in the deed of sale. when a partner retires from the firm. Needless to say. it is hard to see how defendant could be made to answer for plaintiffs' alleged share thereof. maintain that the latter should be held liable for damages caused to them." In the second place. he is entitled to the payment of what may be due him after a liquidation. But it does not appear that plaintiffs have ever asked for a liquidation. There is evidence that the partnership was at that time operating its business at a loss and that the partnership did not have necessary funds to meet its obligation to Meralco for the balance of the purchase price. As a general rule. The court therefore dismissed the complaint with costs against the plaintiffs. P82. consisted of the subscriptions of various persons to the capital stock of the corporation. the stipulation of facts made at the hearing does not bear out the claim that defendant was the managing partner of the partnership. Judge Reyes has testified that when he was invited to join in the present claim he refused because he did not want to be a "sin verguenza. It is true that the value set for those properties in the deed of assignment was P365. In the first place. is more apparent than real. one of the withdrawing partners. have been the intention or understanding of the parties that the withdrawing partners were relinquishing all their rights and interest in the partnership upon the return to them of their investment. our conclusion that the acceptance by the withdrawing partners. including the plaintiffs. consisting of the loss of their share of the profits. if the agreement was that the withdrawing partners were still to have participation in the subsequent transactions of the partnership so that they would have a share not only in the profits but also in the losses. actually "in the red. withdrew from the partnership for fear that they might lose their entire investment should they choose to remain in the partnership which then faced the danger of losing its entire assets. assuming that the assignment actually brought profit to the partnership. It must. the profit alleged to have been realized from the assignment of the Meralco properties to the new corporation. it is not likely that their investment would have been returned to them. should there be any.

JJ. JJ. contrary to the petitioners NACHURA. Chairperson.. in CA-G. Montemayor. 53236. Labrador and Concepcion. 1979 by Isidro Catandijan and Maximina Caezo attesting to her acquisition of theproperty. Promulgated: November 23.versus - CONCEPCION ROJAS. 2000. and Resolution dated May 9. She also discovered that the tax declaration over the property was already in the name of Crispulo Rojas. although the transaction was not reduced into writing.: claim. Bautista Angelo. concur. as it is hereby. 2007 January 29. the petitioner alleged that she bought the parcel of land in 1939 from Crisogono Limpiado. Crispulo [4] Rojas. When she and her husband left for Mindanao in 1948. she entrusted the said land to her father. who took possession of. the respondent asserted that. and cultivated. [5] DECISION In her Answer.below should be. substituted CAEZO and VICTORIANO CAEZO Petitioners. was in possession of the property and was x-----------------------------------------------------------------------------------------x cultivating the same. respondent Concepcion Rojas. J.. SP No. Respondent. In her complaint.R. Pablo. dated September 7. This is a petition for review on certiorari from the Decision[1] of the Court of Appeals. the property. Jugo. Caezo attached to the complaint a Joint Affidavit [3] executed on May 10. 2001. who bought the property from Crisogono Limpiado in 1948. 1997. The subject property is an unregistered land with an area of 4. Crispulo Rojas. and REYES. petitioner Soledad Caezo filed a Complaint[2] for the recovery of real property plus damages with the Municipal Trial Court (MTC) of Naval. with costs against the appellants. CHICO-NAZARIO.169 square meters. Thereafter. In 1980. NACHURA. No. On THIRD DIVISION SOLEDAD CAEZO. C. it was her husband. 148788 Present: YNARES-SANTIAGO. . which accounts for the tax declaration being 11 . J. Biliran. she found out that the respondent. by WILLIAM G. affirmed. against her fathers second wife. J. Naval.. situated at Higatangan. her stepmother. Bengzon. AUSTRIA-MARTINEZ. Paras. Biliran. she immediately took possession of the property.R.

The respondent further contended that the increase in tax collection than the observance of the niceties of law. even received her share in the the Second World War and the government was more interested in the produce of the estate. the RTC amended its original decision on December 14. the MTC gave credence to the evidence on record showing that Crispulo Rojas ever ousted the petitioner testimony of the petitioners two witnesses attesting to the fact that from the property. it held that the action had not yet prescribed considering that the petitioner merely entrusted the property to her father. Upon his death. The dispositive portion of the amended decision reads Crisogono Limpiado sold the property to the petitioner in 1939. the MTC rendered a Decision in favor of the petitioner. The dispositive portion of the Decision reads: WHEREFORE. The RTC found no without infringing the Statute of Frauds. SO ORDERED. P10. 1998. 1998. the property was Crispulos name had little significance on respondents claim. SO ORDERED. [8] petitioner ought to have impleaded all of the heirs as defendants. On October 12. and c) To pay the costs.[7] the ground that the action had already prescribed and acquisitive prescription had set in. which was administered by a special administrator. the decision of the Municipal Trial Court of Naval. 1998. Biliran awarding ownership of the disputed land to the plaintiff and further allowing recovery of damages is hereby REVERSED in toto. premises considered. Crispulo from Crisogono Limpiado in 1948.000. the Court finds a preponderance of evidence in favor of plaintiff Soledad Caezo and against defendant Concepcion Rojas by declaring plaintiff the true and lawful owner of the land more particularly described under paragraph 5 of the complaint and hereby orders defendant Concepcion Rojas: a) To vacate and surrender possession of the land to plaintiff. It held that the 1948 tax declaration in possessed and cultivated the property. until his death in 1978. From then on. The MTC as follows: also found no evidence to show that Crispulo Rojas bought the property 12 .00 for attorneys fees and litigation expenses. the country was then rehabilitating itself from the ravages of Bienvenido Ricafort. considering included in his estate. There is no award of damages. acting on petitioners motion for reconsideration. the RTC reversed the MTC decision on [6] On July 3.in Crispulos name.[10] This time. The petitioner. after hearing. as heir. The ten-year prescriptive period for the recovery of a property held in trust would commence to run Despite the respondents objection that the verbal sale cannot be proven only from the time the trustee repudiates the trust. The said property remains as the legitime of the defendant Concepcion Rojas and her children. premises considered. Biliran. She also argued that the fact that petitioner filed the complaint only in 1997 means The respondent appealed the case to the Regional Trial Court (RTC) of that she had already abandoned her right over the property.00 actual damages.[9] However. that in 1948. b) To pay plaintiff the sum of P34. Naval.000. thus: WHEREFORE.

on the South by Fidel Limpiado. and to pay the costs. 1998 is hereby set aside and another is hereby entered modifying the decision of the Court a quo and declaring Soledad Rojas Vda. 4073 in the name of Crispolo Rojas and later in the name of the Heirs of Crispolo Rojas.00 in actual damages. Ordering the defendant-appellant Concepcion Rojas to pay the plaintiff-appellee the sum of P34. 1998 rendered in Civil Case No.WHEREFORE. Naval. Ordering the Provincial and/or Municipal Assessors Office to cancel the present existing Tax Declaration in the name of Heirs of Crispolo Rojas referring to the above-described property in favor of the name of Soledad Rojas Vda. in view of the foregoing considerations. the amended decision dated December 14. later under Tax Declaration No. It noted that 17 years lapsed since she discovered that respondent was in adverse possession of the property before she instituted an action to recover the same. [14] The CA further held that. and (3) upon his death in 1978. more particularly described and bounded as follows: A parcel of land situated at Higatangan. the appellate court cited the following circumstances: (1) the property was declared for taxation purposes in Crispulos name and he had been paying the taxes thereon from 1948 until his death in 1978. in 1978.169 square meters per Tax Declaration No. 2000. Biliran. which reversed the Amended Decision of the RTC on September 7. bounded on the North by Policarpio Limpiado. the petitioner did not even contest the inclusion of the property in the estate of Crispulo Rojas. SO ORDERED. The complaint filed by Soledad Caezobefore the Municipal Trial Court of Naval. and on the West by Crispolo (sic) Limpiado with an approximate area of 4.[11] She then filed a petition for review with the Court of Appeals (CA). SO ORDERED. (2) Crispulo adversely possessed the same property from 1948 until his death The respondent filed a motion to reconsider the Amended Decision but the RTC denied the same in an Order dated April 25. Biliran is hereby DISMISSED on grounds of laches and prescription and for lack of merit.[12] The CA held that the petitioners inaction for several years casts a serious doubt on her claim of ownership over the parcel of land.00 per quarter based on the regular remittances of the late Crispolo Rojas to the plaintiff-appellee. [13] The CA was convinced that Crispulo Rojas owned the property. thus: WHEREFORE. her right of action 13 . Supporting this conclusion. 1999. And during the probate proceedings. the property was included in his estate. De Caezo as the true and lawful owner of a parcel of land.000. Further. ordering defendant-appellant Concepcion Rojas and all persons claiming rights or interest under her to vacate and surrender possession of the land aforecited to the plaintiff or any of her authorized representatives. on the East by Seashore. having bought the same from Crisogono Limpiado in 1948. B-1041 is hereby REVERSED and SET ASIDE. assuming that there was an implied trust between the petitioner and her father over the property. the proceeds of which were distributed among his heirs. and to pay for the loss of her share in money value of the products of the coconuts of said land from 1979 to 1997 and to pay further until the case is terminated at the rate ofP200. 2258. De Caezo. the decision of this Court dated October 12.

She contends that the fact that respondents of the property in 1997. the respondent asserts that the complaint is barred by prescription. laches and estoppel. the CA denied the petitioners motion for reconsideration for lack of merit. the case should be dismissed. the respondent argues that the petitioners are now estopped from questioning the CA Resolution granting her second motion for extension to file the petition for review. The petitioner insists that the respondents petition for review Crispulo cultivated the property and was in adverse. and express trusts do not prescribe. there was a On May 9. still petitioner cannot be considered as a compelling reason that would justify an allowed 17 years to elapse before she asserted her alleged right over the additional period of property. Even assuming that it was not an express trust. substituted by her heirs. the grant of the second extension of time was warranted considering that the certified true copy of the assailed RTC orders did not arrive at the office of respondents counsel in Cebu City in time for the filing of the petition. She notes that the petitioner That the Court of Appeals committed grave abuse of discretion in setting aside petitioners contention that the Petition for Review filed by respondent CONCEPCION ROJAS before the Court of Appeals was FILED OUT OF TIME. That the Court of Appeals erred and committed grave abuse of discretion amounting to lack or excess of jurisdiction when it decided that the filing of the case by SOLEDAD CAEZO for Recovery of Real Property was already barred by PRESCRIPTION AND LACHES. peaceful and before the CA was filed out of time. assigns the following errors: resulting trust which generally does not prescribe unless there is repudiation by the trustee. The petitioner posits that the CA may continuous possession thereof in the concept of owner. though.[17] did not raise this issue in the comment that she filed in the CA. 14 . that this issue was raised for the first time in their motion for reconsideration. It took the not grant an additional extension of time to file the petition except for the petitioner 49 years from 1948 before she filed the complaint for recovery most compelling reason. On the merits. 2001.[15] petitioner and Crispulo Rojas and his heirs. For her part. From 1948 until his death in 1978. She admits.[16] In this petition for review. but insists that it can be raised at any time since it concerns the jurisdiction of the CA over the petition. Granting that it was only in 1980 that she found counsel needed additional time to secure the certified copy of his annexes out that the respondent adversely possessed the property. and because they were not impleaded. In any case. Finally. extension. the petitioner.to recover the same would still be barred by prescription since 49 years The petitioner further posits that prescription and laches are had already lapsed since Crispulo adversely possessed the contested unavailing because there was an express trust relationship between the property in 1948. the respondent maintains that the other co-owners are indispensable parties to the case.

[21] Trusts are either express or implied. the possession of the cannot acquire by prescription a property entrusted to him unless he property by the respondent. The basis of the rule is that the possession of a trustee is not 15 . The grant or denial of a motion for equitable ownership of property and another person owning the legal title extension of time is addressed to the sound discretion of the court. The petition has no merit. or will. if no trust relations existed. That rule applies squarely to express trusts. the resolution of the second issue hinges on our determination of the existence of a trust over the property --. a trustee resulting trust.[25] The following discussion is instructive: 1948.[18] The to such property. without being expressed. Implied trusts are those which. the equitable ownership of the former entitling him to the CA obviously considered the difficulty in securing a certified true copy of performance of certain duties and the exercise of certain powers by the the assailed decision because of the distance between the office of latter. On the procedural issue raised by the petitioner. an action for recovery of real property.express or implied --. 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. 190 (Code of Civil Procedure). [24] An implied trust may either be a resulting trust or a constructive trust. Indeed. [19] Under Section 40 of Act No.[22] Express trusts are those respondents counsel and the trial court as a compelling reason for the which are created by the direct and positive acts of the parties. which dates back to repudiates the trust. independently. as being superinduced on the On the second issue. such exercise of discretion will not be disturbed by [23] this Court. would already have given rise to acquisitive prescription in accordance with Act No.Thus. In the absence of any showing that the CA granted the motion for writing or deed. There is a rule that a trustee cannot acquire by prescription the ownership of property entrusted to him. extension capriciously. with the respondents uninterrupted possession of the property for 49 years because there existed between her and her father an express trust or a It is true that in express trusts and resulting trusts. 190. are deducible of the particular intention of the parties. we find no reversible error in the grant by the CA of the second motion for extension A trust is the legal relationship between one person having an of time to file the respondents petition. the petitioner insists that her right of action to recover the property cannot be barred by prescription or laches even transaction by operation of law basically by reason of equity. This period coincides with the ten-year period for acquisitive prescription provided under Section 41[20] of the same Act. or that property held in trust can be recovered by the beneficiary regardless of the lapse of time. through her predecessor. or that an action to compel a trustee to convey property registered in his name in trust for the benefit of the cestui que trust does not prescribe. can be brought only within ten years after the cause of action accrues. or by words evincing an intention to create a trust. from the nature of the transaction as matters of intent or.between the petitioner and her father. by some request. or of an interest therein.

the only evidence to support the claim that an express trust existed between the petitioner and her father was the self-serving 16 . and (4) the cestui que trust. (2) a trustee. Not being adverse. consisting of duly identified and definite real properties. [26] a trust. As a rule. made from language. (b) such positive acts of repudiation have been made known to the cestui que trust. They are not equivalent to proof under the Rules of Court. or from the circumstances surrounding the creation of the purported trust.[32] deed.[30] In one case. While oftentimes the intention is manifested by the trustor in express or explicit language. It cannot rest on vague. Thus. [28] Accordingly. An inference of intention to create a trust. In this case. and the relationship. proof of fiduciary relationship must be clear and convincing. can be made only where they admit of no other interpretation.[29] It must be proven by some writing or cannot be inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations. It was stressed therein that what is important is that there should be an intention to create 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 que trust. the Court allowed oral testimony to prove the existence of a trust. such intention may be manifested by inference from what the trustor has said or done. uncertain or indefinite declarations. conduct or circumstances. The creation of an express trust must be manifested with reasonable certainty and The existence of express trusts concerning real property may not be established by parol evidence.[27] The presence of the following elements must be proved: (1) a trustor or settlor who executes the instrument creating the trust. (3) the trust res. and (c) the evidence thereon is clear and conclusive. predicated only on circumstances. he does not acquire by prescription the property held in trust. from the nature of the transaction. which had been partially performed. it Although no particular words are required for the creation of an was incumbent upon petitioner to prove the existence of the trust express trust. or beneficiaries whose identity must be clear. thus: What is crucial is the intention to create a trust.adverse. And petitioner sadly failed to discharge that burden. the burden of proving the existence of a trust is on the party asserting its existence. xxxx testimony of the petitioner. must be made with reasonable certainty. who is the However. a clear intention to create a trust must be shown. an inference of the intention to create a trust." 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. and such proof must be clear and satisfactorily show the existence of the trust and its elements. however. Bare allegations do not constitute evidence adequate to support a conclusion. Section 38 of Act 190 provides that the law of prescription does not apply "in the case of a continuing and subsisting trust.[31] person expressly designated to carry out the trust.

cannot be established upon vague and inconclusive proof. an intention to create a trust cannot be trustee would necessarily have the right to transfer the tax declaration in inferred from the petitioners testimony and the attendant facts and his name and to pay the taxes on the property. Davao del Sur. thus: Neither can it be deduced from the circumstances of the case that Q: What was your agreement with your father Crispulo Rojas when you left this property to him? A: Every time that they will make copra. A resulting trust is a species of implied trust that is presumed always to have been contemplated by the parties. Davao del Sur. the evidence This allegation. such as in deposit. the proof should be as fully convincing as if the acts giving rise What distinguishes a trust from other relations is the separation of the legal title and equitable ownership of the property. 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.[33] a resulting trust was created. 17 . Thus.[34] produce of the property. Q: In what particular part in Mindanao [did] you stay with your husband? A: Bansalan.00 and sometimes P300. legal title is vested in the fiduciary while equitable ownership is vested in a cestui que trust. he gave us every three months sometimes P200. The In light of the disquisitions. in fine. legal title is vested in the trustee. she would not have made an issue out of this because in a trust agreement. did Crispolo Rojas comply with his obligation of giving your share the proceeds of the land? A: When he was still alive. they will give a share. the intention as to which can be found in the nature of their transaction although not expressed in a deed or instrument of conveyance. An implied trust.In the case at bench. The petitioner alleged in her complaint that the tax declaration of the land was transferred to the to the trust obligation are proven by an authentic document.[36] In order to establish an implied trust in real property by parol evidence. standing alone as it does. The petitioner testified only to the effect that her treated as beneficial to the cestui que trust and would not amount to an agreement with her father was that she will be given a share in the adverse possession. we hold that there was no express trust or resulting trust established between the petitioner and her father. and should not be made to rest on loose. is inadequate to establish the existence of a trust because profit-sharing per se. In a trust relation. Had it been her intention to create a trust and make Crispulo her trustee. there was no evidence of any transaction between the petitioner and her father from which it can be inferred that a resulting trust was intended. Trustworthy evidence is required because oral evidence can easily be fabricated.00. equivocal or indefinite declarations. It could also be present in other relations. must be trustworthy and received by the courts with extreme caution. name of Crispulo without her consent. These acts would be circumstances. does not necessarily translate to a trust relation. [37] In the present case.[35] While implied trusts may be proved by oral evidence. Q: And while you were in Bansalan. Such is not true in this case.

such as payment of device to correct the situation. trust over the property with her father as the trustee. when coupled with actual possession. rightfully belongs to another. A trust terminates upon the death of the trustee where the fiduciary relations. a beneficiary and a trustee are linked by confidential or death in 1978.[38] While tax declarations and but one which arises in order to satisfy the demands of justice. Section 41 of Act No. 190 and good conscience. we can only conclude that property by operation of law.[39] Moreover. While in an Assuming that such a relation existed. or generate a fiduciary relation.in the absence of a trust relation. repudiation of the said trust is not a condition precedent to the would not advance her case. Hence. and the be conveyed to the respondent or any of Crispulos other heirs. evincing a direct intention to create a trust. [44] A constructive trust. unlike an express trust. it cannot be said that such appointment was intended to relation of trustee and cestui que trust does not in fact exist. ripened into ownership. they construed against one who. such a finding still Necessarily. constitute evidence of great weight and can be the basis of a claim of obtains or holds the legal right to property which he ought not. to hold. have adversely claimed ownership of the lot.[42] real estate taxes. secures a tax declaration in his name and may. there is neither a promise nor trust is personal to the trustee in the sense that the trustor intended no any fiduciary relation to speak of and the so-called trustee neither accepts other person to administer it. it terminated upon Crispulos express trust. faith. It does not receipts are not conclusive evidence of ownership and do not prove title to come about by agreement or intention but in the main by operation of law. the rule that a trustee cannot. property. be said to either expressly or impliedly. running of the prescriptive period. nevertheless. [45] The of the property. a constructive trust is the proper remedial coupled with the performance of acts of ownership. does not emanate from. the respondent had no right to retain possession of the all times adverse.[40] As previously stated. in a constructive trust. therefore. [41] If Crispulo was indeed appointed as trustee any trust nor intends holding the property for the beneficiary. in equity ownership through prescription. prescription may claim that she was the owner of the property and that she constituted a supervene even if the trustee does not repudiate the relationship. duress or abuse of confidence. However. by fraud. and therefore. even if we sustain petitioners implied trusts. at Crispulos death. Where one mistakenly retains property which Crispulos uninterrupted possession of the subject property for 49 years.[43] allows adverse possession in any character to ripen into ownership after the lapse of ten years. There could be prescriptionunder the said section even in the absence of good faith and just title. a constructive trust would be created over the 18 . after holding of a constructive trust is for the trustee himself. The statutory period of prescription commences when a person who has neither title nor good A constructive trust is one created not by any word or phrase. in constructive implied trusts. applies to express trusts and resulting All the foregoing notwithstanding. acquire ownership over property entrusted to him until and unless he repudiates the trust. At such point. the land. by prescription.

Caezo never contested the inclusion of the contested property in the estate of her father. when indispensable parties are not before the court. are AFFIRMED. and the latter rightfully relies and acts on such belief. First. Laches is negligence or omission to assert a right within a reasonable time. premises considered.[48] 19 . induces another to believe certain facts to exist. intentionally or through culpable negligence.In addition. We note that the complaint filed by the of Crispulo. [47] However. Second. thus. the respondent asserts that the court a quo ought to have petitioners case. The petitioner allegedly discovered that the property was being possessed by the respondent in 1980. admissions. Without them being impleaded. warranting a presumption that the party entitled to it has either abandoned or declined to assert it. correctly observed that: petitioner sought to recover ownership. dated September 7. thus. the action is barred by laches. axiomatic that owners of property over which reconveyance is asserted are indispensable parties. no relief is available. their absence in the suit renders all subsequent actions of the trial court null and void for want of authority to act. the action should be dismissed. 2001. the petitioner is estopped from asserting ownership dismissed the complaint for failure to implead the other heirs who are over the subject property by her failure to protest its inclusion in the estate indispensable parties. WHEREFORE. it was only in 1997 that she filed the action to recover the property. or silence when there is a need to speak out -one. She even participated in the project of partition of her fathers estate which was approved by the probate court in 1984. which included her as a daughter of the first marriage. The CA. 2000. SO ORDERED. a The principle of estoppel in pais applies when -- by ones acts. the suit is in the nature of an action for reconveyance. After personally receiving her share in the proceeds of the estate for 12 years. Being indispensable parties. not just possession of the property. resolution of this issue is now purely academic in light of our finding that the complaint is already barred by prescription. the petition is DENIED. for the court cannot render valid judgment. Thus.[46] Such a situation obtains in the instant case. representations. not only as to the absent parties but even as to those present. a number of other factors militate against the Finally. and Resolution dated May 9. We agree. she suddenly claims ownership of part of her fathers estate in 1997. estoppel and laches.[49] At any rate. It is Even in the probate proceedings instituted by the heirs of Crispulo Rojas. The Decision of the Court of Appeals. so as to be prejudiced if the former is permitted to deny the existence of those facts.

vs. private respondent as president of the Association sought the assistance of the then Minister of Human Settlements to cause the expropriation of the subject property under the Urban Land Reform Program for subsequent resale to its tenants. J. the effects of the provisions of PD 1517. The Facts The facts of the case.. The letter stated in part: 7 At the moment. Inc. 1985. 32821 promulgated on March 21. judgment is hereby rendered: 1. Failing to get the assistance of the government. "to promote. in a letter dated May 29. The matter was endorsed to the Human Settlements Regulatory Commission. signed by Commissioner and Chief Executive Officer Ernesto C. which in a letter dated November 5. REVERSING and SETTING ASIDE the appealed decision dated 10 September 1990.500. 1994. No. are simple. petitioner. Sometime in April 1984. The dispositive portion of the assailed Decision reads: 4 WHEREFORE." 6 G. 1997 MEYNARDO POLICARPIO. Rodolfo Gayatin. Kalentong Street.respondent was elected President of the Barretto Tenants Association (hereafter referred to as the "Association") which was formed. CV No. under the following Terms and Conditions: 20 . in view of the foregoing. 1984. UY.R. rejected the tenant's request for expropriation. Serapia Real Estate.. Be informed further that. denying petitioner's motion for reconsideration. PANGANIBAN. namely. otherwise known as the Urban Land Reform Decree. the tenants formally expressed to Mrs. respondents. in his capacity as president of the Association. Petitioner (along with his co-plaintiffs in the antecedent cases. as culled from the challenged Decision. Later.000. Metro Manila. COURT OF APPEALS and ROSITO PUECHI S. and the Resolution 3 promulgated on July 5. Mandaluyong.: The Court finds occasion to apply the general principles of constructive trust as authorized by the Civil Code in granting this petition and in compelling private respondent to implement his trust relationship with petitioner. Inc. DISMISSING the Complaint. sent to Rosito Uy. Mendiola. This is a petition under Rule 45 of the Rules of Court to reverse the Decision 1 of public respondent 2 in CA-G. are limited only to the proclaimed 245 APD's and/or ULRZ's. Jose Villacin and Jocelyn Montinola 5) and private respondent were former tenants of the 30-door Barretto Apartments formerly owned by Serapia Realty. Private Respondent Rosito Uy orally expressed to Mrs.00) PESOS ONLY. pursuant to Rule VIII & IX of the Rules and Regulations of the abovementioned Decree. expropriation will be availed of only as a last resort as there are various modes of Land Acquisition/Disposition techniques which the Ministry can avail of to help bonafide (sic) tenants/residents of a certain area. Without pronouncement as to costs. the tenants undertook to negotiate directly with the owners of the Barretto Apartments. among others. the following letter: 8 Sir: This is in response to your letter regarding your intent to buy our property together with its improvements located at corners Haig and Romualdez Streets and along Gen. safeguard and protect the general interest and welfare of its members. and 3. We would like to inform you that we are offering to sell the said property at a price of FOUR MILLION FIVE HUNDRED THOUSAND (P4. signed by thirty (30) tenants of the commercial and residential units. On July 27.R. 1994. 1984. private In a letter dated July 30. Initially. 1985. Ochoa their intent to purchase. 2. 116211 March 7. Rosita Barretto Ochoa the tenants' desire to purchase their respective units.

But the negotiations apparently did not ripen into a perfected sale. Joint trial of the two cases ensued. P35. Jocelyn Montinola and Meynardo Policarpio.. — 1. petitioner and his coplaintiffs were notified that private respondent was the new owner of the apartment units occupied by them.237 square meters On November 20. Rodolfo Gayatin acknowledged receipt of the said letter with a request that he be furnished with the following information: 10 Manner of Payment: An earnest money of P100. Door 2. judgment is hereby rendered in the aboveentitled cases in favor of plaintiffs Rodolfo Gayatin. Door 3. petitioner sued for "Redemption and Damages with Prayer For Preliminary Injunction. The trial court found that private respondent had been designated and entrusted by plaintiffs to negotiate with the Barretto family for the sale of the units. One and a half years later." Private respondent counter-sued for Damages and Accion Publiciana with Preliminary Attachment. Inc. SERAFIA REALTY INC. on March 12. Believing that they had been betrayed by their Association president.00 respectively. We are giving you a period of ten (10) days from receipt hereof to see us(. Jose Villacin. We are therefore giving you the first priority to purchase the same. 21 . Ochoa's letter of intent to sell the apartment unit occupied by the tenants were sent by Dionisio Enriquez and Elena J. Full payment payable within 60 a. This offer is on a "FIRST COME FIRST SERVED BASIS" and our price is good only within 60 days or until September 30. It also found that a constructive trust was created between the private respondent as "the cestui que trust [should be trustee] and plaintiffs as beneficiaries [or cestuis que trust] vis-a-vis the subject units. Terms and conditions of the sale. Inc. Very truly yours. Rosa B." 11 The dispositive portion of the trial court decision reads: 12 WHEREFORE.520. Jose Villacin and Rodolfo Gayatin covering Door 8. Lot 14. In addition. b.600. 1987.00. Plan indicating the areas and boundaries of each unit. Ochoa T/ Mrs. upon refund by the plaintiffs to the defendant of the sums of P35. 1985 only./Mrs. Lot 9. 1985 Mr. 1985. and Door 1. Metro Manila (Authorize (sic) representative) Letters acknowledging receipt of Mrs. Ochoa Kalentong Mandaluyong. and days. Ordering said defendant to execute the corresponding deeds of conveyance in favor of plaintiffs Meynardo Policarpio. The tenants designated and appointed private respondent as their president to negotiate with Serapia Realty. P35.200.AREA: 2. Lot 9.. Bañares.000. Rosito Puechi S.) otherwise. we will consider your inaction a waiver in (sic) your part to purchase the same. and against defendant. without any interest. Thank You. Serapia Realty. c.00 within 30 days. By: S/ Mrs.00 and P47. Rosa B. sent to spouses Gayatin a mimeographed letter stating: 9 November 15. Consideration of the sale. Gayatin SIR/MADAM: Please be informed that we are intending to sell the unit you are now occupying. Uy. Jocelyn Montinola.00.200. if you desire. Lot 9.

is concerned. "J") about a year before the execution of the Articles of Incorporation on 06 August 1985. to the Barretto family in an effort to pursue their common desire to own their respective unit(s). because Villacin's earlier petition docketed as G. Costs against defendant Uy. in finding that a constructive trust had not been created. "B" to "F") or about two (2) years after appellant was designated President of the Association and approximately one (1) year after the Articles of Incorporation were drawn up and signed by the parties. Dismissing defendants' counterclaims in Civil Case No. denied for lack of merit. Ochoa but also from appellant who live (sic) in 22 . Further. which the First Division of this Court in a Resolution dated June 26. this petition only by Meynardo Policarpio.) had already been dismissed for failure to attach an affidavit of service. Dismissing Rosito Puechi Uy's complaint in Civil Case No. Hence. 55739. no evidence appears on record to show that the Association filed the requisite documents for incorporation with the Securities and Exchange Commission. 54444 as far as defendant Serapia Real Estate Inc. The record reveals that appellant (herein private respondent) did in fact send several communications. ruled: 16 The contemporary and subsequent acts of the parties herein fail to convince Us that a constructive trust exists for the benefit of the appellees (tenants).000.00 as moral damages. and 4. 2. Jose Villacin. His coplaintiff in the antecedent case. and c) P20. still it cannot be denied that the transaction could not have been effected unless the tenants and the owners came to terms regarding the sale. all with interest at 12% per annum from date of this decision. The Deeds of Absolute Sale in favor of appellant over appellees' unit appear to have been executed on 05 August 1986 (Exhs. filed a Petition for Intervention 13 on March 28. respectively.000. The letter to the Minister of Human Settlements is dated July 30. public respondent said: The Issue The sole issue raised by petitioner in this appeal is: The respondent Court erred in reversing the finding of the trial court that a constructive trust existed between the plaintiffs and the defendant.R. No. (Exhibit "S") Public respondent contended that plaintiffs were informed of the negotiations for the purchase and sale of property.000. A reading of the Articles of Incorporation of Barretto Apartment Tenants Association. b) P40. 116137 (Jose Villacin vs. 1984 (Exh. and to pay to the plaintiffs the following sums: a) P15. et al. Court of Appeals. "J") shows that the purpose for its formation is couched in general terms without specifically stipulating the proposed purchase and sale of the apartment units.00 as exemplary damages. 3. 54444. Incidentally. Dismissing the Complaint in Civil Case No. 14 Public respondent. 15 it appears incumbent upon the tenants to verify from time to time on (sic) the progress of the negotiations not only from Mrs. While it may be conceded that the sale to the tenants was a general concern that would have redounded to their benefit. (Exh. 1995.Should defendant Uy fail to so execute the deeds of conveyance herein ordered within fifteen (15) days from finality of judgment. first to the Ministry of Human Settlements and when this avenue did not prosper. Inc. the Clerk of this Court will execute the same and the Register of Deeds will be ordered to nullify the certificates of title in the name of said defendant and to issue other certificates of title in favor of the four abovenamed plaintiffs. Private respondent appealed the decision to public respondent which as earlier stated reversed the decision and denied the subsequent motion for reconsideration.00 as attorney's fees. 1995.

that the informal Association created a relationship among the parties. 23 . The Court's Ruling Q What was your purpose of attempting to communicate with Mr. He asserts that petitioner. This admission recognized the confidence reposed in him by his co-tenants. and the revelation that Barretto's apartments were heavily encumbered. During his negotiations with Serapia Realty. had created an alibi to suspend payment of rental for years. that upon denial of the tenants' request for expropriation by the Ministry of Human Settlements. states private respondent. you were doing this in your capacity as President? A Both as individual member and as President. Inc. independently of the particular intention of the parties. are deducible from the nature of the transaction by operation of law as matters of equity." Petitioner insists that the tenants had authorized and private respondent had agreed to negotiate with the owners regarding the terms of the sale." Assuming for the sake of argument. A constructive trust as invoked by petitioner can be implied from the nature of the transaction as a matter of equity. Rather. there were actually two batches of sale. in equity and good conscience. as we now do. without being expressed. 17 Before us. 22 A We also tried to negotiate with Mr." 19 We hold that an implied trust was created by the agreement between petitioner (and the other tenants) and private respondent. private respondent admitted that he was not only representing himself but also the other tenants as president of the Association. obtains or holds the legal right to property which he ought not. "the same ceased and expired by virtue of the act of the owners of the apartment who directly deal with the tenants" under Article 1924 21 of the Civil Code. duress or abuse of confidence. when there is conflict between the factual findings of the Court of Appeals and the trial court. petitioner argues that public respondent erred in stating that "there was no common interest on the pan of the members of the association to purchase units they were occupying.the same apartment complex. 20 Q Apart from the Regulatory Commission." 18 He also maintains that it is immaterial whether the intent to buy the units was specifically stated in the purposes of the Association. Q And when you made representations with the owner of the apartment. What is important is that the "contemporary and subsequent acts of parties indicated such a purpose. Their inaction leads to the impression that they lacked interest to pursue their original plan to purchase the property or they could not agree on the terms and conditions for the sale. precisely to conform to the desire of the owners to deal with only one person. As a rule. regardless of the absence of such intention in the purposes of their Association. Ochoa. They arise against one who. Implied trusts are those which. 25 It is not necessary that the intention of the tenants to purchase their apartments units be categorically stated in the purposes of their Association. adds private respondent. 23 the Court may review such findings and conclusions. Ochoa? A So that those who cannot afford to pay in cash can be allowed to pay in installment. However. to hold. in feigning ignorance of the two batches of sale and siting private respondent. you did not make any communication to any person or body in your capacity as President of the Association anymore? It should also be considered. He testified: 26 Private respondent rebuts by saying that the entire property consisting of thirty (30) doors was not sold on one particular date. Q You used the word "we". 24 Constructive trusts are created in order to satisfy the demands of justice and prevent unjust enrichment. tenants "completely abandoned the plan to organize a formal association. by fraud. to whom are you referring to? We find for petitioner. and from the First Lady Imelda Marcos. the jurisdiction of this Court in cases brought before it from the Court of Appeals is limited to the review and revision of errors of law allegedly committed by the appellate court. Petitioner vehemently denies that the co-tenants of private respondent "had revoked or withdrawn the authority and trust reposed on the private respondent to act as negotiator in their behalf. A My co-tenants in the apartment..

520. did not want to contribute funds to redeem the encumbered apartment. sir.84 (including "the monthly rentals in the same amount that they were last paying to defendant Serapia Real Estate. now in the possession of the Branch Clerk of this Court.) The trial court debunked this allegation thus: 28 . after being informed by the owner. which amounts were ordered to be deposited "with the Philippine National Bank. . Shaw Blvd. together with the latter's co-plaintiffs in the action for redemption.Q In your capacity as both individual member and President? A Yes. P35. and this finding was not contested by private respondent. and successfully purchased eight (8) apartment units and secured an authority to sell the remaining twenty-two (22) units. He did not inform them but as far as the amount is concerned as a matter of discretion. testified that the owners wanted to deal with one "spokesman. all of them would suddenly become "reluctant. did you not consider it in keeping with trust and confidence to officially inform them that these apartments is (sic) being sold at that (sic) prices and if you could buy this (sic). you pay this (sic) amount.200. You did not inform them. in self-renewing 120-day time deposits.600.200. Private respondent alleges that. 713640-C and 6713641-C. P35. January 12..200. BALLELOS respondent): (counsel for private Already answered. p." from the month of April 1990 to July 1990) per PNB Certificates of Time Deposit Nos. 713638-C.. surely they would have raised the required amount to redeem the property and.00 and P35.434. The tenants could not be faulted for not inquiring into the status of private respondent's negotiation with the owners of the apartments.200? A I did not.520 and P35. Considering the virtually (sic) give-away considerations (P42. it is unbelievable and inconsistent with the ordinary imperatives of human experience for the plaintiffs to suddenly show reluctance towards the opportunity they have been expecting and preparing for all along. living and dining rooms and kitchen" (citing TSN. Pasig. the tenants authorized private respondent to negotiate on their behalf. 1990. Unfortunately. It taxes the mind no end to accept defendant's claim that when the units which the tenants have for years been dreaming of owning one day were ready to be sold to them. 24 .00.00. all dated August 30. Q As President of the association who got the trust and confidence of the members including the 4 plaintiffs. is it not? ATTY.00) for the subject units all of which were uniformly two-storey apartments with "2 bedrooms. They had a right to expect private respondent to be true to his duty as their representative and to take the initiative of informing them of the progress of his negotiations.00." which now stands at P126. (Such redemption was required before the units could be sold.600. private respondent negotiated for himself only. The incriminating admission of private respondent that he had not informed the plaintiffs in the redemption case of the prices at which the apartment units were sold demonstrated beyond cavil his betrayal of their trust: 29 Q Did you inform vergally (sic) these 4 plaintiffs that their apartments were being bought at P47. 1990 "to pay to the Branch Clerk of this Court all the rentals due on their respective units from the time they stopped paying up to this month of March. P35. petitioner. . Inc. to wit: 30 The ability of the plaintiffs to pay for their respective apartment units in question is demonstrated when they promptly complied with the Court's Order of March 15." 27 Hence. If only the tenants had been informed by private respondent of this predicament of the owners. in turn. P35. . to buy them. 713637-C. acquired the units being rented by them. 7) situated in a strategic and prime area. president of Serapia Real Estate Corporation. The ability of the tenants to pay the purchase price for their units was clearly found by trial court to be sufficient. Pasig Branch." to quote his word. 1990. Alfonso Barretto. 713639-C.

a constructive trust does not arise on every moral wrong in acquiring or holding property or on every abuse of confidence in business or other affairs. Truly. acquires or comes into possession of something at the expense of the latter without just or legal ground. Rules of Court and special laws. If he was in good faith. by Article 1442. rendering an acquisition or retention of property by one person unconscionable against another. "Every person who through an act of performance by another. if any. it is against equity that it should be retained by the person holding it. we may draw freely upon American precedents in determining the effects of trusts. Yet. is a trust by operation of law which arises contrary to intention and in invitum. otherwise known as a trust ex maleficio. he purchased the units for himself at bargain prices so he could resell them at a profit at the expense of the tenants. Unfortunately. the actuations of private respondent show nothing but greed on his part. against one who. either has obtained or holds the legal right to property which he ought not. other statutes and the Rules of Court. especially so because the trusts known to American and English equity jurisprudence are derived from the fidei commissa of the Roman Law and are based entirely upon civil law principles. concealment. Br. petitioner is granted the opportunity to purchase the property which should have been his long ago had private respondent been faithful to his trust. in accordance with its fundamental principles and the traditional exercise of its jurisdiction or in accordance with statutory provision. finding constructive trust under Article 1447 32 of the New Civil Code. whose decision is brought up on appeal.The sale of the apartments in favor of private respondent was on August 6. an involuntary trust. Why did he not inform the tenants that he was the owner as soon as the sale was consummated if. "(S)ince the law of trust has been more frequently applied in England and in the United States than it has been in Spain. or who in any way against equity and good conscience. that he informed the tenants of such sale. RTC. or an implied trust. actual or constructive." The above principle is not in conflict with the New Civil Code. This violation of the trust reposed in him warrants the sanction provided by the equitable rule on which constructive trust is founded. 1987. not all the plaintiffs in the original redemption case will be able to avail of this award because a party who has not appealed from the decision may not obtain any affirmative relief from the appellate court other than what he had obtained from the lower court. a trust de son tort. by duress or abuse of confidence. And since We are a court of law and of equity. shall return the same to him. in equity and good conscience. to the extent that such principles are not inconsistent with the Civil Code. conscience and fair dealing" that he should not be allowed to profit from his breach of trust. they may well be applied in our jurisdiction. 25 . why the delay? Obviously. or questionable means. As the respondent court said. morality. And specifically applicable to the case at bar is the doctrine that "A constructive trust is substantially an appropriate remedy against unjust enrichment. hold and enjoy. although in business or social relations. It is raised by equity in respect of property. Judge. a trust ex delicto. Nueva Ecija 33 that: A constructive trust. or any other means. they supposedly did not have the money to contribute. Codes of Commerce. however. we consider it a serious matter of "justice. artifice. "It behooves upon the courts to shield fiduciary relations against every manner of chicanery or detestable design cloaked by legal technicalities. the case at bar must be resolved on the general principles of law on constructive trust which basically rest on equitable considerations in order to satisfy the demands of justice. takes cognizance. according to him. However. morality. or by any form of unconscionable conduct. raises a constructive trust. after all. Guimba. rests on the general principles on trust which. by fraud. 31 The conclusion we thus reach in this case." 35 Thus. his co-tenants were unwilling to share the expenses of redemption? His co-tenants could not have blamed him for acquiring the entire property. conscience and fair dealing and thus protect the innocent against fraud. by commission of wrong. It has been broadly ruled that a breach of confidence. he hid the perfection of the sale from them. have been adopted or incorporated into our civil law. XXXI. 1986. It is raised by equity to satisfy the demands of justice." 34 Having concluded that private respondent willfully violated the trust reposed in him by his co-tenants. which has been acquired by fraud. ordinarily such a trust arises and will be declared only on wrongful acquisitions or retentions of property of which equity." Although the citations in the said case originated from American jurisprudence. This Court has ruled in the case of Sumaoang vs. or where although acquired originally without fraud. it was only on March 27.

Jr. Davide. C. WHEREFORE.. Melo and Francisco.00 without any interest. J. 26 . No. Private Respondent Rosito Puechi S.. No costs. the petition is hereby GRANTED. The assailed Decision and Resolution are hereby REVERSED and SET ASIDE. JJ.J. Petitioner.200.R. LINA PEALBER... 178645 Present: . G. concur.versus - AUSTRIA-MARTINEZ. Lot 14.We only regret that we cannot grant the same opportunity to the other beneficiaries or cestuis que trust for their failure to perfect their petitions for review of the respondent Court's Decision. in favor of Petitioner Meynardo Policarpio upon the latter's payment of P35. Uy is ORDERED to EXECUTE a deed of conveyance covering Door 8. SO ORDERED. Consistent with the trial court's decision. Narvasa.

on the other hand. which declared 1983. 3672. Petitioner agreed to the proposition of the respondent spouses Ramos.457 sq. petitioner filed before the RTC a Complaint for Declaration of Nullity of Deeds and Titles. Petitioner is the mother of respondent Leticia and the mother-inlaw of respondent Quirino. T-58043 No.... Inc.-x area of 1.....[6] which petitioner properties in the amount of P1 Million... Petitioner averred that in the middle part of 1986... husband of Leticia....* CHICO-NAZARIO. 2009 x.: she discovered that TCT 1983 and TCT No. and PERALTA. First Cause of Action Promulgated: Firstly...R.. Subsequently. 69731.... 3672. in Civil Case No. Upon verification..... T-43373[4] of the Register of Deeds for the Province of Cagayan.. around 10 January 1987. A residential house and a warehouse were constructed on the said parcel of land which petitioner also claimed to own DECISION (the land and the improvements thereon shall be hereinafter referred to as the Ugac properties). The factual and procedural antecedents of the case are set forth hereunder. JJ. Branch 2..Acting Chairperson.. QUIRINO RAMOS. J.. with an January 30. and BARTEX INC. petitioner alleged in her Complaint that she was the owner of a parcel of land situated in Ugac Norte.. the false donation.m... CHICO-NAZARIO. the Decision dated 19 January 2000 of the Regional Trial Court (RTC) purportedly executed in favor of respondent spouses Ramos on 27 April of Tuguegarao City... Reconveyance.. Tuguegarao. Damages. Cagayan.. registered in petitioners name.. petitioner learned that the the Rules of Court is the Decision [1] dated 15 December 2006 of the Court basis for the cancellation of her title was a Deed of Donation of of Appeals in CA-G. On 18 February 1987... is a domestic corporation which bought from respondent spouses Ramos one of the two properties involved in this case.. When petitioner confronted the respondent spouses Ramos about reconvey the same to petitioner. and covered by Transfer Certificate of Title (TCT) No. Respondents.. LETICIA PEALBER..[7] petitioner found out that the respondent spouses Ramos were selling the Ugac properties to 27 . [with] Application for a Writ of Preliminary Prohibitory Injunction against the respondents. Petitioner insisted that her signature on the said Deed of Donation petitioner Lina Pealber the owner of the Bonifacio property subject of this was a forgery as she did not donate any property to respondent spouses case and ordered respondent spouses Quirino Ramos and Leticia Pealber to Ramos.... the latter pleaded that they would just pay for the Ugac [2] Residential House and Camarin. NACHURA... TINGA. CV No. Respondent Bartex.. Said Decision reversed and set aside a Registered Land... [5] T-43373 was cancelled on 13 May was issued in its stead in the name of Assailed in this Petition for Review on Certiorari under Rule 45 of respondent spouses Ramos..[3] It was docketed as Civil Case No..

petitioner executed an Affidavit of Adverse Claim over the Ugac Properties on 19 January 1987 and caused the same to be annotated on TCT No. T68825.] Since [respondent spouses Ramos] have the better credit standing.000. did not convey any valid title.00 for said lot would be paid by [respondent spouses Ramos] from the accumulated earnings of the store. T-68825[10] in the name of respondent Bartex. (2) TCT No. spouses Ramos in favor of respondent Bartex.[12] and on 24 October 1984.. respondent spouses Ramos and Camarin purportedly executed by petitioner in favor respondent allegedly entered into a contract of sale [11] with Mendoza over the Bonifacio spouses Ramos. petitioner prayed for the declaration of On 22 March 1982. T-58043 on the same day. Inc.respondent Bartex. Inc. respondent spouses Ramos still executed in favor of respondent Bartex. As a result. and (4) TCT No.. but also because respondent spouses Ramos did not own the Ugac properties. issued in the name of respondent Bartex. was a buyer in bad faith. was issued on 20 January 1987. they would be made to appear in the Deed of Sale as the vendees so that the title to be issued in their names could be used by [them] to secure a loan with which to build a bigger building and expand the business of [petitioner]. Thereafter. Johnson Paredes Secondly. petitioner demanded from respondent spouses Ramos 28 . Petitioner contended that the Deed of Absolute Sale executed by respondent spouses Ramos in favor of respondent Bartex. the commercial lot (Bonifacio property) allegedly able to convey petitioners caveat to a representative of upon which the building stood is owned by and registered in the name of respondent Bartex. in her name. be declared valid and active. Petitioner then sent her son. Petitioner also warned respondent spouses Ramos Maria Mendoza (Mendoza). Inc. in 1984. Cagayan.Despite petitioners warnings. respondent spouses Ramos returned the prayer not be granted. otherwise. nullity of (1) the Deed of Donation of a Registered Land. Residential House In accordance with the above agreement. As a precaution. T-58043 in the name of respondent spouses Ramos was cancelled and TCT No. Inc. Inc. T-43373.[8] to caution respondent Bartex. Petitioner further prayed that TCT fully paid out of the funds of the store and if respondent spouses Ramos No. T-58043. petitioner sought in the alternative that respondent management of the hardware store to petitioner. [2. not only because respondent Bartex. she (Johnson). issued in the name of respondent property. Consequently. petitioner claimed that for many years prior to 1984. T-62769[13] covering said spouses Ramos. TCT No. she would file the necessary action against them. The respondent spouses Ramos then assured her that they would do no such thing. [3. Thus. Ramos were not the lawful owners of the said properties. Inc. not to sell the Ugac properties anymore.] The consideration of P80. which was about P1. they had already sufficiently reimbursed themselves Second Cause of Action from the funds of the store.] The lot would be bought [by herein respondent spouses Ramos] for and in behalf of [herein petitioner].5 Million. Inc. that respondent spouses operated a hardware store in a building she owned along Bonifacio St. On the bases of receipts spouses Ramos be ordered to pay the assessed value of the Ugac and disbursements. petitioner allowed respondent spouses Ramos to manage the hardware store. Inc. from whom petitioner rented the same. petitioner asserted that the Bonifacio property was properties. a Deed of Absolute Sale [9] over the Ugac properties on 12 January 1987 for a total price of P150.00. had given any amount for the purchase price of the said property.000. (3) the Deed of Absolute Sale executed by the respondent property was issued in the names of respondent spouses Ramos. As petitioner did not have available cash to buy the property. However. Mendoza put the Bonifacio property up for sale. TCT No. Johnson was Tuguegarao. Inc. Should petitioners On 20 September 1984. she allegedly entered into a verbal agreement with respondent spouses Ramos with the following terms: [1.

on 19 January 1987. Donation registered. respondent spouses Ramos accordingly filed before the RTC their Answer[14] to petitioners Complaint. respondent spouses Ramos sought. Respondent properties by respondent spouses Ramos to the corporation was already spouses Ramos further averred that petitioner also knew that they finally consummated on 12 January 1987. TCT No. convey and transfer full ownership of sale. Respondent spouses Ramos paid the TCT No. Petitioner. Respondent Bartex.00. together with her son. be declared null and void. alleging. Inc. Johnson. mortgaged the Ugac properties to the Development Bank of the Philippines (DBP) on 19 August 1990 for the amount of P150. even if petitioner and respondent spouses Ramos belonged to the same family. T-62769. was never aware of any 29 . Thus. and the documents conveying the said sold the Ugac properties to respondent Bartex.58043was issued to respondent spouses encumbrance or lien on the properties. respondent spouses Ramos contended that they were given not only the management. respondent spouses Ramos alleged that petitioner. After settling and paying the obligations and liabilities of petitioner. In representative of the corporation inquired about the Ugac properties for return.000. together with the tax declarations covering the parcel of mortgage debt and. when petitioner respondent spouses Ramos maintained that petitioner was not entitled to caused the annotation of an adverse claim at the back of TCT No. T-58043 any reimbursement for the Ugac properties. Inc. even verified the transferred the Ugac properties to the former by way of a Deed of Donation title and tax declarations covering the Ugac properties with the Register of dated 27 April 1983. that when a redeem the mortgaged property or pay her mortgage debt to DBP. petitioner promised to cede. in compliance with her promise. and out of the proceeds of the sales thereof. moral and exemplary damages and attorneys fees. in reality. Hence. for P150. Maria Teresa Paredes. TCT No. respondent spouses Ramos presented their owners duplicate copy of the Ugac properties to them. mere trustees of the Bonifacio property. As respondent Bartex. Respondent spouses Ramos asserted that petitioner had always only vacated the same after the consummation of the sale to respondent been aware of their intention to sell the Ugac properties as they posted Bartex. prayed that she be declared the owner of the Bonifacio property. filed before the RTC its pay the mortgage debt. claimed that the sale of the Ugac placards thereon stating that the said properties were for sale. Respondent Bartex. respondent Bartex. and the latters wife. therefore. in the name of respondent spouses. Inc. Inc. on the condition that the stocks and merchandise of the store will be inventoried. petitioner asked respondent spouses Ramos to own Answer to petitioners Complaint. T. for allegedly filing a false. respondent spouses Ramos shall pay petitioners outstanding obligations and liabilities. petitioner voluntarily land and the buildings thereon. After accepting the donation and having the Deed of Deeds and the Office of the Municipal Assessor as to any cloud. Respondent Ramos and they then took actual and physical possession of the Ugac spouses Ramos were then actually occupying the Ugac properties and they properties. but also the full ownership of the hardware store by the petitioner. properties were by then being processed for registration. but none were found.the reconveyance of the title to the Bonifacio property to her but the latter unjustifiably refused. mortgage was about to be foreclosed because of the failure of petitioner to On 27 April 1987. flimsy and frivolous complaint. thus. Lastly. the spouses Ramos faulted petitioner for failing to exert efforts to arrive at an amicable settlement of their dispute. As regards the first cause of action.000. Inc. On 2 March 1987. inter alia. by way of a counterclaim against petitioner. respondent spouses Ramos bought the Bonifacio property from Mendoza out of their own funds. T-58043. they were under a moral and legal obligation to reconvey title over the said property to her. and the Register of Deeds for the Province of Cagayan be directed to issue another title in her name. When the With regard to petitioners second cause of action involving the Bonifacio property. Inc.00. Petitioner insisted that respondent spouses Ramos were.

005.* The only reason for an inventory having been made when the hardware store was turned over to [respondent spouses Ramos] was. [respondent spouses Ramos] can merely rely on the above-stated presumption given to notarial documents and need not present any evidence to support their claim of validity and due execution of the notarized deed of donation. to the mind of the Court. is not sufficient to overcome the presumption of regularity of the notarial deed of donation and its entitlement to full faith and credit. the RTC adjudged that: On the second cause of action. [15] (Emphasis ours. On 19 January 2000.946.88* or a difference of P116. That [petitioner] and [respondent spouses Ramos] agreed that the amount due [petitioner] from the proceeds of the sales of her stocks in the hardware store would be applied to the purchase price of the Bonifacio property is supported by the fact that [petitioner] did not ever ask for an accounting of said proceeds. Such denial. she did not execute the same. which in this instance is (sic) the [respondent spouses Ramos] who are asserting the validity of the deed of donation.00. by law. 241 SCRA 356).000. the RTC promulgated its decision. for the latter to account for the sales of such stocks. On the other hand. indeed. [petitioner]. generally. [Respondent spouses Ramos] contend that said amount was expended to pay off [petitioners] obligations to her suppliers. convincing and more than merely preponderant (Calahat vs.imperfection in the title of respondent spouses Ramos over the Ugac properties. While it is true that. 1984 (sic) she already knew that her stocks left by her in March. 282 SCRA 248) and a high degree of proof is needed to overthrow the presumption of truth in the recitals contained in a public document executed with all legal formalities (People vs. as the evidence on record stands[. Hence. The evidence on record shows that when [petitioner] allowed [herein respondent spouses Ramos] full management of the hardware store located on the Bonifacio property in March. Intermediate Appellate Court. these (sic) must be evidence that is clear. [Petitioner] claims that the purchase price for the Bonifacio property was to be taken from the proceeds of sales from the hardware store which. by itself. it claimed that it was an innocent purchaser in good faith. entitled to full faith and credit upon its face (Arrieta v. is totally silent on how much and when [respondent spouses Ramos] paid said alleged obligations of [petitioner] or even who were the said suppliers thus paid. Llosa. another inventory was made [on] the stocks in trade in the said store showing. 277 SCRA 19). Trial of the case thereafter ensued. despite the fact that as early as September.) With respect to petitioners second cause of action. 1982 (sic) was already sold by [respondent spouses Ramos] and that there was a difference 30 . In the case at bench. [petitioner] claims that she did not execute the deed of donation over the Ugac property in favor of [respondent spouses Ramos]. 1982 (sic) an inventory of the stocks in trade in the said store was made showing stocks worth P226. the party who asserts the affirmative side of a proposition has the burden of proof. Her failure to do so results in the failure of her cause.17. And to arrive at the net amount due to [petitioner]. in addition to her allegation that she did not execute any such deed of donation in favor of [respondent spouses Ramos] should have had her allegedly falsified signature on the deed of donation examined by qualified handwriting experts to prove that.05* and when she got back the store from [respondent spouses Ramos] on September 1984.951. the Court finds the evidence preponderantly in favor of the [herein petitioner]. A notarial document is. all that is needed to be done is to deduct the value of the stocks present at the store when management was returned to [petitioner] in September 1984 from the value of the stocks found in the hardware store when said management was given to [respondent spouses Ramos] in 1982. ruling on petitioners first cause of action in this wise: On the first cause of action. in order to contradict the facts contained in a notarial document and the presumption of regularity in its favor. stocks worth P110. the Court finds the testimony of [herein petitioner] Lina Penalber (sic) denying her execution of the deed of donation over the Ugac property in favor of [herein respondent spouses] Quirino Ramos and Leticia Penalber-Ramos (sic) insufficient to support the said cause of action. Fabro. however.] shows a balance in her favor of more than P116. The record.

) On 22 February 2000. According to the Court of Appeals: It appears that before management of the store was transferred to [herein respondent spouses Ramos]. the RTC decreed: WHEREFORE. On the second cause of action. dismissing the same. 2. CV No. On 24 July 2000. requiring the exertion of earnest efforts toward a compromise. judgment is hereby rendered: 1. insofar as the ruling of the RTC on petitioners second cause of action was concerned. which cannot be raised anymore in their Motion for Reconsideration. respondent spouses Ramos were deemed to have waived such objections.2 Ordering the [respondent spouses Ramos] to reconvey to the [petitioner] the said property (Bonifacio property).1 Declaring the [petitioner] the owner of Lot 2-B of subdivision plan PST-2-01019316 (sic) with an area of 195 square meters situated along Bonifacio Street. hence.[17] (Emphasis ours. Finding merit in the appeal.951. spouses Ramos failed to interpose timely objections when petitioner testified on their alleged verbal agreement regarding the purchase of the Bonifacio property. As such.of P116. respondent spouses Ramos elevated their case to the Court of Appeals. 2. under Article 150[21] of the Family Code. After management of 31 . a beginning inventory of the stocks of the hardware store was made by [herein petitioners] other children showing stocks amounting to Php226. [20] The appeal was docketed as CA-G. in favor of the [petitioner] and against the [herein respondent spouses Ramos]. the Court of Appeals rendered the assailed Decision in favor of respondent spouses Ramos. The RTC then reiterated its finding that petitioners evidence clearly established her second cause of action. Additionally. assailing the ruling of the RTC on petitioners second cause of action on the ground that the alleged express trust created between them and petitioner involving the Bonifacio property could not be proven by parol evidence. Cagayan. Thus. respondent spouses Ramos filed with the RTC a Motion for Reconsideration [18] of the afore-mentioned decision. who was not covered by the term family relations 2. and. the appellate court observed that the second cause of action involved not only the petitioner and her daughter. Tuguegarao. Finding the evidence on record insufficient to prove the [herein petitioners] first cause of action. Therefore. and On 15 December 2006.000.) which was due to her.00 plus [16] (Emphasis ours.05. 69731. The Court of Appeals also declared that petitioner failed to prove her claim with the required quantum of evidence.R. did not apply as the impediment arising from the said provision was limited only to suits between members of the same family or With costs de oficio. but also her son-in-law. the RTC held that the requirement that the parties exert earnest efforts towards an amicable settlement of the dispute had likewise been waived by the respondents as they filed no motion regarding the same before the trial. In an Order[19] dated 17 July 2000. in view of all the foregoing. Article 151[22] of the Family Code. the RTC denied respondent spouses Ramos Motion for Reconsideration for lack of merit. ratiocinating that respondent those encompassed in the term family relations under Article 150.

Be it noted that in a petition for review under Rule 45 of the Rules of Court. son of [petitioner] who made the computation on the alleged inventories. [28] The rule that only questions of law may be raised in a petition for review under Rule 45. Here. the legal title to which is vested in another.88 showing a difference of Php116. predicated only on circumstances. warranting a departure from the general rule. It cannot rest on vague.the hardware store was returned to [petitioner]. It is a basic rule of evidence that bare allegations. surmise and conjecture. it is not known if the goods. the latter should prevail. representing the amount of Php116. While oftentimes the intention is manifested by the trustor in express or explicit language. however. were actually sold or not. while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. from the nature of the transaction. a trust is defined as the right. with respect to the second cause of action or the Bonifacio Property in Civil Case No. thus. raising the following issues: (1) whether the existence of a trust agreement between her and respondent spouses Ramos was clearly established.17. Although oral testimony is allowed to prove that a trust exists. or from the circumstances surrounding the creation of the purported trust. petitioner sought reconsideration [25] of the foregoing Decision.946. It may have been taken without actually being sold. made from language. but it was denied by the appellate court in a Resolution[26] dated 31 May 2007. conduct or circumstances. can be made only where they admit of no other interpretation. We find that said inventory showing such difference is not conclusive proof to show that the said amount was used to pay the purchase price of the subject lot. to the finding of the trial court. At the outset.946. only questions of law must be entertained. As will be discussed further. and the deed of absolute sale between Maria Mendoza and [respondent spouses Ramos]. and (2) whether such trust agreement was valid and enforceable. questions or errors of fact are raised. the instant appeal is hereby GRANTED and the Decision dated 19 January 2000 of the Regional Trial Court (RTC) of In its technical legal sense. A question of law arises when there is doubt as to what the law is on a certain state of facts. 3672 is hereby REVERSED and SET ASIDE and a new one entered DISMISSING the second cause of action of [herein petitioners] complaint. and the court may rely on parol evidence to arrive at a conclusion that an express trust exists. enforceable solely in equity. what is crucial is the intention to create a trust. petitioner brought her case before us through the instant Petition. their relation to each other and to the whole and probabilities of the situation. admits of certain exceptions. such intention may be manifested by inference from what the trustor has said or done. are not equivalent to proof. In fact. Thus. existence and relevancy of specific surrounding circumstances.[23] (Emphasis ours. to the beneficial enjoyment of property. it is apparent that petitioner is raising questions of fact in the instant Petition. Contrary. an inference of the intention to create a trust. uncertain or indefinite declarations. as testified by Johnson Paredes. To have the ruling of the Court of Appeals overturned.004. the Court of Appeals disposed of the case as follows: WHEREFORE. but the word trust is frequently 32 . unsubstantiated by evidence. However. [27] When the doubt or difference arises as to the truth or falsehood of alleged facts or when the query necessarily solicits calibration of the whole evidence considering mostly the credibility of witnesses. however. in view of the foregoing.[24] On 12 January 2007. we find the aforementioned exception to be applicable in the present Petition.15. An inference of intention to create a trust. contrary to the contention of [respondent spouses Ramos]. [petitioner] failed to establish with reasonable certainty her claim that the purchase of the subject lot was pursuant to a verbal trust agreement with [respondent spouses Ramos]. As between [petitioners] bare allegation of a verbal trust agreement. [29] among which is when the findings of the trial court are grounded entirely on speculation. a second inventory was made with stocks amounting to Php110. must be made with reasonable certainty.) Tuguegarao City. Branch 2.

Burden of proof is the duty of any party to present evidence to establish his claim or defense by the amount of evidence required by law. Petitioner maintains [31] [32] Trusts are either express or implied.15 difference. and responsibilities which are not Petitioner further alleges that based on the verbal agreement strictly technical trusts. and created and that the same is valid and enforceable.[34] No particular words are required for the creation of an express trust. For the plaintiff. it being sufficient that a trust is clearly intended.946. if indeed they did not use the same to buy the Bonifacio property. an affirmative defense is one which is not a denial of an 33 . build a bigger building to expand petitioners business. personal. Petitioner asserts that given the respondent spouses Ramos failure to discharge such burden. one in whom confidence is reposed is known as the trustee. and they failed to present proof to support their allegation that the amount was used to pay the other obligations of petitioner. with the condition that the beneficiary (cestui que trust) as regards certain property. real. which is preponderance of evidence in civil cases. [35] However. Petitioners arguments fail to persuade. with the agreement that the proceeds from the sales from said store be used to buy the lot upon which the store stands. the only conclusion would be that they did use the amount to purchase the Bonifacio property. the burden of proof never parts. same be used to secure a loan. It is evidence which is more convincing to the court as worthy of belief than that which is offered in opposition thereto.946. She calls attention to the fact that respondent spouses Ramos could not account for the P116. or by words either expressly or impliedly evincing an intention to create a trust. petitioner contends that they have the burden of proving where this amount had gone. the same may not be proved by parol or oral evidence. it behooved for the respondent spouses Ramos to hold the Bonifacio property for petitioners benefit. by some writing or deed. Implied trusts come into being by operation of law. Such being the case. who asserts the affirmative of the issue has the burden of proof to obtain a favorable judgment. cause of action in the instant case and she may not rely on the weakness of the defense of respondent spouses Ramos. relations. when an express trust concerns an immovable property or any interest therein. petitioner maintains that she was able to prove the existence of a trust agreement between her and respondent spouses Ramos.[30] A person who establishes a trust is called the between her and respondent spouses Ramos.[36] that a trust agreement was clearly intended by the parties when petitioner left the management of the hardware store to respondent spouses Ramos. credit.15 difference in the beginning inventory and the second inventory of the stocks of the hardware store.[33]Express trusts are those which are created by the direct and positive acts of the parties. It bears stressing that petitioner has the burden of proving her In the instant case. or will. a trust agreement was trustor. in accordance with Article 1443 of the Civil Code. the party. the proceeds of which would be used to money or choses in action. 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. Express trusts are created by the intention of the trustor or of the parties. There is a fiduciary relation between the trustee and the respondent spouses Ramos as the trustees.employed to indicate duties. As respondent spouses Ramos never denied the existence of the P116. [39] For the defendant. Petitioner claims that the person for whose benefit the trust has been created is referred to as she is the trustor for it was she who entrusted the Bonifacio property to the beneficiary. The respondent spouses Ramos assumption of the management of the hardware store and their eventual purchase of the Bonifacio property indubitably shows that respondent spouses Ramos honored their obligation under the verbal agreement. whether plaintiff or defendant.[38] Therefore. Preponderance of evidence[37] is the weight.

an avoidance of the claim. if established. these testimonies were rendered admissible in writing. but one which. Consequently. petitioner turned over the management of the hardware store to respondent spouses Ramos. while admissibility of evidence is an affair [42] of logic and law. however. Therefore. with.[40] From the allegations of the petitioners Complaint in Civil Case No. it will be just as binding upon the parties as if it had been reduced to petitioner. the respondent spouses Ramos refused. On 20 September 1984. respondent spouses Ramos counter that the same is unenforceable since the agreement was made verbally and no parol evidence may be admitted to prove the existence of an express trust concerning an immovable property or any interest therein. the alleged verbal trust agreement between petitioner and respondent spouses Ramos is in the nature of an express trust as petitioner explicitly agreed therein to allow the respondent spouses Ramos to acquire title to the Bonifacio property in their names. [41] The effect of non-compliance is simply that no action can be proved unless the requirement is complied Per petitioners testimony.000.951. during the trial. thus. Petitioner told respondent spouses Ramos that she was going to buy the lot. The term statute of frauds is descriptive of statutes which require certain classes of contracts to be in writing.16 was attributed to the purchase of the Bonifacio property by the respondent spouses Ramos using the profits from the sales of the store.00 was paid for the Bonifacio property. the respondent spouses Ramos returned the management of the store to petitioner. with the total value of the stocks falling to P110. Nevertheless. Oral evidence of the contract will be excluded upon timely A careful perusal of the records of the case reveals that respondent objection. When petitioner told the respondent spouses Ramos to transfer the title to the Bonifacio property in her name. which shall then be mortgaged by the respondent spouses Ramos so that they could obtain a loan for building a bigger store. another inventory[46] of the stocks was made.000. the said article is in the nature of a statute of frauds.00 for the Bonifacio property was already fully paid. The requirement in Article 1443 that the express trust concerning an immovable or an interest therein be in writing is merely for purposes of proof.[43] the Bonifacio property was offered for sale by its owner Mendoza.946. petitioner allowed her son Johnson to inventory the stocks of the store. 3672. prompting petitioner to file a complaint against them. During that time. make no spouses Ramos did indeed fail to interpose their objections regarding the objection to the admissibility of the oral evidence to support the contract admissibility of the afore-mentioned testimonies when the same were covered by the statute. The money from the hardware store managed by respondent spouses Ramos shall be used to buy the Bonifacio property. we subscribe to the ruling of the RTC in its Order dated 17 July 2000 that said spouses were deemed to have waived their objection to the parol evidence as they failed to timely object when petitioner testified on the said verbal agreement. but to hold the same property for petitioners benefit. Given that the alleged trust concerns an immovable property.e. but merely regulates the formalities of the contract necessary to render it enforceable. The difference of P116. The statute does not deprive the parties of the right to contract with respect to the matters therein involved.88.05. and thereby permit such contract to be proved offered to prove the alleged verbal trust agreement between them and orally. On this score.. But if the parties to the action. will be a good defense i. but the title to the same will be in the latters names. evidence. determined as it is by its relevance and 34 .essential ingredient in the plaintiffs cause of action. not for the validity of the trust agreement. Johnson found out that the purchase price of P80. Thereafter. an inventory[45] of the stocks of the store was made and the total value of the said stocks were determined to be P226. The purchase price of P80.004. Johnson testified[44] that on 22 March 1982. Similarly. When respondent spouses Ramos returned the management of the store to petitioner on 20 September 1984.

R.946. premises considered. or that the stocks of the store might have been damaged or otherwise their purchase prices have increased dramatically.Such a conclusion adopted by the RTC is purely speculative and non sequitur. the exclusion of which rested upon the shoulders of petitioner alone who has the burden of proof in the instant case. despite the December 2006 is hereby AFFIRMED. petitioner and respondent spouses. that the amount thereof may have been written off as business losses due to a bad economic condition. supported only by her own and her son Johnsons testimonies.15 difference. is not conclusive proof that the said amount was used to pay the purchase price of the Bonifacio property. a resulting difference of P116. The 35 . etc. g. Costs against petitioner. by itself.competence. This petitioner miserably failed to do. do not hold water. still depends on judicial evaluation. WHEREFORE. The resulting difference in the two inventories might have been caused by other factors and the same is capable of other interpretations (e.[47] Thus. once assailed Decision of the Court of Appeals in CA-G. CV No.15 in the beginning inventory of the stocks of the hardware store (before management was transferred to respondent spouses Ramos) and the second inventory thereof (after management was returned to petitioner). or that they failed to present proof that they indeed used the said amount to pay the other obligations and liabilities of petitioner is not sufficient to discharge petitioners burden to prove the existence of the alleged express trust agreement.. the weight to be given to such evidence. As correctly ruled by the Court of Appeals. 69731 dated 15 admitted.946. admissibility of the said testimonies. the instant Petition for Review on Certiorari under Rule 45 of the Rules of Court is hereby DENIED. such as would make it the property of petitioner held merely in trust by respondent spouses Ramos. The fact that respondent spouses Ramos never denied the P116.). the Court holds that the same carried little weight in proving the alleged verbal trust agreement between SO ORDERED. Petitioners allegations as to the existence of an express trust agreement with respondent spouses Ramos.

1996 RIZAL SURETY & vs. upon the request of petitioner. contrary to the specific written instructions of the two insureds? And should attorney's fees be awarded in this case? These questions confronted the Court in resolving the instant petition for review on certiorari. a partial compromise agreement was entered into between the REPACOM and respondent Transocean regarding the insurance proceeds.618. petitioner. either by way of compromise agreement or court litigation. 1975. pending a final settlement by and between the two insureds of their respective claims to said proceeds? Can the insurer — whether or not considered a trustee — be held liable for interest on the said insurance proceeds. In response to the March 10. with stipulated value in Philippine Currency of P23. had been deposited with Prudential Bank and Trust Company. 1990 affirming and modifying the decision 3 dated September 19. Manila. 1975. 12 On January 29. COURT OF APPEALS CORPORATION.150. the factual background of this case is as follows: On December 5. 1976. Escolta Branch. 9 On December 2. pending which the said balance would continue to be kept in the same bank account in trust for private respondent and REPACOM unless the parties otherwise agree to transfer said balance to another bank account.000. The insured filed claims against herein petitioner for the insurance proceeds. petitioner informed private respondent and REPACOM that the entire insurance proceeds for the loss of the vessel M/V "Transocean Shipper".153. into 36 . 1976. one of which was that the proceeds be deposited with a local commercial bank in a special dollar account up to and until July 31. 4 in Civil Case No. the vessel 'M/V TRANSOCEAN SHIPPER' was lost in the Mediterranean Sea.00 from local insurance companies and reinsurers.000. Shortly thereafter. TRANSOCEAN TRANSPORT PANGANIBAN. 1975. private respondent requested the Central Bank (CB) to allow it to retain the expected dollar insurance proceeds for a period of three (3) months.500.763. On April 18. 1974. 1961. amounting to US$718. No.078. 11 On January 3. On November 20. 10 CB authorized it to receive and deposit the dollar insurance proceeds in a non-interest bearing account in the name of petitioner and for the joint account of REPACOM and private respondent. the CB on March 15. Copies of this compromise agreement were sent to petitioner.:p Was a trust relationship established between an insurer and the two insureds over the balance of the insurance proceeds being held by the insurer for the account of the two insureds.00 from the petitioner's London insurance broker. and (b) US$3. 1976 letter-request of the parties. 1975.20. 1986 of the Regional Trial Court of Manila. jointly in the names of private respondent and REPACOM. during the effectivity of the aforementioned marine insurance policies. to enable it to complete its study and decide on how to utilize the said amount 6. the latter sum in a non-interest bearing account as authorized by CB. which proceeds the said insurer failed or neglected to deposit in an interest-bearing account.R. INSURANCE and COMPANY. Subsequently. the Reparations Commission (hereinafter referred to as REPACOM) sold to private respondent Transocean Transport Corporation the vessel 'M/V TRANSOCEAN SHIPPER' payable in twenty (20) annual installments. 96727 August 28.083. respondents.00). 1975. The CB granted the request subject to conditions. On June 22. consisting of: (a) P2. 1975. the CB authorized petitioner to receive the insurance proceeds from the English re-insurance firm in foreign currency and to deposit it in the same currency with any local bank in a non-interest bearing account.614.00.931. Sometime in February. anticipating payment of the insurance proceeds in dollars. The Facts As culled from the stipulations between the parties and the assailed Decision.850. 13 wherein they agreed to divide and distribute the insurance proceeds in such a manner that each would receive as its initial share thereof that portion not disputed by the other party (thus. Branch 33. private respondent and REPACOM requested petitioner to pay the insurance proceeds in their joint names.00 under Marine Hull Policy MH-1322 and MH-1331. 1976 authorized private respondent and REPACOM to transfer the balance of the insurance proceeds. leaving the balance in dispute for future settlement. 8 despite problems regarding the amount of their respective claims.G. REPACOM — US$434. which assailed the Decision 1 of the Court of Appeals 2 promulgated October 25. private respondent and REPACOM entered into a partial compromise agreement. the said vessel was insured with petitioner Rizal Surety & Insurance Company for US$3. J. 125886. 5 The said policies named REPACOM and herein private respondent as the insured. and private respondent — US$1. petitioner reinsured the vessel with a foreign insurance firm.00. 7 On November 18.

(iii) REPACOM did not ask petitioner to place the dollars in an interest-bearing account. . a final compromise agreement 18 was entered into between private respondent and REPACOM. 1977. a complaint for collection of unearned interest on the dollar balance of the insurance proceeds. Branch 33. with private respondent and petitioner duly copy-furnished. computed from April 21. the same should bear interest at the authorized rates.aninterest-bearing special dollar account with any local commercial bank. and (iii) this duty to deposit the funds in an interest-bearing account ended when private respondent signed the Loss and Subrogation Receipt on January 31. a revised version thereof was finally presented to the Office of the Solicitor General. transferred. 1978. 17 From the foregoing. to another bank where it could earn interest. conveyed and assigned to the former all its rights. it was your obligation to require the Prudential Bank and Trust Company.078. On October 10. then Acting Solicitor General Vicente V. 1986. asserting that (i) there was no trust relationship. Mendoza wrote petitioner demanding that it pay interest on the dollar balance per the CB letter-authority. Both petitioner and private respondent appealed the trial court's decision. and. 1977. 1977. at least. dated January 31. whereby the latter. the trial court issued its decision holding that (i) a trust relationship existed between petitioner as trustee and private respondent and REPACOM as beneficiaries. As trustee. In view hereof. Escolta Branch for their joint account. Private respondent alleged that the trial court erred when it absolved 37 . private respondent filed with the Regional Trial Court of Manila. and it was your duty as trustee of the said funds to see to it that the same earned the interest authorized by the Central Bank. Having obtained the CB authorization. express or implied. (ii) there was no obligation on the part of petitioner to transfer the dollar deposit into an interest-bearing account because the CB authorization was given to REPACOM and not to petitioner. 16 Because the parties proposed certain amendments and corrections to the Loss and Subrogation Receipt. involved in the transaction. 14 The CB's letter-authorization was addressed to REPACOM. in consideration of an additional sum of one million pesos paid to it by the former. 1977 based on the then prevailing peso-dollar rate of exchange. (iv) no Loss and Subrogation Receipt was executed. 15 In a reply dated May 10. (ii) from April 21. 1976. In a reply dated June 14. to place the deposit to an interestbearing account. 1977. it is clear that effective as of the date of your receipt of a copy of the letter of the Central Bank authorizing the deposit of the amount in an interestbearing special dollar account . requesting the latter to remit the said US$718. On August 15. and on May 25. On February 27. 1979. a demand letter for interest on the said dollar balance was sent by private respondent's counsel to petitioner and Prudential Bank. 1978. On September 19. petitioner through counsel rejected the Acting Solicitor General's demand. without prejudice to their claim for interest on the dollar balance from the time CB authorized its placement in an interest bearing account. REPACOM and private respondent then wrote the petitioner on April 21. 1976. The dollar balance of the insurance proceeds was then remitted to the Philippine National Bank. which we understand is your sister company. . 19 The complaint against defendant Prudential Bank and Trust was dismissed for lack of merit. which neither replied thereto nor complied therewith. (2) interest of 6% per annum on the accrued interest earned until fully paid. If you did not wish to transfer the deposit from the Prudential Bank and Trust Company. interests and claims in and to the insurance proceeds. . petitioner was ordered to pay (1) interest on the balance of US$718. or by transferring the same into an interest-bearing account with Prudential Bank. 1976 until January 31. Escolta branch for the sole account of private respondent. private respondent and REPACOM sent petitioner the duly executed Loss and Subrogation Receipt. petitioner indicated that it would effect the requested remittance when both REPACOM and private respondent shall have unconditionally and absolutely released petitioner from all liabilities under its policies by executing and delivering the Loss and Subrogation Receipt prepared by petitioner. you were morally and legally bound to deposit the funds under terms most advantageous to the beneficiaries. Thus. (3) 10% of the total amount claimed as attorney's fees and (4) costs of suit. petitioner should have deposited the remaining dollar deposit in an interest-bearing account either by remitting the same to the PNB in compliance with the request of REPACOM and private respondent.078.20 at 6% per annum. His letter read in relevant part. On April 14.20 to the Philippine National Bank. 1977. we hereby demand in behalf of the Reparations Commission payment of interest on the dollar deposit from the date of your receipt of the authorization by the Central Bank at the authorized rates. 1976.

Assignment of Errors The Court's Ruling Petitioner alleges that the Court of Appeals erred: I. At the heart of the matter is the question of whether the petitioner is liable for accrued interest on the dollar balance of the insurance proceeds. in affirming the RTC decision which incorrectly awarded attorney's fees and costs of suit to Transocean. . and that the execution thereof did not bar the claims for accrued interest. III. 21 On October 25. 1977 (when the Loss and Subrogation Receipt was signed) instead of January 10.e. its refusal to deposit the dollar balance in an interestbearing account. petitioner charged that the trial court had seriously erred in finding that a trust relationship. this petition. 20 On the other hand. . Did it act merely as an insurer. . Reiterating the arguments it ventilated before the respondent appellate Court. i. 22 The foregoing grounds are almost exactly the same grounds pleaded by petitioner before the respondent Court. Briefly. under terms most advantageous to the beneficiaries. We searched for arguments that could constitute reversible errors committed by the respondent Court. . 1978. . for which petitioner was held liable. the Court of Appeals denied the petitioner's motion for reconsideration. . . . should be computed only until January 31. . The existence of a trust relationship. not as insurer.e. the appellate Court ruled that petitioner gave undue importance thereto. As for the Loss and Subrogation document. Correctness of the award of attorney's fees. but found only one in the last issue.. and in not ordering Transocean to pay to Rizal moral and punitive damages . intended to create a trust. . petitioner insists that the Loss and Subrogation Receipt signed by the insureds released and absolved petitioner from all liabilities. IV. 1976 up to January 10. Petitioner's liability for accrued interest on the dollar balance. 1990. or was it also a trustee? In ruling that petitioner was a trustee of the private respondent and REPACOM. in assuming that REPACOM and Transocean on one hand and Rizal. . .20 after admitting that Transocean and REPACOM had unconditionally and absolutely released and discharged Rizal from its total liabilities when they signed the loss and subrogation receipt . the key issues in this case may be re-stated thus: I. 1977. By virtue of that document. Furthermore. The significance of the Loss and Subrogation Receipt. existed and that petitioner was liable for the interest on the dollar balance despite the execution of the Loss and Subrogation Receipt wherein petitioner was unconditionally and absolutely released from all its liabilities under the marine hull policies. II. when it held that Rizal is liable to Transocean for supposed interest on the balance of US$718.. 1990. First Issue: The Trust Relationship Crucial in the resolution of this case is the determination of the role played by petitioner. On December 17. . plus attorney's fees and expenses of litigation . . petitioner was released only from its liabilities arising from the insurance policies. III. . and Hence. . . petitioner continues to deny the existence of the trust. in not holding that Transocean had acted in palpable bad faith and with malice in filing this clearly unfounded civil action. the Court of Appeals ratiocinated thus: 38 .defendant Prudential Bank from liability and when it ruled that the interest on the balance of the dollar deposit. The shop-worn arguments recycled by petitioner are mainly devoid of merit. 1978 (when the actual transfer of the dollar deposit was made to the bank chosen by private respondent). alleging that it never intended to enter into a fiduciary relationship with private respondent and REPACOM and that it held on to the dollar balance only as a means to protect its interest. which arose from the violation of its duty as trustee — i. in respect of the principal amount representing the insurance proceeds.078. and confirmed that a trust had in fact been established and that petitioner became liable for interest on the dollar account in its capacity as trustee. the Court of Appeals upheld the judgment of the trial court. II. on January 31. . on the other. including the claimed interest. The respondent Court modified the trial court's judgment by ordering petitioner to pay said interest computed from April 21. and IV. but not insofar as its liability for accrued interest was concerned. . .

created a trust relationship between RIZAL on one hand and the REPACOM and plaintiff corporation on the other.The respondent (trial) court sustained the theory of TRANSOCEAN and was of the view that RIZAL held the dollar balance of US$718. during our conference held in the office of Solicitor General Estelito Mendoza. On the contrary. 39 . Moreover. it requested that is authority to deposit the dollar proceeds with any local bank be amended by allowing it to deposit the same in the name of "Rizal Surety & Insurance Company for the joint account of the Reparations Commission and Transocean Transport Corporation. Reparations Commission and Transocean Transport Corporation. 2. . on the other. . The partial compromise agreement entered into between the insureds on January 29. No repudiation was ever made or any one of the parties for that matter questioned said agreement. the Partial Compromise Agreement explicitly states that the dollars "shall be kept in the same bank deposits in trust for and in the joint name of REPACOM and TRANSOCEAN". While it is true. 1975. defendant RIZAL's letter to REPACOM and plaintiff corporation confirming the fact that the insurance proceeds were then deposited with Prudential Bank and it was recorded under the name of Rizal Surety & Insurance Company for the joint account of Transocean Transport Corporation and REPACOM (Exhibit L). especially between defendant RIZAL on one hand and REPACOM and the plaintiff corporation. Indeed. The disputed portion or the balance of the insurance proceeds remaining after deducting the undisputed portions as agreed above shall be kept in the same bank deposit in trust for and in the joint name of REPACOM and TRANSOCEAN until such time as there is a court decision or a compromise agreement on the full amount or portion thereof. That pursuant to RIZAL's letter to the Central Bank dated November 25. on the other hand. RIZAL was furnished a copy of the same and did not in any way manifest objection thereto. Likewise. it shows that the parties intended that the dollar insurance proceeds be held in the name of defendant RIZAL for the joint benefit of REPACOM and plaintiff corporation. . It appears clearly that even from the start of the communications among themselves. the aforesaid enumerated facts sufficiently manifest the intention between REPACOM and TRANSOCEAN on one hand and RIZAL. (Exhibit I) From these facts. 3. to create a trust. It was RIZAL itself which requested the Central Bank that it be allowed to deposit the dollars in its name and "for the joint account of REPACOM and TRANSOCEAN" instead of in the joint account of REPACOM and TRANSOCEAN as originally authorized. over the dollar insurance proceeds of the lost vessel. last 18 November 1975." It further states. therefore.078.20 as trustee for the benefit of REPACOM and plaintiff corporation (private respondent herein) upon consideration of the following facts and the said court's observation — 1. There was. 4. RIZAL even implemented certain provisions thereof. nevertheless. it is very clear that the parties thereto intended that the entire dollar insurance proceeds be held in trust by defendant RIZAL for the benefit of REPACOM and plaintiff corporation. This agreement was further fortified by the Central Bank's reply to the above-mentioned letter authorizing RIZAL to deposit the dollar insurance proceeds in the name of "Rizal Surety & Insurance Company for the joint account of Transocean Transport Corporation and Reparations Commission" (Exhibit J). 1976 over the division of the insurance proceeds which provides as follows: 4. to wit: This is in conformity with our agreement on this matter with the respective officers of our insureds. or until such time as REPACOM and TRANSOCEAN shall agree jointly to transfer such balance to another bank account. that RIZAL was not a party to the Compromise Agreement.

28 this Court held: . The Civil Code provides that: Art. too. It is basic in law that a trust is the right. 1975 addressed to the CB expressly stated that the deposit in Prudential Bank was being made in its name for the joint account of the private respondent and REPACOM. 1441. it made several tenders of payment to the private respondent and REPACOM. into concluding that a trust relationship had been created. petitioner's letter dated November 20. There must also be some power of 40 . In short. Petitioner insists it was never a party to said compromise agreement. and (2) they had not. 109 SCRA 437). By its own allegation. to the beneficial enjoyment of property. so long as the proof thereof is clear. there must be a present and complete disposition of the trust property. as it was not yet granted the right of subrogation over the total loss of the vessel. and that therefore. and sufficiently certain beneficiaries. No particular words are required for the creation of an express trust. Thus: Such a manifestation can in fact be determined merely by construction of. and does not rest on loose. and that it (petitioner) made such request to avoid having the dollar proceeds paid directly to the account of the two insured. Furthermore. and. It is fundamental in the law of trusts that certain requirements must exist before an express trust will be recognized. Furthermore. and inference from. In Mindanao Development Authority vs.xxx xxx xxx The intention to create a trust relation can be inferred from the surrounding factual circumstances. Art. as that would be tantamount to full payment of the loss without first securing petitioner's release from its liabilities under the insurance policies. prior to January 31. As petitioner continued holding on to the deposit for the benefit of private respondent and REPACOM. or will. and convincing. . but nevertheless each of the above elements is required to be established. and simply because it "did not in any way manifest objection thereto" 24 Petitioner's arguments notwithstanding. the surrounding factual circumstances. CA. . 25 It is a fiduciary relationship 26 concerning property which obliges a person holding it (i. This is the essence of the trust flowing from the actions and communications of petitioner. Petitioner further scores the respondent Court for relying on the two insured's arrangement contained in the Partial Compromise Agreement that the dollar balance be kept in the same bank deposit (held by petitioner) "in trust for and in the joint name of REPACOM and TRANSOCEAN". Express trusts are created by direct and positive acts of the parties. satisfactory. 1444. Petitioner insists that it did so only in reaction to the earlier CB letter dated November 20. . enforceable solely in equity. and the Final Compromise Agreement was yet to be executed. Stilted formalities are unnecessary. it being sufficient that a trust is clearly intended.e. It is essential. the beneficiary). an ascertainable trust res. Trusts are either express or implied.e. we hold that the courts below were correct in concluding that a trust relationship existed. Basically. petitioner claims it was just trying to protect its interest when it made such request. signed the Loss and Subrogation Receipt in favor of petitioner. . that the purpose be an active one to prevent trust from being executed into a legal estate or interest. petitioner held on to the dollar balance of the insurance proceeds to protect its interest. Petitioner claims that respondent Court was misled by the trial court's crucial mis-assumption that petitioner was the one which took the initiative of requesting 23 authorization from CB to deposit the dollar proceeds in its name. these elements include a competent trustor and trustee. the trustee) to deal with the property for the benefit of another ( i. In fact. the legal title to which is vested in another. by some writing or deed. 1977. . petitioner obviously recognized its fiduciary relationship with said parties.. and one that is not in contravention of some prohibition of statute or rule of public policy. equivocal or indefinite declarations (Medina vs. albeit the latter declined to accept since the dispute as to their respective claims could not yet be resolved at that time. Petitioner never claimed ownership over the funds in said deposit. 27 The evidence on record is clear that petitioner held on to the dollar balance of the insurance proceeds because (1) private respondent and REPACOM requested it to do so as they had not yet agreed on the amount of their respective claims. 1975 which first ordered petitioner to receive the dollar insurance proceeds and deposit the same with any local bank in a noninterest bearing account in the names of Transocean and REPACOM jointly. or by words either expressly or impliedly evincing an intention to create a trust. notwithstanding that the enjoyment in the beneficiary will take place in the future. Express trusts are created by the intention of the trustor or of the parties. Court of Appeals. if any one of them is missing. it should not be held bound by anything contained therein. it is fatal to the trusts (sic).

it undoubtedly became aware — if it was not already aware even prior thereto — that the parties to said agreement considered petitioner as their trustee in respect of said dollar balance. we hereby assign. in response to the letter of private respondent and REPACOM to petitioner dated April 21. in regard to the principal amount representing the insurance proceeds but not to the accrued interest which stemmed from its refusal to deposit the disputed dollar portion in violation of its duty as a trustee to deposit the same under the terms most advantageous to TRANSOCEAN and REPACOM. Equally as significant. entities. that would lead to an absurd situation. we have unconditionally and absolutely accepted full payment from Rizal Surety & Insurance Company. TRANSOCEAN and REPACOM released RIZAL only from its (RIZAL) liabilities arising from the insurance policies issued.e. and that the court. corporations or properties to the full extent of the abovementioned payment received by us. against all persons. The respondent Court correctly held that: RIZAL gives undue importance to the Loss and Subrogation Receipt (Exh. Yet. the signing of the Loss and Subrogation Receipt was a valid precondition before petitioner could be compelled to turn over the whole amount of the insurance proceeds to the two insured. 1977. of its total liabilities. if called upon so to do. which reads in relevant part. in short. but it instead proceeded to accept its role and responsibility as such trustee by implementing the compromise agreement. otherwise. 278-279. petitioner never committed any act amounting to an unequivocal repudiation of its role as trustee. A declaration of terms is essential. In consideration of this full payment. petitioner not only did not manifest any objection thereto. and these must be stated with reasonable certainty in order that the trustee may administer. (citing Sec. Said receipt absolved the petitioner only from all claims arising from the insurance policies it issued. which were the real owners of the money. . Thus. all the abovementioned elements are present in the instant case. the trust. as insurer. upon being furnished a copy of the same. .administration other than a mere duty to perform a contract although the contract is for a third-party beneficiary. Petitioner's argument that it was never a party to the Partial Compromise Agreement is unavailing. The so-called adversary positions of the parties had no effect on the trust as it never changed the position of the parties in relation to each other and to the dollar proceeds. i. that is.) Undeniably. petitioner reiterated its offer to pay the balance of the insurance claim provided the former sign the Loss and Subrogation Receipt. it is all too evident that petitioner fully grasped the situation and realized that private respondent and REPACOM were constituting petitioner their trustee. Trusts. Petitioner's desperate attempt to establish a viable defense by way of its allegation that no fiduciary relationship could have existed because of the joint insured's adversary positions with respect to the insurance proceeds deserves scant consideration. 1975. U-1) signed by TRANSOCEAN and REPACOM in an effort to absolve itself from liability.. Second Issue: The Loss and Subrogation Receipt Significance Of The The respondent Court committed no reversible error in its appreciation of the Loss and Subrogation Receipt. since. But this was done only on October 10. interests and demands that we have. . petitioner held it for private respondent and REPACOM. may enforce. Corollary thereto. At most. RIZAL was subrogated to the rights which stemmed from the insurance contract but not to those which arise from the trust relationship. corporation or property arising from or otherwise connected with such total loss of the insured property and we hereby acknowledge that the said Company is subrogated in our place and stead to any and all claims. Am Jur 2d. entity. cede and transfer to said Insurance Company any and all claims. interests and demands of whatever nature against any person. Third Issue: Accrued Interest Liability Of Petitioner For 41 . It did not exculpate petitioner from its liability for the accrued interest as this obligation arose in connection with its role as trustee and its unjustified refusal to deposit the money in an interestbearing account as required. pp. The execution of the said Loss and Subrogation Receipt did not preclude the joint insured from claiming the accrued interest. or in the future might have. 31.

In Abrogar v. as a matter of ordinary common sense and common decency. Court of Appeals. there being no reason for them to think otherwise.078. . No.20 was certainly a large sum of money. However one looks at it. that it was of the belief that. This is the very least it could have done if indeed it wanted to repudiate its role as trustee or be relieved of its obligations as such trustee at that point. and for the ultimate benefit of petitioner or its stockholders. 84 SCRA 337. petitioner. as trustee. And whether petitioner benefited directly. . the latter ought. The result was that the trustorsbeneficiaries. this Court held in Stronghold Inc. Such silence and inaction in the face of specific written instructions from the trustors-beneficiaries could not but have misled the latter into thinking that the trustee was amenable to and was carrying out their instructions. but. or indirectly as by enabling its sister company to earn income on the dollar balance. it is grossly unfair for anyone to earn income on the money of another and still refuse to share any part of that income with the latter. 157 SCRA 57] the Court had occasion to 42 . which beyond the shadow of a doubt must have earned income thereon by utilizing and relending the same without having to pay any interest cost thereon. would have resulted to the immense benefit of Prudential Bank (which happens to be a sister company of the petitioner). De la Cruz. therefore. While judicial discretion is here extant. equally as true. Instead of doing thus. In the case at bench. nor just deposit the same in an interest-bearing account at Prudential Bank. Inc. 173 SCRA 619). vs. We agree with private respondent that the dollar balance of US$718. The fact is that petitioner's violation of its duty as trustee was at the expense of private respondent. At that point. rather unconvincingly. petitioner merely tendered payment of the said dollar balance in exchange for the signed Loss and Subrogation Receipt. 1975 letter. The matter cannot and should not be left to speculation and conjecture (Mirasol vs. Inc. Beyond the foregoing considerations. would have dissolved the trust. 2208 of the New Civil Code. 1976 letter of private respondent and REPACOM requesting petitioner to remit the the dollar balance to an interest-bearing account. such prejudice could have been prevented had petitioner acted promptly and in good faith by communicating its real intentions to the trustors. Petitioner's other contention that it was not bound by the CB order. nevertheless. legal or equitable justification. 1988.Petitioner argues. Fourth Issue: Award of Attorney's Fees is Improper Petitioner argues that respondent Court erred in affirming the RTC's award of attorney's fees and costs of suit. January 15. 67970. vs. suffered prejudice in the form of loss of interest income on the dollar balance. private respondent and REPACOM. repeating the oft-heard refrain that it is not sound public policy to place a premium on the right to litigate. we must also make mention of the matter of undue enrichment. Stronghold Insurance Company. for whatever reason. After petitioner's receipt of the April 21. as it was never the trustee for the insured and thus was under no obligation to execute the instruction to transfer the dollar balance into an interestbearing account. This falls far short of the requirement to clearly inform the trustor-beneficiaries of petitioner's refusal or inability to comply with said request/instruction. it was also not obligated — and hence it did not bother — to advise private respondent and REPACOM that it would neither remit the dollar balance to the insured's bank of choice as specifically instructed. Intermediate Appellate Court [G. it could have easily discharged its obligation by simply transferring and paying the dollar balance to private respondent and REPACOM and by so doing.R. is even more ridiculous and undeserving of further comment. simply because said order was not directed to it. vs. despite its having been informed thereof and copy furnished by private respondent and REPACOM. Court of Appeals: 29 Article 2208 of the Civil Code allows attorney's fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. a factual. is immaterial. Leaving such an enormous amount in a non-interest bearing bank account for an extended period of time — about one year and nine months — would undoubtedly have not only prejudiced the owner(s) of the funds. As held by this Court in Solid Homes. carry out said instructions. It is well settled that attorney's fees should not be awarded in the absence of stipulation except under the instances enumerated in Art. This we cannot let pass. . the records do not show enough basis for sustaining the award for attorney's fees and to adjudge its payment by petitioner. an award thereof demands. This in turn prevented the trustors-beneficiaries from early on taking action to discharge the unwilling trustee and appointing a new trustee in its place or from otherwise effecting the transfer of the deposit into an interest-bearing account. to have at least informed the insured that it could not or would not. as shown by its November 25. only agreed to receive and deposit the money under its name for the joint account of the private respondent and REPACOM in a non-interest bearing account. However. petitioner chose to remain silent. Court of Appeals 30 that: Insurance Company. when the trustors instructed petitioner as trustee to deposit the funds in an interest-bearing account. Likewise. Originally. As already mentioned.

GENOVEVA RINGOR. RINGOR. TIU and HEIRS OF JOSE M. SO ORDERED. ESPIRITA RINGOR. the same must be disallowed on appeal.: 43 . in behalf of his deceased mother. Hence. 2004 PROSPERO RINGOR. GERONIMA and SANDIE LOUR. No. substituted by SHAKUNTALA DEBIE. and FELIMON. G.. AVELINA. in behalf of her deceased father.. ABALOS. . J. and TEOFILO M. all surnamed RINGOR. Jr. INC. WHEREFORE. SATURNINO RINGOR. A perusal of the text of the decisions of the trial court and the appellate Court reveals the absence of any justification for the award of attorney's fees made in the fallo or dispositive portions. CLARO ALEJO. Davide. C. if it is stated only in the dispositive portion of the decision. CONCORDIA. ANDRES RINGOR. RIMANDO. the petition is DENIED. all surnamed ALMASEN. RAYMUNDA RINGOR. Narvasa.. JJ. concur. . . 147863 August 13. vs. EMETERIA. otherwise. CRESENCIA. FELIPA. MARCELINA RINGOR. The Court finds that the same situation obtains in this case.. in behalf of their deceased mother. Melo and Francisco.J.R. petitioners. all surnamed RINGOR.state that "[t]he reason for the award of attorney's fees must be stated in the text of the court's decision. EMILIANA R. respondents. the same should be disallowed and deleted. LUISA R. and the assailed Decision is hereby AFFIRMED with the sole modification that the award of attorney's fees in favor of private respondent is DELETED. DECISION QUISUMBING. AGAPITO RINGOR.

4 With Jacobo's thumbmark. docketed as Expediente 241. Parcels 1 and 2 of the lands in Expediente 241 were adjudicated to Jacobo and his son. however. on February 29. in Decree No. the one-half (½) undivided interest of Jacobo in the said Parcels 1 and 2 was sold and transferred to Jose. every time they did.. 25885 and 25886 were issued in the names of Jacobo and Jose respectively. Juan died on July 16. OCT No. Record No.L. in a Compraventa dated November 6. 18797 was issued exclusively to Jose. on November 22." 23 Respondents explained that they did not zealously press for the immediate partition of the lands because Jose constantly assured them that he would never cheat them and because they respected him highly. Genoveva.Petitioners seek the review of the Decision1 dated November 27. 1940. in the name of petitioner corporation. Catalina predeceased her father Jacobo who died sometime in 1935. and with the same circumstances as the Compraventa in Parcels 1 and 2. Jose always answered that it was not going to be easy because there would be "big and small shares. OCT Nos.11 The third application docketed as Expediente 4449.R. Pangasinan. the entire interest of Jacobo in Parcel 3 was likewise sold and transferred to Jose. 1924. He filed three land registration cases alone. 1923. 1922. organized after the initiation of the instant case. 15916. OCT No. Gavina Laranang. in equal shares as pro-indivisoco-owners. Thereafter. assumed and continued the administration of the lands.the five (5) parcels of land in Expediente 244 were adjudicated to Jose as a "donacion de su abuelo" (donation of his grandfather). The Court of Appeals affirmed the decision of the Regional Trial Court (formerly the Court of First Instance) of Dagupan City. their share in the produce and income from the lands. 15918. remained undivided. He did not have offsprings by his second and third wives. Jacobo allegedly sold to Jose for P800 all the lands declared to him in Expediente 4449. witnesses attested that even after the decisions in the three land registration cases and theCompraventas. Record No. By his first wife. half of Parcel 1 was adjudicated to Jacobo and the other half to Jose and later. In Decree No. Ringor. Heirs of Jose M. as the eldest grandchild. owned by the late Jacobo Ringor.13 Although Juan was one of the named applicants. They had seven (7) children.O. Juan married Gavina Marcella. applying jointly with him. their respective children. Jacobo allegedly sold and transferred to Jose his one-half (½) undivided interest in Parcel 1 covered by OCT No. Record No. denying the subsequent motion for reconsideration. 1928. 65500. he had two children. G. Juan and Catalina. 23689 was issued in the names of Jacobo and Juan.17 By another Compraventa also dated November 3. Jacobo applied for the registration of his lands under the Torrens system. G.O. The OCT was eventually cancelled and replaced by TCT No. Jacobo named Jose as the applicant. for partition and reconveyance of land with damages. 1928.18 During trial. 119562awarded full ownership ofParcel 3 to Jacobo.L. Avelina. Concordia.16 These lands are now covered by TCT No. 1935. 19 Jacobo did not partition the lands since the latter said that he still needed them. 48581 and its Resolution.R. including those which petitioners sought to partition in their counterclaim before the trial court. The Compraventas were duly registered sometime in 1940. was issued in Jacobo's name. 20 When Jacobo died on June 7. 15 Subsequently. Cresencia and Felimon Almasen. 25886 were likewise sold and transferred to Jose. According to witness Julio Monsis. 5090 was issued in the name of Jose. in favor of herein respondents. On October 10. namely: Jose (the father and predecessor-in-interest of herein petitioners).L. in Decree No. 1928. in a Compraventa dated November 3.2 dated April 24. 25885.R. The sale to Jose was registered only on February 15. 1928. 23690 pertaining to Parcel 3. He unfailingly gave a share of the produce to all the 7 children of his son Juan.O. Felipa. 13168. Jose. 7 By another Compraventa also dated November 6.24 44 . Genoveva and Agapito are represented in this case by Teofilo Abalos and Marcelina Ringor. the three-fourths (¾) undivided interests of Jacobo in Parcels 2 and 3 covered by OCT No. Agapito. 12 It covered three parcels of land. The OCTs were cancelled and new TCTs were issued in the name of Jose. 119561. Expediente 244. 21 He also conscientiously gave his 5 younger sisters and only brother Agapito. 23643. While Jacobo was the only applicant in Expediente 241. Jacobo remained in possession of the lands and continued administering them as he did prior to their registration. was filed in the names of Jacobo and his only son Juan. Branch 43. 2000 of the Court of Appeals in CA-G. a year before the decision of the land registration court was issued. 10 On April 18. 1928.3 On March 6. 1922. 147191. G. 2001. 13152 was applied for alone by Jacobo. The first application. 22 Herein respondents claim they repeatedly asked Jose for partitioning of the land.R. with his son Juan. or his grandson Jose. TCT No. 6 Thus. CV No. The controversy involves lands in San Fabian. it later appeared that Jose's name was substituted for Juan's name because of an erroneous information that Jose was the only successor-in-interest of Juan. 1918. leaving Juan his lone heir. OCT No.8 All the lands declared to Jacobo in Expediente 241 were allegedly sold to Jose for P6.14 Thus. Jacobo's thumbmark appeared on theCompraventa. Juan. Inc. three-fourths (¾) of parcels 2 and 3 to Jacobo and onefourth (¼) to Jose. dated November 6. 1921.000.9 In the second application. Emeteria and Espirita.5 Decree No. the lands under the three land registration applications. Espirita is represented by her children.

D-3037. 15917 (Lots 2 and 3. petitioners averred that the parcels of land in the exclusive name of Jose are his exclusive properties acquired by him either by inheritance. who left intestate the disputed lands with a total area of 322. They claimed that Jacobo sold the parcels of land under Expediente Nos. respectively. Ringor who are the grandchildren of Jacobo Ringor. Expediente 244). all surnamed Monsis. While trial of the case was in progress. Genoveva. The dispositive portion of the Decision set forth its judgment: (a) Declaring the 7 children of Juan L.29 In their Answer. as pro-indiviso co-owners of all the lands covered by Expediente Nos. 1 & 2. petitioners asserted that respondents' claim of express trust concerning the properties in question could not be proved by parol evidence. These are evidenced by OCT No. herein petitioners. 1971. before the present suit was instituted by respondents. In their Amended Answer. in the name of Jose Ringor. Emeteria and Espirita. or purchase. 3. 1919 for Lots Nos. Agapito. he was survived by his wife Felipa and their legitimate children Maria. (Lot 1. namely: Jose. filed a Complaint in Intervention. 18797 issued March 6. 15917 on February 15. Plan Psu-6095 Amd. Expediente 2449).28 They asked for (a) the partition of their corresponding shares. Plan Psu6095. homestead patent. 15918. the exclusive registered owner of the registered properties. alleging she was the only child of Jacobo with Marcelina Gimeno. Felipa. Respondents demanded from Jose's children. When Julio died on February 3. TCT No. as evidenced by the certificates of title issued more than thirty (30) years ago and in some cases more than fifty (50) years ago. 18797 issued in the name of Jose Ringor underExpediente 244 and that these be subdivided among the seven children of Jose Ringor. 15916. 93019 issued November 22. 15918 (Lots 1 and 2) and TCT 5090 (Lot No. An Amended Complaint was admitted by the lower court in its Order of August 6. On July 8. Eusebio. the RTC decided in favor of respondents. TCT No. and (4) that Jose as trustee and overseer of all these properties was answerable to the respondents for their just shares in the intestate properties of Jacobo. Felipa. according to petitioners. the cancellation of OCT No. The petitioners refused and attempts at amicable settlement failed. and 1928. 1923. it had long been barred by prescription and laches and/or prior judgments since it is an incontrovertible fact that Jose had been. for more than thirty (30) years and in some cases for more than fifty (50) years. Pangasinan. Ringor. the respondents had with respect to the properties owned and possessed by them and their late father. 1971. 15916 issued February 15. they asked for their shares of the intestate properties but was refused. TCT No. evidenced by notarial deeds of sale duly registered in the Registry of Deeds of Pangasinan. Ringor. So did Leocadia Ringor. Concordia.27 (3) that after Jacobo's death. 23797 on May 6. Julio Monsis. all located in San Fabian. (2) that the late Jose Ringor had always been the administrator and trustee of Jacobo. Expediente 4449). as well as liability for administering these properties from the time of Jose's death up to the time the case is terminated.. Inc. surveyor's expenses and cost of the suit. and the six children and grandchildren of Juan Ringor.26 In their Complaint. Plan Psu-35491. among Jose. 1 & 2. The other disputed lands sought to be divided. They alleged that their father acquired legitimate title to and remained in continuous. Inc. 18797 (Lots 1. docketed as Civil Case No. 5. the Heirs of Jose M. 244 and 4449 described in pages 2. 3. 3. 1995. (b) the payment to plaintiffs of whatever maybe found as chargeable to the late Jose Ringor as trustee. (b) Ordering the partition of the said parcels of land covered by TCT Nos. 30Lastly. 25 On March 27. 1940 for Lots Nos. Plan Psu-6099. 1940 for Lots Nos. m. 3. Further. alleging he was the only child of Macaria Discipulo and Jacobo. 2. 2. and (c) the payment of attorney's fees. were held by Jose as exclusive owner. 15917 and 18797. 3) in the name of Jose Ringor (Expediente 241). all surnamed Ringor.31 On February 10. now TCT No. Genoveva. uninterrupted and exclusive possession and enjoyment of the said parcels of land in the concept of an owner at varying times since 1917. petitioners assured. Concordia. Paciencia. TCT No. and TCT No. They claimed that Jose had long acquired indefeasible and incontrovertible title to the said properties in accordance with the provisions of the Land Registration Act. 4449 and 241 to Jose for valuable consideration on November 3 and 6. 1922 for Plan Psu15467. 1982. 1928.Jose died on April 30. 1977. the partition and delivery of their share in the estate left by Jacobo and under Jose's administration. 1. herein petitioners insisted that they rightfully own and possess the disputed lands. 4. 5090 issued December 12.775 sq. 241. all of the Register of Deeds of Pangasinan. herein respondents claimed that (1) they are all grandchildren and/or great grandchildren of Jacobo. Emeteria and Espirita. 15918 issued February 15. whatever cause or right of action. 1940 for Plan Psu31271. and declared for tax purposes in the name of Jose Ringor. OCT No. 1929 for Lot No. respondents filed a Complaint for partition and reconveyance with damages. 5090. if any. 4 and 5 of this decision brought under the Land Registration Act and now covered by TCT No. Panfilo and Fermin. TCT No. including those based on constructive trust. Agapito. Federico. 1973. all surnamed Ringor into 7 equal parts. 1973. and TCT No. herein respondents filed an Amendment to their Amended Complaint impleading as additional party-defendants. 45 . 4 and 5. 15916 in the name of defendant Heirs of Jose M.

AS THE SAME WAS AFFIRMED BY THE COURT A QUO. Furthermore. Thus. the trial court continued. The trial court explained that the prohibition in Article 1443 34 of the New Civil Code – that no express trust concerning an immovable or any interest therein may be proved by parol evidence – is a prohibition for purposes of presenting proof on the matter. all surnamed Ringor. Concordia. (f) On the Counterclaim. all these lands belonged to him such that notwithstanding the subsequent compraventas. the trial court observed that although the applicants were Jacobo and Juan. an action to compel the trustee to convey the properties has not prescribed nor is it barred by laches.(c) Ordering defendants to render an accounting to the plaintiffs of all the income. The trial court held that the notarial deeds of sale executed between Jacobo and Jose in Expediente 241 were false and simulated. the trial court observed that the document evidencing that Jacobo donated the lands therein to Jose was never presented to the registration court. the land was erroneously adjudicated to Jacobo and Jose because it was made to appear that Jose was the only child who succeeded Juan.00 for attorney's fees. As far as he was concerned. THAT AN EXPRESS TRUST WAS ESTABLISHED BY THE LATE JACOBO RINGOR OVER THE PARCELS OF LAND IN QUESTION IN FAVOR OF THE RESPONDENTS AS THE BENEFICIARIES. It noted that Jose registered the deed of sale twelve years after their execution and five years after Jacobo's death. it said that Jose. Agapito. a recognition that even Jose considered that his siblings were beneficial co-owners of the lands under his care. The Court of Appeals affirmed the lower court's decision. Now before us the petitioners. It found that Jose held the subject lands as co-owner and trustee of the express trust. and (2) it gave weight to the oral evidence of herein respondents to prove the existence of an express trust in their favor. nor was any explanation given for the failure to register the alleged donation. raise the following issues: 1. ordering the partition in seven (7) equal shares the parcels of land described in paragraph 34 (a and b). (e) Dismissing the Complaints-in-Intervention of Julio Mon[sis] and Leocadia Ringor. the same was proven by parol evidence. did not repudiate the trust. 35 It went on to say that the failure to object to parol evidence during trial and the crossexamination of the witnesses is a waiver of the prohibition. who died a year before the application was adjudicated. Jose continued Jacobo's practice of sharing the produce of the land with his siblings. such that the trust remained. The trial court noted that even after the registration of the compraventas. it could be deduced that the compraventas were without consideration and this was why the compraventas were not registered during Jacobo's lifetime. yet he did nothing to correct it. (g) Ordering the defendants to pay the costs of suit. from the acts of Jacobo and his full exercise of dominion over the lands until his death. the donation was declared invalid. petitioners contended that the lower court erred when (1) it ruled that Jacobo Ringor constituted an express trust over the disputed properties abovecited in favor of respondents as the beneficiaries and with Jose Ringor as trustee. the trial court declared that Jacobo continued to occupy and exercise acts of ownership over the same parcels of land until his death despite the supposed sale to Jose. and since the trust continued to exist. INSTRUMENT. but it could be waived by a party.32 The trial court concluded that Jacobo created an express trust over his entire property in favor of his grandchildren. Hence. The Motion for Reconsideration of petitioners was also denied. pages 14 and 15 of this decision. More important. On Expediente 4449. among Jose. Genoveva. The trial court concluded that all these incidents and circumstances served as indicia that Jacobo cared little if the lands were in his name or someone else's. as trustee. WITH JOSE RINGOR AS THE TRUSTEE THEREOF (AND CO-BENEFICIARY AT THE SAME TIME). 46 . until his own death. (d) Ordering defendants jointly and severally to pay the plaintiffs the sum of P50. produce and rents on these parcels of land from 1973 until the respective shares of the plaintiffs are physically and peacefully delivered to each of them. Felipa. DEED OR ANY WRITING CREATING AN EXPRESS TRUST AND FORMING PART OF THE EVIDENCE ON RECORD WHICH SUPPORTS THE FINDINGS OF THE TRIAL COURT. Jacobo knew of this error. 33 The trial court reasoned that despite the absence of a document proving the express trust. when in fact Juan had seven children. in their Memorandum. SO ORDERED.36 Before the Court of Appeals. WHETHER OR NOT THERE IS A DOCUMENT.000. On Expediente 244. Emeteria and Espirita. he continued to possess and administer the lands and all the profits from them were at his disposal.

5. THE EVIDENCE ON RECORD. AND LACHES. AND IN ORDERING THEIR PARTITION AMONG THE SEVEN CHILDREN OF JUAN RINGOR. four elements must be present. Petitioners anchor their assertion on the Civil Code.41 1444. (2) a trustee. WHETHER OR NOT THE COURT A QUO ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN RULING THAT PETITIONERS VALIDLY WAIVED THEIR OBJECTION TO THE ADMISSION BY THE TRIAL COURT OF PAROL EVIDENCE AS PROOF OF THE ESTABLISHMENT OF AN EXPRESS TRUST. WHETHER OR NOT THE COURT A QUO ERRED IN AFFIRMING THE TRIAL COURT'S RULING ADMITTING AND GIVING WEIGHT AND CONSIDERATION TO THE PAROL EVIDENCE ON RECORD TO PROVE THE EXISTENCE OF AN EXPRESS TRUST. and they claimed that they objected. for their part.37 3. Respondents.40 1443. OR CONTRARY TO. WHETHER OR NOT THE COURT A QUO COMMITTED SERIOUS ERRORS AND GRAVE ABUSE OF DISCRETION IN VIRTUALLY ORDERING THE NULLIFICATION AND/OR DECLARING THE NULLITY OF --. THE DONATION REFERRED TO IN THE DECISION IN EXPEDIENTE 244. 1443 OF THE NEW CIVIL CODE CAN BE WAIVED. 38 The findings of fact of the Court of Appeals – especially when not at variance with those of the trial court – may not. WHETHER OR NOT THE TRIAL COURT'S RULINGS AS THE SAME WERE AFFIRMED ON APPEAL BY THE COURT A QUO.43 and 1446. from the beginning. to the introduction of any oral testimony to prove the establishment of an express trust. we find no tenable route but to leave the findings of fact of the lower courts untouched. any deed. Briefly stated. WHETHER OR NOT THE ADMISSION OF PAROL EVIDENCE TO PROVE EXPRESS TRUST AS PROSCRIBED BY ART. 8. It is a well-established principle. that in an appeal via certiorari only questions of law may be raised.44 as they point out that in these provisions. 7. or beneficiaries whose identity must be clear. TCT NO. 18797. namely: (1) a trustor or settlor who executes the instrument creating the trust.WHETHER OR NOT THE COURT A QUO ERRED AND COMMITTED GRAVE ABUSE OF DISCRETION IN DECLARING THE SUBJECT PARCELS OF LAND AS BELONGING TO THE INTESTATE ESTATE OF JACOBO RINGOR AND UNDER THE CO-OWNERSHIP OF JOSE RINGOR AND THE RESPONDENTS. The findings of fact of the lower court are conclusive on us. in their petition. for an express trust over an immovable to exist. 5090. 6. WERE ANCHORED ONLY ON PAROL EVIDENCE. instrument or document expressly declaring that a trust was constituted. the issues to be resolved in this petition are: (1) Were the factual findings of the lower and appellate courts supported by evidence on record? (2) Was there a valid express trust established by Jacobo Ringor? (3) May parol evidence be used as proof of the establishment of the express trust? (4) Did the court in effect nullify the Torrens titles over the disputed parcels of land? (5) Were respondents' action barred by prescription and laches? 4. AND THE PRINCIPLES OF RES JUDICATA AND THE INDEFEASIBILITY OF A TORRENS TITLE. and move on to the resolution of the other issues. TCT NO. 15918. AND THE FOUR (4) DULY NOTARIZED COMPRAVENTAS EXECUTED BY JACOBO RINGOR IN FAVOR OF JOSE RINGOR COVERING THE PARCELS OF LAND DESCRIBED THEREIN. WHETHER OR NOT THE FACTUAL FINDINGS OF THE TRIAL COURT WHICH WERE AFFIRMED IN TOTO BY THE COURT A QUO ARE SUPPORTED BY.2. 1597. instrument or document that Jacobo intended to create a trust. IN VIOLATION OF THE APPLICABLE PROVISIONS OF THE CIVIL CODE. AND TCT NO. and (4) the cestui que trust. 93019) OF JOSE RINGOR AND HIS SUCCESSORS-IN-INTEREST (THE PETITIONERS HEREIN) AND DIVESTING THEM OF THEIR EXCLUSIVE OWNERSHIP OVER THE PARCELS OF LAND IN QUESTION. consisting of duly identified and definite real properties. Petitioners' main contention is that the trial and appellate courts had no basis to conclude that Jacobo constituted an express trust because respondents did not present any deed. OCT NO. Respondents cite the three applications for registration of the lands referred to the Expedientes 241. We shall now address these issues together. 244 and 4449 and the 47 . THE DECISIONS OF THE LAND REGISTRATION COURTS IN EXPEDIENTE 244 AND 4449. (3) the trust res. generally be reviewed by this Court. particularly their interpretation of Articles 1440.ALL THE TITLES (TCT NO. AND --. BOTH ACQUISITIVE AND EXTINCTIVE. insist that theintent to create a trust must be in writing. In this case. petitioners urge this Court to review the factual findings of the case. Petitioners aver that these elements are indispensable for an express trust to exist. argue that Jacobo created an express trust. WHETHER OR NOT RESPONDENTS' ACTION WAS ALREADY BARRED BY PRESCRIPTION.42 1445. absent any palpable error or patent arbitrariness. who is the person expressly designated to carry out the trust.39 1441. however. Petitioners. Petitioners then lament that respondents did not present during trial or even attach to the records of the case. At the outset.

a writing is not a requisite for the creation of a trust. uncertain or indefinite declarations. and continued the administration of the lands. From all these premises and the fact that Jose did not repudiate the claim of his co-heirs. the action to reconvey does not prescribe so long as the property stands in the name of the trustee. and (5) Jose did not repudiate the claim of his siblings and only explained upon their expression of the desire for partitioning. with respect to the lands covered by Expediente Nos. An inference of intention to create a trust. including herein respondents.three Compraventas as documentary proofs that an express trust was created by Jacobo. this conclusion can be gleaned clearly when Jacobo exercised acts of ownership over all the disputed lands even after the alleged donation and deeds of sale in favor of Jose. they pose no hindrance or limitation to the enforcement of an express trust. use and administration of the lands. on the lands covered in Expediente 244. the beneficiary is protected in benefits that he has received from such performance. 241 and 4449 are concerned. a practice Jose continued until three years before his death. transferring all the lands in Jose's name. 48 . the objection to the oral character of a trust may be overcome or removed where there has been partial performance of the terms of the trust as to raise an equity in the promisee. 59 Here. Accordingly. It is not error for the court to rely on parol evidence. an express trust exists with Jose Ringor as trustee in favor of all the heirs of Jacobo Ringor.. made from language. While oftentimes the intention is manifested by the trustor in express or explicit language. predicated only on circumstances. Nevertheless. not only did he fail to repudiate the trust.. the oral testimonies of witnesses Emeteria Ringor. deed. he nevertheless is either to have no beneficial interest or only a part thereof. Julio Monsis and Teofilo Abalos . 55 Finally.49 However. but by the direct and positive acts of the parties. are intentionally created by the direct and positive acts of the settlor or the trustor – by some writing.57 Further. in what the lower court said were simulated or falsified sales. he also assured his co-heirs that it was the inconvenience of partitioning that kept him from transferring the shares of his siblings to them. As far as prescription or laches are concerned.46 Unless required by a statutory provision. or by his attorney. Inc. resulting trusts do not prescribe except when the trustee repudiates the trust. when Jacobo transferred these lands to Jose. an inference of the intention to create a trust.45 It is created not necessarily by some written words. executed or partially consummated. Considering then these circumstances.e.i. these were transferred to Jose by final judgment of the land registration court. despite the compraventas transferring the lands in his name. credible witnesses testified that (1) the lands subject of Expedientes 241 and4449 were made and transferred in the name of Jose merely for convenience since Juan predeceased Jacobo. (3) Jacobo did not want to partition the lands because he was still using them. and the titles of the disputed lands are still registered in Jose's name or in the name of the Heirs of Jose M. Jose did not take possession over them from the date of registration to the time of Jacobo's death. What is crucial is the intention to create a trust. it being sufficient that a trust was clearly intended. when a verbal contract has been completed." Article 1449 creates a resulting trust where the donee becomes the trustee of the real beneficiary. and if he does. such as the Statute of Frauds.47 Such a statute providing that no instruments concerning lands shall be "created" or declared unless by written instruments signed by the party creating the trust. Jose took over the administration of the lands and conscientiously and unfailingly gave his siblings their share in the produce of the lands. or oral declaration. oral testimony is allowed to prove that a trust exists. According to them. it can be concluded that as far as the lands covered by Expediente Nos. It provides that. its enforceability will not be barred by the Statute of Frauds. 51 In the present case. sometimes referred to as direct trusts.54 Noteworthy.which the appellate court also relied on to arrive at the conclusion that an express trust exists. Despite the registration in Jose's name. Jacobo continued to perform all the acts of ownership including possession. Jose did not repudiate the trust. but merely as rendering such a trust unenforceable.50 It cannot rest on vague. Express trusts.56 Generally. Instead. 58 To allow prescription would be tantamount to allowing a trustee to acquire title against his principal and true owner. while alive. Article 1449 of the New Civil Code on implied trusts is the pertinent law. Jacobo retained possession. in recognition of their share as co-owners. such intention may be manifested by inference from what the trustor has said or done. which applies only to an executory agreement. 241 and 4449." the donation impaired the hereditary rights of succession of Jose's co-heirs. can be made only where they admit of no other interpretation. conduct or circumstances. or from the circumstances surrounding the creation of the purported trust.48 Contrary to the claim of petitioners. we note that as a "donacion de su abuelo. (2) despite the Compraventas. Under the doctrine of partial performance recognized in this jurisdiction. "[t]here is also an implied trust when a donation is made to a person but it appears that although the legal estate is transmitted to the donee. and when Jacobo religiously gave shares of the income and produce of the disputed lands to the respondents. Jose unfailingly gave his siblings their share of the produce of the lands. Ringor. (4) when Jacobo died. must be made with reasonable certainty. or will. that it was not going to be an easy task. from the nature of the transaction. . 52 A trustee may perform the provisions of the trust. Jacobo's intention impressed upon the titles of Jose a trust in favor of the true party-beneficiaries.53 Thus. Furthermore. is not to be construed as precluding a creation of a trust by oral agreement.. No particular words are required.

. lands for himself until his death. The Decision dated November 27. for the wrong result they seek. violates the principle of res judicata and the indefeasibility of the Torrens title. the basis of which was an alleged "donacion de su abuelo" the trial court concluded they were invalid donations because no deed of donation was ever shown.61 The Torrens system was not intended to foment betrayal in the performance of a trust. 62 It does not permit one to enrich himself at the expense of another. notwithstanding the irrevocability of the Torrens title. It does not protect a usurper from the true owner. The deeds were false.64 The beneficiaries are entitled to enforce the trust. and in Expediente 244 the transfers were invalid donations. SO ORDERED. Ynares-Santiago.63 Petitioners cannot rely on the registration of the lands in Jose's name nor in the name of the Heirs of Jose M. 60 A Torrens Certificate of Title in Jose's name did not vest ownership of the land upon him. 66 As found by the trial court and sustained by the appellate court. simulated and clearly without consideration. Costs against petitioners. 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. The trial court found in favor of herein respondents' claim that the deeds of sale that caused the registration of the TCTs in Expedientes 241 and 4449 in Jose's name were invalid. We are in agreement in sustaining the findings and conclusions of the court a quo. WHEREFORE. affirming the Decision of the Regional Trial Court. This. He was never in business.Petitioners contend.. Branch 43.. the Torrens system of registration can confirm or record nothing. petitioners aver. For Jose could not repudiate a trust by relying on a Torrens title he held in trust for his co-heirs. His intention was clearly to keep the 49 . concur. The trial court noted that the documents evidencing the donations were never presented for registration simply because there was never a donation to Jose and because at the time the application was filed. It only confirms and records title already existing and vested. The Torrens system does not create or vest title. Inc. that the court a quo virtually nullified all the land titles in Jose's name when it declared that the disputed lands belong to the intestate estate of Jacobo and Jose and his siblings were co-owners thereof. To recapitulate. 2000 of the Court of Appeals. JJ. Ringor. and he had no other means for his alleged purchases.65 In fine. The donation was allegedly made merely to facilitate the registration of the lands in Jose's name. (Chairman). formerly the Court of First Instance of Dagupan City. Carpio. Juan. we find no reversible error in the assailed decision of the appellate court. we sustain its findings on the invalidity of the deeds of sale for being simulated and false. sustained by the Court of Appeals. Jr. C. Jacobo's only son. which persuasively convince us that the transfers of the lands in Expedientes 241 and 4449 were simulated sales. is hereby AFFIRMED. He did not intend to relinquish his rights to the lands. it was merely for convenience that Jacobo registered the lands in the name of Jose. was still alive.. and Azcuna. Davide. Neither were the children of Jose propertied nor employed.J. As for the donations of the lands in Expediente 244. the petition is DENIED for lack of merit. Where one does not have a rightful claim to the property. We are not inclined to disturb these findings and conclusions of the trial court. The intended trust must be sustained. and it was to be understood that Jose was merely a trustee. The trial court also found that Jose owned only about three hectares of land which he farmed. however. Nothing is farther from the truth than this contention. nor gainfully employed in the government or in the private sector.

and CHICO-NAZARIO. Present: PANGANIBAN. Palad and Helen P. SR. No. 149542 Herbon and Gabino Herbon. CALLEJO. Balanga. 2006 x------------------------------------------------x DECISION AUSTRIA-MARTINEZ. Leopoldo T. Margarito G. Chairperson. July 20. CV No. 6223 and ordered Alberto Herbon. Respondents.versus - AUSTRIA-MARTINEZ. 1997 of the Regional Trial Court. The factual background of the case is as follows: 50 . 57719 which set aside the Decision dated July 22.: Before the Court is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing the Decision [1] dated August 22. 2001 of the Court of Appeals (CA) in CA-G. Margarito Herbon and Gabino Herbon (petitioners) to vacate the subject premises in favor of Leopoldo T.. J.FIRST DIVISION Alberto Herbon.R. . Cayetano. Branch 1. CJ. Petitioners.R. Cayetano (respondents). Palad and Promulgated: Helen P. JJ. Bataan (RTC) in Civil Case No. YNARES-SANTIAGO.

[9] disposed only to the clan and to no other person. said shares form part of the conjugal property and Remedios was entitled to a part thereof as her conjugal share. Gallego (Maria) testified that Benjamin. respondents presented oral evidence to show that Gonzalo expressed his intentions regarding the disposition of his properties. Ramon 1/28. Modesta Nojadera (Modesta). 1/28. respondents filed a complaint against petitioners for recovery of possession of real property with damages.[4] Adelaida. that Gonzalo intended that the Pag-asa property would be given to Remedios and the same would be left to her granddaughter. petitioners refused to do so. On the other hand. The union of Gonzalo and Remedios bore no children. petitioners took possession of a portion of Lot 421 and despite respondents demands to vacate and turn over possession of the property. [11] eldest daughter of petitioner Gabino Herbon. 1949. on January 4. Sometime During the trial.944 square meters and covered by Transfer as heirs of Remedios. As rebuttal witnesses. that the Pag-asa property has already been transferred to Merlita in accordance with the wishes of Gonzalo. Thereafter.[7]Remedios.[6] and Ignacio. herein petitioners. and 1/14.[5] Benjamin. Ana Nojadera. petitioners filed their Answer with Counterclaim of agricultural land located in Poblacion. Remedios died. the matter was not amicably settled. as surviving heir of Gonzalo.[3] Gonzalos share in Lot 421 was conjugal property. with an area of 32. or on November 9. When respondents brought the matter to conciliation before the Office of the Barangay Captain of Ibaba. a widow. 4408 of the Register of Deeds of Bataan. Adelaida and Ignacio. 1957 executed by sisters Modesta and Concordia selling their separate shares in Lot 421 in favor of Gonzalo. 1994.[8] Hence. 1/14. About a decade later. Adelaida and Ignacio. Bagac. Bataan. which included his share in Lot 421 and a 173-square meter lot in Pag-asa. Concordia Nojadera (Concordia). 1957 executed by Jacinto selling his shares in Lot 421 to Gonzalo. Merlita Herbon Espiritu (Merlita). Nojadera. paid for Jacintos 51 . On September 14. Francisco Palad. had three children from her previous marriage. 1/28. Moreover. 1994. On November 16. 1/14. Gonzalo Palad (Gonzalo) was a co-owner of a parcel On March 2. Gonzalos son. Bataan (Pag-asa property). Gonzalo contracted a second marriage with Remedios Torres (Remedios). Bayani M. [12] as well as a Deed of Absolute Sale dated December 16. 1/14. 1992. that it was the Palad tradition that land inherited by members of the clan shall be during the Japanese Occupation. Bataan. [2] The extent of his co-ownership in Lot 421 is and 1/14. Bagac. having been acquired during his marriage with one Alejandra Nava (Alejandra). 1983. otherwise known claiming that they have a right to possess and occupy a portion of Lot 421 as Lot 421. were their children. Remedios inherited Gonzalos shares in Lot 421. petitioners presented a Deed of Absolute Sale dated December 9. Spouses Juan Banzon and Elena Gutierrez. Palad (Bayani) and Maria A.[13] They submit that since the shares were acquired during the marriage of Gonzalo and Remedios. that Gonzalos share in Lot 421 should be left to Ignacio. 1/28. respondents father. and. Lorenzo Palad. Bagac. Alejandra died.In his lifetime.[10] Certificate of Title (TCT) No.The other co-owners of Lot 421 and their respective shares were: Jacinto Palad (Jacinto). Gonzalo died.

CV No. B) WITH SIGNATURES OVER THE NAME CONCORDIA NOJADERA AND MODESTA NOJADERA VALIDLY TRANSFERRED PORTIONS OF THE LOT TO SPOUSES GONZALO PALAD AND REMEDIOS TORRES. her shares in Lot 421 were inherited by her three sons. considering the absence of any relationship between petitioners and the registered owners of the lot. that. that the Deed of credence since she did not give details of the transaction which she Absolute Sale dated December 16. that respondents have a better title than petitioners. mentioned in the TCT but disowned the Deed of Absolute Sale dated December 16. 57719. that Remedios inherited a portion of Gonzalos share in Lot 421. even if the sale by Concordia is void. Dissatisfied. THE DEED OF ABSOLUTE SALE (EXH. that when Remedios died in 1992. [14] The RTC held that the action for recovery of possession cannot prosper since petitioners proved that they are co-owners of the subject property based on the two deeds of absolute sale.[16] 2. THE SALE BY JACINTO PALAD OF ONE-THIRD OF HIS SHARES IN THE LOT TRANSFERRED OWNERSHIP THEREOF TO SPOUSES GONZALO PALAD AND REMEDIOS TORRES. a Jornal. Instead. without saying that her sister did not sign the same.[18] As to the first ground.[17] 3. 52 . A AND B). 1. 1957 executed by Modesta and witnessed. 1957.R. they filed the present petition anchored on the following grounds: On July 22. petitioners cannot be ejected since no definite portion of Lot 421 was allotted to petitioners and respondents. the RTC rendered its Decision dismissing the complaint and ordering respondents to pay petitioners P3. petitioners take exception from the CAs The CA held that an implied trust was created in finding of implied trust. No motion for reconsideration was filed by the petitioners. also a rebuttal witness. respondents filed an appeal with the CA. testified that she is the Concordia Nojedera registered owner.shares in the Deed of Absolute Sale datedDecember 9. They contend that Marias testimony regarding favor of Benjamin when he paid the price for Jacintos shares in Lot 421 in Benjamins alleged payment of Jacintos shares should not be given the Deed of Absolute Sale dated December 9. 1957. that being co-owners. petitioners argue that Concordia failed to convincingly deny the genuineness of her signature on a public instrument. AND THE NOJADERAS ARE NOT PARTIES TO THIS CASE.000. docketed as CA-G. [15] Concordia is void since Concordia vehemently denied that she signed said document and the striking similarity of the signatures of Modesta and Concordia points to forgery. herein petitioners. 1957 and her purported signature therein. as against respondents Anent the second ground. EVEN WITHOUT THE BENEFIT OF THE TWO DEEDS OF ABSOLUTE SALE (EXH. On August 22. Concordia who are the grandchildren and successors-in-interest of Gonzalo. THE PETITIONERS CANNOT LAWFULLY BE OUSTED FROM THE LOTBECAUSE THEY ARE PART-OWNERS THEREOF BY INHERITANCE FROM THEIR MOTHER REMEDIOS TORRES. 2001. 1997. the CA set aside the Decision of the RTC and ordered petitioners to vacate the subject premises in favor of the respondents. the sale by Modesta is valid since Concordia merely declared in court that she did not sign the deed.00 as attorneys fees and the cost of suit.

as a compulsory heir of Gonzalo. The Court rules in favor of the petitioners. inherited a admissions of both the appellant and the appellee. On the matter of implied trust. findings of fact of the appellate facts set forth in the petition as well as in the petitioners main and reply briefs are not disputed by the respondent. (5). (4). (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record. legitimate or illegitimate. There is an implied trust when property is sold. if the person to whom the title is conveyed is a child. even findings of facts are conflicting. (5) when the must be furnished by the alleged beneficiary of a resulting trust. it being disputably presumed that there is a gift in favor of the child.With respect to the third ground. and (7) apply to the present petition. 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. while the latter is the beneficiary. in petitions for review. surmises or conjectures. (4) when the equivalent. constituting valuable consideration. if properly considered. Article 1448 of the Civil Code provides: Art. they cannot be ousted went beyond the issues of the case. of the one paying the price of the sale. the elements when the inference made is manifestly mistaken. (3) when there is grave abuse of discretion. (2) sometimes referred to as a purchase money resulting trust. which. The former is the trustee. as compulsory heirs of Remedios. 1448. 1957 is void because Concordia disowned having sold her share and that of her sister to any person and the signatures of sisters Modesta and Concordia are forgeries. and (b) such consideration judgment is based on a misapprehension of facts. (7) when the findings portion of his estate and petitioners. absurd or of which are: (a) an actual payment of money. property or services. (11) when the CA manifestly overlooked certain relevant facts not disputed by the parties. it is not its function to analyze or weigh evidence all over again. (8) when the findings are conclusions inherited that share of the estate Remedios inherited from Gonzalo. that the Deed of Absolute Sale dated December 16. such as: (1) when the The trust created under the first sentence of Article 1448 is findings are grounded entirely on speculation. are contrary to the trial court. without citation of specific evidence on which they are based.[20] Accordingly. 1957 and petitioners failed to controvert Marias testimony on this matter.[21] Nevertheless. or an impossible. the jurisdiction of this Court in cases brought before it from the CA is limited to reviewing questions of law which involves no examination of the probative value of the evidence presented by the litigants or any of them. (6) when in making its findings the CA without the benefit of the two deeds of sale. [19] The Supreme Court is not a trier of facts. jurisprudence has recognized several exceptions in which factual issues may be resolved by this Court. [23] 53 . (Emphasis supplied) court are generally conclusive on the Supreme Court. (9) when the Respondents counter that the CA correctly held that an implied trust was created when Benjamin paid for Jacintos share in Lot 421 in the Deed of Absolute Sale dated December 9. no trust is implied by law. petitioners aver that.[22] The Court finds that exceptions (2). would justify a different conclusion. or its findings are contrary to the from Lot 421 since Remedios. However. As a general rule.

the burden of proving the existence of a trust is on the In this case.[34] Jacintos shares in Lot 421 are vague and contain no specificities.[28] Without any doubt.[38] It must be sustained in full agreement. instead of Gonzalo. is not as reliable as written or documentary evidence. "I would sooner trust the smallest slip of paper for truth than the strongest and In the present case. and should to ascertain the parties' intent. or even third execution. understood literally. depending as it does exclusively on human memory. party asserting its existence. the parol evidence offered to prove the most retentive memory ever bestowed on mortal man.As a rule. the proof should be as fully convincing as if the acts giving rise to the trust obligation are proven by an authentic document. and such proof must be clear and 1957 executed by Jacinto is clear and unequivocal as to who are the satisfactorily show the existence of the trust and its elements. The words could be notoriously unreliable as against a written document that testimonies of Bayani and Maria that Benjamin.[26] Thus. just as they appear on the face of the contract. [36] A notarized document intention is to be deciphered from the language used in the contract. the Deed of Absolute Sale dated December 9. 1957. cannot be established upon vague and inconclusive proof. Said witnesses are complete strangers in so far as the intent of the parties to the contract is concerned. from the document not indefinite itself. and conclusive proof of its falsity or nullity on account of some 54 . determinable as it is.[37] and documents acknowledged before a notary public have in parties who are strangers to the contract. they are to be force and effect so long as he who impugns it does not present strong. [25] the evidence must be aids are required and no further extraneous sources are necessary in order trustworthy and received by the courts with extreme caution. the rule is settled that the notarization of a document carries considerable legal effect. not carries the evidentiary weight conferred upon it with respect to its due from the unilateral post facto assertions of one of the parties. As to the Deed of Absolute Sale dated December 16. which is the law among them.[32] As Judge Limpkin of Georgia once said. in order to establish animplied trust in real consideration of the sale. and The hornbook rule on interpretation of contracts gives primacy to renders it admissible in court without further proof of its authenticity [35] and the intention of the parties. Notarization of a private document converts such document into a public one. executed by Modesta and Concordia. Ultimately. And when the terms of the their favor the presumption of regularity. oral testimony as to a certain fact. Adelaida and Ignacio. [30] complete. frail and far from convincing.[27]An implied trust. paid for speaks a uniform language. spoken existence of an implied trust is lean." [33]Indeed.[31] The Court is thus convinced that the deed expresses truly the declarations. [29] Their testimonies do not show that the payment was intended to establish a trust relationship. in fine. equivocal or property by parol evidence. their is entitled to full faith and credit upon its face. be made to rest on loose. are clear. No amount of extrinsic implied trusts may be proved by oral evidence. Trustworthy evidence is required because oral evidence can parties' intent as against the oral testimony that Benjamin paid the easily be fabricated. namely: Gonzalo. as expressed in such language. [24] While vendees.

Gonzalo.flaws or defects provided by law.[45] Alejandras rights to the other half. the New Civil Code provisions on co-ownership shall govern the rights of the parties. have the right to posses and occupy Lot 421. as well as the statements and the authenticity of the signatures thereon. All the foregoing considered. Gonzalo was entitled only to the usufruct of the land equal to that corresponding by way of legitime to each of the legitimate children [47] who has not received any betterment. [50] Gonzalos rights to the other half. the similarity of signatures of Modesta and Concordia in the deed is not proof of forgery. Alejandra.[43] The so-called Palad tradition that the property her share in the conjugal partnership. are conjugal shares. petitioners.[52] Thus. one-half of the subject shares were automatically when unsubstantiated by clear and convincing evidence. in turn. are inherited in turn by her three sons. [44] such that upon document. The fact of forgery can only be established by a comparison between the alleged forged signature and the authentic and genuine signature of the person whose signature is theorized to have Under the Old Civil Code which was then in force.[51] Upon the death of Remedios. as his share in the conjugal or evidence was presented to corroborate Concordias testimony. complete. shares were automatically reserved to the surviving spouse. on intestate succession. stand. were transmitted upon his death to his widow Remedios and his children with his first wife Alejandra. the evidentiary weight conferred upon such public document with respect to its execution. Comparison of signatures cannot be made from shares. Settled is partnership. been forged. Negative and self-serving. one-half of the subject two signatures appearing on the same document. respondents claim for recovery of possession of real property must fail.[48] Gonzalos share in the conjugal partnership and his usufructory right were brought into his second marriage with Remedios. the shares in Lot 421 which she inherited from Gonzalo. the law on intestate succession applies in the disposition of his estate. it must be proved by clear. and conclusive proof that the notarized deed of sale was false. including his conjugal share from his first marriage. Mere denial by Concordia that she signed the deed [40] cannot prevail over the positive presumption enjoyed by a The and 1/14 shares in Lot 421 Gonzalo acquired during his notarial marriage to his first wife. respondents failed to in question should belong only to the Palad clan cannot supersede the law present such required proof. being her compulsory heirs. positive and convincing evidence. as co-owners. No other witness reserved to the surviving spouse. were transmitted the rule that forgery cannot be presumed. herein petitioners.[42] No standard or specimen signatures of Concordia and As to the shares in Lot 421 subject of the two deeds acquired Modesta were offered to compare with the signatures appearing in the during the marriage of Gonzalo and Remedios. upon her death to her legitimate children and surviving spouse Gonzalo.[41] [46] Moreover. Remedios. they are also conjugal questioned deed of sale. the presumption of regularity. denial deserves no weight in law the death of Alejandra. [39] In this case.[49] such that upon the death of Gonzalo. The specific shares of 55 . In the absence of Gonzalos written last will and testament. Until there is partition. as Having failed to present strong.

Bienvenido Sison. CV No. The assailed Decision dated August 22. Tigno in favor of defendant-appellee spouses Edualino Casipit and Avelina Estrada as null and void and of no effect. 5. With costs against defendants-appellees. Gerardo Sison and Adelaida Sison appointed Dominador Cruz as agent to sell three (3) parcels of land adjoining each other located at Padilla St. 1. namely: Manuel Sison. Declaring the Deed of Sale executed by defendant-appellee Rodolfo M. 57719 is REVERSED and SETASIDE. J. 1980. The Decision dated July 22. vs. WHEREFORE. the Court wades into the transcript of stenographic notes only to find that the Court of Appeals. No. 2001 of the Court of Appeals in CA-G. 1993. 1992 and its Resolution[3] promulgated on May 5.R. 6-8). DECISION Respondent Court adequately recited the facts of the case as follows: [6] The facts from the standpoint of plaintiff-appellants (herein private respondents) evidence are summarized in his brief.R. and 3. 2. Pangasinan (TSN.R. indeed.: In denying this petition. Bataan in Civil Case No. 1989. 1997] The Facts RODOLFO TIGNO AND SPOUSES EDUALINO and EVELYN CASIPIT. the petition is GRANTED. Tigno. pp. as well as the accounting of the profits or income received by petitioners from the use of the land. Tigno to vacate the parcels of land described in the complaint and surrender possession thereof to plaintiff-appellant Eduardo M. Declaring plaintiff-appellant Eduardo M. COURT OF APPEALS AND EDUARDO TIGNO. 1997 of the Regional Trial Court. As an exception to the general rule barring factual reviews in petitions under Rule 45. Remedios Sison and the heirs of Isaac Sison. the Court takes this occasion to apply the principles of implied trust. Sept. 110115. Branch 1. These parcels of land belonging to the abovenamed persons are more particularly described as follows: Bienvenido Sison: The Case 56 . the decision appealed from is hereby REVERSED and another one ENTERED as follows: respondents. CV No. respondents. October 8.. Ordering defendant-appellee Rodolfo M. Sometime in January. to wit: PANGANIBAN. SO ORDERED. An action for partition is the proper forum to determine the particular portions properly pertaining to petitioners and WHEREFORE. 29781 promulgated on October 15.the parties cannot be resolved in this case since it is not clear from the records whether all of Gonzalos children from his first marriage were alive Petitioners challenge the Decision[1] of Respondent Court of Appeals[2] in CA-G. Balanga. petitioners. Petitioners subsequent motion for reconsideration was denied for lack of merit in the assailed Resolution.The dispositive portion of the assailed Decision reads:[4] at the time of his death. in view of the foregoing. 6223 is REINSTATED.[5] [G. No costs. Lingayen. correctly overturned the trial courts findings of facts. Tigno as the true and lawful owner of the lands described in the complaint.

p. on the East by alley. Cruz. 27. Sept. Pangasinan (TSN. However. Adelaida Sison and Remedios Sison went to appellants house at Guilig Street. 1989. p. 5. At first. 13). and on the West by Path.000. no deed of sale was prepared on that day (TSN. 9]. and Remedios Sison. Rodolfo Tigno was named as vendee pursuant to the verbal instruction of herein appellant. appellant then instructed Cruz to bring the owners of these parcels of land to his ancestral house at Guilig Street. Accordingly. 5. 9-11). Sept. Cruz and Rodolfo Tigno intimated to Epifanio Tigno that appellant has agreed to buy the 3 parcels of land abovedescribed (TSN. (Exh. 5. C) Sometime in April 1980. the appropriate deeds of sale (Exhs. Pangasinan. After leaving Manila City Hall. respectively. 1980. signed in these three (3) deeds of sale as a witness (Exhs. Sept. Manuel to place the name of Rodolfo Tigno as vendee in the deeds of sale to be subsequently prepared. Lingayen. with an area of 3006. Cruz brought and showed these deeds of sale to appellant in his Makati office. Cruz. 15). At around 5:00 o clock in the afternoon.A parcel of fishpond situated at Padilla Street.000. May 12. and on the West by Mariano Sison. more or less. 1989. with an area of 3006. Sept.e. The latter acceded to the request and gave Five Thousand Pesos (P5. 19. Lingayen. 1989.66 square meters. and on the West by Alejandro Vinluan and Thomas Caldito. B-1 and C-1). Sept. Sept.000. Manuel. On May 6. it was learned that Bienvenido Sison failed to bring the tax declarations relating to his property. bounded on the North by Padilla Street. Also. the heirs of Isaac Sison (Manuel. After leaving appellants office. Manuel Sison did not have a Special Power of Attorney from his sister in the United States of America to evidence her consent to the sale. Cruz and Rodolfo Tigno left for Lingayen. 1989. bounded on the North by Padilla Street. On May 2.000. Tuliao. 1980. p. Eduardo Tigno.00 as the balance for the three (3) parcels of land. etc. 16-23). A. On the South by Bienvenido Sison. on the South by Dionisio and Domingo Sison. 1989. This instruction was given to enable Rodolfo Tigno to mortgage these properties at the Philippine National Bank (PNB). 5. but upon Rodolfo Tignos prodding. Lingayen. A) Remedios Sison A parcel of unirrigated riceland (now fishpond) situated in Poblacion. 1989. Sept. on the East by Path. Sept. At the Manila City Hall. Lingayen. Sept. Cruz and Rodolfo Tigno went to appellants Makati office to convince the latter to buy the properties earlier described. herein appellant (TSN. he approached Cruz and told the latter to offer these parcels of land to his brother. for appropriate funds needed for the development of these parcels of land as fishponds (TSN. In all these deeds of sale. Pangasinan. Remedios Sison had mortgaged her property to a certain Mr. 1980. situated at Padilla Street. 1989. Sometime in the second week of July 1980. the agent in the sale. A-2. appellant was reluctant. Pangasinan for the preparation of the appropriate deeds of sale (TSN. (Exh.00) (TSN. 1106. Pangasinan on May 2. the abovenamed persons and appellant went to Atty. In view thereof. Further. 29. 16. B. 1989. more or less.67 square meters.00) [TSN. Sept. 57 . 1989. In that meeting between Cruz and appellant at the latters office.000. 1980.66 square meters. 5. 1107. together with Bienvenido Sison. Having reached an agreement of sale. despite the fact that no deed of sale was prepared by Atty. pp. 9). 1989. 19-20). Manuels house. Lingayen Branch. 1108. Lingayen. bounded on the North by Padilla Street. more or less. 5.. appellant instructed Cruz and Atty. appellant was finally convinced to buy them (TSN. Manuel Sison. At Atty. B) Heirs of Isaac Sison (i. Pangasinan. After giving the downpayment. Modesto Manuels house at Defensores West Street. Pursuant thereto. containing an area of 3006. 5. Lingayen.This was witnessed by Cruz and Atty. it was agreed that each parcel of land would cost Ten Thousand Pesos (P10. TSN. 1980 and June 12. pp. Remedios Sison. p. on the East by Alley. who works there. Cruz and Rodolfo Tigno went to Manila City Hall to visit the latters uncle. C) were finally prepared by Atty. which mortgage was then existent.00) each to the 3 abovenamed persons for a total of Fifteen Thousand Pesos (P15. pp. (Exh. 5. pp.00) representing the following: a) P15. appellant gave Cruz a Pacific Bank check in the amount of Twenty Six Thousand Pesos (P26. p. as he will be there to attend the town fiesta (TSN. Gerardo and Adelaida Sison) A parcel of fishpond. Epifanio Tigno. pp. 8-10). 1989. Manuel. After seeing these documents. 17-19). on the South by Lots 1105. Bienvenido Sison and Manuel Sison asked appellant to pay a fifty percent (50%) downpayment for the properties. Oct. Pangasinan. 15-17). Rodolfo Tigno learned that the abovedescribed properties were for sale. Manuel and signed by Bienvenido Sison. pp. Gerardo and Adelaida Sison). Manuel.

5. 16. pp. 1989. Sept. D) to the Casipits advising them to desist from the intended sale. Tigno and defendant spouses Edualino Casipit and Avelina Estrada. Pangasinan. secure a loan from the PNB without need of plaintiffs signature and personal presence. and that defendant spouses Casipit acquired the portion of 508. appellant learned that Rodolfo Tigno is negotiating a portion of his land to the Casipits. 16673 for Reconveyance. that considering the busy schedule of plaintiff. TSN.56 square meters to his co-defendant spouses who had previous knowledge that plaintiff. 1989. by way of special and affirmative defense. Nov. 1989. 1989 said portion of 508. this petition for review. that there being trust and confidence as brothers between plaintiff and defendant. Oct. Upon encashment of this check at PNB. Lingayen Branch. E). 2. The plaintiff further averred in said Complaint that some time on May 16. defendants denied the material allegations of the complaint and alleged. and not Rodolfo Tigno.b) P6. Hence.00 for capital gains tax. the loan proceeds to be used as seed capital for the fishponds. 4243). the plaintiff filed Civil Case No. then as executive vice-president of an American firm based in Makati. Rodolfo Tigno. Cruz paid Remedios Sison. The complaint alleged. the former instructed the Notary Public. that after requesting in writing the defendantspouses to desist from buying the land. (pp. and after confronting Rodolfo himself. Tigno was the vendee so that the latter could. 8-11. Metro Manila. Manuel Sison and Bienvenido Sison. upon learning that the sale was already consummated.00 representing Cruzs commission as agent. Oct. to put in said Deeds the name of Rodolfo M. he was merely exercising his right to dispose as owner.000. as he actually did.56 square meters. 10). Respondent Court reversed the trial court. not Rodolfo Tigno (TSN.56 square meters of the land previously owned by Bienvenido Sison (Exh. 1989.56 square meters in good faith and for value. Annulment of Document. At the time of sale. 1. Accordingly. sold to Spouses Edualino Casipit and Avelina Casipit 508. when he was in Lingayen. but his request was not heeded (TSN. that Rodolfo had already sold on April 29. that plaintiff purchased the three (3) parcels of land in question so that his brother Rodolfo Tigno. 12-B to 12-j. 29-32). 1989. plaintiff demanded from said defendants the reconveyance of said lands. that there being a violation of trust and confidence by defendant Rodolfo. appellant sent a letter (Exh. appellant confronted the Casipits and Rodolfo Tigno and asked them to annul the sale. plaintiff found out upon verification with the Register of Deeds of Lingayen. pp. (TSN. p. rollo) On May 24. 6. 1989. through Adelaida Sison. that plaintiff and Rodolfo agreed that the latter would secure a loan from the Philippine National Bank at Lingayen using said lands as collateral. 1989. Ordering the plaintiff to pay the defendants the sum of three thousand (P3. the court hereby renders judgment against the plaintiff and in favor of the defendants. who prepared the Deeds of Sale. On April 29.000. that Rodolfo M. pp. On May 16. Sept. among others. After trial on the merits. who was then jobless. 5. registration and other incidental expense. but all the demands were unjustifiably refused. Tigno became the absolute and exclusive owner of the parcels of land having purchased the same after complying with all legal requirements for a valid transfer and that in selling a portion thereof to his co-defendants. he came to know from friends that Rodolfo was negotiating the sale to defendant spouses of a portion of one of the parcels of land. records). is the real owner of said lands. A few days thereafter. and c) P5. the trial court [7] dismissed the complaint and disposed as follows:[8] Wherefore. relying upon the validity of the vendors ownership. As earlier stated. could have a source of income as a caretaker of the fishponds. without the knowledge and consent of appellant.000. the Casipits were aware that the portion of the land they bought was owned by appellant. 1989. 30-31. Tigno as vendee. 39-41). it was made to appear in the deeds of sale that Rodolfo M. Recovery of Possession and Damages against Rodolfo M. the surrender of the possession thereof to him and the cancellation of the Deed of Sale of said portion of 508. in the light of the facts and circumstances discussed above.00) pesos as attys fees and further to pay the costs of the proceedings. not knowing that the sale was already consummated as early as April 29. pp. The Issues 58 . 1989. the balance due them from appellant (TSN. Ordering the dismissal of the plaintiffs complaint for lack of basis in fact and in law. 16. 1989. In their Answer (pp.

[17] The trust is 59 . 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. not one involving merely personal duties. in the present case. There is an implied trust when property is sold..[16] A resulting trust is exemplified by Article 1448 of the Civil Code. constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. Jr. the trust results because of equity and it arises by implication or operation of law. it arises as a result of a manifestation of intention to create the relationship. this Court decided to take up and rule on such factual issue. The Courts Ruling The petition has no merit. III No fiduciary relationship existed between Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno 3. However. no trust is implied by law. of the one paying the price of the sale.[13] The characteristics of a trust are: II Documents and circumstances substantiate ownership of petitioner Rodolfo Tigno 1. The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase money resulting trust. et al. it being disputably presumed that there is a gift in favor of the child. et al. A corollary question is whether Petitioners Edualino and Evelyn Casipit are purchasers in good faith and for value of a portion of the lots allegedly held in trust and whether they may thus acquire ownership over the said property. The trust which results under such circumstances does not arise from a contract or an agreement of the parties. if the person to whom the title is conveyed is a child. Express trusts are created by the intention of the trustor or of the parties. there is a conflict between the factual findings of the trial court and those of the Respondent Court. Davide. in equity and good conscience. legitimate or illegitimate. However. implied trusts are either resulting or constructive trusts. that is to say.[10] An implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of another. contrary to the decision of the Court of Appeals 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. In petitions for review under Rule 45. unless a different intention or understanding appears. Justice Hilario G.Petitioners raise the following issues: [9] I Evidence of record definitely show that the receipts of payments of Petitioner Rodolfo Tigno for the fishponds in question are authenticated. Court of Appeals. The former is the trustee. It is a relationship.[15] In turn.[14] Trusts are either express or implied. it is a relationship with respect to property. 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. the property is held on resulting trust in favor of the one furnishing the consideration for the transfer. by fraud. The main issue is whether the evidence on record proves the existence of an implied trust between Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno. the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter. it is a relationship of fiduciary character. as an exception to the general rule. First Issue: Was an Implied Trust Created? Implied trusts are those which are deducible by operation of law from the nature of the transaction as matters of equity. which reads: Art. to hold. 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. 1448. 4.[11] The species of implied trust raised by private respondent was extensively discussed by the Court. Hence. vs. obtains or holds the legal right to property which he ought not. They arise contrary to intention against one who. while implied trusts come into being by operation of law. On the other hand. In such a case. duress or abuse of confidence. but from the facts and circumstances. independently of the particular intention of 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. and 5. through the learned Mr. in Morales. this Court ordinarily passes upon questions of law only. while the latter is the beneficiary.:[12] 2.

he should not be allowed to vary the plain content of the two documents indicating that Rodolfo Tigno was the vendee. Cardiente v. was definitely the real buyer: [29] COURT: (The Court will ask few questions. we ruled:[24] A Maybe this or maybe not. the person in whose favor it has been issued is virtually the owner thereof unless proved otherwise. equivocal or indefinite declarations. where A pays the purchase money and title is conveyed by absolute deed to As child or to a person to whom A stands in loco parentis and who makes no express promise. though not named in the receipts or in the deeds of sale. BERMUDEZ: As a rule. or an equivalent.[28] On the other hand. does not lose that character simply because of what appears in a legal document. A trust. Even under the Torrens System of land registration. contrary to the findings of Respondent Court. sir. and such proof must be clear and satisfactorily show the existence of the trust and its elements. no trust can result in favor of the party who is guilty of the fraud.R.) In this petition. property or services.[19] There are recognized exceptions to the establishment of an implied resulting trust. 1980 signed by Remedios Sison. L-33261. G. Another exception is. this Court in some instances did away with the irrevocability or indefeasibility of a certificate of title to prevent injustice against the rightful owner of the property. IAC. New Civil Code) Thus. of course. G. [21] While implied trusts may be proved by oral evidence. these two exhibits are proof merely of the receipt of money by the seller. 154 SCRA 403 [1987]. Bagumbayan. 155 SCRA 689 [1987]. petitioners deny that an implied trust was constituted between the brothers Rodolfo and Eduardo. which we respectfully request that the same be marked as Exhibit 17. 2. such presumption is rebuttable by competent proof. Thus. BERMUDEZ At any rate there was a receipt. that in which an actual contrary intention is proved.R. an actual payment of money. it is undeniable that an implied trust was created when the certificate of registration of the motor vehicle was placed in the name of petitioner although the price thereof was not paid by him but by private ATTY. and such consideration must be furnished by the alleged beneficiary of a resulting trust. [23] As Exhibit 16 dated June 12. although no specific provision could be cited to apply to the parties herein.) 60 . They contend that. it is essential that there be: 1. In any event. the presumption being that a gift was intended. The principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust by relying on the registration is one of the well-known limitations upon a title. they do not show that Rodolfo paid the balance of the purchase price. No. G. is that the document executed by Remedios Sison? ATTY. is this the receipt? In Chiao Liong Tan vs. We are not persuaded. Also where the purchase is made in violation of an existing statute and in evasion of its express provision. Your Honor. the burden of proving the existence of a trust is on the party asserting its existence. Witness Dominador Cruz was unshakable in testifying that Private Respondent Eduardo. 1447. The New Civil Code recognizes cases of implied trust other than those enumerated therein. A certificate of registration of a motor vehicle in ones name indeed creates a strong presumption of ownership. In other words. Hence. and should not be made to rest on loose. BERMUDEZ Q I am showing to you another document.Trustworthy evidence is required because oral evidence can easily be fabricated. their Exhibit 16[25] and Exhibit 17[26] were fully authenticated by Dominador Cruz.R. [20] respondent. (fn: Bornales v. VIRAY That is only a xerox copy. The first is stated in the last part of Article 1448 itself. 73651. For all practical purposes. we object.created in order to effectuate what the law presumes to have been the intention of the parties in the circumstances that the person to whom the land was conveyed holds it as trustee for the person who supplied the purchase money. Amerol v. which derives its strength from the confidence one reposes on another especially between brothers.[18] To give rise to a purchase money resulting trust. No. a trust does not result. ATTY. 75336. Witness Dominador Cruz did not authenticate the genuineness of Exhibit 16:[27] ATTY. an instrumental witness. No. (fn: Art. IAC. Court of Appeals. [22] the evidence must be trustworthy and received by the courts with extreme caution. constituting valuable consideration. 166 SCRA 524 [1988].

Petitioner Rodolfo was named as vendee in the deeds of sale to facilitate the loan and mortgage the brothers were applying for to rehabilitate the fishponds. COURT: Q When did you give that advice? A Before the preparation of the documents. Modesto Manuel. During the time we have conversation on May 2. Manuel called for Rodolfo Tigno so I consented. Manuel called for Rodolfo Tigno because the document was in the name of Rodolfo Tigno. is that correct? Q Do you know the reason why Eduardo Tigno requested you to place the name of his brother as vendee? A None. sir. why did you agree that Rodolfo Tigno to execute the document? A I also explained that matter to him I know that matter to happen in the long run they will have dispute but Eduardo Tigno said he is his brother. 61 . COURT: COURT: Q Being the agent of this transaction did you not try to advice Eduardo Tigno to be safe for him a document will have to be executed showing that he is really the vendee? Q Eduardo Tigno is the real owner. Atty. Atty. Atty. A Because Atty. why did you not ask the preparation of the document to be executed by Rodolfo Tigno accordingly that the real owner who sold to you is the brother. he have [sic] trust and confidence in his brother. and has the power to disposed. sir. why did you consent that the deed of absolute sale in the name of Rodolfo Tigno and not Eduardo Tigno? A Eduardo Tigno requested me to place the name of his brother as vendee so that the brother can use the lands as collateral for possible loan at the PNB (Philippine National Bank). why the plaintiff. sir. Rodolfo Tigno. sir. Its by trust and confidence. Manuel was present when he gave that advice. The best witness to that is the plaintiff. Your Honor. Q The document is already defective. 1980. sir. Your Honor. sir. sir. We object. who prepared and notarized the deeds of sale. at the same time. Pangasinan and. to tend the fish farm on a daily basis. sir. he instructed me to place the name of Rodolfo Tigno in the document. Rodolfo Tigno so that it can be used as collateral. VIRAY: COURT Will you please tell the Court what is the reason. if ever there was.Q Do you know if there [is] a document executed between the brothers to show the real vendee in these three deeds of absolute sale is Eduardo Tigno? A I dont know of any document because according to Eduardo Tigno it will be placed in the name of his brother. WITNESS: Q Considering that you know that the money came from Eduardo Tigno. A Yes. ATTY. what I know is that the real owner is Eduardo Tigno. Be it remembered that private respondent was a Makati-based business executive who had no time to follow up the loan application at the PNB branch in Lingayen. instructed you to put the name of Rodolfo Tigno as vendee in the papers? Q What did Atty. COURT: (Propounding questions) COURT: Q So there is nothing written that will show that the money or purchase price came from Eduardo Tigno. Aside from the trust and confidence reposed in him by his brother. BERMUDEZ: A The reason for [sic] Eduardo Tigno have trust and confidence on his elder brother. COURT: Go ahead. unhesitatingly affirmed the unwritten agreement between the two brothers:[30] Q Do you know already that it will be in the name of Rofolfo [sic] Tigno before the execution? A Yes. Eduardo Tigno. Eduardo Tigno? A I did not think of it. Manuel advised [sic]? ATTY. sir.

make the deeds of sale. VIRAY: A Yes. my cousins wanted to get advance payment. he said. could use the properties as collateral for possible loan to the PNB? Q Since he was going to the United States and he could not wait the preparation of the documents he just instructed you to go ahead with the first instruction. (Underscoring supplied.ATTY. Rodolfo Tigno as vendee in the documents so that the defendant. ATTY. sir. he back [sic] out. Q When was that when the plaintiff instructed you to place the name of his brother. Q What else did you tell him? A I remember he is to make Special Power of Attorney in order his brother (sic) will execute the loan to the PNB. Manuel was not able to prepare the deed of sale on May 2. what then happened in the house of Atty. 1980. I certainly did. Q What did the plaintiff. Q You mean to say five thousand pesos for each parcel of land? A Yes. one half of ten thousand pesos. when Eduardo Tigno and Dominador Cruz and some of the vendors went to my house and they requested me to prepare the deeds of sale. agreeable to the deed of sale to my advised but when I told him that It would take the document probably by the middle of June. I. All right.. Manuel convincingly explained why Petitioner Rodolfo was named as vendee: [31] ATTY. I think that was May 2. sir. In his direct examination. Witness? WITNESS: A Yes.00. Q By the way. sir. Manuel.N. sir. Manuel was not able to prepare the document. Q Who prepared the receipt? A Atty. I heard Eduardo Tigno said to Attyl. the defendant. what else happened? A When the three of us. sir. Witness. VIRAY: Q When the plaintiff Eduardo Tigno instructed you to place the name of his brother as the vendee in the deeds of sale you were to prepare. As a witness. Q After the plaintiff. sir. Atty. sir. how much all in all did Eduardo Tigno give on May 2. 1980 as advanced consideration? A P15. Mr. VIRAY: Q Did Eduardo Tigno agreed [sic] to the request of your cousins to get one half of the price of their land? A He agreed to give five thousand pesos each but he prepared temporary receipt fpr [sic] five thousand pesos. [sic] Manuel that the deed of sale will be placed in the name of my brother. Manuel was corroborated by Dominador Cruz who was the real estate agent cum witness in all three deeds of sale. Q In other words. Eduardo Tigno paid the advanced payment for five thousand pesos for each parcel of land. sir. what did you tell him or did you give any advice? A Yes. sir. sir. sir. what is his answer? A He acceded to my advised [sic]. VIRAY: Q When you said Atty. Rodolfo because we will mortgage the land with the P.000. at first he was agreeable and that he would execute Special Power of Attorney? This testimony of Atty. Q What advice? A Why will I put the name of your brother as vendee when you were here as real buyer who will give the money to the vendors? Why not you. Manuel and Eduardo Tigno were talking. each.B. Manuel? A When Atty. sir. I told him.) A It was sometimes during a fiesta in Guilig when Eduardo Tigno and Dominador Cruz. he pointed out that Petitioner Rodolfo was named as the vendee in the deeds of sale upon the order of private respondent:[32] ATTY. 1980. tell you when you said it would be best to execute the Special Power of Attorney instead of placing the name directly in the deeds of sale. Mr. because he told me he is going abroad and he may not be around and then he instructed me to place the name of his brother as the vendee not the plaintiff anymore. Eduardo Tigno. Rodolfo Tigno. Atty. the proceeds will be used in the development of the 62 . is that what you mean. sir. sir. sir.

he learned from his relatives that his brother was negotiating the sale of a portion of the fishponds to Spouses Casipit. 1980. Cruz and Manuel. 1989. he could not have executed a Special Power of Attorney in favor of Rodolfo. xxx xxx xxx Q How about the balance of the purchase price of the property. to enable Rodolfo to mortgage the lands. Therefore. it is clear that the name of Rodolfo Tigno appeared in the deeds of sale not for the purpose of transferring ownership to him but only to enable him to hold the property in trust for his brother. private respondent instituted this case on May 24.[38] We firmly reject these contentions and need only to cite Respondent Courts incisive findings: After a careful examination of the evidence on record. Petitioners contend that there was no fiduciary relationship created between the brothers Tigno. Q Who is that brother of Eduardo Tigno? A Rodolfo Tigno. Secondly. mainly relying on the Deeds of Sale where defendant Rodolfos name appears as vendee. 1989. we hold that an implied trust was created in favor of the plaintiff [private respondent herein] within the meaning of Article 1448 of the Civil Code. Petitioners argue that Rodolfo Tigno had exercised all the acts of dominion and ownership over the fishponds in question.. Q By the way. Indeed. 1980. by themselves. p. There is an implied trust when property is sold. he immediately wrote a letter dated May 16. [34] Failing to convince petitioners to annul the sale. 63 . Thus. With Rodolfos name as vendee. no delay may be imputed to private respondent. herein private respondent. When private respondent went to Pangasinan to pay the taxes on his property in Bugallon. and cases cited therein. are not conclusive evidence of ownership. We agree with the detailed disquisitions of the Court of Appeals on this point:[37] The trial courts conclusion that defendant-appellee is the true buyer and owner of the lands in question. while the latter is the beneficiary. must inevitably yield to the clear and positive evidence of plaintiff. The former is the trustee. Cited in II Regalado REMEDIAL LAW COMPENDIUM. 1989 addressed to the Casipits advising them to desist from buying the property because he was the real owner. 1987. his name was put as vendee in view of the mutural [sic] trust and confidence existing between said parties who are brothers. and on the Tax Declarations and Tax payment receipts in his name. From the foregoing.[36] Before the institution of this case. only to learn that the sale had already been consummated as early as April 29. Clearly. it is only natural that Tax Declarations and the corresponding tax payment receipts be in his name so as to effect payment thereof. 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. could validly transfer the ownership of a portion to Spouses Casipit. Feb. of the tax declarations being in the name of Petitioner Rodolfo is utterly minimal to show ownership. he filed this case after only five days from learning of the infidelity of his brother. private respondent had no reason to sue. being the real purchaser of the parcels of land. Since defendant Rodolfo is named as vendee in the Deeds of Sale. L-47378. On May 18. 563 [1988]). x x x. the only reason why defendant Rodolfo was made to appear as the buyer in the Deeds of Sale was to facilitate their mortgage with the PNB Branch at Lingayen to generate seed capital for the fishponds. sir. Petitioner Rodolfo. He requested that the buyer of the fishpond will be placed in the name of the brother of Eduardo Tigno. et al. CA. Moreover.fishpond.[33] Contrary to petitioners insistence. 1448. In the face of the credible and straightforward testimony of the two witnesses. aside from the fact that plaintiff was to travel abroad for thirty (30) days sometime in June. was the deed of sale to these parcels of land finally executed? A Yes. no delay may be attributed to private respondent. 27. Suffice it to say that these documents. out of which Rodolfo could derive income. there would be no need anymore for the personal presence of plaintiff-appellant who was very busy with his work in Manila. which provides: Art. sir. 1989[35] or five (5) days after learning from Edualino of the consummation of the sale. as the Deeds of Sale were not yet prepared on May 2. it is well-settled that the tax declarations or the payments of real estate taxes on the land are not conclusive evidence of ownership of the declarant or payor (De Guzman v. is there any instruction made by Eduardo Tigno with respect to the payment thereof? A With respect to the balance after the preparation of the document they will bring it to Eduardo Tigno for him to pay the balance. Firstly. as has thus been fully established. the probative value. Failing to find his brother. if any. as nobody shared in the produce of the fishponds for the past nine (9) years. he confronted Petitioner Edualino Casipit about the impending sale.

000. where property is taken by a person under an agreement to hold it for or convey it to another or the grantor. 5. representing the following: xxx xxx xxx a) P15. Civil Code. 65 SCRA 160) Art. unless a different intention or understanding appears. Therefore. Smith Phil.000. Grio (42 Phil. which was witnessed by Dominador Cruz and Atty. by express provision of the Civil Code. c) P5.00 representing Cruzs commission as agent. b) P6. (Lim vs..79 in 1980 alone.00 for capital gains tax. v. 500. Court of Appeals. as first installment. 19-20). Express trust are created by the intention of the trustor or of the parties. as shown by his Certificate of Income Tax Withheld on Wages for said year (Exhibit G for plaintiff).000. that is to say. 5. Later. is an implied trust..[39] oral evidence is admissible to establish a trust relation between the Tigno brothers. 1441. Fennon S. registration and other incidental expenses. which is a general provision. the record is replete with clear and convincing evidence to show that (1) plaintiff Eduardo Tigno is the real buyer and true owner of the lands in question and (2) defendant Rodolfo M. Since Article 1448 is a specific provision. Private respondent explained how this trust was created:[40] Specific instances or examples of implied trusts are given in the Civil Code. parol evidence is allowed to prove its existence pursuant to Article 1457. Sept. Sept. since this case involves an implied trust falling under Article 1448. 42-43). Lingayen.00 (TSN. 1989. what happened there? A They came to our family home at Guilig street and we went to the house of Atty. pp.An implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of another. in effect. in the amount of P26. Manuel.00 each. where he received P311. Q Was the deed of sale finished on that day? 64 . pp. Inc. It was established thru plaintiffs testimony that plaintiff paid P5. which states: ATTY. under the rule generalia specialibus non derogant.700. Q Why did you go to the house of Atty. unless a different intention or understanding appears. et al. Modesto Manuel. That plaintiff was able to pay these amounts is believable. 5. 1457. Art. the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer. VIRAY Q When you said Dominador Cruz was able to bring the vendors at Guilig street. et al. 101). Sept. by this Court in the case of Martinez v. Statutes. xxx xxx xxx In the earlier case of Heirs of Candelaria. In such a case. sir. Cruz paid the three vendors the balance due them (TSN. Romero. It is also the rule that an implied trust arises where a person purchases land with his own money and takes a conveyance thereof in the name of another.000. it is an express trust which cannot be proved by parol evidence. the Supreme Court elucidated on implied trust: On the other hand. it prevails over and qualifies Article 1441. thus: When this check was encashed.00 as the balance for the three (3) parcels of land. it results because of equity and arises by implication or operation of law.. An implied trust may be proved by oral evidence. because plaintiff had the financial means to pay said amounts. 1989. (Alcantara. In such case. The trust which results under such circumstances does not arise from contract or agreement on the parties. 109 Phil. indeed. he gave a check to Dominador Cruz. It must be noted that Article 1441 of the Civil Code defines both express trust and implied trust in general terms. pp. The trust alleged to have been created in our opinion. to the three vendors for a total of P15. the agent. 1990 Ed. Implied trust come into being by operation of law. Trusts are either express or implied. Indeed. 39-41).000. 35). 1989. We disagree with the trial courts ruling that if. a trust has been established.00. At the time of the sale in 1980. Pierce..000. but from the facts and circumstances. (TSN. a resulting or implied trust arises in favor of the person for whose benefit the property was intended. plaintiff was an executive of Meryll Lynch. p. one of which is described under Article 1448 quoted heretofore. the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer. sir. Tigno is merely a trustee constituted over said lands on behalf of plaintiff. As held. Manuel? A For the executionof [sic] the deed of sale of the property I am going to buy.

and his bare testimony that he was the real buyer. which in fact was confirmed by Rodolfo during his crossexamination (TSN. like an income tax return. other than his bare testimony. as he claimed. sir. sir. 1988. Lingayen. [41] Respondent Court did not give credence to the financial capacity of Petitioner Rodolfo Tigno:[42] Defendant Rodolfos denial of plaintiffs evidence.00. what happened next? A I talked to Atty. pp.000. sir. I am leaving for United States. Rodolfo was jobless then. the other heirs failed to get the power of attorney from their sister in United States.A No. did you also instruct Dominador Cruz for the payment of the balance? The previously quoted testimonies of Modesto Manuel and Dominador Cruz substantially corroborate private respondents testimony. Q Was there any receipt signed evidencing receipt for that? A There was receipt for the P15. although in possession of the deeds of sale in his name. Q Did you agree to the request of the vendors for the advance payment of P5. 1989. Q What was the reason? Q What was your instruction to Dominador Cruz? A The vendors did not bring the tax declarations.00 advance payment which you said the deed of sale were not executed because of some requirement were not available. sir. Q Did you comply? Q When was that? A Yes. On the other hand. pp. sir. what transpired? A The vendors requested for advance payment of P5. was presented to show his income. 18. if given. pp. Q How much all in all? Q Did you give the payment of the balance? A P15. It was unlikely that he had the financial means to pay for the lands in the total amount of P53.000. As testified to by Arnulfo Peralta (TSN. Q Do you remember in whose name the vendors allegedly to have received the P15. sir. His failure to present Manaoat gives rise to a presumption that the latters testimony. Rodolfo Tigno as vendee because I have plan to mortgage the property in PNB. 11-12). A Yes.00 Q Where is that receipt now? A I gave all the papers to him in my brown envelope. A Yes. I issued to him a check payable in the sum of P26. Manuel to place the name of your brother. 16. secondly.000. his financial capability is rendered doubtful by the fact that no evidence.00 in cash.000. sir. Q After giving the P15. after the completion of the papers. sir. xxx xxx xxx Q Aside from instructing Atty. and I told him to prepare the deed of sale at that time and I told him to place my older brother.00? A In my name.00 each for the three parcels of land? Q Did Dominador Cruz bring the documents to you in your office in Makati? A Yes. His bare testimony that he 65 . Q And was the deed of sale covering the three parcels of land completed? A Yes.000. I will be back first week of July. Manuel separately from the vendors. A I told Dominador Cruz. sir. see me on the second week of July and I will give the whole payment of the property. A First week of July 1980.00 each for the three parcels of land. received from Eduardo Tigno.000. Rodolfo Tigno. If indeed he was engaged in some piggery.00. failed to present a single witness to corroborate his claim that he bought the property partly with his own money and partly with the money he allegedly borrowed from a certain Jose Manaoat. Petitioner Rodolfo. 36-37). 6-7). After going over the documents. would have been unfavorable to the former. A Yes.000. cannot be given credence and do not deserve belief. and at one time or another was even supported financially by plaintiff. Q When the deed of sale were not executed on that day. I trust [sic] him. 1989. as testified to by plaintiff (TSN. Oct. Oct. sir. Sept. 29. without corroboration by other witnesses.000.

Cruz told Edualino that he bought from private respondent a portion of the 66 .[43] This posturing is unacceptable.00 from Jose Manaoat to raise partly the amount of P53. it is ineludible that Article 1448 of the Civil Code finds application in this case.000. VIRAY: Since defendant-appellee is not the owner of the lands in question. that defendant Rodolfo M. The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. of something over which he has no right to transfer. JJ. Article 1459 of the Civil Code provides: Art. (Chairman).J. or five (5) days before the consummation of the sale between Rodolfo and Spouses Casipit. and could not have transferred ownership of said lands. sir. Melo. At the picnic. I invited my friends and right there in the fishpond. SO ORDERED. Petitioner Rodolfo is the trustee. Rule 131. premises considered. From the foregoing. and in any event. C. First. which we find totally persuasive:[46] It is our well-considered opinion. Spouses Casipit did not acquire absolute ownership over the property since the apparent vendor. C. we cite public respondents ruling. the purchase price was paid by private respondent who was the real owner of the property. and Francisco. VIRAY: Q What if you invited them. Be it remembered that the fishponds were not registered under the Torrens system.J.. On this point. unrebutted is the emphatic testimony of private respondent that Edualino was invited on May 2. sign that from that time you were the one who bought the parcels of land? A Yes. they cannot be deprived of the land they bought from Rodolfo Tigno. private respondent testified:[44] subject property for the purpose of building a dike. Thereafter. did not have the right to transfer ownership thereof. thus.borrowed P20. 3[e]. if presented. as established by the evidence on record. The fact is. to his co-defendant-appellee spouses. we had small picnic and that my father. and private respondent is the beneficiary. ATTY. what made you say that the defendant Edualino Casipit very well knew that you are the owner of the property he bought? WHEREFORE. ownership of a portion thereof. Narvasa. As a matter of basic principle in the law on sales. who was in the best position to testify that Rodolfo borrowed money from him. Edualino asked Cruz to buy a portion of the property from private respondent. Romero. 1459. Petitioner Rodolfo. During that meeting. which are not registered under the Torrens system. concur. Second Issue: Are Petitioners Casipit Purchasers in Good Faith? Spouses Edualino and Evelyn Casipit contend that they are purchasers in good faith and for valuable consideration. A Way back in 1980 when I gave the advance payment to the vendors. (Underscoring supplied) ATTY. Thus. Second. and Boy Casipit were there. however. which would gives rise to the presumption that his testimony would be adverse to defendant. Although the deeds of sale were in the name of Petitioner Rodolfo. 1980 to a picnic in the fishpond. Costs against petitioners. also uncontested is the testimony of Dominador Cruz that he met Edualino on April 24. but a mere trustee thereof. at the time of delivery.. because no valid sale in the first place was made between defendant-appellees covering the portion of land in question. as he has no right to transfer. a person cannot transfer ownership. [45] Third. private respondent informed Petitioner Edualino Casipit that he was the owner of the property. Rules of Court). Manaoat. the petition is hereby DENIED and the assailed Decision and Resolution are AFFIRMED in toto. by way of sale. that whether or not defendantappellee spouses are in good faith is entirely immaterial. Again. he could not by way of sale have transferred.00 lacks credibility. 1989.. was never presented. by way of sale.000. (Sec. Tigno is not the owner of the lands in question. Q You said Edualino Casipit very well knew that the property is owned by you.

1. JR. 265. They later caused the transfer of its tax declaration in the name of the female plaintiff (Exh.R. filed a motion to intervene in Case No. evidenced by a Deed of Absolute Sale (Exh.WHEREFORE. c. the motion was granted on 4 March 1988. JR. 67 . spouses Ranulfo Ortiz.000. Cesar and Priscila. Priscila Morales. he caused the transfer of the tax declarations of the two parcels in his name (Exhs. The injunction issued in this case is hereby made permanent. K & series). jointly and severally. one of the daughters of late Rosendo Avelino and Juana Ricaforte. through a Escritura de Venta (Exh. After the purchase. He also built his residential house therein with Marcial Aragon (now dead) as his master carpenter who was even scolded by him for constructing the ceiling too low. 117228. DECISION DAVIDE. vacate the premises. and PRISCILA MORALES.s.: In this petition for review on certiorari under Rule 45 of the Rules of Court. a monthly rental of P1. D & E to G & H) as well as consolidated into one the two tax declarations in his name (Exh. Civil Case No. Thereafter.R. RANULFO ORTIZ. petitioners. I) and paid the realty taxes thereon (Exh. respondents. to pay the costs. private respondents herein. 265 was an action for recovery of possession of land and damages with a prayer for a writ of preliminary mandatory injunction filed by private respondents herein. B). pp. litigation expenses. petitioners urge this Court to reverse the 20 April 1994 decision of the Court of Appeals (Seventeenth Division) in CA-G. by the Bureau of Lands (Exh. remove the beauty shop thereat. and ERLINDA ORTIZ.. pay the Plaintiffs. No.. in his name. the dispositive portion of which reads as follows: SO ORDERED. Roda. pre-trial and trial on the merits were had and the case was submitted for decision on 16 November 1990. C). all surnamed Morales. and Erlinda Ortiz. and the amounts of P75. b. and that Morales be ordered to remove whatever improvements he constructed thereon.00 for Attorneys fees. represented by his heirs. Jr. [1] which affirmed in toto the 26 August 1991 decision of the Regional Trial Court of Calbayog City in Civil Case No.00 for moral damages. vacate from the premises in question. F).000.00 of the premises starting from March 1987. judgment is hereby rendered in favor of the Plaintiffs and against Defendants-Intervenor: [G. 1997] RODOLFO MORALES. CV No. Ordering the Defendants-Intervenor to: a. The complaint prayed that private respondents be declared the lawful owners of a parcel of land and the twostorey residential building standing thereon.000. June 19. t. On 2 February 1988. 13-14) Celso Avelino caused the survey of the premises in question. and pay actual and moral damages. In its order of 9 February 1989[3] the trial court allowed his substitution by his heirs.[2] On 30 November 1988 Rodolfo Morales passed away. and d. J. No opposition thereto having been filed. 34936. J). Rosalia. attorney's fees and costs of the suit. vs.00 for litigation expenses. P5. and P10. Declaring the Plaintiffs the absolute and rightful owners of the premises in question. a public instrument. On 26 August 1991 the Trial Court rendered its decision [4] in favor of plaintiffs. 2. 265.n.500. With the knowledge of the Intervenor and the defendant. COURT OF APPEALS (Former Seventeenth Division). against Rodolfo Morales. (Cross-examination of Morales. Celso Avelino (Plaintiffs predecessor in interest) purchased the land in question consisting of two adjoining parcels while he was still a bachelor and the City Fiscal of Calbayog City from Alejandra Mendiola and Celita Bartolome.[5] The following is trial courts summary of the evidence for the plaintiffs: The evidence adduced by the Plaintiffs discloses that the Plaintiffs are the absolute and exclusive owners of the premises in question having purchased the same from Celso Avelino.

[6] After being the City Fiscal of Calbayog.00 for mental anguish. Rosendo Avelino and Juana Ricaforte. After the purchase the couple occupied it as owners until they died. litigation expenses of P5. Morales. Besides. The property is in the name of Celso Avelino and Rosendo told his children about it (TSN. their inquiries and documentary evidence shown to them by Celso Avelino confirm this fact. Celso Avelino. Thus. Celso Avelino became an Immigration Officer and later as Judge of the Court of First Instance in Cebu with his sister. The defendant refused. except Celso Avelino who did not reside in the premises because he was out of Calbayog for more than 30 years until his death in Cebu City. Priscila A. monthly rental of the premises in question of P1. 1948. Aurea. 68 .00 for it although it was valued at less than P5.000. the Plaintiffs demanded.00 starting from March 1987. 1) and constructed the two-storey house. Juana died on May 31. after they were offered by Celso Avelino to buy the premises in question. Plaintiffs.00 for Attorney's fees. their children: Trinidad A. through an Escritura de Venta (Exh.00 and P10. Rodolfo also gave some of the receipts to Celso.D. Celso Avelino kept the receipts for the realty tax payments of the premises. the plaintiffs are claiming P50. J. 4-6). taking in paying boarders and claiming already ownership of the premises in question. to live there until their deaths. no extra-judicial settlement was filed over the premises in question since the death of Rosendo Avelino up to the present. defendant Rodolfo Morales constructed beside the two-storey house and beauty shop for his wife with the consent of Celso and the latters sisters. Peralta. 21). Aurea. the defendant. Inasmuch as the Plaintiffs are the purchasers of the other real properties of Celso Avelino. they examined the premises in question and talked with the defendant about that fact. Due to the damages they sustained as a result of the filing of this case. the defendant and Intervenor did not reside in the premises in question because they reside respectively in Brgy.Likewise. to change the muniment of title to Rosendo Avelino. the defendant refused to vacate or demolish the beauty shop unless he is reimbursed P35.s. 1980. Sometimes Aurea would go to Cebu to deliver these receipts to Celso or the latter will come to get them. 1965 while Rosendo died on June 4.500. Tarobucan and Brgy.000. Despite the fact that Intervenor has two sons who are lawyers.000. who.000. Upon their demise. thus they filed this case. In 1950 Rosendo secured gratuitous license (Exh. N). Trinidad (Sabang). and his sister. He also declared this residential house in his tax declaration to the premises in question (Exh. keeping intact the receipts which he comes to get or Aurea would go to Cebu to give it to him (t. While he was already in Cebu. orally and in writing (Exhs. the defendant had already occupied the same.n. Morales and Aurea Avelino (who died single) succeeded as owners thereof.When the two-storey residential house was finished. In 1979. p. through their son. Morales. C was executed in their favor. of their own knowledge are certain that the premises in question is indeed owned by their predecessorin-interest because the male plaintiff used to play in the premises when he was still in his teens while the female plaintiff resided with the late Judge Avelino. Defendants-Intervenors testimonial evidence tend to show that the premises is question (land and two-storey building) is originally owned by the spouses. pp.00. both of Calbayog City with their own residential houses there. buying lumber from the father of Simplicia Darotel and paying the wages of Antonio Nartea as a laborer. Cruz. constructed a small beauty shop in the premises in question.000. Rosendo Avelino and Juana Ricaforte. without the knowledge and consent of the former. having retired as Operator of the Bureau of Telecommunications. being the neighbors of Celso Avelino. who took care of the couple. F) and paid the corresponding realty taxes. Concepcion A. Rosendo let Celso buy it being the only son. However. the latter encouraged them to purchase the premises in question rather than the property going to somebody else they do not know and that he will vacate the premises as soon as his uncle will notify him to do so. Priscila Morales was aware that the premises in question was surveyed in the name of Celso but she did not make any attempt. he took his parents. despite due notice from his uncle to vacate the premises in question (Exh. not even her father. Avelino) street. The trial courts summary of the evidence for the defendants and intervenor is as follows: The premises in question was acquired by Celso Avelino who was entrusted by Rosendo with the money to buy it. As the plaintiffs were about to undertake urgent repairs on the dilapidated residential building. L & M) to vacate the premises. one of which is at Acedillo (now Sen. So. 2) bought it from the Mendiolas on July 8. taking care of the premises in question. they paid the purchase price and Exh.

From the evidence adduced by the parties. 1988. due to the following facts and circumstances. The Intervenor would not claim ownership of the premises if her son. F. B and C). D.The sale of the subject premises to the Plaintiffs is fraudulent because it included her (Intervenors) share and the beauty shop of her son. The defendant. Ever since the Plaintiffs acquired the disputed premises.00 and the expenses for litigation in the amount ofP30. Brgy. (on the West) and Rosales Blvd. B) from the Mendiolas to Celso 69 . 6. the window shutters to be replaced. with an area of 318 sq. J). a portion along Umbria street (West) cut in the middle with the other half to the south is tilting while the premises inside the fence farther from the beauty shop to be cleaned. the Court found that the two-storey residential building urgently needed major general repairs and although the bedrooms seemed occupied by lodgers. The Deeds of Conveyance of the questioned premises -. it is easily deducible that it has not been inhabited by a true or genuine owner for a long time because the two-story building itself has been left to deteriorate or ruin steadily. There has no extra-judicial partition effected on the subject property since the death of Rosendo Avelino although two of the Intervenor's children are full-pledged lawyers. The identity of the premises in question which is a parcel of land together with the two residential building standing thereon. 3. meters. E. presently covered by Tax Declaration No. the lumber of the eaves about to fall and the hollow-block fence to be straightened out. the defendant. As a result of this case she is worried and suffered moral damages. 2. all borne of the record.000. (on the North). The couple. constructed the beauty parlor in the said premises and later occupied the two-storey residential house. Not one of the children or grandchildren of Rosendo Avelino ever contested the ownership of Celso Avelino of the disputed premises. resided and even died in the disputed premises. located at corner Umbria St.are both public instruments. C) from Celso Avelino to the Plaintiffs. [7] The trial court reached the aforementioned disposition on the basis of its findings of facts and conclusions. it has been declared in his name for taxation purposes and the receipts of the realty taxes thereon were kept by him. Avelino and the Deed of Sale (Exh. Rodolfo Morales. lacks sleep and appetite and should be compensated for P80. Since the premises in question had been acquired by Celso Avelino. Rosendo and Juana Avelino as well as their daughter. Observing the questioned premises from the outside. H. lost her health. some were either delivered to him by Aurea or by defendant. Tax declarations and payments of the realty taxes on the disputed property. 47606 in the name of the female Plaintiff and also bounded on the East by lot 03-002 (1946) and on the South by lot 03-006 (1950). its tax declaration is now in the name of the female Plaintiff with the current realty taxes thereon paid by her. such as the Deed of Conveyance (Exhs. conducted by the Court upon motion of the parties.00 until the case is finished. both as to the land and the two-storey building (Exhs. which we quote: During the ocular inspection of the premises in question on April 4. One. Defendants-Intervenors claim of ownership is based merely on testimonial evidence which is self-serving and cannot prevail over documentary evidence because it is a settled rule in this jurisdiction that testimonial evidence cannot prevail over documentary evidence. While Plaintiff's claim of ownership over the premises in question is duly supported by documentary evidences. neither the defendant nor the Intervenor informed the Court where or in which of the rooms they occupied.000. and 8. Aurea.the Escritura de Venta (Exh. Central. A very careful study and meticulous appraisal of the evidence adduced by both parties and the applicable laws and jurisprudence show a preponderance of evidence conclusively in favor of the Plaintiffs. the paint peeling off. the defendant is not being made to vacate therefrom by the Plaintiffs. 7. 4. and I and K and series) and the survey plan of the land (Exh. G. 5. the following facts are undisputed: 1. Calbayog City.

On this particular issue. it being disputably presumed that there is a gift in favor of the child. Jr. The present condition of the premises. very clearly show that her claim is neither positive nor categorical but is rather unconvincing. It expressly provides: x x x . categorical and credible. the Plaintiffs evidence has established that before the Plaintiffs paid the purchase price of the premises in question. from the testimony of the Intervenor (p. on question of the Court. On the contrary. experience and belief because it would be unnatural for a man to continuously pay realty taxes for a property that does not belong to him. 20. What is instead clear from the evidence is Celso Avelino's absolute ownership of the disputed property. 1988). Ortiz. Intervenors testimony that the disputed premises was acquired by his brother (p. that no extra-judicial partition or settlement was instituted by all the female children of Rosendo Avelino. Seven. Rodolfo was driven by the Plaintiff. that it was surveyed in her brothers name with her knowledge (pp. that the document of conveyance of the land and the building (p.22) the truth is out in that the Intervenor is putting up her pretense of ownership over the disputed premises only when the defendant was being advised to vacate and only to shield him from vacating therefrom. The foregoing testimony of the Intervenor also show that she is already in laches. and which rendered her testimony unworthy of full faith and credit. Eight. Intervenor raises the issue whether or not the plaintiffs are entitled to the damages being claimed which were duly supported or proven by direct evidence. On the witness chair. (underscoring supplied) Finally. F) which was sold to the Plaintiffs (Exh. April 4. and the fact that the Intervenor is not even interested to see the document of the disputed premises (19). especially the two-storey building which has been left to deteriorate or ruin steadily clearly betrays or belies Intervenor's pretense of ownership of the disputed premises. C was duly executed 70 . they talked with the defendant about the intended sale and the latter even encouraged them to purchase it and that he will vacate the premises as soon as the payment is made therefore (TSN. Hence. act as owner of that land? A We just claim only when my son. our Supreme Court. had it surveyed in his name and continuously paid the realty taxes thereon. (Ramos vs. the last part of Art. Intervenors demeanor and manner of testifying show that she was evasive and shifty and not direct in her answers to simple questions that she was admonished by the Court not be evasive and be direct or categorical in her answers.15). that during the lifetime of her father the muniments of title of the premises was never transferred in her fathers name (pp. Thus. ruled: Tax receipts are not true evidence of ownership. C) while Intervenors self-serving and unconvincing testimony of co-ownership is not supported by any piece of credible documentary evidence. In her Memorandum. thus he declared both the land and the residential building in his name. While Plaintiffs evidence of ownership of the disputed premises is clear. Three. Five. 10-11 & 20). However. especially by the Intervenor herself even though two of her children are full-pledge lawyers (p. p. legitimate or illegitimate.. If the premises in question is really owned in common by the children of Rosendo and Juana Avelino. 112 SCRA 543). you would not claim ownership? A No. which circumstance or requisite is absent in this case. why is it that the surviving sisters of the Intervenor did not join her in this case and intervene to protect their respective interests? Six. but no person in his right mind would continue paying taxes for land which he thinks does not belong to him. no trust is implied by law. she declared: Q When your father died. despite their knowledge (p. 14) is in the name of her brother. sir. that not one of the heirs of Rosendo Avelino ever contested Celso Avelinos ownership thereof. Q In other words what you are saying is that if your son was not dispossessed of the property in question. of the one paying the price of the sale. they paid the purchase price and Exh. 16).Two. That Plaintiffs predecessor-in-interest is the true and absolute owner of the disputed premises having purchased it from the Mendiolas while he was the City Fiscal of Calbayog and still a bachelor and later became an Immigration Officer and later became a CFI (now RTC) Judge when the two-storey building was constructed by Marcial Aragon.21). as a co-owner were you not interested to look at the document so that you can lawfully claim. Four. Court of Appeals. it is very apparent that in order for implied trust to exist there must be evidence of an equitable obligation of the trustee to convey. Thus. positive. Intervenors claim of implied trust is untenable because even from the different cases mentioned in her Memorandum. 1448 of Our New Civil Code bolsters Plaintiffs ownership over the disputed premises. if the person to whom the title is conveyed is a child. is more in conformity with common knowledge. 13-14). both as to the land and the residential house (Exh.

the plaintiffs demanded. petitioners herein. for the benefit of the trustor. xxx in not ruling that Celso Avelino purchased the house and lot in question as a mere trustee. xxx in not ruling that appellants are rightful co-owners and possessors of the house and lot in question in their capacities as heirs of Rosendo Avelino and Juana Ricaforte Avelino. which conclusion ignores this Honorable Court's rulings in Ferrer-Lopez v. his father. as the plaintiffs were about to undertake urgent repairs on the dilapidated residential building and make it as their residence. defendants heirs of Rodolfo Morales and intervenor Priscila Morales..00 for it although it is valued at less than P5.by the owner in their favor. De Guzman v. however. and was therefore plainly hearsay. 5. So. Exhibit O was not identified by the purported affiant at the trial. The defendant. appellees predecessor-in. litigation expenses. The defendant refused. 2.000. under an implied trust. L and M) to vacate the premises.00. they found out that the defendant rather than vacate the premises. the true owners of those properties. to the damage. xxx in ordering appellants to vacate the disputed premises and to pay appellees a monthly rental. Court of Appeals. and attorney's fees. 2. 148 SCRA 75 (1987). appealed to the Court of Appeals. 34936. prejudice and injury and mental anguish of the plaintiffs. 185 SCRA 585 (1990). filed the instant case incurring expenses in the process as they hired the services of a lawyer to protect their interests from the willful and wrongful acts or omissions of the defendant. had already occupied the said residential building and admitted lodgers to it (id. considering that the action to dispossess them of the house and land in question is clearly without legal foundation.interest. xxx in not awarding appellants the damages and costs prayed for in answer with counterclaim and answer in intervention. Their motion to reconsider the decision having been denied in the resolution[11] of 14 September 1994 for lack of merit. and heirs of Celso Amarante v. xxx in ruling that the Intervenor is barred by laches from asserting her status as a beneficiary of the aforesaid implied trust. despite his encouragement and notice from his uncle to vacate the subject premises (Exh. and in their Appellants Brief they assigned the following errors: 1. Court of Appeals.000. 3.R. Court of Appeals. p. 8. which docketed the appeal as CA-G. xxx in ordering defendants to remove the beauty shop on the disputed land instead of declaring Rodolfo Morales a builder in good faith and providing for the protection of his rights as such. xxx in ruling that Celso Avelino validly sold the house and lot in question to appellees without the consent of the other heirs of Rosendo Avelino and Juana Ricaforte Avelino. was the true and lawful owner of the house and lot in question. Rosendo Avelino. 112 SCRA 543 (1982). Respondent CA erred in admitting Exhibit O in evidence over the objection of the petitioner's counsel. 9. petitioners filed the instant petition wherein they claim that: 1. the plaintiffs. moral damages. N) reneged on his words and refused to vacate or demolish his beauty shop inside the premises in question unless he is paid P35. 71 . xxx in relying on Conception Peralta's alleged Confirmation (Exhibit O) in ruling that Celso Avelino (and later the respondents) had exclusive and absolute ownership of the disputed property. 24) and claimed ownership thereof. With that unreasonable demand of the defendant. [9] In its decision of 20 April 1994 [10] the Court of Appeals affirmed the decision of the trial court. 7. orally and in writing (Exhs. The RTC erred in ruling that Celso Avelino. Respondent CA erred in adopting the trial courts reasoning that it would be unnatural for a man to continuously pay realty taxes for a property that does not belong to him on the basis of a misreading and misapplication of Ramos v. Court of Appeals. CV No. xxx in declaring appellees the absolute and rightful owners of the house and lot in question by virtue of the sale of those properties to them by Celso Avelino.[8] Dissatisfied with the trial courts decision. 4. 150 SCRA 393 (1987). Respondent CA also erred in concluding that the payment of realty taxes is conclusive evidence of ownership. as the true and lawful owners of the premises in question. Later. and the latters heirs. 6.

On 19 August 1996 we granted petitioners motion for reconsideration and required the parties to submit their respective memoranda. and (ii) refused to apply the clear language of Article 1448 of the Civil Code. 500 (1914). De Matias. 2. 205 SCRA 437 (1992). xxx in affirming the Trial Court's award of damages in favor of the respondents. Magno. and Miranda v. City of Manila. Baganus. and (ii) ignored this Honorable Court's rulings in Municipality of Oas v Roa. Upon prior leave of court. and 2220 of the Civil Code. Martinez v. Was Rodolfo Morales a builder in good faith? 72 . respondent CA: (i) ignored decided cases where this Honorable Court found the existence of trusts on the bases of similar evidence. In so doing. we resolved to deny the petition for failure of petitioners to sufficiently show that the respondent Court of Appeals committed reversible error. 4. respectively. Casiano. however it was not until 1 July 1996 and after we required their counsel to show cause why he should not be disciplinarily dealt with for failure to file comment when said counsel filed the comment by mail. respondent CA: (i) refused to apply the clear language of Articles 448 and 453 of the Civil Code. xxx in refusing to rule that the respondents are liable to petitioners for moral damages. Gayos. 2217. Court of Appeals. mother. 6. Undaunted. 20 (1906) Merchant v. is the property the former acquired a trust property? 2. 7 Phil. and (ii) ignored this Honorable Courts ruling in San Miguel Brewery. 51 SCRA 71 (1973). 260 (1960). 2208. 3. and siblings. The Honorable Court erred in not ruling that at the very least. In so doing. 21 SCRA 292 (1967). Gayos v. Reyes. and Custodio v. petitioners on 17 October 1995 filed a motion for reconsideration of our resolution of 13 September 1995 based on the following grounds: 1. 7. De Buencamino. On 13 September 1995. petitioners filed a reply to the comment.3. Fadullon. xxx in not ruling that the Court of Appeals and the Trial Court gravely misapplied the law in ruling that there was no implied trust over the premises. Petitioners and private respondents submitted their memoranda on 4 and 28 October 1996. 28 Phil. xxx in not ruling that Rodolfo Morales should have at least been regarded as a builder in good faith who could not be compelled to vacate the disputed property or to pay a monthly rental unless he was first indemnified for the cost of what he had built. In so doing. Rodolfo Morales should have been considered a builder in good faith who could not be compelled to vacate the disputed property or to pay monthly rental unless he was first indemnified for the cost of what he had built. xxx in ignoring unrebutted evidence on record that Celso Avelino held title to the disputed property merely as a trustee for his father. and 2219 of the Civil Code. 11 Phil. 810 (1955). respondent CA: (i) misapplied Articles 2199. and attorney's fees and costs of litigation. which we restate as follows: 1. The grant of the motion for reconsideration necessarily limits the issues to the three grounds postulated in the motion for reconsideration. including the cases of Valdez v. 2219. simply put. 5. xxx in ruling that the petitioners' testimonial evidence could not prevail over the respondent's evidence for the purpose of establishing the existence of an implied trust. This ruling ignores this Honorable Court's decision in De Los Santos v. 67 SCRA 146 (1975). Olorga. 109 Phil. after the filing of private respondents comment on the petition and petitioners reply thereto. v. We required respondents to comment on the motion for reconsideration. Did Celso Avelino purchase the land in question from the Mendiolas on 8 July 1948 as a mere trustee for his parents and siblings or. Grana v. et al. 116 (1908). respondent CA ignored unrebutted evidence on record and Articles 2208. 97 Phil. 16 SCRA 849 (1966). In so doing. 8. xxx in inferring and surmising that Celso Avelinos alleged exclusive ownership of the disputed property was affirmed by the inaction of his four sisters. v. 9 SCRA 841 (1963). xxx in not ruling that the Court of Appeals and the Trial Court gravely misapplied the law in awarding damages to the respondents. Inc.

I 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.[18] 3. [22] the evidence must be trustworthy and received by the courts with extreme caution. obtains or holds the legal right to property which he ought not. [21] While implied trusts may be proved by oral evidence. Also where the purchase is made in violation of an existing statute and in evasion of its express provision. that in which an actual contrary intention is proved.[19] There are recognized exceptions to the establishment of an implied resulting trust.[13] Trusts are either express or implied. constituting valuable consideration. 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. and such consideration must be furnished by the alleged beneficiary of a resulting trust. an actual payment of money. the presumption being that a gift was intended. or an equivalent. while implied trusts come into being by operation of law. However. property or services. in equity and good conscience. Another exception is. There is an implied trust when property is sold. it is essential that there be: 4. of course. The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase money resulting trust. On the other hand. implied trusts are either resulting or constructive trusts. 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. constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. 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. and such proof must be clear and satisfactorily show the existence of the trust and its elements. Trustworthy evidence is required because oral evidence can easily be fabricated. 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. to hold. the equitable ownership of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter. Art. It is a relationship. which reads: We shall discuss these issues in seriatim. while the latter is the beneficiary. it arises as a result of a manifestation of intention to create the relationship. equivocal or indefinite declarations. [14] either through implication of an intention to create a trust as a matter of law or through the imposition of the trust irrespective of. 1. a trust does not result. it is a relationship with respect to property. [20] As a rule. legitimate or illegitimate. if the person to whom the title is conveyed is a child. 1448. duress or abuse of confidence. The first is stated in the last part of Article 1448 itself. Was there basis for the award of damages. of the one paying the price of the sale. Express trusts are created by the intention of the trustor or of the parties. and should not be made to rest on loose. They arise contrary to intention against one who. it being disputably presumed that there is a gift in favor of the child. any such intention. and even contrary to. The former is the trustee. [23] 73 . no trust can result in favor of the party who is guilty of the fraud. no trust is implied by law. attorneys fees and litigation expenses to the private respondents? A resulting trust is exemplified by Article 1448 of the Civil Code. and 1.[16] 2. it is a relationship of fiduciary character. To give rise to a purchase money resulting trust. the burden of proving the existence of a trust is on the party asserting its existence. not one involving merely personal duties. [15] In turn. where A pays the purchase money and title is conveyed by absolute deed to As child or to a person to whom A stands in loco parentis and who makes no express promise. Thus.3. 5.[17] The trust is created in order to effectuate what the law presumes to have been the intention of the parties in the circumstances that the person to whom the land was conveyed holds it as trustee for the person who supplied the purchase money.[12] The characteristics of a trust are: 2. by fraud.

Morales. primarily. said documents were also made without the knowledge and consent of defendant Rodolfo Morales who has prior and legal possession over the properties in question and who is a builder in good faith of the shop building thereon. [T]he alleged sale by Celso Avelino alone of the properties in question in favor of plaintiff Erlinda Ortiz and the alleged TD-47606 in the name of Erlinda Ortiz. he sold the property to private respondents. B. expressly or impliedly. The fact remains. were (sic) acquired by said couple -. Who is entitled to the possession thereof? Yet. and. It is. of the one paying the price of the sale.[30] Even more telling is that in the Pre-Trial Order [31] of the trial court. too. on her part.[26] Priscila. null and void because. defendant herein. and by his parents -. Finally. petitioners now want us to reverse the rulings of the courts below that Celso Avelino was the absolute and exclusive owner of the property in question. no trust is implied by law. as found by the trial court and affirmed by the Court of Appeals. Accordingly. Cruz and Concepcion E. [27] Rodolfo and Priscila likewise even failed to suggest in their respective Special and Affirmative Defenses that Celso Avelino held the property in trust despite Rodolfos claim that: 4. only Celso Avelino sold the entire properties. their implied trust theory. were originally and exclusively owned and possessed by his grandparents-Rosendo Avelino and Juana Ricaforte. If truly they were convinced that Celso Avelino acquired the property in trust for his parents. fraudulent. He had its tax declaration transferred in his name. it would have been far easier for them to explicitly state such fact. doctrinally entrenched that the evaluation of the testimony of witnesses by the trial court is received on appeal with the highest respect. second.. were clandestine. absent a clear 74 . the case for petitioners must fall. of course. which for convenience we quote: .Rosendo Avelino and Juana Ricaforte -. (Underscoring supplied). petitioners theory is that Rosendo Avelino owned the money for the purchase of the property and he requested Celso. third. because it is the trial court that has the direct opportunity to observe them on the stand and detect if they are telling the truth or lying through their teeth. merely reiterated the foregoing allegations in subparagraphs A and B of paragraph 2 of her Answer in Intervention. Priscila merely restated these allegations in paragraph 2 of her Special and Affirmative Defenses. Then. The assessment is accepted as correct by the appellate court and binds it. without the knowledge and consent of said Priscila A.[32] As to that.. [T]he lot and the two-storey building in question. such as laches. established positive acts of Celso Avelino indicating. Rodolfo alleged that: A. which they right away possessed exclusively in the concept of owner.children and heirs of said Rosendo Avelino and Juana Ricaforte. [25] In the former. the ones now in litigation in the above-entitled case.on July 8.and consequently. together with an old house then thereon. which are actually possessed by Rodolfo Morales. in the verified Answer of Rodolfo Morales [24] nor in the Answer in Intervention of Priscila A. 1948. the situation is governed by or falls within the exception under the third sentence of Article 1448.. However. and faithfully paid the realty taxes.. to buy the property allegedly in trust for the former.In the instant case. Morales. The preponderance of evidence. Peralta . the trial court pointed out numerous other flaws in petitioners theory. on strength of. that title to the property was conveyed to Celso. that he considered the property he purchased from the Mendiolas as his exclusive property. if the person to whom the title is conveyed is a child. [28] Not surprisingly. however. the parties merely agreed that the main issues were: a. Who is the owner of the premises in question? b. the rule is settled that the burden of proving the existence of a trust is on the party asserting its existence and that such proof must be clear and satisfactory. petitioners relied principally on testimonial evidence. As shown earlier.Priscila A. said documents cover the entire properties in question of the late Rosendo Avelino and Juana Ricaforte. [29] The separate Answers of Rodolfo and Priscila do not likewise allege that Celso Avelino committed any breach of the trust by having the property declared in his name and paying the realty taxes thereon and by having the lot surveyed by the Bureau of Lands which gave it a lot number: Lot 1949. The problem with petitioners is that they entirely forgot that the trial court and the Court of Appeals did not base their rulings on this alone. first. On this basis alone. Morales and Cesar Morales -. without doubt. [S]aid lot. his son. it being disputably presumed that there is a gift in favor of the child. Trinidad A. petitioners did not claim the existence of an implied trust. legitimate or illegitimate. caused the property surveyed for him by the Bureau of Lands. The theory of implied trust with Celso Avelino as the trustor and his parents Rosendo Avelino and Juan Ricaforte as trustees is not even alleged.

equal to that of each of her co-heirs. We rule in the negative. the trial court and the Court of Appeals did not then err in giving more weight to Concepcions earlier Confirmation. bought the parcels of land located at corner Umbria Street and Rosales Blvd. flimsy. which Rosendo could have done after Juanas death on 31 May 1965. He alleged in his answer that the land was acquired by his grandparents Rosendo Avelino and Juana Ricaforte and he constructed the shop building in 1979 upon due permission and financial assistance from his mother. the proper rent. In light of the equivocal nature of Concepcions later affidavit. he constructed a residential building on the lot which building is made of strong materials. Book No. wherein Concepcion stated: 3. however forms part of the state of our deceased parents. Concepcion was thus a co-heir of her siblings. 1987.[34] Likewise fatal to petitioners cause is that Concepcion Peraltas sworn Confirmation dated 14 May 1987 cannot be considered hearsay evidence due to Concepcions failure to testify. or to oblige the one who built or planted to pay the price of the land. full and complete conveyance of the right. 37. Concepcion made a solemn declaration against interest. by her Confirmation. and. The parties shall agree upon the terms of the lease and in case of disagreement. plant or sow because he thinks he owns the land or believes himself to have a claim of title. my sisters Trinidad A. [33] In this case. and the one who sowed. Priscila A. realizing that the Confirmation was admissible. if the owner of the land does not choose to appropriate the building or trees after proper indemnity. [37] In the instant case Rodolfo Morales knew from the very beginning that he was not the owner of the land. and which rendered her testimony unworthy of full faith and credit. and myself. during the time when he was City Fiscal of Calbayog City and still a bachelor. Neither is there any evidence that during his lifetime Rosendo demanded from Celso that the latter convey the land to the former. shall have the right to appropriate as his own the works. Cruz and 75 . and would have had a share. Page No. In light of their assertion that Celso Avelino did not have actual possession of the property because he was away from Calbayog continuously for more than 30 years until he died on October 31. Concepcion explicitly declared therein thus: That my aforenamed brother [Celso Avelino]. attempted to cushion its impact by offering in evidence as Exhibit 4[35]Concepcions affidavit.showing that it was reached arbitrarily. Brgy. Intervenors demeanor and manner of testifying show that she was evasive and shifty and not direct in her answers to simple questions that she was admonished by the Court not to be evasive and direct and categorical in her answers. and a sister of Celso Avelino and intervenor Priscila Morales. Likewise. In such case. petitioners failed to assail. However. after payment of the indemnity provided for in articles 546 and 548. the following observation of the trial court: Six. Priscilas justification for her and her sisters failure to assert coownership of the property based on the theory of implied trust is. As declarant Concepcion was a daughter of Rosendo Avelino and Juana Ricaforte. Notary Public of Calbayog. Petitioners. there existed no valid and cogent reason why Priscila and her sisters did not do anything to have their respective shares in the property conveyed to them after the death of Rosendo Avelino in 1980. Samar. out of his own money. Central. it is an exception to the hearsay rule under Section 38 of Rule 130 of the Rules of Court. [36] and the established fact that the tax declarations of the property were in Celsos name and the latter paid the realty taxes thereon. On the contrary. The property in question (particularly the house). At bottom. Morales. This omission was mute and eloquent proof of Rosendos recognition that Celso was the real buyer of the property in 1948 and the absolute and exclusive owner thereof. it having been offered as evidence of an act or declaration against interest. he shall pay reasonable rent. from Culets Mendiola de Bartolome and Alejandra Fua Mendiola by virtue of a Deed of Sale entered as Doc. therefore. Celedonio Alcazar. 20. sowing or planting. the court shall fix the terms thereof. Clearly. II Was Rodolfo Morales a builder in good faith? Petitioners urge us to so rule and apply Article 448 of the Civil Code. in the estate of Rosendo and Juana.. sown or planted in good faith. to say the least. the crux of the matter is whether petitioners discharged their burden to prove the existence of an implied trust. Article 448 applies only when the builder. On the witness chair. XI. Calbayog City. the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. namely. Concepcion would have been entitled to a proportionate part thereof as coheir. Cruz and Priscila A. Series of 1948 in the Notarial Book of Atty. much less overcome. However. planter or sower believes he has the right to so build. No. Note that Concepcion seemed to be certain that only the house formed part of the estate of her deceased parents. title and interest in and to such property can only be effected with the agreement of the other heirs. However. Morales and from his aunts Trinidad A. which provides: The owner of the land on which anything has been built. dated 16 June 1987. If indeed the property was merely held in trust by Celso for his parents. out of his own money.

. the private respondents have not convincingly shown that they suffered "mental anguish" for certain acts of herein petitioner which fell under any of the cases enumerated in Articles 2219 and 2220 of the Civil Code. The power of the court to award attorney's fees under Article 2208 of the Civil Code demands factual. TSN. concur Francisco. SO ORDERED. 1988. Narvasa. for lack of factual and legal basis. 40.[40] The circumstances of when and where allegedly the consent was given are unclear. social humiliation. p. Under Article 453 of the Civil Code. be proportionate to the suffering inplicted. attorneys fees and litigation expenses. Peralta . by reason of the defendant's culpable action and must. On leave. p.[46] III We cannot however give our affirmance to the awards of moral damages. serious anxiety. it must be shown that an injury was suffered by the claimant and that such injury sprang from any of the cases stated in Articles 2219 and 2220. for the construction of the shop building. In such a case. it would be most unlikely that Rodolfo would have taken the trouble of securing Celsos consent. 1990. Melo. April 4.J. moral damages. 76 . or amusements that WHEREFORE. fright. its basis cannot be left to speculation and conjecture... 2220 to support the award for moral damages. 1988.. Finally. However. (Chairman). only Celso Avelino could have rebutted it. but the testimony was given after Avelinos death. mental anguish. J. and with good reason. TSN. They are awarded only to enable the injured party to obtain means. however. thus forever sealing his lips. The award of attorney's fees is the exception rather than the rule and counsel's fees are not to be awarded every time a party wins a suit.Concepcion A. having insisted with all vigor that the land was acquired by Rosendo Avelino and Juanita Ricaforte. premises considered. the award of moral damages must be set aside. Accordingly. calculated to compensate the claimant for the injury suffered. April 4.. which include physical suffering. 2219. it was clearly self-serving and inconsistent with petitioners vigorous insistence that Celso Avelino was away from Calbayog City continuously for more than 30 years until he died on October 31. legal and equitable justification. the unrebutted evidence shows that Celso Avelino consented to Rodolfo Morales construction of the beauty shop on the land.[39] This so-called unrebutted testimony was rejected by the courts below. 1987. who had been continuously away from Calbayog City for more than 30 years.. with the knowledge and consent of his uncle Celso Avelino. Pursuant to Article 2217 of the Civil Code. First. For the same reason the award of attorney's fees and litigation expenses must suffer the same fate. TSN. not punitive or corrective in nature.[43] In the same vein. 21. 2217. and similar injury may be recovered in the cases enumerated in Article 2219 and 2220 of the same Code. i. [44] In the instant case.[38] Petitioners. attorneys fees and litigation expenses which are hereby DELETED. perforce.[42] Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. such consent is considered bad faith on the part of the landowner. Second. 21. p. The attendant circumstances in this case also reject the application of Articles 19. still. C.e. moral shock. however.. besmirched reputation. Article 2220 is definitely inapplicable since this is not a case of willful injury to property or breach of contract.[41] For moral damages to be recovered. except as to the award of moral damages. contend that: Even assuming the argument that Rodolfo Morales was a builder in bad faith because he was aware of Celso Avelinos supposed exclusive ownership of the land. wounded feelings. 20 and 21 of the Chapter on Human Relations of the Civil Code. Costs against petitioners. will serve to alleviate the moral sufferings he underwent. the judgment of the respondent Court of Appeals is AFFIRMED. it must be shown that they are the proximate result of the defendant's wrongful act or omission in the cases provided for in Articles 2219 and 2220. 40.[45] The general rule is that attorney's fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to litigate. the trial court invoked Articles 19. moral damages must be understood to be in concept of grants. diversion. 20. October 19. Reason and fairness demand that the attribution of an act to a dead man must be viewed with utmost caution. and Panganiban. the rights of the landowner and the builder shall be considered as though both acted in good faith. JJ.

R. September 19..: This is a petition for review[1] by Marcelito D. 2006 x --------------------------------------------------------------------------------------. J. and GARCIA. 77 .x DECISION AZCUNA. 1999. versus . SANDOVAL-GUTIERREZ. SP No. 140798 Petitioner. JJ.R. Juanito Villaverde. VILLAVERDE. No. Present: PUNO. respectively. QUEVADA.CORONA. J. 53209 entitled Marcelito Quevada v. Respondents. COURT OF APPEALS and Promulgated: JUANITO N. in CA-G. Chairperson. Quevada.SECOND DIVISION MARCELITO D. assailing the Decision and Resolution of the Court of Appeals (CA) dated September 16. G. 1999 and November 11. AZCUNA.

thus: WHEREFORE. Because of [private respondents refusal] to accept the rental payments. [petitioner] similarly offered to buy the lot but was Petitioner added that there was an implied trust by virtue of the true agreement whereby the purchase price of the lot would be paid by the [private] respondent and for the latter. After the expiration of the extended Lease. he assured the [private] respondent that if he would not be able to purchase the lot after a reasonable period of time. judgment is hereby rendered in favor of [private respondent] ordering [petitioner]: a) and all persons claiming rights under him to immediately vacate and surrender 78 . Manila. to payP5. On January 20. 1995.[4] at which time he occupied the house as his residence. [1985]. [private respondent] served upon the petitioner a notice to vacate the leased property within a period of fifteen (15) days supposedly counted from receipt thereof. which was an extension of the previous date. was executed.not able to raise the amount ofP1. on the other hand. Sometime in 1994. The [private] respondent did not give him a chance to pay the purchase price by setting a deadline to do the payment.000 representing the purchase price.500 a month. [Private respondent] made several demands to the petitioner to vacate the premises but was refused.] [T]hus. a Lease Contract. Branch 30. [petitioner] opened an account in trust for the [private respondent] where the monthly rentals could be deposited. [the former] will transfer the title to [the latter. 1995 to April 15. It was. After expiration of the lease. then. 1996. he was willing to deliver possession of the house to the [private] respondent after payment of the cost. the answer of the petitioner that as early as November.500. similarly. to transfer the title after he ([private] respondent) shall have paid the purchase price. The facts[2] of the case are as follows: Herein [private] respondent in turn advised him that he would go ahead and buy the lot but with an assurance that as soon as [petitioner] would be in a financial position to do payment. the [private] respondent negotiated for the purchase of the lot from the previous owner. they entered into another Contract of Lease. the Metropolitan Trial Court (MeTC) of Manila. 1994 to August 15. [3] he already started building the house on the lot which was finished in [1986]. in the meantime. Because of the [petitioners] refusal to vacate the premises. 1996. he (as a lessor) and defendant/petitioner entered into a Contract of Lease of a portion of the residential house (consisting of 96 square meters) which is located on the subject property for the period from August 15. Before the [Metropolitan Trial Court (MeTC)]. and every month thereafter until the premises shall have been vacated. 1998.000. 1998. [private respondent] referred the matter to the barangay court for conciliation. commencing from August 15. later on. the [private] respondent refused to accept the monthly rental of the lot for P2. ruled in favor of private respondent. the plaintiff/respondent said that he is the lessor of a parcel of land with a residential house in Sampaloc. at a monthly rental of P2.000 rental starting May. On his (petitioner) part. but without payment of any reasonable compensation (for the use and occupancy thereof). or the sum of P500. Sometime in 1994. In its Decision dated October 27. only for the former to repudiate the agreement to vacate as ofDecember 31.500.000. as a matter of fact. since the house belonged to him. for him to pay the rentals at P2. 1997. in view of the foregoing. the petitioner refused to vacate without justifiable reason. but only with respect to the land. the petitioner continued possessing the premises.

THE COURT OF APPEALS ERRED IN UPHOLDING THE RIGHT OF THE RESPONDENT TO BRING THE ACTION FOR EJECTMENT ALTHOUGH HE IS NOT THE TITLED OWNER THEREOF. SO ORDERED. III. Branch VII. 3) whether petitioner can be reimbursed for the value of the house on the property. PETITIONER OUGHT TO BE REIMBURSED FOR THE VALUE OF THE HOUSE STANDING ON THE LOT. 1996 until subject premises is finally vacated and surrendered to [private respondent]. Manila subject to the right of [petitioner] to remove the improvements existing thereon.. ENTITLED TO CONTINUED POSSESSION THEREOF. the issues to be resolved are: 1) whether the action for THE FOREGOING CONSIDERED. Hence. affirmed the MeTCs Decision in the following manner: WHEREFORE and finding no reversible error in the decision of the lower court. IV.[6] THE COURT OF APPEALS GRIEVOUSLY ERRED WHEN IT FAILED TO APPRECIATE THE FACT THAT AN IMPLIED TRUST WAS CREATED IN FAVOR OF PETITIONER WHO THEREBY BECOMES THE BENEFICIAL OWNER OF THE LOT IN QUESTION AND. Petitioner then went on appeal again asking for reversal of the RTC Decision. but the Regional Trial Court (RTC) of Manila. The CA rendered its assailed Decision.[5] Petitioner appealed. the appealed Decision is hereby AFFIRMED SO ORDERED. and 4) whether there is an implied trust. THUS. c) the costs of suit. Cruz St. AT THE VERY LEAST. 79 . II.500 monthly from May.[7] ejectment is proper. the dispositive portion of which reads: Simply restated. the action for ejectment or. unlawful detainer I or desahucio is under the proper jurisdiction of the MeTC. A discussion of these issues shows that the petition is partly meritorious. SO ORDERED. the same is hereby affirmed in toto. this petition relying upon the following grounds: First. 2) whether such action can be brought by private respondent who is not the titled owner of the property. Sampaloc. b) to pay reasonable compensation for the continued use and occupancy of subject lot in the amount of P2. THE COURT OF APPEALS ERRED IN SUSTAINING THE JURISDICTION OF THE [MeTC] TO HEAR THE INSTANT CASE CONSIDERING THAT THE ALLEGED UNLAWFUL WITHHOLDING OCCURRED MORE THAN ONE YEAR BEFORE THE FILING OF THE EJECTMENT SUIT. more specifically. Petitioners Motion for Reconsideration of the CA Decision was denied.to [private respondent] the leased premises situated at 842 Vicente G.

at any time within one (1) year after such unlawful deprivation or withholding of possession.Section 1.[8] Moreover. Acts of a possessory character for unlawful detainer.[10] acts. or the legal representatives or assigns of any such lessor. private respondent was unlawfully deprived possession of the residential house after petitioners right to its possession as lessee had [P]ossession by tolerance is lawful.[11] As a lessor. 2. may. no matter how long so continued. tolerance or permission. and such possessory MeTC[9] and must be filed within one year. in which case there is 80 . a summary action for ejectment is the proper remedy. Unless otherwise stipulated. failing which. or by posting such notice on the premises if no person be found thereon. a person deprived of the possession of any land or building by force. [Underscoring supplied. do not start the running of the requirements of the above-cited provision in filing an period of prescription. together with damages and costs. A person who occupies the land of another at the latters on December 31. the to vacate. for the restitution of such possession. in accordance with the 1991 Revised performed by one who holds by mere tolerance of the owner [or lessor as Rule on Summary Procedure. by virtue of any contract. [Underscoring supplied. Subject to the provisions of the next succeeding section. but such possession becomes unlawful expired on April 15. vendee. vendor. threat.Despite several demands given by the former to when the possessor by tolerance refuses to vacate upon demand made by vacate the agreement premises. [12] The situation is not much different from that of a tenant whose lease expires but who continues in occupancy by tolerance of the owner. express or implied. or a lessor. or by serving written notice of such demand upon the person found on the premises. Rule 70 of the Rules of Court provides: Under Section 2. or other person. latter refused and which 1997 before the barangay court. strategy. vendor. intimidation. without any contract between them. was entered even into repudiated the the owner.] vacate is made upon the lessee. thus: SEC. bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession. 1996. and when. is necessarily bound by an implied promise to vacate upon demand. Rule 70. Petitioners continued use and occupancy of the premises without The necessary allegations in private respondents complaint clearly meet any contract between him and private respondent was by mere the action tolerance or permission of the latter. Who may institute proceedings. vendee. 1996. or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession. or stealth. such action by the lessor shall be commenced after demand to pay or comply with the conditions of the lease and to SECTION 1. such action is within the jurisdiction of the in this case] are clearly not en concepto de dueo.] The lease contract was not extended again after its expiration on April 15. such action by the lessor shall be commenced only after demand to pay or comply with the conditions of the lease and to vacate is made upon the lessee. and the lessee fails to comply therewith after fifteen (15) days in the case of land or five (5) days in the case of buildings. or any person or persons claiming under them. Lessor to proceed against lessee only after demand.

The prescriptive periods shall resume upon receipt by the complainant of the certificate of repudiation or of the certification to file action issued by upon his refusal to comply with the demand to [22] Second. [17] in on January 20. following its referral for conciliation. however. Consequently. petitioner also did not honor the agreement to vacate as of December 31. conciliation. The 60-day period under the serve upon him on January 20. Such action has for its object the recovery of the physical possession[23] or determination of who is entitled to possession de facto[24] of the leased premises (the house)[. 1998 a written notice to vacate the leased above provision shall be deducted from the one-year period within which to property within fifteen (15) days from its receipt.private respondent had to pending before the barangay authorities. 1998. 1998 was properly commenced in the MeTC. [21] Indeed. 1998. Procedure for Amicable Settlement. x x x (c) Suspension of prescriptive period of offenses. SECTION 410.[16] notice given after the thirty-day lease periods ended December 15. [20] Since there was proper served. [15] Its filing was within theone-year period after private been unlawfully deprived or respondent Even assuming that there was an agreement to pay monthly rent withheld of its possession. Thus. the action for ejectment filed on March 9. Necessarily. the prescriptive periods for offenses and cause of action under existing laws shall be interrupted upon filing the complaint with the punong barangay. file the action for ejectment.[13] the lupon or pangkat secretary: Provided. or arbitration. but from the date the written notice to vacate was demand and notice by the lessor to vacate.[18] the implied renewal of the expired lease contract unlawful was still for a definite period. Continued possession by the latter had become accordance with Section 410(c) of the Local Government Code. the prescriptive period for and January 15. even though he is not the titled owner of the leased property. [E]jectment of the lessee may be ordered. private respondents the punong tolerance of petitioners possession de facto was formally withdrawn barangay andresumed to run upon receipt by private respondent of the certificate to file action dated January 10. That such interruption shall not exceed sixty (60) days from the filing of the complaint with the punong barangay. the prescriptive period was suspended while the case was 1997 before the barangay court. [19] A month-to-month lease under Article 1687 deprivation or withholding of possession started not from the date the x x x expires after the last day of any given thirty-day period. private respondent may bring the action for unlawful detainer. had after April 15. 1998(subsequent to such agreement).] not the ownership of the lot [25] and not its legal 81 . upon proper lease contract expired. petitioners right to the cause of action was interrupted upon filing of the complaint with stay in the premises came to an end. which unlawful provides: vacate. While the dispute is under mediation. xxx Aside from the fact that the lease contract had expired. [14] This notice was not complied with. 1996. while the dispute is under conciliation. The 1997 (prior to the agreement to vacate made before the barangay court) Besides.deemed to be an unlawful deprivation or withholding of possession as of the date of the demand to vacate.

if the owner of the land does not choose to appropriate the building or trees after proper indemnity. but his possession eventually becomes The Court has consistently held that the only issue to be resolved in unlawful upon termination or expiration of his right to possess. in the sense contemplated in civil law. sowing or planting.[31] The proceedings are only intended to provide an expeditious means of protecting actual possession or right to possession of property. at least. he shall pay reasonable rent. a mere lessor may file such action. However. The owner of the land on which anything has been built. independent of any claim of him to continue in its possession and does not give him a better right to ownership by any of the party litigants. In such case. the house covered by the lease. [26] In fact.[33] It does not even matter if a partys title to the property is questionable x x x. without prejudice to the settlement of the Third. any finding of The distinction between a summary action of ejectment and a plenary the court regarding the issue of ownership is merely provisional and not action for recovery of possession and/or ownership of the land is settled in conclusive. [29] petitioner should be paid for the value of the portion of Those in actual possession of property under any right entitling them to the use of the same may maintain an action for ejectment against a wrongful possessor.possession.[30] Thus. or to oblige the one who built or planted to pay the price of the land. [38] His prior unlawful material physical possession of the leased property does not automatically entitle possession of the property involved. [28] what they claim are theirs. to 82 . [34] [N]o questions can be raised or decided incidentally tending to defeat the title or right of Article 448 of the Civil Code provides: ARTICLE 448.[27] The judgment rendered shall not bar an action between the our jurisprudence. sowers[. to be offset against rentals due.[36] The underlying philosophy behind the former is to same parties respecting title to the land or building nor shall it be prevent breach of peace and criminal disorder and to compel [37] parties out conclusive as to the facts therein found in a case between the same parties of possession to respect and resort to the law alone in order to obtain upon a different cause of action involving possession. after payment of the indemnity provided for in articles 546 and 548. sown or planted in good faith. Petitioner should not trifle with the summary nature of an ejectment suit by the simple expedient of asserting someone elses ownership over the leased property. possession evidenced by the documents introduced [35] by petitioner. Ejectment cases are designed to the property. the absence of title is not a ground to withhold relief from the parties x x x. the builder or planter cannot be obliged to buy the land if its value is considerably more than that of the building or trees. Petitioner is necessarily in prior lawful possession of the property. shall have the right to appropriate as his own the works. parties opposing claims of juridical possession in appropriate proceedings. Title is not involved. The above-cited article covers only cases in which the builders.] or planters believe themselves to be owners of the land or. The parties shall agree upon the terms of the lease and in case of disagreement. the court shall fix the terms thereof. and the one who sowed.[32] In fact.[39] detainer or desahucio is the actual physical or summarily restore physical possession to one who has been illegally deprived of such possession. the proper rent.

reasonable rent for the continued use and occupancy ofthe leased premises from the time the lease contract expired until he finally vacates A trust is defined as a fiduciary relationship with respect to property which and surrenders it to private respondent. however. relationship exists that shows the equitable ownership in the land belonging to petitioner and its legal title to private respondent. petitioner must pay by private respondent is for and in his behalf. Petitioner fails to support his assertion will oblige petitioner to pay the price of the land.[45] As a mere tenant.000. owner. No 83 . the former refuses that such has been created in his favor and that the purchase of the land to sell it to the latter. As to its valuation.[44] On the other hand. In fact. one in whom confidence is reposed portion of the house covered by the lease. [47] The fundamental doctrine of Petitioner is not the owner of or claiming title to the land.have a claim of title thereto.[52] to equity and the principle proscribing unjust enrichment. A person who It would not be fair for private respondent to receive both the rent and the establishes a trust is called the trustor. the value of the portion of the house covered by the lease should be determined so Aside from the lessor-lessee relationship between them. to the latter. it is also applied to cases with justice. Private respondent shall not be inequitably profited or [43] particularly since the lease relationship was open and in plain view. and pursuant the beneficiary or cestui que trust.[40] However.[48] Therefore. conscience. its value should be offset[49] against the reasonable rent due for presented showing that petitioners construction of the house was with the its continued use and occupancy until the former vacates and surrenders it consent of the lands previous owner. and petitioners assertion that it cost P500. In order to satisfy the demands the person for whose benefit the trust has been created is referred to as of substantial justice. there is no implied trust. but a mere unjust tenant[42] occupying only a portion of the house on it under the lease consideration. No supporting evidence was the house. Similarly. and fair dealing. by insisting on ejecting petitioner. no other legal that compensation of its value against the rentals due can take effect. private respondent in petitioner is willing to receive reimbursement for its effect elects to appropriate the building.[46] Although he asserts that his ownership of the house is where a builder has constructed improvements with the consent of the not refuted.[50] Nemo without cum just alterius cause or detrimento locupletari potest. to have a just transfer of the leased portion of contract between him and private respondent.[41] value. It does not apply when the interest is x x x In their exercise of rights and performance of duties.[51] Neither is there a showing of bad faith in petitioners refusal to vacate the land. everyone must act that of x x x a mere tenant x x x. but good faith should be presumed. 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. there is no indication that private respondent Fourth. there is only as regards property for the benefit of another is known as the trustee. morality. enrichment enriched is the transfer of value at petitioners expense.

but rather from its September 16. relationship of the parties. equivocal[. which states: SO ORDERED. by force of law. 84 . because such kind of evidence may be easily trust exists between the parties. or abuse of confidence. Private respondent is not alleged to be offset. MODIFICATION that the are case occupancy. may There is no constructive trust either. fabricated x x x. to private respondent. the petition is PARTLY GRANTED. considered a trustee of an implied trust for the benefit of the person from whom the property comes. The Decision and Resolution of the Court of Appeals in CA-G. duress. If property is acquired through mistake or fraud. respectively.] or indefinite declarations x x x. the person obtaining it is. 53209. Art. house against which the reasonable rent due for its continued use and BUT November WITH THE 11. burden of proving the existence of a trust is on the party asserting its existence. ARTICLE 1456.[54] to wit: ARTICLE 1450. Private respondent is under no obligation in equity to hold appropriate proceedings to assess the value of the leased portion of the his legal title to the land for the benefit of petitioner. have obtained or held the legal right thereto by fraud. there is no is REMANDED to the court a quo. has fraudulently registered the land in his name.R.resulting or constructive trust has been shown to arise from the While an implied trust may be proved orally (Civil Code of the Philippines. The latter may redeem the property and compel a conveyance thereof to him. the evidence must be trustworthy and received by the courts 1997[53]before the barangay court negates the contention that an implied with extreme caution. No evidence is presented to show hereby AFFIRMED that such conveyance was to secure payment of a debt. If the price of a sale of property is loaned or paid by one person for the benefit of another and the conveyance is made to the lender or payer to secure the payment of the debt. petitioner has no right to recover it under Article 1456 of the Civil Code. Again. 1457). the agreement to vacate on October 18. It cannot be made to rest on vague and uncertain evidence or on loose. in the absence of proof showing that private respondent No costs. SP No. [55] [T]he Article 1450 of the Civil Code does not apply. and such proof must be clear and satisfactorily show the existence of the trust and its elements. dated The conveyance of the property was not from petitioner. Thus.[56] WHEREFORE. a trust arises by operation of law in favor of the person to whom the money is loaned or for whom it is paid. until it is vacated and surrendered to private respondent. 1999. Verily. 1999 and previous owner. which shall immediately conduct the resulting trust.

ROSALINDA R.HEIRS OF TIMOTEO MORENO and MARIA ROTEA. petitioners. ROTEA.355 square meters under TCT No. 916 and 920 above described among other parcels of land for the proposed expansion of Lahug Airport. CARIDAD ROTEA. represented by his heir JENNIFER ROTEA. petitioners herein. 2003] On 29 December 1961 the trial court promulgated its Decision in Civil Case No. R-1881. including the owners of Lots Nos. ROTEA. EBORA. DE RENACIA. ROTEA.097 square meters under TCT No.065.[4] On 16 April 1952.[3] Some of the landowners executed deeds of sale with right of repurchase in favor of the government but many others. the Civil Aeronautics Administration as the successor agency of the National Airport Corporation filed a complaint with the Court of First Instance of Cebu.291. October 15. 916 and 920 and other subject realties. RUBY C. Cebu City. ARQUISOLA.[2] To entice the landowners to cede their properties. refused the offer because the payment was perceived to be way below the market price.00 for Lot No.[1] In 1949 the National Airport Corporation as the predecessor agency of respondent Mactan-Cebu International Airport Authority (MCIAA) wanted to acquire Lots Nos. respondent. LUIS ROTEA. vs. MARIA LUISA ROTEA-VILLEGAS.No appeal was taken from the Decision on Lots Nos. represented by his heir ROLANDO R. for the expropriation of Lots Nos. 916 and 920. 156273. R-1881 condemning Lots Nos. [G. ARBON. represented by his heirs LIZBETH ROTEA and ELEPETH ROTEA. ELIA R. FE R. and Lot No. ROTEA JR. RT-7544 (107) T-13695. BERNARDA R. the government assured them that they could repurchase their lands once Lahug Airport was closed or its operations transferred to Mactan Airport. 916 and 920 herein mentioned. designated as Lot No. EDJEC. BERNARDA R. J.CEBU INTERNATIONAL AIRPORT AUTHORITY. are the successors-in-interest of the former registered owners of two (2) parcels of land situated inLahug. No. ANGELES VDA. 916 and 920 and other lots for public use upon payment of just compensation. ALFREDO R. 916 and P9. VDA. MACTAN .R.. 916 with an area of 2. JORGE ROTEA. CORAZON ROTEA. 920 with consequential damages by way of legal interest from 16 November 1947.00 for Lot No. [5] Petitioners predecessors were paid P7. VIRGINIA R. as the negotiations for the purchase of the lots necessary for the expansion and improvement of Lahug Airport irredeemably broke down. DECISION BELLOSILLO. and ROLANDO R. RT-7543 (106) T13694. ROTEA. SUELA. DE LIMBAGA. namely: ESPERANZA R.: THE HEIRS OF TIMOTEO MORENO AND MARIA ROTEA. 85 . docketed as Civil Case No. 920 consisting of 3.

or soon after the transfer of Lots Nos. [6] Thereafter.[12] On 28 November 2002 reconsideration denied. and Mactan-Cebu International Airport Authority v. CV No.and the judgment of condemnation became final and executory.[27] we declared On 12 April 1999 the trial court found merit in the claims of petitioners and granted them the right to repurchase the properties at the amount pegged as just compensation in Civil Case No. Municpality of Cabanatuan does not apply to the case at bar since what was involved therein was the right of reversion and not the right of repurchase which they are invoking. Ramos and the airport manager begging them for the exercise of their alleged right to repurchase Lots Nos. Lahug Airport ceased operations as the Mactan Airport was opened for incoming and outgoing flights. [23] Some acted on this assurance and sold their properties. respondent MCIAA clings to our decisions in Fery v. one Richard E. R-1881 was unconditional so that the rights gained therefrom by respondent MCIAA were indicative of ownership in fee simple. 58691 for Lot No. In Fery. which under RA 6958 (1990) were subsequently transferred in favor of respondent MCIAA. we must reckon with the rulings of this Court in Fery v. Court of Appeals. [9] In fact. R-1881 is absolute and without conditions.[16] 86 . this petition for review. no expansion of Lahug Airport was undertaken by MCIAA and its predecessors-in-interest. Court of Appeals. [11] Their pleas were not heeded. In the main. Respondent MCIAA appealed the Decision of the trial court to the Court of Appeals. Enchuan and the leasehold of DPWH. 916 and 920.R. [20] At the end of 1991. Finally. On 11 March 1997 petitioners filed a complaint for reconveyance and damages with RTC of Cebu City against respondent MCIAA to compel the repurchase of Lots Nos. 920 from the predecessor agencies of respondent MCIAA and that it built thereon its Regional Equipment Services and its Region 7 Office. [14] of the Decision was Petitioners argue that Fery v. 58692 for Lot No. petitioners allege that their right to equal protection of the laws would be infringed if some landowners are given the right to repurchase their former properties even as they are denied the exercise of such prerogative. [21] Hence.[24] other landowners held out and waited for the exercise of eminent domain to take its course until finally coming to terms with respondents predecessors that they would not appeal nor block further the judgment of condemnation if the same right of repurchase was extended to them. docketed as CA-G. 916 and 920 which had been expropriated for the extension of Lahug Airport were not utilized. petitioners wrote then President Fidel V.[26] On 20 December 2001 the Court of Appeals reversed the assailed Decision on the ground that the judgment of condemnation in Civil Case No. petitioners averred that they had been convinced by the officers of the predecessor agency of respondent MCIAA not to oppose the expropriation proceedings since in the future they could repurchase the properties if the airport expansion would not push through. [25] A handful failed to prove that they acted on such assurance when they parted with the ownership of their lands. Court of Appeals[22] from the instant case in that the landowners in the MCIAA case offered inadmissible evidence to show their entitlement to a right of repurchase. thus. 916 and 920. no repurchase could be validly exercised. which define the rights and obligations of landowners whose properties were expropriated when the public purpose for which eminent domain was exercised no longer subsists. 64456. 920. and that is. Municpality of Cabanatuan and Mactan-Cebu International Airport Authority v. This is a difficult case calling for a difficult but just solution. which was cited in the recent case of Reyes v. there exists an undeniable historical narrative that the predecessors of respondent MCIAA had suggested to the landowners of the properties covered by the Lahug Airport expansion scheme that they could repurchase their properties at the termination of the airports venture. while petitioners herein offered evidence based on personal knowledge for which reason MCIAA did not object and thus waived whatever objection it might have had to the admissibility thereof. Court of Appeals[19] which is allegedly stare decisis to the instant case to prevent the exercise of the right of repurchase as the former dealt with a parcel of land similarly expropriated under Civil Case No. the certificates of title for these parcels of land were issued in the name of the Republic of the Philippines under TCT No. Municpality of Cabanatuan and Mactan-Cebu International Airport Authority v. Municpality of Cabanatuan[18] which held that mere deviation from the public purpose for which the power of eminent In resolving this dispute. MCIAA did not object to petitioners evidence establishing these allegations. if the decision of expropriation itself provides [the] condition for such repurchase. [17] The appellate court cited Fery v. docketed as Civil Case No. 916 and 920. CEB20015. According to respondent MCIAA there is only one instance when expropriated land may be repurchased by its previous owners. [7] domain was exercised does not justify the reversion of the property to its former owners. On the other hand. Respondent asserts that the Decision in Civil Case No. When the civil case was pending. R-1881 but subject to the alleged property rights of Richard E. R-1881.[10] Hence.[13] The Department of Public Works and Highways (DPWH) also sought to intervene in the civil case claiming that it leased in good faith Lot No. 916 and TCT No. Court of Appeals. They also differentiate Mactan-Cebu International Airport Authority v. 916 and 920 to MCIAA. [15] The trial court opined that the expropriation became illegal or functus officiowhen the purpose for which it was intended was no longer there. [8] Lots Nos. To begin with. Enchuan filed a Motion for Transfer of Interest alleging that he acquired through deeds of assignment the rights of some of herein petitioners over Lots Nos.

Court of Appeals wherein the presentation of parol evidence was allowed to prove the existence of a written agreement containing the right to repurchase. R-1881 could have simply acknowledged the presence of public purpose for the exercise of eminent domain regardless of the survival of LahugAirport.[30] While the trial court in Civil Case No. We also held therein that Chiongbians evidence was both inadmissible and lacking in probative value The terms of the judgment are clear and unequivocal and grant title to Lot No. without any impairment of the estate or title acquired. of course. 941 through parol evidence. these meaningful statements in the body of the Decision warrant the conclusion that the expropriated properties would remain to be so until it was confirmed that Lahug Airport was no longer in operation. upon the contrary.CHIONGBIAN cannot rely on the ruling in Mactan-Cebu International Airport vs. and the public use may be abandoned. or any reversion to the former owner x x x x[28] In Mactan-Cebu International Airport Authority.that the government acquires only such rights in expropriated parcels of land as may be allowed by the character of its title over the properties If x x x land is expropriated for a particular purpose. while in the instant case we have preponderant proof as found by the trial court of the existence of the right of repurchase in favor of petitioners. In the absence of such showing. it does not take away the actual usefulness and importance of the LahugAirport: it is handling the air traffic both civilian and military. the Court will presume that the Lahug Airport will continue to be in operation (emphasis supplied). R-1881 validating our discernment that the expropriation by the predecessors of respondent was ordered under the running impression that Lahug Airport would continue in operation As for the public purpose of the expropriation proceeding. There was no condition imposed to the effect that the lot would return to CHIONGBIAN or that CHIONGBIAN had a right to repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport. either by the exercise of eminent domain or by purchase. it returns to the former owner. This inference further implies two (2) things: (a) after the Lahug Airport ceased its undertaking as such and the expropriated lots were not being used for any airport expansion project. then. must be commensurate to the facts that were established therein as distinguished from those extant in the case at bar. 941 in fee simple to the Republic of the Philippines. with the condition that when that purpose is ended or abandoned the property shall return to its former owner. particularly our ruling as regards the properties of respondent Chiongbian in MactanCebu International Airport Authority. Nonetheless the weight of their import. unconditionally. no evidence was adduced to show how soon is the Mactan Airport to be placed in operation and whether the Lahug Airport will be closed immediately thereafter. Then. 916 and 920 as between the State and their 87 . the Court of Appeals erred in holding that the evidence presented by CHIONGBIAN was admissible x x x x Aside from being inadmissible under the provisions of the Statute of Frauds. and in that case the non-user does not have the effect of defeating the title acquired by the expropriation proceedings x x x x When land has been acquired for public use in fee simple. If x x x land is expropriated for a public street and the expropriation is granted upon condition that the city can only use it for a public street. Verily. It is up to the other departments of the Government to determine said matters. the decree of expropriation gives to the entity a fee simple title. of course. then. Although Mactan Airport is being constructed. or the land may be devoted to a different use. The Court cannot substitute its judgment for those of the said departments or agencies. Chiongbian put forth inadmissible and inconclusive evidence. R1881. or municipality. then. and do not overrule them. when the purpose is terminated or abandoned the former owner reacquires the property so expropriated. unless there is some statutory provision to the contrary x x x x If. it cannot now be doubted. the trial court in its Decision chose not to do so but instead prefixed its finding of public purpose upon its understanding that Lahug Airport will continue to be in operation. however. a province. [the] testimonies are also inadmissible for being hearsay in nature x x x x[29] We adhere to the principles enunciated in Fery and in MactanCebu International Airport Authority. the rights vis--vis the expropriated Lots Nos. for to do so would unsettle as to her properties the judgment of condemnation in the eminent domain proceedings. From it aircrafts fly to Mindanao and Visayas and pass thru it on their flights to the North and Manila. the former owner retains no rights in the land. when the city abandons its use as a public street. Said case did not involve expropriation proceedings but a contract of sale x x x x To permit CHIONGBIAN to prove the existence of a compromise settlement which she claims to have entered into with the Republic of the Philippines prior to the rendition of judgment in the expropriation case would result in a modification of the judgment of a court which has long become final and executory x x x x And even assuming for the sake of argument that CHIONGBIAN could prove the existence of the alleged written agreement acknowledging her right to repurchase Lot No. respondent Chiongbian sought to enforce an alleged right of repurchase over her properties that had been expropriated in Civil Case No. of course. the land becomes the absolute property of the expropriator. Moreover. respondent MCIAA has brought to our attention a significant and telling portion in the Decision in Civil Case No. This Court did not allow her to adduce evidence of her claim. whether it be the State.

wherein this Court allowed a judgment that had become final and executory to be clarified by supplying a word which had been inadvertently omitted and which. the attendance in the case at bar of standing admissible evidence validating the claim of petitioners as well as the portions above-quoted of theDecision in the expropriation case volunteered no less than by respondent itself. petitioners would be denied the use of their properties upon a state of affairs that was not conceived nor contemplated when the expropriation was authorized. To sum up what we have said so far. If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee. a trust by virtue of law is established. Court of Appeals[33]but within the principles enunciated in Fery as mentioned earlier.former owners. De Los Angeles[34] we ruled This Court has promulgated many cases x x x wherein it was held that a judgment must not be read separately but in connection with the other portions of the decision of which it forms a part. For. et al. This is as it should be not only because the admission concerns a legal conclusion fiercely debated by the parties[32] but more so since respondent was truly the absolute owner of the realties until it was apparent that Lahug Airport had stopped doing business. On the contrary. This omission notwithstanding. 1454 of the Civil Code. Paredes. 916 and 920 does not prejudice petitioners interests..[31] Significantly. and. to get the true intent and meaning of a decision.[38] Constructive trusts are fictions of equity which are bound by no unyielding formula when they are used by courts as devices to remedy any situation in which the holder of the legal title may not in good conscience retain the beneficial interest. a resolution or ruling may and does appear in other parts of the decision and not merely in the fallo thereof x x x x The foregoing pronouncements find support in the case of Locsin. vs. Hence x x x the decision of the court below should be taken as a whole and considered in its entirety to get the true meaning and intent of any particular portion thereof x x x x Neither is this Court inclined to confine itself to a reading of the said fallo literally. if an already final judgment can still be amended to supply an omission committed through oversight. such precision is not absolutely necessary nor is it fatal to the cause of petitioners herein. If the fulfillment of the obligation is offered by the grantor when it becomes due. the provision is undoubtedly applicable. In the case at bar. et al. In Republic v. 87. must be equitably adjusted... the return or repurchase of the condemned properties of petitioners could be readily justified as the manifest legal effect or consequence of the trial courts underlying presumption that Lahug Airport will continue to be in operation when it granted the complaint for eminent domain and the airport discontinued its activities. 916 and 920. no specific portion thereof should be resorted to but the same must be considered in its entirety. in effect changed the literal import of the original phraseology x x x x This is so because. this simply means that in the construction or interpretation of an already final decision. petitioners herein.[35] We now resolve to harmonize the respective rights of the State and petitioners to the expropriated Lots Nos. he may demand the reconveyance of the property to him. the government can be compelled by petitioners to reconvey the parcels of land to them. No doubt. 916 and 920 to the government with the latter obliging itself to use the realties for the expansion of Lahug Airport. The predicament of petitioners involves a constructive trust. Mactan-Cebu International Airport Authority[36] is correct in stating that one would not find an express statement in the Decision in Civil Case No. [39] 88 . 91-92. otherwise. petitioners conveyed Lots Nos. one that is akin[37] to the implied trust referred to in Art. R-1881 to the effect that the [condemned] lot would return to [the landowner] or that [the landowner] had a right to repurchase the same if the purpose for which it was expropriated is ended or abandoned or if the property was to be used other than as the Lahug Airport. (b) the foregoing unmistakable declarations in the body of the Decision should merge with and become an intrinsic part of the fallo thereof which under the premises is clearly inadequate since thedispositive portion is not in accord with the findings as contained in the body thereof. R-1881 so as to include the statements in the body thereof afore-quoted is sanctioned by the rule that a final and executory judgment may nonetheless be clarified by reference to other portions of the decision of which it forms a part. supra. Philippine Veterans Board. takes this case away from the ambit of Mactan-Cebu International Airport Authority v. CEB-20015 for reconveyance and damages that respondent MCIAA was the absolute owner of Lots Nos. 1454 is not perfect. the fallo or dispositive portion thereof must be correlated with the body of such final decision x x x x [I]f an amendment may be allowed after a decision has already become final x x x such amendment may consist x x x either in the x x x interpretation of an ambiguous phrase therein in relation to the body of the decision which gives it life. failing to keep its bargain. the judgment portion of a decision should be interpreted and construed in harmony with the ratio decidendi thereof x x x x As stated in the case ofPolicarpio vs. in light of the discussion above. Hence. Although the symmetry between the instant case and the situation contemplated by Art. et al. In addition. the admission of petitioners during the pre-trial of Civil Case No. 63 Phil. as explained by an expert on the law of trusts: The only problem of great importance in the field of constructive trusts is to decide whether in the numerous and varying fact situations presented to the courts there is a wrongful holding of property and hence a threatened unjust enrichment of the defendant. in the first place. when supplied. and while the inclusion of this pronouncement in the judgment of condemnation would have been ideal. there should be no doubt that our present reading of the fallo of the Decision in Civil Case No.

065.[43] The rights and obligations between the constructive trustee and the beneficiary. the improvements would have to be removed without any obligation on the part of petitioners to pay any compensation to respondent MCIAA for whatever it may have tangibly introduced therein. attorney's fees and expenses of litigation. cannot be recovered. with respect to the debtor. the court will exercise its discretion in deciding what acts are required of the plaintiff-beneficiary as conditions precedent to obtaining such decree and has the obligation to reimburse the trustee the consideration received from the latter just as the plaintiffbeneficiary would if he proceeded on the theory of rescission. i. As for the improvements that respondent MCIAA may have made on Lots Nos.[40] Of course.[41] Accordingly. [45] The medium of compensation for the restitution shall be ready money or cash payable within a period of three hundred sixty five (365) days from the date that the amount to be returned by petitioners is determined with finality.In constructive trusts. 89 . When the conditions have for their purpose the extinguishment of an obligation to give. 916 and 920 and/or the latters improvements as set forth herein shall be deemed forfeited and the ownership of those parcels of land shall vest absolutely upon respondent MCIAA. or by time. (2) When the defendant's act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interests. 916 and 920. shall return to each other what they have received x x x x In case of the loss. 916 and 920 which is the natural consequence of nature and time. If after the period of three hundred sixty five (365) days or the lapse of the compromise scheme or schedule of payment such amount owed is not settled. 920 with consequential damages by way of legal interest from 16 November 1947. as the disposition of these properties is governed by existing contracts and relevant provisions of law.e. Finally.00 for attorneys fees and P15. other than judicial costs. respondent MCIAA and petitioners over Lots Nos. Petitioners must likewise pay respondent MCIAA the necessary expenses it may have incurred in sustaining the properties and the monetary value of its services in managing them to the extent that petitioners will be benefited thereby. deterioration or improvement of the thing. the right of repurchase of petitioners and the obligation of respondent MCIAA to reconvey Lots Nos. his fixed costs for improvements thereon. In other words. leasehold right of DPWH.. 916 and P9. As a matter of justice and convenience. if petitioners do not want to appropriate such improvements or respondent does not choose to sell them. i. P7. are echoed in Art. The government however may keep whatever income or fruits it may have obtained from the parcels of land. are laid down in the preceding article shall be applied to the party who is bound to return x x x x Hence.[46] The rule on awards of attorneys fees and litigation expenses is found in Art. in this case. petitioners as if they were plaintiff-beneficiaries of a constructive trust must restore to respondent MCIAA what they received as just compensation for the expropriation of Lots Nos. as in the present case. 916 and 920. except: (1) When exemplary damages are awarded. we delete the award of P60... Petitioners need not also pay for improvements introduced by third parties. the wronged party seeking the aid of a court of equity in establishing a constructive trust must himself do equity. the provisions which. unless the parties herein stipulate and agree upon a different scheme. the improvement shall inure to the benefit of the creditor x x x. 2208 of the Civil Code In the absence of stipulation. upon the fulfillment of said conditions. the trustee may also be paid the necessary expenses he may have incurred in sustaining the property.e. R-1881. petitioners must pay respondent their prevailing free market price in case petitioners opt to buy them and respondent decides to sell. 916 and 920 in Civil Case No. albeit the decision to resist the claim is erroneous.000. and the monetary value of his services in managing the property to the extent that plaintiff-beneficiary will secure a benefit from his acts.e. 1189 of the Civil Code. In return.291. Consequently. medium or schedule of payment. 1190 of the Civil Code. It is not sound public policy to set a premium upon the right to litigate where such right is exercised in good faith. [42] In the good judgment of the court. 916 and 920 to petitioners who shall hold the same subject to existing liens thereon. if any. the creditor being the person who stands to receive something as a result of the process of restitution. respondent MCIAA as representative of the State is obliged to reconvey Lots Nos.00 for Lot No. the law considers the fruits and interests as the equivalent of each other. the arrangement is temporary and passive in which the trustees sole duty is to transfer the title and possession over the property to the plaintiff-beneficiary.000.00 for Lot No. i.00 for litigation expenses in favor of petitioners as decreed in the assailed Decision of 12 April 1999 of the trial court. DPWH. petitioners as creditors do not have to settle as part of the process of restitution the appreciation in value of Lots Nos. in the same way that petitioners need not account for the interests that the amounts they received as just compensation may have earned in the meantime. the parties. If the thing is improved by its nature. [44] Under Art.

(8) In actions for indemnity employer's liability laws.097 square meters in Lahug. the trial court cannot base its award on any of the exceptions enumerated in Art. laborers and skilled workers. Corazon Rotea. Rosalinda R. Petitioners must likewise PAY respondent MCIAA the necessary expenses that the latter may have incurred in sustaining the properties and the monetary value of its services in managing the properties to the extent that petitioners will secure a benefit from such acts. CV No.. Edjec. Maria Luisa Rotea-Villegas. The exercise of judicial discretion in the award of attorneys fees under Art. (c) ORDERING respondent MCIAA TO CONVEY to petitioners the improvements it may have built on Lots Nos. namely: Esperanza R. Alfredo R. and Rolando R. (11) In any other case where the court deems it just and equitable that attorney's fees and expenses of litigation should be recovered. 916 with an area of 2. In all cases. Evidence must be presented to the court as to the facts and circumstances constituting the alleged bad faith. DPWH. (7) In actions for the recovery of wages of household helpers. 2208. or if respondent does not choose to sell them. otherwise. Rotea.291. which shall be governed by existing contracts and relevant provisions of law. neither does the trial court make any finding to that effect in its appealed Decision. Respondent MCIAA however may keep whatever income or fruits it may have obtained from the parcels of land.[47] Art. Bernarda R.Bernarda R. Vda De Limbaga. par.355 square meters and Lot No. legal or equitable justification that would bring the case within the exception and justify the grant of such award. R-1881.065. 2208. The records of the instant case do not disclose any proof presented by petitioners to substantiate that the actuations of respondent MCIAA were clearly unfounded or purely for the purpose of harassment. In the case at bar. if any. As noted in Mirasol v. namely: Lizbeth Rotea and Elepeth Rotea. this exception must be understood to mean those where the defenses are so untenable as to amount to gross and evident bad faith. in the same way that petitioners need not account for the interests that the amounts they received as just compensation may have earned in the meantime. i. Lot No. (11). 2208. considering the established absence of any stipulation regarding attorneys fees. otherwise. Arbon. the award of attorneys fees is not justified where there is no proof other than the bare statement of harassment that a party to be so adjudged had acted in bad faith. Caridad Rotea. under workmen's compensation and (9) In a separate civil action to recover civil liability arising from a crime. (4). (6) In actions for legal support. (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff's valid and demandable claim. Rotea. i. 19 of Cebu City dated 12 April 1999 in Civil Case No. demands a factual. Elia R. Rotea. Rotea. The Decision of the Court of Appeals in CA-G. 90 . Arquisola.R. represented by his heir Rolando R. (b) ORDERING petitioner Heirs of Timoteo Moreno and Maria Rotea TO PAY respondent MCIAA what the former received as just compensation for the expropriation of Lots Nos.00 for Lot No. if petitioners do not want to appropriate such improvements. 920 consisting of 3. the instant Petition for Review is GRANTED. par. with all the improvements thereon evolving through nature or time.. 916 and P9. The Decision of RTC-Br. P7. but excluding those that were introduced by third parties. CEB-20015 is MODIFIED IN PART by (a) ORDERING respondent Mactan-Cebu International Airport Authority (MCIAA) TO RECONVEY to petitioner Heirs of Timoteo Moreno and Maria Rotea. represented by his heirs. Virginia R. Luis Rotea.00 for Lot No. Ebora.e. the attorney's fees and expenses of litigation must be reasonable. (4) In case of a clearly unfounded civil action or proceeding against the plaintiff.(3) In criminal cases of malicious prosecution against the plaintiff. respondent MCIAASHALL REMOVE these improvements WITHOUT ANY OBLIGATION on the part of petitioners to pay any compensation to respondent MCIAA for them. 2208 intends to retain the award of attorneys fees as the exception in our law and the general rule remains that attorneys fees are not recoverable in the absence of a stipulation thereto. Ruby C.e. Rotea Jr.Cebu City. (10) When at least double judicial costs are awarded. 916 and 920.. DeRenacia. Suela. allows attorneys fees in cases of clearly unfounded civil actions. WHEREFORE. Fe R. in which case petitioners SHALL PAY for these improvements at the prevailing free market price. represented by his heir JenniferRotea. Angeles Vda. While Art. De la Cruz. 920 with consequential damages by way of legal interest from 16 November 1947. Jorge Rotea. 64456 dated 20 December 2001 and its Resolution of 28 November 2002 denying reconsideration of the Decision are REVERSED and SET ASIDE. 916 and 920 in Civil Case No.

00 for litigation expenses against respondent MCIAA and in favor of petitioners. if any and desired to be bought and sold by the parties. 19 of Cebu City for purposes of determining the amount of compensation for Lots Nos. unless the parties herein stipulate a different scheme or schedule of payment. if any and desired to be bought and sold by the parties. Austria-Martinez. 916 and 920 and/or the improvements shall be DEEMED FORFEITED and the ownership of those parcels of land shall VEST ABSOLUTELY upon respondent MCIAA. in ready money or cash PAYABLE within a period of three hundred sixty five (365) days from the date that the amount under letter (b) above is determined with finality. after the period of three hundred sixty five (365) days or the lapse of the compromise scheme or schedule of payment and the amount so payable is not settled. securing the immediate execution of this Decision under the premises.. (e) REMANDING the instant case to RTC-Br.000. JJ. and Tinga. the right of repurchase of petitioners and the obligation of respondent MCIAA to so reconvey Lots Nos. and (g) DELETING the award of P60. Callejo. as well as the prevailing free market price of the improvements built thereon by respondent MCIAA. Quisumbing. (f) ORDERING petitioners to respect the right of the Department of Public Works and Highways to its lease contract until the expiration of the lease period. Enchuan on his allegation that he acquired through deeds of assignment the rights of some of herein petitioners over Lots Nos. 91 .000. 916 and 920 to be paid by petitioners as mandated in letter (b) hereof. 916 and 920. This Decision is without prejudice to the claim of intervenor one Richard E. SO ORDERED. No costs. 916 and 920. concur. and in general. and the value of the prevailing free market price of the improvements built thereon by respondent MCIAA. otherwise.(d) ORDERING petitioners TO PAY the amount so determined under letter (b) of this dispositive portion as consideration for the reconveyance of Lots Nos.00 for attorneys fees and P15.

Subic. Zambales and covered by Original Certificate of Title (OCT) No.x DECISION TINGA. who are the descendants of Pablo Pascua (Pablo). and ETANG P. TEPOL (by and through ELENA T.R.* P. T-8242. The appellate court denied petitioners motion for reconsideration. YUMUL and VICTORIA Chairperson. G. T-10863. (Cipriano). Respondents. . No. Branch 73[4] which granted the motion to dismiss filed by Guaranteed Homes. (petitioner). V. HILARIA G. The factual antecedents are as follows: Respondents.. 2009 PASCUA. (EMILIA V. 171531 Petitioner.Present: HEIRS OF MARIA P.R.: filed a complaint seeking reconveyance of a parcel of land with an area of 23. LEONORA P. T-8241. and the Deed of Sale with Mortgage [12] between spouses Albino Rodolfo and Fabia Rodolfo (spouses Rodolfo) and petitioner.[6] OCT No.7229 hectares situated in Cabitaugan. VALDEZ. J.[10] the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales[11] executed by Cipriano Pascua. QUISUMBING. 404[7] was attached as one of the annexes of respondents complaint. DELA CRUZ (by and through ALFONSO G. TUGADE. [5] In the alternative. 67462. TUGADE (ILUMINADA and CARPIO MORALES. [8] TCT No. JR. MOLINO). 92 . GATMIN (LUDIVINA BRION. G. RIVAS and ELESIO TEPOL. COBERO) Promulgated: and SIONY G.). SECOND DIVISION GUARANTEED HOMES. AS HEIRS OF DECEDENT PABLO January 30. JJ. HEIRS OF SEVERINA CORONA.versus . The Court of Appeals reversed the 12 November 1999 Order of the Regional Trial Court (RTC) of Olongapo City. COBERO and ALFREDO G. INC.This is a petition for review [1] under Rule 45 of the Rules of Court of the Court of Appeals Decision dated 22 March 2005[2] and Resolution dated 9 February 2006[3] in CA-G. x ------------------------------------------------------------------------------------------------. Respondents also attached copies of the following documents as integral parts of their complaint: Transfer Certificate of Title (TCT) No. J. It contained several annotations in the memorandum of encumbrances which showed that the property had already been sold by Pablo during his lifetime to Alejandria Marquinez and Restituto Morales..[9] TCT No. the respondents prayed that damages be awarded in their favor. HEIRS OF TINGA. Sr. 404 in the name of Pablo. Inc. DELA CRUZ). CV No.

[14] On 13 February 1967. They also claimed that respondents have no cause of action against the It was further averred in the complaint that Jorge Pascua. Cipriano executed a innocent purchaser for value. TCT No. the heirs of Cipriano filed an answer to the complaint in which they denied knowledge of the existence of the extrajudicial settlement allegedly executed by Cipriano and averred that Respondents likewise averred that on the following day 14 February 1967.[20] The Register of Deeds and the National Treasurer filed. [17] However.In their complaint.[18] Subsequently.[25] 404. on 31 October 1969. [22] The trial court held that petitioner was already the owner of the land. T-10863 in favor of petitioner as early as 1969. through the Office of the Solicitor General.[15] wherein he declared himself as the only heir of Pablo and confirmed the sales made by the decedent during his lifetime.[13] respondents alleged that Pablo died intestate having elapsed from the issuance of TCT No. Branch 75. as they could have recovered the property had it not been for their inaction for over 28 years.[24] without OCT No. did not execute any document transferring ownership of the property. Assurance Fund since they were not actually deprived of ownership over the property. Sr. more than 28 years doctrine that an action to quiet title prescribes where the plaintiff is not in possession of the property. Impleaded as defendants. son of Cipriano. T-8241 was thereby cancelled. 1529 for the filing of an action against the Assurance Fund had long prescribed since the transfer of ownership over the property was registered through the issuance of TCT No. for the issuance of a new owners duplicate of OCT No. and that the complaint states no cause of action as it is an was the deceased Cipriano. Confirmation of Sales.. T-10863 up to the filing of the sometime in June 1945 and was survived by his four children. one of whom complaint. T-10863[19] was issued in the name of petitioner. TCT No. [26] Noting that respondents had never claimed nor established that they have been in possession of the property and that they did not present any evidence to show that petitioner has not been in possession of the property either. T-8241 was not signed by the Register of Deeds. T-8241[16] was issued in the name of Cipriano the latter. TCT No. docketed as Other Case No. [21] The RTC denied the petition. an answer averring that the six (6)-year period fixed in Section 102 of Presidential Decree (P. 93 . T-8242 was issued in the name of the spouses Rodolfo and TCT No. Consequently. T-8242 was cancelled and TCT No. noting that the failure to annotate the subsequent transfer of the property to it at the back of OCT No. filed on 24 January 1997 a petition before the RTC of Olongapo City. The RTC granted petitioners motion to dismiss. 404 did not affect its title to the property. On the same day.D. the spouses Rodolfo sold the disputed property to petitioner by virtue of a Deed of Sale with Mortgage. including the alleged sale of the disputed property to spouses Rodolfo. during his lifetime. 404 having been cancelled. on 5 November 1969.) No. the RTC applied the Petitioner filed a motion to dismiss [23] the complaint on the grounds that the action is barred by the Statute of Limitations. it having relied on the clean title of the document denominated as Extrajudicial Settlement of a Sole Heir and spouses Rodolfo. TCT No. 04-0-97.

[28] In ordering the The trial court found that the complaint per its allegations reinstatement of the complaint.8242 respondents complaint. [27] 94 . T-10863 on 5 November 1969 as of the filing property as a number of the Pascua heirs either had been (still are) in of the complaint on 21 November 1997. the trial court held that the action for was sufficiently alleged in the complaint which stated that neither reconveyance had already prescribed with the lapse of more than 28 years petitioner nor the Rodolfo spouses ever had possession of the disputed from the issuance of TCT No. sufficient to put it into inquiry. the present petition for review.D. the appellate court ruled that the presented a case of implied or constructive trust on the part of Cipriano averments in respondents complaint before the RTC make out a case for who had inaccurately claimed to be the sole heir of Pablo in the deed of quieting of title which has not prescribed. Respondents did not have to extrajudicial settlement of estate which led to the issuance of TCT No. T- prove possession over the property since petitioner as the movant in a 8241 in his favor. in the name of spouses Rodolfo. challenged TCT No. T. the Court of Appeals added. property may be barred from recovering possession of property by virtue of laches. the RTC held that the claim against it had granting of the motion to dismiss and conversely the tenability of the Court long prescribed since Section 102 of P. respondents appealed to the Court of Appeals. Undaunted. laches had not The RTC added that it is an enshrined rule that even a registered owner of set in.The Court of Appeals reversed the RTCs order.[29] By the same token. period within which a plaintiff may file an action against the fund and in this case the period should be counted from the time of the issuance of the The petition is meritorious. No. 1529 provides for a six-year of Appeals reversal of the RTCs ruling. Petitioner is not obliged to go beyond the title considering that there were no circumstances surrounding the sale Hence. The sole issue before this Court revolves around the propriety of the RTCs Concerning the Assurance Fund. As the prescriptive period for reconveyance of a motion to dismiss hypothetically admitted the truth of the allegations in fraudulently registered real property is ten (10) years reckoned from the the complaint. continuous and adverse possession thereof or had been enjoying (still are enjoying) the use thereof. T-10863 on 5 November 1969and thus expired in 1975. The appellate court found that possession over the property date of the issuance of the title. actual. The appellate court further held that the ruling of the RTC that petitioner is an innocent purchaser for value is contrary to the allegations in The RTC further held that petitioner had the right to rely on TCT No.

or if documentary evidence admitted by stipulation discloses facts sufficient to defeat the claim. other pleadings submitted by the parties should be considered in deciding whether or not the complaint should be dismissed for lack of cause of action. who were petitioners The factual allegations in respondents complaint should be considered in tandem with the statements and inscriptions on the documents attached to it as annexes or integral parts. or any circumstance from which it could reasonably be inferred that petitioner had any actual knowledge of facts that would impel it to make further inquiry into the title of the spouses Rodolfo. [32] Likewise. the purchaser is not required to explore farther than what the Torrens title upon its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. For the purpose. admitting the facts alleged. the motion does not admit allegations of which the court will take judicial notice are not true. however. nor to facts inadmissible in evidence. the Court held that in addition to the complaint. [33] For while the court must accept as true all well pleaded facts in the complaint. nor does the rule apply to legally impossible facts. [37] 95 . the parties presented documentary evidence. The public shall then be denied of its foremost motivation for respecting In the case at bar.It is well-settled that to sustain a dismissal on the ground that the complaint states no cause of action. it follows that where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of the property. the business dismiss. is limited only to all material and relevant facts which Firstly. or any encumbrance thereon. community stands to be inconvenienced and prejudiced immeasurably.[31] 8242 in the name of the spouses Rodolfo. At the hearing. the trial court conducted a hearing on the motion to and observing theTorrens system of registration. the efficacy and conclusiveness of the certificate of title which the Torrens system seeks to insure would entirely be futile and nugatory. but only has to rely on. If the rule were otherwise. admission. In a number of cases. the court could render a valid judgment allegations and documentary annexes of the complaint as well as the upon exhibits offered at the hearing of the motion to dismiss. Since "the act of registration is the operative act to convey or affect the land insofar as third persons are concerned. nor to facts which appear by record or document included in the pleadings to be unfounded. the insufficiency of the cause of action Among the documents marked and offered in evidence are the annexes of the complaint. the title of his predecessor-ininterest. other facts not alleged in the complaint may be considered where the motion to dismiss was heard with the submission of evidence. the motion to dismiss must conclusion is that respondents complaint does not state a cause of action hypothetically admit the truth of the facts alleged in the complaint. In the end. [30] The against petitioner. and the test of the sufficiency of the facts alleged in the complaint to constitute a cause of action is whether Based on the standards set by this Court in relation to the factual or not.[35] must appear on the face of the complaint. the complaint does not allege any defect with TCT No. the inescapable the same in accordance with the prayer of the complaint. T- are well pleaded in the complaint. [34] predecessors-in-interest.[36] It is basic that a person dealing with registered property need not go beyond.

nevertheless. The presumption is further bolstered by the fact that TCT No. The purchaser is not bound by registered and that OCT No. lien. hour. and while it remained that way. shall hold the same free from all encumbrances except those noted on said certificate and any of the following encumbrances which may be subsisting. while the Extrajudicial Settlement of a Sole Heir and time of registration. [39] And one such instance is where the Register of Deeds Soliman Achacoso. T. attachment. is not binding on such other heirs. filed or Even assuming arguendo that the extrajudicial settlement was a entered in the Office of the Register of Deeds of the province or city where forgery. and minute of reception of all instruments. lease. which provides that: SEC. the Court still has to uphold the title of petitioner. Each register of deeds shall keep an entry book in which he shall enter in the order of their reception all deeds and other voluntary instruments. 44. The alleged non-signature by the may become the root of a valid title. 56. This is in compliance with Section 56 of Act No. For then. [41] the applicable law at the Secondly. They shall be regarded as registered from the time so noted.8242 and issued both titles on the to the forger. per Entry No. 404 was conveys no title. and all copies of writs and other process filed with him relating to registered land. day. in the order in which they are received. namely: xxxx Sec. There is a presumption of regularity in the performance of sold to an innocent purchaser. T-8241 since he signed TCT No. It is enough that petitioner had examined the The Court cannot give credence to respondents claims that the latest certificate of title which in this case was issued in the name of the Extrajudicial Settlement of a Sole Heir and Confirmation of Sales was not immediate transferor. there are instances when such a fraudulent document expressly cancelled by TCT No. mortgage. He shall note in such book the year. Every conveyance. the land was subsequently same day. upon what appeared in the certificate. the spouses Rodolfo. . order. month. [38] settlement was recorded on 14 February 1967. 404 was not cancelled by the Register of the original certificate but only by the certificate of title of the person from Deeds. if registered. 496. it has operative effect under Section 44 of the Property Registration Decree. the vendee had the right to rely official duty. judgment. 18590. The Register of Deeds of Zambales certified that the extrajudicial whom he had purchased the property.[40] T-8241 was certified to be on file with the Registry of Deeds and registered in the name of Cipriano. T-8241. [Emphasis supplied] Registration in the public registry is notice to the whole world. The case law is 96 . OCT No. and every subsequent purchaser of registered land taking a certificate of title for value and in good faith.that although generally a forged or fraudulent deed is a nullity and Contrary to the assertion of respondents. which provides that: Confirmation of Sales executed by Cipriano alone despite the existence of the other heirs of Pablo. Statutory Liens Affecting Title. and the memorandum of each instrument when made on the certificate of title to which it refers shall bear the same date. does not affect the validity of TCT certificate of title was already transferred from the name of the true owner No. Every registered owner receiving a certificate of title in pursuance of a decree of registration. instrument or entry affecting registered land shall be.

by force of law. SO ORDERED. No. [48] The legal relationship between Cipriano and the other heirs of Pablo is governed by Article 1456 of the THIRD DIVISION 97 . considered a trustee of an implied trust for the benefit of the person from whom the property comes.D. implied or constructive.[42] fraud. no cause of action for cancellation of which ownership is based. by which means he can maintain control and. admission of inferences or conclusions drawn therefrom. nor or matters conclusions of evidence. a rule. hence. CV No. nor mere inferences facts not stated. The decision of the Court of Appeals in CA-G. Branch 73 in Civil Case No. Respondents have no title From the above discussion. The other heirs of Pablo should have filed an action for reconveyance based on implied or constructive trust within ten (10) years from the date of registration of the deed or the date of the issuance of the certificate of title over the property. It is the evidence of the right of the owner or title will lie against it. which in this case was in and relevant facts well pleaded does not extend to render a demurrer an 1967. [49] The RTC was correct in granting petitioners motion the extent of his interest. the person obtaining it is. Even assuming arguendothat they are that the occupants or possessors are others not defendant Spouses entitled to claim against the Assurance Fund. from nor surplusage and irrelevant matters. The 12 November 1999Order of the Regional Trial Court of Olongapo City. Thirdly. Section 101 of P. nor conclusions of law. 67462 is REVERSED and SET ASIDE. as to dismiss. even if alleged in the pleading. 432-097 is REINSTATED. filing or entering. there is no question that petitioner is an to anchor their complaint on. damage or deprivation of any right or Moreover. respondents cannot make out a case for quieting of title since OCT No.the land to which it relates lies. 1529 clearly provides that the Assurance [44] Fund shall not be liable for any loss.R. be constructive notice to all persons from Civil Code which provides that if a property is acquired through mistake or the time of such registering. They merely alleged express. the petition is GRANTED.[47] WHEREFORE. Lastly. there is nothing in the complaint which specified that interest in land which may have been caused by a breach of trust. assert right to exclusive possession and enjoyment of the property. the respondents claim has Rodolfo[45] who could be anybody. The admission of the truth of material time the right to bring such action first occurred. [43] Title to real property refers to that upon innocent purchaser for value. and that the property is in actual already prescribed since any action for compensation against the possession of a number of the Pascua heirs [46] who could either be the Assurance Fund must be brought within a period of six (6) years from the respondents or the heirs of Cipriano. whether the respondents were in possession of the property. 404 had already been cancelled. respondents claim against the Assurance Fund also cannot prosper.

ERIBERTO AND VIRGILIO SANTOS. in representation of the deceased siblings of Maximino. Celso C. dated 28 September 1986. G. No. FUGURACION MEDALLE and MERCEDES LAGBAS.. On 19 May 2006. namely: ESTELA.. petitioners filed a Rejoinder[9] to the respondents Reply and Supplemental Reply on 5 July 2006. consisting of her surviving sister. The facts of the case.R. dated 31 August 2001. ANITA TRASMONTE. J. on the other hand.... and the Complaint for partition..... BRIONES... Donata instituted intestate proceedings to settle her husbands estate with the Cebu City Court of First Instance (CFI).. Atty. HEIRS OF MAXIMINO R. de Briones. through counsel.... Rizalinas daughter.. in representation of her two other sisters who had also passed away. February 5. On 8 July 1952. of the Canto Brioso Arnedo Law Office entered his appearance as collaborating counsel for the respondents. When Maximino died on 1 May 1952.. ANA SANTOS CULTURA.-x RESOLUTION xxxx CHICO-NAZARIO. ELVIRA SANTOS INOCENTES. Petitioners. ruling in favor petitioners.. Promulgated: Respondents. [10] are as follows Petitioners are the heirs of the late Donata OrtizBriones (Donata). the assailed Decision of the Court of Appeals in CA-GR CV No. designated as Special Proceedings No. as recounted in the Decision. 55194. Brioso... Chairperson... ERNESTO MENDOZA. 14th Judicial District..versus- AUSTRIA-MARTINEZ. CRESENCIA BRIONES.. SR. She submitted an 98 .. The dispositive portion[2] reads as follows: of the Maximino was married to Donata but their union did not produce any children.. a Reply[7] and Supplemental Reply[8] to the petitioners Opposition to respondents Motion for Reconsideration. and CHICO-NAZARIO. is hereby REVERSED and SET ASIDE.[6] Atty... Rizalina Ortiz-Aguila (Rizalina). annulment.. RIZALINA SANTOS. are the heirs of the late Maximino Briones (Maximino).. namely: SILVERIO S.. PETRA BRIONES. CEB-5794 is hereby DISMISSED. ADOLFO MENDOZA and PACITA MENDOZA. respectively.... J. 928-R. Respondents. JJ. JR. filed an Opposition to Respondents Motion for Reconsideration. case. a Motion for Reconsideration [3] of the foregoing Decision was filed by Atty. Jr.. petitioners Erlinda Pilapil and the other co-heirs of Donata Ortiz Vda... Briones.. and recovery of possession filed by the heirs of Maximino in Civil Case No. [4] to which the respondents filed a Rejoinder[5] on 23 May 2006. CIRILITA FORTUNA. On 10 May 2006.. affirming the Decision of the Cebu City RTC in Civil Case No. E rlinda Pilapil(Erlinda)..: On 10 March 2006. and the other nephews and nieces of Donata. Thereafter.. heirs ofMaximino R. BRIONES..* CALLEJO. Reales of the Reales Law Office on behalf of the respondents.... 150175 Present: YNARES-SANTIAGO. and grandnephews and grandnieces.. ... Amador F. 2007 x. Brioso then filed on 11 June 2006 and 16 June 2006. BONIFACIO CABAHUG. composed of his nephews and nieces.. Finally.. this Court promulgated its Decision [1] in the above-entitled IN VIEW OF THE FOREGOING. CEB-5794.ERLINDA PILAPIL and HEIRS OF DONATA ORTIZ BRIONES... the CFI issued Letters of Administration appointing Donata as the administratrix of Maximinos estate.

annulment. dated 2 October 1952. and by virtue thereof. among other things. Silverio Briones (Silverio). the following parcels of land x x x. covered by TCTs No. They later filed an Amended Complaint. The Court of Appeals. the RTC rendered its Decision. on 11 December 1992.Inventory of Maximinos properties. were appointed by the RTC as administrators of Donatas intestate estate. and as far as this Petition is concerned. now in her name. On 21 January 1985. belonging to the 99 . xxxx Unsatisfied with the afore-quoted Decision of the Court of Appeals. x x x. But then. annulment. Erlinda. Controversy arose among Donatas heirs when Erlinda claimed exclusive ownership of three parcels of land. in breach of trust. 21544. dated 8 April 1986. On 3 March 1987. a nephew of Maximino. This Court summed up its findings. reversing the Decisions of the Court of Appeals and the Regional Trial Court (RTC). They alleged that Donata. Gregorio filed with the RTC a Motion to Set Aside the Order. 21545. in favor of the heirs of Maximino x x x. the heirs of Donata filed the present Petition. 21545. x x x. This Court. based on two Deeds of Donation. instituted with the RTC a petition for the administration of the intestate estate of Donata. and 58684. The other heirs of Donata opposed Erlindas claim. Donata had the said CFI Order recorded in the Primary Entry Book of the Register of Deeds. affirmed the RTC Decision. xxxx x x x[T]he RTC declared that the heirs of Maximino were entitled to of the real properties covered by TCTs No. through fraud and misrepresentation. Donata died on 1 November 1977. including Erlinda. CEB-5794. the heirs of Maximino filed a Complaint with the RTC against the heirs of Donata for the partition. promulgated on 31 August 2001. CEB-5794. xxxx The CFI would subsequently issue an Order. succeeded in registering in her name the real properties belonging to the intestate estate of Maximino. dated 5 December 1985. appear to be on the same side. this Court found the Petition meritorious and.[11] thus In summary. and recovery of possession of real property. The RTC also issued an Order. awarding ownership of the aforementioned real properties to Donata. The heirs of Donata appealed the RTC Decision. Silverios Letters of Administration for the intestate estate of Maximino was subsequently set aside by the RTC. Erlinda and her husband. claiming that the said properties were already under his and his wifes administration as part of the intestate estate of Donata. which included. docketed as Civil Case No. dismissed the Complaint for partition. and 58684. to the Court of Appeals. through fraud. and recovery of possession of real property filed by the heirs of Maximino in Civil Case No. 21542. xxxx After trial in due course. allowing Silverio to collect rentals from Maximinos properties. as administratrix of the estate ofMaximino. which was initially granted by the RTC. dated 5 December 1985. all the heirs of Donata. 21546. was no longer informed of the subsequent development in the intestate proceedings of the estate of Donata. 21542. In its Decision. received new TCTs. It also orderedErlinda to reconvey to the heirs of Maximino the said properties and to render an accounting of the fruits thereof. Gregorio. to have the real properties. On 27 June 1960. the heirs of Maximino failed to prove by clear and convincing evidence that Donata managed. dated 10 March 2006. allegedly executed in her favor by her aunt Donata. however. and without the knowledge of the other heirs. in its Decision. 21543. one of Donatas nieces. filed a Petition with the RTC for Letters of Administration for the intestate estate of Maximino. covering the said properties. both dated 15 September 1977. dated 8 April 1986.

and exclusive heir of Maximino. not through fraud or mistake. Donata was able to register the real properties in her name. Hence. successors-in-interest. issued by the CFI in Special Proceedings No. which produced no legal effect. There being no basis for the Complaint of the heirs of Maximino in Civil Case No. vested virtue et al. misrepresentation of Donata that she was Maximinos sole heir. presumed to be fairly and regularly issued. respondents asseverate that. dated 2 October 1952. [i]f property is that Donata merely possessed and held the properties in trust for her acquired through mistake or fraud. held in trust for their benefit by Donata. Article 1456 of the New Civil Code. the person obtaining it is. by force of co-heirs/owners. dated 10 March 2006. it does not find any new evidence or argument that would adequately justify a change in its previous position. by relying on certain procedural presumptions in its Decision. making Donata the singular owner of the entire estate of Maximino. this Court ruled in the negative. no implied trust was established between Donata and the heirs of Maximino under Article 1456 of the New Civil Code. dated 2 October 1952. is imprescriptible. including the real properties. the existence of any trust relations properties moment between petitioners and respondents shall be examined in the light of of Maximinos death and which they could no longer be deprived of. 928-R. the same should have been dismissed. CEB-5794. that respondents right to succession to the disputed As this Court declared in its Decision. In the absence of fraud. from of this v. and eventually.[14] While this Court is persuaded to reexamine and clarify some points Respondents move for the reconsideration of the Decision of this Court raising still the arguments that Donata committed fraud in in its previous Decision in this case. which provides that. thus. the foremost question to be respondents action to recover title to and possession of their shares answered is still whether an implied trust under Article 1456 of the New was transmitted and in Quion v. making justice subservient to the dictates of mere procedural fiats. from whom the property comes. De the Courts Los in Maximinos estate. securing the Court of First Instance Order. dated 2 October 1952. by petitioners as the latters Civil Code had been sufficiently established in the present case. Lastly. considered a trustee of an implied trust for the benefit of the person Angeles. but pursuant to an Order. was a void order. being based on the fraudulent In the Decision. Respondents also advance a fresh contention that the CFI Order.intestate estate of Maximino. ruling law. this Court has sacrificed their substantive right to succession. hence. registered in her name. and not merely a co-owner with the other heirs of her deceased husband. It should be 100 . The CFI Order. which declared her as the sole heir of her deceased husband Maximino and authorized her to have Maximinos properties registered exclusively in On the finding of fraud her name. absolute. Claridad [13] [12] that. declared Donata as the sole. since there was insufficient evidence to establish that Donata committed fraud. or by and Sevilla.

928-R the The CFI Order. The non-presentation of the actual CFI Order was not fatal to the cause of the heirs of Donata considering that its authenticity and contents were never questioned.remembered that Donata was able to secure certificates of title to the disputed properties by virtue of the CFI Order in Special Proceedings No. ages. reproduced below presumptions of regularity and validity. but this is not surprising considering that it was issued 35 years prior to the filing by the heirs of Maximino of their Complaint in Civil Case No. x x x. contrary to the declaration by the RTC. The allegation of fraud by the heirs of Maximino did not pertain to the CFI Order. the non-presentation of the CFI Order. It was recorded in the Primary Entry Book of the Register of Deeds on 27 June 1960. 928-R had jurisdiction of the subject matter and the parties. dated 2 October 1952. this Court must presume. was acting in the lawful exercise of jurisdiction. 928-R (the proceedings she instituted to settle Maximinos intestate estate). xxxx SEC. nonetheless. and exclusive heir of Maximino. 928-R. the Petition filed by Donata for Letters of Administration in Special Proceedings No. xxxx There was totally no evidentiary basis for the foregoing pronouncements. and it could not give credence to the following statements made by the Court of Appeals in its Decision. CEB-5794 before the RTC. By reason of the foregoing provisions. 928-R. (n) That a court. In the absence of proof to the contrary. as Entry No. in the absence of any clear and convincing proof to the contrary. effectively settled the intestate estate of Maximino by declaring Donata as the sole. heirs of Donata. instituted by Donata herself. The existence of such CFI Order. 928-R. enjoy the presumption of validity pursuant to the Section 3(m) and (n) of Rule 131 of the Revised Rules of Court. does not amount to a willful suppression of evidence that would give rise to the presumption that it would be adverse to the heirs of Donata if produced. and exclusive heir of her deceased husband. It is undisputed that the said CFI Order was issued by the CFI in Special Proceedings No. 928-R before the CFI was not even referred to nor presented during the course of the trial of Civil Case No. the Court accorded to Special Proceedings No. at 1:10 p. 1714. First of all. Moreover. but to the manner or procedure by which it was issued in favor of Donata.. Reproduced below are the relevant portions[15] of the Decision At the onset. whether in the Philippines or elsewhere. CEB-5794 on 3 March 1987. which declared her as Maximinos sole heir. and to have rendered a judgment valid in every respect. The issuance by the CFI of the said Order. absolute. The petitioners. Disputable presumptions. dated 2 October 1952. to settle the intestate estate ofMaximino. It was annotated on the TCTs covering the real properties as having declaredDonata the sole. cannot be denied. but may be contradicted and overcome by other evidence: xxxx (m) That official duty has been regularly performed. How then could the Court of Appeals make a finding that Donata willfully excluded from the said Petition the names. absolute. there was also no evidence showing 101 . that the CFI in Special Proceedings No. The following presumptions are satisfactory if uncontradicted. 3. and residences of the other heirs of Maximino? Second.m. or judge acting as such. it should be emphasized that Donata was able to secure the TCTs covering the real properties belonging to the estate of Maximino by virtue of a CFI Order. as well as its conduct of the entire Special Proceedings No. were unable to present a copy of the CFI Order. issued in Special Proceedings No.

the heirs of Maximino did not propound sufficient evidence to debunk such presumption. the evidence on record. 928-R. in fact. They only made a general denial of knowledge of Special Proceedings No. The CFI Order[17] in question reads in full as ORDER It is worth noting that. Respondents only submitted a certified true copy thereof on 15 June 2006. x x x. and based on the uncontradicted testimony of Donata G. Respondents did not offer any explanation as to why they belatedly produced a copy of the said Order. annexed to their Supplemental Reply to petitioners opposition to their motion for reconsideration of this Courts Decision. 928-R. 928-R was never in issue and was.that the CFI actually failed to send notices of Special Proceedings No. Maximino Suico Briones. the latter having died without any legitimate ascendant nor descendant. one of the heirs of Maximino. that the copy submitted is a certified true copy of the said Order. admitted by the petitioners. nor any legitimate brother or sister. which included sending out of notices and requiring the presentation of proof of service of such notices. Respondents should be taken to task for springing new evidence so late into the proceedings of this case. and. 928-R to the heirs of Maximino or that it did not require presentation of proof of service of such notices. R. but merely claimed to have been fortunate enough to obtain a copy thereof from the Register of Deeds of Cebu. and that the said Order may provide new information vital to a just resolution of the xxxx present case. 1960. However. nephews or nieces. this Court is compelled to consider the same as part of Aurelias testimony deserves scant credit considering that she was not testifying on matters within her personal knowledge.[16] At the hearing of this incident today. and pursuant to the pertinent provisions of the new Civil Code of the Philippines. the Court was proceeding from an evaluation of the evidence on record. given that the existence of the CFI Order in Special Proceedings No. The only evidence on record in reference to the absence of notice of such proceedings was the testimony of Aurelia Briones (Aurelia). 928-R. and she is hereby entitled to inherit all the residue of this 102 . in its foregoing ratiocination. It should be remembered that there stands a presumption that the CFI Judge had regularly performed his duties in Special Proceedings No. The phrase I dont think is a clear indication that she is merely voicing out her opinion on how she believed her uncles and aunts would have acted had they received notice of Special Proceedings No. There was no testimony or document presented in which the heirs of Maximinocategorically denied receipt of notice from the CFI of the pendency of Special Proceedings No. dated January 5. at least until 1985. 928- This is with reference to the Motion of the Administratrix. absolute and exclusive heir of the estate of the deceased Maximino Suico Briones. Ortiz that she was the nearest surviving relative of the deceased Maximino Suico Briones at the time of the latters death. that she be declared the sole heir of her deceased husband. nobody appeared to resist the motion. Parties should present all their available evidence at the courts below so as to give the opposing party the opportunity to scrutinize and challenge such evidence during the course of the trial. which did not include an actual copy of the CFI Order in Special Proceedings No. Ortiz the sole. 928-R. the Court hereby declares the aforesaidDonata G.

estate after paying all the obligations thereof, which
properties are those contained in the Inventory, dated
October 2, 1952.
Cebu City, January 15, 1960.

deduce that the CFI Order was in fact issued on 15 January 1960 and not 2
October 1952, as earlier stated in the Decision. It was the inventory of
properties, submitted by Donata as administratrix of Maximinos intestate
estate, which was dated 2 October 1952.[18] Other than such observation,
this Court finds nothing in the CFI Order which could change its original
position in the Decision under consideration.

it

is

true

that

since

the

of the intestate proceedings instituted by Donata before the trial court. As
this Court pointed out in its earlier Decision, the manner by which the CFI

From the contents of the afore-quoted Order, this Court is able to

While

This Court cannot stress enough that the CFI Order was the result

judge conducted the proceedings enjoys the presumption of regularity, and
encompassed in such presumption is the order of publication of the notice
of the intestate proceedings. A review of the records fails to show any
allegation or concrete proof that the CFI also failed to order the publication
in newspapers of the notice of the intestate proceedings and to require
proof from Donata of compliance therewith. Neither can this Court find any
reason or explanation as to whyMaximinos siblings could have missed the
published notice of the intestate proceedings of their brother.

CFI

was

not

informed

that Maximino still had surviving siblings and so the court was not able to
order that these siblings be given personal notices of the intestate
proceedings, it should be borne in mind that the settlement of estate,
whether testate or intestate, is a proceeding in rem,[19] and that the
publication in the newspapers of the filing of the application and of the
date set for the hearing of the same, in the manner prescribed by law, is a
notice to the whole world of the existence of the proceedings and of the

In relying on the presumptions of the regular performance of
official duty and lawful exercise of jurisdiction by the CFI in rendering the
questioned Order, dated 15 January 1960, this Court is not, as counsel for
respondents allege, sacrificing the substantive right of respondents to their
share in the inheritance in favor of mere procedural fiats. There is a
rationale for the establishment of rules of procedure, as amply explained
by this Court in De Dios v. Court of Appeals[20]

hearing on the date and time indicated in the publication. The publication
requirement of the notice in newspapers is precisely for the purpose of
informing all interested parties in the estate of the deceased of the
existence of the settlement proceedings, most especially those who were
not named as heirs or creditors in the petition, regardless of whether such
omission was voluntarily or involuntarily made.

Procedural rules are designed to insure the orderly
and expeditious administration of justice by providing for a
practical system by which the parties to a litigation may be
accorded a full and fair opportunity to present their
respective positions and refute each other's submissions
under the prescribed requirements, conditions and
limitations. Adjective law is not the counterfoil of
substantive law. In fact, there is a symbiotic relationship
between them. By complying faithfully with the Rules of
Court, the bench and the bar are better able to discuss,
analyze and understand substantive rights and duties and

103

consequently to more effectively protect and enforce them.
The other alternative is judicial anarchy.

siblings, had absolutely no knowledge of the said proceedings all these
years. As established in R a m o s v. R a m o s ,[21] the degree of proof to
establish fraud in a case where the principal actors to the transaction

Thus, compliance with the procedural rules is the general rule, and

have already passed away is proof beyond reasonable doubt, to wit

abandonment thereof should only be done in the most exceptional
circumstances. The presumptions relied upon by this Court in the instant
case

are

disputable

presumptions,

which

are

satisfactory,

"x x x But length of time necessarily obscures
all human evidence; and as it thus removes from the
parties all the immediate means to verify the nature
of the original transactions, it operates by way of
presumption, in favor of innocence, and against
imputation of fraud. It would be unreasonable, after a
great length of time, to require exact proof of all the
minute circumstances of any transaction, or to expect a
satisfactory explanation of every difficulty, real or
apparent, with which it may be encumbered. The most that
can fairly be expected, in such cases, if the parties are
living, from the frailty of memory, and human infirmity, is,
that the material facts can be given with certainty to a
common intent; and, if the parties are dead, and the cases
rest in confidence, and in parol agreements, the most that
we can hope is to arrive at probable conjectures, and to
substitute general presumptions of law, for exact
knowledge. Fraud, or breach of trust, ought not
lightly to be imputed to the living; for, the legal
presumption is the other way; as to the dead, who
are not here to answer for themselves, it would be
the height of injustice and cruelty, to disturb their
ashes, and violate the sanctity of the grave, unless
the evidence of fraud be clear, beyond a reasonable
doubt (Prevost vs. Gratz, 6 Wheat. [U.S.], 481, 498).

unless

contradicted or overcome by evidence. This Court finds that the evidence
presented by respondents failed to overcome the given presumptions.
Although Donata may have alleged before the CFI that she was
her husbands sole heir, it was not established that she did so
knowingly, maliciously and in bad faith, so as for this Court to conclude
that she indeed committed fraud. This Court again brings to the fore
the delay by which respondents filed the present case, when the
principal actors involved, particularly, Donata and Maximinos siblings,
have already passed away and their lips forever sealed as to what truly
transpired between them. On the other hand, Special Proceedings No.
928-R took place when all these principal actors were still alive and
each would have been capable to act to protect his or her own right
to Maximinosestate. Letters

of

Administration

Moreover,

of Maximinos estate

even

if Donatas allegation

that

she

were issued in favor of Donata as early as 8 July 1952, and the CFI

was Maximinos sole heir does constitute fraud, it is insufficient to

Order in question was issued only on 15 January 1960.The intestate

justify abandonment of the CFI Order, dated 15 January 1960,

proceedings for the settlement of Maximinos estate were thus pending

[22]

for almost eight years, and it is the burden of the respondents to

being in rem and

establish that their parents or grandparents, Maximinos surviving

performance of official duty and lawful exercise of jurisdiction by the

considering

the

nature

the

disputable

of

intestate
presumptions

proceedings
of

the

as

regular

104

CFI in rendering the questioned Order, dated 15 January 1960, in
Special Proceedings No. 928-R.

"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" (89
C.J.S. 724). They are ordinarily subdivided into resulting
and constructive trusts (89 C.J.S. 722).

On prescription of the right to recover based on implied trust
Assuming,

for

the

sake

of

argument,

that Donatas misrepresentation constitutes fraud that would impose upon
her the implied trust provided in Article 1456 of the Civil Code, this Court
still cannot sustain respondents contention that their right to recover their
shares in Maximinos estate is imprescriptible. It is already settled in
jurisprudence that an implied trust, as opposed to an express trust, is
subject to prescription and laches.

"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).

The case of Ramos v. Ramos[23] already provides an elucidating
discourse on the matter, to wit
"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" (Art.
1441, 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. 122).

On the other hand, a constructive trust is a trust
"raised by construction of law, or arising by operation of
law." In a more restricted sense and as contradistinguished
from a resulting trust, a constructive trust is "a trust not
created by any words, either expressly or impliedly
evincing a direct intention to create a trust, but by the
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. 726-727). "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
prescribe (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

105

1968. A present reading of the Quion[24] and Sevilla[25] cases.G. 13 SCRA 80. while respondents right to inheritance was transferred or vested upon them at the 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. L-17957. That rule applies squarely to express trusts. 4895. De Guzman. 64. supra. 35. Fabian vs. Nava and Aquino. Gorricho andAguado. Diones. Henares. 1962. Compare with Mejia vs. January 29. January 30. J.] 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 ofCandelaria vs. January 30. 27 SCRA 1179.. The rule of imprescriptibility was misapplied to constructive trusts (Geronimo and Isidoro vs. L-15539. 1962. 261. Prescription may supervene in an implied trust (Buenovs. the rule is different. Sumira vs. With respect to constructive trusts. And whether the trust is resulting or constructive. 11033. 126. 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. 97 Phil. 97 Phil.J.S. Salinas vs. Bancairen vs. 12 SCRA 199. 875). the last paragraph of Article 494. Casaas vs. See Tamayo vs. Quito. Matias. 1962.G. 109 Phil. L-17957. Golfeo vs. 153. 1956. 135. De Pasion vs. Tuason. Jacinto. Levantino. 1351.Capunitan. Fabian. 4 SCRA 84). Gerona vs. 71 Phil. Zuiga. 42 Phil. or that property held in trust can be recovered by the beneficiary regardless of the lapse of time (Marabilles vs. Buencamino vs. Not being adverse. supra. Court of Appeals. The basis of the rule is that the possession of a trustee is not adverse. Santos. he does not acquire by prescription the property held in trust. 277). L-10228. Laguna vs. invoked by respondents. 63 O. M. 973. Gorricho and Aguado. 98 Phil. Fernandez and Bengzon. 1964. [Emphases supplied. 112 Phil. 100 Phil. vs. Boaga vs. Jacinto. 449-450. 50 Phil. Vistan. 37). 138. Romero. Diaz vs. 147 Phil. 566. 502-3. May 29.person in trust for the benefit of another (Sevilla vs. Jacinto vs. May 31. Claridad vs. Rosello. Grao. Caladiao vs. 10 SCRA 691). 31. February 28. 145. 4 SCRA 1221. 139. 63 O. De Guzman. 55 Phil. Prescription of the action for reconveyance of the disputed properties based on implied trust is governed by Article 1144 of the New Civil Code. 1965. Thus. 407). Magdangal. their enforcement of said right by appropriate legal action may be barred by the prescription of the action. Thus. 16 SCRA 849). G. Jacinto vs. Tuason & Co. 403. 63 O. Levantino. 11 SCRA 153. 1969. L-20449. Gerona vs. 5 SCRA 371). must be made in conjunction with and guided accordingly by the established in the afore-quoted case. supra. 1962. 100 Phil. Soler. 97. its enforcement may be barred by laches (90 C. 729. April 28. De Pasion. Compare with the rule regarding co-owners found in principles time of Maximinos death. 105 Phil. L-19060. Martinez vs. De los Angeles. 157). Civil Code. L-22587. Compare with Cuison vs. 500. 122. 105 Phil. 887-889. which reads 106 . Juan vs. 62 O. 54 Am Jur. L-19073. 74 Phil. 112 Phil. The prescriptibility of an action for reconveyance based on constructive trust is now settled (Alzona vs.G. 651. Gonzales vs. Gampona. (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. 103 Phil. May 31. Jimenez. 4 SCRA 450. Callejo. Reyes. 266.

annulment. either expressly or impliedly. Therefore. based on implied trust. 928-R.ART. The respondents filed with the RTC their Complaint for partition. (3) Upon a judgment. (2) Upon an obligation created by law. 928-R that she was Maximinos sole heir necessarily excludes recognition of some other co-owner or co-heir to the inherited properties. which requires the discouragement of stale claims for the peace of society. in this case. only on 3 March 1987. it bears to emphasize that Donata had never recognized Since an implied trust is an obligation created by law (specifically. The defense of laches. 1144. Prescription is statutory. [30] had clearly prescribed. even though respondents Complaint before the RTC in Civil Case No. The general rule is that an action for reconveyance of real property based on implied trust prescribes respondents as co-owners or co-heirs. in Special Proceedings No. Moreover. The following actions must be brought within ten years from the time the right of action accrues: (1) Upon a written contract. and recovery of possession of the disputed real properties. the action for partition among co-owners does not prescribe so long as the co-ownership is expressly or impliedly recognized. of the New Civil Code. CEB-5794 also prays for partition of the disputed properties. as provided for in Article 494. [28] Her assertion before the CFI in Special Proceedings No. While as a general rule. is also barred by laches. by Article 1456 of the New Civil Code). almost 27 years after the registration of the said properties in the name of Donata. ten years from registration and/or issuance of the title to the property. which is a question of time. the rule on non-prescription of action for partition of property owned in common does not apply to the case at bar. Donata had already unequivocally repudiated any other claim to the same. Donata was able to register and secure certificates Other than prescription of action. By virtue of the CFI Order.[27] but also because by registering the disputed properties exclusively in her name. respondents action for recovery of possession of the disputed properties Laches is defined as the failure to assert a right for an unreasonable and unexplained length of time. Consequently.[29] of title over the disputed properties in her name on 27 June 1960. which is a question of inequity in permitting a claim to be enforced. respondents right to recover possession of the disputed properties. docketed as Civil Case No. The next question now is when should the tenyear prescriptive period be reckoned from. CEB-5794. laches is equitable. then respondents had 10 years within which to bring an action for reconveyance of their shares in Maximinos properties. warranting a presumption that the party entitled to assert it has either abandoned or declined to assert it. applies independently of prescription. it does not make their action to enforce their right to the said properties imprescriptible. dated 15 January 1960. [26] not only because registration under the Torrens system is a constructive On laches as bar to recovery notice of title. 107 . This equitable defense is based upon grounds of public policy.

he must show that he is not guilty of any of the aforesaid failings. particularly the belated submission of evidence and argument of new issues. because of laches. thus. 928-R is void and.Erlinda took possession of the real properties. It actually works against the heirs of Maximino. the registration of the disputed properties in the name ofDonata pursuant to such Order was likewise void. Silverio. on 3 March 1987. and Maximinos siblings could have regularly observed the actions and behavior of Donata with regard to the said real properties. the heirs of Maximino even emphasized that Donata lived along the same street as some of the siblings ofMaximino and. in exclusion of all others.[32] On void judgment or order Respondents presented only in their Reply and Supplemental Reply to the petitioners Opposition to their Motion for Reconsideration the argument that the CFI Order. The law does not encourage laches. filed a Petition for Letters of Administration for the intestate estate of Maximino on 21 January 1985. dated 15 January 1960. it cannot have any legal effect. she failed to inform them of the CFI Order. which must have already put the heirs of Maximino on guard if they truly believed that they still had rights thereto. indifference. 108 . After Donatas death. This Court. This Court is unconvinced. which belonged to the estate of Maximino. in Special Proceedings No. This Court pointed out therein[31] that In further support of their contention of fraud by Donata. the Complaint for partition. were so obviously exercising rights of ownership over the real properties. On the contrary. in Special Proceedings No. x x x basis for barring respondents action for recovery of the disputed properties Considering the circumstances in the afore-quoted paragraphs. subsequently. yet. The heirs of Maximino knew he died on 1 May 1952. 928-R. before instituting. Some of the real properties. Consequently. however. Donata and. appreciates such information differently.Since they only lived nearby. dated [15 January 1960]. and the issuance in her name of new TCTs covering the real properties which belonged to the estate of Maximino. and continued to manage the same and collect the rental fees thereon. for a party to deserve the considerations of the courts. CEB-5794. Donata had possession of the real properties. were also located within the same area as their residences in Cebu City. They even attended his wake. It is well established that the law serves those who are vigilant and diligent and not those who sleep when the law requires them to act.This Court has already thoroughly discussed in its Decision the recovery of the real property belonging to the estate of Maximino. without any proffered reason or justification for such delay. After learning that the intestate estate of Maximino was already settled in Special Proceedings No. Maximinos siblings had ample opportunity to inquire or discuss with Donata the status of the estate of their deceased brother. respondents are consistently displaying a penchant for delayed action. It is uncontested that from the time of Maximinos death on 1 May 1952. Civil Case No. Erlinda. they waited another two years. negligence or ignorance. She managed the real properties and even collected rental fees on some of them until her own death on 1 November 1977. They did not offer any explanation as to why they had waited 33 years fromMaximinos death before one of them. annulment and as well as respondents conduct before this Court. 928-R.

. 1.. Barnes.. 111 Ill. 41 Ill. Buntin. and recovery of possession of the disputed properties. 117. thus "* * * A voidable judgment is one which. 374. Sandoval Coal and Mining Co. It neither binds nor bars any one. The parties attempting to enforce it may be responsible as trespassers. Hargis vs. 396. 399. The party against whom it is given may escape its effect as a bar or an obligation. & M. Sherrell vs. 3 Humph. 453. See also Cornell vs. 385. 440. 2 Dill. 312. Springer. Dawson and Another vs.) In the jurisprudence referred to by the respondents. Va. but all authorities agree that jurisdiction over the subjectmatter is essential to the validity of a judgment and that want of such jurisdiction renders it void and a mere nullity. 35 Tex. The purchaser at a sale by virtue of its authority finds himself without title and without redress. Morse. Martin. it will be efficacious as a claim. Hollingsworth vs. Harnden. though not a mere nullity.. It is not always easy to draw the line of demarcation between a void judgment and a voidable one. [35] It cannot be the subject of a collateral attack as is being done in this case.)[34] Distinction must be made between a void judgment and a voidable one. Johnson.. 247. 391. 7 Hill. Beverly and McBride vs. 7 Bush.. It always contains some defect which may become fatal. 418. 35.. Mobley vs.Manchester vs. CEB-5794 was one for partition. the intestate estate of Maximino. If no proceedings are ever taken against it. (Fisher vs. 414. Mintonye. [33] an order or judgment is considered void when rendered by the court without or in excess of its jurisdiction or in violation of a mandatory duty. Snyder. St. and it is not open to impeachment in any collateral action... Roberts vs. 9 Ga. voidable. sec. 3 Ind. Until that is done... or a source of title. dated 15 January 1960. dated 15 January 109 .. But unless and until it is duly annulled. but only by a proper application to have it vacated or reversed.. 259. it is attended with all the ordinary consequences of a legal judgment. Andrewsvs. If emanating from a court of general jurisdiction. Olson vs. 613.. 3 Greene [Iowa].. can only be set aside by direct action to annul and enjoin its enforcement. an estoppel.Seely vs. 7 Kan. circumstances which are not present in the case at bar. Reid. 6 Ind. Gibson. Meyer vs. 1 Paine. Foote L. 130. 29 W. 11 Ga. the said Order.. Central Bank of Georgia vs. Note that respondents Complaint before the RTC in Civil Case No. 47 Kan. 9 Ga. 55. 106 Ill. 295. Commercial Bank of Order. namely. From it no rights can be obtained. Co. Huls vs. Hence. Towns vs. Johnson vs. is liable to be made void when a person who has a right to proceed in the matter takes the proper steps to have its invalidity declared. Nunnally. Swiggart vs. * * *" The fraud and misrepresentation fostered by Donata on the CFI in Special Proceedings No. Morton vs. "A void judgment is in legal effect no judgment. 9 Smedes & M. 928-R did not deprive the trial court of jurisdiction over the subject-matter of the case. White vs. Harber. Wells. By it no rights are divested. vs. So until and unless respondents bring a direct action to nullify the CFI Order. Stowers. 47 Ill. 4 Scam. 345. it will continue throughout its life to all intents a valid sentence. 549. which already became final and executory. dated 15 January 1960. citing Campbell vs. Miller vs. All acts performed under it and all claims flowing out of it are void. Mobley. but not void on its face. 9 Ga.. 30 Ill. Goodrum. Burke. 215. it will be sustained by the ordinary presumptions of regularity. In the eye of the law it is non-existent. annulment." (Freeman on Judgments. 2 Sneed. Being worthless in itself. 32. Bagley. It carries within it the means of its own overthrow. The annulment sought in the Complaint was not that of the CFI Order. 364.. State.. but of the certificates of title over the properties issued in Donatas name. Root... Donatas fraud and misrepresentation may have rendered the CFI But it is otherwise when the judgment is void. 45. all proceedings founded upon it are equally worthless. Louis and Sandoval Coal and Mining Co. McCahan.

in Special Proceedings No. 110 . 928-R (earlier instituted by Donata for the Nonetheless. the assailed Order remains valid and binding. dated 15 January therein. 928-R. the discovery of the fraud. 1960. during the course of the RTC proceedings which they instituted for the settlement ofMaximinos estate.1960. in Special Proceedings No. and attain a favorable judgment then their right to file an action to annul the CFI Order. this Court also points out that an action to annul an order or judgment based on fraud must be brought within four years from settlement of Maximinos estate). the Motion for Reconsideration is DENIED.[36] If it is conceded that the respondents came to know of Donatas fraudulent acts only in 1985. SO ORDERED. has likewise prescribed by present time. In view of the foregoing.