ATP-MAD-Case Digests

Trust

Salao vs Salao L-26699, March 16, 1976

Facts:

The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal begot four children named Patricio,
Alejandra, Juan (Banli) and Ambrosia. Manuel Salao died in 1885. His eldest son, Patricio, died in 1886 survived by his only
child. Valentin Salao.

After Valentina’s death, her estate was administered by her daughter Ambrosia.

The documentary evidence proves that in 1911 or prior to the death of Valentina Ignacio her two children, Juan Y. Salao, Sr.
and Ambrosia Salao, secured a Torrens title, OCT No. 185 of the Registry of Deeds of Pampanga, in their names

The property in question is the forty-seven-hectare fishpond located at Sitio Calunuran, Lubao, Pampanga, wherein Benita
Salao-Marcelo daughter of Valentin Salao claimed 1/3 interest on the said fishpond.

The defendant Juan Y. Salao Jr. inherited from his father Juan Y. Salao, Sr. ½ of the fishpond and the other half from the
donation of his auntie Ambrosia Salao.

It was alleged in the said case that Juan Y. Salao, Sr and Ambrosia Salao had engaged in the fishpond business. Where they
obtained the capital and that Valentin Salao and Alejandra Salao were included in that joint venture, that the funds used
were the earnings of the properties supposedly inherited from Manuel Salao, and that those earnings were used in the
acquisition of the Calunuran fishpond. There is no documentary evidence to support that theory.

The lawyer of Benita Salao and the Children of Victorina Salao in a letter dated January 26, 1951 informed Juan S. Salao, Jr.
that his clients had a one-third share in the two fishponds and that when Juani took possession thereof in 1945, in which
he refused to give Benita and Victorina’s children their one-third share of the net fruits which allegedly amounted to
P200,000. However, there was no mention on the deeds as to the share of Valentin and Alejandra.

Juan S. Salao, Jr. in his answer dated February 6, 1951 categorically stated that Valentin Salao did not have any interest in
the two fishponds and that the sole owners thereof his father Banli and his aunt Ambrosia, as shown in the Torrens titles
issued in 1911 and 1917, and that he Juani was the donee of Ambrosia’s one-half share.

Benita Salao and her nephews and niece asked for the annulment of the donation to Juan S. Salao, Jr. and for the
reconveyance to them of the Calunuran fishpond as Valentin Salao’s supposed one-third share in the 145 hectares of
fishpond registered in the names of Juan Y. Salao, Sr. and Ambrosia Salao.

Issue:

Whether or not the Calunuran fishpond was held in trust for Valentin Salao by Juan Y. Salao, Sr. and Ambrosia Salao.

Held:

There was no resulting trust in this case because there never was any intention on the part of Juan Y. Salao, Sr., Ambrosia
Salao and Valentin Salao to create any trust. There was no constructive trust because the registration of the two fishponds
in the names of Juan and Ambrosia was not vitiated by fraud or mistake. This is not a case where to satisfy the demands of
justice it is necessary to consider the Calunuran fishpond ” being held in trust by the heirs of Juan Y. Salao, Sr. for the heirs
of Valentin Salao.

Ratio:

A Torrens Title is generally a conclusive evidence of the ownership of the land referred to therein. (Sec. 47, Act 496). A
strong presumption exists that Torrens titles were regularly issued and that they are valid. In order to maintain an action
for reconveyance, proof as to the fiduciary relation of the parties must be clear and convincing.

The plaintiffs utterly failed to prove by clear, satisfactory and convincing evidence. It cannot rest on vague and uncertain
evidence or on loose, equivocal or indefinite declarations.

Trust and trustee; establishment of trust by parol evidence; certainty of proof. — Where a trust is to be established by oral
proof, the testimony supporting it must be sufficiently strong to prove the right of the alleged beneficiary with as much
certainty as if a document proving the trust were shown. A trust cannot be established, contrary to the recitals of a Torrens
title, upon vague and inconclusive proof.

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Trusts; evidence needed to establish trust on parol testimony. — In order to establish a trust in real property by parol
evidence, the proof should be as fully convincing as if the act giving rise to the trust obligation were proven by an authentic
document. Such a trust cannot be established upon testimony consisting in large part of insecure surmises based on ancient
hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 Phil. 110).

The foregoing rulings are good under article 1457 of the Civil Code which, as already noted, allows an implied trust to be
proven by oral evidence. Trustworthy oral evidence is required to prove an implied trust because, oral evidence can be
easily fabricated.

On the other hand, a Torrens title is generally a conclusive of the ownership of the land referred to therein (Sec. 47, Act
496). A strong presumption exists. that Torrens titles were regularly issued and that they are valid. In order to maintain an
action for reconveyance, proof as to the fiduciary relation of the parties must be clear and convincing.

The real purpose of the Torrens system is, to quiet title to land. “Once a title is registered, the owner may rest secure, without
the necessity of waiting in the portals of the court, or sitting in the mirador de su casa, to avoid the possibility of losing his
land”.

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127 Torbela v. Spouses Rosario

G.R. No. 140528 December 7, 2011

FACTS:

1. The issue is over a parcel of land inherited by the Torbela siblings from their parents.
2. They executed a deed of absolute quitclaim over the property in favor of Dr. Rosario. Four days after, a TCT was
issued in Dr. Rosario’s name covering the property.
3. Another deed of absolute quitclaim was subsequently executed twelve days after by Dr. Rosario acknowledging
that he only borrowed the lot from the Torbela siblings and was already returning the same. This deed was
notarized but not immediately annotated.
4. Dr. Rosario used the land as mortgage for a loan he obtain through DBP for P70,000.00. He used the proceeds of
the loan to build a 4 storey building which was initially used as a hospital but later converted into a commercial
space. Part was leased to PT&T and the rest to Rosario ’s sister who operated the Rose Inn Hotel and Restaurant.
5. Dr. Rosario fully paid the loan from DBP and the mortgage was cancelled and ratified by a notary public. However,
Dr. Rosario took another loan from PNB. He later acquired a third loan from Banco Filipino and bought out the
loan from PNB cancelling the mortgage with PNB. Rosario failed to pay their loan in Banco Filipino and the
property was extrajudicially foreclosed.
6. Meanwhile, back in 1965, the Torbela siblings sought to register their ownership over the lot and to perfect their
title but couldn’t because the title was still with DBP. They showed as proof the deed of absolute quitclaim
presented executed by Rosario himself. In 1986, they filed a civil case for recovery of ownership and possession
and damages. They tried to redeem the lot from Banco Filipino but failed. TCT was issued to Banco FIilipino.
7. The Torbela’s claim they have right over the rents of the building through accession because they are the land
owners.

ISSUE(S):

1. W/N The Express Trust created herein was effectively repudiated

HELD: Yes.

There is no dispute that the Torbela sibling inherited the title to Lot No. 356-A from their parents, the Torbela spouses,
who, in turn, acquired the same from the first registered owner of Lot No. 356-A, Valeriano. Indeed, the Torbela siblings
executed a Deed of Absolute Quitclaim on December 12, 1964 in which they transferred and conveyed Lot No. 356-A to Dr.
Rosario for the consideration of P9.00.

However, the Torbela siblings explained that they only executed the Deed as an accommodation so that Dr. Rosario could
have Lot No. 356-A registered in his name and use said property to secure a loan from DBP, the proceeds of which would
be used for building a hospital on Lot No. 356-A – a claim supported by testimonial and documentary evidence, and borne
out by the sequence of events immediately following the execution by the Torbela siblings of said Deed.

On December 16, 1964, TCT No. 52751, covering Lot No. 356-A, was already issued in Dr. Rosario’s name. On December
28, 1964, Dr. Rosario executed his own Deed of Absolute Quitclaim, in which he expressly acknowledged that he “only
borrowed” Lot No. 356-A and was transferring and conveying the same back to the Torbela siblings for the consideration
of P1.00. On February 21, 1965, Dr. Rosario’s loan in the amount of P70,200.00, secured by a mortgage on Lot No. 356-A,
was approved by DBP. Soon thereafter, construction of a hospital building started on Lot No. 356-A.

Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words either
expressly or impliedly evincing an intention to create a trust. Under Article 1444 of the Civil Code, “[n]o particular words
are required for the creation of an express trust, it being sufficient that a trust is clearly intended.”[62] It is possible to
create a trust without using the word “trust” or “trustee.” Conversely, the mere fact that these words are used does not
necessarily indicate an intention to create a trust. The question in each case is whether the trustor manifested an intention
to create the kind of relationship which to lawyers is known as trust. It is immaterial whether or not he knows that the
relationship which he intends to create is called a trust, and whether or not he knows the precise characteristics of the
relationship which is called a trust.

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When Dr. Rosario was able to register Lot No. 356-A in his name under TCT No. 52751 on December 16, 1964, an implied
trust was initially established between him and the Torbela siblings under Article 1451 of the Civil Code

For repudiation of an express trust to be effective, the unequivocal act of repudiation had to be made known to the Torbela
siblings as the cestuis que trust and must be proven by clear and conclusive evidence.

The Torbela siblings can only be charged with knowledge of the mortgage of Lot No. 356-A to PNB on March 6, 1981 when
the amended loan and mortgage agreement was registered on TCT No. 52751 as Entry No. 520099. Entry No. 520099 is
constructive notice to the whole world[74] that Lot No. 356-A was mortgaged by Dr. Rosario to PNB as security for a loan,
the amount of which was increased to P450,000.00. Hence, Dr. Rosario is deemed to have effectively repudiated the express
trust between him and the Torbela siblings on March 6, 1981, on which day, the prescriptive period for the enforcement of
the express trust by the Torbela siblings began to run.

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Tongoy v. Court of Appeals, G.R. No. L-45645

The case is basically an action for reconveyance respecting two (2) parcels of land in Bacolod City. The first is Lot No.
1397 of the Cadastral Survey of Bacolod, otherwise known as Hacienda Pulo, containing an area of 727,650 square meters
and originally registered under original Certificate of Title No. 2947 in the names of Francisco, Jose, Ana, Teresa and Jovita
in pro-indiviso equal shares. Said co-owners were all children of the late Juan Aniceto Tongoy. The second is Lot No. 1395
of the Cadastral Survey of Bacolod, briefly referred to as Cuaycong property, containing an area of 163,754 square meters,
and formerly covered by Original Certificate of Title No. 2674 in the name of Basilisa Cuaycong.

"Of the original registered co-owners of Hacienda Pulo, three died without issue, namely: Jose, who died a widower on
March 11, 1961; Ana, who also died single on February 6, 1957, and Teresa who also died single on November 3, 1949. The
other two registered co-owners, namely, Francisco Tongoy and Jovita Tongoy, were survived by children. Francisco
Tongoy, had six children; Patricio D. Tongoy and Luis D. Tongoy by the first marriage; Amado P. Tongoy, Ricardo P.
Tongoy; Cresenciano P. Tongoy and Norberto P. Tongoy by his second wife Antonina Pabello whom he subsequently
married sometime after the birth of their children. For her part, Jovita Tongoy (Jovita Tongoy de Sonora), who died on May
14, 1915, had from children: Mercedes T. Sonora, Juan T. Sonora, Jesus T. Sonora and Trinidad

On April 17, 1918, Hacienda Pulo was mortgaged by its registered co owners to the Philippine National Bank (PNB), Bacolod
Branch, as security for a loan of P11,000.00 payable in ten (10) years at 8% interest per annum. The mortgagors however
were unable to keep up with the yearly amortizations. as a result of which the PNB instituted judicial foreclosure
proceedings over Hacienda Pulo on June 18, 1931.

To avoid foreclosure, one of the co-owners and mortgagors, Jose Tongoy, proposed to the PNB an amortization plan that
would enable them to liquidate their account. But, on December 23, 1932, the PNB Branch Manager in Bacolod advised Jose
Tongoy by letter that the latter's proposal was rejected and that the foreclosure suit had to continue.

In the meantime, Patricio D. Tongoy and Luis Tongoy executed on April 29, 1933 a Declaration of Inheritance wherein they
declared themselves as the only heirs of the late Francisco Tongoy and thereby entitled to the latter's share in Hacienda
Pulo.

On March 13, 1934, Ana Tongoy, Teresa Tongoy, Mercedes Sonora, Trinidad Sonora, Juan Sonora and Patricio Tongoy
executed an 'Escritura de Venta', which by its terms transferred for consideration their rights and interests over Hacienda
Pulo in favor of Luis D. Tongoy. Thereafter, Jesus Sonora and Jose Tongoy followed suit by each executing a similar 'Escritura
de Venta' pertaining to their corresponding rights and interests over Hacienda Pulo in favor also of Luis D. Tongoy. In the
case of Jose Tongoy, the execution of the 'Escritura de Venta' was preceded by the execution on October 14, 1935 of an
Assignment of Rights in favor of Luis D. Tongoy by the Pacific Commercial Company as judgment lien-holder (subordinate
to the PNB mortgage) of Jose Tongoy's share in Hacienda Polo.

On the basis of the foregoing documents, Hacienda Pulo was placed on November 8, 1935 in the name of Luis D. Tongoy,
married to Maria Rosario Araneta, under Transfer Certificate of Title No. 20154. In the following year, the title of the
adjacent Cuaycong property also came under the name of Luis D. Tongoy, married to Maria Rosario Araneta, per Transfer
Certificate of Title No. 21522, by virtue of an 'Escritura de Venta' executed in his favor by the owner Basilisa Cuaycong on
June 22, 1936 purportedly for P4,000.00. On June 26, 1936, Luis D. Tongoy executed a real estate mortgage over the
Cuaycong property in favor of the PNB, Bacolod Branch, as security for loan of P4,500.00. Three days thereafter, on June 29,
1936, he also executed a real estate mortgage over Hacienda Pulo in favor of the same bank to secure an indebtedness of
P21,000.00, payable for a period of fifteen (15) years at 8% per annum.

After two decades, on April 17, 1956, Luis D. Tongoy paid off all his obligations with the PNB, amounting to a balance of
P34,410.00, including the mortgage obligations on the Cuaycong property and Hacienda Pulo. However, it was only on April
22, 1958 that a release of real estate mortgage was executed by the bank in favor of Luis D. Tongoy. On February 5, 1966,
Luis D. Tongoy died at the Lourdes Hospital in Manila, leaving as heirs his wife Maria Rosario Araneta and his son Francisco
A. Tongoy. Just before his death, however, Luis D. Tongoy received a letter from Jesus T. Sonora, dated January 26, 1966,
demanding the return of the shares in the properties to the co-owners.

"Not long after the death of Luis D. Tongoy, the case now before Us was instituted in the court below on complaint filed on
June 2, 1966 by Mercedes T. Sonora, Juan T. Sonora **, Jesus T. Sonora, Trinidad T. Sonora, Ricardo P. Tongoy and
Cresenciano P. Tongoy. Alleging in sum that plaintiffs and/or their predecessors transferred their interests on the two lots
in question to Luis D. Tongoy by means of simulated sales, pursuant to a trust arrangement whereby the latter would return
such interests after the mortgage obligations thereon had been settled.

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Issue: 1. W/N there is an implied trust.

2. W/N the action for reconveyance has already prescribed

Held:

1. SIMULATED TRANSFER CANNOT GIVE RISE TO IMPLIED TRUST. — There is no implied trust that was generated
by the simulated transfers; because being fictitious or simulated, the transfers were null and void ab initio- from
the very beginning-and thus vested no rights whatsoever in favor in Luis Tongoy or his heirs. That which is
inexistent cannot give life to anything.
2. But even assuming arguendo that such an implied trust exist between Luis Tongoy as trustee and the private
respondent as cestui que trust, still the rights of private respondent to claim reconveyance is not barred by
prescription or laches. Implied or constructive trusts prescribe in ten years. The prescriptibility of an action for
reconveyance based on implied or constructive trust, is now a settled question in this jurisdiction. It prescribes in
ten years

Considering that the implied trust resulted from the simulated sales which were made for the purpose of enabling
the transferee, Luis D. Tongoy, to save the properties from foreclosure for the benefit of the co-workers it would
not do to apply the theory of constructive notice resulting from the registration in the trustee's name. Hence, the
ten-year prescriptive period old not be counted from the date of registration in the name of the trustee, as
contemplated in the earlier case of Juan vs. Zuñiga (4 SCRA 1221). Rather, it should be counted from the date of
recording of the release of mortgage in the Registry of Deeds, on which dates — May 5, 1958 — the cestui que
trust were charged with the knowledge of the settlement of the mortgage obligation, the attainment of the purpose
for which the trust was constituted.

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Vda. de Esconde v. Court of Appeals, G.R. No. 103635, [February 1, 1996], 323 PHIL 81-94

Petitioners Constancia, Benjamin and Elenita, and private respondent Pedro, are the children of the late Eulogio Esconde
and petitioner Catalina Buan. Eulogio Esconde was one of thechildren and heirs of Andres Esconde.

Andres is the brother of Estanislao Esconde, the original owner of the disputed lot who died without issue on April 1942.
Survived by his only brother, Andres, Estanislao left an estate consisting of four (4) parcels of land in Samal, Bataan.
Eulogiodied in April, 1944 survived by petitioners and private respondent. At that time, Lazara and Ciriaca, Eulogio's sisters,
had already died without having partitioned the estate of the late Estanislao Esconde.

On December 5, 1946, the heirs of Lazara, Ciriaca and Eulogio executed a deed of extrajudicial partition. Since the children
of Eulogio, with the exception of Constancia, were then all minors, they were represented by their mother and judicial
guardian, petitioner Catalina Buan vda. de Esconde who renounced and waived her usufructuary rights over the parcels of
land in favor of her children in the same deed.

Sometime in December of 1982, Benjamin discovered that Lot No. 1700 was registered in the name of his brother, private
respondent. Believing that the lot was co-owned by all the children of Eulogio Esconde, Benjamin demanded his share of
the lot from private respondent. However, private respondent asserted exclusive ownership thereof pursuant to the deed
of extrajudicial partition. Hence, on June 29, 1987, petitioners herein filed a complaint before the RTC of Bataan against
private respondent for the annulment of TCT No. 394. In its decision of July 31,1989, the lower court ruled that the action
had been barred by both prescription and laches. Hence, petitioners elevated the case to the CA which affirmed the lower
court's decision.

ISSUE:

The applicability of the laches doctrine to implied trust is the issue in this petition

Held:

1. TRUST; CONCEPT. — Trust is the legal relationship between one person having an equitable ownership in property and
another person owning the legal title to such property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the latter. Trusts are either express or implied. An
express trust is created by the direct and positive acts of the parties, by some writing or deed or will or by words evidencing
an intention to create a trust. No particular words are required for the creation of an express trust, it being sufficient that a
trust is clearly intended. On the other hand, 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.

2. ID.; ID.; ID.; CONSTRUCTIVE TRUST; DEEMED ESTABLISHED IF BY MISTAKE A PROPERTY IS ENTIRELY ALLOTED
TO ONE OF THE HEIRS; CASE AT BENCH. — In the case at bench, petitioner Catalina Buan vda. de Esconde, as mother and
legal guardian of her children, appears to have favored her elder son, private respondent, in allowing that he be given Lot
No. 1700 in its entirety in the extrajudicial partition of the Esconde estate to the prejudice of her other children. Although
it does not appear on record whether Catalina intentionally granted private respondent that privileged bestowal, the fact
is that, said lot was registered in private respondent's name.

After the TCT No. 394 was handed to him by his mother, private respondent exercised exclusive rights of ownership therein
to the extent of even mortgaging the lot when he needed money. If, as petitioners insist, a mistake was committed in allotting
Lot No. 1700 to private respondent, then a trust relationship was created between them and private respondent. However,
private respondent never considered himself a trustee. If he allowed his brother Benjamin to construct or make
improvements thereon, it appears to have been out of tolerance to a brother. Consequently, if indeed, by mistake, private
respondent was given the entirety of Lot No. 1700, the trust relationship between him and petitioners was a constructive,
not resulting, implied trust. Petitioners, therefore, correctly questioned private respondent's exercise of absolute
ownership over the property. Unfortunately, however, petitioners assailed it long after their right to do so had
prescribed.

3. ID.; ID.; ID.; ID.; RULE THAT REPUDIATION OF THE TRUST IS ESSENTIAL FOR PRESCRIPTION TO SUPERVENE, NOT
APPLICABLE THERETO; CASE AT BENCH. — The rule that a trustee cannot acquire by prescription ownership over
property entrusted to him until and unless he repudiates the trust, applies to express trusts and resulting implied
trusts. However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the
relationship. Necessarily, repudiation of the said trust is not a condition precedent to the running of the prescriptive period.

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Since the action for the annulment of private respondent's title to Lot No. 1700 accrued during the effectivity of Act No. 190,
Section 40 of Chapter III thereof applies. . .. Thus, in Heirs of Jose Olviga v. Court of Appeals, (G.R. No. 104813, October 21,
1993, 227 SCRA 330, 334-335) the Court ruled that the ten-year prescriptive period for an action for reconveyance of real
property based on implied or constructive trust which is counted from the date of registration of the property, applies when
the plaintiff is not in possession of the contested property. In this case, private respondent, not petitioners who instituted
the action, is in actual possession of Lot No. 1700. Having filed their action only on June 29, 1987, petitioners' action has
been barred by prescription.

4. APPLICABILITY OF LACHES DOCTRINE TO IMPLIED TRUSTS. — Laches has also circumscribed the action for, whether
the implied trust is constructive or resulting, this doctrine applies.

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Iglesia Filipina Independiente v. Heirs of Taeza

The plaintiff-appellee Iglesia Filipina Independiente (IFI, for brevity), a duly registered religious corporation, was the owner
of a parcel of land situated at Ruyu (now Leonarda), Tuguegarao, Cagayan, and covered by Original Certificate of Title No.
P-8698. The said lot is subdivided as follows: Lot Nos. 3653-A, 3653-B, 3653-C, and 3653-D.

1977, a complaint for the annulment of the February 5, 1976 Deed of Sale with Mortgage was filed by the Parish Council of
Tuguegarao, Cagayan, represented by Froilan Calagui and Dante Santos, the President and the Secretary, respectively, of
the Laymen's Committee, with the then Court of First Instance of Tuguegarao, Cagayan, against their Supreme Bishop
Macario Ga and the defendant Bernardino Taeza.

The said complaint was, however, subsequently dismissed on the ground that the plaintiffs therein lacked the personality
to file the case.

After the expiration of Rev. Macario Ga's term of office as Supreme Bishop of the IFI on May 8, 1981, Bishop Abdias dela
Cruz was elected as the Supreme Bishop. Thereafter, an action for the declaration of nullity of the elections was filed by Rev.
Ga, with the Securities and Exchange Commission (SEC).

In 1987, while the case with the SEC is (sic) still pending, the plaintiff-appellee IFI, represented by Supreme Bishop Rev.
Soliman F. Ganno, filed a complaint for annulment of the sale of the subject parcels of land against Rev. Ga and the defendant
Bernardino Taeza, which was docketed as Civil Case No. 3747. The case was filed with the Regional Trial Court of
Tuguegarao, Cagayan, Branch III, which in its order dated December 10, 1987, dismissed the said case without prejudice,
for the reason that the issue as to whom of the Supreme Bishops could sue for the church had not yet been resolved by the
SEC.

On February 11, 1988, the Securities and Exchange Commission issued an order resolving the leadership issue of the IFI
against Rev. Macario Ga.

Meanwhile, the defendant Bernardino Taeza registered the subject parcels of land. Consequently, Transfer Certificate of
Title Nos. T-77995 and T-77994 were issued in his name.

The defendant then occupied a portion of the land. The plaintiff-appellee allegedly demanded the defendant to vacate the
said land which he failed to do.

In January 1990, a complaint for annulment of sale was again filed by the plaintiff-appellee IFI, this time through Supreme
Bishop Most Rev. Tito Pasco, against the defendant-appellant, with the Regional Trial Court of Tuguegarao City, Branch 3.

On November 6, 2001, the court a quo rendered judgment in favor of the plaintiff-appellee. It held that the deed of sale
executed by and between Rev. Ga and the defendant-appellant is null and void

Issue: W/N there has been an implied trust.

Held:

In the present case, however, respondents' predecessor-in-interest, Bernardino Taeza, had already obtained a transfer
certificate of title in his name over the property in question. Since the person supposedly transferring ownership was not
authorized to do so, the property had evidently been acquired by mistake. In Vda. de Esconde v. Court of Appeals, 18 the
Court affirmed the trial court's ruling that the applicable provision of law in such cases is Article 1456 of the Civil Code
which states that "[i]f property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered
a trustee of an implied trust for the benefit of the person from whom the property comes." Thus, in Aznar Brothers Realty
Company v. Aying, 19 citing Vda. de Esconde, 20 the Court clarified the concept of trust involved in said provision, to wit:

Construing this provision of the Civil Code,in Philippine National Bank v. Court of Appeals, the Court stated:

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a typical trust, confidence
is reposed in one person who is named a trustee for the benefit of another who is called the cestui que trust,
respecting property which is held by the trustee for the benefit of the cestui que trust. A constructive trust, unlike
an express trust, does not emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary
and a trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither a promise
nor any fiduciary relation to speak of and the so-called trustee neither accepts any trust nor intends holding the
property for the beneficiary.

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The concept of constructive trusts was further elucidated in the same case, as follows:

. . . . 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. In turn, implied trusts are either resulting or constructive
trusts. These two are differentiated from each other as follows:

Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the
equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature
of circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal
title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are
created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise
contrary to intention against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property
which he ought not, in equity and good conscience, to hold. (Italics supplied)

A constructive trust having been constituted by law between respondents as trustees and petitioner as beneficiary of the
subject property, may respondents acquire ownership over the said property? The Court held in the same case of Aznar,
that unlike in express trusts and resulting implied trusts where a trustee cannot acquire by prescription any property
entrusted to him unless he repudiates the trust, in constructive implied trusts, the trustee may acquire the property through
prescription even if he does not repudiate the relationship. It is then incumbent upon the beneficiary to bring an action for
reconveyance before prescription bars the same.

In Aznar, 22 the Court explained the basis for the prescriptive period, to wit:

. . . under the present Civil Code, we find that just as an implied or constructive trust is an offspring of the law (Art.
1456, Civil Code), so is the corresponding obligation to reconvey the property and the title thereto in favor of the
true owner. In this context, and vis-à-vis prescription, Article 1144 of the Civil Code is applicable.

Article 1144. The following actions must be brought within ten years from the time the right of action accrues:

(1) Upon a written contract;

(2) Upon an obligation created by law;

(3) Upon a judgment.

An action for reconveyance based on an implied or constructive trust must perforce prescribe in ten years and not
otherwise. A long line of decisions of this Court, and of very recent vintage at that, illustrates this rule. Undoubtedly, it is
now well-settled that an action for reconveyance based on an implied or constructive trust prescribes in ten years
from the issuance of the Torrens title over the property.

It has also been ruled that the ten-year prescriptive period begins to run from the date of registration of the deed or the
date of the issuance of the certificate of title over the property.

Here, the present action was filed on January 19, 1990, while the transfer certificates of title over the subject lots were
issued to respondents' predecessor-in-interest, Bernardino Taeza, only on February 7, 1990. Clearly, therefore, petitioner's
complaint was filed well within the prescriptive period stated above, and it is only just that the subject property be returned
to its rightful owner.

WHEREFORE, the petition is GRANTED.

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.Morales v. Court of Appeals, G.R. No. 117228, [June 19, 1997], 340 PHIL 397-422

Celso Avelino - Seller

Ranulfo & Erlinda Ortiz – Spouses-Buyers

Rodolfo Morales – Nephew-Builder

Priscila Morales – Seller’s Other Sister / Mother of Builder

FACTS

Seller owns two adjoining parcels of land on which he constructed a house where he let his parents and sister lived while
he worked as City Fiscal of Calbayog, then Immigration Officer, and, later on, as Judge of CFI Cebu.

While in Cebu, without the Seller’s knowledge, his Nephew built a beauty shop on his property. When he was offering to
sell the property to prospective buyer Spouses, the latter did an ocular inspection and was able to talk with the Nephew,
who encouraged them to buy the property and assured them that he will vacate the premises if notified by the seller to
do so. The sale was consummated and the Spouses paid the purchase price. Unfortunately, despite due notice from the
Seller, the Nephew refused to vacate or demolish the beauty shop unless he is reimbursed for P35k. The Spouses also
subsequently found out that the Nephew also then occupied the dilapidated residential building, which the former had
sought to repair. The Spouses then filed a case to recover the property against the Nephew (later substituted by his heirs).

According to the Nephew’s mother, sister of the Seller, (aside from the one who live in the house constructed) who also
intervened in the case, the property was inherited by her together with their other siblings, except for the Seller who was
away for 30 years because of his job. The Seller, being the only son, was allowed by their father to acquire the property with
money coming from the father. She further alleged that the constructed house was built by their parents and that the built
beauty shop was with the knowledge and consent of the Seller. She intervened arguing that the sale was fraudulent for
including her share and the beauty shop of her son.

The Trial Court ruled in favor of the Spouses and ordered the Nephew to vacate and remove the beauty shop. The court
noted that the seller’s siblings and their descendants had not disputed the Seller’s ownership of the property nor the extra
judicial-partition effected on the property, even though two of the Sister-Intervenor’s children were lawyers. It further
noted that the claim of ownership by the buyer Spouses were based on documentary evidence (Deed of Conveyance, tax
declarations transferred to the wife-buyer, etc.), as against the evidence presented by the Seller’s Sister and Nephew which
were only testimonial. Furthermore, the other sisters did not join them and intervened in the case. The court further ruled
that their claim of implied trust is untenable, because in order for implied trust to exist there must be evidence of an
equitable obligation of the trustee to convey, which was absent in this case.

The CA affirmed the decision of the trial court.

ISSUE

WON the Seller was a mere trustee for his parents and siblings

RATIO

NO. As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be
clear and satisfactorily show the existence of the trust and its elements. While implied trusts may be proved by oral
evidence, the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to
rest on loose, equivocal or indefinite declarations.

A trust is the legal relationship between one person having an equitable ownership in property and another person owning
the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and
the exercise of certain powers by the latter. The characteristics of a trust are: (a) it is a relationship; (b) it is a relationship
of fiduciary character; (c) It is a relationship with respect to property, not one involving merely personal duties; (d) it
involves the existence of equitable duties imposed upon the holder of the title to the property to deal with it for the benefit
of another; and (e) it arises as a result of a manifestation of intention to create the relationship.

A resulting trust, also sometimes referred to as a PURCHASE MONEY RESULTING TRUST, is exemplified by Article 1448 of
the Civil Code, which reads:

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Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid
by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the
beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the
price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in f avor of the child.

To give rise to a purchase money resulting trust, it is essential that there be:

(1) an actual payment of money, property or services, or an equivalent, constituting valuable consideration,
(2) and such consideration must be furnished by the alleged beneficiary of a resulting trust.

The Court agreed with the lower courts that the current situation falls within the exception under the third sentence of
Article 1448.

Also fatal to the case of the Sister and the Nephew is the declaration of their other sister, Concepcion, who disclaimed any
interest on the property and executed a Confirmation that their brother bought the property using his own funds. If indeed
the property was merely held in trust by Celso for his parents, Concepcion would have been entitled to a proportionate part
thereof as co-heir. However, by her Confirmation, Concepcion made a solemn declaration against interest. Furthermore, the
Seller’s sisters did not do anything to have their respective shares in the property conveyed to them after the death of their
father. Neither is there any evidence that during his lifetime, their father demanded from the Seller that the latter convey
the land, which was mute and eloquent proof of the father’s recognition that the Seller was the to be the absolute owner of
the property.

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