You are on page 1of 21

TRUSTS G.R. No.

L-17809 December 29, 1962

A. In General (Arts. 1440-1442) RESURRECCION DE LEON, ET AL., vs. EMILIANA MOLO-


PECKSON, ET AL.,
Salao v. Salao FACTS:
70 SCRA 65 1. In 1941, Mariano Molo y Legaspi died leaving a will
Facts: The plaintiffs, all relatives of the defendants, instituted wherein he bequeathed his entire estate to his wife,
action for a piece of land in Bataan, alleging it came from Juana Juan. On May 11, 1948, Juana Juan in turn
common funds and that there was an oral partition made executed a will naming therein many devisees and
earlier. They alleged that the defendants, who became legatees, one of whom is San Rafael, mother of the
administrators of property in Malabon inherited from their plaintiffs and defendant Pilar Perez Nable. On June 7,
grandparents, used common funds to buy property elsewhere. 1948, however, Juana Juan executed a donation inter
vivos in favor of Emiliana Molo-Peckson and Pilar
Perez Nable of almost all of her entire property
leaving only about P16,000.00 worth of property for
Issue: 1. Who is the trustor and who is the trustee? the devisees mentioned in the will. Among the
2. Was trust created? properties conveyed to the donees are the ten parcels
of land subject of the present action. Juana Juan died
Held: 1. A person who establishes a trust is called the trustor; on May 28, 1950.
one in whom confidence is reposed as regards property for the
benefit of another person is known as the trustee; and the
person for whose benefit the trust has been created is referred 2. On December 5, 1950, Emiliana Molo-Peckson and
to as the beneficiary" (Art. 1440, Civil Code). There is a Pilar Perez Nable executed a document which they
fiduciary relation between the trustee and the cestui que trust called "MUTUAL AGREEMENT" the pertinent
as regards certain property, real, personal, money or choses in provisions of which are: 1)that the following lots
action. should be sold at ONE (1) PESO TO — JUSTA DE
2. The court ruled that it was not proven that a trust had been LEON and RESURRECCION DE LEON, several parcels
created. No documentary evidence was presented to prove an of land located at Calle Tolentino , share and share
express trust, and Art. 1443 says parol evidence cannot be alike or half and half of TEN (10) LOTS described in
used to prove an express trust concerning realty. TCT 28157. 2.) That this agreement is made in
conformity with the verbal wish of the late Don
Mariano Molo y Legaspi and the late Dona Juana
Francisco Juan y Molo. These obligations were
Art. 1443. No express trusts concerning an immovable repeatedly told to Emiliana Molo Peckson, before their
or any interest therein may be proved by parol death and that same should be fulfilled after their
evidence. death.

Neither can the evidence prove an implied trust. While an


implied trust may be proven by oral evidence, it must be
trustworthy. Neither was it proven that there was fraud or 3. On August 9, 1956, however, the same defendants,
mistake, enough to create a constructive trust. executed another document in which they revoked
the so-called mutual agreement mentioned above

TWO KINDS OF TRUST


4. August 11, 1956, the beneficiary Resurreccion de
Leon and Justa de Leon, thru their counsel demanded
the conveyance to them of the ten parcels of land for
Express- Created by the parties, or by the intention of the
the consideration of P1.00 per parcel as stated in the
trustor. Express trusts do not prescribe unless repudiated.
document of December 5, 1950. And having the
defendants refused to do so, said beneficiaries
consigned on July 8, 1957 the amount of P10.00 as
Implied- Created by operation of law. The rule on implied the consideration of the ten parcels of
trusts regarding prescription is confusing. In general, resulting land.lawphil.net
trusts do not prescribe, but constructive trusts do.
Hence this case.

CFI: Trust has been constituted by the late spouses Mariano


Molo and Juana Juan over the ten parcels of land in question
in favor plaintiffs as beneficiaries and, as a consequence
concluded:

1. The defendants, jointly and severally to free the said ten


(10) parcels of land from the mortgage lien in favor of DBP,
and to sign and execute in favor of the plaintiffs a deed of
absolute sale of the said properties for and in consideration of
TEN (P10.00) PESOS;

2. The defendants to render an accounting of the fruits of said


ten (10) parcels of land from the time plaintiffs demanded the
conveyance of said parcels of land on August 11, 1956

ISSUE: 1. WON there the Dec. 5, 1950 document created


an express trust in favor of the appellees YES

1
2. WON the mutually agreement creating the trust G.R. No. L-21334 December 10, 1924
can be revoked without the consent of the
trustee? NO THE GOVERNMENT OF THE PHILIPPINE
ISLANDS, Petitioner, vs. ANASTASIA ABADILLA, ET
Ruling: AL., claimants.
THE MUNICIPALITY OF TAYABAS, ET AL., claimants-
1. That the document represents a recognition of pre- appellees,
existing trust or a declaration of an express trust MARIA PALAD, ET AL., claimants-appellants.
impressed on the ten parcels of land in question is
evident. A declaration of trust has been defined as an Facts:
act by which a person acknowledges that the
property, title to which he holds, is held by him for On January 25, 1892, Luis Palad executed a holographic will
the use of another. This is precisely the nature of the granting his wife, Dorothea Lopez, the right of exclusive use
will of the donor: to convey the titles of the lands to and possession of several parcels of lands in the Province of
appellants with the duty to hold them in trust for the Tayabas during her lifetime or until she remarries. The lands
appellees. Appellants obligingly complied with this shall be donated to the secondary school in Tayabas upon
duty by executing the document under consideration. Dorothea’s death or second marriage. On December 3, 1896,
the testator died.
There is nobody who could cajole them to execute it, nor is
there any force that could corce them to make the declaration Sometime in 1900, Dorothea married one Calixto Dolendo. On
therein expressed, except the constraining mandate of their April 20, 1903, the testator’s collateral heirs brought an action
conscience to comply with "the obligations repeatedly told to for the partition of the lands on the ground that Dorothea lost
Emiliana Molo Peckson," one of appellants, before their death, her right over the lands by reason of her second marriage.
epitomized in the "verbal wish of the late Don Mariano Molo y During the pendency of the action, the parties arrived at an
Legaspi and the late Doña Juana Francisco Juan y Molo" to agreement delivering the lands with lot nos. 3464 and 3469 to
convey after their death said ten parcels of land at P1.00 a the Municipality of Tayabas as trustee while lot no. 3470 was
parcel to appellees. left in the possession of Dorothea. The testator’s collateral
In fact, the acknowledgement appended to the document they heirs filed a claim over the lands contending that the trust
subscribed states that it was "their own free act and voluntary instituted in the will was ineffective.
deed."1awphi1.netIndeed, it is to be supposed that appellants Issue:
understood and comprehended the legal import of said
documents when they executed it more so when both of them Whether or not the trust instituted in the will was effective
had studied in reputable centers of learning, one being a
pharmacist and the other a member of the bar. Ruling:

2. It is true, as appellants contend, that the alleged Yes. A liberal interpretation of the will revealed that the
declaration of trust was revoked, and having been testator intended to create a trust for the benefit of the
revoked it cannot be accepted, but the attempted secondary school, naming the ayuntamiento of the town or the
revocation did not have any legal effect. The Civil Governor of the Province as trustee. In order that a trust
rule is that in the absence of any reservation of the may be effective, there must be a trustee and a cestui que
power to revoke a voluntary trust is irrevocable trust. The Governor of Tayabas, as the successor of the Civil
without the consent of the beneficiary. It cannot be Governor under the Spanish regime, acted as trustee in the
revoked by the creator alone, nor by the trustee. present case.
Here, there is no such reservation.
If the trustee holds the legal title and the devise is valid, the
To recapitulate, we hold: (1) that the document executed on natural heirs of the deceased testator have no remaining
December 5, 1950 creates an express trust in favor of interest in the land except their right to the reversion in the
appellees; (2) that appellants had no right to revoke it without event the devise for some reason should fail, an event which
the consent of the cestui que trust; (3) that appellants must has not yet taken place. The intention of the testator was to
render an accounting of the fruits of the lands from the date have the income of the property accumulate for the benefit of
the judgement rendered in G.R. No. L-8774 became final and the proposed school until the same should be established.
executory; and (4) that appellants should free said lands from
The lands with lot nos. 3464 and 3469 shall hereby remain in
all liens and encumbrances.
the possession of the Municipality of Tayabas as trustee until
WHEREFORE, with the modification as above indicated with the secondary school is erected. However, the ownership of lot
regard to accounting, we hereby affirm the decision appealed no. 3470 has lawfully passed to Dorothea by prescription,
from, without pronouncement as to costs. having held possession of the land, adverse to all claimants,
since 1904.

2
Cristobal vs. Gomez, 50 Phil. 810 (1927) 11. 1 April 1918 – Marcelino finally paid off his debt with
Banas
Street, J

Issue:
This action was instituted in the CFI of Cavite by Paulina
Cristobal, wife of Epifanio Gomez, and her children to recover
from Marcelino Gomez (brother of Epifanio) two parcels of land
located in the sitio of Japay. WON Marcelino acted as a mere trustee despite the
improvements made to the property of Epifanio?

Facts:
Held/Ratio

1. Property in question belonged to Epifanio.


Yes.
2. 13 Dec 1891 – Epifanio sold the property under
contract of sale with pacto de retro to Luis Yangco,
redeemable in 5 years, for the sum of Php2,500 1. The Court said that the trial court made no error in
3. Epifanio remained in possession of the property but in holding that Marcelino must surrender the property in
the character of a lessee litigation (and that he being dead, the same
obligation devolves on his heirs). The so-called
4. Property was not redeemed in 5years. But Yangco partnership between Marcelino and Telesfora created
after many years conceded to the vendor the privilege a TRUST for the express purpose of securing the
of repurchasing property of Epifanio; and that since the purpose had
been accomplished, the property should be returned
5. Epifanio had no means to repurchase applied to to Epifanio’s legitimate children.
Bibiano Banas, a kinsman, for assistance. Bibiano
agreed on the condition that Epifanio’s brother, 2. That under Art 1257 of the Civil Code, the successors
Marcelino, and sister, Telesfora, would make of Epifanio are entitled to demand fulfilment of the
themselves responsible for the loan. Banas eventually trust. (NCC Art. 1308. The contract must bind both
advanced Php7,000.00 to be used to repurchase the contracting parties; its validity or compliance cannot
property in the name of Marcelino and Telesfora. be left to the will of one of them. (1256a))

6. Marcelino and Telesfora will administer the property 3. Marcelino claimed that the money used by him to
until the capital advanced by Banas should be paid off redeem the property was his own. However, the
afterwhich the property will be returned to Epifanio. Court reasoned that since he was able to obtain
enough from income from the property he was
7. Marcelino and Telesfora created a “private already able to reimburse himself for all outlays.
partnership in participation” for the purpose of
redeeming the property. Marcelino will act as the 4. Marcelino claimed that the trust agreement was kept
manager. secret from Epifanio such that the stipulation could
not have accepted by him before revocation of the
8. Among the provisions in the partnership agreement: same. However, the Court pointed out that Banas
a. (h) That all the income, rent, and produce of testified that Epifanio was present when the contract
the aforesaid property of Epifanio Gomez was made
shall be applied exclusively to the 5. Revocation due to the “behavior” of Epifanio should
amortization of the capital employed by the have been when he was still alive.
two parties, that is to say, Don Marcelino
Gomez and Doña Telesfora Gomez, with its 6. Prescription on favor of Marcelino is not effective.
corresponding interest and other incidental Because Marcelino was not really holding adversely
expenses. under a claim of title exclusive of any other right and
adverse to all other claimants. He was a trustee in
b. (i) As soon as the capital employed, with its possession under a continuing and subsisting trust.
interest and other incidental expenses, shall
have been covered, said properties shall be
returned to our brother Epifanio Gomez or to
his legitimate children, with the direct
intervention, however, of both parties,
namely, Don Marcelino Gomez and Doña
Telesfora Gomez, or one of them.

c. (j) In order that the property of Epifanio


Gomez may be returned, it is made essential
that he shall manifest good behavior in the
opinion of Don Marcelino Gomez and Doña
Telesfora Gomez jointly.

9. Telesfora conveyed her interest and share to


Marcelino to free herself from the responsibility she
assumed to Banas. Banas consented to such on 10
September 1909.

10. Since Marcelino is now the lone “debtor” , Banas


required him to execute a contract of sale with pacto
de retro to secure the debt. This was executed also
on 10 Sept 1909.

3
J. Antonio ARANETA v. Antonio PEREZ We hold that appellant's claim is not justified considering that
appellee was forced to file the present suit in view of
June 29, 1965 appellant's refusal to honor the note under consideration. The
FACTS: request, therefore, for dismissal has no legal basis.

Antonio M. Perez executed a promissory note wherein he


agreed to pay J. Antonio Araneta, or order, the sum of
P3,700.00 119 days from said date, or on October 13, 1961,
and if it is not paid on the date of maturity, to pay interest at
9% per annum on the amount of the loan, and P370.00 as
attorney's fees in addition to costs and other disbursements
taxable under the Rules of Court.

The note having become due and Antonio M. Perez having


failed to pay it despite demand made upon him to do so,
Araneta filed on October 31, 1961 a complaint in the Municipal
Court of Manila to collect its import under the terms therein
stipulated.

Perez admitted the execution of the promissory note as well as


his failure to pay it despite its maturity and demand. Perez
alleged that the proceeds of the note were applied by him to
the payment of the medical treatment of his minor daughter
Angela Perez y Tuason, who is the beneficiary of the trust then
administered by Araneta as trustee, and that the trust estate is
bound to pay the expenses of said treatment because they
were for the benefit of said minor and so the personal fund he
borrowed from Araneta and for which he executed the
aforesaid promissory note should be paid by Araneta in the
manner above-stated. In the same answer, Perez set up a
counterclaim demanding several amounts by way of moral
damages, exemplary damages, and attorney's fees.

MTC ordered Perez to pay the amounts prayed for and


dismissed his counterclaim for damages. Perez filed a
complaint with the MTC against Araneta in his capacity as
truatee and prayed that Araneta as trustee be required to pay
Perez the amount of P3,700.00 advanced by the latter in order
to meet the obligation of the trust estate which was dismissed
by the court. The court a quo affirmed the MTC’s judgment.

ISSUE: WON Perez is indebted to Araneta and that the true


debtor was the trust estate of the children of Angela.

RULING:

The promissory note signed by appellant clearly


states that he agreed to pay Araneta or order the sum of
P3,700.00 on October 13, 1961 and if the same is not paid on
said date to pay 9% interest thereon per annum until fully
paid, plus the sum of P370.00 as attorney's fees, in addition to
the costs and other disbursements taxable under the Rules of
Court. Under these terms it is clear that appellant bound
himself to pay personally said promissory note which he
cannot shift to another without the consent of the payee. Such
is the undertaking of the maker.

Under Sec. 60 of the Negotiable Instruments Law, the maker


of a promissory note cannot escape liability by alleging that he
spent the money for the medical treatment of his daughter,
the beneficiary of the trustee who is the payee of the note,
since it is not the payee’s concern to know how said proceeds
should be spent, inasmuch as that is the sole concern of the
maker, and payee’s interest is merely to see that the note be
paid according to its terms.

But even assuming for the sake of argument that


what is claimed by appellant as to how he spent the proceeds
of the notes is true, that will not exempt him from his liability
to Araneta but would merely give him some basis to claim for
recoupment against the share of the trust fund belonging to
the benefited minor if it is properly shown that there is fund
coming to said minor. Here, no such showing was made.
Moreover, the trust herein created merely provides for delivery
to the beneficiaries of the share that may correspond to them
in the net income of the trust fund, but does not impose upon
the trustee the duty to pay any obligation or expenses that
may be needed by said beneficiaries.

4
Mindanao Development Authority vs. Court of Appeals 1. WON Francisco Ang Bansing as vendor and the
(1982) one who worked to secure the title of his entire tract
of land which included the portion sold by him. to
Juan Cruz Yap Chuy acted in the capacity of
CONCEPCION JR., J.: and/or served as trustee for any and all parties
FACTS: who become successor-in-interest to Juan Cruz
Yap Chuy
 It is not disputed that Francisco Ang Bansing was the
owner of a big tract of land with an area of about 2. WON Ang Bansing was bound and obligated to give,
300,000 sq.m., situated in Barrio Panacan Davao City. deliver and reconvey to Juan Cruz Yap Chuy and/or
his successor-in-interest the title pertaining to the
 February 25, 1939, Ang Bansing sold a portion portion of land sold and conveyed by him to Juan
thereof, with an area of about 5 hectares to Juan Cruz Yap Chuy by virtue of the deed of sale and his
Cruz Yap Chuy The contract provided, among others, affidavit.
the following:
HELD:
That I hereby agree to work for the titling of the entire area of
my land under my own expenses and the expenses for the No express trust had been created between Ang Banging and
titling of the portion sold to me shall be under the expenses of Juan Cruz over Lot 1846-C of the Davao Cadastre.
the said Juan Cruz Yap Chuy. "Trusts are either express or implied. Express trusts are
 After the sale, the land of Ang Bansing was surveyed created by the intention of the trustor or of the parties.
and designated as Lot 664-B, Psd-1638. Lot 664-B Implied trusts come into being by operation of law."
was further subdivided into five (5) lots It is fundamental in the law of trusts that certain requirements
 The portion sold to Juan Cruz Yap Chuy shortened to must exist before an express trust will be recognized. Basically,
Juan Cruz, was designated as Lot 664B-3, with an these elements include
area of 61.107 square meters, more or less. 1. Competent trustor and trustee,
 June 15-17 and December 15, 1939, a cadastral 2. Ascertainable trust res, and sufficiently certain
survey was made and Lot 664-B-3 was designated as beneficiaries. Stilted formalities are unnecessary, but
Lot 1846-C of the Davao Cadastre. nevertheless each of the above elements is required
 December 23, 1939, Juan Cruz sold Lot 1846-C to to be established, and, if any one of them is missing,
the Commonwealth of the Philippines for the amount it is fatal to the trusts.
of P6,347.50. On that same day, Juan Cruz, as 3. Present and complete disposition of the trust
vendor, and C.B. Cam and Miguel N. Lansona as property, notwithstanding that the enjoyment in the
sureties, executed a surety bond in favor of the beneficiary will take place in the future.
vendee to guarantee the vendor's absolute title over
the land sold. 4. The purpose be an active one to prevent trust from
being executed into a legal estate or interest, and one
 Cadastral survey plan was approved by the Director of that is not in contravention of some prohibition of
Lands on July 10, 1940 statute or rule of public policy.
 March 7, 1941, Original Certificate of Title No. 26 was 5. Some power of administration other than a mere duty
issued in the means of Victoriana Ang Bansing, to perform a contract although the contract is for a
Orfelina Ang Bansing and Francisco Ang Bansing as third-party beneficiary.
claimants of the land, pursuant to Decree No. 745358
issued on July 29, 1940. On March 31, 1941, OCT No. 6. Declaration of terms which must be stated with
26 was cancelled pursuant to a Deed of Adjudication reasonable certainty in order that the trustee may
and TCTNo. 1783 was issued in the name of administer, and that the court, if called upon so to do,
Francisco Ang Bansing. may enforce, the trust.

In this case, the herein petitioner relies mainly upon the


following stipulation in the deed of sale executed by Ang
 February 25, 1965, the President of the Philippines Bansing in favor of Juan Cruz to prove that an express trust
issued Proclamation No. 459, transferring ownership had been established with Ang Bansing as the settlor and
of certain parcels of land situated in Sasa Davao City, trustee and Juan Cruz as the cestui que trust or beneficiary:
to the Mindanao Development Authority, now the
Southern Philippines Development Administration, That I hereby agree to work for the titling of the entire area of
subject to private rights, if any. my land under my own expenses and the expenses for the
titling of the portion sold to me shall be under the expenses of
 Lot 1846-C, the disputed parcel of land, was among said Juan Cruz Yap Chuy.
the parcels of land transferred to the Mindanao
Development Authority in said proclamation. The above-quoted stipulation, however, is nothing but a
condition that Ang Bansing shall pay the expenses for the
 March 31, 1969, Atty. Hector L. Bisnar counsel for the registration of his land and for Juan Cruz to shoulder the
Mindanao Development Authority, wrote Ang Bansing expenses for the registration of the land sold to him. The
requesting the latter to surrender the Owner's stipulation does not categorically create an obligation on the
duplicate copy of TCT No. 2601 so that Lot 1846-C part of Ang Bansing to hold the property in trust for Juan Cruz.
could be formally transferred to his client but Ang Hence, there is no express trust.
Bansing refused.
It is essential to the creation of an express trust that the
 Consequently, on April 11, 1969, the MDA filed a settlor presently and unequivocally make a disposition of
complaint against Francisco Ang Bansing before the property and make himself the trustee of the property for the
CFI of Davao City, for the reconveyance of the title benefit of another.
over Lot 1846-C, alleging, among others, the
following: In case of a declaration of trust, the declaration must be clear
and unequivocal that the owner holds property in trust for the
ISSUE: purposes named.

5
While Ang Bansing had agreed in the deed of sale that he will issuance of Original Certificate of Title No. 26 in the names of
work for the titling of "the entire area of my land under my Victoriana Ang Bansing Orfelina Ang Bansing and Francisco
own expenses," it is not clear therefrom whether said Ang Banging. From that date up to April 11, 1969, when the
statement refers to the 30-hectare parcel of land or to that complaint for reconveyance was filed, more than 28 years had
portion left to him after the sale. A failure on the part of the passed. Clearly, the action for reconveyance had prescribed.
settlor definitely to describe the subject-matter of the
supposed trust or the beneficiaries or object thereof is strong
evidence that he intended no trust.

The intent to create a trust must be definite and particular. It


must show a desire to pass benefits through the medium of a
trust, and not through some related or similar device.

Clear and unequivocal language is necessary to create a trust


and mere precatory language and statements of ambiguous
nature, are not sufficient to establish a trust. As the Court
stated in the case of De Leon vs. Packson,

a trust must be proven by clear, satisfactory and convincing


evidence; it cannot rest on vague and uncertain evidence or on
loose, equivocal or indefinite declarations. Considering that the
trust intent has not been expressed with such clarity and
definiteness, no express trust can be deduced from the
stipulation aforequoted.

Nor will the affidavit executed by Ang Bansing on April 23,


1941, be construed as having established an express trust. As
counsel for the herein petitioner has stated, "the only purpose
of the Affidavit was to clarify that the area of the land sold by
Ang Bansing to Juan Cruz Yap Chuy is not only 5 hectares but
61,107 square meters or a little over six (6) hectares."

That no express trust had been agreed upon by Ang Bansing


and Juan Cruz is evident from the fact that Juan Cruz, the
supposed beneficiary of the trust, never made any attempt to
enforce the alleged trust and require the trustee to transfer the
title over Lot 1846-C in his name.

Despite numerous transfers of portions of the original 30-


hectare parcel of land of Ang Bansing to Juan Cruz and the
issuance of certificates of title in the name of Juan Cruz, the
latter never sought the transfer of the title to Lot 1846-C in his
name. For sure, if the parties had agreed that Ang Bansing
shall hold the property in trust for Juan Cruz until after the
former shall have obtained a certificate of title to the land, the
latter would have asked for the reconveyance of the title to
him in view of the surety bond executed by him in favor of the
Commonwealth Government wherein he warrants his title over
the property. The conduct of Juan Cruz is inconsistent with a
trust and may well have probative effect against a trust.

But, even granting, arguendo, that an express trust had been


established, as claimed by the herein petitioner, it would
appear that the trustee had repudiated the trust and the
petitioner herein, the alleged beneficiary to the trust, did not
take any action therein until after the lapse of 23 years.

Needless to say, only an implied trust may have been


impressed upon the title of Ang Banging over Lot 1846-C of
the Davao Cadastre since the land in question was registered
in his name although the land belonged to another. In implied
trusts, there is neither promise nor fiduciary relations, the so-
called trustee does not recognize any trust and has no intent
to hold the property for the beneficiary." It does not arise by
agreement or intention, but by operation of law. Thus, if
property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the
property comes.

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.

There is also a constructive trust if a person sells a parcel of


land and thereafter obtains title to it through fraudulent
misrepresentation.

Such a constructive trust is not a trust in the technical sense


and is prescriptible; it prescribes in 10 years. Here, the 10-year
prescriptive period began on March 31, 1941, upon the
6
Roa, Jr. vs. Court of Appeals, 123 SCRA 3

FACTS: plaintiff and his brothers and sisters Trinidad Reyes


Roa, Esperanza Roa de Ongpin, Concepcion Roa and Zosimo
Roa, husband of the latter, were the owners pro-indiviso of a
parcel of land located in Tagoloan, Misamis Oriental. They filed
for the issuance of title but opposition was made by one Pablo
Valdehuesa for a portion of the land. Pablo claimed that the
portion was his. In order to ensure the issuance of the tittle
the siblings entered into an agreement with Pablo
(compromise agreement) wherein they would replace the lot
with another parcel of land of equivalent size or if the
replacement is not to his liking they would pay him 400 pesos.
As a result of the agreement Pablo withdrew his opposition.
Pablo died so ownership passed to his heirs, however no lot
was given as replacement nor were they paid. Also the
property described I the original agreement was partitioned
already to the plaintiff in this case.

ISSUE: WON the agreement created a trust

HELD: YES

Court cited pertinent AmJur the most releveant being

“A constructive trust, otherwise known as a trust ex maleficio,


a trust ex delicto, a trust de son tort, an involuntary trust, or
an implied trust, is a trust by operation of law which arises
contrary to intention and in invitum, against one who, by
fraud, actual or constructive, by duress or abuse of confidence,
by commission of wrong, or by any form of unconscionable
conduct, artifice, concealment, or questionable means, or who
in any way against equity and good conscience, either has
obtained or holds the legal right to property which he ought
not, in equity and good conscience, hold and enjoy. It is raised
by equity to satisfy the demands of justice. However, 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; ordinarily such a trust arises and
will be declared only on wrongful acquisitions or retentions of
property of which equity, in accordance with its fundamental
principles and the traditional exercise of its jurisdiction or in
accordance with statutory provision, takes cognizance. It has
been broadly ruled that a breach of confidence, although in
business or social relations, rendering an acquisition or
retention of property by one person unconscionable against
another, raises a constructive trust.”

The court said that what was created was not an


express trust because in that type of trust the intent nto create
one needs to be clear even in the absence of particular words.
Furthermore it could not be an implied trust because the law
states that “Art. 1456. If property is acquired through mistake
or fraud, the person obtaining it is, by force of law, considered
a trustee of an implied trust for the benefit of the person from
whom the property comes.” And in this case there was no use
of force or fraud in play.

So basically the court concluded that although this


type of scenario may not fall under the types of implied trusts
enumerated in the CC, the enumeration given does not
preclude the existence of other types of trusts that are in line
with the general law on trusts. In this case the court resolved
the case on the general principles of law on constructive trust
which basically rest on equitable considerations in order to
satisfy the demands of justice, morality, conscience and fair
dealing and thus protect the innocent against fraud.

7
Perez vs. Araneta, 4 SCRA 430 (1962)  The provision of the will of the decedent explicitly
authorizing the trustee to sell the property held in
CONCEPCION, J.: trust and to acquire, with the proceeds of the sale,
Trustor: Angela S. Tuason other property ("con amplios poderos de vender los
mismos, y con su producto adquirir otros bienes,")
Trustee: J. Antonio Araneta leaves no room for doubt about the intent of the
testatrix to keep, as part of the trust, said proceeds of
Beneficiaries: Benigno, Angela and Antonio, all surnamed the sale, and not to turn the same over to the
Perez y Tuason, the grandchildren of the decedent beneficiary as net rentals ("rentas netas").
Sometime in 1948, Angela S. Tuason died leaving a will,  Pursuant to the general law on trust, "a provision in
paragraph 4 of which reads: the instrument to the effect that the beneficiary shall
be entitled to the 'income and profits of' of the trust
Instituyo como mis unicos herederos a mis mencionados tres
estate is not ordinarily sufficient to indicate an
hijos, a rason de una novena parte del caudal hereditario que
intention that he should be entitled to receive gains
dejare para cada uno de ellos. Lego a mi hijo Antonio otra
arising from the sale of trust property ..."
porcion equivalente a dos novenas partes del caudal
hereditario. Lego asimismo a mis nietos que fueren de mi hija  It is well settled that profits realized in the sale
Nieves, otra porcion equivalente a dos novenas partes del of trust properties are part of the capital held
caudal hereditario. Y finalmente lego a mis nietos que fueren in trust to which the beneficiaries are not
hijos de mi hija Angela otra porcion equivalente de dos entitled as income.
novenas partes del caudal hereditario. Dichos tres legados, sin
embargo, estan sujetos a la manda que se menciona en el
parrafo siguiente. Los dos legados, a favor de mis
mencionados nietos seran administrados por mi albacea, J.
Antonio Araneta (y en defecto de este, su hermano, Salvador
Araneta), con amplios poderes de vender los mismos, y con
suproducto adquirir otros bienes, y con derecho a cobrar por
su administracion, honorarios razonables. Los poderos de dicho
administrador seran los de un trustee con los poderes mas
amplios permitidos por la ley. Deberasin embargo, rendir
trimestralmente, cuenta de su administracion a los legatarious
que fueren mayores de edad. Y asimismo, debera hacerles
entrega de la participacion que a cada legatario corresponda
en las rentas netas de la administracion. La administracion
sobre un grupo cesara cuando todos misnietos de dicho grupo
llegare a su mayoria de edad, y una mayoria de los mismos
acordaren la terminacion de la administracion. Por nietos, debe
entederse no solamente a los nietos varones sino tambien a
los nietos mujeres.

In conformity with this provision of said will, the present


trusteeship proceedings was instituted and certain properties
of the estate of the deceased, valued P900,00 were turned
over in 1950 to J. Antonio Araneta, as trustee for the benefit of
Benigno, Angela and Antonio, all surnamed Perez y Tuason,
the grandchildren of the decedent referred to in her
aforementioned will.

Portions of said properties constituting the trust were sold in


1956, 1957 and 1958 at prices exceedingly by P13,418.42,
P4,023.52 and P81,386.94, respectively — aggregating
P98,828.88 — the original appraised value thereof.

On September 28, 1959, the judicial guardian and father of


said minors filed a motion in the trusteeship proceedings
alleging that said sum of P98,828.88 represents profits or
income (based on the statements of profits and losses
attached to the corresponding income tax returns) of the
trusteeship to which said minors are entitled, pursuant to the
above quoted provision of the will, and praying that the trustee
be accordingly instructed to deliver said sum.

TC: Ruled in favor of trustee J. Antonio Araneta. Said sum not


income.

SC: Affirmed TC judgment. Aforesaid sum of P98,828.88 is


not a profit or income which should be turned over to the
guardian of said minors according to the provisions of the will.

 To begin with, the issue as to whether or not the


minors are entitled to the delivery of said sum of
P98,828.88 is a matter dependent exclusively upon
the conditions upon which the trust had been
established, as provided in the above quoted
paragraph of the will of the decedent, which in turn
depends upon the latter's intent, as set forth in said
paragraph. (The fact that it is treated as profit within
the purview of our internal revenue law is not
controlling.)
8
KINDS OF TRUST Sinaon vs. Soroñgon, 136 SCRA 407 (1985)

EXPRESS TRUST Aquino, J

GERTRUDES F. CUAYCONG, ET AL. vs LUIS D.


CUAYCONG, Et Al., Facts

G.R. No. L-21616. December 11, 1967 1. Canuta Soblingo – on of the 5 children of Domingo
Soblingo (the alleged owner of the lot in litigation
when it was not yet registered)
Facts:

Eduardo Cuaycong, married to Clotilde de Leon, died without 2. 4 March 1916 – Judge Carlos Imperial adjudicated to
issue but with three brothers and a sister surviving him: Lino, Canuta Soblingo Lot No 4781 of the Sta Barbara,
Justo, Meliton and Basilisa. Upon his death, his properties were Iloilo cadastre with an area of 5.5 hectares. OCT No
distributed to his heirs as he willed except two haciendas both 6178-A was issued in 1917 to Canuta
known as Hacienda Bacayan. Hacienda Bacayan is comprised
of eight (8) lots all of which are titled in the name of Luis D.
Cuaycong, son of Justo Cuaycong. Meliton and Basilisa died
without any issue. Plaintiffs, surviving heirs of Lino, filed a suit 3. 1923- Canuta sold the lot to spouses Patricio Sinaon
against Justo, Luis and Benjamin Cuaycong for conveyance of and Julia Sualibio (granddaughter of Canuta)
inheritance and accounting alleging, among others, that Luis
thru clever strategy, fraud, misrepresentation and in disregard
of Eduardo’s wishes by causing the issuance in his name of a. Canutas were registered owners for more
certificates of title covering Hacienda Bacayan’s properties. The than 40years and had possession of the lot
plaintiffs also claimed that Eduardo had an arrangement with during that period
Justo and Luis that the latter will hold in trust what might
belong to his brothers and sister as a result of the
arrangements and deliver to them their share when the proper
4. 1968 – Sorongon (et al) amended their complaint
time comes. The plaintiffs repeatedly demanded for their share
filed in 1964 that Canuta and the Sinaons were
in the property after Eduardo and Clotilde’s death.
TRUSTEES of the lot in litigation. As such the heirs of
On the other hand, Luis Cuaycong moved to dismiss the case Domingo’s four heirs are entitled to 4/5 share.
on the grounds of unenforceability of the claim under the
statute of frauds, no cause of action, and bar of causes of
action by the statute of limitations. The CFI dismissed the case 5. Trial Court – sustained the “Trustee” theory of
for the plaintiffs’ failure to file an amended complaint Sorongon, and ordered the Sinaons to convey 4/5 of
mentioning or alleging therein the written evidence of the Lot No 4781 to Sorongon et al.
alleged trust. Plaintiff thereafter manifested that the claim is
based on an implied trust as shown by paragraph 8 of the Issue:
complaint. They added that there being no written instrument
WON Canuta and the Sinaons were mere trustees via an
of trust, they could not amend the complaint to include such
implied or express trust of the lot in litigation?
instrument.

Issue: WON the trust is express or implied.


Held/Ratio:
Ruling:
No.
The SC held that the alleged trust is an express trust. The CIvil
Code defines an express trust as one created by the intention 1. Sinaons were registered owners for more than 40
of the trustor or of the parties, and an implied trust as one that years had become indefeasible and possession could
comes into being by operation of law. Express trusts are those not be disturbed. Any pretension as to the existence
created by the direct and positive acts of the parties, by some of an implied trust should not be countenanced.
writing or deed or will or by words evidencing an intention to Sorongon used unreliable oral evidence to prove the
create a trust. On the other hand, implied trusts are those trust to which The Court said that title and possession
which, without being expressed, are deducible from the nature cannot be defeated by oral evidence that can be
of the transaction by operation of law as matters of equity, easily fabricated and contradicted.
independently of the particular intention of the parties. Thus, if
2. The Court said that there was no express trust
the intention to establish a trust is clear, the trust is express; if
because “Express trusts concerning real property
the intent to establish a trust is to be taken from
cannot be proven by parol evidence (Art 1443, Civil
circumstances or other matters indicative of such intent, then
Code). Citing Suarez vs Tirambulo where it was held
the trust is implied. From these and from the provisions of the
that An implied trust “cannot be established contrary
complaint itself, it is clear that the plaintiffs alleged an express
to the recitals of a Torrens Title, upon vague and
trust over an immovable, especially since it is alleged that the
inconclusive proof. No
trustor expressly told the defendants of his intention to
establish the trust. Such a situation definitely falls under Article 3. The supposed trust in this case is a constructive trust
1443 of the Civil Code. arising by operation of law. (Art 1465, Civil Code). It
is not a trust in the technical sense.

Note: Even assuming that there was an implied trust,


prescription would have worked in favor of the Sinaons. In
Gerona vs de Guzman, the Court said that “an action for
reconveyance of realty, based upon a constructive or implied
trust resulting from fraud, may be barred by prescription. The
prescriptive period is reckoned from the issuance of the title
which operates as a constructive notice”.

9
IMPLIED TRUSTS execution of the deed of sale (and) it was only after the death
of Federico Valdez, Jr. (in 1960) that the widow, Teofila
G.R. No. L-22571 May 25, 1973 Olorga, tried to eject the plaintiffs."

JOSEFINA VALDEZ, et.al vs. TEOFILA OLORGA et. Al ISSUES: 1. WON there was an implied trust created among
Valdez Jr and the other co-heirs. YES
Case: This is an action for partition filed by the living
children and grandchildren of the late spouses Federico 2. WON the heirs of Valdez Jr. have acquired the
Valdez, Sr. and Juanita Batul against the heir and property through prescription. NO
widow of Federico Valdez, Jr. The action concerns Lot
No. 18, of Puerto Princesa Cadastre, covered by T.C.T. RULING: 1.) There was an implied trust.. Given the
No. T-94 in the name of Federico Valdez, Jr. antecedents of the property and the fact that its acquisition by
Federico Valdez, Jr. was for the benefit not of himself alone
FACTS: but also of his brother and sisters, although for purposes of
convenience he was made to appear as the sole vendee, the
The land in question Lot No. 18 of the Puerto Princesa juridical relation that arose among them was one of co-
Cadastre, was originally purchased by the spouses Federico ownership, with the plaintiffs-appellees actually in possession
Valdez, Sr. and Juanita Batul from Dolores M. de Gutierrez for of a portion of the property
P500.00; however the sale not registered because the original
title was lost, but they had been in open, public, peaceful and 2.) Under Article 494 of the Civil Code, "No prescription shall
uninterrupted occupation and possession of Lot No. 18, the run in favor of a co-owner or co-heir against his co-owners or
property in question, since the year 1930 or 1933; The parties co-heirs so long as he expressly or impliedly recognizes the co-
herein, plaintiffs and defendants alike, are all successors-in- ownership." Insofar as the aspect of extinctive prescription
interest of the spouses, either as forced or compulsory heirs or referred to in this article is concerned, it is but a restatement
in representation thereof; of Article 1965 of the Spanish Civil Code, which provides: "As
between co-heirs, co-owners, or proprietors of adjacent
Portion of the property was rented out to certain Mr. Quicho estates, the action to demand the partition of the inheritance
who eventually purchased a portion of said lot. or of the thing held in common, or the survey of the adjacent
That in 1947, upon discovering that the land in question had properties, does not prescribe." And from the standpoint of
not been transferred in the name of their parents, Josefina acquisitive prescription, or prescription of ownership, this Court
Valdez made efforts to have the said land transferred to them, has held in numerous decisions involving fiduciary relations
and commissioned cousin Mrs. Castro, together with Federico such as those occupied by a trustee with respect to the cestui
Valdez, Jr., to negotiate with the Gutierrez family for the que trust that as a general-rule the former's possession is not
purpose, which culminated in the execution of the deed of adverse and therefore cannot ripen into a title by prescription.
sale. The Gutierrez family demanded additional payment from Adverse possession in such a case requires, the concurrence of
vendees. Mr. Quicho advanced the amount of P2,200.00 partly the following-circumstances: (a) that the trustee has
as purchase price of the portion purchased by him, in the final performed unequivocal acts of repudiation amounting to an
execution of the deed of sale, and ouster of the cestui que trust; (b) that such, positive acts of
repudiation have been made known to the cestui que trust and
The Deed of Sale was finalized but was finally placed in the (c) that the evidence thereon should be clear and conclusive. *
name of Valdez, Jr. alone as vendee, instead of the "Heirs of These circumstances are not present in this case.
Federico Valdez, Sr." or "Heirs of Juanita Batul" with the
express understanding that he will hold the same in trust for In view of the foregoing considerations the judgment appealed
his other brother and sisters. It was done through the from is hereby affirmed. With costs.
suggestion of Mr. Quicho who wanted to facilitate his own
deed of sale over the portion that he purchased;

Valdez, Jr. never asserted, nor attempted to assert, during his


lifetime, sole and exclusive ownership of the premises in
question, against the herein plaintiffs; but after his death in
1960, his widow tried to eject the plaintiffs.

Hence this action for partition.

DEFENSE :

The legal point raised by the appellants is that since the land in
question was sold to the late Federico Valdez, Jr. in 1948 and
the Transfer Certificate of Title, so he alleges, was issued in his
name in 1950, the action had already prescribed when it was
filed more than ten (10) years thereafter, or in 1962; that
furthermore, from the date of the sale up to the time his death
in 1960 he exercised exclusive ownership of the land. In other
words the appellants claim both extinctive and acquisitive
prescription.

Lower Court:

(1.) There was an implied trust. The deed of sale was


executed and the name of Federico Valdez, Jr. was made to
appear therein as the only vendee, "this was done pursuant to
the wishes of Mr. Quicho who advanced the money, in order
that he could facilitate the deed of sale between him and the
Valdezes, With the understanding that Federico Valdez, Jr. will
hold the same in, trust for his other brother and sisters;"

(2) that when 'Federico Valdez, Jr. was still living, "he never
attempted to exclude the herein plaintiffs from ownership of
the land in question, (and) said plaintiffs have been in
continuous and uninterrupted possession of the premises they
are occupying inside the lot in question long before the
10
19 Phil. 202 shall be reversed on formal or technical grounds, or for such
error as has not prejudiced the real rights of the excepting
party."

CARSON, J.: Accepting, as we do, the truth and accuracy of the facts found
After a careful examination of the evidence of record in this by the trial court there can be no shadow of doubt that the
case we are satisfied that the material findings of fact by the plaintiffs are entitled to the relief furnished them by
trial court are fully sustained thereby, and that upon the facts the decree. The attempt on the part of the appellants to
as proven that court properly granted the relief afforded by escape the logical and manifestly just consequences of the
the decree from which this appeal was taken. conclusions of facts set out in the opinion of the trial judge by
pointing this court to the doctrine laid down in its decisions in
From the facts proven at the trial it appears that a number of the case of Martinez vs. Martinez (1 Phil. Rep., 647) and
Chinese merchants raised a fund by voluntary subscription with the case of Compania General de Tabacos vs. Topino (4 Phil.
which they purchased a valuable tract of land and erected a Rep. 33), can not and should not succeed. It is at most an
large building to be used as a sort of club house for the attempt to substitute for the plain dictates of reason
mutual benefit of the subscribers to the fund. The subscribers and equity certain technical propositions of law laid down in
organized themselves into an irregular association, which had those cases which have no proper application to the facts
no regular articles of association, and was not incorporated or proven in this case. The Martinez case turned on the
registered in the commercial registry or elsewhere. The lack of proof of tne existence of the relationship of principal
association not having any existence as a legal entity, it was and agent or of trustee and cestui que trust between the
agreed to have the title to the property placed in the name of parties, in addition to proof that the funds with which the
one of the members, the defendant, Cho Jan Ling, who on property was purchased had been furnished by another
his part accepted the trust, and agreed to hold the property than him who secured its registry in his own name. In the
as the agent of the members of the association. After the case at bar we think that the evidence clearly discloses not
club building was completed with the funds of the members of only that the funds with which the property in question
the association, Cho Jan Ling collected sotfie ¥=25,000 was purchased were furnished by the members of the
in rents for which he failed and refused to account, and association, but that Cho Jan Ling, in whose name it was
upon proceedings being instituted to compel him to do so, he registered, received and holds the property as the agent and
set up title in himself to the club property as well as to the trustee of the association; that on at least one occasion he
rents accruing therefrom, falsely alleging that he had bought admitted the beneficial ownership to be in the association; and
the real estate and constructed the building with his own that while the legal registered title is in his name the
funds, and denying the claims of the members of the beneficial ownership is in the association. Nor has the
association that it was their funds which had been used for doctrine laid down in the Topifio case any direct bearing
that purpose. upon the facts proven and the relief sought and granted in
this case. The Topifio case turned on the determination of the
The decree of the trial court provides for the conveyance of question of the legal title of the grantor of the
the club house and the land on which it stands from the conveyance inscribed in the land registry, and the further
defendant, Cho Jan Ling, in whose name it is registered, to the question of the right of the holder of a duly registered title to
members of the association, and further makes provision for be secured in his right of possession as against third persons
an accounting by him for rents had and received, who do not claim through him, until and unless the inscription
of his title has been judicially canceled. In the case at bar the
Accepting the truth of the above-set-out summary of the facts legal title of the holder of the registered title is not questioned;
proven at the trial, we think appellants' assignments of error it is admitted that the members of the association
are entitled to but scant consideration, in so far as they are voluntarily obtained the inscription in the name of Cho Jan
based on alleged abuses of discretion by the trial court in Ling and that they have no right to have that inscription
improvidently appointing a receiver pending these canceled; they do not seek such cancellation, and on
proceedings, and in permitting amendments to the original the contrary they allege and prove that the duly registered
complaint, chiefly for the purpose of bringing in the proper legal title to the property is in Cho Jan Ling, but they
parties to this action. Even if it be admitted that the court maintain, and we think that they rightly maintain, that he
erred in appointing a receiver at the institution of these holds it under an obligation, both express and implied, to deal
proceedings and in retaining him after he had been appointed, with it exclusively tor the benefit of the members of the
this alleged error in no wise affected the real merits of the association and subject to their will.
case; and in the light of the facts set out above it will hardly be
contended that the appellants have suffered any damage for Without prejudice to the filing of a more extended opinion
which they should have redress, merely because, during the hereafter by any of the members of the court, if it be deemed
pendency of this action and without awaiting the final decree advisable or necessary so to do, the decree entered by the
compelling them to disgorge, the court took under its own court below should be affirmed with the costs of this instance
guardian care certain funds and property which they unjustly against the appellants. It is so ordered.
sought to retain, although its retention by them involved a
flagrant breach of trust on their part. So, too, even if
we were to admit, which we do not, that the trial judge was
too liberal in his allowance of amendments to the complaint
filed in this proceeding, we are nevertheless unable to see that
any real or substantial right of the appellants was prejudiced
thereby. Due, doubtless, to the inherent difficulties which
must be anticipated in the conduct of a case wherein a large
number of the parties are Chinese persons, unable
to speak any tongue but their own, some formal or technical
irregularities seem to have crept into the proceedings in the
court below and an unusually large number of amendments of
the pleadings appear to have been necessary for the proper
development of the facts and in order to bring: in all the
parties interested, but none of these irregularities or
amendments in any wise prejudiced the defense set up by
the appellants in the court below, and assignments of error
based thereon can not be sustained under section 503 of the
Code of Civil Procedure, which provides that "No judgment
11
147 Escobar v. Locsin, have therefore shielded fiduciary relations against every manner
of chicanery or detestable design cloaked by legal technicalities.
G.R. No. L-48309 January 30, 1943 The Torrens system was never calculated to foment betrayal in
TOPIC: Proving Implied Trust the performance of a trust.

PONENTE: BOCOBO, J.:

FACTS:

1. The complaint in this case, which prays for the


reconveyance of lot No. 692 of the Cuyapo cadastre
in Nueva Ecija, alleges that the plaintiff is the owner
of said lot; and that in the course of the cadastral
proceedings, plaintiff being illiterate, asked Domingo
Sumangil to claim the same for plaintiff but Sumangil
committed a breach of trust by claiming the lot for
himself, so it was adjudicated in favor of Sumangil.

2. The defendant is the special administrator of the


estate of Juana Ringor, to whom the parcel of land in
question was assigned by partition in the intestate
estate of Domingo Sumangil and Honorata Duque.

3. The Court of First Instance of Nueva Ecija found that


the plaintiff is the real owner of the lot which she had
acquired in 1914 by donation propter nuptias from
Pablo Ringor; that plaintiff had since that year been in
possession of the land; and that the same had been
decreed in the cadastral proceedings in favor of
Domingo Sumangil.

4. The trial court, while recognizing that the plaintiff had


the equitable title and the defendant the legal title,
nevertheless dismissed the complaint because the
period of one year provided for in section 38 of the
Land Registration Act (No. 496) for the review of a
decree had elapsed, and the plaintiff had not availed
herself of this remedy.

ISSUE(S):

1. W/N Plaintiff is the rightful owner of the lot in question


HELD:

Yes.

RATIO:

The complaint did not seek the review of the decree or the
reopening of the cadastral case, but the enforcement of a trust.
Hence, section 38 of Act No. 496 does not apply. The estate of
Juana Ringor as the successor in interest of the trustee,
Domingo Sumangil, is in equity bound to execute a deed of
conveyance of this lot to the cestui que trust, the plaintiff-
appellant.

Registered lands and ownership therein, shall in all respects be


subject to the same burdens and incidents attached by law to
unregistered land. Nothing contained in this Act shall in any way
be construed to relieve registered land or the owners thereof
from any rights incident to the relation of husband and wife, or
from liability to attachment on mesne process or levy on
execution, or from liability to any lien of any description
established by law on land and the buildings thereon, or the
interest of the owner in such land or buildings, or to change the
laws of descent, or the rights of partition between coparceners,
joint tenants and other cotenants, or the right to take the same
by eminent domain, or to relieve such land from liability to be
appropriated in any lawful manner for the payment of debts, or
to change or affect in any other way any other rights or liabilities
created by law and applicable to unregistered land, except as
otherwise expressly provided in this Act or in the amendments
hereof.

A trust — such as that which was created between the plaintiff


and Domingo Sumangil — is sacred and inviolable. The Courts
12
EMILIA O'LACO and HUCO LUNA v. VALENTIN CO CHO between members of the same family, and no trust
CHIT, O LAY KIA and CA relation exists between them.

G.R. No. 58010 | March 31, 1993 | BELLOSILLO 2. Spouses Valentin are already barred by laches

FACTS: ISSUE:

1. Emilia O'Laco and respondent O Lay Kia are half-sisters 1. WON there was effort on the side of spouses Hugo
to settle the controversy - YES
2. May 31, 1943 – Philippine Sugar Estate Development
Company, Ltd., sold a parcel of land1 with the Deed of 2. WON there was an implied trust - YES
Absolute Sale naming O'Laco as vendee; thereafter,
Transfer Certificate of Title No. 66456 was issued in her 3. WON laches came in - NO
name.

3. May 17, 1960 – spouses Valentin Co Cho Chit and O Lay HELD: YES!!!
Kia (spouses Valentin) learned from the newspapers
that O'Laco sold the same property to the Roman Catholic
Archbishop of Manila for P230,000.00, with assumption of
the real estate mortgage constituted thereon. RATIO:

4. June 22, 1960 –spouses Valentin sued spouses Emilia


O'Laco and Hugo Luna (spouses Hugo) to recover the
1. Procedural -- Contention no. 1
purchase price of the land before CFI of Rizal.
a. The complaint must show that there were efforts
a. Spouses Valentin: Emilia O'Laco knew that they
towards compromise, pursuant to Art. 222 of the
were the real vendees of the Oroquieta property
New Civil Code2, or a motion to dismiss could
sold in 1943 by Philippine Sugar Estate
have been filed under Sec. 1, par. (j), Rule 16, of
Development Company, Ltd., and that the legal
the Rules of Court.
title thereto was merely placed in her name.
b. An attempt to compromise as well as the inability
i. Emilia O'Laco breached the trust when
to succeed is a condition precedent to the filing
she sold the land to the Roman Catholic
of a suit between members of the same family.
Archbishop of Manila.
c. But plaintiff may be allowed to amend his
ii. Asked the trial court to garnish all the
complaint to correct the defect if the amendment
amounts still due and payable to
does not actually confer jurisdiction on the court
spouses Hugo arising from the sale,
in which the action is filed, i.e., if the cause of
which was granted on 30 June 1960.
action was originally within that court's
b. Spouses Hugo:deny the existence of any form of jurisdiction.
trust relation.
d. Spouses Valentin did not formally amend their
i. O'Laco actually bought the property with complaint. They were allowed to introduce
her own money evidence purporting to show that earnest efforts
toward a compromise had been made.3 Hence,
ii. she left the Deed of Absolute Sale and the complaint was deemed accordingly amended
the corresponding title with spouses to conform to the evidence.
Valentin merely for safekeeping;
e. If the defendant permits evidence to be
iii. when O’Laco asked for the return of the introduced without objection and which supplies
documents evidencing her ownership, the necessary allegations of a defective
spouses Valentin told her that these complaint, then the evidence is deemed to have
were misplaced or lost; hence, she filed the effect of curing the defects of the complaint.
a petition for issuance of a new title. On
August 18, 1944 the CFI Manila granted
her petition.
2. (ISSUE NO. 2) Substantial – existence of trust relations
5. CFI Rizal, September 20, 1976 – finding no trust relation
a. Trust relations between parties may either be
between the parties, dismissed the complaint together
express or implied.
with the counterclaim.
i. Express trusts are those which are
6. Petitioners and respondents appealed.
created by the direct and positive acts
7. CA, April 9, 1981 (ipapanganak na si Azy nito, of the parties, by some writing or deed,
hehehe) – reversed TC decision. MR denied. Appealed to or will, or by words evincing an intention
SC. to create a trust.

ii. Implied trusts are those which, without


being express, are deducible from the
CONTENTION OF SPOUSES HUGO (PETITIONERS): nature of the transaction as matters of
intent, or which are superinduced on the
1. The complaint fails to allege that earnest efforts toward a transaction by operation of law as
compromise were exerted considering that the suit is

1 Lot No. 5, Block No. 10, Plan Psu-10038, situated at Oroquieta St., Sta. 3 That is, O Lay Kia pressed O'Laco for the transfer of the title of
Cruz, Manila the Oroquieta property in the name of spouses Valentin, just
2 Superseded by the Family Code, I didn’t try to look for the exact before O’Laco’s marriage to Hugo. But, instead of transferring the
provision: “No suit shall be filed or maintained between members of the title as requested, Emilia sold the property to the Roman Catholic
same family unless it should appear that earnest efforts toward a Archbishop of Manila. This testimony was not objected to by
compromise have been made, but that the same have failed, subject to the spouses Hugo.
limitations in Article 2035.”
13
matters of equity, independently of the older brother of Emilia, under similar or identical
particular intention of the parties. circumstances.

b. Implied trusts may either be resulting or i. Spouses Valentin: The reason why they
constructive trusts, both coming into being by did not place these properties in their
operation of law.4 name was that being Chinese nationals
at the time of the purchase they did not
i. Resulting trusts are based on the want to execute the required affidavit to
equitable doctrine that valuable the effect that they were allies of the
consideration and not legal title Japanese.
determines the equitable title or interest
and are presumed always to have been 1. Spouses Valentin even filed an
contemplated by the parties. action for reconveyance
against Ambrosio when he
1. They arise from the nature or claimed the Kusang-Loob
circumstances of the property as his own, which
consideration involved in a they won.
transaction whereby one
person thereby becomes 2. Ambrosio O'Laco filed a case
invested with legal title but is against the Anti-Dummy Board,
obligated in equity to hold his because of this, there was an
legal title for the benefit of implied admission by Ambrosio
another. that his sister Emilia, like him,
was merely used as a dummy.
ii. Constructive trusts are created by the
construction of equity in order to satisfy c. The circumstances by which O'Laco obtained a
the demands of justice and prevent new title by reason of the alleged loss of the old
unjust enrichment. title then in the possession of spouses Valentin
cast serious doubt on the veracity of her
1. They arise contrary to intention ownership.
against one who, by fraud,
duress or abuse of confidence, i. The petitions respectively filed by Emilia
obtains or holds the legal right and Ambrosio for both properties were
to property which he ought both granted on the same day by the
not, in equity and good CFI of Manila.
conscience, to hold.
1. It really looks that there was
c. Express trusts concerning immovables or any conspiracy between the siblings
interest therein cannot be proved by parol to defraud and deprive spouses
evidence. Implied trusts may be established by Valentin of their properties.
oral evidence.
d. Until the sale of the contested property to the
i. In order to establish an implied trust in Roman Catholic Archbishop of Manila, Emilia
real property by parol evidence, the O'Laco actually recognized the trust.
proof should be as fully convincing as if
the acts giving rise to the trust i. Specifically, when spouses Valentin
obligation were proven by an authentic learned that Emilia was getting married
document. It cannot be established to Hugo, O Lay Kia asked Emilia to have
upon vague and inconclusive proof. the title to the property already
transferred to her and her husband
Valentin, and Emilia assured her that
"would be arranged (maaayos na)" after
3. (APPLICATION OF NO. 2) There is a resulting trust was her wedding.
indeed intended by the parties under Art. 1448 of the
NCC: e. The TC determined that spouses Valentin had
some money with which they could buy the
a. As stipulated by the parties, the document of property."
sale, the owner's duplicate copy of the certificate
of title, insurance policies, receipt of initial i. Valentin was the Chief Mechanic of the
premium of insurance coverage and real estate Paniqui Sugar Mills. Emilia failed to
tax receipts ware all in the possession of convince the Court that she was
respondent spouses which they offered in financially capable of purchasing the
evidence. As per O Lay Kia, the reason why these property.
documents of ownership remained with her is
that the land in question belonged to her. 1. In fact, she opened a bank
account only in 1946 and
i. The only possible reason for these likewise began filing income
documents to be possessed by the tax returns that same year, 39
spouses Valentin for 17 years after the while the property in question
purchase of the property in 1943 is was bought in 1943.
O’Laco only held the property for the
former.

b. Before buying the property, spouses Valentin 4. (ISSUE NO. 3) In resulting trust, the rule of
purchased another property situated in Kusang- imprescriptibility may apply for as long as the trustee has
Loob, Sta. Cruz, Manila, where the certificate of not repudiated the trust. Once the resulting trust is
title was placed in the name of Ambrosio O'Laco,

4 Specific examples of resulting trusts may be found in the Civil Code,


particularly Arts. 1448, 1449, 1451,1452 and 1453, 23 while constructive
trusts are illustrated in Arts. 1450, 1454, 1455 and 1456.
14
repudiated, however, it is converted into a constructive
trust and is subject to prescription.

a. A resulting trust is repudiated if the following


requisites concur:

i. the trustee has performed unequivocal


acts of repudiation amounting to an
ouster of the cestui qui trust;

ii. such positive acts of repudiation have


been made known to the cestui qui
trust; and,

iii. the evidence thereon is clear and


convincing.

b. The Court categorically ruled that an action for


reconveyance based on an implied or
constructive trust must perforce prescribe in ten
(10) years, and not otherwise, thereby modifying
previous decisions holding that the prescriptive
period was four (4) years.

5. (APPLICATION OF NO. 5) Neither the registration of the


property in the name of Emilia O'Laco nor the issuance of
a new Torrens title in 1944 in her name in lieu of the
alleged loss of the original may be made the basis for the
commencement of the prescriptive period.

a. As late as 1959, or just before she got married,


Emilia continued to recognize the ownership of
spouses Valentin over the Oroquieta property.

b. Immediately after Emilia sold the Oroquieta


property spouses Valentin instituted the present
suit for breach of trust. Correspondingly, laches
cannot lie against them.

15
Special Services Corporation vs. Centro La Paz, 121 I. WON Estudillo is merely the trustee of Centro La Paz?
SCRA 748
II. WON the “Acknowledgements” of registered owners
Trustor: Centro La Paz not being annotated on TCT No. 51837 is conclusive
of all matters, valid and binding?
Trustee: Alejandro Estudillo, et. al*
III. Whether or not Centro La Paz which is merely a
Chapter of Union Espiritista de Filipinas, Inc. has a
FACTS: juridical personality of its own in accordance with the
provisions of our laws;
 The Union Espiritista Cristiana de Filipinas, Inc., is a
semi-religious and charitable organization. HELD:

I.

 October 10, 1972, judgment was rendered in favor of 1. CENTRO reiterated ownership of the properties in
petitioner Special Services Corporation by the CFI, question and emphasized that the registered owners
Branch IV, Manila, against one Alejandro Estudillo in thereof had publicly acknowledged their possession of
the amount of P94,727.52, more or less, in an action said properties in the concept of trustees.
for Replevin with Sum of Money. A writ of execution
was thereafter issued but which has remained
2. Preponderance of evidence CENTRO had established
that it was "really and true and lawful owner of the
unsatisfied.
property in dispute, and that the persons registered
therein as its owners are merely trustees of the
plaintiff, the series of documents executed even as
 December 15, 1972, the Sheriff of Manila caused the early as 1957, long before the issue of whether
annotation of a notice of levy on TCT No. 51837, in Alejandro Estudillo really has an interest and/or
respect of the rights, interest and participation of participation in the property in dispute, attest to
Alejandro Estudillo, one of the registered owners plaintiff's ownership of the property in question.
indicated in said title.
The Deed of Donation dated March 13, 1957
 Title covers 2 parcels of land situated in Sampaloc,
Manila, consisting 348 square meters and registered Deed of Absolute Sale executed by Joaquina dela Rosa in favor
in the names of:* of Alejandro Estudillo, Pedro Paguio and Maximo Victoria of the
same property covered by the Deed of Donation;
1. Alejandro Estudillo, married to Primitiva
Victoria; Deed of Sale of two parcels in dispute described under T.C.T.
No. 51837 executed by Sta. Mesa Realty, Inc. in favor of
2. Joaquina de la Rosa, widow; Alejandro Estudillo, Joaquina dela Rosa, Pedro Q. Paguio and
Maximo Victoria
3. Pedro Paguio, married to Amor Jose
and Deed of Acknowledgment dated October 30, 1961 also
executed by Estudillo de la Rosa and Victoria acknowledging
4. Maximo Victoria, married to Juliana
that the property described under the aforementioned T.C.T.
Roberto, all Chapter members.
No. 51837, together with the improvements thereon are being
 July 23, 1973: schedule of the public auction sale of possessed by them only as trustees;
Estudillo's rights and interests in said properties
Deed of Acknowledgment executed on October 22, 1971,
 June 27, 1973, Alejandro Estudillo filed a "Motion to jointly by Amor Jose, widow of Paguio and the latter's
Dissolve and/or Cancel the Notice of Levy" alleging daughters, Sumilang Paguio and Filipina Paguio (co-registered
that he and the other registered owners indicated on owner of Estudillo) likewise declaring that their possession of
the title merely held in trust the properties and the said property is merely that of trustees and not as owners;
improvements thereon in favor of Centro La Paz
Petitions for revocation of tax assessments Nos. 3187 and
(Samahang Espiritista Sa Lunduyang La Paz) a
3188
Chapter of Union Espiritista Cristiana de Filipinas, Inc.
as evidenced by "Acknowledgments" executed by Petition to exempt said parcels from taxation, being owned by
them on October 20, 1961 and October 2, 1971. a religious organization and;
 Estudillo further alleged that CENTRO's ownership Follow-up letters addressed to the City Assessor of Manila,
was also evidenced by letters sent to the City dated February 15, 1963; December 29,1963 and May 29,
Assessor by him and Crispulo Romero, President of 1962 respectively
CENTRO, long before the filing of the replevin case on
December 28, 1971 praying for the revocation of tax Deed of Sale executed by Estudillo, heirs of dela Rosa and
assessments on said properties as the same, were Paguio of the two parcels in favor of Centro La Paz, indubitably
used for religious purposes. Date of letters are as point to one and inescapable conclusion that the plaintiff is
follows really the true and lawful owner of the property in dispute and
that persons registered therein as its owners, are merely
trustees of the plaintiff.
1. February 15, 1963 II. As found by both the Trial Court and Appellate Court,
the evidence sufficiently establishes that the
2. November 29, 1963 and
registered owners of the parcels of land covered by
3. August 8, 1966 TCT 51837, all of whom are members of CENTRO,
hold the properties in trust for CENTRO by virtue
of the indubitable documents executed even before
the institution of suit. In the same manner that the
 July 21, 1973, CENTRO submitted a third party claim
real property, registered solely in the name of a
to the Sheriff of Manila likewise averring exclusive
husband, can be proven to be conjugal property with
ownership of the properties in question.
his wife, the fact of registration in the name of
ISSUE/s: Alejandro Estudillo and others does not bar evidence

16
to show that the registered owners hold the
properties in trust for CENTRO.

Admittedly, the trust was not registered in accordance with


section 65 of Act 496 (the former Land Registration Law). The
absence of said registration, however, cannot be taken against
CENTRO inasmuch as, if the public auction sale had actually
been held, with Special Service Corp. (SSC) as the successful
buyer, SSC could not have been considered a purchaser for
value and in good faith at said sale since it had knowledge of
CENTRO's claim, particularly when the latter had filed a third-
party-claim with the Sheriff of Manila before the scheduled
auction sale, which knowledge was equivalent to registration of
the several "Acknowledgments" in the Registry of Deeds.

III. Evident from the record that although it was CENTRO


that was actively prosecuting the case, in substance,
it was representing the mother organization, the
Union Espiritista Cristiana de Filipinas, Inc., which is
the real party in interest and is itself named in the
Complaint. It is an organization that is duly registered
with the Securities and Exchange Commission, and
thus possessed of a juridical personality to sue and be
sued.

17
Chiao Liong Tan vs. Court of Appeals, 228 SCRA 75

FACTS: Chiao Long Tan claims to be the owner of a 1976


Isuzu Elf van. As owner
thereof, petitioner says he has been in possession, enjoy
ment, and utilization of the van until his older brother, Tan
Ban Yong, unlawfully took it away from him. Chiao claims that
the van is registered under his name, that he bought the
vehicle from isuzu balintawak,
that he sent his brother to pay for the van and the rec
eipt was issued in his name because it was his money that
was used to pay for the vehicle, that he allowed his brother to
use the vehicle because the latter was working for the
company,
and that his brother later refused to return the vehicle a
nd appropriated the same for himself.

According to respondent CLT Industries is the family business


and it was under the name of
petitioner since at the that time, he was leaving for the
US and petitioner is the only Filipino left in the Philippines.
When the family business needed a vehicle, he asked
petitioner to
look for a vehicle and gave him money as downpayment
for an Isuzu Elf van. After a month, he paid for the van by
getting a loan from a friend.
As much as the receipt was placed in the name of petiti
oner,
private respondent allowed the registration under the na
me of petitioner.
There was also agreement that he would use the vehicle
as he paid for the same.
All the abovementioned allegations of private respondent
has been
corroborated by witnesses. The trial court hence ruled i
n favor of the private respondent and the CA affirmed this
decision.

ISSUE: WON there was an Implied trust created when the


Van was registered under petitioners name but was paid for
and really owned by respondent

HELD: YES

The New Civil Code recognizes cases of implied trust


other than those enumerated therein. Thus, although no
specific provision could be cited to apply to the parties herein,
it is undeniable that an implied trust was created when the
certificate of registration of the motor vehicle was placed in the
name of the petitioner although the price thereof was not paid
by him but by private respondent. 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. A trust, which derives its
strength from the confidence one reposes on another
especially between brothers, does not lose that character
simply because of what appears in a legal document.

On the side issue of replevin, the court said that


respondent should have filed for recovery of possession on the
basis of ownership, but due to the policy to settle in one action
all the conflicting claims of the parties to the possession of the
property in controversy, the question of ownership may be
resolved in the same proceeding.

18
SABAS H. HOMENA and ILUMINADA JUANEZA v. DIMAS prescription or laches becomes irrelevant in a case such as
CASA AND MARIA CASTOR and the REGISTER OF this, where plaintiffs clearly have no cause of action.
DEEDS FOR THE PROVINCE OF COTABATO

G.R. No. L-32749 | January 22, 1988 | YAP

FACTS:

1. Homena and Juaneza filed a case against Casa and Castor


for unlawful dispossession disturbing the former’s
peaceful, continuous, open, uninterrupted adverse and
public possession of the property in question.

a. Homena and Juaneza sought to annul the original


certificate of title in favor of Casa and Castor
pursuant to a Homestead Patent on the ground
that said patent was obtained fraudulently by
stating that the lot was not claimed and occupied
by another person.

b. Homena and Juaneza allege than on June 15,


1967, they purchased from Casa and Castro 2
hectares of land with the agreement that the
deed of sale would be given to the former after
the 5-year prohibitive period provided in the
Homestead Patent Law. However, they never got
the title from Casa and Castro.

2. Casa and Castro’s motion to dismiss:

a. complaint is barred by prescription, since thirteen


years had elapsed from the issuance of the
homestead patent before the action was filed;

b. The deed of sale executed on June 15, 1952 or


prior to the approval of the application and
issuance of the homestead patent was null and
void and inoperative to convey the land in
question, which was at that time still public land;
and

c. Homena and Juaneza are not the proper party to


institute the action to annul the homestead
patent.

3. Homena and Juaneza’s opposition to the motion to


dismiss:

a. The validity of the patent as a whole was not


assailed, only with respect to the 2 hectares that
Casa and Castro were able to register.

b. Because of the fraud in registration, it needs 4


years to be prescribed, action was started before
that time elapsed.

c. The defense of prescription cannot be set


up in an action to recover property held in
trust by a person for another.

4. TC dismissed the case. MR denied. Appealed to CA, which


certified the case to SC.

ISSUE: WON there was an implied trust among the


parties

HELD: NO.

RATIO:

1. Under the Public Land Act, the homestead owner was


prohibited from transferring his rights. Hence, the
agreement is clearly illegal and void ab initio; it is intended
to circumvent and violate the law.

2. As parties to a void contract, the Homena and Juaneza


have no rights which they can enforce and the court
cannot lend itself to its enforcement.

3. Homena and Juaneza cannot invoke the doctrine of


implied trust based on an illegal contract. The issue of

19
Heirs of Candelaria vs. Romero, 109 Phil. 500. (1960) for the transfer, unless a different intention or
understanding appears. The trust which results under
GUTIERREZ DAVID, J.: such circumstances does not arise from contract or
Trustee: Lucas Candelaria (land was registered under his agreement of the parties, but from the facts and
name) circumstances, that is to say, it results because of
equity and arises by implication or operation of law.
Beneficiaries: Emilio Candelaria (actually paid for said land)
 In the present case, the complaint expressly alleges
Emilio Candelaria and his brother Lucas Candelaria bought that "although Lucas Candelaria had no more interest
each a lot in the Solokan Subdivision on installment basis. over the lot, the subsequent payments made by
Emilio Candelaria until fully paid were made in the
Lucas paid the first two installments corresponding to his lot, name of Lucas Candelaria, with the understanding
but faced with the inability of meeting the subsequent that the necessary documents of transfer will be
installments because of sickness which caused him to be made later, the reason that the transaction being
bedridden, he sold his interest to his brother Emilio, who then brother to brother." From this allegation, it is
reimbursed him the amount he had already paid, and apparent that Emilio Candelaria who furnished the
thereafter continued payment of the remaining installments consideration intended to obtain a beneficial interest
until the whole purchase price had been fully satisfied. Said in the property in question. Having supplied the
payments done by Emilio were however made in the name of purchase money, it may naturally be presumed that
Lucas, with the understanding that the necessary documents he intended the purchase for his own benefit. Indeed,
of transfer will be made later. it is evident from the above-quoted allegation in the
complaint that the property in question was acquired
In 1918 a transfer certificate of title for said lot was issued by
by Lucas Candelaria under circumstances which show
the register of deeds of Manila in the name of "Lucas
it was conveyed to him on the faith of his intention to
Candelaria married to Luisa Romero".
hold it for, or convey it to the grantor, the plaintiff's
Lucas held the title to said lot merely in trust for Emilio and predecessor in interest.
that this fact was acknowledged not only by him but also by
 Constructive or implied trusts may, of course,
the defendants (Lucas’ heirs) on several occasions.
be barred by lapse of time. The rule in such trusts
Lucas' possession of the lot was merely tolerated by Emilio and is that laches constitutes a bar to actions to enforce
his heirs. Lucas had been collecting all its rents for his own the trust, and repudiation is not required, unless
use as financial aid by Emilio to him as a brother in view of the there is a concealment of the facts giving rise to the
fact that he was bedridden without any means of livelihood trust. Continuous recognition of a resulting
and with several children to support, although from 1926, trust, however, precludes any defense of laches
when Emilio was confined at the Culion Leper Colony up to his in a suit to declare and enforce the trust.
death on February 5, 1936, Lucas had been giving part of the
rents to Fortunata Bautista, the second wife of Emilio, in
accordance with the Emilio's wishes.

Lucas died in August, 1942, survived by the present


defendants, who are his spouse Luisa Romero and several
children; and that said defendants are still in possession of the
lot, having refused to reconvey it to plaintiff despite repeated
demands.

Heirs of Emilio filed complaint for reconveyance of real


property with damages.

TC: Dismissed complaint on the ground that cause of action is


unenforceable under the NCC and that the action has already
prescribed.

 In the order granting the motion to dismiss, the lower


court held that an express and not an implied trust
was created as may be gleaned from the facts alleged
in the complaint, which is unenforceable without any
writing, and that since Transfer Certificate of Title No.
9584 covering the land in question had been issued to
Lucas Candelaria way-back in 1918 or 38 years before
the filing of the complaint, the action has already
prescribed.

SC: Implied trust, not express trust. As to whether action


is barred by lapse of time, the case is remanded for further
proceedings to allow them to present proof in support of their
claim.

 Where property is taken by a person under an


agreement to hold it for, or convey it to another or
the grantor, a resulting or implied trust arises in favor
of the person for whose benefit the property was
intended. This rule, which has been incorporated in
the new Civil Code in Art. 1453 thereof, is founded
upon equity.

 An implied trust arises where a person


purchases land with his own money and takes
a conveyance thereof in the name of another.
In such a case, the property is held on a resulting
trust in favor of the one furnishing the consideration
20
PNB vs. Court of Appeals right to recover the said amount it erroneously credited to
respondent Mata.
1. Concept of Implied Trust
After trial, the Regional Trial Court of Manila rendered
DOCTRINE: Article 1456 of the Civil Code provides that if judgment dismissing the complaint ruling that the instant case
property is acquired through mistake or fraud, the person falls squarely under Article 2154 on solutio indebiti and not
obtaining it is, by force of law, considered a trustee of an under Article 1456 on constructive trust. The lower court ruled
implied trust for the benefit of the person from whom the out constructive trust, applying strictly the technical definition
property comes. of a trust as "a right of property, real or personal, held by one
Trusts are either express or implied. While express trusts are party for the benefit of another; that there is a fiduciary
created by the intention of the trustor or of the parties, implied relation between a trustee and a cestui que trustas regards
trusts come into being by operation of law. Implied trusts are certain property, real, personal, money or choses in
those which, without being expressed, are deducible from the action." The appellate court, in affirming the lower court,
nature of the transaction as matters of intent or which are concluded that petitioner's demand for the return of
superinduced on the transaction by operation of law as US$14,000 cannot prosper because its cause of action had
matters of equity, independently of the particular intention of already prescribed under Article 1145, paragraph 2 of the Civil
the parties. Code which states that action upon quasi-contract must be
commenced within 6 years. This is because petitioner's
In turn, implied trusts are subdivided into resulting and complaint was filed only on February 4, 1982, almost seven
constructive trusts. A resulting trust is a trust raised by years after March 11, 1975 when petitioner mistakenly made
implication of law and presumed always to have been payment to private respondent.
contemplated by the parties, the intention of which is found in
the nature of the transaction, but not expressed in the deed or Petitioner naturally opts for an interpretation under
instrument of conveyance. Examples of resulting trusts are constructive trust as its action filed on February 4, 1982 can
found in Articles 1448 to 1455 of the Civil Code. On the other still prosper, as it is well within the prescriptive period of ten
hand, a constructive trust is one not created by words either (10) years as provided by Article 1144, paragraph 2 of the Civil
expressly or impliedly, but by construction of equity in order to Code.
satisfy the demands of justice. An example of a constructive ISSUE: WON petitioner may still claim the US$14,000 it
trust is Article 1456 quoted above. erroneously paid private respondent under a constructive trust.
2. Express v. Constructive Trust: Existence of Fiduciary HELD/RULING: The Court rule in the negative. Although the
Relation Court is aware that only seven (7) years lapsed after petitioner
DOCTRINE: A deeper analysis of Article 1456 reveals that it is erroneously credited private respondent with the said amount
not a trust in the technical sense for in a typical trust, and that under Article 1144, petitioner is well within the
confidence is reposed in one person who is named a trustee prescriptive period for the enforcement of a constructive or
for the benefit of another who is called the cestui que trust, implied trust, the Court rule that petitioner's claim cannot
respecting property which is held by the trustee for the benefit prosper since it is already barred by laches. It is a well-settled
of the cestui que trust. 13 A constructive trust, unlike an rule now that an action to enforce an implied trust, whether
express trust, does not emanate from, or generate a fiduciary resulting or constructive, may be barred not only by
relation. While in an express trust, a beneficiary and a trustee prescription but also by laches.
are linked by confidential or fiduciary relations, in a While prescription is concerned with the fact of delay, laches
constructive trust, there is neither a promise nor any fiduciary deals with the effect of unreasonable delay. It is amazing that
relation to speak of and the so-called trustee neither accepts it took petitioner almost seven years before it discovered that
any trust nor intends holding the property for the beneficiary it had erroneously paid private respondent.
FACTS: Private Respondent B.P. Mata & Co. Inc. (Mata), a
private corporation engaged in providing goods and services to
shipping companies. has acted as a manning or crewing agent
for Star Kist Foods, Inc., USA (Star Kist). Mata makes advances
for the crew's expenses, fees, and basic personal needs.
Subsequently, Mata sends monthly billings to Star Kist, which
in turn reimburses Mata by sending a telegraphic transfer
through banks for credit to the latter's account.

In 1975, Security Pacific National Bank (SEPAC) of Los Angeles


transmitted a cable message to the International Department
of Philippine National Bank to pay the amount of US$14,000 to
Mata by crediting the latter's account with the Insular Bank of
Asia and America (IBAA), per order of Star Kist. PNB's
International Department noticed an error and sent a service
message to SEPAC Bank. The latter replied with instructions
that the amount of US$14,000 should only be for US$1,400. A
cashier's check in the amount of US$1,400 representing
reimbursement from Star Kist, was issued by the Star Kist for
the account of Mata on February 25, 1975 through the Insular
Bank of Asia and America (IBAA).

However, a few days later, PNB effected another payment in


the amount of US$14,000 purporting to be another transmittal
of reimbursement from Star Kist, private respondent's foreign
principal. Six years later, (in 1981), PNB requested Mata for
refund of US$14,00 after it discovered its error in effecting the
second payment.

On February 4, 1982, PNB filed a civil case for collection and


refund of US$14,000 against Mata arguing that based on a
constructive trust under Article 1456 of the Civil Code, it has a

21