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G.R. NO. 150913
FEBRUARY 20, 2003

3 parcels of unregistered land in Pangasinan were formerly owned by
the spouses Tazal who on 1 September 1957 sold them to respondents’
predecessor-in-interest, Reyes, with right to repurchase within two 2 years
from date thereof by paying to the vendee the purchase price and all
expenses incident to their reconveyance. After the sale the vendee a
retro took physical possession of the properties and paid the taxes thereon.
The otherwise inconsequential sale became controversial when 2 of the 3
parcels were again sold by Tazal in favor of petitioners’ predecessor-in-
interest Rayos without first availing of his right to repurchase the properties.
In the meantime, the conventional right of redemption in favor of spouses
Tazal expired without the right being exercised by either the Tazal spouses or
the vendee Rayos.
After the expiration of the redemption period, Tazal attempted to
repurchase the properties from Reyes by asserting that the 1 September
1957 deed of sale with right of repurchase was actually an equitable
mortgage and offering the amount of P724.00 to pay for the alleged debt.
But Reyes refused the tender of payment and vigorously claimed that their
agreement was not an equitable mortgage.3
On 9 May 1960 Francisco Tazal filed a complaint with the CFI Reyes for the
declaration of the 1 September 1957 transaction as a contract of equitable
mortgage. He also prayed for an order requiring defendant Mamerto Reyes to
accept the amount of P724.00 which he had deposited with the trial court as
full payment for his debt, and canceling the supposed mortgage on the three
(3) parcels of land with the execution of the corresponding documents of
reconveyance in his favor.
Whether or not the consignation is valid
In order that consignation may be effective the debtor must show that:
(a) there was a debt due;

(c) previous notice of the consignation had been given to the person interested in the performance of the obligation. 1606 of the Civil Code within which to exercise the right to repurchase.00 was conditional and void as it was predicated upon the argument of Tazal that he was paying a debt which he could do at any time allegedly because the 1 September 1957 transaction was a contract of equitable mortgage and not a deed of sale with right to repurchase. . petitioners failed to prove in the Civil Cases that any form of notice regarding their intention to deposit the amount of P724. to show the acceptance by the creditor of the amount deposited as full settlement of the obligation.(b) the consignation of the obligation had been made because the creditor to whom a valid tender of payment was made refused to accept it. Second. Moreover.00 with the CFI had been served upon respondents. petitioners failed. the tender of payment of P724. The failure of petitioners to comply with any of these requirements rendered the consignation ineffective. Reyes was therefore within his right to refuse the tender of payment offered by petitioners because it was conditional upon his waiver of the two (2)-year redemption period stipulated in the deed of sale with right to repurchase. (e) after the consignation had been made the person interested was notified thereof.00. the consignation as a means of payment is void. to avail of the thirty (30)-day grace period under Art. and. The latter constitutes the second notice required by law as it already concerns the actual deposit or consignation of the amount and is different from the first notice that makes known the debtor’s intention to deposit the amount. Consignation and tender of payment must not be encumbered by conditions if they are to produce the intended result of fulfilling the obligation. First. In the instant case. and as a corollary. and third. or in the alternative. a requirement missing in the instant case. The ostensible purposes of offering the amount in connection with a purported outstanding debt were to evade the stipulated redemption period in the deed of sale which had already expired when the tender of payment was made and the Civil Case was instituted. to notify respondents of the intention to deposit the amount with the court. In the instant case. to offer a valid and unconditional tender of payment. Without any announcement of the intention to resort to consignation first being made to the persons interested in the fulfillment of the obligation. This requirement is not fulfilled by the notice which could have ensued from the filing of the complaint in the civil case or the stipulation made between Tazal and Reyes regarding the consignation of P724. a declaration by the court of the validity of the consignation. (d) the amount due was placed at the disposal of the court.

petitioners cannot rely upon sheer speculation and unfounded inference to construe the Decision of the Court of First Instance as one impliedly approving the consignation of P724.000. Robes. there is no payment and the debtor is in mora and he shall be liable for the expenses and bear the risk of loss of the thing. stipulating for a downpayment of P23. The contract likewise provides for cancellation.00 in three equal installments of six months each with the first . It should be recalled that one of the requisites of consignation is the filing of the complaint by the debtor against the creditor. Mr. forfeiture of previous payments. Should the consignation be disapproved by the court and the case dismissed. much less accepted by Mamerto Reyes or his heirs.00 plus 12% interest per annum to be paid within four years from execution of the contract. expenses that petitioners had to reimburse to respondents’ predecessor-in-interest aside from the P724. Atty.00 satisfied all the requirements for validity and enforceability.930.00 with the Court of First Instance could have perfected the redemption of the three (3) parcels of land because it was not approved by the trial court. since there is no clear and preponderant evidence that the consignation of P724.It is also futile to argue that the deposit of P724. Hence it is the judgment on the complaint where the court declares that the consignation has been properly made that will release the debtor from liability. herein respondents. and since Mamerto Reyes vehemently contested the propriety of the consignation. ROMAN CATHOLIC OF MALOLOS V IAC GR 72110 NOVEMBER 16.000.00 earlier deposited by Tazal. After the expiration of the stipulated period for payment. and reconveyance of the land in question in case the private respondent would fail to complete payment within the said period. Adalia Francisco (president of the company who bought land) wrote the petitioner a formal request that her company be allowed to pay the principal amount of P100. 1990 FACTS: On July 7. the subject contract over the land in question was executed between the petitioner as vendor and the private respondent through its then president. Carlos F.00 and the balance of P100. as vendee.00 and perfecting the redemption of the three (3) parcels of land. In the instant case. 1971.

protesting the alleged refusal of the latter to accept tender of payment made by the former on the last day of the grace period. Tender of payment involves a positive and unconditional act by the obligor of offering legal tender currency as payment to the obligee for the former’s obligation and demanding that the latter accept the same.installment and the accrued interest of P24. The respondent court was therefore in error. NO. FIRST UNITED CONSTRUCTORS CORPORATION AND BLUE STAR CONSTRUCTION CORPORATION v BAYANIHAN AUTOMOTIVE CORPORATION G. Atty.00. tender of payment cannot be presumed by a mere inference from surrounding circumstances. But the private respondent demanded the execution of a deed of absolute sale over the land in question. 2014 FACTS: Petitioner First United Constructors Corporation (FUCC) and petitioner Blue Star Construction Corporation (Blue Star) were associate construction firms sharing financial resources. Atty.R. wrote a reply to the private respondent stating the refusal of his client to execute the deed of absolute sale so the petitioner cancelled the contract and considered all previous payments forfeited and the land as ipso facto reconvened. Thus. Francisco had sufficient available funds did tender payment for the said obligation. Fernandez. The private respondent wrote the petitioner requesting an extension of 30 days from said date to fully settle its account but this was still denied. Consequently.000.000. sufficiency of available funds is only affirmative of thecapacity or ability of the obligor to fulfill his part of the bargain. but granted the latter a grace period of five days from the receipt of the denial to pay the total balance of P124.00 to be paid immediately upon approval of the said request. The petitioner formally denied the said request of the private respondent. At most. Francisco wrote a letter directly addressed to the petitioner. HELD: No. ISSUE: Whether or not the finding of the IAC that Atty. equipment and technical personnel on a case-to- . 164985 JANUARY 15.

specifically the second dump truck delivered on May 27. without prejudice to the provisions of the second paragraph of article 1191. 1992 to July 8. FUCC again ordered from the respondent one unit of Isuzu Transit Mixer that was also delivered to the petitioners. the respondent learned that FUCC had ordered the payment stopped. 1992.7It is the setting up of a demand arising from the same transaction as the plaintiff claim. the respondent commenced this action for collection on April 29. Due to the refusal to pay. 1992. 1993. 1992. at his election: (1) Accept or keep the goods and set up against the seller. no other remedy can thereafter be granted. and maintain an action against the seller for damages for the breach of warranty.00 represented by the two checks. FUCC ordered from the respondent one unit of Hino Prime Mover that the respondent delivered on the same date. 1992. When the buyer has claimed and been granted a remedy in anyone of these ways. (2) Accept or keep the goods and maintain an action against the seller for damages for the breach of warranty. On September 29. (4) Rescind the contract of sale and refuse to receive the goods or if the goods have already been received. Where there is a breach of warranty by the seller. The respondent immediately demanded the full settlement of their obligation from the petitioners. the breach of warranty by way of recoupment in diminution or extinction of the price. the buyer may. return them or offer to return them to the seller and recover the price or any part thereof which has been paid. From May 27. On September 19. to abate or .case basis. (3) Refuse to accept the goods. and the balance through post-dated checks. seeking payment of the unpaid balance in the amount of P735. they ordered six units of dump trucks from the respondent. but to no avail. FUCC partially paid in cash. Instead.000. Recoupment is the act of rebating or recouping a part of a claim upon which one is sued by means of a legal or equitable right resulting from a counterclaim arising out of the same transaction. For the two purchases. and of selling the trucks to interested buyers who were mostly engaged in the construction business. Upon presentment of the checks for payment. a domestic corporation engaged in the business of importing and reconditioning used Japan-made trucks. the petitioners informed the respondent that they were withholding payment of the checks due to the breakdown of one of the dump trucks they had earlier purchased from respondent. ISSUE: Whether or not the petitioners validly exercised the right of recoupment through the withholding of payment of the unpaid balance of the purchase price of the two purchases HELD: Article 1599.

Later on. Salazar filed a complaint against BPI. The underlying premise of this provision. Templonuevo protested the purportedly unauthorized encashments and demanded from BPI the aggregate amount of the checks. Salazar was able to deposit the checks in her personal savings account with BPI and encash the same. This fact is crucial as Salazar’s entitlement to the value of the instruments is based on the assumption that she is a transferee within the contemplation of Section 49 of the NIL. A year after the last encashment. they froze her other account with them. Despite lack of knowledge and endorsement of Templonuevo. NO.50. The three checks were deposited in three different occasions over the span of eight months.reduce that claim. These checks were payable to the order of JRT Construction and Trading which was the name of Templonuevo’s business. ISSUE: Whether or not Did BPI have the authority to unilaterally withdraw from Salazar’s account the amount it has previously paid upon certain unendorsed order instrument HELD: Records show that no prior arrangement existed between Salazar and Templonuevo regarding the transfer of ownership of the checks. BPI complied with Templonuevo’s demand. Since the money could no longer be debited from the account of Salazar where she deposited the checks. 136202 JANUARY 25. CA G. 2007 FACTS: Salazar had in her possession three crossed checks with an aggregate amount of P267. however. BPI issued a cashier’s check in favor of Templonuevo for the aggregate amount and debited P267. is that a valid transfer of ownership of the negotiable instrument in question has .692.R.70 from Salazar’s account representing the aggregate amount and the bank charges for the cashier’s check. 707. Section 49 of the NIL contemplates a situation where the payee or endorsee delivers a negotiable instrument for value without endorsing it. BPI V.

1997 as security.600. issued a new post-dated check as security. Something more than mere possession is necessary to authorize payment to such possessor BOGNOT VS.00 from RRI Lending. The loan was evidenced by a promissory note and was secured by a post-dated check dated November 30.00 as renewal fee. however.taken place. RRI Lending on the other hand. 2014 FACTS: In September 1996. RRI LENDING GR NO. and the check dated July 30. in the amount of P54. Rolando Bognot applied for and obtained a loan of P500.000. He paid a renewal fee of P54. 1996. Evidence on record shows that Leonardo renewed the loan several times on a monthly basis. or of the right of one who has made payment to be discharged from liability. RRI Lending superimposed the date "June 30. 1997.00 for each renewal. 1996. payable on November 30. Leonardo purportedly paid the renewal fees and issued a post-dated check dated June 30. Consequently. the disclosure statement. Rolando’s wife. Several days before the loan’s maturity. Julieta. Transferees in this situation do not enjoy the presumption of ownership in favor of holders since they are neither payees nor endorsees of such instruments. 1997" on the promissory note to make it appear that it would mature on the said date. and executed and/or renewed the promissory note previously issued. RRI Lending sent Leonardo follow-up letters demanding . On the excuse that she needs to bring home the loan documents for the Bognot siblings’ signatures and replacement. Julieta asked the RRI Lending clerk to release to her the promissory note. Leonardo Bognot and his younger brother. Mere possession of a negotiable instrument does not in itself conclusively establish either the right of the possessor to receive payment.600. never returned these documents nor issued a new post-dated check. cancelled and returned to Leonardo the post-dated checks issued prior to their renewal. went to the respondent’s office and applied for another renewal of the loan. Julieta. She issued in favor of RRI Lending a promissory note and a check dated July 30. As had been done in the past. 180144 SEPTEMBER 24. 1997.

R. Neither did he present official receipts evidencing payment. NO.payment of the loan. Atty Bordador with the accused was for Narciso to receive the jewelry and gold items for and in behalf of Aida and for Narciso to sign the "Kasunduan at Katibayan" receipts while Aida will pay for the price later on. ISSUE: Whether or not the parties’ obligation was extinguished by payment HELD: Jurisprudence tells us that one who pleads payment has the burden of proving it. plus interest and penalty charges. Indeed. 162826 OCTOBER 14. the petitioner failed to present any evidence that RRI Lending had in fact encashed his check and applied the proceeds to the payment of the loan. Lydia knew them because they are the relatives of her husband. 2013 FACTS: Narciso and Aida Luz are brother and sister. The subject items were usually given to Narciso only upon instruction from Aida through . These demands went unheeded. In the present case. the burden rests on the defendant to prove payment. Leonardo failed to satisfactorily prove that his obligation had already been extinguished by payment. rather than on the plaintiff to prove non-payment. The usual business practice of Sps. nor any proof that the check had been dishonored. the burden of showing with legal certainty that the obligation has been discharged by payment rests on the debtor. NARCISO DEGAÑOS V PEOPLE BERSAMIN G. As the CA correctly noted. once the existence of an indebtedness is duly established by evidence.

he already made partial payments in the amount of P53. he was the agent of the complainants in the sale to others of the items. The contention of Degaños is devoid of factual and legal bases.307.00 which was contributed by his brothers and sisters who helped him and which amount was delivered by Aida to the private complainants. RTC found Narciso GUILTY beyond reasonable doubt of the crime of estafa but acquitted Luz for insufficiency of evidence. The said ledger contains a list of her supposed indebtedness to the private complainants. Co-accused Narciso categorically admitted that he is the only one who was indebted to the private complainants and out of his indebtedness.telephone calls or letters. imposing on Narciso twenty years of reclusion temporal.000. Lydia made an accounting which contained the amount of P122. Atty. Thereafter. Said business arrangement went on for quite some time since Narciso and Aida Luz had been paying religiously. Plainly. Narciso contends that his agreement with the complainants relative to the items of jewelry and gold was a sale on credit. On appeal.00 as principal and P21.00. She even asked the private complainants why they gave so many pieces of jewelry and gold bars to Narciso without her permission. Narciso. not a consignment to sell on commission basis. Jose Bordador brought a ledger to her and asked her to sign the same. She refused to sign the same because the contents thereof are not her indebtedness but that of his brother. Included in the said partial payments is the amount of P20.00 as interest. Degaños assailed his conviction ISSUES: Whether or not RTC erred in not finding that the agreement between the private complainant and accused was one of sale on credit.673. and told them that she has no participation in the transactions covered by the subject "Kasunduan at Katibayan" receipts. they sent demand letters Aida sent a letter to Lydia Bordador requesting for an accounting of her indebtedness. the transaction was a consignment under the obligation to account for the proceeds of sale. or to return the unsold items. In . As such. She did not pay the interest because the same was allegedly excessive. not a sale on credit. Based on the express terms and tenor of the Kasunduan at Katibayan. When the accused defaulted in their payment.483. HELD: Transaction was an agency. she paid the principal amount through checks. Narciso received and accepted the items under the obligation to sell them in behalf of the complainants and he would be compensated with the overprice as his commission.

Constancio then asked his brother. due to industry of Constancio. thereby converting his liability from criminal to civil. Novation did not transpire as to prevent the incipient criminal liability from arising Degaños claims that his partial payments to the complainants novated his contract with them from agency to loan. The offer was accepted by Maximo. according the first paragraph of Article 1458 of the Civil Code one of the contracting parties in a contract of sale obligates himself to transfer the ownership of and to deliver a determinate thing. 2004 FACTS: During the lifetime of Constancio Labanon. as amended. HEIRS OF LABANON V. he found it difficult to file his public land application over said lot. Homestead Application No. Constancio cultivated the said lot and introduced permanent improvements that still exist up to the present. Being of very limited educational attainment.contrast. The CA rejected the claim of Degaños. his criminal liability was extinguished is untenable Novation is not one of the grounds prescribed by the RPC for the extinguishment of criminal liability. opining that his argument that novation took place when the private complainants accepted his partial payments before the criminal information was filed in court and therefore. After which. while the other party obligates himself to pay therefor a price certain in money or its equivalent. on June 6. HEIRS OF LABANON GR 160711 AUGUST 14. the fact that the complainants later required him to make a formal proposal before the barangay authorities on the payment of the balance of his outstanding obligations confirmed that novation had occurred. Maximo Labanon who was better educated to file the corresponding public land application under the express agreement that they will divide the said lot as soon as it would be feasible for them to do so. During the time of the application it was Constancio who continued to cultivate the said lot in order to comply with the cultivation requirement set forth under Commonwealth Act 141. he settled upon a piece of alienable and disposable public agricultural land situated at Brgy. Lanao. Contrary to the contention of Narciso. on Homestead applications. Cotabato. there was no sale on credit to him because the ownership of the items did not pass to him. He insists that his failure to complete his payments prior to the filing of the complaint-affidavit by the complainants notwithstanding. 244742 (E-128802) of his brother . 1941. Kidapawan. prior to the outbreak of WWII.

thru Alberto Makilang. on November 12. Original Certificate of Title No. did cancel the same. Leopoldo Labanon. Roberto Nieto and Pancho Labanon. Recovery of Ownership.Maximo was approved with Homestead Patent No. after discovering that the defendant-heirs of Maximo Labanon were taking steps to deprive the heirs of Constancio Labanon of their ownership over the eastern portion of said lot. The document was executed to safeguard the ownership and interest of his brother Constancio Labanon. However. the parcel of land was declared for taxation purposes in the name of Alberto under TD No. Caniedo. respondents right to enforce the trust agreement can no longer be restricted nor prejudiced by prescription. On February 11. And after Maximo Labanons death. 67512. 11593 and the latter. 11593. the defendant heirs of Maximo Labanon namely. the husband of Visitacion Labanon. Maximo Labanon executed a document denominated as Assignment of Rights and Ownership. petitioners filed a complaint[5] for Specific Performance. demanded the owners copy of the certificate of title covering the aforesaid Lot to be surrendered to the Register of Deeds of Cotabato so that the ownership of the heirs of Constancio may be fully effected but the defendants refused and still continue to refuse to honor the trust agreement entered into by the deceased brothers. It must be noted that the Assignment of Rights and Ownership and Maximo Labanons Sworn Statement were executed after the Homestead Patent was applied for and eventually granted with the issuance of Homestead Patent No. Subsequently. 1991. the trust could no longer be renounced. one of the children of Constancio. Attorneys Fees and Damages with Writ of Preliminary Injunction and Prayer for Temporary Restraining Order against respondents ISSUE: Whether or not Whether or not the Trust Agreement allegedly made by Constancio Labanon and Maximo Labanon prescribed HELD: In the case at bar. After the death of Constancio Labanon. without first verifying the legality of the basis for said cancellation. thus. Eventually. the latter. 1955. Thus. Alicia L. P-14320 was issued by the Register of Deeds of Cotabato over said lot in favor of Maximo Labanon. his heirs executed an extra-judicial settlement of estate with simultaneous sale over the aforesaid eastern portion of the lot in favor of Alberto Makilang. Maximo Labanon never repudiated the express trust instituted between him and Constancio Labanon. 67512 . in March 1991. Further. caused to be cancelled from the records of the defendant Provincial Assessor of Cotabato the aforesaid TD No.

WHEREFORE. while holding the title. petitioners can no longer question the validity of the positive declaration of Maximo Labanon in the Assignment of Rights and Ownership in favor of the late Constancio Labanon. as the agreement was not impugned during the formers lifetime and the recognition of his brothers rights over the eastern portion of the lot was further affirmed and confirmed in the subsequent April 25. Petitioners as heirs of Maximo cannot disarrow the commitment made by their father with respect to the subject property since they were merely subrogated to the rights and obligations of their predecessor-in-interest. Maximo Labanon. P-14320. In addition. Lastly. Section 31. 2003 Resolution in CA-G. is evidence against the former. in relation to the property. 1942. P-14320 segregated and subdivided by the Land Management . 65617 are AFFIRMED with the modifications that the Kidapawan City. Cotabato RTC. As the old adage goes. Branch 17 is directed to have OCT No. Rule 130 of the Rules of Court is the repository of the settled precept that [w]here one derives title to property from another. CV No. the act. assigns. Evidently. Petitioners cannot now feign ignorance of such acknowledgment by their father. Maximo. 1962 Sworn Statement. that the eastern portion of the land covered by OCT No. Thus. it was the intent of Maximo Labanon to hold the title over the land in his name while recognizing Constancio Labanons equitable ownership and actual possession of the eastern portion of the land covered by OCT No. The May 8. P-14320 is owned and possessed by and rightfully belongs to Constancio Labanon and the latters heirs. and heirs. the spring cannot rise higher than its source. the heirs of Maximo Labanon are bound to the stipulations embodied in the Assignment of Rights and Ownership pursuant to Article 1371 of the Civil Code that contracts take effect between the parties.on June 6. or omission of the latter.R. They simply stepped into the shoes of their predecessor and must therefore recognize the rights of the heirs of Constancio over the eastern portion of the lot. 2003 CA Decision and October 13. declaration. petitioners have accepted the declaration made by their predecessor-in-interest. the petition is DENIED.

that same year Callejo registered his adverse claim to the land. 1955 Assignment of Rights and Ownership executed by Maximo Labanon and Constancio Labanon. including the part that was sold to Domantay. executed a public document acknowledging that his deceased parents had sold a parcel of the land to Domantay. but the court found that in 1918. When Vicente died after the sale and his widow waived her rights to the remaining portion of the property to their children Mariano and Marcos. was a “continuing and subsisting trust” until repudiated. whose surveyor went to the land in 1952 to segregate it. the two brothers applied to register the land in their name. if any. and after approval of the subdivision plan. when they had the land registered in their name. to order the Register of Deeds of Kidapawan City. the Tamayos sold a piece of land to Fernando Domantay. Tamayo v Callejo FACTS: Before 1912. In 1918 Domantay sold the land to Callejo. Costs against petitioners. the court held. An express trust. ruling out an express trust. In 1940 Mariano Tamayo sold the land to Estacio.Bureau into two (2) lots based on the terms of the February 11. the admission of the sale in a public document turned the implied trust into an express one. ISSUE: Whether or not in not holding that the respondent Aurelio Callejo's cause of action. in which case the period of prescription begins to run only from the time of repudiation. Tamayo pleaded the statute of limitations as defense. saying they inherited it from their father. Mariano Tamayo. on his behalf and that of his brother. who took possession of the land. had already prescribed HELD: . P-14320 and issue one title each to petitioners and respondents based on the said subdivision plan. Though there was no clear evidence to create a trust. Cotabato to cancel OCT No.

It is thus apparent that the Court of Appeals did not err in overruling the plea of prescription. 1952. then held by the latter. Emilia.It should be noted. until repudiated. the parcel of land of about 22. free from any lien or encumbrance thereon. 5486 in the former's name. a Chinese national and cannot own property in the Philippines. when the period of prescription had barely begun to run. made by their parents. not subject to the statute of limitations. When O Lay Kia found out. de quienes las presentare. of the tract of land previously sold by their parents to Fernando Domantay — and later conveyed by him to Aurelio Callejo may have had a constructive or implied nature. namely: On the date last mentioned.125-1/3 square meters. 1952. and that. the case at bar was filed weeks later. on November 15. its status was substantially affected on June 28. until early in June. in which event the period of prescription begins to run only from the time of the repudiation.. in view of the sale thus made by his parents. that although the trust created by the application for registration filed by Mariano and Marcos Tamayo. and the inclusion in OCT No. Issue: Whether or not there was a trust relationship between the sisters Held: Yes. at least. O lay kia bought a piece of land and had it named under her sister. cuyo titulo me comprometo a defender contra las reclamaciones . issued in their names. 1913. for the sum of P200. Express trusts are those which are created by the direct and positive acts of . as is her husband Co Cho Chit. 3 The latter did not take place. sus herederos y causa habientes por la propiedad. Emilia on the other hand sold the property to the Church without the knowledge of her sister. 1918. inter alia. "no particular words" being "required for the creation of an express trust. by the following facts.. 2612. Vicente Tamayo and Cirila Velasco. that Fernando Domantay is the absolute owner of said land. to Fernando Domantay had the effect of imparting to the aforementioned trust the — nature of an express trust — it having been created by the will of the parties. on or about September 29. But. or on June 25. had sold to Fernando Domantay. however. and stipulating. Fernando Domantay and petitioner Mariano Tamayo — the latter acting in his own behalf and on that of his brother Marcos Tamayo — executed the public instrument Exhibit I whereby Mariano Tamayo explicitly acknowledged that his deceased parents. they immediately filed a case for breach of contract.Trust relations between parties may either be express or implied. it being sufficient that a trust is clearly intended" 2 — which express trust is a "continuing and subsisting" trust. then. 1915. when Mariano Tamayo rejected Aurelio Callejo's demand that the now disputed portion be excluded from TCT No. in the case at bar." 1 This express recognition by Mariano Tamayo — on his behalf and that of his brother Marcos Tamayo — of the previous sale. he (Mariano Tamayo) "quedo responsible al susodicho Don Fernando Domantay. O’ Laco vs Co Cho Chit Facts: Emila is the half-sister of O Lay Kia who is.

They arise contrary to intention against one who. in equity and good conscience. de RIGONAN vs. there is a previous case of similar facts involving O lay kia and her brother on a different parcel of land decided in her favor. Emilia actually recognized the trust Vda. the court cited five instances that prove a trust relationship.became pro indiviso co-owners of the subject property by intestate succession.Leonardo. duress or abuse of confidence. Andres. Honorata. are deducible from the nature of the transaction as matters of intent. Apolinar. or will. 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. 2005 FACTS: The instant controversy revolves around a parcel of land located at Tuburan Sur. 159571 July 15. In this case. by fraud. No. Third.R. . or by words evidencing an intention to create a trust. his eight children -. Implied trusts are those which. Gerardo. both coming into being by operation of law. obtains or holds the legal right to property which he ought not. Fourth. When Hilarion died long before World War II. to hold. Tax Declaration No. until the sale to the church. sps O Lay Kia were in possession of all the pertinent documents of the sale from the beginning until the end of the transaction. the circumstances leading to Emilia acquiring a title to the land was dubious. by some writing or deed. Implied trusts may either be resulting or constructive trusts. and Oliva -. On the other hand. or which are super induced on the transaction by operation of law as matters of equity. constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. without being expressed. Danao City.the parties. DERECHO G. originally owned by Hilarion Derecho. 00267[5] was issued under the name Heirs of Hilarion. Agaton. Subsequently. Dolores. 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. Second. First. independently of the particular intention of the parties.

On July 16.together with her husband.[8] More than five decades passed without any controversy. five of the co-owners -. 00267.[6] Notably. it was still co-owned at the time it was conveyed to Petitioner Laude. [15] On November 10.Leonardo.[17] Petitioners did not deny the imputed fraud in the execution of the Affidavit of Adjudication.Gerardo. Apolinar. [18] They theorized that the co-ownership over the property ended when the period for redemption lapsed without any action on the part of the co- owners. respondents -. Teodoro Rigonan (the deceased husband of Petitioner Delfina vda.sold the inherited property to Francisco Lacambra. thus. he settled his obligations with the bank[13] by securing the aid of Spouses Valerio and Visminda Laude. Leandro Rigonan executed the assailed Affidavit of Adjudication in favor of his son. Lacambra. 00726 under the latters name on May 10.purchased [7] the land from Lacambra and immediately occupied it. On April 24. 1984. subject to a five-year redemption clause. They likewise maintained that the subject property had not been partitioned among the heirs. averred that the document had no bearing on their claim of ownership. Sometime in 1928. Teodoro mortgaged the subject property to the Rural Bank of Compostela of Cebu. which had long pertained to the Rigonan spouses following the 1928 conveyance from the absolute owner. two years after the period for redemption expired.[19] Therefore. On April 5. 1984. Honorata. 1993. Andres. first. Leandro Rigonan -.[9] Under this instrument. Dreading foreclosure. 1921. and. Teodoro executed the assailed Deed of Absolute Sale of Unregistered Land in favor of Valerio Laude. however.[11] and acquired Tax Declaration the alleged heirs of Hilarion and pro indiviso owners of the subject realty -. 00667 in his own name. 1980.were not parties to the pacto de retro sale. de Rigonan). the Rigonan spouses bought the property as legitimate . Agaton. second. Leandro declared himself to be the sole heir of Hilarion. They. [14] who then obtained Tax Declaration No. to recover the property. and Dolores -. [10] while Teodoro obtained the cancellation of Tax Declaration No. and Oliva -. the three other Derecho heirs -. whose validity and authenticity they assailed on the ground of fraud.brought an action before the Regional Trial Court (RTC) of Danao City (Branch 25). to annul the Deed of Sale in favor of Laude[16] and the Affidavit of Adjudication.[12] During the same year. Dolores -.

not from any presumed intention of the parties. not in the capacity of redeeming co- owners. and that it had appreciated in value. acquisitive prescription had allegedly set in. when five of the eight co-owners assumed ownership of the whole inherited property and sold . [46] Under Article 1456 of the new Civil Code. but by operation of law in order to satisfy the demands of justice and equity and to protect against unfair dealing or downright fraud. the implied trust arose in 1921. petitioners maintained that they were entitled to the equitable defense of laches. and thus inapplicable to the 1928 purchase. by force of law. when he sold it.[20] Petitioners likewise argued that they and their predecessors-in-interest had continuously owned and possessed the subject property for 72 years. An implied trust arises.[22] Issue: Whether or not respondent erred in holding that the land subject matter hereof is property held in common by the Heirs of Hilarion Derecho and an implied trust was created by the act of repurchase. the person obtaining it is. considered a trustee of an implied trust for the benefit of the person from whom the property comes. in their favor. the spouses likewise acquired absolute ownership. which he had acquired by virtue of a failure to redeem. if property is acquired through mistake or fraud. Therefore. Held: Petitioners contend that the appellate court erred in holding that an implied trust had arisen from the 1928 repurchase by the Rigonan spouses. Although this provision is not retroactive in character.[21] Lastly.[47] In the present case.vendees for value and in good faith. Accordingly. it merely expresses a rule already recognized by our courts prior to the effectivity of the Code. when the case was filed in 1993. They supposedly did so only after finding that the land had been developed. Respondents and their forebears were rebuked for not asserting their rights over the property for the past 72 years. They argue that the sale was a conveyance of the absolute ownership of Lacambra over the land.

. Thus. a trustee for the benefit of the person from whom it was acquired. to the extent of their participation.Gerardo. and the person who acquired it. The CA. the property is deemed to have been acquired through fraud. erred in finding that the implied trust had arisen in 1928. and Oliva -- and unlawfully deprived them of their undivided shares in the in its entirety to Lacambra. Petitioners Rigonan were merely stepping into the shoes of Lacambra as trustee. The sale clearly defrauded the three other co- heirs who were not parties to the transaction -. Agaton.[48] In the present case. [49] By then. however. Lacambra was the trustee who held the property partly for the benefit of the three mentioned heirs (cestuis que trustent). when the Rigonan spouses repurchased the property from Lacambra.