LAYUG, Sarah Jade P.

JD 2A

CASE DIGESTS on TRUSTS

1. Ringor v. Ringor, G.R. No. 147863

FACTS

The controversy involves lands in San Fabian, Pangasinan, owned by the late Jacobo
Ringor. By his first wife, Gavina Laranang, he had two children, Juan and Catalina.
Catalina died before her father Jacobo, leaving, Juan as the sole heir. Juan, in turn,
have seven children: Jose (the father and predecessor-in-interest of herein
petitioners), Genoveva, Felipa, Concordia, Agapito, Emeteria and Espirita.

Jacobo applied for the registration of his lands under the Torrens system. He filed
three land registration cases alone, with his son Juan, or his grandson Jose, applying
jointly with him.

During trial, witnesses attested that even after the decisions in the three land
registration cases and the Compraventas, Jacobo remained in possession of the lands
and continued administering them as he did prior to their registration. He unfailingly
gave a share of the produce to all the 7 children of his son Juan. Jacobo did not
partition the lands and when he died the lands under the three land registration
applications remained undivided. Jose, as the eldest grandchild, assumed and
continued the administration of the lands. He also conscientiously gave his 5 younger
sisters and only brother Agapito, their share in the produce and income from the
lands.Herein respondents claim they repeatedly asked Jose for partitioning of the
land; however, every time they did, Jose always answered that it was not going to
be easy because there would be "big and small shares."

When Jose died respondents (Jose’s siblings) demanded from Jose's children, herein
petitioners, the partition and delivery of their share in the estate left by Jacobo and
under Jose's administration. The petitioners refused. Respondents filed a Complaint
for partition and reconveyance with damages.

ISSUES

I. Was there a valid express trust established by Jacobo Ringor?

 II. May parol evidence be used as proof of the establishment of the express
trust?
III. Were respondents' action barred by prescription and laches?

HELD

Jose was merely a trustee, resulting from the valid express trust established by
Jacobo Ringor.

Express trusts, sometimes referred to as direct trusts, are intentionally created by

the direct and positive acts of the settlor or the trustor – by some writing, deed, or
will, or oral declaration. It is created not necessarily by some written words, but by
the direct and positive acts of the parties. No particular words are required, it being
sufficient that a trust was clearly intended. Unless required by a statutory provision,
such as the Statute of Frauds, a writing is not a requisite for the creation of a trust.
Such a statute providing that no instruments concerning lands shall be "created" or
declared unless by written instruments signed by the party creating the trust, or by
his attorney, is not to be construed as precluding a creation of a trust by oral
agreement, but merely as rendering such a trust unenforceable. Contrary to the claim
of petitioners, oral testimony is allowed to prove that a trust exists. It is not error for
the court to rely on parol evidence. What is crucial is the intention to create a trust.
While oftentimes the intention is manifested by the trustor in express or explicit
language, such intention may be manifested by inference from what the trustor has
said or done, from the nature of the transaction, or from the circumstances
surrounding the creation of the purported trust. However, an inference of the
intention to create a trust, made from language, conduct or circumstances, must be
made with reasonable certainty. It cannot rest on vague, uncertain or indefinite
declarations. An inference of intention to create a trust, predicated only on
circumstances, can be made only where they admit of no other interpretation. In the
present case, a trust was fully established as seen by the acts of the Jacobo and Jose.

Under the doctrine of partial performance recognized in this jurisdiction, the objection
to the oral character of a trust may be overcome or removed where there has been
partial performance of the terms of the trust as to raise an equity in the promisee.52
A trustee may perform the provisions of the trust, and if he does, the beneficiary is
protected in benefits that he has received from such performance.53 Thus, when a
verbal contract has been completed, executed or partially consummated, its
enforceability will not be barred by the Statute of Frauds, which applies only to an
executory agreement.

Generally, resulting trusts do not prescribe except when the trustee repudiates the
trust. Further, the action to reconvey does not prescribe so long as the property
stands in the name of the trustee. To allow prescription would be tantamount to
allowing a trustee to acquire title against his principal and true owner. Here, Jose did
not repudiate the trust, and the titles of the disputed lands are still registered in
Jose's name or in the name of the Heirs of Jose M. Ringor, Inc.

2. Heirs of De la Cruz y Gutierrez v. Court of Appeals, G.R. No. 76590

FACTS

Herein petitioners are the heirs (children) of the late Maria de la Cruz y Gutierrez,
married to Mateo del Rosario Lansang, while herein private respondents are the heirs
of Maria de la Cruz y Guevarra, married to Calixto Dimalanta, and Fermin de la Cruz.
The controversy involves a 1,980 square meters portion of Lot 1488.

From 1921 until her death in 1951, Maria de la Cruz y Gutierrez resided in the
questioned lot in the concept of an owner. She declared the lot for tax purposes in
her name. Later, she entrusted the administration of the said lot to her niece Maria
de la Cruz y Guevarra. When cadastral proceedings were held in Porac, Maria de la
Cruz y Gutierrez filed an answer to the questioned lot. In the said filed answer, over
the handwritten name "Maria de la Cruz y Gutierrez" is a thumbmark presumably
affixed by her; that in paragraph 7, a person named therein as Fermin de la Cruz y
Gutierrez is stated to have an interest or participation on the said lot. However, in
the space provided in paragraph 8 to be filled up with the personal circumstances of
claimant Maria de la Cruz y Gutierrez, what appears therein is the name Maria de la
Cruz, married to Calixto Dimalanta, instead of Maria de la Cruz y Gutierrez,; and in
the space provided intended for the personal circumstances of other person or
persons who may have an interest on the said lot, the name Fermin de la Cruz, single,
appears. Accordingly, the trial court rendered a decision adjudicating Lot No. 1488 in
favor of Maria de la Cruz, 26 years old, married to Calixto Dimalanta and Fermin de
la Cruz, Single. Finally, an Original Certificate of Title was issued in their names.

Petitioners, filed a complaint for reconveyance.

The main thrust of the complaint is that the claimant Maria de la Cruz y Gutierrez
and not Maria de la Cruz y Guevarra who by not using her maternal surname
"Guevarra" succeeded in registering Lot 1488 in her name and that of her brother
Fermin de la Cruz. Under the circumstances, it is claimed that Maria de la Cruz
married to Calixto Dimalanta and Fermin de la Cruz hold the property in trust for the
petitioners.

In their answer, private respondents claimed that the land in question is their
exclusive property, having inherited the same from their parents. Moreover, they
asserted that petitioners have lost their cause of action by prescription.

ISSUE

Whether or not petitioners' action for reconveyance has already prescribed.

HELD

It has been held that under the law on Trusts, it is not necessary that the document
expressly state and provide for the express trust, for it may even be created orally,
no particular words are required for its creation (Article 1444, Civil Code). 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 (Sotto v. Teves, 86 SCRA
154 [1978]). No particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended (Vda. de Mapa v. Court of Appeals,
154 SCRA 294 [1987]). Hence, petitioner's action, being one based on express trust,
has not yet prescribed. Be it noted that Article 1443 of the Civil Code which states
"No express trusts concerning an immovable or any interest therein may be proved
by parol evidence," refers merely to enforceability, not validity of a contract between
the parties. Otherwise stated, for purposes of validity between the parties, an express
trust concerning an immovable does not have to be in writing. Thus, Article 1443
may be said to be an extension of the Statute of Frauds. The action to compel the
trustee to convey the property registered in his name for the benefit of the cestui for
trust does not prescribe. If at all, it is only when the trustee repudiates the trust that
the period of prescription may run.

3. LINA PEÑALBER vs. QUIRINO RAMOS, LETICIA PEÑALBER, and BARTEX

INC, G.R. No. 178645
FACTS
Petitioner is the mother of respondent Leticia and the mother-in-law of respondent
Quirino, husband of Leticia. Respondent Bartex, Inc., on the other hand, is a domestic
corporation which bought from respondent spouses Ramos one of the two properties
involved in this case.

Lina alleged that she was the owner of a parcel of land and a residential house
constructed thereon in Cagayan, and that she discovered that the respondent
spouses executed a forged Deed of Donation as she did not donate the property to
the spouses. When she confronted the Spouses Ramos, they answered that they will
just pay for the properties. Petitioner agreed. However, later on, she found out that
the spouses were selling the Ugac properties to respondent Bartex, Despite
petitioner’s warnings, respondent spouses Ramos still executed in favor of
respondent Bartex, Inc. a Deed of Absolute.

Secondly, petitioner claims a second cause of action involving a hardware store in a

building that the petitioner owned. However, the commercial lot upon which the
building stood is just being rented by the petitioner. It was alleged that, when
petitioner did not have available cash to buy the property, she entered into an
agreement with the spouses, where the latter would buy the lot in behalf of Lina. On
20 September 1984, respondent spouses Ramos returned the management of the
hardware store to petitioner. Consequently, petitioner demanded from respondent
spouses Ramos the reconveyance of the title to the Bonifacio property to her but the
latter unjustifiably refused.

Petitioner insisted that respondent spouses Ramos were, in reality, mere trustees of
the Bonifacio property.

ISSUE

Whether or not there exist a trust agreement between the parties.

HELD

There exist no trust agreement in the present case. Petitioner failed to prove the
existence of a trust agreement between her and respondent spouses Ramos.

In its technical legal sense, a 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,
but the word "trust" is frequently employed to indicate duties, relations, and
responsibilities which are not strictly technical trusts.
Trusts are either express or implied. Express trusts are created by the intention of
the trustor or of the parties. Implied trusts come into being by operation of law.
Express trusts are those which are created by the direct and positive acts of the
parties, by some writing or deed, or will, or by words either expressly or impliedly
evincing an intention to create a trust. No particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly intended.
However, in accordance with Article 1443 of the Civil Code, when an express trust
concerns an immovable property or any interest therein, the same may not be proved
by parol or oral evidence. But, the spouses were deemed to have waived their
objection to the parol evidence as they failed to timely object when petitioner testified
on the said verbal agreement. The requirement in Article 1443 that the express trust
concerning an immovable or an interest therein be in writing is merely for purposes
of proof, not for the validity of the trust agreement. Therefore, the said article is in
the nature of a statute of frauds. The term statute of frauds is descriptive of statutes
which require certain classes of contracts to be in writing. The statute does not
deprive the parties of the right to contract with respect to the matters therein
involved, but merely regulates the formalities of the contract necessary to render it
enforceable.41 The effect of non-compliance is simply that no action can be proved
unless the requirement is complied with. Oral evidence of the contract will be
excluded upon timely objection. But if the parties to the action, during the trial, make
no objection to the admissibility of the oral evidence to support the contract covered
by the statute, and thereby permit such contract to be proved orally, it will be just
as binding upon the parties as if it had been reduced to writing

Petitioner’s allegations as to the existence of an express trust agreement with

respondent spouses Ramos, supported only by her own and her son Johnson’s
testimonies, do not hold water. As correctly ruled by the Court of Appeals, a resulting
difference of ₱116,946.15 in the beginning inventory of the stocks of the hardware
store (before management was transferred to respondent spouses Ramos) and the
second inventory thereof (after management was returned to petitioner), by itself, is
not conclusive proof that the said amount was used to pay the purchase price of the
Bonifacio property, such as would make it the property of petitioner held merely in
trust by respondent spouses Ramos. Such a conclusion adopted by the RTC is purely
speculative and non sequitur. The resulting difference in the two inventories might
have been caused by other factors and the same is capable of other interpretations
(e. g., that the amount thereof may have been written off as business losses due to
a bad economic condition, or that the stocks of the store might have been damaged
or otherwise their purchase prices have increased dramatically, etc.), the exclusion
of which rested upon the shoulders of petitioner alone who has the burden of proof
in the instant case. This petitioner miserably failed to do. The fact that respondent
spouses Ramos never denied the ₱116,946.15 difference, or that they failed to
present proof that they indeed used the said amount to pay the other obligations and
liabilities of petitioner is not sufficient to discharge petitioner’s burden to prove the
existence of the alleged express trust agreement.

4. Heirs of Narvasa, Sr. v. Imbornal, G.R. No. 182908

FACTS

During her lifetime, Basilia owned a parcel of land which she conveyed to her three
(3) daughters Balbina, Alejandra, and Catalina (Imbornal sisters).

Meanwhile, Catalina’s husband, Ciriaco Abrio (Ciriaco), applied for and was granted
a homestead patent over a land (Motherland) adjacent to the Cayanga River e. Later,
it was cancelled, and Transfer Certificate of Title was issued in the name of Ciriaco’s
heirs, namely: Margarita Mejia; Rodrigo Abrio, married to Rosita Corpuz; Antonio
Abrio, married to Crisenta Corpuz; Remedios Abrio, married to Leopoldo Corpuz;
Pepito Abrio; Dominador Abrio; Francisca Abrio; Violeta Abrio; and Perla Abrio (Heirs
of Ciriaco). Ciriaco and his heirs had since occupied the northern portion of the
Motherland, while respondents occupied the southern portion.

Accretions accumulated over the land. Claiming rights over the entire Motherland,
Francisco, et al., as the children of Alejandra and Balbina, filed a complaint for
reconveyance, partition, and/or damages against respondents. They anchored their
claim on the allegation that Ciriaco, with the help of his wife Catalina, urged Balbina
and Alejandra to sell the Sabangan property, and that Ciriaco used the proceeds
therefrom to fund his then-pending homestead patent application over the
Motherland. In return, Ciriaco agreed that once his homestead patent is approved,
he will be deemed to be holding the Motherland – which now included both accretions
– in trust for the Imbornal sisters.

ISSUE

Whether or not there exist implied trust between the Imbornal sisters and Ciriaco.
 HELD

There is none. An implied trust arises, not from any presumed intention of the parties,
but by operation of law in order to satisfy the demands of justice and equity and to
protect against unfair dealing or downright fraud. To reiterate, Article 1456 of the
Civil Code states that "[i]f property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the benefit
of the person from whom the property comes."

The burden of proving the existence of a trust is on the party asserting its existence,
and such proof must be clear and satisfactorily show the existence of the trust and
its elements. While implied trusts may be proven by oral evidence, the evidence must
be trustworthy and received by the courts with extreme caution, and should not be
made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is
required because oral evidence can easily be fabricated.

In this case, it cannot be said, merely on the basis of the oral evidence offered by
Francisco, et al., that the Motherland had been either mistakenly or fraudulently
registered in favor of Ciriaco. Accordingly, it cannot be said either that he was merely
a trustee of an implied trust holding the Motherland for the benefit of the Imbornal
sisters or their heirs. Given that Ciriaco applied and was granted a homestead patent,
which requires proof that the applicant meets the stringent CA 141. It must be
presumed, therefore, that Ciriaco underwent the rigid process and duly satisfied the
strict conditions necessary for the grant of his homestead patent application.

5. Estate of Cabacungan v. Laigo, G.R. No. 175073

FACTS

Margarita Cabacungan (Margarita) owned three parcels of unregistered land.

Sometime in 1968, Margarita's son, Roberto Laigo, Jr. (Roberto), applied for a non-
immigrant visa to the United States, and to support his application, he allegedly asked
Margarita to transfer the tax declarations of the properties in his name. For said
purpose, Margarita, unknown to her other children, executed an Affidavit of Transfer
of Real Property whereby the subject properties were transferred by donation to
Roberto. Not long after, Roberto's visa was issued and he was able to travel to the
U.S and returned in due time. In 1979, he adopted respondents Pedro Laigo (Pedro)
and Marilou Laigo (Marilou), and then he married respondent Estella Balagot.
In 1990, Roberto sold the property to the spouses Mario and Julia without the
knowledge of Margarita and her other children. When Margarita found out about the
sales, she filed an action for recovery of ownership and possession.

ISSUE

Whether or not there is an implied trust relationship between Maragarita and Roberto.

HELD

Yes, Margarita has satisfactorily through testimonial evidence proved the existence
of the trust relationship.

Articles 1448 to 1456 of the Civil Code enumerate cases of implied trust, but the list
according to Article 1447 is not exclusive of others which may be established by the
general law on trusts so long as the limitations laid down in Article 1442 are
observed,[45] that is, that they be not in conflict with the New Civil Code, the Code
of Commerce, the Rules of Court and special laws.

While resulting trusts generally arise on failure of an express trust or of the purpose
thereof, or on a conveyance to one person upon a consideration from another
(sometimes referred to as a "purchase-money resulting trust"), they may also be
imposed in other circumstances such that the court, shaping judgment in its most
efficient form and preventing a failure of justice, must decree the existence of such
a trust. We find that petitioner before the trial court, had actually adduced evidence
to prove the intention of Margarita to transfer to Roberto only the legal title to the
properties in question, with attendant expectation that Roberto would return the
same to her on accomplishment of that specific purpose for which the transaction
was entered into. The evidence of course is not documentary, but rather testimonial.

Sotto v. Teves ruled that the doctrine of laches is not strictly applied between near
relatives, and the fact that the parties are connected by ties of blood or marriage
tends to excuse an otherwise unreasonable delay.

6. Juan v. Yap, Sr., G.R. No. 182177

FACTS

Spouses Maximo and Dulcisima Cañeda (Cañeda spouses) mortgaged to petitioner

Richard Juan (petitioner) two parcels of land to secure a loan. On 30 June 1998,
petitioner, sought the extrajudicial foreclosure of the mortgage. Although petitioner
and respondent participated in the auction sale, the properties were sold to petitioner
for tendering the highest bid.

On 15 February 1999, respondent and the Cañeda spouses executed MOA where the
Cañeda spouses (1) acknowledged respondent as their "real mortgagee-creditor x x
x while Richard Juan [petitioner] is merely a trustee of respondent; (2) respondent
agreed to allow the Cañeda spouses to redeem the foreclosed properties; and (3) the
Cañeda spouses and respondent agreed to initiate judicial action "either to annul or
reform the [Contract] or to compel Richard Juan to reconvey the mortgagee’s
rights to respondent as trustor. Three days later, the Cañeda spouses and respondent
sued petitioner to declare respondent as trustee of petitioner vis a vis the Contract,
annul petitioner’s bid for the foreclosed properties, declare the Contract "superseded
or novated" by the MOA, and require petitioner to pay damages, attorney’s fees and
the costs. In his Answer, petitioner insisted on his rights over the mortgaged
properties.

ISSUE

Whether an implied trust arose between petitioner and respondent, binding petitioner
to hold the beneficial title over the mortgaged properties in trust for respondent.

HELD

Yes. An implied trust arising from mortgage contracts is not among the trust
relationships the Civil Code enumerates. The Code itself provides, however, that such
listing "does not exclude others established by the general law on trust x x x."Under
the general principles on trust, equity converts the holder of property right as trustee
for the benefit of another if the circumstances of its acquisition makes the holder
ineligible "in x x x good conscience [to] hold and enjoy [it]."

Applying these principles, this Court recognized unconventional implied trusts in

contracts involving the purchase of housing units by officers of tenants’ associations
in breach of their obligations, the partitioning of realty contrary to the terms of a
compromise agreement, and the execution of a sales contract indicating a buyer
distinct from the provider of the purchase money. In all these cases, the formal
holders of title were deemed trustees obliged to transfer title to the beneficiaries in
whose favor the trusts were deemed created. We see no reason to bar the recognition
of the same obligation in a mortgage contract meeting the standards for the creation
of an implied trust.

This arrangement mirrors that in Tigno v. Court of Appeals where the notary public
who drew up a sales contract testified that he placed the name of another person in
the deed of sale as the vendee upon instructions of the actual buyer, the source of
the purchase money, who had to go abroad to attend to pressing concerns. In settling
the competing claims between the nominal buyer and the financier in Tigno, we gave
credence to the parol evidence of the latter and found the former liable to hold the
purchased property in trust of the actual buyer under an implied trust. No reason has
been proffered why we should arrive at a different conclusion here.

Clearly then, petitioner holds title over the mortgaged properties only because
respondent allowed him to do so. The demands of equity and justice mandate the
creation of an implied trust between the two, barring petitioner from asserting
proprietary claims antagonistic to his duties to hold the mortgaged properties in trust
for respondent. To arrive at a contrary ruling is to tolerate unjust enrichment, the
very evil the fiction of implied trust was devised to remedy.

7. Chiao Liong Tan v. CA, 228 SCRA 75

FACTS

Petitioner Chiao Liong Tan claims to be the owner of a motor vehicle and that he has
been in possession, enjoyment and utilization of the said motor vehicle until it was
taken from him by his older brother, Tan Ban Yong, the private respondent herein.

Petitioner relies principally on the fact that the Isuzu Elf van is registered in his name
and that he sent his brother to pay for the van and the receipt for payment was
placed in his (petitioner's) name because it was his money that was used to pay for
the vehicle; that he allowed his brother to use the van because the latter was working
for his company, the CLT Industries; and that his brother later refused to return the
van to him and appropriated the same for himself.

On the other hand, private respondent testified that CLT Industries is a family
business that was placed in petitioner's name because at that time he was then
leaving for the United States and petitioner is the remaining Filipino in the family
residing in the Philippines. When the family business needed a vehicle in 1987 for
use in the delivery of machinery to its customers, he asked petitioner to look for a
vehicle and gave him the amount of P5,000.00 to be deposited as down payment for
an Isuzu Elf Van which would be available in about a month. After a month, he himself
paid the whole price out of a loan of P140,000.00 which he obtained from his friend
Tan Pit Sin. Inasmuch as the receipt for the down payment was placed in the name
of petitioner and since he was still on good terms with him, private respondent
allowed the registration of the vehicle in petitioner's name. It was also their
understanding that he would keep the van for himself because CLT Industries was
not in a position to pay him. Hence, from the time of the purchase, he had been in
possession of the vehicle including the original registration papers thereof, but
allowing petitioner from time to time to use the van for deliveries of machinery.

Gina Lu, an employee of the Balintawak Isuzu Motors, testified that private
respondent paid the balance of the purchase price of the Isuzu Elf van but the receipt
was issued in the name of Chiao Liong Tan to make the records consistent because
it was the latter who made down payment deposit. Thereafter, the Isuzu Elf van was
released to him.

ISSUE

Whether or not Chiao Liong Tan is a trustee of Tan Ban Yong.

HELD

Yes. The New Civil Code recognizes cases of implied trust other than those
enumerated therein. Thus, although no specific provision could be cited to apply to
the parties herein, it is undeniable that an implied trust was created when the
certificate of registration of the motor vehicle was placed in the name of the petitioner
although the price thereof was not paid by him but by private respondent. The
principle that a trustee who puts a certificate of registration in his name cannot
repudiate the trust by relying on the registration is one of the well-known limitations
upon a title. A trust, which derives its strength from the confidence one reposes on
another especially between brothers, does not lose that character simply because of
what appears in a legal document.

Even under the Torrens System of land registration, this Court in some instances did
away with the irrevocability or indefeasibility of a certificate of title to prevent
injustice against the rightful owner of the property.

8. Viewmaster Construction Corp. v. Roxas, G.R. No. 133576

 FACTS

It was alleged that petitioner Viewmaster agreed to act as the guarantor of Allen
Roxas for the loan that the latter needs from FMIC if herein respondent Allen Roxas
shall sell fifty percent (50%) of his shareholdings in State Investment and shall
undertake a joint venture project with Plaintiff Viewmaster to co-develop the two real
estate properties in Quezon City and Las Pias, and if Roxas shall sell and petitioner
Viewmaster shall purchase fifty percent (50%) of the latter’s total eventual
acquisitions of shares of stock in State Investment. These were not put into writing.

As a result of the loans granted by FMIC in consideration of, and upon the guaranty
of Viewmaster, Allen Roxas eventually gained control and ownership of State
Investment.

Despite demand, Allen Roxas failed and refused to sell 50% of his shareholdings in
State Investment and to enter into a joint venture project with Viewmaster for the
purpose of developing the two aforementioned real properties, resulting in the
institution by Viewmaster for a complaint for specific performance, enforcement of
implied trust and damages against State Investment Trust, Inc., Northeast Land
Development, Inc., State Properties Corporation and Allen C. Roxas.

ISSUE

Whether or not Allen Roxas is a trustee of Viewmaster.

HELD

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

From the above, it is quite clear that in order for the provisions of Article 1448 to
apply in the case at bar "the price is paid by another for the purpose of having the
beneficial interest of the property."
It bears stressing that respondent Allen Roxas obtained a loan from First Metro
Investments, Inc. not from petitioner Viewmaster. It was FMIC that provided the
funds with which Allen Roxas acquired the controlling interest in State Investment
Trust, Inc. FMIC lent the money to Roxas because the latter needed the money and
not to obtain any beneficial interest in the shares of stock in State Investment.
Viewmaster merely facilitated the loan by acting as guarantor of the loan and nothing
more.

As correctly pointed out by petitioners, an implied trust cannot arise if the funds used
by the alleged trustee in acquiring the alleged trust property originated from a loan.

The general rule is that the use of borrowed money in making a purchase does not
raise a resulting trust in favor of the lender, even where the money is loaned to
enable the borrower to purchase the property in question and the borrower promises,
but fails, to execute a mortgage on the property after it is purchased, to secure the
loan. Nor does the use of money given to one for the purchase of the property raises
a resulting trust in the property in favor of the donor (76 AmJur 2d. pp. 440-441).

If an implied trust cannot exist in favor of a lender, We cannot see our way clear how
a mere guarantor, like Viewmaster, can claim a resulting implied trust when it issued
to Allen Roxas a Continuing Guaranty.

9. Bautista v. Bautista, G.R. No. 202088

FACTS

The Bautista siblings - Margarito, Manuel L. Bautista, Carmelita Bautista Sahagun ,

Aniano L. Bautista, Florencia Bautista de Villa, and Ester Bautista Cabrera (Ester) -
established a lending business through a common fund from the proceeds of the sale
of a parcel of coconut land they inherited from their mother Consorcia Lantin Bautista.
Margarito, Florencia, and Ester managed the business with Reginald Sahagun,
Carmelita's son, as credit investigator. Senen Cabrera, Ester's husband, prepared the
documents for mortgage and reported the status of the lending business to the
Bautista siblings. Through the said lending business, the siblings acquired several
real properties.

On March 2, 1998, Amelia V. Mendoza obtained a loan from Florencia, and secured
the same with a real estate mortgage over a parcel of land she owned.
Florencia, thereafter, received the owner's duplicate copy of TCT No. T-2371, which
she, in turn, entrusted to Carmelita when she went overseas.

On November 28, 2002, Amelia allegedly sold the subject property to Margarito
through a Kasulatan ng Bilihang Tuluyan and, likewise, cancelled the loan through
another "Cancellation and Discharge of Mortgage." On the same date, Florencia filed
a Petition for the Issuance of a Second Owner's Duplicate of TCT No. T-2371 alleging
that she was the mortgagee of the subject property, and that she could not locate,
despite diligent search, the owner's duplicate title in her possession, which she
misplaced sometime in September 2002. Florencia also executed a Special Power of
Attorney in favor of Margarito to represent her in the proceedings. Petitioners tried
to oppose the issuance, the RTC granted the petition and TCT No. T-59882 was later
issued in the name of Margarito.

Failing to settle their differences, petitioners subsequently instituted a Complaint for

Partition and Accounting with Prayer for Temporary Restraining Order and/or Writ of
Preliminary Injunction docketed as Civil Case No. SP-6064(04) before the RTC of San
Pablo City, Branch 32, over several properties against herein respondent Margarito,
the Spouses Marconi de Villa and Florencia Bautista, and the Spouses Senen Cabrera
and Ester Bautista. Petitioners averred that Margarito and the others refused to heed
their oral and written demands for the partition of the properties they co-owned,
which included the Sta. Monica property.

Later on, Margarito asseverated that he exclusively owns the property in controversy
since he used his personal funds in purchasing the land. Margarito presented TCT No.
T-59882 covering the Sta. Monica property, and the Tax Declaration and Receipts
thereof.

ISSUE

Whether or not there is an implied trust relationship between Margarito and his
siblings.

HELD

Yes. There is an implied trust when a 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. This is sometimes referred to as a purchase money
resulting trust, the elements of which are: (a) an actual payment of money,
property or services, or an equivalent, constituting valuable consideration;
and (b) such consideration must be furnished by the alleged beneficiary of
a resulting trust.

In the case at bar, although a certificate of title is the best proof of ownership of a
piece of land, the mere issuance of the same in the name of any person does not
foreclose the possibility that the real property may be under co-ownership with
persons not named in the certificate or that the registrant may only be a trustee or
that other parties may have acquired interest subsequent to the issuance of the
certificate of title. The principle that a trustee who puts a certificate of registration in
his name cannot repudiate the trust by relying on the registration is one of the well-
known limitations upon a title.

A trust, which derives its strength from the confidence one reposes on another
especially between families, does not lose that character simply because of what
appears in a legal document. From the foregoing, this Court finds that an implied
resulting trust existed among the parties. The pieces of evidence presented
demonstrate their intention to acquire the Sta. Monica property in the course of their
business, just like the other properties that were also the subjects of the partition
case and the compromise agreement they entered into. Although the Sta. Monica
property was titled under the name of Margarito, the surrounding circumstances as
to its acquisition speak of the intent that the equitable or beneficial ownership of the
property should belong to the Bautista siblings.

10. Tigno v. Court of Appeals, G.R. No. 110115

FACTS

Bienvenido Sison, Remedios Sison and the heirs of Isaac Sison, namely: Manuel
Sison, Gerardo Sison and Adelaida Sison appointed Dominador Cruz as agent to sell
three (3) parcels of land adjoining each other. When Rodolfo Tigno learned that the
properties were for sale, he approached Cruz and told the latter to offer these parcels
of land to his brother, Eduardo Tigno, herein appellant. Pursuant thereto, Cruz and
Rodolfo Tigno went to appellant's Makati office to convince the latter to buy the
properties earlier described. At first, appellant was reluctant, but upon Rodolfo
Tigno's prodding, appellant was finally convinced to buy them.
Appellant agreed to pay 15, 000.00 pesos as downpayment. This was witnessed by
Cruz and Atty. Manuel. After giving the downpayment, appellant instructed Cruz and
Atty. Manuel to place the name of Rodolfo Tigno as "vendee" in the deeds of sale to
be subsequently prepared. This instruction was given to enable Rodolfo Tigno to
mortgage these properties at the Philippine National Bank (PNB), Lingayen Branch,
for appropriate funds needed for the development of these parcels of land as
"fishponds". Eventually, the appropriate deeds of sale were finally prepared and
signed by the parties.

Thereafter, Rodolfo Tigno, without the knowledge and consent of appellant, sold to
Spouses Edualino Casipit and Avelina Casipit 508.56 square meters of the land
previously owned by Bienvenido Sison (Exh. E). At the time of sale, the Casipits were
aware that the portion of the land they bought was owned by appellant, not Rodolfo
Tigno. Plaintiff filed Civil Case No. 16673 for "Reconveyance, Annulment of
Document, Recovery of Possession and Damages" against Rodolfo M. Tigno and
defendant spouses Edualino Casipit and Avelina Estrada.

ISSUE

Whether the evidence on record proves the existence of an implied trust between
Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno.

HELD

Implied trusts are those which are deducible by operation of law from the nature of
the transaction as matters of equity, independently of the particular intention of the
parties. Article 1448 provides, an implied trust arises where a person purchases land
with his own money and takes conveyance thereof in the name of another. In such a
case, the property is held on resulting trust in favor of the one furnishing the
consideration for the transfer, unless a different intention or understanding appears.
The trust which results under such circumstances does not arise from a contract or
an agreement of the parties, but from the facts and circumstances; that is to say,
the trust results because of equity and it arises by implication or operation of law.
The species of implied trust raised by private respondent was extensively discussed
by the Court, through the learned Mr. Justice Hilario G. Davide, Jr., in Morales, et al.
vs. Court of Appeals, et al.:
 A trust is the legal relationship between one person having an equitable
ownership in property and another person owning the legal title to such
property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the latter.
The characteristics of a trust are:

1. It is a relationship;

2. it is a relationship of fiduciary character;

3. it is a relationship with respect to property, not one involving merely

personal duties;

4. it involves the existence of equitable duties imposed upon the holder of the
title to the property to deal with it for the benefit of another; and

5. it arises as a result of a manifestation of intention to create the relationship.

The trust created under the first sentence of Article 1448 is sometimes referred to as
a purchase money resulting trust. To give rise to a purchase money resulting trust,
it is essential that there be:

1. an actual payment of money, property or services, or an equivalent, constituting

valuable consideration;

2. and such consideration must be furnished by the alleged beneficiary of a resulting

trust.

There are recognized exceptions to the establishment of an implied resulting trust.

The first is stated in the last part of Article 1448 itself. Thus, where A pays the
purchase money and title is conveyed by absolute deed to A's child or to a person to
whom A stands in loco parentis and who makes no express promise, a trust does not
result, the presumption being that a gift was intended. Another exception is, of
course, that in which an actual contrary intention is proved. Also where the purchase
is made in violation of an existing statute and in evasion of its express provision, no
trust can result in favor of the party who is guilty of the fraud.

The trial court is incorrect in ruling that if, indeed, a trust has been established, it is
an express trust which cannot be proved by parol evidence. It must be noted that
Article 1441 of the Civil Code defines both express trust and implied trust in general
terms, thus:

Art. 1441. Trusts are either express or implied. Express trust are created by
the intention of the trustor or of the parties. Implied trust come into being by
operation of law.

Specific instances or examples of implied trusts are given in the Civil Code, one of
which is described under Article 1448 quoted heretofore. Since Article 1448 is a
specific provision, it prevails over and qualifies Article 1441, which is a general
provision, under the rule generalia specialibus non derogant (Alcantara, Statutes,
1990 Ed., p. 101).

Therefore, since this case involves an implied trust falling under Article 1448, parol
evidence is allowed to prove its existence pursuant to Article 1457, Civil Code, which
states:

Art. 1457. An implied trust may be proved by oral evidence.

From the foregoing, it is ineludible that Article 1448 of the Civil Code finds application
in this case. Although the deeds of sale were in the name of Petitioner Rodolfo, the
purchase price was paid by private respondent who was the real owner of the
property. Petitioner Rodolfo is the trustee, and private respondent is the beneficiary.

11. O'Laco v. Chit, G.R. No. 58010

FACTS

Philippine Sugar Estate Development Company, Ltd., sold a parcel of land to Emilia
O'Laco as vendee; thereafter, Transfer Certificate of Title No. 66456 was issued in
her name. When private respondent-spouses Valentin Co Cho Chit and O Lay Wa that
Emilia O'Laco sold the same property to the Roman Catholic Archbishop of Manila,
with assumption of the real estate mortgage constituted thereon, they sued
petitioner-spouses Emilia O'Laco and Hugo Luna to recover the purchase price of the
land, 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.

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 was granted.

Trial court, finding no trust relation between the parties, the trial court dismissed the
complaint together with the counterclaim. Petitioners and respondents appealed.
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.

ISSUE

Whether there is a trust relation between the parties in contemplation of law and if
there is, is it already barred by laches?

HELD

We find that there is. 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. Implied trusts 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.

Specific examples of resulting trusts may be found in the Civil Code, particularly Arts.
1448, 1449, 1451,1452 and 1453, while constructive trusts are illustrated in Arts.
1450, 1454, 1455 and 1456.

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 —

"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).

The present action is between members of the same family since petitioner Emilia
O'Laco and respondent O Lay Kia are half-sisters. 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.

12. Spouses Inalvez v. Nool, G.R. No. 188145

FACTS

This petition stemmed from a complaint for recovery of possession over a parcel of
land filed by Spouses Primo and Juliana Inalvez (petitioners) against Bayang Nool,
Allan Nool and Celestino Nool (respondents), with the Department of Agrarian Reform
Adjudication Board (DARAB).

The records showed that the subject property was originally registered in the names
of Spouses Nicolas and Francisca Nool and Spouses Comelio and Bayang. On May 3,
1965, Spouses Cornelio and Bayang sold a large portion of their one-half share of the
landholding to the petitioners and Maria Zamora. Consequently, TCT No. 58398 was
cancelled and in lieu thereof, TCT No. 58439 was issued in the names of the following
co-owners: Spouses Nicolas and Francisca (one-half share); Zamora (one-fourth
share); Spouses Cornelio and Bayang (one-eighth share); and the petitioners (one-
eighth share).

On June 4, 1979, Spouses Nicolas and Francisca sold their entire one-half share in
favor of Spouses Abraham and Olivia Macayanan, Then the new set of owners,
namely, Spouses Macayanan, Zamora, Spouses Cornelio and Bayang, and the
petitioners executed a Real Estate Mortgage (REM) over the whole property in favor
of Tarlac Development Bank (TDB) to secure a loan.

Unfortunately, the mortgage was foreclosed, and the title to the subject property was
consolidated with TDB after which TDB sold the parcel of land to the petitioners and
Spouses Jim and Liberty Baluyot.
On June 16, 2000, the petitioners instituted a complaint for ejectment, collection of
shares and damages, against the respondents before the DARAB-Region III docketed
as DARAB Case No. III-T-1952-00. The petitioners alleged that since Bayang is
Juliana's sister, they allowed the respondents to cultivate 2-ha portion of the subject
property. The respondents' cultivation thereof was purportedly conditioned upon the
payment to the petitioners of a rightful share in the produce. Thus, when the
respondents failed to fulfil their undertaking, the petitioners instituted an ejectment
complaint against them.

For her part, Bayang averred that she and her late husband were the actual and
registered co-owners of the subject property, which they inherited from her father,
together with the petitioners. Bayang denied having sold portions of their property
to the petitioners and Zamora.

On January 14, 2002, the DARAB dismissed the case upon finding that no tenancy
relationship exists between the parties. Dissatisfied, the petitioners filed a complaint
for recovery of possession.

ISSUE

Whether or not there exists a trust relationship among the co-owners.

HELD

Yes. Here, records show that the subject property was originally owned by Juliana
and Bayang's father, Cleto Macayanan under Original Certificate of Title No. 1665.
"Pursuant to Article 1451 of the Civil Code, when land passes by succession to any
person and he causes the legal title to be put in the name of another, a trust is
established by implication of law for the benefit of the true owner." Bayang, being an
heir and a co-owner, is thus entitled to the possession of the subject property. This
was confirmed by the issuance of TCT No. 58439 in the names of Spouses Nicolas
and Francisca for one-half share, Spouses Cornelio and Bayang for one-eighth share,
Zamora for one-fourth share, and the petitioners for one-eighth share. Evidently, a
co-ownership existed between the parties prior to the foreclosure and consolidation
of title in favor of TDB and the subsequent re-acquisition thereof by the petitioners.

Co-ownership is a form of trust and every co-owner is a trustee for the others."
"Before the partition of a land or thing held in common, no individual or co-owner
can claim title to any definite portion thereof. All that the co-owner has is an ideal or
abstract quota proportionate share in the entire land or thing." "Should a co-owner
alienate or mortgage the co-owned property itself, the alienation or mortgage shall
remain valid but only to the extent of the portion which may be allotted to him in the
division upon the termination of the co-ownership. "In case of foreclosure, a sale
would result in the transmission only of whatever rights the seller had over of the
thing sold."

Indeed, a co-owner does not lose his part ownership of a co-owned property when
his share is mortgaged by another co-owner without the former's knowledge and
consent as in the case at bar. The mortgage of the inherited property is not binding
against co-heirs who never benefited. As correctly emphasized by the CA, the
petitioners' right in the subject property is limited only to their share in the co-owned
property. When the subject property was sold to and consolidated in the name of
TDB, the latter merely held the subject property in trust for the respondents. When
the petitioners and Spouses Baluyot bought back the subject property, they merely
stepped into the shoes of TDB and acquired whatever rights and obligations appertain
thereto.

13. Capitle v. Vda. de Gaban, G.R. No. 14689

FACTS

Fabian Correjado (Fabian) inherited from his father Santos Correjado two parcels of
land subject of the case at bar, Fabian died intestate in 1919.He was survived by four
children, namely:Julian, Zacarias, Francisco and Manuel, all surnamed Correjado.

After Fabians death in 1919, his son Julian occupied and cultivated the two subject
parcels of land (the property) until his death in 1950.He was survived by three
children, namely, herein respondents. Julians brother Francisco died and was
survived by herein petitioners. Julians brother Zacarias died in 1984 and was survived
by the other petitioners herein Aurora P. vda. de Correjado, Lilia Capitle, Artemio
Correjado, Cecilia Correjado, Rogelia Correjado (Rogelia), Sofronio Correjado,
Vicente Correjado and Gloria vda. de Beduna.

On November 26, 1986, petitioners filed a complaint for partition of the property and
damages before the RTC against respondents, alleging that Fabian contracted two
marriages, the first with Brigida Salenda who was the mother of Julian, and the
subsequent one with Maria Catahay (Maria) who was the mother of Zacarias, Manuel
and Francisco; that the property remained undivided even after the death of Julian
in 1950, his children-herein respondents having arrogated unto themselves the use
and enjoyment of the property, to the exclusion of petitioners; and that respondents
refused to deliver petitioners share in the property despite demands therefor and for
partition.

To the Complaint respondents countered in their Answer that in the proceedings in

the intestate estate of their great grandfather Santos Correjado, petitioners were not
adjudicated any share in the property, for Maria, the mother of petitioners respective
fathers Francisco and Zacarias, was just a mistress of Fabian, hence, Francisco and
Zacarias (as well as Manuel) were illegitimate who were not entitled to inherit under
the old Civil Code (Spanish Civil Code of 1889).

ISSUE

Whether or not laches is applicable in the case at bar.

HELD

Yes. It is a hornbook doctrine that the possession of a co-owner is like that of a

trustee and shall not be regarded as adverse to the other co-owners but in fact as
beneficial to all of them so much so that each co-owner may demand at any time the
partition of the common property and that this implies that an action to demand
partition is imprescriptible or cannot be barred by laches (Salvador v. Court of
Appeals, 243 SCRA 23; De Castro v. Echarri, 20 Phil. 23).

While the right of action to demand partition does not prescribe, acquisitive
prescription may set in where one of the co-owners openly and adversely occupies
the property without recognizing the co-ownership (Cordova v. Cordova, 102 Phil.
1182; Heirs of Segunda Manungding v. Court of Appeals, 276 SCRA 601), The statute
of limitations operates, as in other cases, from the moment such adverse title is
asserted by the possessor of the property (Ramos v. Ramos, 45 Phil. 362; Bargayo
v. Camumot, 40 Phil. 857).

The elements constituting adverse possession by a co-owner against another co-

owner or cestui que trust are:(1) that he has performed unequivocal acts of
repudiation amounting to an ouster of the cestui que trust or other co-owners; (ii)
that such positive acts of repudiation have been made known to the cestui que trust
or the other co-owners; and (iii) that the evidence thereon must be clear and
convincing (Salvador v. Court of Appeals, supra).

In light of the prescription of petitioners’ action, discussion thereof is dispensed with.

Suffice it to state that while laches may not be strictly applied between near relatives,
under the facts and circumstances of the case, especially the uncontroverted claim
of respondents that their father Julian, and the documented claim of respondent
Julieta, had paid realty taxes on the property as exclusive owner, as well as the
admission of petitioner Rogelia that, as quoted above, she and her co-petitioners
never benefited or were deprived of any benefits from the property since 1919 up to
the time of the filing ofthe case in 1986 before the RTC or for a period of 67 years,
despite demands therefor, even an extremely liberal application of laches would bar
the filing of the case. Laches is applicable in the case at bar.

14. Spouses Paringit v. Bajit, G.R. No. 181844

FACTS

During their lifetime, spouses Julian and Aurelia Paringit leased a lot from Terocel
Realty, Inc. For having occupied the lot for years, Terocel Realty offered to sell it to
Julian but he did not have enough money at that time to meet the payment deadline.
Julian sought the help of his children so he can buy the property but only his son
Felipe and wife Josefa had the financial resources he needed at that time. To bring
about the purchase, Julian executed a deed of assignment of leasehold right in favor
of Felipe and his wife that would enable them to acquire the lot. Felipe and his wife
paid the last installment and the realty company executed a Deed of Absolute Sale
in their favor and turned over the title to them.

Due to issues among Julian’s children regarding the ownership of the lot, Julian
executed an affidavit clarifying the nature of Felipe and his wife’s purchase of the lot.
He claimed that it was bought for the benefit of all his children and that if any of the
children claims or needs a bigger area than 15 sq. m., he/she should amicably talk
with or negotiate with any other brother or sister for transfer or assignment of such
area as they agree.

On January 23, 1987 Felipe and his wife registered their purchase of the lot. Despite
the title, however, the spouses moved to another house on the same street in 1988.
Marciana, et al, on the other hand, continued to occupy the lot with their families
without paying rent. This was the situation when their father Julian died on December
21, 1994. A year later, Felipe and his wife sent a demand letter to Marciana, et al
asking them to pay rental arrearages. Marciana, et al refused to pay or reply to the
letter, believing that they had the right to occupy the house and lot, it being their
inheritance from their parents. Felipe and his wife filed an ejectment suit against
them. The suit prospered, resulting in the ejectment of Marciana, et al and their
families from the property. Shortly after, Felipe and his wife moved into the same.

Marciana, et al filed the present action against Felipe and his wife for annulment of
title and reconveyance of property before the RTC. RTC dismissed the petition but
the CA ordered the reconveyance of the property to Marciana, et al.

ISSUES

1. Whether or not the CA erred in finding that Felipe and his wife purchased the
subject lot under an implied trust for the benefit of all the children of Julian;
and
2. Whether or not the CA erred in failing to hold that Marciana, et al’s right of
action was barred by prescription or laches.

HELD

Yes there is an implied trust. The CA found that Felipe and his wife’s purchase of the
lot falls under the rubric of the implied trust provided in Article 1450 of the Civil
Code.28 Implied trust under Article 1450 presupposes a situation where a person,
using his own funds, buys property on behalf of another, who in the meantime may
not have the funds to purchase it. Title to the property is for the time being placed
in the name of the trustee, the person who pays for it, until he is reimbursed by the
beneficiary, the person for whom the trustee bought the land. It is only after the
beneficiary reimburses the trustee of the purchase price that the former can
compel conveyance of the property from the latter.

The circumstances of this case are actually what implied trust is about. Although no
express agreement covered Felipe and his wife’s purchase of the lot for the siblings
and their father, it came about by operation of law and is protected by it. The nature
of the transaction established the implied trust and this in turn gave rise to the rights
and obligations provided by law. Implied trust is a rule of equity, independent of the
particular intention of the parties.

Here, the evidence shows that Felipe and his wife bought the lot for the benefit of
Julian and his children, rather than for themselves.

Felipe and his wife also claim that Marciana, et al’s action to recover their portions of
the house and lot had already prescribed. True, an implied trust prescribes within 10
years from the time the right of action accrues. But when did the right of action based
on the implied trust accrue in this case? A right of action implies the existence
of a cause of action and a cause of action has three elements: a) the
existence of a right in plaintiff’s favor; b) defendant’s obligation to respect
such right; and c) defendant’s act or omission that violates the plaintiff’s
right. Only when the last element occurs or takes place can it be said in law
that a cause of action has arisen.

In an implied trust, the beneficiary’s cause of action arises when the trustee
repudiates the trust, not when the trust was created as Felipe and his wife would
have it. The spouses of course registered the lot in their names in January 1987 but
they could not be said to have repudiated the implied trust by that registration. Their
purchase of the land and registration of its title in their names are not incompatible
with implied trust. It was understood that they did this for the benefit of Julian and
all the children. At any rate, even assuming that Felipe and his wife’s registration of
the lot in their names in January 1987 constituted a hostile act or a violation of the
implied trust, Marciana, et al had 10 years or until January of 1997 within which to
bring their action. Here, they filed such action in July 1996 well within the period
allowed them.

15. Home Guaranty Corp. v. La Savoie Development Corp., G.R. No.

168616

FACTS

La Savoie Development Corporation (La Savoie) is a domestic corporation engaged

in the business of "real estate development, subdivision and brokering, however, due
to the devaluation of Philippine peso and other factors, L Savoie was unable to pay
its obligations to its creditors. Thus, the corporation filed petition for the declaration
of state of suspension of payments with approval of proposed rehabilitation
plan under the Interim Rules of Procedure on Corporate Rehabilitation. The
corporation’s creditors files their comments and oppositions. Home Guaranty
Corporation, herein petitioner, filed an opposition as well even though it is not a
creditor. It asserted that it had a "material and beneficial interest in the . . . Petition,
in relation to the interest of Philippine Veterans Bank (PVB), Planters Development
Bank (PDB), and Land Bank of the Philippines (LBP), which are listed as creditors of
Petitioner vis-a-vis certain properties or assets that might have been taken
cognizance of, and placed under the custody of the [Regional Trial] Court and[/]or
the appointed Rehabilitation Receiver. Home Guaranty Corporation noted that
through the "La Savoie Asset Pool Formation and Trust Agreement"16 (Trust
Agreement), La Savoie obtained financing for some of its projects through a
securitization process in which Planters Development Bank as nominal issuer issued
PI50 million in asset participation certificates dubbed as the "La Savoie Development
Certificates"17 (LSDC certificates) to be sold to investors. The projects financed by
these certificates consisted of the development of real properties in General Trias,
Cavite; Sto. Tomas, Batangas; Los Banos, Laguna; and Quezon City. The same
properties were conveyed in trust by La Savoie, as trustor, to Planters Development
Bank, as trustee, and constituted into the La Savoie Asset Pool (Asset Pool).

Home Guaranty Corporation argued that it and the investors on the LSDC certificates
had "preferential rights" over the properties making up the Asset Pool as these "were
conveyed as security or collaterals for the redemption of the [LSDC certificates]."
Thus, they should be excluded from the coverage of La Savoie's Petition for
Rehabilitation.

ISSUE

Whether or not there is an implied trust between La Savoie and Home Guaranty Corp.

HELD

Yes.

These contractual provisions evince the following relations

1. A trust relation, with respect to the Asset Pool, in which La Savoie is the
trustor, Planters Development Bank is the trustee, and the holders of
the LSDC certificates are the beneficiaries;
 2. A credit relation, with respect to the LSDC certificates, in which La
Savoie is the debtor (Planters Development Bank being a mere nominal
issuer), the holders of the LSDC certificates are the creditors, and Home
Guaranty Corporation is the guarantor. (It will be recalled that Home
Guaranty Corporation itself acknowledged, in the Opposition it filed
before the Regional Trial Court, that it was not a creditor of La Savoie.);
and

3. An agency relation, with respect to the transfer of the real properties in

the Asset Pool should the guarantor pay for the LSDC certificates, in
which La Savoie is the principal and Planters Development Bank is the
agent. In this event, Home Guaranty Corporation is the transferee.

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.

This case falls squarely under Article 1456 of the Civil Code. Home Guaranty
Corporation acquired the properties comprising the Asset Pool by mistake or through
the ineffectual transfer (i.e., for being pactum commissorium) made by the original
trustee, Planters Development Bank.

Two key points are established from the preceding discussions. First, the Court of
Appeals' June 21, 2005 Decision restored La Savoie's status as a corporation under
receivership. Second, with all but a constructive trust created between Home
Guaranty Corporation and La Savoie, the properties comprising the Asset Pool remain
within the dominion of La Savoie.

16. Ramnani v. Court of Appeals, G.R. Nos. 85494 & 85496

FACTS

Ishwar, Choithram and Navalrai, all surnamed Jethmal Ramnani, are brothers of the
full blood. Ishwar and his spouse Sonya executed a general power of attorney
appointing Navalrai and Choithram as attorneys-in-fact, empowering them to
manage and conduct their business concern in the Philippines.
Choithram, in his capacity as aforesaid attorney-in-fact of Ishwar, entered into two
agreements for the purchase of two parcels of land. Per agreement, Choithram paid
the down payment and installments on the lot with his personal checks. A building
was constructed thereon by Choithram and this was occupied and rented by Jethmal
Industries and a wardrobe shop called Eppie's Creation. Three other buildings were
built thereon by Choithram through a loan of P100,000.00 obtained from the
Merchants Bank as well as the income derived from the first building. The buildings
were leased out by Choithram as attorney-in-fact of Ishwar. Two of these buildings
were later burned.
Sometime in 1970 Ishwar asked Choithram to account for the income and expenses
but Choithram failed and refused to render such accounting. As a consequence,
Ishwar revoked the general power of attorney.
Choithram and Ortigas were duly notified of such revocation. Said notice was also
registered with the SEC and was duly published.
Nevertheless, Choithram as such attorney-in-fact of Ishwar, transferred all rights and
interests of Ishwar and Sonya in favor of his daughter-in-law, Nirmla Ramnani. Her
husband is Moti, son of Choithram. Upon complete payment of the lots, Ortigas
executed the corresponding deeds of sale in favor of Nirmla.

Thus, Ishwar and Sonya (spouses Ishwar for short) filed a complaint in the Court of
First Instance of Rizal against Choithram and/or spouses Nirmla and Moti (Choithram
et al. for brevity) and Ortigas for reconveyance of said properties or payment of its
value and damages. An amended complaint for damages was thereafter filed by said
spouses.
 ISSUE

Whether or not a rust relationship between the latter as principal and Choithram as
attorney-in-fact of Ishwar was established.

HELD

Yes. Under Article 1455, when any trustee, guardian or other person holding
a fiduciary relationship uses trust funds for the purchase or property and
causes the conveyance to be made to him or to a third person, a trust is
established by operation of law in favor of the person to whom the funds
belong.

In the letter written by Choithram, he said thet he could have repudiated the trust
and ran away with the properties of Ishwar by predating documents and Ishwar would
be entirely helpless. He was bitter as a result of Ishwar's revocation of the power of
attorney but no mention was made of any temporary arrangement or a claim of
ownership over the properties in question nor was he able to present any
memorandum or document to prove the existence of such temporary arrangement.

The facts of the case clearly spelled out that the transfer of the property to Nirmla
was fraudulent and that it should be considered to be held in trust by Nirmla for
spouses Ishwar. As above-discussed, this allegation is well-taken and the transfer of
the property to Nirmla should be considered to have created an implied trust by
Nirmla as trustee of the property for the benefit of spouses Ishwar, in contemplation
of Article 1455.

17. Pagaduan v. Spouses Ocuma, G.R. No. 176308

FACTS

The subject lot used to be part of a big parcel of land that originally belonged to
Nicolas Cleto. The big parcel of land was the subject of two separate lines of
dispositions. The first line of dispositions began with the sale by Cleto to Antonio
Cereso. Cereso in turn sold the land to the siblings with the surname Antipolo. The
Antipolos sold the property to Agaton Pagaduan, father of petitioners. All the
dispositions in this line were not registered and did not result in the issuance of new
certificates of title in the name of the purchasers. When Cleto died, his widow Ruperta
sold the land to Eugenia Reyes who in turn, executed a unilateral deed of sale where
she sold the northern portion with an area to respondents and the southern portion
to Agaton Pagaduan.

Petitioners instituted a complaint for reconveyance of the southern portion with

damages, against respondents before the RTC.

RTC ruled that a constructive trust over the property was created in petitioners' favor,
the court below ordered respondents to reconvey the disputed southern portion and to
pay attorney's fees as well as litigation expenses to petitioners. CA ruled that while the
registration of the southern portion in the name of respondents had created an implied
trust in favor of Agaton Pagaduan, petitioners, however, failed to show that they had
taken possession of the said portion. Hence, the appellate court concluded that
prescription had set in, thereby precluding petitioners' recovery of the disputed portion.

ISSUE

Whether or not there is an implied trust between the parties.

HELD

There is none. An action for reconveyance respects the decree of registration as

incontrovertible but seeks the transfer of property, which has been wrongfully or
erroneously registered in other persons' names, to its rightful and legal owners, or
to those who claim to have a better right. However, contrary to the positions of
both the appellate and trial courts, no trust was created under Article 1456
of the new Civil Code which 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.

The property in question did not come from the petitioners. In fact that property
came from Eugenia Reyes. The title of the Ocumas can be traced back from Eugenia
Reyes to Ruperta Asuncion to the original owner Nicolas Cleto. Thus, if the
respondents are holding the property in trust for anyone, it would be Eugenia Reyes
and not the petitioners.

Moreover, as stated in Berico v. Court of Appeals, Article 1456 refers to actual or

constructive fraud. Actual fraud consists in deception, intentionally
practiced to induce another to part with property or to surrender some legal
right, and which accomplishes the end designed. Constructive fraud, on the
other hand, is a breach of legal or equitable duty which the law declares
fraudulent irrespective of the moral guilt of the actor due to the tendency to
deceive others, to violate public or private confidence, or to injure public
interests. The latter proceeds from a breach of duty arising out of a fiduciary or
confidential relationship. In the instant case, none of the elements of actual or
constructive fraud exists. The respondents did not deceive Agaton Pagaduan to
induce the latter to part with the ownership or deliver the possession of the property
to them. Moreover, no fiduciary relations existed between the two parties.

18. Gabutan v. Nacalaban, G.R. Nos. 185857-58 & 194314-15

FACTS

Godofredo Nacalaban purchased a parcel of land from Petra, Fortunata, Francisco and
Dolores, all surnamed Daamo. When Godofredo died he was survived by his wife
Baldomera, and their children, Dante, Helen, and Susan. On March 19, 1979,
Baldomera issued a Certification in favor of her mother, Melecia. It provided, in effect,
that Baldomera was allowing her mother to build and occupy a house on the portion
of the property. Accordingly, the house was declared for taxation purposes. The tax
declaration presented in evidence showed that Melecia owned the building on the
land owned by Godofredo.

Baldomera died, her children executed an Extrajudicial Settlement of Estate of

Deceased Person with Sale (Extrajudicial Settlement with Sale) where they
adjudicated unto themselves the property and sold it to the College.

Melecia died on April 20, 199718 and was survived by her children, Trifonia, Buna,
Felisia, Crisanta, and Tirso.
College demanded Trifonia D. Gabutan, Mary Jane Gilig, Allan Ubaub, and Evelyn
Dailo, the heirs of Melecia who were occupying the house on the property, to vacate
the premises.

On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance of Real Property,
Declaration of Nullity of Contracts, Partition and Damages with Writ of Preliminary
Attachment and Injunction against Nacalaban, et al. and the College. They alleged
that: (1) Melecia bought the property using her own money but Godofredo had the
Deed of Absolute Sale executed in his name instead of his mother-in-law; (2)
Godofredo and Baldomera were only trustees of the property in favor of the real
owner and beneficiary, Melecia; (3) they only knew about the Extrajudicial
Settlement with Sale upon verification with the Registry of Deeds; and (4) the College
was a buyer in bad faith, being aware they were co-owners of the property.

ISSUE

Whether or not an An implied resulting trust was created between Melecia and
Godofredo.

HELD

Article 1448 of the Civil Code provides in part that 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. The trust created here, which is also referred to as a
purchase money resulting trust,89 occurs when there is (1) an actual payment of money,
property or services, or an equivalent, constituting valuable consideration; (2) and such
consideration must be furnished by the alleged beneficiary of a resulting trust.90 These
two elements are present in this case.

Gabutan, et al., through the testimonies of Felisia, Crisanta, and Trifonia, established
that Melecia's money was used in buying the property, but its title was placed in
Godofredo's name. She purchased the property because Felisia wanted to build a
pharmacy on it.91 On one occasion in Melecia's house, and when the entire family was

present, Melecia gave Godofredo the money to purchase the property.92 Melecia
entrusted the money to Godofredo because he was in Cagayan de Oro, and per Melecia's
instruction, the deed of sale covering the property was placed in his name.93 It was
allegedly her practice to buy properties and place them in her children's name, but it was
understood that she and her children co-own the properties.

Both the RTC and CA found credence on these pieces of testimonial evidence that an
implied resulting trust exists. Reliance on these testimonies will not violate the parol
evidence rule, as Nacalaban, et al. once raised. In Tong v. Go Tiat Kun, we ruled
that since an implied trust is neither dependent upon an express agreement
nor required to be evidenced by writing, Article 1457 of our Civil Code
authorizes the admission of parol evidence to prove their existence. What is
crucial is the intention to create a trust. We cautioned, however, that the parol
evidence that is required to establish the existence of an implied trust necessarily
has to be trustworthy and it cannot rest on loose, equivocal or indefinite declarations.
The testimonies of Felisia, Crisanta, and Trifonia satisfy these requirements. They are
consistent and agree in all material points in reference to the circumstances behind
the arrangement between Melecia and Godofredo. We agree with the RTC when it
said that this arrangement among family members is not unusual, especially in the
1950s.

If the registration of the land is fraudulent, the person in whose name the land is
registered holds it as a mere trustee, and the real owner is entitled to file an action
for reconveyance of the property. The fact that the property was already titled in
Godofredo's name, and later transferred to the College, is not a hindrance to an action
for reconveyance based on an implied trust. The title did not operate to vest
ownership upon the property in favor of the College. Its issuance in favor of a
particular person does not foreclose the possibility that the real property may be co-
owned with persons not named in the certificate, or that it may be held in trust for
another person by the registered owner.

An action for reconveyance based on an implied or a constructive trust prescribes 10

years from the alleged fraudulent registration or date of issuance of the certificate of
title over the property. However, an action for reconveyance based on implied or
constructive trust is imprescriptible if the plaintiff or the person enforcing the trust is
in possession of the property. In effect, the action for reconveyance is an action to
quiet the property title, which does not prescribe. The reason is that the one who is
in actual possession of the land claiming to be its owner may wait until his possession
is disturbed or his title is attacked before taking steps to vindicate his right. His
undisturbed possession gives him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim of a third party
and its effect on his own title, which right can be claimed only by one who is in
possession.

19. Spouses Pascual v. Court of Appeals, G.R. No. 115925

FACTS

Petitioner Consolacion Sioson and respondent Remedios S. Eugenio-Gino are the

niece and granddaughter, respectively, of the late Canuto Sioson CANUTO and 11
other individuals, including his sister Catalina Sioson ("CATALINA") and his brother
Victoriano Sioson, were co-owners of a parcel of land.

On 26 September 1956, CANUTO and CONSOLACION executed a Kasulatan ng

Bilihang Tuluyan4 ("KASULATAN"). Under the KASULATAN, CANUTO sold his 10/70
share in Lot 2 in favor of CONSOLACION.

CONSOLACION immediately took possession of Lot Nos. 2-A and 2-E. She later
declared the land for taxation purposes and paid the corresponding real estate taxes.

On 23 October 1968, the surviving children of CANUTO, namely, Felicidad and

Beatriz, executed a joint affidavit affirming the KASULATAN in favor of
CONSOLACION. They also attested that the lots their father had sold to
CONSOLACION were Lot Nos. 2-A and 2-E

On 4 February 1988, REMEDIOS filed a complaint against CONSOLACION and her

spouse Ricardo Pascual in the RTC "Annulment or Cancellation of Transfer Certificate
[of Title] and Damages." REMEDIOS claimed that she is the owner of Lot Nos. 2-A
and 2-E because CATALINA devised these lots to her in CATALINA’s last will and
testament. REMEDIOS added that CONSOLACION obtained title to these lots through
fraudulent means since the area covered by TCT (232252) 1321 is twice the size of
CANUTO’s share in Lot 2. REMEDIOS prayed for the cancellation of CONSOLACION’s
title, the issuance of another title in her name, and the payment to her of damages.

Petitioners sought to dismiss the complaint on the ground of prescription. Petitioners

claimed that the basis of the action is fraud, and REMEDIOS should have filed the
action within four years from the registration of CONSOLACION’s title and not some
19 years later. REMEDIOS opposed the motion, claiming that she became aware of
CONSOLACION’s adverse title only in February 1987. CONSOLACION maintained that
she had timely filed her complaint within the four-year period.

ISSUES

1) Whether prescription bars the action filed by REMEDIOS, and (2) hether
REMEDIOS is a real party-in-interest.

HELD

What REMEDIOS filed was an action to enforce an implied trust but the same is
already barred by prescription. Prescriptive Period is 10 Years Counted from
Registration of Adverse Title.

The four-year prescriptive period relied upon by the trial court applies only if the
fraud does not give rise to an implied trust, and the action is to annul avoidable
contract under Article 139012 of the Civil Code. In such a case, the four-year
prescriptive period under Article 1391 begins to run from the time of discovery of the
mistake, violence, intimidation, undue influence or fraud.In the present case,
REMEDIOS does not seek to annul the KASULATAN. REMEDIOS does not assail the
KASULATAN as a voidable contract. In fact, REMEDIOS admits the validity of the sale
of 1,335 square meters of land under the KASULATAN. However, REMEDIOS alleges
that the excess area of 1,335 meters is not part of the sale under the KASULATAN.
REMEDIOS seeks the removal of this excess area from TCT No. (232252) 1321 that
was issued to CONSOLACION. Consequently, REMEDIOS’ action is for "Annulment or
Cancellation of Transfer Certificate [of Title] and Damages."

REMEDIOS’ action is based on an implied trust under Article 1456 since she claims
that the inclusion of the additional 1,335 square meters in TCT No. (232252) 1321
was without basis. In effect, REMEDIOS asserts that CONSOLACION acquired the
additional 1,335 square meters through mistake or fraud and thus CONSOLACION
should be considered a trustee of an implied trust for the benefit of the rightful owner
of the property. Clearly, the applicable prescriptive period is ten years under Article
1144 and not four years under Articles 1389 and 1391.

It is now well-settled that the prescriptive period to recover property obtained by

fraud or mistake, giving rise to an implied trust under Article 1456 of the Civil Code,
is ten years pursuant to Article 1144. This ten-year prescriptive period begins to run
from the date the adverse party repudiates the implied trust, which repudiation takes
place when the adverse party registers the land.
REMEDIOS filed her complaint on 4 February 1988 or more than 19 years after
CONSOLACION registered her title over Lot Nos. 2-A and 2-E on 28 October 1968.
Unquestionably, REMEDIOS filed the complaint late thus warranting its dismissal. As
the Court recently declared in Spouses Alfredo v. Spouses Borras,—

Following Caro, we have consistently held that an action for reconveyance

based on an implied trust prescribes in ten years. We went further by
specifying the reference point of the ten-year prescriptive period as the date
of the registration of the deed or the issuance of the title.

20. Jarantilla, Jr. v. Jarantilla, G.R. No. 154486

FACTS

In 1948, the Jarantilla heirs extrajudicially partitioned amongst themselves the real
properties of their deceased parents. With the exception of the real property
adjudicated to Pacita Jarantilla, the heirs also agreed to allot the produce of the said
real properties for the years 1947-1949 for the studies of Rafael and Antonieta
Jarantilla.

In the same year, the spouses Rosita Jarantilla and Vivencio Deocampo entered into
an agreement with the spouses Buenaventura Remotigue and Conchita Jarantilla to
provide mutual assistance to each other by way of financial support to any
commercial and agricultural activity on a joint business arrangement. This business
relationship proved to be successful as they were able to establish a manufacturing
and trading business, acquire real properties, and construct buildings, among other
things. This partnership ended in 1973.

On April 29, 1957, the spouses Buenaventura and Conchita Remotigue executed a
document wherein they acknowledged that while registered only in Buenaventura
Remotigue’s name, they were not the only owners of the capital of the businesses
Manila Athletic Supply (712 Raon Street, Manila), Remotigue Trading (Calle Real,
Iloilo City) and Remotigue Trading (Cotabato City).

The present case stems from the amended complaint filed by Antonieta Jarantilla
against Buenaventura Remotigue, Cynthia Remotigue, Federico Jarantilla, Jr.,
Doroteo Jarantilla and Tomas Jarantilla, for the accounting of the assets and income
of the co-ownership, for its partition and the delivery of her share corresponding to
eight percent (8%), and for damages. Antonieta claimed that in 1946, she had
entered into an agreement with Conchita and Buenaventura Remotigue, Rafael
Jarantilla, and Rosita and Vivencio Deocampo to engage in business. Antonieta
alleged that the initial contribution of property and money came from the heirs’
inheritance, and her subsequent annual investment of seven thousand five hundred
pesos (₱7,500.00) as additional capital came from the proceeds of her farm.
Antonieta also alleged that from 1946-1969, she had helped in the management of
the business they co-owned without receiving any salary. Her salary was supposedly
rolled back into the business as additional investments in her behalf. Antonieta
further claimed co-ownership of certain properties (the subject real properties) in the
name of the defendants since the only way the defendants could have purchased
these properties were through the partnership as they had no other source of income.

The respondents, including petitioner herein, in their Answer, denied having formed
a partnership with Antonieta in 1946.

During the course of the trial at the RTC, petitioner Federico Jarantilla, Jr., who was
one of the original defendants, entered into a compromise agreement with Antonieta
Jarantilla wherein he supported Antonieta’s claims and asserted that he too was
entitled to six percent (6%) of the supposed partnership in the same manner as
Antonieta was. He prayed for a favorable judgment in this wise:

Defendant Federico Jarantilla, Jr., hereby joins in plaintiff’s prayer for an accounting
from the other defendants, and the partition of the properties of the co-ownership
and the delivery to the plaintiff and to defendant Federico Jarantilla, Jr. of their
rightful share of the assets and properties in the co-ownership.

ISSUE

Whether or not petitioner is entitled to respondents’ properties based on the concept

of trust.

HELD

Petitioner is not entitled to the properties. No trust is established.

Express trusts are created by the intention of the trustor or of the parties, while
implied trusts come into being by operation of law, either through implication of an
intention to create a trust as a matter of law or through the imposition of the trust
irrespective of, and even contrary to, any such intention. In turn, implied trusts are
either resulting or constructive trusts. 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.

Respondent has presented only bare assertions that a trust was created. Noting the
need to prove the existence of a trust, this Court has held thus:

"As a rule, the burden of proving the existence of a trust is on the party
asserting its existence, and such proof must be clear and satisfactorily show
the existence of the trust and its elements. While implied trusts may be proved
by oral evidence, the evidence must be trustworthy and received by the courts
with extreme caution, and should not be made to rest on loose, equivocal or
indefinite declarations. Trustworthy evidence is required because oral evidence
can easily be fabricated."

The petitioner has failed to prove that there exists a trust over the subject real
properties. Aside from his bare allegations, he has failed to show that the respondents
used the partnership’s money to purchase the said properties. Even assuming
arguendo that some partnership income was used to acquire these properties, the
petitioner should have successfully shown that these funds came from his share in
the partnership profits. After all, by his own admission, and as stated in the
Acknowledgement of Participating Capital, he owned a mere 6% equity in the
partnership.

Petitioner’s only piece of documentary evidence is the Acknowledgement of

Participating Capital, which as discussed above, failed to prove that the real
properties he is claiming co-ownership of were acquired out of the proceeds of the
businesses covered by such document. Therefore, petitioner’s theory has no factual
or legal leg to stand on.