G.R. No. L-21616 December 11, 1967 3.
7 3. The brothers and sister failed to pay the 1/2 share of Clotilde over the two haciendas which
GERTRUDES F. CUAYCONG, ET AL., plaintiffs-appellants,
vs.
LUIS D. CUAYCONG, ET AL., defendants-appellees.
Benito C. Jalandoni and M. S. Gomez for plaintiffs-appellants.
Hilado and Hilado for defendants-appellees.
BENGZON, J.P., J.:
Eduardo Cuaycong, married to Clotilde de Leon, died on June 21, 1936 without issue but with
three brothers and a sister surviving him: Lino, Justo, Meliton and Basilisa. Upon his death,
his properties were distributed to his heirs as he willed except two haciendas in Victorias,
Negros Occidental, devoted to sugar and other crops — the Haciendas Sta. Cruz and Pusod
both known as Hacienda Bacayan. Hacienda Bacayan is comprised of eight (8) lots — No.
28, covered by T.C.T. No. T-22130; Nos. 8, 17, 18 & 135, covered by T.C.T. No. T-22131;
Nos. 21, 22, 23, covered by T.C.T. No. 22132 — all of which are titled in the name of Luis D.
Cuaycong, son of Justo Cuaycong.
Lino Cuaycong died on May 4, 1937 and was survived by his children Paz, Carolina,
Gertrudes, Carmen, Virgilio, Benjamin, Praxedes and Anastacio. Praxedes Cuaycong,
married to Jose Betia, is already deceased and is survived by her children Jose Jr., Jesus,
Mildred, Nenita and Nilo, all surnamed Betia. Anastacio Cuaycong, also deceased, is
survived by his children Ester, Armando, Lourdes, Luis T., Eva and Aida, all surnamed
Cuaycong.
Meliton and Basilisa died without any issue.
On October 3, 1961, the surviving children of Lino Cuaycong: Gertrudes, Carmen, Paz,
Carolina, Virgilio; the surviving children of Anastacio: Ester, Armando, Lourdes, Luis T., Eva
and Aida; as well as Jose, Jr., Jesus, Mildred, Nenita, Nilo, all surnamed Betia, children of
deceased Praxedes Cuaycong Betia, filed as pauper litigants, a suit against Justo, Luis and
Benjamin Cuaycong1 for conveyance of inheritance and accounting, before the Court of First
Instance of Negros Occidental (Civil Case No. 6314), alleging among others that:
1. Eduardo Cuaycong had on several occasions, made known to his brothers and sisters that
he and his wife Clotilde de Leon (died in 1940) had an understanding and made
arrangements with Luis Cuaycong and his father Justo Cuaycong, that it was their desire to
divide Haciendas Sta. Cruz and Pusod among his brothers and sister and his wife Clotilde.
2. With the consent of his wife, Eduardo had asked his brothers and sister to pay his wife
P75,000 (the haciendas were worth P150,000) and then divide equally the remaining one-half
share of Eduardo.
were later acquired by Luis Cuaycong thru clever strategy, fraud, misrepresentation and in
disregard of Eduardo's wishes by causing the issuance in his name of certificates of title
covering said properties.
4. As the two haciendas were the subject of transactions between the spouses and Justo and
Luis Cuaycong, Eduardo told Justo and Luis, and the two agreed, to 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 time comes.
5. That as far back as 1936 Lino demanded from Justo and Luis his share and especially
after Eduardo's and Clotilde's death, the plaintiffs demanded their shares.
6. That their demands had been refused and in 1960 during the estate proceedings of
Praxedes Escalon, deceased wife of Luis D. Cuaycong, the latter fraudulently made it appear
that the plaintiffs had nothing to do with the land; that Luis Cuaycong had possessed the
lands since June 21, 1936 from which time he should be made to account for the plaintiffs'
share; and that P1,500 attorney's fees should be paid in their favor.
Luis D. Cuaycong on October 20, 1961 moved to dismiss the complaint on the grounds of
unenforceability of the claim under the statute of frauds, no cause of action (Rule 8, Sec. 1 [f]
of the Rules of Court), and bar of causes of action by the statute of limitations (Rule 8, Sec.
1[e]). Subsequently, opposition thereto, answer and reply were filed; the plaintiffs also sought
to have Benjamin Cuaycong declared in default for his failure to answer.
On December 16, 1961, the Court of First Instance ruled that the trust alleged, particularly in
paragraph 8 of the complaint, refers to an immovable which under Article 1443 of the Civil
Code may not be proved by parole evidence. Plaintiffs were given 10 days to file an amended
complaint mentioning or alleging therein the written evidence of the alleged trust, otherwise
the case would be dismissed.
Later, on December 23, 1961, the court decreed that since there was no amended complaint
filed, thus, no enforceable claim, it was useless to declare Benjamin Cuaycong in default.
Plaintiff thereafter manifested that the claim is based on an implied trust as shown by
paragraph 8 of the complaint. They added that there being no written instrument of trust, they
could not amend the complaint to include such instrument.
On January 13, 1962, the court dismissed the case for failure to amend the complaint; it
further refused to reconsider its order denying the motion to declare Benjamin Cuaycong in
default, stating that such a default declaration would be of no purpose.
Failing in their efforts to have the dismissal reconsidered, plaintiffs appealed to Us. The
resolution of the appeal hinges on whether the trust is express or implied.
Paragraph 8 of the complaint state:
That as the said two haciendas were then the subject of certain transactions between
the spouses Eduardo Cuaycong and Clotilde de Leon on one hand, and Justo and
Luis D. Cuaycong on the other, Eduardo Cuaycong told his brother Justo and his
nephew, defendant Luis D. Cuaycong, to hold in trust what might belong to his
brothers and sister as a result of the arrangements and to deliver to them their shares
when the proper time comes, to which Justo and Luis D. Cuaycong agreed.
And for the above reasons, We agree that it was pointless to declare Benjamin Cuaycong in
default, considering that without a written instrument as evidence of the alleged trust, the
case for the plaintiffs must be dismissed.
WHEREFORE, the order of dismissal of the lower court appealed from is hereby affirmed,
without costs. So ordered.

The plaintiffs claim that an inplied trust is referred to in the complaint which, under Article
1457 of the Civil Code, may be proved by parole evidence.

Our Civil Code defines an express trust as one created by the intention of the trustor or of the
parties, and an implied trust as one that comes into being by operation of law. 2 Express trusts
are those created by the direct and positive acts of the parties, by some writing or deed or will
or by words evidencing an intention to create a trust. On the other hand, implied trusts are
those which, without being expressed, are deducible from the nature of the transaction by
operation of law as matters of equity, in dependently of the particular intention of the
parties.3 Thus, if the intention to establish a trust is clear, the trust is express; if the intent to
establish a trust is to be taken from circumstances or other matters indicative of such intent,
then the trust is implied. From these and from the provisions of paragraph 8 of the complaint
itself, We find it clear that the plaintiffs alleged an express trust over an immovable, especially
since it is alleged that the trustor expressly told the defendants of his intention to establish the
trust. Such a situation definitely falls under Article 1443 of the Civil Code.

Appellants point out that not only paragraph 8 should be considered but the whole complaint,
in which case they argue that an implied trust should be construed to exist. Article 1453, one
of the cases of implied trust, is also cited: "When property is conveyed to a person in reliance
upon his declared intentions to hold it for or transfer it to another or the grantor, there is an
implied trust in favor of the person whose benefit is contemplated." Said arguments are
untenable, even considering the whole complaint. The intention of the trustor to establish the
alleged trust may be seen in paragraphs 5 and 6.4 Article 1453 would apply if the person
conveying the property did not expressly state that he was establishing the trust, unlike the
case at bar where he was alleged to have expressed such intent. Consequently, the lower
court did not err in dismissing the complaint.

Besides, even assuming the alleged trust to be an implied one, the right alleged by plaintiffs
Would have already prescribed since starting in 1936 When the trustor died, plaintiffs had
already been allegedly refused by the aforesaid defendants in their demands over the land,
and the complaint was filed only in 1961 — more than the 10-year period of prescription for
the enforcement of such rights under the trust.lawphil It is settled that the right to enforce an
implied trust in one's favor prescribes in ten (10) years.5 And even under the Code of Civil
Procedure, action to recover real property such as lands prescribes in ten years (Sec. 40, Act
190).
G.R. No. L-59879 May 13, 1985
PATRICIO SINAON and MARIA, FRANCISCA and JOSE, all surnamed
SINAON, petitioners,
vs.
ANDRES SOROÑGON, ANASTACIA PARREÑO, SOLEDAD PARREÑO, ANA PARREÑO,
MARCELINA, CLARITA, RUFINO and MANUEL, all surnamed ARELLANO, SIMPLICIO
SOMBLINGO and BRIGIDA SOMBLINGO and COURT OF APPEALS, respondents.
AQUINO, J.:
The issue in this case is whether an action for reconveyance of a registered five-hectare land,
based on implied trust, would lie after the supposed trustees had held the land for more than
forty years.
According to the documentary evidence consisting of public documents and tax records,
Judge (later Justice) Carlos A. Imperial in a decree dated March 4, 1916 adjudicated to
Canuta Soblingo (Somblingo), a widow, Lot No. 4781 of the Sta. Barbara, Iloilo cadastre with
an area of 5.5 hectares. OCT No. 6178-A was issued in 1917 to Canuta (Exh. 6 and 7 or B).
In 1923 Canuta sold the lot to the spouses Patricio Sinaon and Julia Sualibio for P2,000 (Exh.
8). TCT No. 2542 was issued to the Sinaon spouses (Exh. 9 or C). It is still existing and
uncancelled up to this time, Julia was the granddaughter of Canuta.
The lot was declared for tax purposes in Sinaon's name (Exh. 3). The Sinaon spouses and
their children paid the realty taxes due thereon (Exh. 1 to 5-C). They have possessed the
land as owners from 1923 up to this time or for more than half a century.
Canuta was one of the five children of Domingo Somblingo, the alleged original owner of the
lot when it was not yet registered. His other four children were Felipe, Juan, Esteban and
Santiago. The theory of respondents Soroñgon, et al.,which they adopted in their 1968
second amended complaint (they filed the action in 1964) is that Canuta and the Sinaons
were trustees of the lot and that the heirs of Domingo's four children are entitled to a 4/5
share thereof.
That theory was sustained by the trial court and the Appellate Court. The trial court ordered
the Sinaons to convey 4/5 of Lot No. 4781 to respondents Soroñgon, et al. It decreed partition
of the lot in five equal parts. The Sinaons appealed to this Court. The respondents did not file
any brief.
We hold that after the Sinaons had appeared to be the registered owners of the lot for more
than forty years and had possessed it during that period, their title had become indefeasible
and their possession could not be disturbed. Any pretension as to the existence of an implied
trust should not be countenanced.
The trustors. who created the alleged trust, died a long time ago. An attempt to prove the
trust was made by unreliable oral evidence. The title and possession of the Sinaons cannot
be defeated by oral evidence which can be easily fabricated and contradicted. The
contradictory oral evidence leaves the court sometimes bothered and bewildered.
There was no express trust in this case. Express trusts concerning real property cannot be
proven by parol evidence (Art. 1443, Civil Code). An implied trust "cannot be
established, contrary to the recitals of a Torrens title, upon vague and inconclusive proof"
(Suarez vs. Tirambulo, 59 Phil. 303; Salao vs. Salao, L-26699, March 16,1976, 70 SCRA 65,
83).
Even assuming that there was an implied trust, plaintiffs' action was clearly barred by
prescription (Salao vs. Salao,supra, p. 84).
Prescription is rightly regarded as a statute of repose whose object is to suppress fraudulent
and stale claims from springing up at great distances of time and surprising the parties or
their representatives when the facts have become obscure from the lapse of time or the
defective memory or death or removal of witnesses (53 C.J.S. 903). See Teves Vda. de
Bacong vs. Teves and CA, G.R. No. 50143, October 24, 1983, 125 SCRA 137; Ramos vs.
Ramos, L-19872, December 3, 1974, 61 SCRA 284; Gallanosa vs. Arcangel, L-29300, June
21, 1978, 83 SCRA 676 and Sinco vs. Longa 51 Phil. 507.
It was not necessary for the Sinaons to plead prescription as a defense because there is no
dispute as to the dates. There was no factual issue as to prescription (Chua Lamko vs. Dioso,
97 Phil. 821, 824; Ferrer vs. Ericta, L-41767, August 23, 1978, 84 SCRA 705).
At any rate, the Sinaons invoked in the lower court the ruling laid down in Gerona vs. De
Guzman, 120 Phil. 149, 153 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 (Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266-267; J.M. Tuason & Co., Inc. vs.
Magdangal, 114 Phil. 42, 46-47; Lopez vs. Gonzaga, 119 Phil. 424, 437).
The supposed trust in this case, which is neither an express nor a resulting trust, is a
constructive trust arising by operation of law (Art. 1456, Civil Code). It is not a trust in the
technical sense (Gayondato vs. Treasurer of the P.I., 49 Phil. 244). *
WHEREFORE, the judgment of the Court of Appeals is reversed and the complaint is
dismissed. The receivership is terminated. The receiver is directed to wind up his accounts.
No costs.
SO ORDERED.
G.R. Nos. L-20787-8 June 29, 1965
J. ANTONIO ARANETA, plaintiff-appellee,
vs.
ANTONIO PEREZ, defendant-appellant.
Araneta, Mendoza and Papa for plaintiff-appellee.
Alfonso Felix, Jr. for defendant-appellant.
BAUTISTA ANGELO, J.:
On June 16, 1961, 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 (Civil Case No. 92265).
In his answer, defendant Perez admitted the execution of the promissory note as well as his
failure to pay it despite its maturity and demand, but he averred certain allegations that were
irrelevant to the complaint. Thus, 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 in Special
Proceeding No. Q-73 of the Court of First Instance of Quezon City, 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.
On motion for judgment on the pleadings filed by Araneta, and without any opposition on the
part of defendant Perez, the municipal court rendered a decision on April 1962 ordering
Perez to pay the amounts prayed for in the complaint and dismissing his counterclaim for
damages. His motion for reconsideration having been denied, Perez appealed to the court a
quo where the appeal was docketed as Civil Case No. 50707 and where he filed practically
the same answer he filed in the municipal court.
In the meantime, or on February 8, 1962, Perez filed a complaint in the Municipal Court of
Manila against Araneta in his capacity as trustee of the minor child Angela Perez y Tuason in
Special Proceeding No. Q-73 of the Court of First Instance of Quezon City wherein, making
reference to Civil Case No. 92265 filed against him by Araneta, he repeated the same
allegations contained in the answer he interposed to the complaint of Araneta 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. And on the basis of a motion to dismiss filed
by Araneta as trustee, and over the opposition of Perez, the municipal court dismissed the
latter's complaint. His motion for reconsideration having been denied, Perez appealed to the
court a quo were his case was docketed as Civil Case No. 50706 and where he filed an
amended complaint against Araneta.
Considering that the two cases involved the same parties and the same promissory note,
they were ordered consolidated. And on September 7, 1962, the court a quo issued a joint
order wherein it affirmed the judgment on the pleadings rendered by the municipal court in
Civil Case No. 50707, while it affirmed the order of dismissal that was likewise issued by the
same court in Civil Case No. 50706. His motion for reconsideration filed in the two
consolidated cases having been denied, Perez interposed the present joint appeal.
Appellant contends that (1) the court a quo erred in finding Antonio Perez indebted to Antonio
Araneta in the sum of P3,700.00 requiring him to pay said amount to Araneta with interest at
the rate of 9% per annum from October 13, 1961 until its full payment, plus P370.00 as
attorney's fees, and in failing to find that the true debtor was the trust estate of the children of
Angela I. Tuason; and (2) assuming that the court a quo correctly ruled in requiring Antonio
Perez to pay the above amount to Antonio Araneta, nevertheless, the court a quo erred in
failing to require Araneta in his capacity as trustee of the aforesaid children to reimburse
Antonio Perez that amount upon proof by the latter of the payment made by him of said
amount.
1. 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. Indeed, Section 60 of the Negotiable Instrument, Law provides that
"the maker of a negotiable instrument by making it engages that he will pay it according to its
tenor and admits the existence of the payee and his then capacity to indorse so that appellant
cannot now escape liability as maker by alleging that he spent the money for the medical
treatment of his daughter since it is not the payee's concern to know how said proceeds
should be spent. That is the sole concern of the maker. Payee's interest is merely to see that
the note be paid according to its terms.
Neither can appellant escape liability by resorting to the expedient that appellee, by moving
for judgment on the pleadings, is deemed to have admitted the material allegations of his
answer in Civil Case No. 50707, for the reason that said allegations are irrelevant and have
no bearing whatsoever on appellant's personal liability. In this connection, it is meet to recall
that appellant, after admitting the execution of the promissory note and his failure to pay it
despite demand thereof, made averments which in substance had the effect of a recoupment
of what he had spent against any share in the trust fund that may come to the minor for
whose benefit he claims to have spent the money.
Thus, he made the following affirmative defenses: That Dña. Angela Tuason died in 1948
leaving estate worth five million pesos 2/9 of which she left in trust for the benefit of the
children of said Angela Tuason under the administration of appellee Araneta; that the will was
prepared by Araneta; that the estate is now worth one million pesos and despite thereof
Araneta professed inability to pay the allowance of P18,000.00 a year due the beneficiaries;
that Araneta sold some income — producing properties of the trust and speculated with trust
funds in the stock market; that appellant had to advance certain expenses for the minors and
secure for them properties worth at least a quarter of a million pesos; that the two
beneficiaries are for unknown reasons short of funds so, that the appellant had to borrow the
sum of P3,700.00 for the medical treatment of minor Angela Perez y Tuason; that appellant
asked the trustee to advance said amount with the concurrence of the beneficiaries but the
trustee refused though he offered to lend the money out of his own pocket, and so appellant
executed the promissory note in question.
It is clear that insofar as the personal liability of appellant Perez on the promissory note is
concerned, which he admittedly executed for value in favor of appellee Araneta, all the above
recited allegations are irrelevant and immaterial and cannot tender any issue that will affect
his personal liability under the note. And this is so because the allegation regarding the
existence of the trust and its mismanagement on the part of appellee Araneta as trustee,
certainly, has nothing to do with the money lent by him to appellant. Neither has the allegation
that the proceeds of the note were spent by appellant for the medical treatment of minor
Angela anything to do with his personal obligation because the destination of the proceeds of
said note is certainly not the concern of Araneta. We are, therefore, of the opinion that the
court a quo did not err in rendering judgment on the pleadings in the light of what is averred in
appellee's complaint.
2. 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.
only when there is absolute necessity therefor, or when they themselves are unable to
provide for those expenses. As already stated, the beneficiaries here are well off or have
enough to provide for their necessities if only their guardian should take steps to attend to
them as required by the circumstances. But instead of doing so, appellant insists on having
appellee recoup with trust money what he had allegedly spent for his daughter's benefit thus
giving rise to the present dual litigation.
We take note of the written manifestation or "constancia" submitted to this Court by appellant
dated August 22, 1963 in his capacity as judicial guardian of the beneficiaries herein, as well
as of supplement thereof made on September 20, 1963, inviting attention of this Court to an
order issued by the Juvenile and Domestic Relations Court authorizing appellant as such
guardian to assign the amount of P3,700.00 to appellee herein for the purpose of reimbursing
him for the amount he had advanced and which is the subject of the promissory note for
which reason appellant now claims that this case is now moot and should be dismissed. But
to such manifestation appellee has filed a rejoinder dated September 2, 1963 stating that the
request for dismissal is untenable since the order appealed from calls not only for the
payment of the sum of P3,700.00 but of 9% interest thereon per annum from October 13,
1961 until payment and of the sum of P370.00 as attorney's fees.
We hold that appellant's claim is not justified considering that appellee was forced to file the
present suit in view of appellant's refusal to honor the note under consideration. The request,
therefore, for dismissal has no legal basis.
WHEREFORE, with the modification that the payment of interest on the note should start
from the date of extrajudicial demand, or October 18, 1961, we hereby affirm the order
appealed from in all other respects, without pronouncement as to costs.
Bengzon, C.J., Concepcion, Reyes, J.B.L., Paredes, Dizon, Regala, Makalintal, Bengzon,
J.P., and Zaldivar, JJ., concur.
Barrera, J., is on leave.

Appellant has cited several authorities to support his stand that the medical expenses in
question which were made for the sake of the beneficiary should be borne by the trust fund,
but from an examination thereof one may see that they require that beneficiary be insolvent in
order that the trust estate may be obliged to shoulder the expenses. 1Here the beneficiary is
not in that situation for, as appellant himself has admitted, said beneficiary has properties that
are worth at least a quarter of a million pesos which are under the Guardianship Court of
Manila. There is, therefore, no room for the application of the ruling laid down in the cited
authorities.

The other authorities cited by appellant to bolster his claim are also inapplicable for they
sanction the applications of the trust fund to medical or other expenses of the beneficiaries
[G.R. No. 103635. February 1, 1996]
CATALINA BUAN VDA. DE ESCONDE, CONSTANCIA ESCONDE VDA. DE PERALTA,
ELENITA ESCONDE and BENJAMIN E SCONDE, petitioners, vs. HONORABLE
COURT OF APPEALS and PEDRO ESCONDE, respondents.
DECISION
ROMERO, J.:
This petition for review on certiorari seeks the reversal of the January 22,
1992 decision[1] in CA G.R. CV No. 26795 of the Court of Appeals affirming the Decision of
the Regional Trial Court of Bataan, Branch 2.[2] The lower court declared that petitioners
action for reconveyance of real property based on an implied trust has been barred by
prescription and laches.
Petitioners Constancia, Benjamin and Elenita, and private respondent Pedro, are the
children of the late Eulogio Esconde and petitioner Catalina Buan. Eulogio Esconde was one
of the children[3] and heirs of Andres Esconde. Andres is the brother of Estanislao Esconde,
the original owner of the disputed lot who died without issue on April 1942. Survived by his
only brother, Andres, Estanislao left an estate consisting of four (4) parcels of land in Samal,
Bataan, namely: (a) Lot No. 1865 with 22,712 square meters; (b) Lot No. 1902
with 54,735 square meters; (c) Lot No. 1208 with 20,285 square meters; and (d) Lot No. 1700
with 547 square meters.
Eulogio died in April, 1944 survived by petitioners and private respondent. At that time,
Lazara and Ciriaca, Eulogios sisters, had already died without having partitioned the estate of
the late Estanislao Esconde.
On December 5, 1946, the heirs of Lazara, Ciriaca and Eulogio executed a deed of
extrajudicial partition,[4] with the heirs of Lazara identified therein as the Party of the First Part,
that of Ciriaca, the Party of the Second Part and that of Eulogio, the Party of the Third
Part. Since the children of Eulogio, with the exception of Constancia, were then all minors,
they were represented by their mother and judicial guardian, petitioner Catalina Buan vda. de
Esconde who renounced and waived her usufructuary rights over the parcels of land in favor
of her children in the same deed. Salient provisions of the deed state as follows:
1. TO ARTURO DOMINGUEZ, minor, Party of the First Part is adjudicated:
(a) Lot No. 1865 of Samal Cadastre;
(b) Portion of Lot No. 1208, Samal Cadastre, which portion has an area of FIVE (5) Luang;
2. TO JOVITA BUAN, RICARDO BUAN, and MELODY and LEOPOLDO OCONER, are
adjudicated Lot No. 1902 Samal Cadastre, and to de (sic) divided as follows:
(a) Jovita Buan - Undivided one-third (1/3) share;
(b) Ricardo Buan - Undivided one-third (1/3) share;
(c) Melody Oconer - Undivided one-sixth (1/6) share;
(d) Leopoldo Oconer - Undivided one-sixth (1/6) share;
3. TO CONSTANCIA, PEDRO, BENJAMIN and ELENITA, all Surnamed ESCONDE, are
adjudicated, in undivided equal shares each, the following:
(a) Lot No. 1208 Samal Cadastre, subject to the encumbrance of the right of ownership of
Arturo Dominguez on the FIVE LUANG;
4. TO PEDRO ESCONDE is adjudicated exclusively Lot No. 1700 of the Cadastral Survey of
Samal; (Italics supplied.)
The deed bears the thumbmark of Catalina Buan and the signature of Constancia
Esconde, as well as the approval and signature of Judge Basilio Bautista.[5]
Pursuant to the same deed, transfer certificates of title were issued to the new owners of
the properties.[6] Transfer Certificate of Title No. 394 for Lot No. 1700 was issued on February
11, 1947 in the name of private respondent but Catalina kept it in her possession until she
delivered it to him in 1949 when private respondent got married.
Meanwhile, Benjamin constructed the family home on Lot No. 1698-B[7] which is
adjacent to Lot No. 1700. A portion of the house occupied an area of twenty (20) square
meters, more or less, of Lot No. 1700. Benjamin also built a concrete fence and a common
gate enclosing the two (2) lots, as well as an artesian well within Lot No. 1700.
Sometime in December, 1982, Benjamin discovered that Lot No. 1700 was registered in
the name of his brother, private respondent. Believing that the lot was co-owned by all the
children of Eulogio Esconde, Benjamin demanded his share of the lot from private
respondent.[8] However, private respondent asserted exclusive ownership thereof pursuant to
the deed of extrajudicial partition and, in 1985 constructed a buho fence to segregate Lot No.
1700 from Lot No. 1698-B.
Hence, on June 29, 1987, petitioners herein filed a complaint before the Regional Trial
Court of Bataan against private respondent for the annulment of TCT No. 394. They further
prayed that private respondent be directed to enter into a partition agreement with them, and
for damages (Civil Case No. 5552).
In its decision of July 31, 1989, the lower court dismissed the complaint and the
counterclaims. It found that the deed of extrajudicial partition was an unenforceable contract
as far as Lot No. 1700 was concerned because petitioner Catalina Buan vda. de Esconde, as
mother and judicial guardian of her children, exceeded her authority as such in donating the
lot to private respondent or waiving the rights thereto of Benjamin and Elenita in favor of
private respondent. Because of the unenforceability of the deed, a trust relationship was
created with private respondent as trustee and Benjamin and Elenita as beneficiaries. The
court said:
Although the parties to the partition did not either contemplate or express it in said document,
the resulting trust arose or was created by operation of Article 1456 of the new Civil Code,
which reads: 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. The persons from whom the two-thirds portion of Lot 1700 came are
plaintiffs Benjamin and Elenita Esconde and the trustee was defendant Pedro Esconde, who
acquired such portion through mistake by virtue of the subject partition. The mistake was the
allotment or assignment of such portion to Pedro Esconde although it had rightfully belonged
to said two plaintiffs more than two (2) years before.[9]
However, the lower court ruled that the action had been barred by both prescription and
laches. Lot No. 1700 having been registered in the name of private respondent on February
11, 1947, the action to annul such title prescribed within ten (10) years on February 11, 1957
or more than thirty (30) years before the action was filed on June 29, 1987. Thus, even if Art.
1963 of the old Civil Code providing for a 30-year prescriptive period for real actions over
immovable properties were to be applied, still, the action would have prescribed on February
11, 1977.
Hence, petitioners elevated the case to the Court of Appeals which affirmed the lower
courts decision. The appellate court held that the deed of extrajudicial partition established an
implied trust arising from the mistake of the judicial guardian in favoring one heir by giving
him a bigger share in the hereditary property. It stressed that an action for reconveyance
based on implied or constructive trust prescribes in ten (10) years counted from the
registration of the property in the sole name of the co-heir.[10]
Petitioners are now before this Court charging the Court of Appeals with having erred in:
(a) denying their appeal by reason of prescription and laches, and (b) not reversing the
decision of the lower court insofar as awarding them damages is concerned.
Trust is the legal relationship between one person having an equitable ownership in
property and another person owning the legal title to such property, the equitable ownership
of the former entitling him to the performance of certain duties and the exercise of certain
powers by the latter.[11] Trusts are either express or implied. An express trust is created by
the direct and positive acts of the parties, by some writing or deed or will or by words
evidencing an intention to create a trust.[12] No particular words are required for the creation
of an express trust, it being sufficient that a trust is clearly intended. [13]
On the other hand, implied trusts are those which, without being expressed, are
deducible from the nature of the transaction as matters of intent or which are superinduced
on the transaction by operation of law as matters of equity, independently of the particular
intention of the parties.[14] In turn, implied trusts are either resulting or constructive
trusts. These two are differentiated from each other as follows:
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest and are presumed always to have been
contemplated by the parties. They arise from the nature or circumstances of the consideration
involved in a transaction whereby one person thereby becomes invested with legal title but is
obligated in equity to hold his legal title for the benefit of another. On the other hand,
constructive trusts are created by the construction of equity in order to satisfy the demands of
justice and prevent unjust enrichment. They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal right to property which he
ought not, in equity and good conscience, to hold. [15]
While the deed of extrajudicial partition and the registration of Lot No. 1700 occurred in
1947 when the Code of Civil Procedure or Act No. 190 was yet in force, we hold that the trial
court correctly applied Article 1456. In Diaz, et al. v. Gorricho and Aguado,[16] the Court
categorically held that while it is not a retroactive provision of the new Civil Code, Article 1456
merely expresses a rule already recognized by our courts prior to the Codes promulgation.
This article provides:
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.
Construing this provision of the Civil Code, in Philippine National Bank v. Court of
Appeals, the Court stated:
A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in a
typical trust, confidence is reposed in one person who is named a trustee for the benefit of
another who is called the cestui que trust, respecting property which is held by the trustee for
the benefit of the cestui que trust. A constructive trust, unlike an express trust, does not
emanate from, or generate a fiduciary relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a constructive trust, there is neither
a promise nor any fiduciary relation to speak of and the so-called trustee neither accepts any
trust nor intends holding the property for the beneficiary. [17]
In the case at bench, petitioner Catalina Buan vda. de Esconde, as mother and legal
guardian of her children, appears to have favored her elder son, private respondent, in
allowing that he be given Lot No. 1700 in its entirety in the extrajudicial partition of the
Esconde estate to the prejudice of her other children. Although it does not appear on record
whether Catalina intentionally granted private respondent that privileged bestowal, the fact is
that, said lot was registered in private respondents name. After TCT No. 394 was handed to
him by his mother, private respondent exercised exclusive rights of ownership therein to the
extent of even mortgaging the lot when he needed money.
If, as petitioners insist, a mistake was committed in allotting Lot No. 1700 to private
respondent, then a trust relationship was created between them and private
respondent. However, private respondent never considered himself a trustee. If he allowed
his brother Benjamin to construct or make improvements thereon, it appears to have been out
of tolerance to a brother. Consequently, if indeed, by mistake,[18] private respondent was WHEREFORE, the instant petition for review on certiorari is hereby DENIED and the
given the entirety of Lot No. 1700, the trust relationship between him and petitioners was questioned decision AFFIRMED subject to the modification that private respondent shall
a constructive, not resulting, implied trust. Petitioners, therefore, correctly questioned private indemnify petitioner Benjamin Esconde the expenses the latter had incurred for the
respondents exercise of absolute ownership over the property. Unfortunately, however, improvements on Lot No. 1700. No costs.
petitioners assailed it long after their right to do so had prescribed.
SO ORDERED.
The rule that a trustee cannot acquire by prescription ownership over property entrusted
to him until and unless he repudiates the trust, applies to express trusts [19] and resulting
implied trusts.[20] However, in constructive implied trusts, prescription may supervene[21] even
if the trustee does not repudiate the relationship. Necessarily, repudiation of the said trust is
not a condition precedent to the running of the prescriptive period.
Since the action for the annulment of private respondents title to Lot No. 1700 accrued
during the effectivity of Act No. 190, Section 40 of Chapter III thereof applies. It provides:

Sec. 40. Period of prescription as to real estate. - An action for recovery of title to, or
possession of, real property, or an interest therein, can only be brought within ten years after
the cause of such action accrues.

Thus, in Heirs of Jose Olviga v. Court of Appeals, [22] the Court ruled that the ten-year
prescriptive period for an action for reconveyance of real property based on implied or
constructive trust which is counted from the date of registration of the property, applies when
the plaintiff is not in possession of the contested property. In this case, private respondent,
not petitioners who instituted the action, is in actual possession of Lot No. 1700. Having filed
their action only on June 29, 1987, petitioners action has been barred by prescription.
Not only that. Laches has also circumscribed the action for, whether the implied trust is
constructive or resulting, this doctrine applies.[23] As regards constructive implied trusts, the
Court held in Diaz, et al. v. Gorricho and Aguado[24] that:

x x x in constructive trusts (that are imposed by law), there is neither promise nor fiduciary
relation; the so-called trustee does not recognize any trust and has no intent to hold for the
beneficiary; therefore, the latter is not justified in delaying action to recover his property. It is
his fault if he delays; hence, he may be estopped by his own laches.

It is tragic that a land dispute has once again driven a wedge between
brothers. However, credit must be given to petitioner Benjamin Esconde [25] for resorting to all
means possible in arriving at a settlement between him and his brother in accordance with
Article 222 of the Civil Code.[26] Verbally and in two letters,[27] he demanded that private
respondent give him and his sisters their share in Lot No. 1700. He even reported the matter
to the barangay authorities for which three conferences were held. [28] Unfortunately, his
efforts proved fruitless. Even the action he brought before the court was filed too late.
On the other hand, private respondent should not be unjustly enriched by the
improvements introduced by his brother on Lot No. 1700 which he himself had tolerated. He
is obliged by law to indemnify his brother, petitioner Benjamin Esconde, for whatever
expenses the latter had incurred.
G.R. No. L-19012 October 30, 1967
VICTORIA JULIO, plaintiff-appellant,
vs.
EMILIANO DALANDAN and MARIA DALANDAN, defendants-appellees.
Pedro Magsalin and O.M. Herrera for plaintiff-appellant.
Cornelio R. Magsarili for defendants-appellees.
SANCHEZ, J.:
Disputing the correctness of the lower court's order of April 29, 1961 dismissing the
complaint, plaintiff elevated the case1 to this Court on appeal.
Plaintiff's complaint — which defendants, by a motion to dismiss, successfully overturned in
the court below — is planted upon a document Annex "A" of the complaint, labeled in the
national language "SALAYSAY" (Statement). It was in the form of an affidavit subscribed and
sworn to by one Clemente Dalandan on September 8, 1950. By the terms of this writing,
Clemente Dalandan, deceased father of defendants Emiliano and Maria Dalandan,
acknowledged that a four-hectare piece of riceland in Las acknowledged that a four-hectare
piece of riceland in Las Piñas, Rizal belonging to Victoriana Dalandan, whose only child and
heir is plaintiff Victoria Julio, was posted as security for an obligation which he, Clemente
Dalandan, assumed but, however, failed to fulfill. The result was that Victoriana's said land
was foreclosed. The key provisions of said document are:2
3. Na ang lupang palayang ito na pagaari ni VICTORIANA DALANDAN at sa
kasalukuyan ay walang ibang tagapagmana kung di si VICTORIA JULIO, ay
napafianza sa akin nuong bago pa dumating ang huling digmaan at dahil sa hindi ako
nakatupad sa aking pananagutang na sasagutan ng bukid niyang ito ay naembargo
ang nasabi niyang lupa;
[That this riceland owned by VICTORIANA DALANDAN whose sole heir is VICTORIA
JULIO was posted as security for an obligation assumed by me even before the
outbreak of the last war and because I failed to fulfill the obligation secured by her
said farm the same was foreclosed;]
4. Na dahil dito ay ako samakatuwid ay nanagot sa kanya (VICTORIA JULIO), sa
pagkakaembargo ng lupa niyang iyong kung kaya't nagkasundo kami na ako ay
nanagot sa kanya sa pagkaembargong iyon at ipinangako ko sa kanya na ang lupa
niyang iyon na naembargo ng dahil sa aking pananagutan ay aking papalitan ng
bukid din na may mahigit na APAT (4) na hectarea (o humigit kumulang sa APAT NA
KABANG BINHI);
[That because of this, and as agreed upon between us, I accordingly held myself
liable to Victoria Julio for the foreclosure of her said land, and I promised her that I
would replace her aforesaid land which was foreclosed because of my obligation with
another farm of more than four; (4) hectares, that is, one planted to four cavanes of
seedlings, more or less;]
5. Na hindi maaring pilitin ang aking mga anak (EMILIANO AT MARIA DALANDAN),
na hingin ang ani ng bukid na nabangit sa itaas ng salaysay na ito;
[That my children (EMILIANO AND MARIA DALANDAN) may not be forced to give
up the harvest of the farm herein above mentioned;]
6. Na hindi rin maaring hingin kaaggad sa lalong madaling panahon ang kapalit ng
bukid na may apat na kabang binhi;
[That neither may the land — which was exchanged for the farm with four cavanes of
seedlings — be demanded immediately;]
Victoria Julio, in turn, joined Clemente Dalandan in the execution of, and also swore to, the
said document, in this wise:
Na, ako VICTORIA JULIO, na binabanggit sa itaas nito sa salaysay ni CLEMENTE
DALANDAN, ay nagpapatunay na tutoong lahat ang kanyang salaysay na iyon at
tinatanggap ko ang kanyang mga sinasabi.
[That I, VICTORIA JULIO, mentioned in the above statement of CLEMENTE
DALANDAN, attest to the truth of, and accept, all that he stated therein.]
Back to the complaint herein. Plaintiff went on to aver that the land of Clemente Dalandan set
forth in the document, Annex "A" of the complaint, referred to six small parcels described in
paragraph 4 thereof with a total area of barely two hectares — "the only land owned by
Clemente Dalandan at the time of the execution of the document" —except fifty plots or
"banigan" (saltbeds), which were previously conveyed to plaintiff's mother by mean of pacto
de retro sale and title to which had already been vested in the latter; that after the death of
Clemente Dalandan, plaintiff requested from defendants, Clemente's legitimate and surviving
heirs who succeeded in the possession of the land thus conveyed, to deliver the same to her;
that defendants "insisted that according to the agreement", neither delivery of the land nor the
fruits thereof could immediately be demanded, and that "plaintiff acceded to this contention of
defendants and allowed them to continue to remain in possession" thereof; that demands
have "been made upon defendants to fix the period within which they would deliver to the
herein plaintiff the above-described parcels of land but defendants have refused and until
now still refuse to fix a specific time within which they would deliver to plaintiff the
aforementioned parcels of land." Predicated upon the foregoing allegations, plaintiff prayed
for judgment against defendants:
(a) Adjudging the herein plaintiff as owner of the land described in paragraph 4
hereof;
 (b) Fixing a time within which defendants should deliver the said parcels of land to
the herein plaintiff as well as the fruits thereof;
(c) Adjudging that upon the expiration of the said time defendants convey and deliver
to the herein plaintiff the said parcels of land as well as the fruits thereof;
(d) Ordering the defendants to pay the plaintiff the sum of P2,000.00 as attorneys'
fees;
(e) Ordering the defendants to pay the costs of the suit; and granting such other relief
and remedy as may be just and equitable in the premises.
Defendants met the complaint with a motion to dismiss grounded on: (1) prescription of
plaintiff's action; (2) pendency of another suit between the same parties for the same cause;
and (3) release and/or abandonment of the claim set forth in plaintiff's complaint.
By its order of April 29, 1961, the lower court ruled that plaintiff's suit, viewed either as an
action for specific performance or for the fixing of a term, had prescribed. Reason: the 10-
year period from the date of the document had elapsed. The lower court found it unnecessary
to pass upon the other grounds for the motion to dismiss. Hence, this appeal.
1. The threshold problem, basic to an understand of the issues herein involved, is the
meaning to be attached to the document now under review. Undoubtedly, bad more felicitous
terms been employed, the intention of the parties could easily be read. Unfortunately,
ineptness of expression exacts of us an examination of the document. Familiar rules of
interpretation of documents tell us that in ascertaining the intention of the parties, the
contents thereof should not be interpreted piecemeal; all parts, provisions or terms are to be
considered; each paragraph clause or phrase must be read not in isolation, but in the light of
the entire writing; doubtful ones should be given that sense which may result from all of them,
considered as a whole. Such construction will be adopted as will result from an overall view of
the document itself.
It is, in this perspective that we now look into the writing. Adverting to paragraph 4 of the
deed, defendants take the position that the deceased Clemente Dalandan simply "promised"
to Victoria Julio a farm of about four hectares to replace the land of Victoriana Dalandan
(mother of Victoria Julio) which was foreclosed. But this view loses sight of the later
provisions thereof. By paragraph 5, Clemente's children may not be forced to give up the
harvest of the farm mentioned in the deed. This was followed by paragraph 6 which states
that Victoria Julio may not immediately demand the substitute (kapalit) for the forfeited land.
These last two statements in the deed express the dominant purpose of the instrument. They
convey the idea that the naked ownership of the land in substitution was, indeed, transferred
to Victoria Julio. Else there would have been no sense in the proviso that the fruits as well as
the physical possession of the land could not immediately be demanded by Victoria Julio from
Clemente's children, the herein defendants. For, the right to demand fruits and physical
possession of property has been known to be attributes of ownership.
The disputed complaint in paragraphs 6 and 7 thereof, in essence, avers plaintiff's request for
the delivery of the real property; defendants' answer that "according to the agreement" neither
land nor fruits thereof could immediately be taken away from them, and plaintiff's conformity
thereto; and plaintiff's demands that the period for delivery be fixed and defendants' refusal.
The allegations of the complaint just noted carry us to another aspect of the document:
defendants' rights over the land vis-a-vis plaintiff's. What rights were transmitted to
defendants by their father, Clemente Dalandan? Paragraphs 6 and 7 of the document supply
the answer. They are usufructuaries for an undetermined length of time. For so long as that
period has not been fixed and has not elapsed, they hold the property. Theirs is to enjoy the
fruits of the land and to hold the same as trustees of Victoria Julio. And this because, by the
deed, Clemente Dalandan divested himself of the ownership — qualified solely by withholding
enjoyment of the fruits and physical possession. In consequence, Clemente Dalandan cannot
transmit to his heirs, the present defendants, such ownership.3 Nemo dat quod non habet.
And then, the document is a declaration by Clemente Dalandan, now deceased, against his
own proprietary interests. Such document is binding upon his heirs.4
2. But, defendants aver that recognition of the trust may not be proved by evidence aliunde.
They argue that by the express terms of Article 1443 of the Civil Code, "[n]o express trusts
concerning an immovable or any interest therein may be proved by parol evidence." This
argument overlooks the fact that no oral evidence is necessary. The express trust imposed
upon defendants by their predecessor appears in the document itself. For, while it is true that
said deed did not in definitive words institute defendants as trustees, a duty is therein
imposed upon them — when the proper time comes — to turn over both the fruits and the
possession of the property to Victoria Julio. Not that this view is without statutory support.
Article 1444 of the Civil Code states that: "No particular words are required for the creation of
an express trust, it being sufficient that a trust is clearly intended." In reality, the development
of the trust as a method of disposition of property, so jurisprudence teaches, "seems in large
part due to its freedom from formal requirements."5 This principle perhaps accounts for the
provisions in Article 1444 just quoted. For, "technical or particular forms of words or phrases
are not essential to the manifestation of intention to create a trust or to the establishment
thereof."6 Nor would the use of some such words as "trust" or "trustee" essential to the
constitution of a trust as we have held in Lorenzo vs. Posadas, 64 Phil. 353, 368. Conversely,
the mere fact that the word "trust" or "trustee" was employed would not necessarily prove an
intention to create a trust. What is important is whether the trustor manifested an intention to
create the kind of relationship which in law is known as a trust. It is unimportant that the
trustor should know that the relationship "which he intends to create is called a trust, and
whether or not he knows the precise characteristics of the relationship which is called a
trust."7 Here, that trust is effective as against defendants and in favor of the beneficiary
thereof, plaintiff Victoria Julio, who accepted it in the document itself. 8
3. Plaintiff is not to be handicapped by a lack of a clear statement as to the actual description
of the land referred to in the trust deed, basis of plaintiff's cause of action. Obviously, the
document was not prepared by a learned scrivener. It imperfectly speaks of a "farm of more
than four (4) hectares." But averment in the complaint is not lacking to clear the uncertainty
as to the identity of the land mentioned in that document. Plaintiff points out in paragraph 4 of
her complaint that while said deed does not specifically define its boundaries "the parties to
the said document actually refer" to the land which was "the only land owned by Clemente
Dalandan at the time of the execution" thereof, and which is set forth in small parcels under
said paragraph. This allegation in the complaint does not add any new term or stipulation to
the writing. Rather, it explains an obscurity occasioned by lack of precision in a clumsily
prepared document. Thus it is, that authorities are not wanting in support of the view that "in
so far as the identity of land involved" in a trust is concerned, "it has also been held that the
writings, in being considered for the purpose of satisfying the statute of frauds, are to be
considered in their setting, and that parol evidence is admissible to make clear the terms of a
trust the existence of which is established by a writing, . . ."9
4. This case having been brought before us on a motion to dismiss, we need but stress that
we are to be guided solely by the averments of the complaint. So guided, we must say that
there is sufficient showing in the complaint that there is an acknowledgment on the part of
defendants that they hold the property not as their own, but in trust. There is no statement in
the complaint intimating disavowal of such trust; the complaint alleges refusal to deliver
possession. In the sense in which we understand the complaint to be, it cannot be said that
plaintiff's action to recover the property thus held in trust has prescribed. Given the fiduciary
relation which according to the complaint is recognized by defendants, the latter may not
invoke the statute of limitations as a bar to plaintiff's action.10
5. Even on the assumption that defendants have not been constituted as trustees under the
document in question, still we arrive at the same conclusion. For, plaintiff's action is aimed, by
an alleged owner of real property at recovery of possession thereof, conditioned upon the
fixing of the period therefor. Since plaintiff claims ownership, possession, in the words of this
Court "is a mere consequence of ownership."11 It may not be said that plaintiff's suit is barred
by the statute of limitations. She is protected by Article 1141 of the Civil Code, which reads:
"Real actions over immovables prescribe after thirty years." We take this view for the obvious
reason that defendants' motion to dismiss on this score is directed at the prescription of
plaintiff's action — not on acquisitive prescription.
Parenthetically, the question of ownership over the portion of fifty salt beds had already been
resolved by this Court in a decision promulgated on February 29, 1964 in L-19101 (Emiliano
Dalandan and Maria Dalandan, plaintiffs, vs. Victoria Julio, et al., defendants). There, this
Court affirmed the order dismissing the complaint filed by defendants herein, plaintiffs therein,
for the repurchase of fifty salt beds which were the subject of a sale with pacto de
retroexecuted on September 24, 1932 by Clemente Dalandan in favor of Victoriana
Dalandan, predecessor of plaintiff.
There is no point in the argument that an action is pending between plaintiff and defendants.
Because, with the exception of the fifty salt beds — which according to the complaint is not
included in the deed — plaintiff filed no opposition to defendants' application for land
registration. Failure to so object in reference to the registration of a bigger portion of the land,
simply means that there is no case between the parties in reference thereto in the land
registration proceeding.
Not that plaintiff released or abandoned the claim to that bigger portion. For, there is an
averment in the complaint that an agreement exists between plaintiff and defendants to defer
delivery thereof; and that defendants thereafter refused to fix the period for such delivery. So
that, on the assumption that defendants should succeed in obtaining title to the property in
the land registration case, such would not bar Victoria Julio from requiring them to execute a
conveyance of the property in her favor, in the event she (plaintiff herein) prevails in the
present case. And this, because defendants could here be declared as mere trustees of
plaintiff, if the averments of the complaint are found to be true."12
For the reasons given, the order of the Court of First Instance of Rizal dated April 29, 1961
dismissing the complaint is hereby reversed and set aside, with instructions to remand the
case to the court below for further proceedings.
Costs against defendants-appellees. So ordered.

6. Defendants in their brief draw attention, by way of counter-assignment of error, to their

claim that this case should also be dismissed upon the ground that there exists another
action pending between the same parties for the same cause, and on the further ground of
release and/or abandonment.

The facts bearing on this issue are: In Land Registration Case N-706, G.L.R.O. Record No.
N-7014, Court of First Instance of Rizal, defendants are applicants. That case — so
defendants aver — covers the very same land set forth in plaintiff's complaint. In their
opposition to that application, herein plaintiff prayed that the same land — the subject of this
suit — (covered by Plan PSU 129514) be registered "in the names of the herein applicants
and oppositor with the specific mention therein that the herein oppositor owns fifty salt beds
therein and having an absolute right to the use of the depositories." Defendants argue that if
plaintiff was the real owner of the entire area, opposition should have been presented on the
whole, not merely as to fifty salt beds.
G.R. No. L-25563 July 28, 1972
MARIANO TAMAYO, petitioner,
vs.
AURELIO CALLEJO and the HON. COURT OF APPEALS, respondents.
CONCEPCION, C.J.:p
This action, initiated in the Court of First Instance of Pangasinan, was brought by Aurelio
Callejo, originally against Mariano Tamayo only, and, later, against his brother Marcos
Tamayo, also, for the reconveyance of the northern portion of a parcel of land formerly
covered by Original Certificate of Title No. 2612, in the names of said brothers. In due course,
said court dismissed the complaint, with costs against the plaintiff. The latter appealed to the
Court of Appeals which, in turn, rendered a decision the dispositive part of which reads:
IN VIEW WHEREOF, judgment must have to be as it is hereby, reversed,
and the land in question claimed in par. 2 of the original and amended
complaint and graphically shown in Exh. Q in the name of appellant, is
declared reconveyed unto him, but the expenses of registration of this
decision once it should have become final, shall be at his, appellant's cost;
no other pronouncement as to costs whether here, whether in Lower Court;
all other claims between appellant and appellee within their respective
pleadings are hereby dismissed.
It appears that the spouses Vicente Tamayo and Cirila Velasco-Tamayo owned a parcel of
land in the barrio of Oalsic or Gualsic, between the municipalities of Alcala and Malasiqui,
Pangasinan. Prior to February 1, 1912, said spouses sold part of the northern portion of said
land, with an area of 22,125-1/3 square meters, to Fernando Domantay, who took possession
thereof. Sometime after this sale, but before said date, Vicente Tamayo died. His widow
having waived her rights to the remaining portion of their original property in favor of her
children Mariano Tamayo and Marcos Tamayo, these brothers were, on February 1, 1912,
declared, in Civil Case No. 136 of the Court of First Instance of Pangasinan, sole heirs of the
deceased. On September 29, 1913, Mariano Tamayo and Marcos Tamayo applied, in
Cadastral Case No. 61, G.L.R.O. Record No. 10548 of the same court, for the registration in
their names, of a tract of land of about 383,509 square meters, alleging that they had thus
inherited the same from their deceased father.
After appropriate proceedings, judgment was rendered, directing the registration, in the name
of Mariano Tamayo; and Marcos Tamayo, of 205,421 square meters only of the land applied
for, said applicants having acknowledged that the remaining portion thereof belonged to the
estate of Gregorio Flor Mata, deceased. Upon the issuance of the corresponding decree
thereafter, said OCT No. 2612 was, on November 15, 1915, issued in favor of the brothers
Mariano Tamayo and Marcos Tamayo. Not long after, or on August 22, 1918, Fernando
Domantay sold his above mentioned land of 22,125-1/3 square meters to Aurelio Callejo, who
took possession thereof since then. Subsequently, or on May 23, 1930, Marcos Tamayo sold
his undivided share in the property covered by OCT No. 2612 to his brother Mariano Tamayo,
who, accordingly, obtained, on May 26, 1930, Transfer Certificate of Title No. 5486 in his
name, in lieu of OCT No. 2612. Then, on February 24, 1940, Mariano Tamayo sold 70,000
square meters, more or less, on the western portion of said property, to Proceso Estacio,
upon whose request surveyor Fidel Diaz went, sometime in June 1952, to the land covered
by said TCT No. 5486, for the purpose of preparing a subdivision plan and segregating the
seven (7) hectares thus conveyed by Mariano Tamayo, but Diaz did not accomplish his
purpose, for he was not allowed by Callejo to enter the portion held by the latter. What is
more, Callejo asked Mariano Tamayo to cause to be excluded from TCT No. 5486 the land
held by the former, but the latter refused to do so. Hence, on June 16, 1952, Callejo
registered his adverse claim over said land, which claim was annotated in TCT No. 5486.
Then, on June 25, 1952, Callejo filed, with the Court of First Instance of Pangasinan, his
present complaint, for reconveyance and damages, against Mariano Tamayo. The complaint
was later amended to include Marcos Tamayo as one of the defendants, he having,
meanwhile, reacquired his share in the land covered before by OCT No. 2612, and then TCT
No. 5486. Having failed to answer the amended complaint, defendant Marcos Tamayo was
declared in default, whereas defendant Mariano Tamayo filed his answer with counterclaim.
His main defense was that the land claimed by Callejo is outside the perimeter of the area
covered by the aforementioned certificates of title. In his amended answer, Mariano Tamayo
pleaded, also, the statute of limitations. After due trial, said court rendered a decision
dismissing the complaint, upon the ground that the land purchased by Fernando Domantay
from the parent of Mariano and Marcos Tamayo is not included in said titles. On appeal taken
by plaintiff Callejo, this decision was reversed by the Court of Appeals, which found, as a fact,
that the land claimed by him is part of the land covered by the aforementioned certificates of
title, and overruled the plea of prescription set up by Mariano Tamayo, upon the theory that
the title to said portion of land now claimed by Callejo, and, before, by Fernando Domantay,
is held in trust by the Tamayos and that the action to enforce said trust does not prescribe.
The case is now before Us on petition for review filed by Mariano Tamayo. The petition was,
at first denied by minute resolution, which was later reconsidered and the petition given due
course.
In his brief before this Court, Tamayo maintains that the Court of Appeals has erred: (1) "in
not holding that the respondent Aurelio Callejo's cause of action, if any, had already
prescribed"; (2) "in holding that the petitioner's failure to appeal from the decision that did not
grant him affirmative relief on the matter of possession, constituted res adjudicata thereon";
(3) "in disregarding the judicial admission made by the respondent Callejo and his counsel";
(4) "in making conclusions not supported by the facts on record"; and (5) "in not affirming the
decision rendered by the trial court."
Under his first assignment of error, Tamayo argues that if the erroneous inclusion in his
certificate of title of the parcel of land formerly sold by his parents to Fernando Domantay
created, by operation of law, an implied trust, the corresponding action for reconveyance of
said parcel prescribed ten (10) years from the accrual of the cause of action, on November
15, 1915, when OCT No. 2612 was issued, or long before the institution of this case on June
25, 1952.
It should be noted, however, that although the trust created by the application for registration
filed by Mariano and Marcos Tamayo, on or about September 29, 1913, and the inclusion in
OCT No. 2612, issued in their names, on November 15, 1915, of the tract of land previously
sold by their parents to Fernando Domantay — and later conveyed by him to Aurelio Callejo
may have had a constructive or implied nature, its status was substantially affected on June
28, 1918, by the following facts, namely: On the date last mentioned, Fernando Domantay
and petitioner Mariano Tamayo — the latter acting in his own behalf and on that of his brother
Marcos Tamayo — executed the public instrument Exhibit I whereby Mariano
Tamayo explicitly acknowledged that his deceased parents, Vicente Tamayo and Cirila
Velasco, had sold to Fernando Domantay, for the sum of P200, the parcel of land of about
22,125-1/3 square meters, then held by the latter, and stipulating, inter alia, that Fernando
Domantay is the absolute owner of said land, free from any lien or encumbrance thereon, and
that, in view of the sale thus made by his parents, he (Mariano Tamayo) "quedo responsible
al susodicho Don Fernando Domantay, sus herederos y causa habientes por la propiedad,
cuyo titulo me comprometo a defender contra las reclamaciones ... de quienes las
presentare."1
This express recognition by Mariano Tamayo — on his behalf and that of his brother Marcos
Tamayo — of the previous sale, made by their parents, to Fernando Domantay had the effect
of imparting to the aforementioned trust the — nature of an express trust — it having been
created by the will of the parties, "no particular words" being "required for the creation of an
express trust, it being sufficient that a trust is clearly intended" 2 — which express trust is a
"continuing and subsisting" trust, not subject to the statute of limitations, at least, until
repudiated, in which event the period of prescription begins to run only from the time of the
repudiation.3 The latter did not take place, in the case at bar, until early in June, 1952, when
Mariano Tamayo rejected Aurelio Callejo's demand that the now disputed portion be
excluded from TCT No. 5486 in the former's name. But, then, the case at bar was filed weeks
later, or on June 25, 1952, when the period of prescription had barely begun to run.
It is thus apparent that the Court of Appeals did not err in overruling the plea of prescription.
Under his second assignment of error, petitioner Tamayo maintains that "the Court of
Appeals erred in holding that the petitioner's failure to appeal from the decision that did not
grant him affirmative relief on the matter of possession, constituted res adjudicata thereon."
This pretense is manifestly devoid of merit, for the Court of Appeals had explicitly
acknowledged Callejo's title over the disputed land and declared the same reconveyed to
him. This necessarily implied that Callejo is entitled to remain in possession of said land.
The third assignment of error impugns the following observations made in the decision of the
Court of Appeals:
... it is true that appellees sought to show that it was outside of their titled
land, and north of this, and is now identified as Lot 12340 of the Malasiqui
cadastre, and peculiarly enough, there is an answer in cross by appellant
himself that might indicate that he indeed admitted that this land in question
is Lot 12340 of the Malasiqui cadastre, tsn. 21, Abalos, but his counsel must
have apparently discovered that this was an error, so much so that even in
Lower Court, in the memorandum that he filed, he contended that the
questioned land could not be Lot 12340, R.A., p.48, so that even were this
testimony to be given the category of a judicial admission, Rule 129, sec. 2 of
the Revised Rules of Court, the same must have to give way to the truth if
the latter were shown to be otherwise from the evidence, because then it
would have been shown to have been due to palpable mistake, and let it be
remembered that technical numerations of their lots very probably are not
known with exactness by lay witnesses; ... .
Petitioner maintains that "it has not been shown by clear evidence" that respondent Callejo
had made the admission in question "through palpable mistake"; and that Callejo's counsel
and said appellate court had, in turn, admitted the inexistence of evidence of such "palpable
mistake."
The Court of Appeals did not make the admission imputed thereto. Neither did it "disregard"
the admission of Callejo. The latter is to the effect that in cadastral case No. 92, Cadastral
Record No. 1860, he had asserted his claim to the "land in question" by filing an answer —
dated June 25, 1952 — which refers to Lot No. 12340 of the cadastral survey. Callejo's
counsel had, also, made a similar admission, in the trial court. Callejo did not admit, however,
that Lot No. 12340, is the property conveyed to Fernando Domantay — his predecessor in
interest — by the parents of Mariano and Marcos Tamayo. Needless to say, in the answer
(Exhibits P and 1) filed by him in said Case No. 92, on June 25, 1952, to which petitioner
referred in connection with said admission Callejo could not have legally claimed any portion
of Lot No. 12341 — covered by TCT No. 5486, in the name of Mariano Tamayo — for the
very reason that the latter's right to the registration of this Lot 12341 had already been settled
in the decision and decree upon which OCT No. 2612 — from which said TCT No 5486 has
been derived — was based and such decision is no longer subject to review, although without
prejudice to the corresponding action for reconveyance, if proper. Hence, coetaneously with
the filing of said answer (Exhibits P and 1), Callejo had commenced the present action for
reconveyance and damages.
Thus Callejo claimed both Lot No. 12340 and the northern portion of Lot No. 12341. Indeed,
said answer describes the southern boundary of said Lot No. 12340 as Lot No. "12341,
Mariano Tamayo — portion claimed by Aurelio Callejo." Thus, Callejo alleged in said pleading
that, aside from Lot No. 12340, he claimed, also, a portion of the land included in Lot No.
12341. What is more, he alleged, in paragraph 5 of the aforementioned answer, that he had
acquired the said Lot No. 12340 by "purchase from Maximo Rico" not from Fernando
Domantay, his predecessor in interest with respect to his title to the northern portion of Lot
No. 12341. And this is borne out by the very testimony of petitioner herein, who admitted that
the property inherited by him from his parents is bounded on the north by the land formerly
belonging to said Maximo Rico, and, more significantly, by the deed Exhibit I, in which
petitioner acknowledged that the property sold by his parents to Fernando Domantay is
bounded "al norte, con el terreno de la propiedad de Maximo Rico." These admissions by
petitioner herein leave no room for doubt that Lot No. 12340 is not the property so conveyed
to Domantay and then assigned by the latter to Callejo.
The full text of the finding of the Court of Appeals — of which the contested observations are
but a part — reads:
CONSIDERING: Therefore, that question of whether or not appellees' titled
land had included appellant's portion bought from Fernando Domantay, and
since an examination of evidence would show that the said land that bad
been bought by appellant was bounded on the North by Maximo Rico and
Moises Rosal, on the East by Felomena Macaraeg, on the South by Mariano
Tamayo and on the West by Maria Olea, see Exhs. F and I, while the land
that had been titled in the name of defendants was bounded on the North by
Felipe Novida on the NE by properties of Felomena Macaraeg and Santiago
Tamayo, on the South by property of the estate of Gregorio Flor Mata, on the
West, by Macaro Creek and on the Northwest by the property of Felipe
Novida, see Exh. B, and since appellant's purchase referred only to a portion
of the Tamayo land, the fact that it was bounded on the south by Mariano
Tamayo according to Exhs. E and I would support his claim that said portion
was really part, the northern part, of the original Tamayo land; the fact that
the boundary on the north of the land he purchased was Maximo Rico and
Moises Rosal as shown in Exhs. F and I, in the light of the proven fact that
Maximo Rico was the successor in interest to that land toward the north,
formerly of Felipe Novida — and this is admitted by appellee himself:
Q. That land north of the land described in your title TCT
5486 was later owned by Maximo Rico, is it not?
A. Not only Maximo Rico, also Fernando Dumatay, tsn. 39.
Rollazo.
which confirms the testimony of witness, Fernando Rico, son
of Maximo:
Q. That land bought by your father from Matias Lomibao
used to be the property of one Felipe Novida is that right?
A. Matias Lomibao bought that land from Felipe Novida and
Matias Lomibao sold that land to Maximo Rico. tsn. 36,
Rollazo;
therefore, the portion bought by appellant in 1918 is persuasively shown by
these details to be really that northern portion within the former Tamayo land;
it is true that appelles sought to show that it was outside of their titled land,
and north of this, and is now identified as Lot 12340 of the Malasiqui
cadastre, and peculiarly enough, there is an answer in cross by appellant
himself that might indicate that he indeed admitted that this land in question
is Lot 12340 of the Malsiqui cadastre, t.s.n. 21, Abalos but his counsel must
have apparently discovered that this was an error, so much so that even in
Lower Court, in the memorandum that he filed, he contended that the
questioned land could not be Lot 12340, R.A., p. 48, so that even were this
testimony to be given the category of a judicial admission, Rule 129, see. 2
of the Revised Rules of Court the same must have to give way to the truth if
the latter were shown to be otherwise from the evidence, because then it
would have been shown to have been due to a palpable mistake, and let it be
remembered that technical numerations of their lots very probably are not
known with exactness by law witnesses; at any rate, and indeed, a further
examination of the proof would demonstrate that this Lot 12340 is not really
the land that had been bought by appellant from Fernando Dumatay, but is a
land north of that; because:
1st — This Lot 12340 is shown by the very Exh. 2 of defendants-appellees,
to have been acquired by appellant, not from Fernando Dumatay but from
Maximo Rico, — see par. 5 thereof;
2nd. — The fact that appellant had bought a portion of said Maximo Rico's
land north of the titled property that is to say, north of Lot 12341, is admitted
by appellee himself in cross.
Q. That land north of the land described in your title, TCT
5486 was later owned by Maximo Rico, is it not?
A. Not only Maximo Rico, also Fernando Dumatay.
Q. Who is the owner now of that land north of the land
covered by TCT 5486?
A. It was sold to Aurelio Callejo, now the heirs of Aurelio
Callejo and Fernando Dumatay. tsn. 39, Rollazo, witness,
Mariano Tamayo;
3rd — This can only mean that Lot 12340, which is the Lot 12341, — which
is appellee's land — had been acquired by appellant Aurelio, not from
Fernando Dumatay, — but from Maximo Rico, — successor in interest of
Felipe Novida the former boundary owner north of the titled land, as shown
indeed in appellant's answer in the cadastral case, Exh. 2, exhibited by
appellees themselves;
4th — Appellee's own exhibit 2, which is a verified copy of the plan in the
Bureau of Lands of Lots 12340 and 12341, would indicate that Lot 12340 is
 as so testified by surveyor Diaz, outside of land surveyed in Plan 11-7384 approval has become final and executory may the reconveyance be either made or deemed
which is the plan of the titled property; but on the other hand, surveyor Diaz it effected.
must be remembered. also prepared and identified his own plan, Exh. Q
which is sketch plan of 11-7384 — Amd', and her it is graphically seen that SO MODIFIED, the appealed decision of the Court of Appeals is hereby affirmed in all other
Lot A thereof, therein denominated as part of the land described in the plan respects, with the costs of this instance against petitioner Mariano Tamayo. It is so ordered.
11-7384 Amd. — is for and in the name of, "Aurelio Callejo", so much so that
it even indicates the position and location of Aurelio's house.

None of the premises on which the foregoing finding is based has been assailed by petitioner
herein. Hence, the third assignment of error is clearly untenable.

Under petitioner's fourth assignment of error, it is urged that the conclusion of the Court of
Appeals to the effect that Lot No. 12340 was acquired by respondent Callejo from Maximo
Rico "is not supported by any direct testimonial evidence." This argument is in the nature of a
negative pregnant. It does not deny the existence of indirect testimonial evidence, such as
the circumstances pointed out in the above-quoted finding of the Court of Appeals. Neither
does it assail the existence of direct documentary evidence, such as petitioner's
aforementioned admission in Exhibit I. In short, it does not deny the existence of substantial
evidence in support of the contested, conclusion of fact of the Court of Appeals.

Apart from the foregoing, this assignment of error, like the third, tends to impugn the finding of
the Court of Appeals to the effect that the land sold by petitioner's parents to Domantay is
within the perimeter of the property covered by TCT No. 5486. This, however, is essentially a
question of fact, and, consequently, the finding to this effect is final and not subject to review
in the present appeal on certiorari.5 Indeed, its determination would require an examination of
all the evidence introduced before the trial court, a consideration of the credibility of
witnesses, and of the circumstances surrounding the case, and their relevancy or relation to
one another and to the whole, as well as an appraisal of the probabilities of the entire
situation. It would thus abolish the distinction between an ordinary appeal on the one hand,
and a review on certiorari, on the other, and thus defeat the purpose for which the latter
procedure has been established. In short, the issue raised in petitioner's third and fourth
assignments of error is basically one of fact, not reviewable by Us on certiorari.

Under the last assignment of error, petitioner questions the right of Callejo to demand a
reconveyance, insofar as it may affect the portion of 70,000 square meters sold by him to
Proceso Estacio, upon the ground that the latter is a purchaser in good faith for value. This is,
however, a defense not available to petitioner herein, aside from the fact that he has not even
pleaded it in the trial court or otherwise raised it either in that court or in the Court of Appeals.

We note that the dispositive part of the decision of the Court of Appeals declares that the land
in question is "declared reconveyed" to said respondent. Such reconveyance cannot,
however, be deemed made without a survey defining with precision the metes and bounds of
the area to be segregated for herein respondent, Aurelio Callejo. Accordingly, the case
should be remanded to the court of origin for the preparation of a subdivision plan of the
portion thus to be segregated and the judicial approval of such plan, and only after such
G.R. No. L-43082 June 18, 1937
PABLO LORENZO, as trustee of the estate of Thomas Hanley, deceased, plaintiff-
appellant,
vs.
JUAN POSADAS, JR., Collector of Internal Revenue, defendant-appellant.
Pablo Lorenzo and Delfin Joven for plaintiff-appellant.
Office of the Solicitor-General Hilado for defendant-appellant.
LAUREL, J.:
On October 4, 1932, the plaintiff Pablo Lorenzo, in his capacity as trustee of the estate of
Thomas Hanley, deceased, brought this action in the Court of First Instance of Zamboanga
against the defendant, Juan Posadas, Jr., then the Collector of Internal Revenue, for the
refund of the amount of P2,052.74, paid by the plaintiff as inheritance tax on the estate of the
deceased, and for the collection of interst thereon at the rate of 6 per cent per annum,
computed from September 15, 1932, the date when the aforesaid tax was [paid under
protest. The defendant set up a counterclaim for P1,191.27 alleged to be interest due on the
tax in question and which was not included in the original assessment. From the decision of
the Court of First Instance of Zamboanga dismissing both the plaintiff's complaint and the
defendant's counterclaim, both parties appealed to this court.
It appears that on May 27, 1922, one Thomas Hanley died in Zamboanga, Zamboanga,
leaving a will (Exhibit 5) and considerable amount of real and personal properties. On june
14, 1922, proceedings for the probate of his will and the settlement and distribution of his
estate were begun in the Court of First Instance of Zamboanga. The will was admitted to
probate. Said will provides, among other things, as follows:
4. I direct that any money left by me be given to my nephew Matthew Hanley.
5. I direct that all real estate owned by me at the time of my death be not sold or
otherwise disposed of for a period of ten (10) years after my death, and that the same
be handled and managed by the executors, and proceeds thereof to be given to my
nephew, Matthew Hanley, at Castlemore, Ballaghaderine, County of Rosecommon,
Ireland, and that he be directed that the same be used only for the education of my
brother's children and their descendants.
6. I direct that ten (10) years after my death my property be given to the above
mentioned Matthew Hanley to be disposed of in the way he thinks most
advantageous.
xxx xxx xxx
8. I state at this time I have one brother living, named Malachi Hanley, and that my
nephew, Matthew Hanley, is a son of my said brother, Malachi Hanley.
The Court of First Instance of Zamboanga considered it proper for the best interests of ther
estate to appoint a trustee to administer the real properties which, under the will, were to pass
to Matthew Hanley ten years after the two executors named in the will, was, on March 8,
1924, appointed trustee. Moore took his oath of office and gave bond on March 10, 1924. He
acted as trustee until February 29, 1932, when he resigned and the plaintiff herein was
appointed in his stead.
During the incumbency of the plaintiff as trustee, the defendant Collector of Internal Revenue,
alleging that the estate left by the deceased at the time of his death consisted of realty valued
at P27,920 and personalty valued at P1,465, and allowing a deduction of P480.81, assessed
against the estate an inheritance tax in the amount of P1,434.24 which, together with the
penalties for deliquency in payment consisting of a 1 per cent monthly interest from July 1,
1931 to the date of payment and a surcharge of 25 per cent on the tax, amounted to
P2,052.74. On March 15, 1932, the defendant filed a motion in the testamentary proceedings
pending before the Court of First Instance of Zamboanga (Special proceedings No. 302)
praying that the trustee, plaintiff herein, be ordered to pay to the Government the said sum of
P2,052.74. The motion was granted. On September 15, 1932, the plaintiff paid said amount
under protest, notifying the defendant at the same time that unless the amount was promptly
refunded suit would be brought for its recovery. The defendant overruled the plaintiff's protest
and refused to refund the said amount hausted, plaintiff went to court with the result herein
above indicated.
In his appeal, plaintiff contends that the lower court erred:
I. In holding that the real property of Thomas Hanley, deceased, passed to his
instituted heir, Matthew Hanley, from the moment of the death of the former, and that
from the time, the latter became the owner thereof.
II. In holding, in effect, that there was deliquency in the payment of inheritance tax
due on the estate of said deceased.
III. In holding that the inheritance tax in question be based upon the value of the
estate upon the death of the testator, and not, as it should have been held, upon the
value thereof at the expiration of the period of ten years after which, according to the
testator's will, the property could be and was to be delivered to the instituted heir.
IV. In not allowing as lawful deductions, in the determination of the net amount of the
estate subject to said tax, the amounts allowed by the court as compensation to the
"trustees" and paid to them from the decedent's estate.
V. In not rendering judgment in favor of the plaintiff and in denying his motion for new
trial.
The defendant-appellant contradicts the theories of the plaintiff and assigns the following
error besides:
The lower court erred in not ordering the plaintiff to pay to the defendant the sum of
P1,191.27, representing part of the interest at the rate of 1 per cent per month from
April 10, 1924, to June 30, 1931, which the plaintiff had failed to pay on the
inheritance tax assessed by the defendant against the estate of Thomas Hanley.
The following are the principal questions to be decided by this court in this appeal: (a) When
does the inheritance tax accrue and when must it be satisfied? (b) Should the inheritance tax
be computed on the basis of the value of the estate at the time of the testator's death, or on
its value ten years later? (c) In determining the net value of the estate subject to tax, is it
proper to deduct the compensation due to trustees? (d) What law governs the case at bar?
Should the provisions of Act No. 3606 favorable to the tax-payer be given retroactive effect?
(e) Has there been deliquency in the payment of the inheritance tax? If so, should the
additional interest claimed by the defendant in his appeal be paid by the estate? Other points
of incidental importance, raised by the parties in their briefs, will be touched upon in the
course of this opinion.
(a) The accrual of the inheritance tax is distinct from the obligation to pay the same. Section
1536 as amended, of the Administrative Code, imposes the tax upon "every transmission by
virtue of inheritance, devise, bequest, gift mortis causa, or advance in anticipation of
inheritance,devise, or bequest." The tax therefore is upon transmission or the transfer or
devolution of property of a decedent, made effective by his death. (61 C. J., p. 1592.) It is in
reality an excise or privilege tax imposed on the right to succeed to, receive, or take property
by or under a will or the intestacy law, or deed, grant, or gift to become operative at or after
death. Acording to article 657 of the Civil Code, "the rights to the succession of a person are
transmitted from the moment of his death." "In other words", said Arellano, C. J., ". . . the
heirs succeed immediately to all of the property of the deceased ancestor. The property
belongs to the heirs at the moment of the death of the ancestor as completely as if the
ancestor had executed and delivered to them a deed for the same before his death." (Bondad
vs. Bondad, 34 Phil., 232. See also, Mijares vs. Nery, 3 Phil., 195; Suilong & Co., vs. Chio-
Taysan, 12 Phil., 13; Lubrico vs. Arbado, 12 Phil., 391; Innocencio vs. Gat-Pandan, 14 Phil.,
491; Aliasas vs.Alcantara, 16 Phil., 489; Ilustre vs. Alaras Frondosa, 17 Phil., 321; Malahacan
vs. Ignacio, 19 Phil., 434; Bowa vs. Briones, 38 Phil., 27; Osario vs. Osario & Yuchausti
Steamship Co., 41 Phil., 531; Fule vs. Fule, 46 Phil., 317; Dais vs. Court of First Instance of
Capiz, 51 Phil., 396; Baun vs. Heirs of Baun, 53 Phil., 654.) Plaintiff, however, asserts that
while article 657 of the Civil Code is applicable to testate as well as intestate succession, it
operates only in so far as forced heirs are concerned. But the language of article 657 of the
Civil Code is broad and makes no distinction between different classes of heirs. That article
does not speak of forced heirs; it does not even use the word "heir". It speaks of the rights of
succession and the transmission thereof from the moment of death. The provision of section
625 of the Code of Civil Procedure regarding the authentication and probate of a will as a
necessary condition to effect transmission of property does not affect the general rule laid
down in article 657 of the Civil Code. The authentication of a will implies its due execution but
once probated and allowed the transmission is effective as of the death of the testator in
accordance with article 657 of the Civil Code. Whatever may be the time when actual
transmission of the inheritance takes place, succession takes place in any event at the
moment of the decedent's death. The time when the heirs legally succeed to the inheritance
may differ from the time when the heirs actually receive such inheritance. "Poco importa",
says Manresa commenting on article 657 of the Civil Code, "que desde el falleimiento del
causante, hasta que el heredero o legatario entre en posesion de los bienes de la herencia o
del legado, transcurra mucho o poco tiempo, pues la adquisicion ha de retrotraerse al
momento de la muerte, y asi lo ordena el articulo 989, que debe considerarse como
complemento del presente." (5 Manresa, 305; see also, art. 440, par. 1, Civil Code.) Thomas
Hanley having died on May 27, 1922, the inheritance tax accrued as of the date.
From the fact, however, that Thomas Hanley died on May 27, 1922, it does not follow that the
obligation to pay the tax arose as of the date. The time for the payment on inheritance tax is
clearly fixed by section 1544 of the Revised Administrative Code as amended by Act No.
3031, in relation to section 1543 of the same Code. The two sections follow:
SEC. 1543. Exemption of certain acquisitions and transmissions. — The following
shall not be taxed:
(a) The merger of the usufruct in the owner of the naked title.
(b) The transmission or delivery of the inheritance or legacy by the fiduciary
heir or legatee to the trustees.
(c) The transmission from the first heir, legatee, or donee in favor of another
beneficiary, in accordance with the desire of the predecessor.
In the last two cases, if the scale of taxation appropriate to the new beneficiary is
greater than that paid by the first, the former must pay the difference.
SEC. 1544. When tax to be paid. — The tax fixed in this article shall be paid:
(a) In the second and third cases of the next preceding section, before
entrance into possession of the property.
(b) In other cases, within the six months subsequent to the death of the
predecessor; but if judicial testamentary or intestate proceedings shall be
instituted prior to the expiration of said period, the payment shall be made by
the executor or administrator before delivering to each beneficiary his share.
If the tax is not paid within the time hereinbefore prescribed, interest at the rate of
twelve per centum per annum shall be added as part of the tax; and to the tax and
interest due and unpaid within ten days after the date of notice and demand thereof
by the collector, there shall be further added a surcharge of twenty-five per centum.
 A certified of all letters testamentary or of admisitration shall be furnished the
Collector of Internal Revenue by the Clerk of Court within thirty days after their
issuance.
It should be observed in passing that the word "trustee", appearing in subsection (b) of
section 1543, should read "fideicommissary" or "cestui que trust". There was an obvious
mistake in translation from the Spanish to the English version.
The instant case does fall under subsection (a), but under subsection (b), of section 1544
above-quoted, as there is here no fiduciary heirs, first heirs, legatee or donee. Under the
subsection, the tax should have been paid before the delivery of the properties in question to
P. J. M. Moore as trustee on March 10, 1924.
(b) The plaintiff contends that the estate of Thomas Hanley, in so far as the real properties
are concerned, did not and could not legally pass to the instituted heir, Matthew Hanley, until
after the expiration of ten years from the death of the testator on May 27, 1922 and, that the
inheritance tax should be based on the value of the estate in 1932, or ten years after the
testator's death. The plaintiff introduced evidence tending to show that in 1932 the real
properties in question had a reasonable value of only P5,787. This amount added to the
value of the personal property left by the deceased, which the plaintiff admits is P1,465,
would generate an inheritance tax which, excluding deductions, interest and surcharge, would
amount only to about P169.52.
If death is the generating source from which the power of the estate to impose inheritance
taxes takes its being and if, upon the death of the decedent, succession takes place and the
right of the estate to tax vests instantly, the tax should be measured by the vlaue of the estate
as it stood at the time of the decedent's death, regardless of any subsequent contingency
value of any subsequent increase or decrease in value. (61 C. J., pp. 1692, 1693; 26 R. C. L.,
p. 232; Blakemore and Bancroft, Inheritance Taxes, p. 137. See also Knowlton vs. Moore,
178 U.S., 41; 20 Sup. Ct. Rep., 747; 44 Law. ed., 969.) "The right of the state to an
inheritance tax accrues at the moment of death, and hence is ordinarily measured as to any
beneficiary by the value at that time of such property as passes to him. Subsequent
appreciation or depriciation is immaterial." (Ross, Inheritance Taxation, p. 72.)
Our attention is directed to the statement of the rule in Cyclopedia of Law of and Procedure
(vol. 37, pp. 1574, 1575) that, in the case of contingent remainders, taxation is postponed
until the estate vests in possession or the contingency is settled. This rule was formerly
followed in New York and has been adopted in Illinois, Minnesota, Massachusetts, Ohio,
Pennsylvania and Wisconsin. This rule, horever, is by no means entirely satisfactory either to
the estate or to those interested in the property (26 R. C. L., p. 231.). Realizing, perhaps, the
defects of its anterior system, we find upon examination of cases and authorities that New
York has varied and now requires the immediate appraisal of the postponed estate at its clear
market value and the payment forthwith of the tax on its out of the corpus of the estate
transferred. (In re Vanderbilt, 172 N. Y., 69; 69 N. E., 782; In re Huber, 86 N. Y. App. Div.,
458; 83 N. Y. Supp., 769; Estate of Tracy, 179 N. Y., 501; 72 N. Y., 519; Estate of Brez, 172
N. Y., 609; 64 N. E., 958; Estate of Post, 85 App. Div., 611; 82 N. Y. Supp., 1079. Vide also,
Saltoun vs. Lord Advocate, 1 Peter. Sc. App., 970; 3 Macq. H. L., 659; 23 Eng. Rul. Cas.,
888.) California adheres to this new rule (Stats. 1905, sec. 5, p. 343).
But whatever may be the rule in other jurisdictions, we hold that a transmission by inheritance
is taxable at the time of the predecessor's death, notwithstanding the postponement of the
actual possession or enjoyment of the estate by the beneficiary, and the tax measured by the
value of the property transmitted at that time regardless of its appreciation or depreciation.
(c) Certain items are required by law to be deducted from the appraised gross in arriving at
the net value of the estate on which the inheritance tax is to be computed (sec. 1539,
Revised Administrative Code). In the case at bar, the defendant and the trial court allowed a
deduction of only P480.81. This sum represents the expenses and disbursements of the
executors until March 10, 1924, among which were their fees and the proven debts of the
deceased. The plaintiff contends that the compensation and fees of the trustees, which
aggregate P1,187.28 (Exhibits C, AA, EE, PP, HH, JJ, LL, NN, OO), should also be deducted
under section 1539 of the Revised Administrative Code which provides, in part, as follows: "In
order to determine the net sum which must bear the tax, when an inheritance is concerned,
there shall be deducted, in case of a resident, . . . the judicial expenses of the testamentary or
intestate proceedings, . . . ."
A trustee, no doubt, is entitled to receive a fair compensation for his services (Barney vs.
Saunders, 16 How., 535; 14 Law. ed., 1047). But from this it does not follow that the
compensation due him may lawfully be deducted in arriving at the net value of the estate
subject to tax. There is no statute in the Philippines which requires trustees' commissions to
be deducted in determining the net value of the estate subject to inheritance tax (61 C. J., p.
1705). Furthermore, though a testamentary trust has been created, it does not appear that
the testator intended that the duties of his executors and trustees should be separated.
(Ibid.; In re Vanneck's Estate, 161 N. Y. Supp., 893; 175 App. Div., 363; In re Collard's
Estate, 161 N. Y. Supp., 455.) On the contrary, in paragraph 5 of his will, the testator
expressed the desire that his real estate be handled and managed by his executors until the
expiration of the period of ten years therein provided. Judicial expenses are expenses of
administration (61 C. J., p. 1705) but, in State vs. Hennepin County Probate Court (112 N.
W., 878; 101 Minn., 485), it was said: ". . . The compensation of a trustee, earned, not in the
administration of the estate, but in the management thereof for the benefit of the legatees or
devises, does not come properly within the class or reason for exempting administration
expenses. . . . Service rendered in that behalf have no reference to closing the estate for the
purpose of a distribution thereof to those entitled to it, and are not required or essential to the
perfection of the rights of the heirs or legatees. . . . Trusts . . . of the character of that here
before the court, are created for the the benefit of those to whom the property ultimately
passes, are of voluntary creation, and intended for the preservation of the estate. No sound
reason is given to support the contention that such expenses should be taken into
consideration in fixing the value of the estate for the purpose of this tax."
(d) The defendant levied and assessed the inheritance tax due from the estate of Thomas
Hanley under the provisions of section 1544 of the Revised Administrative Code, as amended
by section 3 of Act No. 3606. But Act No. 3606 went into effect on January 1, 1930. It,
therefore, was not the law in force when the testator died on May 27, 1922. The law at the
time was section 1544 above-mentioned, as amended by Act No. 3031, which took effect on
March 9, 1922.
It is well-settled that inheritance taxation is governed by the statute in force at the time of the
death of the decedent (26 R. C. L., p. 206; 4 Cooley on Taxation, 4th ed., p. 3461). The
taxpayer can not foresee and ought not to be required to guess the outcome of pending
measures. Of course, a tax statute may be made retroactive in its operation. Liability for taxes
under retroactive legislation has been "one of the incidents of social life." (Seattle vs.
Kelleher, 195 U. S., 360; 49 Law. ed., 232 Sup. Ct. Rep., 44.) But legislative intent that a tax
statute should operate retroactively should be perfectly clear. (Scwab vs. Doyle, 42 Sup. Ct.
Rep., 491; Smietanka vs. First Trust & Savings Bank, 257 U. S., 602; Stockdale vs. Insurance
Co., 20 Wall., 323; Lunch vs. Turrish, 247 U. S., 221.) "A statute should be considered as
prospective in its operation, whether it enacts, amends, or repeals an inheritance tax, unless
the language of the statute clearly demands or expresses that it shall have a retroactive
effect, . . . ." (61 C. J., P. 1602.) Though the last paragraph of section 5 of Regulations No. 65
of the Department of Finance makes section 3 of Act No. 3606, amending section 1544 of the
Revised Administrative Code, applicable to all estates the inheritance taxes due from which
have not been paid, Act No. 3606 itself contains no provisions indicating legislative intent to
give it retroactive effect. No such effect can begiven the statute by this court.
The defendant Collector of Internal Revenue maintains, however, that certain provisions of
Act No. 3606 are more favorable to the taxpayer than those of Act No. 3031, that said
provisions are penal in nature and, therefore, should operate retroactively in conformity with
the provisions of article 22 of the Revised Penal Code. This is the reason why he applied Act
No. 3606 instead of Act No. 3031. Indeed, under Act No. 3606, (1) the surcharge of 25 per
cent is based on the tax only, instead of on both the tax and the interest, as provided for in
Act No. 3031, and (2) the taxpayer is allowed twenty days from notice and demand by rthe
Collector of Internal Revenue within which to pay the tax, instead of ten days only as required
by the old law.
Properly speaking, a statute is penal when it imposes punishment for an offense committed
against the state which, under the Constitution, the Executive has the power to pardon. In
common use, however, this sense has been enlarged to include within the term "penal
statutes" all status which command or prohibit certain acts, and establish penalties for their
violation, and even those which, without expressly prohibiting certain acts, impose a penalty
upon their commission (59 C. J., p. 1110). Revenue laws, generally, which impose taxes
collected by the means ordinarily resorted to for the collection of taxes are not classed as
penal laws, although there are authorities to the contrary. (See Sutherland, Statutory
Construction, 361; Twine Co. vs. Worthington, 141 U. S., 468; 12 Sup. Ct., 55; Rice vs. U. S.,
4 C. C. A., 104; 53 Fed., 910; Com. vs. Standard Oil Co., 101 Pa. St., 150; State vs. Wheeler,
44 P., 430; 25 Nev. 143.) Article 22 of the Revised Penal Code is not applicable to the case
at bar, and in the absence of clear legislative intent, we cannot give Act No. 3606 a
retroactive effect.
(e) The plaintiff correctly states that the liability to pay a tax may arise at a certain time and
the tax may be paid within another given time. As stated by this court, "the mere failure to pay
one's tax does not render one delinqent until and unless the entire period has eplased within
which the taxpayer is authorized by law to make such payment without being subjected to the
payment of penalties for fasilure to pay his taxes within the prescribed period." (U. S. vs.
Labadan, 26 Phil., 239.)
The defendant maintains that it was the duty of the executor to pay the inheritance tax before
the delivery of the decedent's property to the trustee. Stated otherwise, the defendant
contends that delivery to the trustee was delivery to the cestui que trust, the beneficiery in this
case, within the meaning of the first paragraph of subsection (b) of section 1544 of the
Revised Administrative Code. This contention is well taken and is sustained. The
appointment of P. J. M. Moore as trustee was made by the trial court in conformity with the
wishes of the testator as expressed in his will. It is true that the word "trust" is not mentioned
or used in the will but the intention to create one is clear. No particular or technical words are
required to create a testamentary trust (69 C. J., p. 711). The words "trust" and "trustee",
though apt for the purpose, are not necessary. In fact, the use of these two words is not
conclusive on the question that a trust is created (69 C. J., p. 714). "To create a trust by will
the testator must indicate in the will his intention so to do by using language sufficient to
separate the legal from the equitable estate, and with sufficient certainty designate the
beneficiaries, their interest in the ttrust, the purpose or object of the trust, and the property or
subject matter thereof. Stated otherwise, to constitute a valid testamentary trust there must
be a concurrence of three circumstances: (1) Sufficient words to raise a trust; (2) a definite
subject; (3) a certain or ascertain object; statutes in some jurisdictions expressly or in effect
so providing." (69 C. J., pp. 705,706.) There is no doubt that the testator intended to create a
trust. He ordered in his will that certain of his properties be kept together undisposed during a
fixed period, for a stated purpose. The probate court certainly exercised sound judgment in
appointment a trustee to carry into effect the provisions of the will (see sec. 582, Code of Civil
Procedure).
P. J. M. Moore became trustee on March 10, 1924. On that date trust estate vested in him
(sec. 582 in relation to sec. 590, Code of Civil Procedure). The mere fact that the estate of
the deceased was placed in trust did not remove it from the operation of our inheritance tax
laws or exempt it from the payment of the inheritance tax. The corresponding inheritance tax
should have been paid on or before March 10, 1924, to escape the penalties of the laws. This
is so for the reason already stated that the delivery of the estate to the trustee was in
esse delivery of the same estate to the cestui que trust, the beneficiary in this case. A trustee
is but an instrument or agent for the cestui que trust (Shelton vs. King, 299 U. S., 90; 33 Sup.
Ct. Rep., 689; 57 Law. ed., 1086). When Moore accepted the trust and took possesson of the
trust estate he thereby admitted that the estate belonged not to him but to his cestui que
trust (Tolentino vs. Vitug, 39 Phil.,126, cited in 65 C. J., p. 692, n. 63). He did not acquire any
beneficial interest in the estate. He took such legal estate only as the proper execution of the
trust required (65 C. J., p. 528) and, his estate ceased upon the fulfillment of the testator's
wishes. The estate then vested absolutely in the beneficiary (65 C. J., p. 542).
The highest considerations of public policy also justify the conclusion we have reached. Were
we to hold that the payment of the tax could be postponed or delayed by the creation of a
trust of the type at hand, the result would be plainly disastrous. Testators may provide, as
Thomas Hanley has provided, that their estates be not delivered to their beneficiaries until
after the lapse of a certain period of time. In the case at bar, the period is ten years. In other
cases, the trust may last for fifty years, or for a longer period which does not offend the rule
against petuities. The collection of the tax would then be left to the will of a private individual.
The mere suggestion of this result is a sufficient warning against the accpetance of the
essential to the very exeistence of government. (Dobbins vs. Erie Country, 16 Pet., 435; 10
Law. ed., 1022; Kirkland vs. Hotchkiss, 100 U. S., 491; 25 Law. ed., 558; Lane County vs.
Oregon, 7 Wall., 71; 19 Law. ed., 101; Union Refrigerator Transit Co. vs. Kentucky, 199 U. S.,
194; 26 Sup. Ct. Rep., 36; 50 Law. ed., 150; Charles River Bridge vs. Warren Bridge, 11 Pet.,
420; 9 Law. ed., 773.) The obligation to pay taxes rests not upon the privileges enjoyed by, or
the protection afforded to, a citizen by the government but upon the necessity of money for
the support of the state (Dobbins vs. Erie Country, supra). For this reason, no one is allowed
to object to or resist the payment of taxes solely because no personal benefit to him can be
pointed out. (Thomas vs. Gay, 169 U. S., 264; 18 Sup. Ct. Rep., 340; 43 Law. ed., 740.)
While courts will not enlarge, by construction, the government's power of taxation (Bromley
vs. McCaughn, 280 U. S., 124; 74 Law. ed., 226; 50 Sup. Ct. Rep., 46) they also will not
place upon tax laws so loose a construction as to permit evasions on merely fanciful and
insubstantial distictions. (U. S. vs. Watts, 1 Bond., 580; Fed. Cas. No. 16,653; U. S. vs.
Wigglesirth, 2 Story, 369; Fed. Cas. No. 16,690, followed in Froelich & Kuttner vs. Collector of
Customs, 18 Phil., 461, 481; Castle Bros., Wolf & Sons vs. McCoy, 21 Phil., 300; Muñoz &
Co. vs. Hord, 12 Phil., 624; Hongkong & Shanghai Banking Corporation vs. Rafferty, 39 Phil.,
145; Luzon Stevedoring Co. vs. Trinidad, 43 Phil., 803.) When proper, a tax statute should be
construed to avoid the possibilities of tax evasion. Construed this way, the statute, without
resulting in injustice to the taxpayer, becomes fair to the government.
That taxes must be collected promptly is a policy deeply intrenched in our tax system. Thus,
no court is allowed to grant injunction to restrain the collection of any internal revenue tax (
sec. 1578, Revised Administrative Code; Sarasola vs. Trinidad, 40 Phil., 252). In the case of
Lim Co Chui vs. Posadas (47 Phil., 461), this court had occassion to demonstrate trenchment
adherence to this policy of the law. It held that "the fact that on account of riots directed
against the Chinese on October 18, 19, and 20, 1924, they were prevented from praying their
internal revenue taxes on time and by mutual agreement closed their homes and stores and
remained therein, does not authorize the Collector of Internal Revenue to extend the time
prescribed for the payment of the taxes or to accept them without the additional penalty of
twenty five per cent." (Syllabus, No. 3.)
". . . It is of the utmost importance," said the Supreme Court of the United States, ". . . that the
modes adopted to enforce the taxes levied should be interfered with as little as possible. Any
delay in the proceedings of the officers, upon whom the duty is developed of collecting the
taxes, may derange the operations of government, and thereby, cause serious detriment to
the public." (Dows vs. Chicago, 11 Wall., 108; 20 Law. ed., 65, 66; Churchill and Tait vs.
Rafferty, 32 Phil., 580.)
It results that the estate which plaintiff represents has been delinquent in the payment of inheritance tax
and, therefore, liable for the payment of interest and surcharge provided by law in such cases.
The delinquency in payment occurred on March 10, 1924, the date when Moore became trustee. The
interest due should be computed from that date and it is error on the part of the defendant to compute it
one month later. The provisions cases is mandatory (see and cf. Lim Co Chui vs. Posadas, supra), and
neither the Collector of Internal Revenuen or this court may remit or decrease such interest, no matter
how heavily it may burden the taxpayer.
To the tax and interest due and unpaid within ten days after the date of notice and demand thereof by
the Collector of Internal Revenue, a surcharge of twenty-five per centum should be added (sec. 1544,
subsec. (b), par. 2, Revised Administrative Code). Demand was made by the Deputy Collector of
Internal Revenue upon Moore in a communiction dated October 16, 1931 (Exhibit 29). The date fixed for
the payment of the tax and interest was November 30, 1931. November 30 being an official holiday, the
tenth day fell on December 1, 1931. As the tax and interest due were not paid on that date, the estate
became liable for the payment of the surcharge.
In view of the foregoing, it becomes unnecessary for us to discuss the fifth error assigned by the plaintiff
in his brief.
We shall now compute the tax, together with the interest and surcharge due from the estate of Thomas
Hanley inaccordance with the conclusions we have reached.
At the time of his death, the deceased left real properties valued at P27,920 and personal properties
worth P1,465, or a total of P29,385. Deducting from this amount the sum of P480.81, representing
allowable deductions under secftion 1539 of the Revised Administrative Code, we have P28,904.19 as
the net value of the estate subject to inheritance tax.
The primary tax, according to section 1536, subsection (c), of the Revised Administrative Code, should
be imposed at the rate of one per centum upon the first ten thousand pesos and two per centum upon
the amount by which the share exceed thirty thousand pesos, plus an additional two hundred per
centum. One per centum of ten thousand pesos is P100. Two per centum of P18,904.19 is P378.08.
Adding to these two sums an additional two hundred per centum, or P965.16, we have as primary tax,
correctly computed by the defendant, the sum of P1,434.24.
To the primary tax thus computed should be added the sums collectible under section 1544 of the
Revised Administrative Code. First should be added P1,465.31 which stands for interest at the rate of
twelve per centum per annum from March 10, 1924, the date of delinquency, to September 15, 1932,
the date of payment under protest, a period covering 8 years, 6 months and 5 days. To the tax and
interest thus computed should be added the sum of P724.88, representing a surhcarge of 25 per cent
on both the tax and interest, and also P10, the compromise sum fixed by the defendant (Exh. 29), giving
a grand total of P3,634.43.
As the plaintiff has already paid the sum of P2,052.74, only the sums of P1,581.69 is legally due from
the estate. This last sum is P390.42 more than the amount demanded by the defendant in his
counterclaim. But, as we cannot give the defendant more than what he claims, we must hold that the
plaintiff is liable only in the sum of P1,191.27 the amount stated in the counterclaim.
G.R. No. L-38972 September 28, 1987
PAZ GARCIA vda. de MAPA, * SEGUNDO MAPA, PRISCILLA M. MONZON, TERESA
MAPA, IGNACIO SALAZAR AND JOSE SALAZAR, petitioners,
vs.
COURT OF APPEALS, LUIS HIDROSOLLO and TEODORO HIDROSOLLO, in their own
behalf and as Joint Administrators of the testate estate of Ludovico Hidrosollo, and
VICTORIA ** HIDROSOLLO, CORAZON HIDROSOLLO, ROSARIO HIDROSOLLO and
MAGDALENA HIDROSOLLO, respondents.
FERNAN, J.:
This is a petition for review on certiorari of the decision of the Court of Appeals in CA-G.R.
No. 40448-R entitled "Paz Garcia Vda. de Mapa, et al. vs. Luis Hidrosollo, et al." reversing
the decision of the then Court of First Instance of Manila in Civil Case No. 59566, bearing the
same title.
The antecedent facts of the case are as follows:
On January 16, 1965, petitioners Paz Garcia Vda. de Mapa, et al. instituted Civil Case No.
59566 before the then Court of First Instance of Manila to recover from the estate of the late
Ludovico Hidrosollo, then the subject of Special Proceedings No. 52229 of the same court,
the properties left by the late Concepcion Mapa de Hidrosollo. They claimed that the
deceased Concepcion Mapa de Hidrosollo, in her last will and testament dated June 2, 1951
and admitted to probate in Special Proceedings No. 46015, instituted Ludovico Hidrosollo as
universal heir to the residue of her estate with the obligation as trustee to hold the same in
trust for petitioners herein who are nephews and nieces of the deceased Concepcion Mapa
de Hidrosollo and for respondents Luis, Teodoro, Victorina, Corazon, Violets, *** Rosario and
Magdalena, all surnamed Hidrosollo, who are nephews and nieces of Ludovico Hidrosollo;
that Ludovico, however, died without fulfilling the obligation so that the estate of Concepcion
formed part of the estate of Ludovico. They prayed in the alternative that judgment be
rendered either a) declaring a trust to have been created in their favor and their co-
beneficiaries over the residue of the estate of Concepcion Mapa de Hidrosollo and ordering
therein defendants Luis and Teodoro Hidrosollo as administrators of the estate of Ludovico
Hidrosollo, to deliver to them 6/13 of the said properties; or b) declaring the institution of
Ludovico Hidrosollo as universal heir with a provision for fideicommissary substitution in their
favor and their co- beneficiaries as null and void, declaring the residue of the estate of
Concepcion Mapa de Hidrosollo to have been subject to intestate succession, declaring them
to be the sole heirs to said residue and ordering therein defendants Luis and Teodoro
Hidrosollo to turn over to them the said properties.
Respondents, in their Answer, denied the existence of a trust and alleged that Ludovico
Hidrosollo, being the surviving spouse of the deceased Concepcion Mapa de Hidrosollo
became the latter's universal heir when she died without descendants or ascendants; that as
such universal heir, Ludovico stepped into the rights, title and claims of the deceased
Concepcion Mapa de Hidrosollo, so that the controverted properties became part of his own
estate subject of settlement in Special Proceedings No. 52229. They further claimed that Civil
Case No. 59566 was barred by the order of the same court sitting as a probate court in
Special Proceedings No. 52229 which denied petitioners' motion for intervention, and that
petitioners, in having instituted Civil Case No. 59566 had forfeited any benefits under the will.
In disposing of the case, the lower court ruled that a trust was created over the properties of
petitioners' claim, however, respondents had forfeited their rights thereto; and that the denial
of petitioners' motion to intervene in Special Proceedings No. 52229 did not deprive the
petitioners of their right to institute a separate action to recover what pertains to them in their
own right. Thus, the lower court ordered respondents Luis and Teodoro Hidrosollo or
whoever of the rest of therein defendants had disposition of the properties to reconvey the
same in favor of petitioners, to render an accounting of the income of said properties and to
deliver to petitioners the net proceeds of such income.
Respondents moved for a reconsideration of the decision, but were denied the relief sought.
Their appeal to the Court of Appeals proved fruitful as the appellate court reversed the
decision of the lower court and ruled instead that no trust nor fideicommissary substitution
was created in Concepcion Mapa de Hidrosollo's Will and that petitioners' claim was barred
by a final judgment, i.e., the order denying their motion to intervene in Special Proceedings
No. 52229 from which no appeal was taken.
Hence, this present recourse, petitioners maintaining that the will of Concepcion Mapa de
Hidrosollo created a trust in their favor, not a fideicommissary substitution, and that the denial
of their motion to intervene in Special Proceedings No. 52229 did not constitute a bar to Civil
Case No. 59566.
We find both contentions meritorious.
A careful perusal and scrutiny of the pertinent provisions of Concepcion Mapa de Hidrosollo's
Will reveal that she intended to create a trust in favor of both petitioners and private
respondents. These provisions read:
OCTAVA: Del resto de todos mis bienes parafernales y ganaciales, instituyo
por mi unico y universal heredero, a mis esposo Ludovico Hidrosollo, a
quien, al mismo tiempo, nombro como mi Abacea (sic) testamentario con
relvacin (sic) de fianza.
NOVENA: Encargo a mi esposo que en el caso de que me abreviva (sic),
disponga de los bienes que le queden a favor de nuestros sobrinos, todos en
partes iguales, a saber:
1. Jose 8. Victorina
Agustin Mapa Hidrosollo
 Ignacio Salazar y a Luis Hidrosollo conjuntamente, y en el caso de que
2. Segundo 9. Corazon
ambos o cualquiera de ellos no pudiere por cualquier motive, complier con el
Mapa Hidrosollo
cometido, que dicha administracion se ponga en manos de los sobrinos, uno
3. Priscilla 10. Luis del groupo Mapa o Salazar y el otro del grupo Hidrosollo. (pp. 58-59, Rollo).
Mapa Hidrosollo
Thus, under paragraph 8 of the Will, Ludovico Hidrosollo was instituted as sole and universal
4. Teresa 11. Violeta heir to the rest of the properties not covered by the legacies in the preceding paragraphs.
Mapa Hidrosollo Under paragraph 9, however, said Ludovico Hidrosollo was charged (encargo) with the
obligation to deliver the rest of the estate in equal parts to the Mapa, Salazar and Hidrosollo
5. Ignacio 12. Rosario nephews and nieces, who, as beneficiaries, were directed to deliver annually to one Salvador
Salazar Hidrosollo Genova, during his lifetime, 12 cavans of palay on the condition that the latter assist Luis
Hidrosollo in each harvest. Said beneficiaries were likewise required to allow said Salvador
6. Jose 13. Magdalena Genova to maintain his house on a parcel of land situated at Ilaud, Municipality of Dumarao,
Salazar Hidrosollo without payment of any compensation (Par. 10 of the Will).

7. Teodoro
Hidrosollo
DECIMA: Los beneficiarios nombrados en la clausula que antecede tendran
la obligacion de entregar, cada ano a Salvador Genova, centras esta viva,
doce cavanes de palay, con la condicion de que dicho Salvador ayude a Luis
Hidrosollo en la recoleccion de cada cosecha. Dichos beneficiarios tendran
iqualmente la obligacion de permitir al menciado Salvador Genova a tener su
casa en nuestro solar en I laud, dentro de la poblacion de Dumarao, sin pago
alguno.
UNDECIMA: Encargo igualmente a mi esposo, como heredero universal mio
que, si a su muerte, hubiese alguna dueda contraida por el durante su
supervivencia sobre mi dicha deuda sea cargada a la parte que corresponda
a sus sobrinos por consagunidad todos appellidados Hidrosollo, y no debera
en mio alguno afectar la participacion de mis sobrinos, cuatro de ellos
appellidados Mapa y dos appellidados Salazar.
xxx xxx xxx
DECIMA TERCERA: Es tambien mi voluntad la desque los bienes
permanezcan en todo tiempo en comunidad, y que los beneficiarios se
abstengan an absoluto de venderos o gravarlos en cualquier forma, en
respeto a la memoria de sus tios que solo miran el proprio bien de sus
dichos sobrinos.
xxx xxx xxx
In paragraph 11 of the same Will, the testatrix expressly provided that any obligations which
her husband might incur after her death, shall be charged against the share corresponding to
the Hidrosollo nephews and nieces and in no case shall the participation of her own nephews
and nieces be charged with said obligations. She likewise expressed the wish that all her
properties should always remain in co-ownership among her beneficiaries, who should
abstain from selling or encumbering the same in any manner whatsoever (par. 13) and that
the same be administered jointly by Ignacio Salazar and Luis Hidrosollo, or in case of their
inability, by a nephew or niece from each of the two groups (par. 15).
Although the word "trust" itself does not appear in the Will, the testatrix's intent to create one
is nonetheless clearly demonstrated by the stipulations in her Will. In designating her
husband Ludovico Hidrosollo as universal and sole heir with the obligation to deliver the
properties to petitioners and private respondents, she intended that the legal title should vest
in him, and in significantly referring to petitioners and private respondents as "beneficiarios,"
she intended that the beneficial or equitable interest to these properties should repose in
them. To our mind, these designations, coupled with the other provisions for co-ownership
and joint administration of the properties, as well as the other conditions imposed by the
testatrix effectively created a trust in favor of the parties over the properties adverted to in the
Will. "No particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended. " (Art. 1443, Civil Code of the Philippines).
However, we must not lose sight of the fact that as the surviving spouse of the testatrix,
Ludovico Hidrosollo was entitled to a legitime of one-half (1/2) of her hereditary estate. As
that portion is reserved by law for the compulsory heirs, no burden, encumbrance, condition
or substitution of any kind whatsoever may be imposed upon the legitime by the testator. (Art.
904, second paragraph, Ibid) The trust created by Concepcion Mapa should therefore be, as
it is hereby declared to be effective only on the free portion of her estate, i.e., that portion not
covered by Ludovico Hidrosollo's legitime.

DECIMA QUINTO: Encargo a mis sobrinos nombrados en esta testamento

que la administracion de los bienes de la comunidad sea encomendada a
Anent the issue of res judicata, We rule that the order denying petitioners' motion for
intervention in Special Proceedings No. 52229 did not constitute an adjudication on the merits
and therefore could not operate as a bar to Civil Case No. 59566.

The reason given by the probate court for denying petitioners 'motion for intervention is as
follows:

... that there is no fideicommissary substitution because the testatrix did not
impose upon her spouse the absolute obligation to deliver the property to
said petitioners. When the testatrix provided in her will that her husband
dispose of in favor of the petitioners his remaining properties it only shows
that he was not absolutely obligated to preserve and transmit to the
petitioners the properties by him acquired under the will of his deceased wife.
If the testatrix intended to entrust the property to her husband with the
obligation to preserve and to transmit the remaining properties to the
petitioners, she could have said so in an express manner. However, even
assuming that Clause 9 could be interpreted to he a fideicommissary
substitution, such substitution can not be given effect in the face of an
opposition and in view of Art, 863 of the Civil Code of the Philippines,
requiring that substitution must not go beyond one degree from the heir
originally instituted. It will be noticed that the second heirs instituted are
merely "sobrinos" of the fiduciary or first heir (surviving spouse). Upon these
facts, the Court is of the opinion that the movants for intervention do not have
a legal interest in the estate under the present administration. (pp. 50-51,
Record on Appeal, p. 101, Rollo).

Since the denial order was anchored primarily on the nonexistence of, or the ineffectivity of a
fideicommissary substitution, and did not resolve the issue of trust alleged by petitioners, said
order cannot be considered an adjudication on the merits of petitioners' claim against the
estate.

WHEREFORE, the decision of the Court of Appeals in CA G.R. No. 40448-A is hereby
reversed. Private respondents Luis and Teodoro Hidrosollo or their successors as
administrators of the estate of Ludovico Hidrosollo are hereby ordered to deliver to petitioners
their lawful shares in the trust constituted over the free portion of the estate of Concepcion
Mapa. Said Luis and Teodoro Hidrosollo or their successors are further ordered to render an
accounting of the income of the properties pertaining to petitioners and to deliver to the latter
the net proceeds of such income.

No pronouncement as to costs.

SO ORDERED.
[G.R. No. 107797. August 26, 1996]
PURITA SALVATIERRA, ELENITA SALVATIERRA NUNEZ, ANSELMO SALVATIERRA,
JR., EMELITA SALVATIERRA, and ROMEL SALVATIERRA, petitioners, vs. THE
HONORABLE COURT OF APPEALS and SPS. LINO LONGALONG and
PACIENCIA MARIANO, respondents.
DECISION
HERMOSISIMA, JR., J.:
The intricate yet timeworn issue of prescription has come to the fore in this case. Which
prescriptive period for actions for annulment should prevail, Art. 1391 of the New Civil Code
which limits the filing of actions to four (4) years or Art. 1144 of the same Code which limits
the period of the filing of actions on certain grounds to ten years? Likewise, at issue is
whether or not there was a double sale to a party or parties under the facts obtaining.
The petitioners in this case filed the herein petition for certiorari, assailing as they do the
decision of the Court of Appeals which held:[1]
WHEREFORE, the decision appealed from is herein REVERSED, defendants-appellees are
ordered to reconvey to plaintiffs-appellants the 149-sq. m. portion of Lot No. 26 registered in
the name of Anselmo Salvatierra under OCT O-4221 as described in the deed of sale Exh. A
or 1 of this case; and defendants-appellees are furthermore ordered to pay plaintiffs-
appellants the amount of P5,000.00 as attorneys fees.
The antecedent facts are not disputed:
In 1930, Enrique Salvatierra died intestate and without any issue. He was survived by his
legitimate brothers: Tomas, Bartolome, Venancio and Macario, and sister Marcela, all
surnamed Salvatierra. His estate consisted of three (3) parcels of land (Lot Nos. 25, 26 and
27), more particularly described in the following manner:
Cad. Lot No. 25 covered by Tax Declaration No. 11950
A parcel of land lot No. 25, situated at Poblacion, San Leonardo, Nueva Ecija. Bounded on
the NE-Lots Nos. 26 & 27; on the SE-Rizal St., SW-Lot No. 24; and on the NW-Bonifacio
Street. Containing an area of ONE THOUSAND ONE HUNDRED AND SIXTEEN (1,116) sq.
m. more or less and assessed at P1,460.00.
Cad. Lot No. 26 covered by Tax Decl. No. 11951
A parcel of land situated at Poblacion, San Leonardo, Nueva Ecija, Lot No. 26, bounded on
the NE-Lot No. 29 & 27; on the SE-Lot No. 25; and on the NW-Bonifacio St. Containing an
area of SEVEN HUNDRED FORTY NINE (749) sq. m. more or less and assessed at
P720.00.
Cad. Lot No. 27 Covered by Tax Decl. No. 11949
A parcel of land situated at Poblacion, San Leonardo, Nueva Ecija, Lot No. 27, bounded on
the NE-Lot No. 28; SE-Rizal St.; SW-Lot No. 25 and on the NW-Lot No. 26. Containing an
area of SIX HUNDRED SEVENTY (670) sq. m. more or less.
(Exh.: B: or 2)
On May 4, 1966, Macario Salvatierra sold Lot No. 26 to his son, Anselmo Salvatierra by
means of a deed of sale, and in consideration of the amount of P1,000.00. Meanwhile,
Marcela, prior to her death sold her 1/5 undivided share in the Estate of Enrique Salvatierra to
her brother, Venancio. After the death of Bartolome, his heirs Catalina and Ignacia Marquez
sold his 1/5 undivided share to Tomas and his wife, Catalina Azarcon.
On September 24, 1968, an Extrajudicial Partition with Confirmation of Sale was
executed by and among the surviving legal heirs and descendants of Enrique Salvatierra,
which consisted of the aforementioned Lot No. 25, 26 and 27. By virtue of the sale executed
by Marcela in favor of Venancio, the latter now owns 2/5 shares of the estate. By virtue of the
sale by Bartolomes heirs Catalina and Ignacia, of his undivided shares to Tomas, now
deceased, represented by his widow, Catalina Azarcon, the latter now owns 2/5 shares in the
said estate.Anselmo Salvatierra represented his father Macario, who had already died. The
extrajudicial partition with confirmation of sale summed up the shares assigned to the heirs of
Enrique Salvatierra:
To: VENANCIO SALVATIERRA 1,041 sq. m. known as Lot No. 27 covered by Tax Decl. No.
11949 and portion of Lot No. 26 covered by Tax Decl. No. 11951;
To: Macario Salvatierra now ANSELMO SALVATIERRA 405 sq. m. known as Lot No. 26-part
and covered by Tax. Decl. No. 11951;
To: HEIRS OF TOMAS SALVATIERRA 1,116 sq. m. the whole of Lot No. 25 and declared
under Tax Decl. No. 11950.
Legal Heirs of Tomas Salvatierra are:
Montano Salvatierra
Anselmo Salvatierra
Donata Salvatierra
Francisco Salvatierra
Cecilio Salvatierra
Leonila Salvatierra
 (Exhs. B-1, and 2-B, p. 8, id.).[2]
(Italics supplied)
Thereafter, on June 15, 1970, Venancio sold the whole of Lot No. 27 and a 149-sq. m.
portion of Lot 26 for the consideration of P8,500.00 to herein respondent spouses Lino
Longalong and Paciencia Mariano. The Longalongs took possession of the said lots. It was
discovered in 1982 (through a relocation survey) that the 149 sq. m. portion of Lot No. 26 was
outside their fence. It turned out that Anselmo Salvatierra was able to obtain a title, Original
Certificate of Title No. 0-4221 in his name, the title covering the whole of Lot. No. 26 which
has an area of 749 sq. m.
Efforts to settle the matter at the barangay level proved futile because Purita Salvatierra
(widow of Anselmo) refused to yield to the demand of Lino Longalong to return to the latter
the 149 sq. m. portion of Lot No. 26.
Private respondents Longalong then filed a case with the RTC for the reconveyance of
the said portion of Lot 26. The court a quo dismissed the case on the following grounds: 1)
that Longalong, et al. failed to establish ownership of the portion of the land in question, and
2) that the prescriptive period of four (4) years from discovery of the alleged fraud committed
by defendants predecessor Anselmo Salvatierra within which plaintiffs should have filed their
action had already elapsed.[3]
On appeal, the Court of Appeals ruled:
To start with, a vendor can sell only what he owns or what he is authorized to sell (Segura v.
Segura, 165 SCRA 368). As to the co-owner of a piece of land, he can of course sell his pro
indiviso share therein to anyone (Art. 493, New Civil Code; Pamplona v. Moreto, 96 SCRA
775), but he cannot sell more than his share therein.
The deed of extrajudicial partition with confirmation of previous sale Exh. B or 2 executed by
the heirs of Enrique Salvatierra was explicit that the share of Anselmo Salvatierra which he
got from his father Macario Salvatierra thru sale, was only Four Hundred Five (405) sq. mts.
out of Lot No. 26 (Exhs. B-1 and B-2), the whole lot of which has an area of 749 sq. mts., so
that 344 sq. mts. of said lot do not pertain to Anselmo Salvatierra and his heirs, herein
defendants-appellees. This must be the reason why, in said deed of extrajudicial partition,
Venancio Salvatierra was still given a portion of Lot No. 26 covered by Tax Declaration No.
11951 (Exh. B-3, p. 7, Rec.), for logically, if the whole of Lot No. 26 measuring 749 sq. mts.
had been given to Anselmo Salvatierra, Venancio Salvatierra would no longer be entitled to a
portion of said lot. And as both parties to this case do not at all dispute the truth, correctness,
and authenticity of the deed of extrajudicial partition with confirmation of sale Exh. B or 2
dated September 24, 1968, as in fact both parties even marked the same as their own
exhibit, we have no choice but simply to enforce the provisions of said deed.
Now, as we have stated earlier, Macario Salvatierra, even before the extrajudicial partition of
the three lots left by the late Enrique Salvatierra among his heirs, could very well dispose only
of his pro indivisoshare in said lots, as he in fact did on May 4, 1966 in a deed of sale in favor
of his son Anselmo Salvatierra; and two years later, on September 24, 1968, when the deed
of extrajudicial partition Exh. B or 2 was executed by the heirs of Enrique Salvatierra, it was
stipulated that Macarios share in Lot No. 26 was only 405 sq. mts. thereof, which share
Macario had already sold to his son Anselmo Salvatierra. As of September 24, 1968, the date
of said deed of partition, then, Anselmo Salvatierra already knew that he had only acquired
405 sq. mts. of Lot No. 26 from his father Macario Salvatierra, and yet on May 20, 1980, or 12
years later, he proceeded with the registration of the earlier deed of sale between him and his
father and of the whole Lot No. 26 with an area of 749 sq. mts. although he already knew
through the deed of extrajudicial partition Exh. A or 1 that he was only entitled to 405 sq. mts.
out of Lot No. 26, and which knowledge he could not deny as he was one of the signatories to
said deed of extrajudicial partition (Exh. B-1 or 2-b).
It is, therefore, obvious and clear, on the basis of the evidence on record, that when Anselmo
Salvatierra registered the deed of sale Exh. 7 dated May 4, 1966 between him and his father
Macario Salvatierra on May 20, 1980, and when he obtained a title in his name over the
whole of Lot No. 26 with an area of 749 sq. mts., he did so with intent to defraud the other
heirs of the late Enrique Salvatierra, particularly Venancio Salvatierra and the latters heirs
and successors-in-interest, for he, Anselmo Salvatierra, knew that he was entitled to only 405
sq. mts. out of the whole Lot No. 26 with an area of 749 sq. mts. In fact, a closer look at the
deed of sale Exh. 7 dated May 4, 1966 between father and son, Macario and Anselmo,
reveals that the word and figure SEVEN HUNDRED FORTY NINE (749) sq. mts. written
therein appear to have been only superimposed over another word and figure that had been
erased, and even the word FORTY NINE was merely inserted and written above the regular
line, thereby creating the strong conviction that said word and figure were altered to suit
Anselmos fraudulent design (p. 12, Rec.).
Apparently, the lower court failed to examine carefully the deed of extrajudicial partition Exh.
B or 2 and the deed of sale Exh. 7 between Macario Salvatierra and his son Anselmo
Salvatierra, for had it done so, it could not have failed to notice that Anselmo Salvatierra
received only 405 sq. mts. out of Lot No. 26 from his father Macario Salvatierra, not the whole
Lot No. 26 measuring 749 sq. mts. The lower court was also of the mistaken impression that
this case involves a double sale of Lot No. 26, when the truth is that Macario Salvatierra
could only sell and, therefore, sold only 405 sq. mts. out of Lot No. 26 to his son Anselmo by
virtue of the deed of sale Exh. 7, not the whole 749 sq. mts. of said lot, and plaintiffs in turn
bought by virtue of the deed of sale Exh. A 149 sq. mts. out of the remaining area of 344 sq.
mts. of Lot No. 26 from Venancio Salvatierra, to whom said 344-sq. mt. portion of Lot No. 26
was given under the deed of partition Exh. B or 2.
Neither can we agree with the lower court that even if plaintiffs-appellants had established
their ownership over the 149-sq. mt. portion of Lot No. 26 in question, they are already barred
by prescription to recover said portion from defendants. In this connection, the lower court
ratiocinated that an action for reconveyance should be filed within four (4) years from the
discovery of the fraud, citing Esconde v. Barlongay, 152 SCRA 603, which in turn cited
Babin v. Medalla, 108 SCRA 666, so that since plaintiffs-appellants filed their action for
reconveyance only on November 22, 1985 or five years after the issuance of Anselmo
Salvatierras title over Lot No. 26 on May 20, 1980, said court held that appellants action for
reconveyance against defendants has already prescribed.
At this juncture, we find the need to remind the court a quo as well as other trial courts to
keep abreast with the latest jurisprudence so as not to cause possible miscarriages of justice
in the disposition of the cases before them. In the relatively recent case of Caro v. CA, 180
SCRA 401, the Supreme Court clarified the seemingly confusing precedents on the matter of
prescription of actions for reconveyance of real property, as follows:
We disagree. The case of Liwalug Amerold, et al. v. Molok Bagumbaran, G.R. L-33261,
September 30, 1987, 154 SCRA 396 illuminated what used to be a gray area on the
prescriptive period for an action to reconvey the title to real property and corrollarily, its point
of reference:
x x x It must be remembered that before August 30, 1950, the date of the effectivity of the
new Civil Code, the Old Code of Civil Procedure (Act No. 190) governed prescription. It
provided:
SEC. 43. Other civil actions; how limited. Civil actions other than for the recovery of real
property can only be brought within the following periods after the right of action accrues:
3. Within four years: x x x An action for relief on the ground of fraud, but the right of action in
such case shall not be deemed to have accrued until the discovery of the fraud:
xxx xxx xxx
In contract under the present Civil Code, we find that just as an implied or constructive trust in
an offspring of the law (Art. 1465, Civil Code), so is the corresponding obligation to reconvey
the property and the title thereto in favor of the true owner. In this context, and vis-a-
vis prescription, Article 1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within ten years from the time the right of
action accrues:
1) Upon a written contract;
2) Upon an obligation created by law;
3) Upon a judgment;
xxx xxx xxx
An action for reconveyance based on an implied or constructive trust must perforce prescribe
in ten years and not otherwise. A long line of decisions of this Court, and of very recent
vintage at that, illustrates this rule. Undoubtedly, it is now well-settled that an action for
reconveyance based on an implied or constructive trust prescribes in ten years from the
issuance of the Torrens title over the property. The only discordant note, it seems, is Balbin v.
Medalla, which states that the prescriptive period for a reconveyance action is four
years. However, this variance can be explained by the erroneous reliance on Gerona v. de
Guzman. But in Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3) of
Act No. 190 was applied, the New Civil Code not coming into effect until August 30, 1950 as
mentioned earlier.It must be stressed, at this juncture, that Article 1144 and Article 1456, are
new provisions. They have no counterparts in the old Civil Code or in the old Code of Civil
Procedure, the latter being then resorted to as legal basis of the four-year prescriptive period
for an action for reconveyance of title of real property acquired under false pretenses.
An action for reconveyance has its basis in Section 53, paragraph 3 of Presidential Decree
No. 1529, which provides:
In all cases of registration procured by fraud, the owner may pursue all his legal and equitable
remedies against the parties to such fraud without prejudice, however, to the rights of any
innocent holder of the decree of registration on the original petition or application, x x x.
This provision should be read in conjunction with Article 1456 of the Civil Code, which
provides:
Article 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.
The law thereby creates the obligation of the trustee to reconvey the property and the title
thereto in favor of the true owner. Correlating Section 53, paragraph 3 of Presidential Decree
No. 1529 and Article 1456 of the Civil Code with Article 1144 (2) of the Civil Code, supra, the
prescriptive period for the reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of title. In the present case,
therefore, inasmuch as Civil Case No. 10235 was filed on June 4, 1975, it was well-within the
prescriptive period of ten (10) years from the date of the issuance of Original Certificate of
Title No. 0-6836 on September 17, 1970.
(All Italics Supplied).
And the above ruling was re-affirmed in the very recent case of Tale vs. C.A. G.R. No.
101028, promulgated only last April 23, 1992.
Guided by the above clarificatory doctrine on prescription of actions for reconveyance of
real property, it is obvious that the lower court erred in relying on the discredited ruling
in Esconde v. Barlongay, supra, which case in turn relied on the earlier discredited case
of Balbin v. Medalla, also supra, which mistakenly limited the running of the prescriptive
period in an action for reconveyance of real property to only four (4) years form the issuance
of the certificate of title.
Since OCT No. 0-4221 over Lot No. 26 was issued to Anselmo Salvatierra on May 20,
1980, appellants filing of the instance action for reconveyance on November 22, 1985 was
well within the ten (10) year prescriptive period provided by law for such action.
 A motion for reconsideration having been denied, petitioners brought this petition to set
aside the decision of the respondent appellate court and to affirm in toto the decision of the
trial court.
Petitioners assail the decision of the respondent appellate court for its failure to consider
the application and interpretation of certain provisions of the New Civil Code in the case at
bar, namely Articles 1134, 493, 1088, 1544, 1431, 1396, and 1391. [4]
Since petitioners invoke the abovementioned provisions of law, it is apparent that they
rely on the theory that this is a case of double sale of Lot No. 26 to both petitioners and
respondents Longalong, et al. A perusal of the records and evidence (exhibits and annexes),
however, reveals otherwise. Both parties did not dispute the existence and contents of the
Extrajudicial Partition with Confirmation of Sale, as both presented them as their respective
exhibits (Exh. B-1 and 2). The parties may not have realized it, but the deciding factor of this
dispute is this very document itself. It is very clear therein that Macario Salvatierras share in
the estate of the deceased Enrique Salvatierra is only 405 sq. m. out of the 749 sq. m.
comprising Lot No. 26. Since Venancio Salvatierra, under this document, is to get a portion of
Lot No. 26 in addition to Lot No. 27, then it follows that Venancio is entitled to the remaining
344 sq. m. of Lot No. 26, after deducting the 405 sq. m. share of Macario.
We find no ambiguity in the terms and stipulations of the extrajudicial partition. The
terms of the agreement are clear and unequivocal, hence the literal and plain meaning
thereof should be observed.[5] The applicable provision of law in the case at bar is Article
1370 of the New Civil Code which states:
Art. 1370. If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulation shall control.
Contracts which are the private laws of the contracting parties, should be fulfilled according to
the literal sense of their stipulations, if their terms are clear and leave no room for doubt as to
the intention of the contracting parties, for contracts are obligatory, no matter what their forms
maybe, whenever the essential requisites for their validity are present. [6]
As such, the confirmation of sale between Macario and his son Anselmo, mentioned in
the extrajudicial partition involves only the share of Macario in the estate. The law is clear on
the matter that where there are two or more heirs, the whole estate of the decedent is, before
its partition, owned in common by such heirs,[7] and hence, the effect of the alienation or the
mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted
to him in the division upon the termination of the co-ownership.[8]
It goes without saying, therefore, that what Anselmo bought from his father in 1966 was
only his fathers share in the estate which turned out to be 405 sq. m. of Lot No. 26, as agreed
upon during their extrajudicial partition, in which Anselmo was a signatory. The registration of
the whole Lot No. 26 in the name of Anselmo Salvatierra was therefore, done with evident
bad faith. A careful examination of the Deed of Sale (Exh. 7) dated May 4, 1966 between
Macario and Anselmo (father and son) shows that an alteration was perpetrated by the
superimposition of the words and figure SEVEN HUNDRED FORTY NINE (749) sq. m. over
other words and figures therein. Besides, when Anselmo Salvatierra obtained the Original
Certificate of Title No. 0-4221 covering the whole of Lot No. 26 on May 20, 1980, he had
already known that he was entitled to only 405 sq. m. of the said lot since the extrajudicial
partition has already been executed earlier in 1968. Obviously, Anselmos act of registering
the whole Lot No. 26 in his name was intended to defraud Venancio who was then legally
entitled to a certain portion of Lot No. 26 by the extrajudicial partition.
With regard to the issue as to prescription of the action, we agree with the respondent
appellate court that this action has not yet prescribed. Indeed, the applicable provision in the
case at bar is Art. 1144 of the New Civil Code which provides that:
Art. 1144. The following actions must be brought within ten years from the time the right of
action accrues:
(1) Upon written contract;
(2) Upon an obligation created by law; and
(3) Upon a judgment.
Art. 1391[9] of the same code, referred to by petitioners is not in point. This article must be
read in conjunction with Art. 1390[10] which refers to voidable contracts. This case at hand
involves fraud committed by petitioner Anselmo Salvatierra in registering the whole of Lot No.
26 in his name, with evident bad faith. In effect, an implied trust was created by virtue of Art.
1456 of the New Civil Code which states:
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.
Implied trust is defined as the right, enforceable solely in equity, to the beneficial
enjoyment of property, the legal title to which is vested in another and is further subdivided
into resulting and constructive trust.[11] While resulting trust is one raised by implication of law
and presumed to have been contemplated by the parties; constructive trust, on the other
hand, is one raised by construction of law or arising by operation of law.[12]
This case more specifically involves constructive trust. In a more restricted sense, it is a
trust not created by any words, either expressly or impliedly, evincing a direct intention to
create a trust, but by the construction of equity in order to satisfy the demands of justice. [13] It
does not arise by agreement or intention but by operation of law.[14]
In this connection, we hold that an action for reconveyance of registered land based on
an implied trust may be barred by laches. The prescriptive period for such actions is ten (10)
years from the date the right of action accrued.[15] We have held in the case of Armamento v.
Central Bank[16] that an action for reconveyance of registered land based on implied trust,
prescribes in ten (10) years even if the decree of registration is no longer open to review.
 In Duque v. Domingo,[17] especially, we went further by stating:

The registration of an instrument in the Office of the Register of Deeds constitutes

constructive notice to the whole world, and, therefore, discovery of the fraud is deemed to
have taken place at the time of registration. Such registration is deemed to be a constructive
notice that the alleged fiduciary or trust relationship has been repudiated. It is now settled that
an action on an implied or constructive trust prescribes in ten (10) years from the date the
right of action accrued.

The complaint for reconveyance was filed by the Longalong spouses on November 22,
1985, only five (5) years after the issuance of the O.C.T. No. 0-4221 over Lot No. 26 in the
name of Anselmo Salvatierra. Hence prescription has not yet set in.
We find no reason to disturb the findings of the respondent Court of Appeals as to facts
its said factual findings having been supported by substantial evidence on record. They are
final and conclusive and may not be reviewed on appeal. The analysis by the Court of
Appeals of the evidence on record and the process by which it arrived at its findings on the
basis thereof, impel conferment of the Supreme Courts approval on said findings, on account
of the intrinsic merit and cogency thereof no less than that Courts superior status as a review
tribunal.[18] No reversible errors can be attributed to the findings of the respondent Court of
Appeals because the decision herein assailed was properly supported by substantial
evidence on record, which were not in anyway impugned by the petitioners.
IN VIEW OF THE FOREGOING CONSIDERATIONS, we resolve to DENY the petition
for want of merit, with costs against petitioners.
SO ORDERED.
G.R. No. 58010. March 31, 1993.
EMILIA O'LACO and HUCO LUNA, petitioners, vs. VALENTIN CO CHO CHIT, O LAY KIA
and COURT OF APPEALS, respondents.
Sergio L. Guadiz for petitioners.
Norberto J . Quisumbing & Associates for private respondents.
SYLLABUS
1. REMEDIAL LAW; CIVIL PROCEDURE; ACTIONS; CONDITION PRECEDENT TO FILING
OF SUIT BETWEEN MEMBERS OF THE SAME FAMILY; EFFECT OF FAILURE TO
COMPLY WITH CONDITION. — Admittedly, the present action is between members of the
same family since petitioner Emilia O'Laco and respondent O Lay Kia are half-sisters.
Consequently, there should be an averment in the compliant that earnest efforts toward a
compromise have been made, pursuant to Art. 222 of the New Civil Code, or a motion to
dismiss could have been filed under Sec. 1, par. (j), Rule 16 of the Rules of Court. For, it is
well-settled that the attempt to compromise as well as the inability to succeed is a condition
precedent to the filing of a suit between members of the same family. Hence, the defect in the
complaint is assailable at any stage of the proceedings, even on appeal, for lack of cause of
action.
2. ID.; ID.; AMENDMENT TO COMPLAINT; WHEN PROPER; AMENDMENT TO CONFORM
TO EVIDENCE. — Plaintiff may be allowed to amend his complaint to correct the defect if the
amendment does not actually confer jurisdiction on the court in which the action is filed, i.e., if
the cause of action was originally within that court's jurisdiction. In such case, the amendment
is only to cure the perceived defect in the complaint, thus may be allowed. In the case before
Us, while respondent-spouses did not formally amend their complaint, they were nonetheless
allowed to introduce evidence purporting to show that earnest efforts toward a compromise
had been made, that is, respondent O Lay Kia importuned Emilia O'Laco and pressed her for
the transfer of the title of the Oroquieta property in the name of spouses O Lay Kia and
Valentin Co Cho Chit, just before Emilia's marriage to Hugo Luna. But, instead of transferring
the title as requested, Emilia sold the property to the Roman Catholic Archbishop of Manila.
This testimony was not objected to by petitioner-spouses. Hence, the complaint was deemed
accordingly amended to conform to the evidence, pursuant to Sec. 5, Rule 10 of the Rules of
Court which reads — "Sec. 5. Amendment to conform to or authorize presentation of
evidence. — When issues not raised by the pleadings are tried by express or implied consent
of the parties, they shall be treated in all respects, as if they had been raised in the pleadings
. . ." Indeed, if the defendant permits evidence to be introduced without objection and which
supplies the necessary allegations of a defective complaint, then the evidence is deemed to
have the effect of curing the defects of the complaint. The insufficiency of the allegations in
the complaint is deemed ipso facto rectified.
3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRUSTS; EXPRESS TRUST; DEFINED;
IMPLIED TRUST; DEFINED. — By definition, trust relations between parties may either be
express or implied. Express trusts are those which are created by the direct and positive acts
of the parties, by some writing or deed, or will, or by words evincing an intention to create a
trust. Implied trusts are those which, without being express, are deducible from the nature of
the transaction as matters of intent, or which are superinduced on the transaction by
operation of law as matters of equity, independently of the particular intention of the parties.
4. ID.; ID.; ID.; IMPLIED TRUSTS; RESULTING TRUST; BASIS THEREOF;
CONSTRUCTIVE TRUST; BASIS THEREOF. — Implied trust may either be resulting or
constructive trusts, both coming into being by operation of law. Resulting trusts are based on
the equitable doctrine that valuable consideration and not legal title determines the equitable
title or interest and are presumed always to have been contemplated by the parties. They
arise from the nature or circumstances of the consideration involved in a transaction whereby
one person thereby becomes invested with legal title but is obligated in equity to hold his
legal title for the benefit of another. On the other hand, constructive trusts are created by the
construction of equity in order to satisfy the demands of justice and prevent unjust
enrichment. They arise contrary to intention against one who, by fraud, duress or abuse of
confidence, obtains or holds the legal right to property which he ought not, in equity and good
conscience, to hold.
5. ID.; ID.; ID.; EXPRESS TRUSTS CONCERNING IMMOVABLES NOT PROVED BY
PAROL EVIDENCE; IMPLIED TRUST IN REAL PROPERTY ESTABLISHED BY PAROL
EVIDENCE; PROOF REQUIRED; CASE AT BAR. — Unlike express trusts concerning
immovables or any interest therein which cannot be proved by parol evidence, implied trusts
may be established by oral evidence. However, in order to establish an implied trust in real
property by parol evidence, the proof should be as fully convincing as if the acts giving rise to
the trust obligation were proven by an authentic document. It cannot be established upon
vague and inconclusive proof. After a thorough review of the evidence on record, We hold
that a resulting trust was indeed intended by the parties under Art. 1448 of the New Civil
Code which states — "Art. 1448. There is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for the purpose of having the
beneficial interest of the property. The former is the trustee, while the latter is the beneficiary .
. ." As stipulated by the parties, the document of sale, the owner's duplicate copy of the
certificate of title, insurance policies, receipt of initial premium of insurance coverage and real
estate tax receipts were all in the possession of respondent-spouses which they offered in
evidence. As emphatically asserted by respondent O Lay Kia, the reason why these
documents of ownership remained with her is that the land in question belonged to her.
Indeed, there can be no persuasive rationalization for the possession of these documents of
ownership by respondent-spouses for seventeen (17) years after the Oroquieta property was
purchased in 1943 than that of precluding its possible sale, alienation or conveyance by
Emilia O'Laco, absent any machination or fraud. This continued possession of the
documents, together with other corroborating evidence spread on record, strongly suggests
that Emilia O'Laco merely held the Oroquieta property in trust for respondent-spouses.
6. ID.; ID.; ID.; CONSTRUCTIVE TRUST SUBJECT TO PRESCRIPTION; RESULTING
TRUST IMPRESCRIPTIBLE; RESULTING TRUST CONVERTED TO CONSTRUCTIVE
TRUST BY REPUDIATION; REQUISITES; PRESCRIPTIVE PERIOD FOR ACTION FOR
RECONVEYANCE BASED ON CONSTRUCTIVE TRUST. — As differentiated from
constructive trusts, where the settled rule is that prescription may supervene, in resulting
trust, the rule of imprescriptibility may apply for as long as the trustee has not repudiated the
trust. Once the resulting trust is repudiated, however, it is converted into a constructive trust
and is subject to prescription. A resulting trust is repudiated if the following requisites concur:
(a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the
cestui qui trust; (b) such positive acts of repudiation have been made known to the cestui qui
trust; and, (c) the evidence thereon is clear and convincing. In Tale v. Court of Appeals 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. So long as the trustee
recognizes the trust, the beneficiary may rely upon the recognition, and ordinarily will not be
in fault for omitting to bring an action to enforce his rights. There is no running of the
prescriptive period if the trustee expressly recognizes the resulting trust. Since the complaint
for breach of trust was filed by respondent-spouses two (2) months after acquiring knowledge
of the sale, the action therefore has not yet prescribed.
DECISION
BELLOSILLO, J p:
History is replete with cases of erstwhile close family relations put asunder by property
disputes. This is one of them. It involves half-sisters each claiming ownership over a parcel of
land. While petitioner Emilia O'Laco asserts that she merely left the certificate of title covering
the property with private respondent O Lay Kia for safekeeping, the latter who is the former's
older sister insists that the title was in her possession because she and her husband bought
the property from their conjugal funds. To be resolved therefore is the issue of whether a
resulting trust was intended by them in the acquisition of the property. The trial court declared
that there was no trust relation of any sort between the sisters. 1 The Court of Appeals ruled
otherwise. 2 Hence, the instant petition for review on certiorari of the decision of the appellate
court together with its resolution denying reconsideration. 3
It appears that on 31 May 1943, the Philippine Sugar Estate Development Company, Ltd.,
sold a parcel of land, Lot No. 5, Block No. 10, Plan Psu-10038, situated at Oroquieta St., Sta.
Cruz, Manila, with the Deed of Absolute Sale naming Emilia O'Laco as vendee; thereafter,
Transfer Certificate of Title No. 66456 was issued in her name.
On 17 May 1960, private respondent-spouses Valentin Co Cho Chit and O Lay Wa learned
from the newspapers that Emilia 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. 4
On 22 June 1960, respondent-spouses Valentin Co Cho Chit and O Lay Kia sued petitioner-
spouses Emilia O'Laco and Hugo Luna to recover the purchase price of the land before the
then Court of First Instance of Rizal, respondent-spouses asserting that petitioner Emilia
O'Laco knew that they were the real vendees of the Oroquieta property sold in 1943 by
Philippine Sugar Estate Development Company, Ltd., and that the legal title thereto was
merely placed in her name. They contend that Emilia O'Laco breached the trust when she
sold the land to the Roman Catholic Archbishop of Manila. Meanwhile, they asked the trial
court to garnish all the amounts still due and payable to petitioner-spouses arising from the
sale, which was granted on 30 June 1960. 5
Petitioner-spouses deny the existence of any form of trust relation. They aver that Emilia
O'Laco actually bought the property with her own money; that she left the Deed of Absolute
Sale and the corresponding title with respondent-spouses merely for safekeeping; that when
she asked for the return of the documents evidencing her ownership, respondent-spouses
told her that these were misplaced or lost; and, that in view of the loss, she filed a petition for
issuance of a new title, and on 18 August 1944 the then Court of First Instance of Manila
granted her petition.
On 20 September 1976, finding no trust relation between the parties, the trial court dismissed
the complaint together with the counterclaim. Petitioners and respondents appealed.
On 9 April 1981, the Court of Appeals set aside the decision of the trial court thus —
". . . We set aside the decision of the lower court dated September 20, 1976 and the order of
January 5, 1977 and another one is hereby entered ordering the defendants-appellees to pay
plaintiffs-appellants jointly and severally the sum of P230,000.00 representing the value of the
property subject of the sale with assumption of mortgage to the Roman Catholic Archbishop
of Manila with legal interest from the filing of the complaint until fully paid, the sum of
P10,000.00 as attorney's fees, plus costs."
On 7 August 1981, the Court of Appeals denied reconsideration of its decision, prompting
petitioners to come to this Court for relief.
Petitioners contend that the present action should have been dismissed. They argue that the
complaint fails to allege that earnest efforts toward a compromise were exerted considering
that the suit is between members of the same family, and no trust relation exists between
them. Even assuming ex argumenti that there is such a relation, petitioners further argue,
respondents are already barred by laches.
We are not persuaded. Admittedly, the present action is between members of the same
family since petitioner Emilia O'Laco and respondent O Lay Kia are half-sisters.
Consequently, there should be an averment in the complaint that earnest efforts toward a
compromise have been made, pursuant to Art. 222 of the New Civil Code, 6 or a motion to
dismiss could have been filed under Sec. 1, par. (j), Rule 16, of the Rules of Court. 7 For, it is
well-settled that the attempt to compromise as well as the inability to succeed is a condition
precedent to the filing of a suit between members of the same family. 8 Hence, the defect in
the complaint is assailable at any stage of the proceedings, even on appeal, for lack of cause
of action. 9
But, plaintiff may be allowed to amend his complaint to correct the defect if the amendment
does not actually confer jurisdiction on the court in which the action is filed, i.e., if the cause of
action was originally within that court's jurisdiction. 10 In such case, the amendment is only to
cure the perceived defect in the complaint, thus may be allowed.
In the case before Us, while respondent-spouses did not formally amend their complaint, they
were nonetheless allowed to introduce evidence purporting to show that earnest efforts
toward a compromise had been made, that is, respondent O Lay Kia importuned Emilia
O'Laco and pressed her for the transfer of the title of the Oroquieta property in the name of
spouses O Lay Kia and Valentin Co Cho Chit, just before Emilia's marriage to Hugo Luna. 11
But, instead of transferring the title as requested, Emilia sold the property to the Roman
Catholic Archbishop of Manila. This testimony was not objected to by petitioner-spouses.
Hence, the complaint was deemed accordingly amended to conform to the evidence, 12
pursuant to Sec. 5, Rule 10 of the Rules of Court which reads —
"SECTION 5. Amendment to conform to or authorize presentation of evidence. — When
issues not raised by the pleadings are tried by express or implied consent of the parties, they
shall be treated in all respects, as, if they had been raised in the pleadings . . ." (emphasis
supplied).
Indeed, if the defendant permits evidence to be introduced without objection and which
supplies the necessary allegations of a defective complaint, then the evidence is deemed to
have the effect of curing the defects of the complaint. 13 The insufficiency of the allegations
in the complaint is deemed ipso facto rectified. 14
But the more crucial issue before Us is whether there is a trust relation between the parties in
contemplation of law.
We find that there is. By definition, trust relations between parties may either be express or
implied. 15 Express trusts are those which are created by the direct and positive acts of the
parties, by some writing or deed, or will, or by words evincing an intention to create a trust. 16
Implied trusts are those which, without being express, are deducible from the nature of the
transaction as matters of intent, or which are superinduced on the transaction by operation of
law as matters of equity, independently of the particular intention of the parties.17 Implied
trusts may either be resulting or constructive trusts, both coming into being by operation of
law. 18
Resulting trusts are based on the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest 19 and are presumed always to have been
contemplated by the parties. They arise from the nature or circumstances of the consideration
involved in a transaction whereby one person thereby becomes invested with legal title but is
obligated in equity to hold his legal title for the benefit of another. 20 On the other hand,
constructive trusts are created by the construction of equity in order to satisfy the demands of
justice 21 and prevent unjust enrichment. They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal right to property which he
ought not, in equity and good conscience, to hold. 22
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. 24
Unlike express trusts concerning immovables or any interest therein which cannot be proved
by parol evidence, 25 implied trusts may be established by oral evidence. 26 However, in
order to establish an implied trust in real property by parol evidence, the proof should be as
fully convincing as if the acts giving rise to the trust obligation were proven by an authentic
document. 27 It cannot be established upon vague and inconclusive proof. 28
After a thorough review of the evidence on record, We hold that a resulting trust was indeed
intended by the parties under Art. 1448 of the New Civil Code which states —
"ARTICLE 1448. There is an implied trust when property is sold, and the legal estate is
granted to one party but the price is paid by another for the purpose of having the beneficial
interest of the property. The former is the trustee, while the latter is the beneficiary . . ."
(emphasis supplied).
First. As stipulated by the parties, the document of sale, the owner's duplicate copy of the
certificate of title, insurance policies, receipt of initial premium of insurance coverage and real
estate tax receipts ware all in the possession of respondent spouses which they offered in
evidence. As emphatically asserted by respondent O Lay Kia, the reason why these
documents of ownership remained with her is that the land in question belonged to her. 29
Indeed, there can be no persuasive rationalization for the possession of these documents of
ownership by respondent-spouses for seventeen (17) years after the Oroquieta property was
purchased in 1943 than that of precluding its possible sale, alienation or conveyance by
Emilia O'Laco, absent any machination or fraud. This continued possession of the
documents, together with other corroborating evidence spread on record, strongly suggests
that Emilia O'Laco merely held the Oroquieta property in trust for respondent-spouses.
Second. It may be worth to mention that before buying the Oroquieta property, respondent-
spouses purchased another property situated in Kusang-Loob, Sta. Cruz, Manila, where the
certificate of title was placed in the name of Ambrosio O'Laco, older brother of Emilia, under
similar or identical circumstances. The testimony of former counsel for respondent-spouses,
then Associate Justice Antonio G. Lucero of the Court of Appeals, is enlightening —
"Q In the same conversation he told you how he would buy the property (referring to the
Oroquieta property), he and his wife?
"A Yes, Sir, he did.
"Q What did he say?
xxx xxx xxx
"A He said he and his wife has (sic) already acquired by purchase a certain property located
at Kusang-Loob, Sta. Cruz, Manila. He told me he would like to place the Oroquieta Maternity
Hospital in case the negotiation materialize(s) in the name of a sister of his wife (O'Laco)"
(emphasis supplied). 30
On the part of respondent-spouses, they explained that the reason why they did not place
these Oroquieta and Kusang-Loob properties in their name was that being Chinese nationals
at the time of the purchase they did not want to execute the required affidavit to the effect that
they were allies of the Japanese. 31 Since O Lay Kia took care of Emilia who was still young
when her mother died, 32 respondent-spouses did not hesitate to place the title of the
Oroquieta property in Emilia's name.
Quite significantly, respondent-spouses also instituted an action for reconveyance against
Ambrosio O'Laco when the latter claimed the Kusang-Loob property as his own. A similar
stipulation of facts was likewise entered, i.e., respondent-spouses had in their possession
documents showing ownership of the Kusang-Loob property which they offered in evidence.
In that case, the decision of the trial court, now final and executory, declared respondent-
spouses as owners of the Kusang-Loob property and ordered Ambrosio O'Laco to reconvey it
to them. 33
Incidentally, Ambrosio O'Laco thus charged respondent spouses Valentin Co Cho Cit and O
Lay Kia before the Anti-Dummy Board, docketed as Case No. 2424, for their acquisition of
the Kusang-Loob and Oroquieta properties. 34 He claimed that respondent-spouses utilized
his name in buying the Kusang-Loob property while that of petitioner O'Laco was used in the
purchase of the Oroquieta property. In effect, there was an implied admission by Ambrosio
that his sister Emilia, like him, was merely used as a dummy. However, the Anti-Dummy
Board exonerated respondent-spouses since the purchases were made in 1943, or during
World War II, when the Anti-Dummy Law was not enforceable.
Third. The circumstances by which Emilia O'Laco obtained a new title by reason of the
alleged loss of the old title then in the possession of respondent-spouses cast serious doubt
on the veracity of her ownership. The petitions respectively filed by Emilia O'Laco and
Ambrosio O'Laco for the Oroquieta and the Kusang-Loob properties were both granted on the
same day, 18 August 1944, by the then Court of First Instance of Manila. These orders were
recorded in the Primary Entry Book of the Register of Deeds of Manila at the same time, 2:35
o'clock in the afternoon of 1 September 1944, in consecutive entries, Entries Nos. 246117-18.
35 This coincidence lends credence to the position of respondent-spouses that there was in
fact a conspiracy between the siblings Ambrosio and Emilia to defraud and deprive
respondents of their title to the Oroquieta and Kusang-Loob properties.
Fourth. Until the sale of the Oroquieta property to the Roman Catholic Archbishop of Manila,
petitioner Emilia O'Laco actually recognized the trust. Specifically, when respondent spouses
learned that Emilia was getting married to Hugo, O Lay Kia asked her to have the title to the
property already transferred to her and her husband Valentin, and Emilia assured her that
"would be arranged (maaayos na)" after her wedding. 36 Her answer was an express
recognition of the trust, otherwise, she would have refused the request outright. Petitioners
never objected to this evidence; nor did they attempt to controvert it.
Fifth. The trial court itself determined that "Valentin Co Cho Chit and O Lay Kia had some
money with which they could buy the property." 37 In fact, Valentin was the Chief Mechanic
of the Paniqui Sugar Mills, was engaged in the buy and sell business, operated a gasoline
station, and owned an auto supply store as well as a ten-door apartment in Caloocan City. 38
In contrast, Emilia O'Laco failed to convince the Court that she was financially capable of
purchasing the Oroquieta property. In fact, she opened a bank account only in 1946 and
likewise began filing income tax returns that same year, 39 while the property in question was
bought in 1943. Respondent-spouses even helped Emilia and her brothers in their expenses
and livelihood. Emilia could only give a vague account on how she raised the money for the
purchase of the property. Her narration of the transaction of sale abounds with "I don't know"
and "I don't remember." 40
Having established a resulting trust between the parties, the next question is whether
prescription has set in.
As differentiated from constructive trusts, where the settled rule is that prescription may
supervene, in resulting trust, the rule of imprescriptibility may apply for as long as the trustee
has not repudiated the trust. 41 Once the resulting trust is repudiated, however, it is
converted into a constructive trust and is subject to prescription.
A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed
unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such
positive acts of repudiation have been made known to the cestui qui trust; and, (c) the
evidence thereon is clear and convincing. 42
In Tale v. Court of Appeals 43 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.
Neither the registration of the Oroquieta property in the name of petitioner 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. For, the
issuance of the Torrens title in the name of Emilia O'Laco could not be considered adverse,
much less fraudulent. Precisely, although the property was bought by respondent-spouses,
the legal title was placed in the name of Emilia O'Laco. The transfer of the Torrens title in her
name was only in consonance with the deed of sale in her favor. Consequently, there was no
cause for any alarm on the part of respondent-spouses. As late as 1959, or just before she
got married, Emilia continued to recognize the ownership of respondent-spouses over the
Oroquieta property. Thus, until that point, respondent-spouses were not aware of any act of
Emilia which would convey to them the idea that she was repudiating the resulting trust. The
second requisite is therefore absent. Hence, prescription did not begin to run until the sale of
the Oroquieta property, which was clearly an act of repudiation.

But immediately after Emilia sold the Oroquieta property which is obviously a disavowal of the
resulting trust, respondent-spouses instituted the present suit for breach of trust.
Correspondingly, laches cannot lie against them.

After all, so long as the trustee recognizes the trust, the beneficiary may rely upon the
recognition, and ordinarily will not be in fault for omitting to bring an action to enforce his
rights. 44 There is no running of the prescriptive period if the trustee expressly recognizes the
resulting trust. 45 Since the complaint for breach of trust was filed by respondent-spouses
two (2) months after acquiring knowledge of the sale, the action therefore has not yet
prescribed.

WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision of the Court of
Appeals of 9 April 1981, which reversed the trial court, is AFFIRMED. Costs against
petitioners.

SO ORDERED.
G.R. No. L-12111 January 31, 1959
AGATONA GERONIMO and INOCENCIO ISIDORO, plaintiffs-appellants,
vs.
JOSE NAVA and FELISA AQUINO, defendants-appellees.
Luis Manalang and Associates for appellants.
Jose Nava, A. C. Bagasao, Ananias C. Ona and Constancio S. Vitug for appellees.
MONTEMAYOR, J.:
Plaintiff spouses Agatona Geronimo and Isidro Inocencio are appealing directly to this
Tribunal from the order of the Court of First Instance of Nueva Ecija, dated October 29, 1956,
dismissing their complaint on motion of defendant Jose Nava and his co-defendants, his
children by his deceased wife, Felisa Aquino, on the ground of res adjudicata.
The following facts are not disputed. On October 19, 1935, Jose Nava and his wife, Felisa
Aquino, were owners of our lots, Nos. 2820, 2821, 2819 and 1729 of the Cabanatuan
Cadastre, forming a single mass, with a total area of 3,549 square meters, with a house of
strong materials erected thereon, with a total assessed value of P8,820.00. On that date, they
mortgaged said four lots to La Urbana, presumably a building and loan association, to secure
the payment of a loan of P3,047.76. For failure to live up to the terms of the mortgage, the
latter was foreclosed by La Urbana, pursuant to Act 3135, and on March 9, 1939, the said
property was sold to La Urbana for the sum of P3,786.26. On April 26, 1938, La Urbana
transferred and assigned all its rights and interest in the said property to Agatona Geronimo,
plaintiff in the present case, for the sum of P6,000.00, subject, however, to the right of
redemption of Nava and his wife Felisa. Agatona paid P600.00 on account of the purchase
price and to secure the payment of the balance of P5,400.00, mortgaged the same lots to la
Urbana, which duly notified Nava and his wife of the assignment or transfer. Immediately after
buying the lots from the Sheriff in March, 1938, La Urbana took possession of the same and
collected the rentals thereon at the rate of P30.00 a month. In May, 1938 shortly after
purchasing the same lots from La Urbana, Agatona also took possession of the property and
collected P62.50 representing the May and June rentals, and since July of the same year,
she had been collecting the rentals at the rate of P35.00 a month.
Within the one year period of redemption Nava tried to redeem the property, going to La
Urbana and offering to pay the amount of redemption, and when the latter refused to accept
the offer, disclaiming any interest in the property because it had already transferred the same
to Agatona, Nava wrote to Agatona, making the same offer to redeem after liquidation of the
account consisting of rentals so far received by her. He even offered to meet her at the office
of the Clerk of Court and waited for her there all day on the last day of the redemption period,
and when she failed to appear, he bought a cashier's check at the Philippine National Bank in
the amount of P3,470.00 and deposited the sum in the Philippine National Bank branch in
Cabanatuan in her name. On the same day, he filed Civil Case No. 8071 of the Court of First
Instance of Nueva Ecija against Agatona and Inocencio to compel them to permit him to
redeem the property after rendering an account of the rentals received by them and to pay
damages. On filing the case, Nava filed with the Register of Deeds of Nueva Ecija a notice of
lis pendens in accordance with the provisions of Section 24, Rule 7, of the Rules of Court,
and said notice was noted on the corresponding certificates of title, covering the four lots.
When Agatona and her husband bought the same lots from La Urbana, transfer certificates of
title for the four lots were issued to her, on which certificates were also noted the notice of lis
pendens and other annotations which appeared in the former certificates of title which were
cancelled. In that case, La Urbana was impleaded upon petition of Agatona and her husband.
After hearing, the trial court found that Nava and his wife had substantially complied with the
provisions regarding redemption; that they had made not only a valid offer to redeem, but
they actually made a valid tender of payment of the redemption price, and rendered judgment
as follows:
Accordingly, the Court hereby renders judgment in favor of the plaintiffs and against
the defendants, ordering the latter to execute in favor of the former a valid and
registerable deed to resale of the property in question within 15 days from the date
this judgement becomes final. The redemption price shall be determined as follows:
To the auction price of P3,786.29, there shall be added the interest thereon for one
year at the rate of 12%. To said sum and interest, there shall also be added any
amount paid either by the defendants for any assessments or taxes or insurance
after the auction, plus the interest thereon at the same rate, computed from date of
such payment to March 9, 1939. From such total sum, there shall be deducted the
rents received by the defendants at the rate of P30.00 a month from the months of
March, April and May, 1938, P32.50 for the month of June and P35.00 monthly from
July to March 9, 1939. The resulting difference represents the redemption price as of
March 9, 1939, the last date of the one-year period of redemption. In view, however,
of the fact that the defendants have turned down the offer of the plaintiffs to redeem
the property made within the period of redemption and in view further of the fact that
the Court has found the plaintiffs entitled to redeem, the defendants are hereby
adjudged possessors of the property in bad faith from the date of the filing of this
complaint (Enage vs. Escaño, 38 Phil., 665, 666.) Therefore, the total rentals
received by the defendants as the rate of P35.00 monthly from March 9, 1939, until
the reconveyance is effected and the restoration of the actual possession to the
plaintiffs, should be paid by the defendants to said plaintiffs together with legal
interest thereon from March 9, 1939, less, however, such sums as defendants might
have paid after March 9, 1939, for taxes and insurance. The defendants shall also
pay the costs of this suit.
On appeal to the Court of Appeals by Agatona and her husband, the appealed judgment was
affirmed by the Court of Appeals in a decision dated November 21, 1942. On December 8,
1942, the decision of the Court of Appeals became final and executory, and ten days
thereafter, the records of the case were returned to the trial court.
On March 15, 1943, Nava and his wife asked for the issuance of a writ of execution of the
decision and the trial court, on March 24, 1943, ordered the clerk of court to issue the
corresponding writ of execution.
In their appeal, Agatona and her husband made the following assignment of errors:
I. The lower court erred in dismissing the complaint on the ground of res judicata.
II. The lower court erred in not holding that the present action is premised on a
different cause of action and that new facts like the withdrawal of the redemption
money after the decision had become final, failure to register the decision and so
cancel TCTs in the name of Agatona Geronimo and cause issuance of new ones in
Nava's name and/or to request issuance of writ of execution, etc., may be presented
and proven and are not barred by the first case.
III. The lower court likewise erred in not holding that the judgment rendered in civil
case No. 8071 as confirmed by the decision of the Court of Appeals promulgated on
November 21, 1942, is expired, and cannot constitute a bar to present action for it is
itself barred by prescription and by laches after almost 15 years for defendant's
failure (1) to execute the judgment, (2) to register the decision in the office of the
Register of Deeds of Nueva Ecija, (3) to cancel the certificates of title in the name of
plaintiff Agatona Geronimo, (4) to cause the issuance of new ones in the name of
Jose Nava; and that the registration of titles since 1938 in Agatona Geronimo's name
created an indefeasible title on her.
IV. The lower court also erred in not holding that defendant's withdrawal of the
redemption money deposited in the Cabanatuan Branch of the Philippine National
Bank for consignment is a waiver of defendants' right to redeem the properties
involved and a loss of any right to said properties — defendants cannot have both the
money and the properties.
V. The lower court also erred in not holding the propriety of cancelling the
annotations of lis pendens of Civil Case No. 8071 and of the mortgage by Agatona
Geronimo in favor of La Urbana on the back of Torrens Titles Nos. 14699, 14760,
14701 and 14702 issued on the name of Agatona Geronimo; and that the registered
interests therein, whether vested, contingent, expectant or inchoate, of all parties
concerned, have already ceased or terminated as any action that may arise
therefrom is already barred by prescription and the aforesaid decision in former case
(8071) has already ceased or lost its force and effect, thereby creating a situation as
if there never have been any decision or annotation.
VI. The lower court likewise erred in not holding that debt moratorium does not apply
to the enforcement of the decision in case 8071 which is, in the main ordering the
execution by the defendants of a registerable deed of repurchase and that the same
is a matter of defense by defendants Agatona Geronimo, et al., and it must be set by
defendants and not by the plaintiffs, the Navas, and granting arguendo, debt
moratorium applies to the case at bar, still more than ten years have already elapsed
after deducting the duration of debt moratorium as decided by the Honorable
Supreme Court in one case.
VII. The lower court finally erred in denying plaintiffs' motions for reconsideration
dated December 28, 1956 and January 19, 1957.
As already stated, the appealed order of dismissal in the present case is based on the
proposition that the decision of the trial court affirmed by the Court of Appeals in Civil Case
No. 8071 was a bar to the present action, for the reason that a final judgment rendered by a
court of competent jurisdiction on the merits is conclusive as to the rights of the parties, and
that as to them, it constitutes a bar to subsequent actions involving the same claim, demand
and cause of action, provided that there was between the two cases, identity of parties, of
subject matter and cause of action (30 Am. Jur. 914; I Moran p. 612, 1957 ed.)
In the present case, the parties are the same as those in Civil Case No. 8071, except that
after the death of Nava's wife, Felisa Aquino, her children by Nava were substituted as co-
defendants. The subject mater is the same in both cases, namely, the four lots in litigation.
However, appellants Agatona and Inocencio dispute the identity of the cause of action
because in Civil Case No. 8071, what was sought and decided therein was the right of Nava
and his wife to redeem the property in question, whereas, in the present case, the complaint
of plaintiffs Agatona and Isidoro seeks the cancellation of the annotations specially of the
notice of lis pendens on their transfer certificates of title, and that of the mortgage for the sum
of P4,900.00, executed by Agatona in favor of Banco Hipoticario de Filipinas, the reason
given being that the registered interest involving said annotations had already ceased, and
that any action they may arise therefrom was already barred by prescription. Technically, the
cause of action in the present case and in Civil Case No. 8071 may differ. But in substance,
they are the same.
Plaintiff herein maintain that they are still the owners of the four lots in question and have the
right to continue as such; that the annotation of lis pendens as regards the institution of Civil
Case No. 8071 may be cancelled, for the reason that the judgment in said case in favor of
Nava et al. can no longer be enforced because of the passage of time, namely, prescription.
It will be recalled, however, that in Civil Case No. 8071, the Court of First Instance of Nueva
Ecija found and held that Nava and his wife had the right to redeem the property, and it
ordered that Agatona and her husband execute the necessary registerable titles to the four
lots in favor of Nava and wife, upon the payment of the price to be ascertained after
liquidation. The judgment may not have been executed totally, but the defendants herein
maintain and evidently with reason, that it was at least partially executed, for the reason that
as stated in the motion to dismiss, after Nava and his wife had asked for the execution of the
judgment rendered in Civil Case No. 8071, that is, in July 1944, provincial auditor Francisco
Alejo, who was occupying the house erected on the four lots in question, began paying the
house rent to Nava, stating that Agatona had refused to accept said rentals, for the reason
that she lost in Civil Case No. 8071, and that when Mr. Alejo vacated the house in May 1945,
Nava took possession of the whole property and has continued in possession up to the date
of filing the motion for dismissal on October 24, 1956. In other words, by virtue of the decision
in Civil Case No. 8071, herein defendants Nava et al., not only were restored to the
possession of the property in question since 1945, but had been receiving the rentals of the
house on said property since 1944. The only thing lacking is the formal execution of the deed
of transfer or the sale by Agatona and her husband to herein defendants.
In the present case, we are inclined to brush aside technicalities when they stand in the way
of administering justice and giving to parties in litigation their due, specially in case of
redemption. Moreover, the equities in the case are on the side of the defendants-appellees
herein. The four lots in question at the time that they were mortgaged to Nava and his wife to
La Urbana were assessed in the amount of P8,820 and the Court may take judicial notice of
the fact that the assessed value oftentimes is but a fraction of the real value of the property
assessed. At the present time, or rather, when the present action was instituted in 1956, the
property in question, according to plaintiffs themselves because of the natural tendency of
real estate to increase in value, are assessed at P13,350.00 and must be worth more than
that; and yet, that same property was originally mortgaged with La Urbana by Nava and his
wife for all P3,047.76 and was sold at auction sale to La Urbana for P3,376.29, so that the
redemption price cannot be much more than that, considering that from the same shall be
deducted the rentals received by Agatona and her husband at the rate of P30.00 a month
from March 1938 until the defendants herein began receiving said rentals some time in July,
1944.
que trust, over the property, then the prescription invoked by her, assuming it to be available,
falls far short of the period required by law to established title by prescription. Agatona did not
even have the possession of the property in order to exercise acts of ownership over the
same.
In conclusion, we find that the order of dismissal appealed order, sustained. But if we merely
affirmed the appealed order, the parties would be in the same situation they were before the
present action was initiated, consequently, for the benefit of the parties, and in the interest of
justice we hereby order both parties plaintiff and defendant to comply with terms of the
decision of the trial court in Civil Case No. 8071. The trial court is directed to see to it that this
is done within a reasonable time. No costs.

Moreover, there is another aspect of this case which is not only important, but also decisive.
Considering the circumstances surrounding this case, as well as that of Civil Case No. 8071,
we find that when Agatona evidently acquiescing in the final decision in Civil Case No. 8071,
not only allowed but even directed the tenant of the house on the property to pay his rentals
to Nava, instead of to herself; and when in 1945, she allowed Nava to occupy the house
when the tenant disoccuppied it, and to take possession of the whole property, her acts
should be construed as a recognition of the fact that the property, though still in her name,
was to be held in trust for Nava, to be conveyed to him on payment of the repurchase price.
Such trust is an express one, not subject to prescription. We may also hold that when the trial
court in that Civil Case No. 8071 declared in a decision that had become final and executory,
that Nava et al. had the right to redeem the property, and ordered Agatona et al. to make the
resale, there was created what may be regarded as a constructive trust, in the sense that
although Agatona and her husband had the naked title to the property by reason of the
certificates of title issued in their names, and which they retained, nevertheless, they were to
hold such property in trust for Nava et al. to redeem, subject to the payment of redemption
price. Of course, it might be contended that in the latter instance of a constructive trust,
prescription may apply where the trustee asserts a right adverse to that of the cestui que
trust, such as, asserting and exercising acts of ownership over a property being held in trust.
But even under this theory, such a claim of prescription would not prosper in the present
case. As already stated, since 1944, after the decision in Civil Case No. 8071 became final
and executory, Agatona evidently acquiesced in the decision against her, so much so that
thereafter, as already stated, she suggested that the tenant of the house pay his rentals to
Nava instead of to her, meaning that Nava had a right to said rentals. No only this, but since
May, 1945, when the tenant left the house, Nava took possession thereof as well as the land
on which it was built, and has been occupying the same up to the present time, exercising
acts of ownership over the same, and Agatona evidently, all along, showing confirmity. It was
only on September 30, 1956 that she and her husband filed the present case to cancel the
notice of lis pendens of Civil Case No. 8071, including naturally, the decision in said case
against them, and to recover the possession of the property. If such acts on her part as
trustee can be considered as an assertion of the right of ownership against Nava, the cestui