TRUST DIGEST COMPILATION:

A compilation of cases based on Atty. Mandocdoc’s syllabus

By:
Princess Andrea Alvaran
Christina Frances Dychioco
Daphne Marie Gomez
Hazel Ann Mharie Guerrero
Michelle Mendoza
Alyanna Alex Sulaik
Vera Patricia De Vera

November 2020
Atty. Dan Kevin Mandocdoc
Ateneo Law School
 Table of Contents GABUTAN V. NACALABAN ........................................................... 40

INTRODUCTION PARINGIT V. BAJIT ........................................................................ 42

MORALES V. COURT OF APPEALS ................................................ 1 DE OCAMPO V. ZAPORTEZA ....................................................... 44

PANLILIO V. CITIBANK................................................................... 3 MIGUEL J. OSSORIO PENSION FOUNDATION V. CA ................ 45

RAMOS V. RAMOS ............................................................................ 5 HEIRS OF TANAK V. MARTINEZ ................................................. 48

EXPRESS TRUSTS HEIRS OF CANDELARIA, ETC. V. ROMERO, ET AL. ................. 50

PACHECO V. ARRO .......................................................................... 7 CUAYCONG V. CUAYCONG .......................................................... 52
TAN SENGUAN AND CO. V. PHIL. TRUST CO. .............................. 9 ADAZA V. COURT OF APPEALS ................................................... 54
RIZAL SURETY & INSURANCE V. CA .......................................... 11 DIAZ V. GORRICHO AND AGUADO ............................................. 56
GOVERNMENT V. ABADILLA ....................................................... 13 SING JUCO AND SING BENGCO V. SUNYANTONG AND
DEVELOPMENT BANK OF THE PHILIPPINES V. COMMISSION LLORENTE ...................................................................................... 58
OF AUDIT ......................................................................................... 14 HERNANDEZ V. HERNANDEZ ...................................................... 60
MINDANAO DEVELOPMENT AUTHORITY V. COURT OF GAYONDATO V. TREASURER ...................................................... 62
APPEALS .......................................................................................... 16
ESCOBAR V. LOCSIN ..................................................................... 64
JULIO V. DALANDAN ..................................................................... 18
LOPEZ V. CA ................................................................................... 65
CAÑEZO V. ROJAS.......................................................................... 20
PASIÑO V. MONTERROYO............................................................ 68
PEÑALBER V. RAMOS . . 22
HOME GUARANTY CORP. V. LA SAVOJE DEV. CORP. ............. 70
GO V. ESTATE OF BUENAVENTURA.................................................24
RULES OF PRESCRIPTION ON TRUSTS
IMPLIED TRUSTS
TONG V. GO TIAT KUN ................................................................. 73
JUAN V. YAP .................................................................................... 26 ANNEX
ANNEX ............................................................................................. 76
HEIRS OF NARVASA V. IMBORNAL............................................. 28
SALAO V. SALAO ............................................................................ 30
PNB V. CA ........................................................................................ 32
TY V. TY ........................................................................................... 34
PNB V. AZNAR ................................................................................. 36
SIME DARBY PILIPINAS, INC. V. MENDOZA .............................. 38

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INTRODUCTION
Morales v. Court of Appeals
June 19, 1995/ 274 SCRA 282/ Introduction
FACTS:
Spouses Ranulfo and Erlinda Ortiz claims to be the
absolute and exclusive owners of the 318 sqm land located in
Calbayog City, through their purchase from Celso Avelino.
Celso Avelino purchased the property, when he was still
a bachelor and a city fiscal of Calbayog City, from Alejandra
Mendiola and Celita Bartolome through an "Escritura de
Venta." After the purchase, he caused the transfer of the title as
well as the tax declarations in his name. He faithfully paid the
taxes and kept the receipts thereof. He also caused a survey of
the premises in question with the Bureau of Lands and built a
residential house thereon. He took his parents, Rosendo Avelino
and Juana Ricaforte, and his sister Aurea to live in his property
until their death. Celso Avelino then became an Immigration
Officer and later a Judge of the Court of First Instance in Cebu
so he left his property under the care of his sister, Aurea. Without
his knowledge, his nephew, Rodolfo Morales, constructed a
beauty shop on the premises in question. Celso thereafter sold
the property to Ranulfo and Erlinda Ortiz, they paid the purchase
price and a deed of absolute sale was executed. Rodolfo
Morales, however, refused to vacate the premises unless he is
reimbursed P35,000. He also occupied the residential building
on the property, took in paying boarders and even claimed
ownership of the premises in question.
Rodolfo Morales contends that his grandparents
Rosendo Avelino and Juana Ricaforte originally owned the
premises in question. The property was allegedly bought by
Celso Avelino who was entrusted by Rosendo with the money
to buy it. They caused the name of the property to be under Celso
Avelino being the only son. When Rosendo Avelino and Juana
Ricaforte died, their children: Celso Avelino, Trinidad Cruz,
Concepcion Peralta, Priscilla Morales and Aurea Avelino
succeeded as owners thereof.
ISSUE:
Whether or not Celso Avelino acquired the property as a
mere trustee (NO)
RULING:
No, Celso Avelino acquired the property as a gift from
his parents and not as a trustee.
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, 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. Implied trusts are either resulting
or constructive trusts. Constructive trusts are created by the
construction of equity in order to satisfy the demands of justice
and prevent unjust enrichment. Resulting trusts are based on the
equitable doctrine that valuable consideration and not legal title
determines the equitable title or interest and are presumed
always to have been contemplated by the parties. They arise
from the nature of circumstances of the consideration involved
in a transaction whereby one person becomes invested with legal
title but is obligated in equity to hold his legal title for the benefit
of another.
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 A resulting trust in exemplified by Article 1448 of the
Civil Code: "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 having the beneficial interest of the property. The
former is the trustee, while the latter is the beneficiary. However,
if the person to whom 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 disputable presumed that there is gift in
favor of a child.”
The last sentence of Article 1448 gives one of the
recognized exceptions to the establishment of an implied
resulting trust. As a rule the burden of proving the existence of
trust is on the party asserting its existence, and such proof must
be clear and satisfactorily show the existence of trust. While
implied trusts may be proved by oral evidence, evidence must
be trustworthy and received by the courts with extreme caution.
On this basis alone, Rodolfo and Priscilla Morales' claim
must fail. Rodolfo and Priscilla relied merely on testimonial
evidences which are self-serving. Proof of Ranulfo and Erlinda
Ortiz's lawful acquisition of the property through Celso
Avelino s ownership on the other hand was supported b
documentary evidence such as the deed of absolute sale and tax
declarations. Even testimonies of Celso's other sisters prove that
they believe that he is the true owner of the property. The fact
that the other siblings did not intervene in this case to protect
their right and that upon the death of their parents no extra-
judicial partition occurred further strengthens Celso's
ownership. Moreover, assuming that their claim that Celso was
a mere trustee is true, it still falls under the exemption under the
last sentence of Article 1448 which states that if the person to
whom the title conveyed is a child, there is a presumption that it
is a gift in favor of the child.
DOCTRINE:
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. 1

1 Author: Dychioco, Christina Frances

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 Panlilio v. Citibank
Nov. 28, 2007/539 SCRA 69/ Introduction
FACTS:
On October 1997, Amalia Panlilio was initially planning
to invest in Citibank s Peso Repriceable Promissor Note
(PRPN), a product which yields high interest earnings, but
because it was not available that day, she decided to deposit
P1,000,000 in a Cithi account, a fi ed-term savings account
with a higher-than-average interest. She opened another
checking account where the interest earnings of the Cithi
account will be credited. Amalia also opened in-trust-for (ITF)
accounts, for her two minor children, Alejandro King Aguilar
and Fe Emanuelle C. Panlilio. To open these accounts, Amalia
signed two documents: a Relationship Opening Form (ROF) and
an Investor Profiling and Suitability Questionnaire
(Questionnaire).
A month later, Amalia placed P2,100,000 in a Long-
Term Commercial Paper (LTCP), a debt instrument that paid a
high interest, issued by the corporation Camella and Palmera
Homes (C&P Homes). The rest of the money was placed in two
PRPN accounts, in trust for each of Amalia s two children. To
facilitate the investment, Amalia signed three documents:
Directional Investment Management Agreement (DIMA), Term
Investment Application (TIA), and Directional Letter/Specific
Instructions.
Allegations differ between Amalia and Citibank as to
whether Amalia instructed Lee to place the money in the LTCP
of C&P Homes. Amalia insists that Citibank s Lee did not
follow her orders to invest the money in the ITP account and
instead, placed it in the LTCP of C&P Homes. On the other
hand, Citibank denied Amalia s allegations and contented that
Amalia decided to liquidate their investment only months after
opening the LTCP after the newspapers reported that Ayala
Land Inc. was cancelling plans in C&P Homes.
Amalia met with a Citibank representative to pre-
terminate the LTCP and their other investments. Citibank told
them that liquidation could be made only if there is a willing
buyer, which could be difficult at that time because of the
economic crisis. Amalia sent three demand letters which ordered
Citibank to withdraw her investments as soon as possible, but to
no avail. In Citibank s repl , the said that the investment had a
2003 maturity and was not a deposit. Thus, its return to the
investor was not guaranteed.
Amalia then filed a complaint for sum of money with the
RTC. RTC upheld all the allegations of the petitioners and
concluded that Amalia never instructed Citibank to invest the
money in an LTCP. This was appealed to the CA. The CA
reversed the decision of the RTC and dismissed the case. Hence,
the current petition.
ISSUES:
1. Whether or not Amalia Panlilio is bound by the Terms &
Conditions of the documents they signed with Citibank -
DIMA, TIA, Directional Letter/Specific Instructions,
and COIs (YES)
2. Whether or not Citibank is obliged to return the money
to the Amalia Panlilio upon their demand prior to
maturity (NO)
RULING:
(1) YES, the DIMA, TIA, Directional Letter, and COIs are
evidence of the contract between the parties and are binding on
them pursuant to Art. 1159 of the Civil Code.
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 Amalia affixed her signatures on the DIMA, TIA and the
Directional Letter/Specific Instructions, a clear evidence of her
consent which, under Art. 1330 of the Civil Code, she cannot
deny absent any evidence of mistake, violence, intimidation,
undue influence or fraud. The documents, therefore, generally
extricate Citibank from liability in case the investment is lost.
Accordingly, Panlilio assumed all risks and the task of collecting
from the borrower/issuer, C&P Homes. The DIMA, Directional
Letter/Specific Instructions, TIA and COIs, read together,
establish the agreement between the parties as an investment
management agreement, which created a principal-agent
relationship between petitioners as principals and respondent as
agent for investment purposes. The agreement is not a trust or an
ordinary bank deposit; hence, no trustor-trustee-beneficiary or
even borrower-lender relationship existed between petitioners
and respondent with respect to the DIMA account. Citibank
purchased the LTCPs only as agent of the Amalia; thus, the latter
assumed all obligations or inherent risks entailed by the
transaction under Art. 1910 of the Civil Code.
The investment transaction that transpired between
Citibank and Amalia is perfectly legal, as investment
management activities may be exercised by a banking institution
pursuant to the General Banking Act of 1948 (RA 337) and the
BSP Manual of Regulations for Banks (MORB).
(2) NO, Amalia Panlilio may not seek a return of their
investment directly from Citibank at or prior to maturity.
The investment is NOT a deposit, and therefore not
guaranteed by Citibank. Absent any fraud or bad faith, the
recourse of Amalia in the LTCP is solely against the issuer, C&P
2 Author: Dychioco, Christina Frances
Homes, and only upon maturity. If they do want the immediate
return of their investment before the maturity date, their only
way is to find a willing buyer to purchase the LTCP at an agreed
price, or to go directly against the issuer C&P Homes, not
against the Citibank.
DOCTRINE:
The Court gives credence to respondent s e planation
that the word TRUST appearing on the TIA simpl means that
the account is to be handled b the bank s trust department,
which handles not only the trust business but also the other
fiduciary business and investment management activities of the
bank, while the ITF or in trust for appearing on the other
documents only signifies that the money was invested by Amalia
in trust for her two children, a device that she uses even in her
ordinary deposit accounts with other banks. The ITF device
allows the children to obtain the money without need of paying
estate taxes in case Amalia meets a premature death. However,
it creates a trustee-beneficiary relationship only between Amalia
and her children, and not between Amalia, her children, and
Citibank. 2
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 Ramos v. Ramos
Dec. 3, 1974/61 SCRA 284/ Introduction
FACTS:
Spouses Martin Ramos and Candida Tanate died and
were survived by their three legitimate children: Jose, Agustin
and Granada. Martin was also survived by seven natural
children: Atanacia, Timoteo, Modesto, Manuel, Emiliano, Maria
and Federico. A special proceeding was instituted for the
settlement of the intestate estate of the Spouses. Martin s
brother, Rafael, was appointed administrator of the estate. A
project of partition was submitted, and it was signed by the three
legitimate children, and by two natural children in representation
of the other five who were minors.
In the project of partition, the conjugal hereditary estate
was appraised at almost P75,000. It consisted of many parcels of
land, some head of cattle, and advances to the legitimate
children. The following adjudications were made: Jose for
P25,000, Granada for P1,891, Agustin for P36,000, and P1,785
for each of the natural children.
Half of the appraised value of the estate represented the
estate of Martin. One-third thereof was the free portion of
P12,000. The shares of the seven natural children were to be
taken from that one-third free portion of the estate of their father.
P1,785 was the legal share of each natural child, and this may be
satisfied in cash. The second paragraph of Art. 8406 gives the
legitimate children the right to satisfy in cash the hereditary
portions of the natural children.
Judge Nepomuceno asked the administrator to submit a
report and evidence showing that the shares of the heirs had been
delivered to them. A manifestation was signed by the three
legitimate children and Atanacia, Timoteo, and Zayco, the
guardian of the 5 minor heirs. Eight lots of the Himalayan
Cadastre were registered in equal shares in the names of Jose s
widow, Gregoria, their daughter, and Granada.
Emiliano et al. filed a suit in the CFI seeking for
reconveyance in their favor. They contended that did not know
that intestate proceedings were instituted for the distribution of
the estate of their father. Neither did they know that their Uncle
Zayco was appointed their guardian. They never received the
P1,785 representing their share. Atanacia never signed any
project of partition or any receipt of share in the inheritance.
Also, their shares were held in trust by Gregoria et al. The
defense of Gregoria et al. asserts the release of claim, lack of
cause of action res judicata, and prescription on the case. The
lower court dismissed the complaint on the ground of res
judicata.
ISSUE:
Whether or not there a trust on the ground of res judicata
and prescription (NO)
RULING:
NO, there was no trust, on the ground of res judicata and
prescription. Trust is defined as a right, enforced solely in equity,
to the beneficial enjoyment of the property, the legal title to
which is vested in another. Trusts are either express or implied.
Express trusts are created by the intention of the trust, or of the
parties. It may not be proven with oral evidence. They are
created with the direct and positive acts of the parties, by some
writing or deed, or will, or by words evincing the intention to
create a trust. Implied trusts come into being by operation of law.
It may be proven with oral evidence. It can be deduced from the
nature of the transaction as matters of intent, or which are super
induced on the transaction by matters of law.
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 Resulting trust is a trust which is raised or created by act
or construction of law. In a restricted sense, it is a trust raised by
implication of law, and presumed always to have been
contemplated by the parties. Constructive trust is a trust not
created by any words, but by construction of equity in order to
satisfy the demands of justice. A trustee cannot acquire by
prescription the ownership of the property entrusted to him, and
this rule applies to express trusts, as well as in resulting trusts. It
cannot be applied to constructive trusts. However, when the trust
is resulting or constructive, its enforcement may be barred by
laches.
The legitimate children did not prove any express trust .
The fact that there was an intestate proceeding negates the
existence of express trust. The public documents prove that the
estate of Ramos was settled, and that the adjudications were
made. An express trust must be proved with clear and
convincing evidence. The natural children also did not say that
it was an implied trust. During the proceedings, the lots were
claimed by the legitimate children to the exclusion of the natural
children. Because of this, the natural children are said to have
repudiated any trust constituted over the property. The natural
children only have themselves to blame if the courts can no
longer afford them the relief against their inequities. They let all
of this happen under their watch. The decision of the intestate
proceeding is binding on the whole world.
DOCTRINE:
Implied trusts are those which, without being expressed,
are deducible from the nature of the transactions as matters of
intent, or which are superinduced on the transaction by operation
of law as matters of equity, independently of the particular
3Author: Dychioco, Christina Frances
intention of the parties The are ordinarily subdivided into
resulting and constructive trusts.
The rule of imprescriptibility of an action to recover
property held in trust may possibly apply to a resulting trust as
long as the trustee has not repudiated the trust. A resulting trust
is broadly defined as a trust which is raised or created by the act
or construction of law, but in its more restricted sense it is a trust
raised by implication of law and presumed always to have been
contemplated by parties, the intention as to which is to be found
in the nature of their transaction, but not expressed in the deed
or instrument of conveyance.
Examples of resulting trusts are found in articles 1448 to
1445 of the Civil Code. On the other hand, a constructive trust
is a trust raised by construction of law, or arising by operation
of law. In a more restricted sense and as contradistinguished
from a resulting trust, a constructive trust is a trust not created
by any words, either expressly or implied evincing a direct
intention to create a trust, but by the construction of equity in
order to satisfy the demands of justice. It does not arise by
agreement or intention but by operation of law. If a person
obtains legal title to property by fraud or concealment, courts of
equity will impress upon the title a so- called constructive trust
in favor of the defrauded party. A constructive trust is not a trust
in the technical sense. 3
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 EXPRESS TRUSTS ISSUE:
Whether or not the trustee or predecessors-in-interest can
be compelled via specific performance to convey or assign the
lands of the cestui que trust (YES)
Pacheco v. Arro
Feb. 16, 1950/ 85 PHIL. 505/ Express Trusts
RULING:
YES, the trustee or predecessor-in-interest can be
FACTS:
compelled via specific performance to convey or assign the
On January 1941, a petition for a writ of certiorari was
lands of the cestui que trust.
led by Dolores Pacheco, as guardian of the minors Concepcion,
The juridical concept of a trust, which in a broad sense
Alicia and Herminia surnamed Yulo, daughters of the late Jose
involves, arises from, or is the result of, a fiduciary relation
Yulo y Regalado, for the review of a judgement rendered by the
between the trustee and the cestui que trust as regards certain
CA ordering the execution of deeds of assignment in favor of the
property, real, personal, funds or money, or choses in action,
plaintiffs for each and every lot claimed by them. Yulo alleged
must not be confused with an action for specific performance.
that the claims do not constitute grounds for action and claimants
When the claim to the lots in the cadastral case was withdrawn
be evicted from their lots. Yulo died and was substituted by his
by the respondents relying upon the assurance and promise made
children in the case.
in open court by Dr. Mariano Yulo in behalf of Jose Yulo y
The plaintiffs were the claimants of the lots mentioned
Regalado, the predecessor-in-interest of the petitioners, a trust
in the lawsuit all located in the Streets Zamora and Quennon of
or a fiduciary relation between was created.
the municipality of Isabela. If the names of these streets were
The trustee cannot invoke the statute of limitations to bar
changed from Zamora and Quennon to T. Yulo and G. Regalado,
the action and defeat the right of the cestuis que trustent. If
respectively, which are the names of the parents of the
Pacheco s claim be sustained, that onl owner can be compelled
defendant, the said defendant would be willing to transfer said
in an action for specific performance, then actions to compel a
lots to their respective claimants, an agreement that was made in
party to assign or convey the undivided share in a parcel of land
open court. After many efforts were made, as there was a need
registered in his name to his co-owner or co-heir could no longer
for a law to be authorize municipalities to change the names of
be brought and could no longer succeed and prosper.
the streets that are within their respective jurisdictional terms, a
resolution ordering the change was issued by the Municipal
Council of Isabela of the names of the streets already mentioned
DOCTRINE:
and once said resolution was approved by the Honorable
The juridical concept of a trust, which in a broad sense
Provincial Board of Negros Occidental, the change was made by
involves, arises from, or is the result of, a fiduciary relation
executive order of the Municipal President in February 1934.
between the trustee and the cestui que trust as regards certain
Yulo did not want to sign the deeds until he died.

7|Page
property real, personal, funds or money, or choses in action
must not be confused with an action for specific performance.
When the claim to the lots in the cadastral case was withdrawn
by the respondents relying upon the assurance and promise made
in open court by Dr. Mariano Yulo, in behalf of Jose Yulo y
Regalado, the predecessor-in-interest of the petitioners, a trust
or a fiduciary relation between them arose, or resulted therefrom,
or was created thereby. The trustee cannot invoke the statute of
limitations to bar the action and defeat the right of the cestuis
que trust.4

4 Author: Dychioco, Christina Frances

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 Tan Senguan and Co. v. Phil. Trust Co.
Nov. 6, 1933/ 58 PHIL 700/ Express Trusts
FACTS:
Tan Sen Guan & Co, a mercantile partnership registered
in accordance with the laws of the Philippines Islands, and the
Philippine Trust Company, a corporation properly organized and
with its principal place of business in the City of Manila, entered
into an agreement. The agreement reads as follows:
Whereas Tan Sen Guan & Co secured a judgment for the sum
of P21,426 against Mindoro Sugar Co, of which Philippine
Trust Company is the Trustee;
Whereas the Tan Sen Guan & Co hereby assigns, conveys,
transfers and sells to said Philippine Trust Company, Trustee,
the full amount of said judgment against Mindoro Sugar Co,
together with all its rights thereto, said Philippine Trust
Company, Trustee, hereafter to have the full use and benefit of
said judgment to the same extent and in the same manner as if
originally entered in favor of said company; and in
consideration for the covenants and stipulations following:
1. Upon signing of this Agreement, Philippine Trust
Company, Trustee, shall pay to Tan Sen Guan & Co
the sum of P5,000.
2. Philippine Trust Company, Trustee, agrees that
should Mindoro Sugar Co be sold, assigned or its
ownership transferred in any manner whatsoever to
any person or entity including Philippine Trust
Company, itself, it shall pay to Tan Sen Guan & Co,
an additional sum of P10,000, said amount to be paid
immediately upon the perfection of said sale or
transfer and irrespective of the amount which might
be paid for it
3. In case any creditor of Mindoro Sugar obtains in the
payment of his credit, a greater proportion than the
price hereby paid to Tan Sen Guan & Co which is
P15,000 for a debt of P21,426 or 70% thereof,
Philippine Trust Company, Trustee, shall pay to Tan
Sen Guan & Co, whatever sum may be necessary in
order that the amount received by said Tan Sen Guan
& Co be equal, in proportion to its claim, to the
received by said other creditor, in proportion to his
claim.
4. In case that Mindoro Sugar is sold to any person or
entity which pays nothing to the creditors or pay to
them in satisfaction of their credits an amount equal
or less than 70% of their respective claims; or should
said creditors from whatever source obtain in payment
of their credits an amount of equal or less than 70% of
their respective claims, then Philippine Trust
Company, Trustee, will only pay to Tan Sen Guan &
Co the above-mentioned additional sum of P10,000
upon the sale or transfer of the Mindoro Sugar Co, as
above stated.
Tan Sen Guan & Co brought the suit in the CFI of Manila
for the sum of P10,000 based on such agreement. After the trial,
the Court absolved Philippine Trust Company on two grounds:
(1) it was bound only as trustee and not as an individual as based
on the contract, and (2) it had not been proven that all the
properties of Mindoro Sugar had been sold. The second ground
was premised at the stipulation that “… Modesto Manahan,
justice of the peace of the municipality of San Jose, Province of
Mindoro, sold at public auction to the Roman Catholic
Archbishop of Manila, a corporation sole, all the properties
belonging to the Mindoro Sugar Company which appear
described in the certificate of sale executed.” Philippine Trust
Company claims that the omission of a comma between the
words Mindoro Sugar Company” and which appear
described” shows that onl a portion of Mindoro Sugar s
properties were sold.
ISSUE:
W/N Philippine Trust Company should be held liable to
Tan Sen Guan & Co as a trustee in its personal capacity (YES)
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RULING: Not only is there no express stipulation that the trustee
YES, the Philippine Trust Company should be held should not be held responsible but in the "Wherefore" clause of
liable to Tan Sen Guan & Co as a trustee in its personal capacity. the contract, the judgment was expressly assigned in favor of the
While the legal title of the properties of the Mindoro Sugar Philippine Trust Company, not the Philippine Trust Company or
Company were in the Philippine Trust Company as trustee, Tan the trust estate. It therefore follows that appellant had a right to
Sen Guan & Co. secured a judgment against the Mindoro Sugar proceed directly against the Philippine Trust Company on its
Company and sold, transferred, and assigned that judgment to contract and has no claim against either the Mindoro Sugar
its trustee by their contract. Whether all the properties of the Company or the trust estate.
Mindoro Sugar Company were sold by the justice of the peace
as recited in paragraph 9 of the stipulation of facts, is not DOCTRINE:
controlled by the insertion or omission of a comma in the The Philippine Trust Company was not authorized to
stipulation of facts. An examination of any of the standard manage the affairs of the Mindoro Sugar Company or to enter
dictionaries will show that the relative pronoun "which" is into contracts in its behalf. But even if the contract had been
descriptive and not restricted. If a restrictive relative pronoun authorized by the trust indenture, the Philippine Trust Company
were desired, the word "that" should have been used. in its individual capacity would still be responsible for the
While in the contract in question the Philippine Trust contract as there was no express stipulation that the trust estate
Company was usually referred to as trustee, it must be noted that and not the trustee should be held liable on the contract in
nowhere in the deed of trust from the Mindoro Sugar Company question. 5
to the Philippine Trust Company, was any authority given to
enter into a contract such as is here presented. The Philippine
Trust Company held the legal title to the properties of the
Mindoro Sugar Company to protect the bond holders. So far as
the Philippine Trust Company was concerned, it was not
authorized to manage the affairs of the Mindoro Sugar Company
or to enter into contracts in its behalf. But even if the contract
had been authorized by the trust indenture, the Philippine Trust
Company in its individual capacity would still be responsible for
the contract as there was no express stipulation that the true
estate and not the true trustee should be held liable on the
contract in question.

5 Author: Dychioco, Christina Frances

10 | P a g e
 Rizal Surety & Insurance v. CA
28 Aug. 1996 / 261 SCRA 69 / Express Trust
FACTS:
The Reparations Commission (REPACOM) sold a
vessel to Transocean Transport Corporation (Transocean) which
was insured by Rizal Surety & Insurance Company (Rizal
Surety) under 2 Marine Hull Policies. Both policies named
REPACOM and Transocean as the insured. Rizal Surety then
reinsured the vessel with a forrign insurance firm. In 1975, the
vessel went missing in the Mediterranean Sea. REPACOM and
Transocean filed claims for the insurance proceeds against Rizal
Surety. A compromise agreement was then entered into between
REPACOM and Transocean for the insurance proceeds.
Transocean requested the Central Bank (CB) to allow it to retain
the dollar insurance proceeds for 3 months while Transocean
decides how to use the money. CB granted this request subject
to conditions. One condition was that the proceeds must be
deposited with a local commercial bank in a special dollar
account until July 1975.
The insured both requested Rizal Surety to pay the
proceeds in their joint names. CB then authorized Rizal Surety
to receive the proceeds for the English re-insurance company in
dollars, to be deposited with any local bank in a non-interest
bearing account in the names of REPACOM and Transocean. 2
weeks later, the CB authorized Rizal Surety to receive and
deposit the dollar proceeds in a non-interest bearing account in
its name (Rizal Surety) and for the joint account of REPACOM
and Transocean. The following month, Rizal Surety informed
the insured that the entire amount has been deposited with
Prudential Bank and Trust Company in a non-interest bearing
account.
REPACOM and Transocean entered into a partial
compromise agreement wherein they agreed to first receive their
initial share, as agreed upon, and the balance would be settled in
the future. While this agreement was pending, the balance would
continue to be in the same bank account in trust for both of them.
In March 1976, the CB sent a letter authorizing both Transocean
and REPACOM to transfer the balance into an interest-bearing
account. The letter was addressed only to REPACOM but
Transocean and Rizal Surety were duly furnished with a copy.
REPACOM and Transocean requested Rizal Surety to remit the
balance to their joint account with PNB but Rizal Surety replied
that it would only do so once both insured unconditionally and
absolutely releases it from all liabilities, through the delivery of
the Loss and Subrogation Receipt. A proposed version with
amendments of the Loss and Subrogation Receipt was presented
to the OSG and the Acting Solicitor General demanded Rizal
Surety to pay the interest on the dollar balance but the latter
argued that there was (1) no trust relationship in the transaction,
(2) it had no obligation to transfer the dollar deposit into a
interest-bearing account because the CB authorization was given
to REPACOM instead, (3) REPACOM did not ask it to transfer
the dollar amount into an interest-bearing account and (4) no
Loss and Subrogation Receipt was executed.
After the Loss and Subrogation Receipt was executed,
and the final compromise agreement was entered into between
the insured, Transocean filed a complaint for collection of
unearned interest on the dollar balance. RTC held that there was
a trusted relationship wherein Rizal Surety was the trustee, and
REPACOM and Transocean were the beneficiaries. It also held
that Rizal Surety had the should have deposited the balance on
the dollar amount in an interest-bearing account, and that this
duty to deposit ended when Transocean signed the Loss and
Subrogation Receipt later on. CA affirmed this.
11 | P a g e

ISSUE:
Whether or not a trust relationship existed (YES)
RULING:
YES, a trust relationship existed.
A trust is the right to the enjoyment of property, where
the legal title to which belongs to another, and is enforceable
only in equity. An express trust is established by direct and
positive acts of the parties, by (1) writing or deed, (2) will, or by
words that either expressly or impliedly show an intention to
create the trust. In this case, it was clear that Rizal Surety held
the money representing the balance on the dollar insurance
proceeds because both the insured requested it to do so since
they have yet to finalize their respective claims, and because
they had not yet signed the Loss and Subrogation Receipt in
favor of Rizal Surety. It was also clear that a trust was
established since Ri al Suret s letter to the CB e pressl states
that the deposit with Prudential Bank was made in its name but
for the joint account of Transocean and REPACOM. Rizal
Surety never claimed the money to be theirs, which is why it
made various tenders of payment to REPACOM and
Transocean, although the two refused to accept.
The Supreme Court cited Mindanao Development
Authority v. CA, which enumerated the requisites that must be
present to establish a trust. There must be (1) a competent trustor
and trustee, (2) an ascertainable trust res, (3) sufficiently certain
beneficiaries, (4) a present and complete disposition of the trust
property, (5) an active purpose of the trust, which is to prevent
it from being executed into a legal estate or interest, (6) power
of administration other than a mere duty to perform the contract,
6 Author: Gomez, Daphne
even if the contract is for the benefit of a third party, and (7) a
declaration of terms of the trust, which is stated with reasonable
certainty. In this case, all these requisites were met. Rizal Surety
cannot argue that it was not a party to the Partial Compromise
Agreement since it became aware that REPACOM and
Transocean considered it to be their trustee with regard to the
dollar amount, upon being furnished a copy of the agreement. It
did not object to or repudiate it, and even proceeded with its role
as a trustee by implementing the compromise agreement
DOCTRINE:
1. Express trusts are created by direct and positive acts of
the parties, or by their words which show an intention
to create a trust
2. Requisites of an express trust:
a. Competent trustor and trustee
b. An ascertainable trust res
c. Sufficiently certain beneficiaries
d. Present and complete disposition of the trust
property
e. Active purpose of the trust, which is to prevent
it from being executed into a legal estate or
interest
f. Power of administration other than a mere duty
to perform the contract, even if the contract is
for the benefit of a third party
g. Declaration of terms of the trust, which is stated
with reasonable certainty. 6
12 | P a g e
 Government v. Abadilla school to be established in Tayabas, with the ayuntamiento or
10 Dec 1924 / 46 SCRA 642 / Express Trust the civil governor as the trustee. For a trust to become effective,
there must be a cestui que trust. The Court held that there was a
FACTS: cestui que trust in this case. In private trusts, it is not necessary
Luis Palad owned lands and he obtained title thereto by that the cestui que trust is named or be in esse at the time the
composicion gratuita in 1894. He executed a holographic will trust was established in its favor. Therefore, despite the
and 4 years later, he died without descendants but left a widow, secondary school not yet existing, there is still a valid trust
Dorotea Lopez. A part of the will states that the coconut land created for its benefit.
will be used by Dorotea until her death or she remarries. When
either of these happen, the will states that the property will be DOCTRINE:
delivered to the Ayutamiento of the town or if none, the civil For private trusts, it is not necessary that the cestui que
governor of the province, so that a secondary college can be built trust is named, or that it even exists at the time the trust is created
in the capital of Tayabas. His collateral heirs, Leopoldo and in its favor.7
Policarpio opposed and thus, the CFI ordered the protocolization
of the will. 3 ears after the order, Dorotea remarries and Luis
collateral heirs brought an action for partition on the ground that
Dorotea s subsequent marriage caused her loss of the right to use
and possess the property. During the pendency of the case, the
land was turned over to the municipality as its share of the
inheritance. The action was then dismissed, without prejudice to
the right of the collateral heirs to bring another action

ISSUE:
Whether or not a trust was established (YES)

RULING:
YES, a trust was established. The Supreme Court held
that testamentary disposition must be liberally construed so as to
give effect to the intention of testators. Hence, the clause
regarding the inheritance of the municipality shows that Luis
Palad proposed to create a trust for the benefit of a secondary

7
Author: Gomez, Daphne

13 | P a g e
 Development Bank of the Philippines v.
Commission of Audit
Date 2004/ 422 SCRA 459 / Express Trust
FACTS:
Through the adoption of a Resolution, the DBP Board of
Governors created the DBP Gratuity Plan and authorized the
establishment of a retirement fund to provide the benefits due to
DBP retiring employees and officials, pursuant to CA No. 186.
In February 1980, DBP and the Board of Trustees of the Gratuity
Plan Fund entered into a Trust Indenture, which vested control
and administration of the fund in the Board of Trustees. The
trustee then appointed DBP Trust Services Department (DBP-
TSD) as the investment manager, embodied in the Investment
Management Agreement. The goal was to make the income and
principal of the Fund sufficient to satisf DBP s liabilities under
the Plan.
DBP created a Special Loan Program, which was part of
its benefit program to provide financial assistance to qualified
members and to protect and enhance the value of their gratuity
benefits. Under this program, an employee can use a portion of
his outstanding equit through obtaining a loan. He can also
invest it, and the earnings from this would be applied to the
interest owing on the gratuity loan. The excess or balance of the
interest earnings will then be distributed to the investor-
members. DBP-TSD paid more than 11.6 million PHP to the
investor-members as the net earnings of the investments from
1991-1991. However, through an Audit Observation
Memorandum, the Auditor did not allow this, arguing that the
distribution of the income of the Plan is irregular and is
considered use of public funds for private purposes. The Auditor
required those who received from DBP-TSD to return the
money, and recommended DBP to record income from the
Gratuit Plan Fund as miscellaneous income since the Fund is
still owned by the Bank given that (1) the Board of Trustees is
only an administrator, and (2) the employees are not yet the
owner, they merely have an inchoate interest therein.
The DBP Chairman asked COA to reconsider the
Memorandum, arguing that an express trust was created for the
benefit of qualified DBP employees through the Trust
Agreement executed in February 1980, which gave the Fund a
separate legal personality. He alleged that the Agreement
transferred legal title over the Fund to the Board of Trustees, that
all the earnings from the Fund accrue only to the Fund, and that
the income of the Fund is not that of the DBP. COA ruled that
the Fund ceased to have a separate personality since the
establishment of the Special Loan Program. It also ruled that
retirement benefits can only be availed of when one actually
retires. Therefore, before retirement, a qualified employee
merely has an inchoate right over the benefits and partial
enjoyment of such before retirement is not allowed.
ISSUE:
Whether or not an express trust was established (YES)
RULING:
YES, an express trust was established.
The Resolution of the DBP Board of Governors creating
the Plan and the Agreement executed by the DBP Chairman and
the trustees of the Fund established the express trust. This
e press trust is an emplo ees trust, which is one that is
maintained by an employer in order to provide for retirement,
pension or other benefits. An emplo ees trust is a separate
taxable entity, created for the exclusive benefit of qualified
employees. The Resolution shows that there was an intention to
establish a trust fund to cover the retirement benefits of qualified
14 | P a g e
employees. It also shows that the principal and income of the
Fund was intended to be separate and distinct from DBP funds.
The cestui que trust are the qualified DBP officials and
employees. Even if the rights of the officials and employees to
claim their gratuities is still inchoate, the trust created by DBP
remains valid. It is not always necessary to have the cestui que
trust named or for it to be in esse at the time the trust was
established in its favor. It is enough that the beneficiaries are
sufficiently certain or identifiable.

DOCTRINE:
It is not always necessary to have the cestui que trust
named or for it to be in esse at the time the trust was established
in its favor. It is enough that the beneficiaries are sufficiently
certain or identifiable.8

8
Author: Gomez, Daphne

15 | P a g e
 Mindanao Development Authority v. Court of
Appeals
5 April 1982/ 113 SCRA 429/ Express Trust
FACTS:
Francisco Ang Bansing owned a big parcel of land in
Davao City and he sold a portion thereof to Juan Cruz Yap Chuy
(Juan Cruz), later designated as Lot 1846-C. The contract
between them stated that Bansing agreed to work for the tilling
of his land using his own money and the expenses of the part
sold shall be shouldered by Juan Cruz. Bansing thereafter further
subdivided the lot into 5 lots. Juan Cruz then sold Lot 1846-C to
the Commonwealth of the Philippines and executed a surety
bond in favor of the Commonwealth whereby CB Cam and
Miguel Lansona guaranteed Juan Cru s absolute title over the
land. Bansing sold another lot, Lot 1846-A to Juan Cruz. He also
sold two subdivisions of Lot 1846-B to Vedasto Corcuera, while
four subdivisions of Lot 1846-B were conveyed to Juan Cruz.
After these, what remained in Bansing s possession were Lot
1846-C (subject property) and Lot 1846-E, since he later sold
Lot 1846-D to Corcuera.
In February 1965, the President issued Proclamation No.
459, which transferred ownership of different parcels of land in
Davao City to Mindanao Development Authority, including the
subject property. Atty. Bisnar, the counsel for Mindanao
Development Authority wrote a letter to Bansing requesting him
to surrender the Owner s duplicate certificate of title but he
refused. Mindanao Development then filed a complaint for
reconveyance of title. CFI held that an express trust was created
and ordered the reconveyance of title to Mindanao
Development.
ISSUE:
Whether or not an express trust was established (NO)
RULING:
NO, an express trust was not established.
The Court held that no expressed trust was created
between Bansing and Juan Cruz. An express trust is created by
the intention of the parties and for the courts to recognize an
express trust, certain requirements must be met. There must be
(1) a competent trustor and trustee, (2) an ascertainable trust res,
(3) sufficiently certain beneficiaries, (4) a present and complete
disposition of the trust property, (5) an active purpose of the
trust, which is to prevent it from being executed into a legal
estate or interest, (6) power of administration other than a mere
duty to perform the contract, even if the contract is for the benefit
of a third party, and (7) a declaration of terms of the trust, which
is stated with reasonable certainty. If one is missing, it is fatal to
the finding that an express trust was created. In this case,
Mindanao Development relied on the stipulation in the deed of
sale between Bansing and Juan Cruz which stated that Bansing
will pay for the registration of his land and Juan Cruz would pay
for the registration of the land sold to him. There was nothing in
that stipulation that categorically points to an obligation on the
part of Bansing to hold the property in trust for Juan Cruz. To
establish an express trust, it is essential that the settlor
unequivocally and presently dispose of the property and make
himself a trustee of the same for the benefit of another. There
must be a clear and unequivocal statement that the owner is
merely holding the property in trust for the purposes named. It
is also not clear from the stipulation whether Bansing agreed to
shoulder costs for the entire tract of land or just the portion left
to him after the sale. The Court held that failure of the settlor to
definitely describe the property involved in trust or the
16 | P a g e
beneficiaries or object thereof is strong evidence that the parties evidence, or loose, equivocal or indefinite declarations.
did not intend to create a trust. Since intention to create a trust was not expressed by the
parties clearly and definitely, no express trust was
The Court also held that a trust must be proven by clear established.
and convincing evidence and the parties cannot rely on vague 4. The fact that the supposed beneficiary never attempted
and uncertain evidence, or loose, equivocal or indefinite to enforce an alleged trust and never required the trustee
declarations. Since intention to create a trust was not expressed to transfer title in his name supports the finding that no
by the parties clearly and definitely, no express trust was trust was established.9
established.
Lastly, the Court held that no express trust was created
since Juan Cruz, the supposed beneficiary, never attempted to
enforce the alleged trust and never required the trustee to transfer
title over the property in his name. If the parties agreed that
Bansing will hold the property in trust for Juan Cruz until
Bansing obtains a certificate of title to the land, then Juan Cruz
would have asked for reconveyance of the title to him in light of
the surety bond executed by him in favor of the Commonwealth,
in which he warrants his title over the property.

DOCTRINE:
1. To establish an express trust, it is essential that the settlor
unequivocally and presently dispose of the property and
make himself a trustee of the same for the benefit of
another. There must be a clear and unequivocal statement
that the owner is merely holding the property in trust for
the purposes named.
2. Failure of the settlor to definitely describe the property
involved in trust or the beneficiaries or object thereof is
strong evidence that the parties did not intend to create a
trust.
3. A trust must be proven by clear and convincing evidence
and the parties cannot rely on vague and uncertain
9
Author: Gomez, Daphne

17 | P a g e
 Julio v. Dalandan
30 October 1967/ 21 SCRA 543 / Express Trust
FACTS:
Clemente Dalandan and Victoria Julio executed an
affidavit subscribed and sworn to by them in September 1950,
wherein Clemente acknowledged he undertook an obligation
secured by a piece of 4-hectare riceland in Rizal owned by
Victoriana Dalandan, Victoria s mother. He failed to satisf his
obligation and the land was foreclosed. The document stated that
Victoria Julio was the only heir of Victoriana, and that Clemente
would hold himself liable to Victoria for the foreclosure, by
replacing the subject land with another farm which is bigger and
has seedlings alread planted. It also stated that Clemente s
children, Emiliano and Maria, cannot be compelled to give up
the harvest of the farm and that the land cannot be demanded
immediately.
According to Victoria, the land Clemente referred to as a
replacement was barely 2 hectares big, which was the only land
Clemente owned at the time of the execution of the document,
excluding 50 saltbeds which were previously conveyed to
Victoriana through pacto de retro sale. Victoria stated she
requested Emiliano and Maria to deliver the land to her after
Clemente s death. Emiliano and Maria argued that according to
the document, the delivery of the land and fruits cannot be
demanded immediately, and that Victoria agreed to this and
allowed them to remain in possession of the land. Victoria
alleged that she demanded them to fix a period within which they
would deliver the land but they refused to do so. Victoria sought
relief from the courts but the lower court held that whether the
action was one for specific performance or one to fix a term, it
had already prescribed.
ISSUE:
Whether or not a trust was established (YES)
RULING:
YES, a trust was established. The Supreme Court held
that a trust was established, wherein Victoria was the beneficiary
in whose favor it was created. Emiliano and Maria argued that
trust cannot be proven by evidence aliunde and that Art. 1443 of
the Civil Code provides that an express trust over an immovable
or any interest therein cannot be proven solely by parol evidence.
However, the Court held that no oral evidence is necessary in
this case since the express trust imposed upon Emiliano and
Maria can be seen in the document itself, even if it did not use
definite words naming them as trustees. Despite the lack of such
words, the duty to turn over the fruits and the land to Victoria is
clear. The Court cited Art. 1444 of the Civil Code which states
that no particular words are required for the creation of an
e press trust, it being sufficient that a trust is clearl intended .
Technical or particular forms of words, or the use of the words
trust or trustee , are not essential to show an intention to
create a trust. What is essential is that there was a manifestation
of an intention to create the kind of relationship that the law
recognizes as trust. Whether or not the trustor knows that the
relationship he intends to create is known as trust , or whether
he knows the exact characteristics of a trust, is immaterial.
DOCTRINE:
Technical or particular forms of words, or the use of the
words trust or trustee , are not essential to show an intention
to create a trust. What is essential is that there was a
18 | P a g e
manifestation of an intention to create the kind of relationship
that the law recognizes as trust. 10

10
Author: Gomez, Daphne

19 | P a g e
 Cañezo v. Rojas
23 November 2007 / 538 SCRA 242 / Express Trusts
FACTS:
In 1997, Petitioner Soledad Cañezo filed a complaint for
recovery of property plus damages with the MTC against her
stepmother and respondent, Concepcion Rojas. The property
involved is an unregistered land with an area of 4,169 sqm.,
located in Higatangan, Naval, Biliran.
Cañezo alleged that she bought the subject parcel of land
in 1939 from Crisogono Limpiado, but the sale was not in
writing. Her and her husband left for Mindanao and entrusted
the subject land to her father, Crispulo Rojas in 1948. Her father
took possession and cultivated the said land.
In 1980, after her father s death, Ca e o found that her
stepmother, Concepcion, was in possession of the land and was
cultivating the same. It was also discovered by Cañezo that the
tax declaration over the property has already been named under
Crispulo Rojas (her father).
Concepcion, on the other hand, contends that it was her husband,
Crispulo, who bought the property from Limpiado, which was
the reason why the tax declaration was in his name. And that
Crispulo has been in possession and has cultivated the land until
his death.
Conception further contends that Ca e o s action has
been barred by laches since the action was instituted 17 years
(instituted in 1997) after knowledge that Concepcion was in
possession of the subject property.
The MTC ruled in favor Cañezo.
The RTC initiall reversed MTC s decision, but later
amended its ruling upon Ca e o s motion for reconsideration
and said that the action had not yet prescribed.
Cañezo appealed to the CA and presented parol evidence
showing the arrangement made with her father. She claimed that
there was an express trust and that actions for express trust do
not prescribe.
CA reversed RTC s amended decision and dismissed the
case due to laches and prescription and for lack of merit. The CA
further held that even assuming there was an implied trust
between Cañezo and her father over the property, the right of
action to recover would still be barred by prescription given that
49 years had already lapsed since her father adversely possessed
the subject property in 1948.
ISSUE:
Whether or not there was a trust (express or implied)
over the property between father and daughter (NO)
RULING:
NO, there was no trust (express or implied) over the
property over the property between Crispulo and Cañezo.
Express trusts 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
deducible from the nature of the transaction as matters of intent
or, independently, of the particular intention of the parties
without being expressed. In express trusts and resulting trusts, a
trustee cannot acquire by prescription a property entrusted to
him unless he repudiates the trust.
The burden of proving a trust is on the party asserting its
existence and such proof must be clear and satisfactorily show
the existence of trust and its elements. An express trust
concerning real property may not be established by parol
evidence as it must be proven by some writing or deed. Here, the
only evidence shown by Cañezo to support her claim that an
20 | P a g e
express trust existed between her and her father was merely her
own testimony.
Thus, an intention to create a trust cannot be inferred
from Ca e o s testimon and the attendant facts and
circumstance. Her testimony only established that the agreement
with her father was that she will be given a share in the produce
of the property. Such testimony is insufficient in proving that a
trust existed since profit-sharing does not necessarily translate to
a trust relation.
Even assuming that a trust existed, it would have
terminated upon death of the trustee. In this case, her father died
in 1978 and she instituted the action only in 1997. She was
therefore barred by laches.

DOCTRINE:
Although no particular words are required for the
creation of an express trust, a clear intention to create a trust
must be shown and proof of fiduciary relationship must be clear
and convincing. The creation of an express trust must be
manifested with reasonably certainty and cannot be inferred
from loose and vague declarations.11

NOTE: This case also appears under the Implied Trusts topic

11 Author: Guerrero, Hazel Ann Mharie

21 | P a g e
 Peñalber v. Ramos
30 January 2009 / 577 SCRA 509 / Express Trusts
FACTS:
Petitioner Peñalber operated a hardware store in a building
(Bonifacio property) owned by Mendoza (lessor). Respondent
Sps. Ramos managed Pe alber s hardware store. Mendoza had
the property up for sale. Since Peñalber did not have enough
cash, she entered into a verbal contract with Sps. Ramos. The
two parties verbally agreed on the ff:
1. The lot would be bought by the respondent spouses for
and on behalf of Peñalber
2. The 80,000-purchase price for the subject lot would be
paid by Sps. Ramos from the accumulated earnings of
the hardware store.
3. Sps. Ramos would be made to appear in the Deed of Sale
as vendees so that the title to be issued in their names
could be used by responded to secure a loan in order to
be able to build a bigger building and expand the
business.
Sps. Ramos entered into a contract of sale with Mendoza
wherein titles were issued in their favor. They also returned the
management of the hardware back to petitioner Peñalber.
Peñalber asserts that the Bonifacio property was fully paid
using the funds of the store and that Sps. Ramos had already
been reimbursed by the funds of the store, should they had given
any amount in buying the subject property. Peñalber insisted that
the spouses were merely trustees of the Bonifacio property; thus,
she demanded from Sps. Ramos a reconveyance of the title to
the subject property, but the spouses unjustifiably refused.
Respondent spouses contended that not only were they given
management of the hardware store, but also full ownership of it
by petitioner. This was with a condition that the stocks and
merchandise of the store will be inventoried, and out of the
proceeds of the sales, respondents shall pa petitioner s
outstanding obligations and liabilities. After paying the
obligations and liabilities, respondent spouses bought the
Bonifacio property from Mendoza with their own funds.
The RTC ruled in favor of petitioner Peñalber and denied
Sps. Ramos MR. The lower court reasoned that spouses failed
to interpose timely objections when Peñalber testified on their
alleged verbal agreement with regard to the to the purchase of
the Bonifacio property. As a result, the RTC held that Sps.
Ramos waived such objections and can no longer be raised in
their MR.
The CA reversed and ruled in favor of respondent spouses.
ISSUE/S:
W/N there is a trust agreement between the respondent
and petitioner. (NO)
RULING:
NO, there was no trust agreement between Peñalber
and Sps. 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,
22 | P a g e
it being sufficient that a trust is clearly intended. However, DOCTRINE:
Article 1443 of the Civil Code states that when an express trust In its technical legal sense, a trust is defined as the right,
concerns an immovable property or any interest therein, the enforceable solely in equity, to the beneficial enjoyment of
same may not be proved by parol or oral evidence. property, the legal title to which is vested in another; but the
In the present case, the subject property is an immovable word “trust” is frequently employed to indicate duties, relations,
property and therefore, trusts regarding the matter cannot be responsibilities which are not strictly technical trusts.12
proven by parol evidence from which the trial court based their
ruling. However, the trial court was also correct when it
dismissed the motion for reconsideration based on the objection
on parol evidence. Because respondents objections were
brought up late, the same amounted to a waiver.
Nevertheless, even if the parol evidence was admitted,
the same was insufficient to prove a trust agreement between the
parties. Peñalber alleged that Sps. Ramos could not account for
the P116,946.15 difference in the beginning inventory and
second inventory of stocks of the hardware store and that the
spouses failed to provide evidence that such amount was used to
pa petitioner s other obligations. Peñalber further contends that
respondent spouses had the burden of proof where the alleged
amount was used if it was not used to buy the Bonifacio
property. Without such proof, Peñalber maintains that Sps.
Ramos indeed used the money to buy said property.
However, the Court disagrees and stressed that petitioner
Peñalber has the burden of proof and that she cannot rely on the
weakness of the defense of respondent Sps. Ramos. Petitioner
failed to prove the existence of trust. The difference between the
inventories is not conclusive proof that the same was applied to
the purchase price of the property.
The Bonifacio property remains with Sps. Ramos.

12 Author: Guerrero, Hazel Ann Mharie

23 | P a g e
 Go v. Estate of Felisa Tamio de Buenaventura
22 July 2015 / 263 SCRA 632 / Express & Implied Trust
FACTS:
The late Felisa bought a parcel of land with an area of
533 sq. m. from Carmen Zaragosa in 1959 and a TCT was issued
in her name. She then constructed a 3-storey building called
D Lourds Building where she resided until her death.
In 1960, the subject property was supposedly sold to one
of her daughters, Bella Guerrero, her husband Felimon
Buenaventura, Sr., and Felisa s common law husband Delfin, Sr.
for Php 15,000. The title was said to have been irretrievably
destroyed; thus, Bella caused its reconstitution where the
previous TCT was cancelled and was issued a new title. Then
in 1968, Resurrecion, the other daughter of Felisa, began to
occupy the second floor of the building until her death in 2007.
When Felisa died in 1994, she bequeathed the property
to Resurrecion and her granddaughters Rhea and Regina Bihis.
An adverse claim by the Bihis Family on the lot was also
annotated. Bella was appointed administratri of Felisa s Estate
and in the inventor of Felisa s properties, Bella included the
subject property as part of the said estate. As a result, the adverse
claim of the Bihis Family was cancelled.
In 1997, the heirs of Felimon, Sr. executed a purported
Extrajudicial Settlement of the Estate of Felimon Buenaventura,
Sr. and caused its annotation on the TCT of the property. Hence,
the TCT was cancelled and a new one was issued in the names
of the said Heirs, Bella, Delfin, Jr., and Lester.
The property was sold to herein petitioners on the same
day for Php 4,500,000. The sale was without knowledge of the
Bihis Family. A new TCT was again issued in the name of
Wilson and Peter Go and they then filed ejectment cases against
the propert s occupants.
The probate court revoked Bella s appointment as
administratrix and granted such to the Resurreccion. Hence, the
Bihis Famil , representing Felisa s estate, filed an action for
reconveyance and damages with the RTC.
The RTC found that there was an implied trust between
Bella and Felimon, Sr. by operation of law. The lower court
concluded that it was the intention of the late Felisa to merely
entrust to Bella and Felimon, Sr. the subject property for the sole
purpose of using the same as collateral to secure a loan with the
GSIS. Thus, it was clear that Felisa never intended to relinquish
her ownership over the subject property. However, the land
could no longer be reconveyed since the RTC declared that
petitioners were purchasers in good faith.
The CA modified the RTC s decision and ordered the
reconveyance of the sale. However, it affirmed the ruling of the
lower court that an implied trust was constituted between Felisa,
during her lifetime, and Bella, Delfin, Sr., and Felimon, Sr. when
the former sold the subject property to the latter. Felisa had not
intended to relinquish her ownership over the subject property
in their favor, as evidenced not only by the said letter but also by
her contemporaneous and subsequent acts of ownership.
ISSUE/S:
W/N there was an implied trust between Felisa and Bella,
Delfin, Sr. and Felimon, Sr.? (YES)
RULING:
YES, an implied trust was established.
Trust is the right to the beneficial enjoyment of property,
the legal title to which is vested in another. It is a fiduciary
relationship that obliges the trustee to deal with the property for
the benefit of the beneficiary. Trust relations between parties
may either be express or implied. An express trust is created by
24 | P a g e
the intention of the trustor or of the parties, while an implied may only be a trustee or that other parties may have acquired
trust comes into being by operation of law. interest subsequent to the issuance of the certificate of title," as
Express trusts are created by direct and positive acts of in this case. Registration does not vest title; it is merely the
the parties, by some writing or deed, or will, or by words either evidence of such title.
expressly or impliedly evincing an intention to create a trust. It
is possible to create a trust without using the word "trust" or DOCTRINE:
"trustee." Conversely, the mere fact that these words are used Trust is the right to the beneficial enjoyment of property,
does not necessarily indicate an intention to create a trust. the legal title to which is vested in another. It is a fiduciary
The lower courts found that there was an implied trust relationship that obliges the trustee to deal with the property for
established as evidenced by a letter written and signed by Felisa. the benefit of the beneficiary. Trust relations between parties
The SC, however, ruled that there was an express trust as may either be express or implied. An express trust is created by
Felisa s words unequivocall and absolutel declared her the intention of the trustor or of the parties, while an implied
intention of transferring the title over the subject property to trust comes into being by operation of law. Express trusts are
Bella, Delfin, Sr., and Felimon, Sr. in order to merely created by direct and positive acts of the parties, by some writing
accommodate them in securing a loan from the GSIS. She also or deed, or will, or by words either expressly or impliedly
stated that she was retaining her ownership over the property and evincing an intention to create a trust. 13
wished that her heirs share equally therein.
Hence, while in the beginning, an implied trust was
merely created between Felisa, as trustor, and Bella, Delfin, Sr.,
and Felimon, Sr., as both trustees and beneficiaries, the
execution of the letter settled, once and for all, the nature of the
trust established between them as an express one, their true
intention irrefutably extant thereon.
Bella contends that there was no express trust as her
signature was only placed to appease her mother. She mentioned
that she could afford to sign such as they were the owners of the
property anyway.
The Court holds that "[m]ere issuance of the certificate
of title 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

13 Author: Guerrero, Hazel Ann Mharie

25 | P a g e

IMPLIED TRUSTS
Juan v. Yap
30 March 2011 / 646 SCRA 753 / Listing of Implied Trusts
Not Exclusive: Founded on Equity (Art. 1447)
FACTS:
Spouses Maximo and Dulcisima Cañeda (Sps. Cañeda)
mortgaged to petitioner Richard Juan (petitioner) two parcels of
land in Talisay Cebu to secure a loan of Php 1.68 million,
payable in one year. Petitioner Juan is the employee and nephew
of respondent Gabriel yap, Sr. (Yap). The contract was prepared
and notarized by Atty. Antonio Solon.
Petitioner Juan, represented by Solon, sought the
extrajudicial foreclosure of the mortgage. Although petitioner
Juan and respondent Yap participated in the auction sale, the
properties were sold to petitioner for tendering the highest bid of
Php 2.2 million. No certificate of sale was issued to petitioner,
however, for his failure to pay the sale's commission.
Respondent and the Cañeda spouses executed a
memorandum of agreement (MOA) where they agreed that:
1. Sps. Cañeda acknowledge respondent Yap as their real
mortgage-creditor and that Juan is merel a trustee (aka
not the real mortgage creditor).
2. Yap allowed Sps. Cañeda to redeem the foreclosed
properties for Php 1.2 million.
3. Sps. Cañeda and respondent agreed to initiate judicial
action either to annul or reform the contract or compel
Juan to reconve the mortgagee s rights to Yap as
trustor.
Three days later, the Cañeda spouses and respondent Yap
sued petitioner in the RTC to:
1. Declare Juan as trustee of Yap vis a vis the Contract
2. Annul Juan s bid for the foreclosed properties
3. Declare the Contract superseded or novated by the MOA
4. Require Juan to pay damages, costs.
Sps. Cañeda consigned with the trial court the amount of Php
1.68 million as redemption payment.
The RTC ruled in favor of petitioner Juan as he was declared
the true and real mortgagee. Meanwhile, the CA reversed and
declared respondent Yap the Contract s actual mortgagee. The
appellate court found the following circumstances crucial in its
concurrence with Yap s theor notwithstanding the Contract:
1. Solon testified that he drew up the Contract naming
petitioner as mortgagee upon instructions of respondent.
2. Dulcisima Ca eda acknowledged respondent as the
creditor from whom she and her husband obtained the
loan the Contract secured.
3. Respondent shouldered the payment of the foreclosure
expenses.
Instead, however, of annulling the Contract, the CA held that
reformation was the proper remedy, with the MOA serving as
the correction done by the parties to reveal their true intent.
Hence the appeal by petitioner Juan to the Supreme Court.
ISSUE:
Whether or not an implied trust arose between Juan and
Yap, binding Juan to hold the beneficial title over the mortgaged
properties in trust for Yap (YES)
RULING:
YES, an implied trust was constituted between Juan and
Yap.
26 | P a g e
 An implied trust arising from mortgage contracts is not
among the trust relationships the Civil Code enumerates. The
CC states, however, that such listing does not e clude others
established b the general law on trust. Equit converts the
holder of property right as trustee for the benefit of another if the
circumstances of its acquisition makes the holder ineligible in
good conscience to hold and enjoy it. As implied trusts are
remedies against unjust enrichment, what is important with
regard to constructive trusts is whether there is a wrongful
holding of property; thus, a threatened unjust enrichment of
defendant.
The SC here stated that Sps. Cañeda acknowledged Yap
as the lender from whom they borrowed the funds secured by the
Contract. They did so in the MOA and Dulcisima Cañeda
reiterated the concession on the stand. When Sps. Cañeda sought
for a time extension to settle their loan, they directed the request
to Yap and not Juan where the former granted such extension.
Hence, Juan was considered a stranger to the loan agreement, the
principal obligation which the Contract merely secured.
Also, in Att . Solon s testimony, who notarized the
Contract, said that he placed Juan s named in the Contract as a
mortgagor as instructed by Yap. Respondent Yap explained that
such arrangement was convenient because when the Contract
was executed, he was mostly abroad and could not personally
attend to his businesses in the country. Yap also mentioned that
while he was away, he trusted Juan, who was his nephew by
affinit and paid emplo ee, to take care of ever thing.
Finally, it was also Yap, and not Juan, who shouldered
the payment of the foreclosure expenses. The fact that Juan
failed to explain this peculiarity and that no certificate of sale
was issued to him (despite being the highest bidder) for his non-
14 Author: Guerrero, Hazel Ann Mharie
payment of the commission, undercuts his posturing as the real
mortgagor.
Thus, Juan holds title over the mortgaged property
merely because Yap allowed him to do so. The demands of
equity and justice mandate the creation of an implied trust
between them two, which bars Juan from asserting proprietary
claims against his duties to hold the mortgaged properties in trust
for Yap. For SC to rule otherwise is to tolerate unjust
enrichment, which is the very evil that the fiction of implied trust
is supposed to remedy.
DOCTRINE:
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
e clude others established b the general law on trust. 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 make the holder ineligible in
good conscience to hold and enjoy it. As implied trusts are
remedies against unjust enrichment, the only problem of great
importance in the field of constructive trusts is whether in the
numerous and varying factual situations presented, there is a
wrongful holding of property and hence, a threatened unjust
enrichment of the defendant.14
27 | P a g e
 Heirs of Narvasa v. Imbornal
6 August 2014/ 732 SCRA 171 / Oral Evidence & Implied
Trust
FACTS:
Petitioners are the heirs and successors-in-interest of
Francisco, Pedro, and Petra (Francisco et al.) while
Respondents are descendants of Pablo (Emiliana, Victoriano,
Felipe, Maria, Eduardo, Mateo, and Raymundo all surnamed
Imbornal).
Basilia owned a parcel of land (Sabangan property)
located in Sabangan, Brgy. Nibaliw West, San Fabian,
Pangasinan with an area of 4,144 sqm.
In 1920, Basilia conveyed the Sabangan property to her
three daughters namely Balbina, Aljenadra, and Catalina
Imbornal (Imbornal sisters). Catalina s husband, Ciriaco Abrio,
applied for and was granted a homestead patent over a 31,367
sqm riparian land (Motherland) adjacent to the Cagayan River,
Pangasinan.
Ciriaco and his heirs occupied the northern portion of the
Motherland while the heirs of Pablo (Respondents) occupied the
southern portion of the same land. Two accretions occurred
throughout the years:
1. 1940 (1st accretion) adjoined the southern portion of
the Motherland where an OCT was issued to one of
Pablo Imbornal s heirs (Victoriano); and
2. 1971 (2nd accretion) abutted the first accretion on the
southern portion of the Motherland where an OCT was
issued in the name of all Pablo Imbornal s heirs.
Francisco Narvasa s heirs filed a complaint for
reconveyance claiming their rights over the entire Motherland
wherein the alleged that Ciriaco, with Catalina s help, urged
Balbina and Alejandra to sell the Sabangan property. Petitioners
also alleged that Ciriaco used the proceeds to fund the
homestead application that he applied for over the Motherland.
And that Ciriaco agreed that once the patent is approved, he will
be deemed as holder of the Motherland in trust for the Imbornal
Sisters Alejandra and Balbina.
Francisco et al. stated their claim over the land were not
asserted due to them respecting respondents rights. Petitioners
only asserted their claim when they discovered that the subject
properties were now covered by a Torrens title and free from any
encumbrances.
The RTC ruled that the land belongs to petitioners (Francisco
et al.) by reasoning that there was an implied trust. The RTC said
that Ciriaco was only able to acquire the Motherland through the
proceeds from the sale of the Sabangan property and that the
Imbornal Sisters and Francisco et al. are entitled to their shares
over the Motherland.
The CA reversed the decision of the RTC and said that the
title over the Motherland negates the existence of trust.
Francisco et al. now contends that the proceeds of Sabangan
sale were used for the pending homestead application. They
further alleged that Ciriaco, through fraud, led the Imbornal
sisters to believe that they had a share to the land using Art. 1456
as basis, which allows Francisco et al. to claim ownership over
the Motherland.
ISSUE:
Whether or not there was an implied trust (NO)
RULING:
NO, an implied trust was not constituted.
An implied trust arises, not from any presumed intention
of the parties, but by operation of law. Nevertheless, the burden
28 | P a g e
of proving the existence of a trust is on the party asserting its implied trusts may be proven by oral evidence, it must be
existence. trustworthy and received by the courts with extreme caution
Further, such proof must be clear and satisfactorily show because oral evidence can be easily fabricated. 15
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
because oral evidence can be easily fabricated.
In this case, aside from the oral evidence offered by
Francisco that the Motherland had been mistakenly registered in
favor of Ciriaco. But the process of application for a homestead
patent is a rigid one (actual possession, cultivation, and
improvement of the homestead). Ciriaco underwent such
process and duly satisfied the conditions imposed.
As such, it is highly implausible that the Motherland had
been acquired and registered by mistake or through fault as
would create an implied trust between Imbornal sisters and
Ciriaco.
Failing to rebut such evidence, no implied trust existed.
Prescription Issue: Action for reconveyance based on
implied trust prescribes in 10 years which starts to run from the
date of registration or issuance of title. In the case:
1. OCT issued 1933, prescribes on1943
2. OCT on 1st Accretion issued in 1952, prescribes in 1962
3. OCT on 2nd Accretion issued in 1978, prescribes in
1988.
It was only in 1984 that a complaint was filed, thus, action
on Motherland and 1st accretion had already prescribed.

DOCTRINE:
The burden of proving the existence of a trust is on the
party asserting its existence of the trust and its element. While

15 Author: Guerrero, Hazel Ann Mharie

29 | P a g e
 Salao v. Salao
March 16, 1976/70 SCRA 65/Implied Trust
FACTS:
Sps. Manuel Salao and Valentina Ignacio had four
children: Patricio, Alejandra, Juan, and Ambrosia. After the
death of Manuel in 1885 and the death of Valentina in 1914,
Valentina s estate was administered b her daughter, Ambrosia.
The estate was subsequently extrajudicially partitioned and was
signed by Alejandra, Juan, Ambrosia, and Valentin (the son of
the late Patricio). Valentin Salao was given parcels of land with
the appraised value of P13,501 which exceeded the amount
given to his co-heirs by P5,365,75, hence Valentin was
mandated to pay the excess to his co-heirs. Before the death of
Valentina, Juan and Ambrosia was able to secure a Torrens Title
in their own names for a 47 hectare fishpond located at Sitio
Calunuran, Pampanga. After the death of Valentin, his estate (2
fishponds he had inherited from Valentina) was divided between
his daughters, Benita and Victorina. After the death of
Ambrosia, Benita filed an action for reconveyance of the
Calunuran fishpond which was allegedly held in trust and had
become the exclusive property of Juan Salao, Jr. Before the
death of Ambrosia, she donated half of her the Calunuran
fishpond property to Juan Salao, Jr. Subsequently, Benita claims
to have one-third share in the two fishponds and that Juan Jr.
refused to turn over the same. Juan Jr. contests that Valentin did
not have any interest in the Calunuran property, providing in
evidence the Torrens Title named after his father, Juan, and his
aunt, Ambrosia. He further contends that he was the donee of
half the property of Ambrosia s share in the same propert .
Benita seeks to annul the donation to Juan Jr. and
reconveyance of the one-third share of the Calunuran property,
or approximately 145 hectares of the same. As defense, Juan Jr.
invoked the indefeasibility of the Torrens Title granted to Juan
Sr. and Ambrosia and that prescription and laches had set in.
The trial court dismissed the complaint. The lower court
found that there was no community of property among Juan Sr.,
Ambrosia, and Valentin. Further, the lower court found that the
failure of Valentin to assail the Torrens Title in the name of Juan
Sr. And Ambrosia further strengthens the fact that he was not a
co-owner of the Calunuran property.
ISSUES:
1. Whether or not the Calunuran property was held in trust
for Valentin Salao by Juan Salao Sr. and Ambrosia Salao
(NO)
2. Whether or not the prescription and laches had set in
(YES)
RULING:
1. The Court held that the Calunuran property was not held
in trust for Valentin by Juan Sr. and Ambrosia. The Court
quotes its previous jurisdiction defining trust as the
right, enforceable solely in equity, to the beneficial
enjoyment of property, the legal title to which is vested
in another... The Court further e plains that trust ma
either be express or implied. Express trust is one created
by the intention of the trustor or the parties, while
implied trust is created through operation of law. Further,
no express trust concerning immovables or any interest
therein may be proven by parol evidence, while an
implied trust may be proven by parol evidence. The
Court held that in this case, there was no documentary
evidence presented by Benita to prove that there was an
express trust over the Calunuran property in favor of
Valentin. Purely parole evidence was offered by Benita
30 | P a g e
 to prove the alleged trust. Further, parol evidence cannot
be used to prove an express trust concerning real
propert . Additionall , Benita s pleadings and evidence
cannot be relied upon to prove an implied trust. The co-
ownership, which is the source of contention, was not
proven by competent evidence. Hence, Benita failed to
prove that a trust existed with clear, satisfactory, and
convincing evidence. The Court also notes that a
trustworthy oral evidence is required to prove an implied
trust because oral evidence can be easily fabricated. In
this case, there was no trust since there was no intention
from Juan Sr., Ambrosia, and Valentin to create said
trust. Further, there can be no constructive trust because
Juan Sr. and Ambrosia did not acquire the property
through fraud or mistake.

2. Prescription or laches had already set in. The longest

period for extinctive prescription was only ten years. The
extrajudicial demand for reconveyance was made by
Benita and Victorina in in 1951, while the Calunuran
property was registered in 1911. They filed their cause
of action more than forty years from the date of
registration of the property.

DOCTRINE:
Implied trust must be proven by clear, satisfactory, and
convincing evidence and cannot rely on vague, uncertain
declarations of facts.16

16
Author: Sulaik, Alyanna Alex

31 | P a g e
 PNB v. CA
January 21, 1993/217 SCRA 347/Implied Trusts
FACTS:
P.B. Mata & Co Inc. is a crewing agent for Star Kist
Foods, Inc. As per the agreement, P.B. Mata makes advances for
the crew s medical e penses, National Seaman s Board fees,
Seamen's Welfare fund, and standby fees and for the crew;s
basic personal needs. P.B. Mata then sends a monthly billing to
Star Kist, which reimburses P.B. Mata by sending a telegraphic
transfer through banks for the credit of the P.B. Mata s account.
In February 1975, the Security Pacific National Bank (SEPAC)
transmitted a cable message to the International Department of
PNB to pay $14,000 to P.B. Mata with the Insular Bank of Asia
(IBAA), per order of Star Kist. Upon notice of error, it was found
out that the right amount to be paid to P.B. Mata is only $1,400.
Star Kist then issued a Cashier s Check worth $1,400 in favor of
P.B. Mata through IBAA. However, fourteen days after the
issuance of the first check, PNB issued another Cashier s Check
worth $14,000, allegedly another reimbursement from Star Kist.
6 year later, PNB requested for the refund of the $14,000 from
P.B. Mata, alleging that under Art. 1456 of the Civil Code, based
on a constructive trust, PNB has the right to recover the amount
it erroneously credited to P.B. Mata.
The lower court dismissed the petition and rationed that
the case at bar is one of solutio indebiti and not one of
constructive trust. Such being one of solutio indebiti, the same
had already prescribed.
ISSUE:
Whether or not PNB may still claim the $14,000 it
erroneously paid P.B. Mata under constructive trusts (NO)
RULING:
The Court holds that in this case, the requisites of solutio
indebiti are present: (1) that something has been received when
there was no right to demand it and (2) the same was duly
delivered through mistake. In this case, the corrected payment
was alread issued b Star Kist in the form of a Cashier s Check
with the correct amount of $1,400. Subsequently, PNB issued
et another Cashier s Check is the amount of the uncorrected
check, $14,000. The Court defines constrictive trust as one not
created by words either expressly or impliedly, but by
construction of equit in order to satisf the demands of justice.
In this case, P.B. Mata received a $14,000 check and did not
have intention to hold the same for a beneficiary like PNB. Art.
1456, however, effectively creates a constructive trust for the
benefit of the people from whom the property comes for reasons
of justice and equity, like that of PNB. The Court further takes
into account that quasi-contractual obligations give rise to a
personal liability ordinarily enforceable by an action at law
while constructive trusts are enforceable by proceeding in equity
to compel the defendant to surrender specific property. To be
sure, the distinction is more procedural than substantive.
However, whether the cause of action is one of solutio indebiti
or one of constructive trusts, the same had already been barred
by prescription. Under the provisions of solutio indebiti, the
same prescribes in 6 years. PNB, having filed their petition for
more than the same, loses their cause of action under solutio
indebiti. On the other hand, the Court rules that although causes
of action for constructive trusts do not prescribe until after 10
years and only 7 years had elapsed, PNB is already well within
the prescriptive period for the enforcement of a constructive
trust. The same had already been barred by laches. The Court
takes into account that PNB had taken almost 7 years before it
had discovered that it made an erroneous payment to P.B. Mata.
32 | P a g e
The Court posits that It is incredible for a bank, and a
government bank at that, which regularly publishes its balanced
financial statements annually or more frequently, by the quarter,
to notice its error only 7 years later. xxx Moreover, as between
parties where negligence is imputable to one and not to the other,
the former must perforce bear the consequences of its neglect.

DOCTRINE:
Constructive trust is one not created by words either
expressly or impliedly, but by construction of equity in order to
satisfy the demands of justice. However, in the case of banks,
especially a universal bank with worldwide operations, filing a
remedy after the lapse of 7 years, bars the cause of action by
laches.17

17
Author: Sulaik, Alyanna Alex

33 | P a g e
 Ty v. Ty
April 30, 2008/553 SCRA 306/Implied Trusts
FACTS:
Alexander Ty died of cancer at the age of 34. He was
survived by his wife, Sylia Ty and only daughter, Krizia Ty. A
petition for the settlement of his intestate estate was filed by
Sylvia in the Quezon City RTC, while the Superior Court of
California ordered the distribution of the Hollywood
condominium unit, the Montebello lot, and the 1986 Toyota
Pick-Up to Sylvia and Krizia. The inventory of the property to
be settled in Quezon City RTC is an EDSA property located in
EDSA, Greenhills, Mandaluyong City, a Meridien
Condominium, and a Wack-Wack property. Sylvia then asked
the court to either sell or mortgage the subject properties to pay
additional estate taxes worth P4.7M. Alejandro Ty, father of
Alexander, filed a complaint for recovery of property with
prayer for preliminary injunction. Alexander contends that he
owns the EDSA property, the Meridien condominium, and the
Wack-Wack property. He alleges he bought the subject
properties and placed the titles of the said property in the name
of Alexander who was to hold the same in trust for his brothers
and sisters. He contests that Alexander and Sylvia were earning
minimal income and were financially incapable of purchasing
the properties at the time of the purchase of the same. Alexander
further alleges that Sylvia acted in bad faith in including the
properties in the inventory when she was well aware that
Alexander was simply holding the same in trust for his siblings.
Sylvia denied these allegations and contends that Alexander
purchased all three of the subject properties with his own money
since he was financially capable to purchase the same due to the
fact that he was engaged in the business of importing luxury cars
and various profitable business ventures. Sylvia prays for
unenforceability of the verbal trust agreement under the Statutes
of Frauds and that the same is already barred by laches.
The RTC ruled in favor of Alexander and order Sylvia to
deliver the same to him with P100,000 for moral damages and
P200,000 for attorne s fees.
ISSUE:
Whether or not a trust was established by Alejandro in
favor of Alexander (NO)
RULING:
The Court held that there can be no express trust when
there is nothing written to prove the same, especially in a case
for real property. Further, under Art. 1448, the law provides that
when the person to whom the title is conve ed is the child,
legitimate or illegitimate, of the one paying the price of the sale,
in which case no trust is implied by law, it being disputably
presumed that there is a gift in favor of the child. Further, there
was not evidence pointing to the fact that Alexander was
financially dependent on Alejandro. The CA, as quoted by the
Court, found that Alexander was able to afford the costs of his
cancer treatment abroad, as well as, the cost of the trips he had
made to the United States without the financial support of
Alejandro. The Court cites the last sentence of Art. 1448 which
states, ...However, if the person to whom the title is conve ed
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. If the title
conveyed is to the child of the one paying the price of the sale,
there is no trust implied by the law. The law disputably presumes
the same to be one of a gift, a donation in favor of the child.
Alejandro, in this case, failed to convincingly prove that he a
trust was indeed created in favor of Alexander and that
34 | P a g e
Alexander was financially dependent on him during the time the
subject properties were acquired. Further, for the Meridien
condominium and the Wack-Wack property, there can be no
implied trust created since there was no proof to show that part
of the purchase price was paid by Alejandro. In the contrary, the
evidence strongly suggests that Alexander was financially
capable of acquiring the disputed properties and did so without
the financial help of Alejandro.

DOCTRINE:
If the title conveyed is to the child of the one paying the
price of the sale, there is no trust implied by the law. The law
disputably presumes the same to be one of a gift, a donation in
favor of the child.18

18 Author: Sulaik, Alyanna Alex

35 | P a g e
 PNB v. Aznar
May 30, 2011/649 SCRA 214/Implied Trusts
FACTS:
Respondents Merelo Aznar, et. al. contributed P212,720
to rehabilitate Rural Insurance & Surety Co., Inc (RISCO),
which had ceased operations due to business reverses, the money
was used to purchase three parcels of land all situated in Cebu
City, the parcels of land were covered by TCT No. 8921, TCT
No. 8922, and TCT No. 24576 all in the name of RISCO. The
amount contributed by the respondents constituted as a lien and
encumbrance on the property as annotated on the titles of the
lots. Various annotations of Notice of Attachments and Writs of
Execution were then made on the three titles. As a result, a
Certificate of Sale was issued in favor of the Philippine National
Bank (PNB) as the highest bidder for the three for a total of
P31,430. Therefore, a final Certificate of Title was issued in
PNB s name. A nar then filed for quieting of title, declarator
relief, cancellation of TCT, and reconveyance with temporary
restraining order and preliminary injunctions for the subject lots
with the contention that the annotations were still subject to their
liens and encumbrances and that the writs issued were void for
lack of valid service upon RISCO on PNB and that the Final
Deed of Sale is likewise void as it was issued 28 years after,
hence prescription had set in. PNB posits that no cause of action
for quieting title as the issuance of titles in favor of PNB had
become final and executory, that Aznar is a mere stockholder of
RISCO and does not have legal right over the subject properties,
and that their only recourse is reimbursement or refund of their
contributions.
The trial court held that there was an express trust created
over the properties: RISCO as the trustee, Aznar, et. al. as the
beneficiaries. However, this was reversed by the Court of
Appeals when it ruled that the contribution made by Aznar is
only a loan secured by a lien on the lots rather than an express
trust.
ISSUE:
Whether or not the contribution made by Aznar et. al. are
held in express trust by PNB in favor of the former (NO)
RULING:
The Court defined trust as the right to beneficial
enjoyment of property, the legal title to which is vested in
another. Trust ma be e press or implied. An e press trust is
created by the intention of the trustor or of the parties, while an
implied trust comrds into by operation of law. Express trusts are
intentionally created by direct and positive acts of the parties by
some writing, deed, or will or oral declaration. It need not be in
written words, but must be by the direct and positive acts of the
parties. There are no words particularly required for the creation
of an express trust, being that it was clearly intended is
sufficient. In this case, there was no clear intention to create an
express trust, on the contrary, there is no indication in the terms
that Aznar et. al. are beneficiaries under express trust and that
RISCO as trustor. The Court then holds that the only recourse
Aznar may avail of is the reimbursement of their contributions
used to purchase the properties. However, the same had already
prescribed. The Civil Code provides that written contracts must
be brought within ten years from the time of the right of action
accrues. In this case, the Minutes considered as a written
contract was approved in March 1961, while Aznar et. al. only
filed for reimbursement of their contribution in January 1998.
Hence, their right of action had long prescribed.
DOCTRINE:
36 | P a g e
 The creation of an express trust must be manifested with
reasonable certainty and cannot be inferred from loose and
vague declarations or from ambiguous circumstances
susceptible of other interpretations. 19

19 Author: Sulaik, Alyanna Alex

37 | P a g e
 Sime Darby Pilipinas, Inc. v. Mendoza
June 19, 2013/699 SCRA 290/Implied Trusts
FACTS:
Sime Darby Pilipinas (Sime Darby) employed Jesus
Mendoza as sales manager to handle sales, marketing, and
distribution of the compan s tires and rubber products. Sime
Darby purchased a Class A club shares in Alabang Country Club
(ACC) but placed the same in the name of Mendoza in trust for
Sime Darby since the By-Laws of ACC state that only natural
persons may own a club shares. Sime Darby paid for the monthly
dues and assessment of the club share. When Mendoza retired,
Sime Darby fully paid Mendoza his separation pay with an
amount of P3,000,000. Nine years later, Sime Darby found a
buyer of the club share for P1,101,363.64. Before the sale could
push through, the broker required Sime Darby to secure
authorization to sell from Mendoza. However, Mendoza refused
to sign the authorization as he alleges that Sime Darby failed to
pay him P300,000 worth of unpaid separation benefits. Sime
Darby filed a complaint for damages with writ of preliminary
injunction against Mendoza, claiming that it had continuously
paid for the monthly dues and assessments of the ACC shares
during and after the employment of Mendoza. Despite the
retirement of Mendoza, he continued to use the facilities and
privileges of ACC for 10 years. Mendoza contends that he owns
the club share, he claims that the company purchased and placed
the share in his name as part of employee benefit and bonus,
further, that Sime Darby failed to pay the full amount of his
retirement benefits.
The trial court ruled in favor of Sime Darby. However,
the Court of Appeals ruled against Sime Darby as they failed to
prove with clear and unmistakable right over the ACC club
share.
ISSUE:
Whether or not Mendoza is the owner of the ACC club
share. (NO)
RULING:
The Court held that Sime Darby has sufficiently proven
its right over the club share by presenting the Deed of Sale from
the purchase of the contested share. Under the By-Laws of the
company, the share was placed under the name of Mendoza by
Sime Darby under a trust agreement. Mendoza was named the
assignee of the club share, while ownership of the share was
placed in the name of Sime Darby. Mendoza, on his end, did not
refute Sime Darb s club share and its monthl pa ments for the
club dues and assessments. He also admitted to signing the club
share certificate and the assignment of rights, both in blank, and
turning it over to Sime Darby. With the above circumstances, it
can then be said that a trust relationship exists between the
parties. The Court ratiocinated that a trust arises in favor of one
who pays the purchase price of a property in the name of another,
because of the presumption that he who pays for a thing intends
a beneficial interest for himself. While Sime Darby paid for the
purchase price of the clube share, Mendoza was given the legal
title. Thus, a resulting trust is presumed as a matter of law. It
can be said that Sime Darby did not intend to give up its
ownership over the club shares, but instead merely wanted
Mendoza to hold the shares in trust on behalf of the company
because by the By-Laws of Sime Darby, they cannot hold club
shares. In return of holding the shares in trust for Sime Darby,
Mendoza was allowed to enjoy privileges of club membership.
DOCTRINE:
38 | P a g e
 A trust arises in favor of one who pays the purchase price
of a property in the name of another, because of the presumption
that he who pays for a thing intends a beneficial interest for
himself.20

20 Author: Sulaik, Alyanna Alex

39 | P a g e
 Gabutan v. Nacalaban
June 29, 2016 / 795 SCRA 115 / Implied Trust
FACTS:
Godofredo Nacalaban bought a parcel of land in
Cagayan de Oro (CDO) on which he built his house on. Later
on, he died. His heirs are his wife, Baldomera, and children,
Dante, Helen, and Susan (Nacalaban et. al.) Baldomera allowed
her mother, Melecia, to build a house on the property, to which
the latter occupied upon completion. When Baldomera died, her
children sold the property to Cagayan Capitol college.
Subsequently, Melecia died and was survived by her children,
Gabutan et. al. Cagayan College then demanded them to vacate
the property.
Gabutan et. al. then filed a case for reconveyance
claiming that it was Melecia who bought the land, and it was
only named to Godofredo. Furthermore, they also claimed that
Godofredo was merely a trustee and that Cagayan College was
a buyer in bad faith. Naclaban et. al. claimed that they had the
authority to sell because they inherited the property.
RTC ruled in favor of Gabutan et. al. It was found that it
was really Melecia who paid for the property. They ruled that
Nacalaban et. al. must turn over the proceeds of the sale to
Gabutan et. al. On the other hand, the RTC ruled that Cagayan
College was a buyer in good faith and had the right of possession
of the property. Both parties were unsatisfied and filed before
the CA. The CA agreed with the RTC. Hence the appeal.
ISSUE:
Whether or not the action for reconveyance filed by
Gabutan et. al. was proper (YES)
RULING:
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, occurs when there is: (Both
elements are present in this case)
(1) an actual payment of money, property, or services, or
an equivalent, constituting valuable consideration
(2) such consideration must be furnished by the alleged
beneficiary of a resulting trust.
The testimonies of Gabutan et. al. established their claim
that the mone used to bu the propert was Melecia s. Pertinent
testimonies believed by the lower court and the SC include:
1. Melecia bought the property because her daughter,
Felisia, wanted to build a pharmacy on it.
2. Melecia entrusted Godofredo with the money
because he was in CDO, and as per Melecia s
instructions, the deed was placed under his name.
3. Melecia would usually buy properties and name
them to her children, but it was always understood
that such properties were co-owned by them.
Both the RTC and CA found credence on these pieces of
testimonial evidence that an implied resulting trust exists.
Reliance on these will not violate the parol evidence rule. In a
previous case, the SC already 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. The SC ruled that the arrangement between Godofredo
40 | P a g e
and Melecia was not unusual between family, especially during The trust created here, which is also referred to as a
the 1950s. purchase money resulting trust, occurs when there is: (Both
Naclaban et. al., on the other hand, denied the elements are present in this case)
arrangement between Godofredo and Melecia, and maintained (1) an actual payment of money, property, or services, or
that it was the latter who bought the property, as evidenced by an equivalent, constituting valuable consideration
their possession of the Deed of Conditional Sale and the title in (2) such consideration must be furnished by the alleged
Godofredo s name. However, the Court did not give credence to beneficiary of a resulting trust.
this argument as they failed to provide the details of the sale, Since an implied trust is neither dependent upon an
specifically with regard as to how Godofredo was able to afford express agreement nor required to be evidenced by writing,
the property. If Godofredo really bought the property with his Article 1457 of our Civil Code authorizes the admission of parol
own money, it was surprising that Baldomera did not transfer the evidence to prove their existence. What is crucial is the intention
title of the property to her name when Godofredo died in 1974. to create a trust.21
Baldomera did not do so until her death in 1994 despite being
pressed by her siblings to partition the property. The RTC
correctly deduced that this only meant that Baldomera
acknowledged that the property belongs to Melecia.
Hence, the action for reconveyance was proper. 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.

DOCTRINES:
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.

21
Author: De Vera, Vera Patricia DL.

41 | P a g e
 Paringit v. Bajit
September 29, 2010 / 631 SCRA 584 / Implied Trust
FACTS:
Sps. Julian and Aurelia Paringit leased a lot in Sampaloc,
Manila from Terocel Realty. They built their home there and
raised 5 children. Later on, Aurelia died. Because they had lived
on the lot for so long, Terocel Realty offered to sell it to Julian,
but the latter did not have enough money. He asked help from
his children and only his son, Felipe, had the money.
Julian then executed a Deed of Assignment of Leasehold
Right in favor of Felipe and his wife, Josefa (Sps. Paringit), that
would enable then to acquire the lot. Eventually, they bought it
for Php 55,000.00. Terocel then executed a Deed of Absolute
Sale for them. Due to issues among Julian's children regarding
the ownership of the lot, Julian executed an affidavit clarifying
the nature of Sps. Paringit s purchase of the lot. He claimed that
it was bought for the benefit of all his children.
Felipe s wife and siblings, e cept Florencio, signed the
affidavit, saying that Julian was telling the truth. Sps. Paringit
then registered the land and got their TCTs. However, they
themselves did not live in this house and moved to another
house. The rest of Felipe s siblings occupied the lot with their
families without paying rent. Later on, their father died.
The sps. Paringit then sent demands to Felipe s siblings,
asking them to pay rent amounting to Php 168,000.00. The
siblings refused to pay so the Sps. Paringit filed an ejectment
suit, which prospered. Shortly thereafter, Sps. Paringit moved
into the said property.
The siblings, Marciana, et. al. (Bajit), brought the case to
court, insisting that the agreement was that Sps. Paringit would
acquire the lot for the benefit of all the siblings. They even tried
to reimburse the spouses for their shares in the lot's price. Felipe
claimed that he did not know that the property was for all of them
and claimed that his wife s consent to sign the affidavit was
vitiated. However, the siblings denied pressuring Josefa into
signing the document in question and claimed that it was her
who caused the drafting of the affidavit.
The RTC ruled in favor of the Sps. Paringit. The CA
reversed and ruled in favor of the siblings. Hence, this petition.
ISSUE:
Whether or not there was an implied trust (YES)
RULING:
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 bene6ciary, 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.
Felipe and his wife claim that:
(1) that they did not lend money to Marciana, et al.,
for the purchase of the lot;
(2) that they did not buy it for the bene6t of the
siblings; and
(3) that the conveyance of the lot was not to secure
the payment of any supposed loan.
Felipe and his wife insist that they had no agreement with
Marciana, et al., regarding the spouses' purchase of the lot for
the benefit of all of Julian's children. However, the SC stated that
the circumstances of this case are actually what implied trust is
about. Although no express agreement covered Felipe and his
42 | P a g e
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. The evidence shows that
Felipe and his wife bought the lot for the benefit of Julian and
his children, rather than for themselves. Such are the following:
(1) When Terocel granted to Julian the right to acquire the
lot where their house stood, that right technically
belonged to Julian and all his children.
(2) Felipe, acting through his wife, countersigned Julian's
affidavit the way his siblings did. The document
expressly acknowledged the parties' intention to
establish an implied trust between Felipe and his
wife, as trustees, and Julian and the other children as
trustors. Josefa, Felipe's wife, of course claims that she
signed the document only to show that she received a
copy of it. But her signature did not indicate that fact.
(3) If the spouses really believed that the assignment of the
house and the right to buy the lot were what their
transactions with Julian were and if they also believed
that they became absolute, then them moving out of the
house in 1988 and letting Marciana, et al., continue to
occupy the house did not make sense.
(4) The spouses only demanded rent after Julian died. This
shows that from the time they bought the lot to when they
made their demands, the spouses respected the right of
the siblings to reside on the property. Until they filed the
suit, they did nothing to assert their supposed
ownership of the house and lot.
22
Author: De Vera, Vera Patricia DL.
The spouses clam as well that the action for recover has
already prescribed. A right of action implies the existence of a
cause of action. In this case, the action has not yet prescribed
because Marciana, et. al. had until January 1997 to file such.
Since the spouses registered the lot in their names in January
1987, they had 10 years to repudiate the claim and by filing of
such action in July 1996, they filed the claim well within the
period allowed.
DOCTRINES:
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.
Implied trust is a rule of equity, independent of the
particular intention of the parties. 22
43 | P a g e
 De Ocampo v. Zaporteza
August 31, 1929 / 52 Phil. 442 / Implied Trust
FACTS:
Agripino De Ocampo (De Ocampo) got a loan from Juan
Zaporteza (Zaporteza). For this, there a deed of sale, subject to
repurchase, over a parcel of land. The land had 1,300 coconut
trees planted thereto and the deed to such was executed in favor
of Zaporteza. Subsequently, a certificate of transfer was given to
him. When De Ocampo offered to repurchase the land,
Zaporteza refused to sell it. De Ocampo then filed a complaint
against Zaporteza.
De Ocampo claims that the contract between them is a
simple mortgage and not a sale. He said that the contract was
only made to appear as if it were a sale because his lawyer told
him that it would not look good if it were a simple mortgage for
a loan. Hence, the trial court stated that it was convinced that De
Ocampo gave a substantially correct account of the
conversations between them which preceded the execution of
the document in question, and they are of opinion that this is
supported by the evidence.
ISSUE:
Whether or not the contract expressed the true agreement
entered into by and between the parties (NO)
RULING:
Art. 1454 states that if an absolute conve ance of
property is made in order to secure the performance of an
obligation of the grantor towards the grantee, a trust by virtue of
law is established. If the fulfillment of the obligation is offered
23
Author: De Vera, Vera Patricia DL.
by the grantor when it becomes due, he may demand the
reconve ance of the propert to him.
Zaporteza is bound to execute the deed in favor of De
Ocampo. While it is true that the deed in question apparently
evidences an agreement of sale subject to repurchase, it,
however, fails to express the true intent and agreement of the
parties. When a deed of sale with a right to repurchase was
really intended, then the doctrines upheld by Uy Aloc vs. Cho
Jan Ling, Camacho vs. Municipality of Baliuag, and Severino
vs. Severino are applicable. In this case, Zaporteza only holds
the certificate of transfer in trust for De Ocampo as to the
portion containing the 1,300 coconut trees. The former is
bound to execute a deed in favor of De Ocampo, transferring
the said portion to him.
DOCTRINE:
Art. 1454 states that if an absolute conve ance of
property is made in order to secure the performance of an
obligation of the grantor towards the grantee, a trust by virtue of
law is established. If the fulfillment of the obligation is offered
by the grantor when it becomes due, he may demand the
reconveyance of the property to him. 23
44 | P a g e
 Miguel J. Ossorio Pension Foundation v. CA
June 28, 2010 / 621 SCRA 606 / Implied Trust
FACTS:
Miguel J. Ossorio Pension Foundation (MPF) is a non-
stock and non-profit corporation, organized for the purpose of
holding title to and administering the employees' trust or
retirement funds (Employees' Trust Fund [ETF]) established for
the benefit of the emplo ees of Victoria s Milling Compan , Inc.
(VMC). They claim that the income earned by the ETF is exempt
under Sec. 53(b) of the Tax Code. They decided to invest part of
the ETF to purchase a lot in the Madrigal Business Park (MBP)
in Muntinlupa. They bought this through VMC. They allege that
VMC purchased two lots and invited them to invest in one also.
MPF claims that their share in the MBP lot is 49.59%.
Their investment manager, Citytrust Banking Corporation
(Citytrust), regularly reported the ETF share in the MBP lot in a
Portfolio Mixed Analysis. The MBP lot is covered by a TCT
with VMC as the registered owner. MPF claims that since it
needed funds to pay the retirement and pension benefits of VMC
emplo ees and to reimburse VMC s advances, MPF s Board of
Trustees authorized the sale of its share in the MBP lot.
VMC then negotiated the sale of the MBP lot with
Metropolitan Bank and Trust Company (Metrobank) for
Php81,675,000.00, but the consummation of the sale was
withheld. Eventually, VMC sold the MBP lot to Metrobank and
signed the Deed of Absolute Sale as the sole vendor. Metrobank,
as withholding agent, paid the BIR P6,125,625 as withholding
tax on the sale of real property.
MPF alleges that the parties who co-owned the MBP lot
executed a notarized MOA as to the proceeds of the sale. The
co-ownership agreement is as follows:
% SQM AMOUNT
MPF 49.59% 450.00 P5,504,748.25
VMC 32.23% 351.02 P3,578,294.70
VFC (irrelevant) 18.18% 197.98 P2,018,207.30
MPF claims that it is a co-owner of the MBP lot as a
trustee of the ETF. MPF further contends that ETF is exempt
from income tax. Since MPF, as trustee, purchased 49.59% of
the MBP lot using funds of the ETF, the former asserts that the
latter's share in the income tax paid (P3,037,500) should be
refunded.
ISSUE:
Whether or not MPF or the ETF is estopped from
claiming that the ETF is the beneficial owner of 49.59% of the
MBP lot and that VMC merely held the MBP lot in trust for the
ETF (NO)
RULING:
The law expressly allows a co-owner (first co-owner) of
a parcel of land to register his proportionate share in the name of
his co-owner (second co-owner) in whose name the entire land
is registered. The second co-owner serves as a legal trustee of
the first co-owner insofar as the proportionate share of the first
co-owner is concerned. The first co-owner remains the owner of
his proportionate share and not the second co-owner in whose
name the entire land is registered.
Art. 1452 provides that If two or more persons agree to
purchase a property and by common consent the legal title is
taken in the name of one of them for the benefit of all, a trust is
created by force of law in favor of the others in proportion to
the interest of each. For this provision to appl , all that a co-
owner needs to show is that there is "common consent" among
the purchasing co-owners to put the legal title to the purchased
45 | P a g e
property in the name of one co-owner for the benefit of all. Once
"common consent" is shown, "a trust is created by force of
law." The BIR has no option but to recognize such legal trust as
well as the beneficial ownership of the real owners because the
trust is created by force of law. The fact that the title is
registered solely in the name of one person is not conclusive
that he alone owns the property.
The trustor-beneficiary is not estopped from proving
its ownership over the property held in trust by the trustee
when the purpose is not to contest the disposition or
encumbrance of the property in favor of an innocent third-
party purchaser for value. The BIR, not being a buyer or
claimant to any interest in the MBP lot, has not relied on the face
of the title of the MBP lot to acquire any interest in the lot. There
is no basis for the BIR to claim that petitioner is estopped from
proving that it co-owns, as trustee of the ETF, the MBP lot. Art.
1452 of the Civil Code recognizes the lawful ownership of the
trustor-beneficiary over the property registered in the name
of the trustee.
No particular words are required for the creation of
a trust, it being sufficient that a trust is clearly intended. It
is immaterial whether or not the trustor and the trustee
know that the relationship which they intend to create is
called a trust, and whether or not the parties know the
precise characteristic of the relationship which is called a
trust because what is important is whether the parties
manifested an intention to create the kind of relationship
which in law is known as a trust.
The fact that the documents are under VMC s name does
not remove the possibility that the property is owner by another
entity because Art. 1452 expressly authorizes a person to
purchase a property with his own money and to take
conveyance in the name of another.
In this case, the notarized MOA and the certified true
copies of the Portfolio Mix Analysis prepared by Citytrust
clearly prove that MPF invested using funds of the ETF, to
purchase the MBP lot. Since the MBP lot was registered in
VMC's name only, a resulting trust is created by operation of
law. A resulting trust is based on the equitable doctrine that
valuable consideration and not legal title determines the
equitable interest and is presumed to have been
contemplated by the parties. Based on this resulting trust, the
ETF is considered the beneficial co-owner of the MBP lot.
MPF has sufficiently proven that it had a "common
consent" or agreement with VMC and VFC to jointly purchase
the MBP lot. The absence of MPF's name in the TCT does not
prevent petitioner from claiming before the BIR that the ETF is
the beneficial owner of 49.59% of the MBP lot and that VMC
merely holds 49.59% of the MBP lot in trust, through MPF, for
the benefit of the ETF.
The BIR has acknowledged that the owner of a land can
validly place the title to the land in the name of another person.
The BIR ruled that an implied trust is deemed created by law
and the transfer of the land to the beneficiary is not subject
to capital gains tax or creditable withholding tax.
DOCTRINES:
The law expressly allows a co-owner (first co-owner) of
a parcel of land to register his proportionate share in the name of
his co-owner (second co-owner) in whose name the entire land
is registered. The second co-owner serves as a legal trustee of
the first co-owner insofar as the proportionate share of the first
co-owner is concerned. The first co-owner remains the owner of
his proportionate share and not the second co-owner in whose
name the entire land is registered.
46 | P a g e
 For Art. 1452 to apply, all that a co-owner needs to show
is that there is "common consent" among the purchasing co-
owners to put the legal title to the purchased property in the name
of one co-owner for the benefit of all. Once "common consent"
is shown, "a trust is created by force of law." Art. 1452 also
expressly authorizes a person to purchase a property with his
own money and to take conveyance in the name of another.
No particular words are required for the creation of a
trust, it being sufficient that a trust is clearly intended. It is
immaterial whether or not the trustor and the trustee know that
the relationship which they intend to create is called a trust, and
whether or not the parties know the precise characteristic of the
relationship which is called a trust because what is important is
whether the parties manifested an intention to create the kind of
relationship which in law is known as a trust.
A resulting trust is based on the equitable doctrine that
valuable consideration and not legal title determines the
equitable interest and is presumed to have been contemplated by
the parties.24

24
Author: De Vera, Vera Patricia DL.

47 | P a g e
 Heirs of Tanak v. Martinez
June 10, 1986 / 142 SCRA 252 / Implied Trust
FACTS:
A certain Pangawaran (Moro) during his lifetime
cultivated and occupied a parcel of land containing an area of 16
hectares in Davao. He died in 1938. During his lifetime, he had
3 wives, one after the other. The marriages are as follows:
1. First marriage Najo: He had 2 children with her. It
was during this union that the 16 hectares of land was
cultivated by Pangawaran. When Najo died, there was no
liquidation of the conjugal partnership and partition of
successional sales.
2. Second marriage Antiras: She assisted him in the
cultivation of the parcel of land in question. This union
produced Tanak Pangawaran (Tanak). Antiras then
died and there was no liquidation again.
3. Third marriage Aranan: The same situation
happened during this union which resulted in a child
named Tagwalan Pangawaran (Tagwalan)
When Pangawaran died in 1938, Tagwalan, being the
only male child, alleged that he prevailed upon the other heirs
and that he should act as administrator and overseer of the entire
property. He also stated that in due time, he will cause the
partition and distribution of the respective shares of all the
rightful heirs. However, Tagwalan was able to have the property
registered solely in his name and an Original Certificate of Title
was issued dated July 26, 1966. It was alleged that he falsified
the application for free patent by stating falsely that he was the
only heir of Pangawaran, when in fact there were other heirs.
Furthermore, it was alleged that ever since the application for
free patent, Tagwalan exercised and usurped rights of ownership
over the entire land as if he is the sole owner thereof reaping
therefrom the fruits of his own personal profit to the unlawful,
unjust, and illegal exclusion of Tanak. Upon discovery of what
Tagwalan did, Tanak repeatedly demanded for partition and
delivery of the rightful share in the inheritance of their common
father's property, to which Tagwalan refused to do so.
Tanak then filed a complaint against Tagwalan for
annulment of certificate of title on July 1, 1976. The lower
courts found that Tanak s action alread prescribed and that the
no longer have jurisdiction over the case because it was brought
after the lapse of 1 year from the date of the issuance of the OCT.
Hence, this appeal.
ISSUE:
Whether or not the lower courts erred in dismissing the
complaint as it overlooked the Civil Code provisions on implied
trust (YES)
RULING:
The Court found the contention of the petitioners
meritorious. They contended that since the action is one for
reconveyance based on implied trust, the respondent court still
has jurisdiction over the case because such action prescribes in
ten (10) years and since the original certificate of title was
issued on July 19, 1966 and the action was filed on July 1, 1976,
the ten-year prescriptive period has not yet elapsed. (It was
only dated July 26, 1966, but it was issued on the 19th.)
In this case, because of Pangawaran's cultivation of the
land throughout his lifetime, he became entitled to the free patent
and such entitlement benefitted his heirs after he died. Tagwalan,
as an heir of Pangawaran, became entitled to the same privilege
and applied for such. However, he was not the only one who
was entitled to this privilege because he was not the only heir
48 | P a g e
of Pangawaran. This is where the fraud came in, manifesting in DOCTRINE:
Tagwalan's pretense that he was the sole heir of Pangawaran. Art. 1456 provides that: If property is acquired through
The respondent court seems to be unmindful of the fact mistake or fraud, the person obtaining it is, by force of law,
that since Tagwalan, through fraud, was able to secure a title in considered a trustee of an implied trust for the benefit of the
his own name to the exclusion of his co-heirs who equally have person from whom the property comes.
the right to a share of the land covered by the title, an implied
trust was created in favor of said co-heirs. Tagwalan is The rules are well-settled that when a person through
deemed to merely hold the property for their and his benefit. fraud succeeds in registering the property in his name, the law
Art. 1456 provides that: If propert is acquired through creates what is called a "constructive or implied trust" in
mistake or fraud, the person obtaining it is, by force of law, favor of the defrauded party and grants the latter the right
considered a trustee of an implied trust for the benefit of the to recover the property fraudulently registered within a
person from whom the propert comes. In Gonzales v. Jimenez, period of ten years.25
the land in question was obtained through fraudulent
representations by means of which a patent and a title were
issued in their name, they are deemed to hold it in trust for the
benefit of the person prejudiced by it. There being an implied
trust in this transaction, the action to recover the property
prescribes after the lapse of ten years. The period in that has
not yet elapsed.
The rules are well-settled that when a person through
fraud succeeds in registering the property in his name, the law
creates what is called a "constructive or implied trust" in
favor of the defrauded party and grants the latter the right
to recover the property fraudulently registered within a
period of ten years.
Therefore, it is clear that the prescriptive period which is
applicable in this case is ten (10) years. Consequently, the action
of petitioner was not yet barred since it was filed on July 1, 1976
while the last day for filing such action was on July 19, 1976,
ten years after the issuance of the original certificate of title.

25
Author: De Vera, Vera Patricia

49 | P a g e
 Heirs of Candelaria, etc. v. Romero, et al.
Sept. 30, 1960 / 109 Phil. 500 / Implied Trusts
FACTS:
Sometime prior to 1917, brothers Emilio and Lucas
Candelaria each bought a lot in Solokohan Subdivision in an
installment basis. Lucas was only able to pay the first two
installments corresponding to his lot as he became bedridden.
He then sold his interest on the lot to Emilio, who reimbursed
him for the amount he already paid. Emilio continued to pay, in
the name of Lucas, the remaining installments until the whole
purchase price of the lot had been satisfied. This arrangement
was agreed upon by the brothers with the understanding that the
necessary documents for the transfer would be made later, as a
transaction from brother to brother.
In 1918, a Transfer Certificate Title for the subject lot
was issued in the name of Lucas and his wife. Lucas held the
title merely in trust for Emilio, which he and his heirs
acknowledged. Moreover, Lucas possession of the lot was
merely tolerated by Emilio and his heirs.
After the death of Lucas, his heirs remained in
possession of the lot and refused to convey such to the heirs of
Emilio. When the heirs of Emilio filed a Complaint, the
defendant heirs filed a Motion to Dismiss on the ground that the
plaintiff s cause of action was unenforceable and that the action
has already prescribed.
Lower court ruled in favor of the defendant heirs, ruling
that an express trust, not an implied one, was created. Therefore,
the trust was unenforceable if not produced in writing.
Additionally, the action has already prescribed because the TCT
was issued in 1918 38 years before filing the Complaint.
ISSUE:
Whether or not an express trust was created (NO)
RULING:
Court ruled that an implied trust was created and not an
express trust. As held in Martinez v. Graño, a resulting trust or
an implied trust is founded upon equity. It arises when property
is taken by a person, under an agreement to hold it for, or to
convey it to another or the grantor. In such trust, property is held
for the one furnishing the consideration of the transfer, unless
the intent of the parties says otherwise. It must be noted that
unlike an express trust, implied trusts are created by implication
from facts and circumstances of the case or by operation of law.
Here, it is apparent that Emilio furnished the
consideration with the intent to obtain a beneficial interest on the
lot. Since he supplied the purchase money, it may naturally be
presumed that he intended the purchase for his own benefit. It is
evident from the allegation in the Complaint that property was
acquired by Lucas showing that it was conveyed to him on
the faith of his intention to hold or convey it to Emilio.
With regard the issue on laches and prescription,
constructive or implied trusts may be barred by the lapse of time.
Continuous recognition of the resulting trust, however,
precludes the defense of laches in a suit to declare and enforce
the trust. The beneficiary of a resulting trust may prefer the trust
to persist and demand no conveyance from the trustee. Court,
however, decided it was not ready to rule on such issue and
remanded it to the lower courts.
50 | P a g e
DOCTRINE:
An implied trust, in favor of the person for whose benefit
the property was intended, is created where property is taken by
a person under an agreement to hold it for or convey it to another
or the grantor. 26

26 Author: Mendoza, Michelle Anne

51 | P a g e
 Cuaycong v. Cuaycong
Dec. 11, 1967 / 21 SCRA 1192 / Implied Trusts
FACTS:
Upon the death of Eduardo Cuaycong, his properties
were distributed to his siblings Lino, Justo, Meliton, and
Basilisa. Two haciendas, however, were excluded from said
distribution: Hacienda Sta. Cruz, and Hacienda Bacayan.
In 1961, the surviving heirs of Lino filed a suit against
Justo and his son Luis for conveyance of inheritance and
accounting. The plaintiff heirs allege that during the later years
of Eduardo and his wife, they entered into an agreement with
Lino and Luis and expressed their intent to divide haciendas
among the siblings of Eduardo. Following the agreement,
Eduardo directed his siblings to pay his wife P75,000.00, as
opposed to P150,000.0, which is the value of the lots, and then
divided equally the remaining one-half share of Eduardo. When
the siblings failed to pay the share of Eduardo s wife, Luis
fraudulently caused the issuance of the certificates of title
covering the properties in his name.
Since the two haciendas were subject of certain
transactions between Spouses Cuaycong and Justo and Luis,
Eduardo told them to hold in trust the shares of the other siblings
over the land, and that said shares will be delivered to the
siblings in due time. After the death of Spouses Cuaycong, all of
Eduardo s properties were distributed to the beneficiaries,
except the two haciendas, which remained titled in the Luis
name. The other heirs of Eduardo demanded from Justo and Luis
their respective shares. The father-son duo, however, refused.
Luis claimed that the other heirs had nothing to do with the lands
he now has in possession.
Luis then moved to dismiss the complaint on the ground
that the foregoing claim was unenforceable under the Statue of
Frauds and it is barred by the statute of limitations. The RTC
ruled that the alleged trust may not be proven by parole
evidence, pursuant to the rule on immovable property in Art.
1443 of the Civil Code. The lower court dismissed the case upon
the failure to file an amended complaint.
The other heirs now appeal to the Supreme Court,
contending that the trust between Eduardo and Luis over the
haciendas was that of an implied trust. Hence, it may be proven
by parole evidence under Art. 1457 of the Civil Code.
ISSUE:
Whether or not the trust is an implied trust which can be
proven by parole evidence (NO)
RULING:
The Court ruled that there was an express trust over the
haciendas because Eduardo, the trustor, expressly told the
beneficiaries of his intent to establish the trust. It, therefore,
cannot be proven by parole evidence.
The Civil Code defines an express trust as one created by
the intention of the trustor or of the parties. 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. An implied trust, on the other hand, is one that
comes into being by operation of law. Implied trusts are those
which, without being expressed, are deducible from the nature
of the transaction by operation of law, as matters of equity,
independent of the particular intention of the parties.
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.
52 | P a g e
In this case, the Court finds that there was an express trust over
the two haciendas because Trustor expressly told the heirs of his
intention to establish the trust.
Art. 1453 is not applicable in this case. This article only
applies when the trustor did not expressly state that he was
establishing the trust. In this case, it was expressly
communicated. Eduardo s intention could be established b the
arrangements made with Justo and Luis and the fact that
Eduardo asked his siblings to pay his wife for her share, and to
divide his one-half share among them.
Assuming arguendo that there was an implied trust, the
case would be resolved the same because the action has already
prescribed. When Eduardo died in 1936, plaintiffs were already
refused by Justo and Luis in their demands over the land. The
complaint was filed only in 1961. Since the right to enforce an
implied trust in one's favor prescribes in ten years, action clearly
prescribed.

DOCTRINES:
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. An implied trust, on the
other hand, is one that comes into being by operation of law.

Article 1453 would apply only if the person conveying the

property did not expressly state that he was establishing the trust.

Right to enforce an implied trust in one s favor prescribes in ten

years.27

27 Author: Mendoza, Michelle Anne

53 | P a g e
 Adaza v. Court of Appeals
Mar. 21, 1989 / 171 SCRA 369 / Implied Trusts
FACTS:
Prior to the death of Victor Adaza Sr., Victor executed a
Deed of Donation in favor of one his daughters, Violeta. This
Deed covered a 13-hectare land in Dapitan City, Zamboanga del
Norte. Th donation was accepted by Violeta in the same
instrument, which both donor and donee acknowledged before
the Notary Public. The donated land was then part of the public
domain and as a disposable public land, it was held and
cultivated by Victor Sr. for many years.
With the help of her brother Horacio, Violeta filed a
homestead application covering the said land. This application
was approved and a free patent was issued consequently. As a
result, thereof, an Original Certificate of Title was issued in the
name of Violeta. In turn, she declared the property in her name.
In 1962, Violeta and her husband Lino obtained a loan
from the Philippine National Bank. She secured the loan by
mortgaging the subject property, while Homero, her other
brother, was still administering it.
Four years after leaving Dapitan, Horacio returned to
celebrate the town fiesta with the family. During said gathering,
Horacio asked Violeta to sign a Deed of Waiver, stating that the
Dapitan property was owned in common by Violeta and himself.
This is notwithstanding the fact that the Original Certificate of
Title had been issued under Violeta s name onl . This Deed of
Waiver also provided for the transfer and conveyance by Violeta
in favor of Horacio of half of the property, together with all the
improvements. Violeta then signed the Deed of Waiver, with
Horacio and Homero signing as witnesses.
A few months later, Violeta and her husband Lino filed
a complaint to annul the Deed of Waiver and sought damages
against Spouses Horacio and Felisa Adaza. Violeta alleged that
she was the absolute and registered owner of the land by virtue
of an unconditional donation executed by their father. She also
claimed that she only signed the Deed of Waiver because of
Horacio s fraudulent misrepresentation and undue influence.
Horacio answered that he and Violeta were co-owners
even if the property was only registered under her name. He
argued that her ownership was subject to the obligation to keep
or use the property for the benefit of their parents, while either
of the parents was still alive. Finally, he contends that Violeta
executed the Deed of Waiver, freely and voluntarily.
The trial court declared that the Deed of Waiver was
valid and that Horacio was the owner of one-half of the
undivided portion of the subject lot. While the Court of Appeals
agreed that the Deed of Waiver was signed voluntarily, it did not
agree with the lower court s decision with regard the donation.
The CA held that the Deed was without cause or consideration
because the land was unconditionally donated to Violeta alone.
In the instant Petition for Review, petitioners insist once more
that Violeta was not the sole owner of the land and that she held
half of the property in trust for Horacio.
ISSUE:
Whether or not the Deed of Donation created an implied
trust in favor of Horacio with respect to one-half of the Dapitan
property (YES)
54 | P a g e
RULING:
Court held that the Deed of Waiver was valid and that The statement in the Deed of Waiver is an admission
Horacio was the one-half owner of the subject lot. The intention that Violeta held the Dapitan land in trust for Horacio. This
of Victor Adaza Sr. to donate the land to Violeta and Horacio Deed, therefore, created an implied trust for Horacio with
was apparent. respect to the subject property.
First, the Deed of Donation contained cross-out Violeta s contention that there was a long dela and
provisions which provides inaction on the part of Horacio is without merit. A continued
recognition of the existence of a trust precludes the defense of
That the donee shall share one-half (1/2) of the entire property with laches. The mentioned two letters written by Violeta show that
one of her brothers or sisters after the death of the donor. there was a recognition in her part of the trust imposed on her by
That the donee do [sic] hereby receive and accept this gift and law. Horacio s reliance on his blood relationship with his sister
donation made in her favor by the donor, not subject to any and the trust and confidence normally connoted in the Filipino
condition, and do hereby express her appreciation and gratefulness culture should not be taken against him.
for the kindness and generosit of the donor. Court granted the Petition.
It was Horacio himself who crossed-out the provision to DOCTRINE:
make it appear that the land was being donated solely to Violeta There is an implied trust when a donation is made to a person,
to facilitate easily the issuance of the title. but it appears that although the legal estate is transmitted to the
Second, through the Deed of Waiver, Violeta donee, he nevertheless has no beneficial interest or is concerned
acknowledged that she owned the land in common with her with only a part thereof.28
brother Horacio. She signed it in the presence of their other
siblings, with the records bereft of any indication of any evil
intent or malice on the part of siblings to collude against Violeta.
Both the trial court and the Court of Appeals reached the
conclusion that Violeta had in fact voluntarily signed the Deed
of Waiver, even though she had done so with reluctance.
Third, records of the Court show that parents Victor and
Rosario had the practice of conveying the lands by simply
putting one of the names of their children in the title. This
arrangement is reflected and recognized by Violeta upon
acknowledging through the two letters, ultimately affirming that
Horacio owned the one-half share of the land.

28 Author: Mendoza, Michelle Anne

55 | P a g e
 Diaz v. Gorricho and Aguado
March 29, 1958 / 103 Phil. 261 / Constructive Trusts
FACTS:
Spouses Francisco Diaz and Maria Sevilla are the
registered owners of Lot Nos. 1941 and 3073 of the Cadastral
Survey of Cabanatuan. When Diaz died in 1919, he was survived
by his widow Sevilla and their children, Manuel, Lolita, and
Constancia.
In 1935, Respondent Carmen J. Gorricho filed an action
against Sevilla with the CFI Manila and thus, a writ of
attachment was issued upon Sevilla s shares in the two lots.
Thereafter, these lots were sold at a public auction and was
purchased by Gorricho herself. When Sevilla failed to redeem
the properties within one year, the acting provincial sheriff
executed a final deed of sale in favor of Gorricho.
In the final deed, however, the sheriff conveyed to
Gorricho the whole of the parcels instead of only the half-interest
of Sevilla therein. Gorricho, nevertheless obtained the Transfer
Certificate of Title Nos. 1354 and 1355 in her name in 1937.
Pursuant to said deed, Gorricho has possessed the subject lands
as its owner ever since.
In 1952, a year after Sevilla died, her children filed the
present action against Gorricho and her husband Francisco
Aguado. The Heirs of Sevilla compelled Gorricho and Aguado
to execute a deed of reconveyance over the undivided one-half
interest, which respondents were allegedly holding in trust for
them.
The trial court held that there was a constructive trust in
favor of the Heirs when Gorricho took advantage of the sheriff s
error and obtained the whole lots and title for herself.
Unfortunately, for the Heirs, however, the action was already
barred by laches and prescription.
ISSUE:
Whether or not the Heirs may compel reconveyance of
their one-half share of the Lots since the trust was continuing
and subsisting (NO)
RULING:
The principal contention of the Heirs is that their father s
half of the disputed property was erroneously acquired by
Gorricho. Since it was acquired through the sheriff s mistake, an
implied trust, as provided by Article 1456 of the Civil Code
arose.
The American law on trusts has always maintained a
distinction between express trusts created by intention of the
parties, and the implied or constructive trusts that are exclusively
created by law, the latter not being trusts in their technical sense.
Express trusts disable the trustee from acquiring for his
own benefit the property committed to his management or
custody, at least while he does not openly repudiate the trust, and
makes such repudiation known to the beneficiary or cestui que
trust. For this reason, the old Code of Civil Procedure declared
that the rules on adverse possession do not apply to
con in ing and b i ing (i.e., nrep dia ed) r .
As pointed out by the lower court, in constructive trusts,
laches constitutes a bar to actions to enforce the trust.
Repudiation is not required, unless there is concealment of the
facts giving rise to the trust.
In express trusts, the delay of the beneficiary is directly
attributable to the trustee who holds the property of the former.
The trustee s possession is not averse to the beneficiar , until
and unless the latter is made aware that the trust has been
repudiated.
56 | P a g e
 In constructive trusts, there is neither promise nor
fiduciary relation. The so-called trustee does not recognize any
trust and has no intent to hold anything for the beneficiary.
Therefore, the beneficiary is not justified in delaying action to
recover his property, as it is his fault if he delays; hence, he may
be estopped by his own laches.
The Heirs cause of action to attack the sheriff s deed and
to cancel the TCT s accrued from 1937 the year of issuance
and recording. The Heirs allowed 15 years to elapse before
taking remedial action in 1952. Even if Constancia came of age
in 1939, there was more than sufficient time (13 years) elapsed.
Under the old Code of Civil Procedure, in force at the time, the
longest period of extinctive prescription was only 10 years.

DOCTRINE:
In constructive trusts, those 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.29

29 Author: Mendoza, Michelle Anne

57 | P a g e
 Sing Juco and Sing Bengco v. Sunyantong and
Llorente
June 30, 1922 / 43 Phil. 589 / Constructive Trusts
FACTS:
In 1919, plaintiffs Sing Juco and Sing Bengco received
from Maria Gay a written option to purchase an estate known as
San Antonio Estate in Iloilo. This propert is measured to be
more than 2,000 hectares and has large cattle existing on said
estate. When the term of the option expired, Sing Juco and Sing
Bengco had it extended verbally until 12:00 NN of 17 June 1919.
Defendant Antonio Sunyantong was, at the time, an
employee of Sing Juco and Sing Bengco. Plaintiffs reposed
confidence in him, so they readily disclosed their plans to him
of purchasing the San Antonio Estate and thereby progressing
their negotiations with Gay.
During one of the conferences for the purchase of the San
Antonio Estate, Sunyantong remarked that it would be best to let
some days pass before accepting the terms of the transfer
proposed by Gay. This was to ascertain that Gay might not think
that they were coveting said property. While this mere remark
cannot be easily taken with malice on the part of said
Sunyantong, it ceases to be innocent upon the review of his
interaction with Alipio de los Santos thereafter.
Sing Juco and Sing Bengco sent Suyantong to meet De
los Santos to examine the estate and to satisfy himself of its
condition. When De los Santos told Sunyantong of his favorable
impression of the San Antonio Estate, Sunyantong advised him
not to report such to Sing Juco. This was supposedly to protect
De los Santos from getting the blame of this highly valuable
transactions if it fails.
On the day of the expiration of the option to purchase,
Sunyantong called Maria Gay. Sunyantong offered to buy the
San Antonio Estate on the same terms proposed by Gay and
terms not yet accepted by the principals. That such offer to buy
was not for the benefit of the principals, but for his own wife, his
co-defendant Vicenta Llorente de Sunyantong.
Gay called Sotelo, the broker for the principals, and told
him that another buyer of the San Antonio Estate has presented
himself to purchase said estate and ultimately push through with
the terms. Gay, keeping in mind the option to purchase, wanted
to inquire of the decision of the principals. Sing Bengco,
instructed Sotelo to inform her that if she cannot wait until 12:00
NN, she may do as she pleases. In particular, Sing Bengco said,
ella cuidado.
While the words of Sing Bengco can draw out different
interpretations, it was taken by Gay to mean that the plaintiffs
waived their option to buy. Consequently, Gay closed the sale of
the San Antonio Estate in favor of defendant Sunyantong.
ISSUE:
Whether or not Sunyantong is liable to Sing Juco and
Sing Bengco for buying the San Antonio Estate for his wife
(YES)
RULING:
The Court held that there was a constructive or equitable
trust and that Sunyantong must convey the San Antonio Estate
to Sing Juco and Sing Bengco. Sunyantong, in intervening in the
negotiations, makes him guilty of infidelity as he was an
employee of the Sing Juco and Sing Bengco to whom he owed
loyalty and faithfulness.
While it can be conceded that the option to purchase of
Sing Juco and Sing Bengco have expired, it cannot be ignored
simply that this was also caused by the disloyalty of Sunyantong.
Such an act of infidelity committed by a trusted employee
58 | P a g e
calculated to redound to his own benefit and to the detriment of
his employers cannot pass without legal sanction. According to DISSENTING OPINION OF VILLAMOR, J,:
the Court, as an illicit act committed with culpa, agent must be The Court should not have ordered Sunyantong to
held liable for the damage caused. convey the estate to Sing Juco and Sing Bengco because the
This reparation, however, is limited to the liability of Sunyantong should only be reparation of damage,
indemnification of damages as the Civil Code does not have an which was not utlimatley proven. Villamor argues that the Sings
express provision for such. Court now turns to apply the already waived their right to the option when Sing Bengco said,
principle regarded as an equitable trust b virtue of which the ella cuidado. Pursuant to this, Ga was free to dispose of the
thing acquired by an employee is deemed not to have been property.30
acquired for his own benefit or that of any other person, but for
his principal, and held in trust for the latter.
As correctly held by the lower court, the Supreme Court
ordered Sunyantong to execute a deed of conveyance to the
Sings of the San Antonio Estate for the same price.

DOCTRINE:
In a case where a confidential employee purchases and
benefits from the property his principal was negotiating, the
reparation of the damages must consist of respecting the contract
which about to be concluded, and which was frustrated by the
act of disloyalty and infidelity.
This principal can be regarded as an equitable trust, b
virtue of which the thing acquired by an employee is deemed to
have been acquired not for his own benefit, or that of any other
person but for his principal and held in trust for the latter.

30 Author: Mendoza, Michelle Anne

59 | P a g e
 Hernandez v. Hernandez
March 9, 2011 / 645 SCRA 24 / Constructive Trust
FACTS:
The Republic of the Philippines, through the Department
of Public Works and Highways, offered to purchase a portion of
a parcel of land covered by a TCT in Sto. Tomas, Batangas. The
foregoing property was for the expansion of the South Luzon
Expressway.
The land is pro-indiviso owned by (1) petitioner Cornelia
Hernandez; (2) Atty. Jose Hernandez, deceased father of
respondent Cecilio, represented by Paciencia; and (3) Mena
Hernandez, also deceased and represented by her heirs.
The initial purchase price that was offered by the
government was allegedly at P35 per sqm. for 14, 643 square
meters of the aforementioned land. The Hernandez family,
however, rejected the offer. After a series of negotiations, the
last offer stood at P70 pesos per sqm., which was also rejected.
The DPWH, henceforth, filed an expropriation case. In
two other separate civil cases, different parcels of land in
Tanauan and Sto. Tomas, Batangas, belonging to 34 and 23
families, respectively were going to be affected by the subject
expropriation. Included in the count of the families is the
Hernandezes.
Owners of the Hernandez family executed a letter
indicating that Cecilio shall act as the representative of the
owners of the land and shall be entitled to compensation for
doing such. During the expropriation proceedings, Cecilio was
appointed as one of the commissioners to represent the
defendants in the second civil case and to determine just
compensation. Cornelia and her co-owners executed an
irrevocable SPA appointing Cecilio as their attorney-in-fact with
respect to the expropriation of the subject property. The decision
of the RTC fixed the just compensation for the property with the
total area of 14, 643 sqm., which was pegged at P21.9 million.
This included the commissioner s fees.
A year later, Cornelia executed a Revocation of the SPA
withdrawing the authority earlier granted to Cecilio. She
moved for the withdrawal of her 1/3 share of the just
compensation. The trial court granted it with the condition that
the money would be released only to the attorney-in-fact,
Cecilio. With this he was able to get the full P21.9 million.
Cornelia received from Cecilio a BPI check amounting
to P1.123 million, while Cecilio would receive approximately P
6 million. This was accompanied by a Receipt and Quitclaim
document in favor of Cecilio, which states that:
a. The amount received will be the share of Cornelia in the
just compensation;
b. In consideration of the payment, it will release and
forever discharge Cecilio from any action, damages,
claims or demands;
c. Cornelia will not institute any action or opposition to the
release of the entire amount.;
The check was received by Cornelia with a heavy heart
because she needed the money immediately for medical
expenses due to her frail condition. She only learned that she was
entitled to P7 million a few days later. Consequently, Cornelia
asked for an accounting of the proceeds from Cecilio, but to no
avail.
Cornelia instituted a complaint for the annulment of the
quitclaim and recovery of sum of money and damages. Trial
court nullified the quitclaim and ordered Cornelio to give the
remaining balance with interest, but the Court of Appeals
reversed such decision. Now, Cecilio contests the equal division
of the proceeds. As an agent, Cecilio insists that he be given the
60 | P a g e
compensation he deserves based on the agreement made in the curiosity of Cornelia. Cecilio, however, did not disclose the truth
letter, which acted as a service contract. and instead of coming up with the request of his aunt, he made
a contract intended to bar Cornelia from recovering any further
ISSUE: sum of money from the sale of her property.
Whether or not the agent breached his duty of loyalty (YES)
DOCTRINE:
RULING: The relation of an agent to his principal is fiduciary and
Court ruled in the affirmative. Court held that while it is elementary that as regards to property subject matter of the
Cecilio will be receiving 83% of the just compensation due agency, an agent is estopped from acquiring or asserting a title
Cornelia, no evidence would show that Cornelia agreed, by way adverse to that of the principal. This position is analogous to that
of the November letter, to give Cecilo the considerable of a trustee and therefore, he cannot be allowed to create in
percentage of the proceeds of the sale. himself an interest in opposition to that of his principal or cestui
As shown in the records of the Court, Cornelia asked for que trust.31
an accounting of the just compensation from Cecilio several
times but the request was never accomplished. This failure for
accounting is indicative of Cecilio s violation of the fiduciar
relationship of an agent and a principal. The relation of an agent
to his principal is fiduciary. It is elementary that as regards
property subject matter of the agency, an agent is estopped from
acquiring or asserting a title adverse to that of the principal. This
position is analogous to that of a trustee and therefore, he cannot
be allowed to create in himself an interest in opposition to that
of his principal.
Instead of an accounting, what Cornelia received was a
receipt and quitclaim document that was ready for signing. Due
to Cornelia s frail condition and urgent need of money in order
to buy medicines, she nevertheless signed the quitclaim.
Quitclaims are contracts, which can be voided if there could be
manifestation and proof of fraud or intimidation.
The facts show that a simple accounting of the proceeds
of the just compensation would have been enough to satisfy the

31 Author: Mendoza, Michelle Anne

61 | P a g e
 Gayondato v. Treasurer
August 25, 1926 / G.R. No. 24597 / Implied Trusts
FACTS:
Domingo Gayondato formerly owned three parcels of
land in Isabela, Negros Occidental which he inherited from his
mother. In 1899, Domingo Gayondato married Adela Gasataya
and had a child, herein petitioner Rosario Gayondato, born in
1900.
Upon the death of Domingo Gayondato in 1902, Gabino
Gasataya, father of Adela, took charge of the three parcels of
land. In 1908, Adela Gasataya married Domingo Cuachon and
Gabino Gasataya then turned over to the spouses the possession
of the land.
The lands were included in Cadastral Case No. 11 of the
CFI of Negros. In a hearing, Domingo Cuachon appeared on
behalf of his wife and stepdaughter and filed claims for the lots
by way of an answer in which he stated that the lots were the
property of "his wife, Adela Gasataya, and of her daughter, 15
years of age." CFI erroneously decreed the registration of the
said parcels of land in the name of Adela Gasataya alone. Adela
mortgaged the properties to the National Bank and eventually,
in 1920, sold it to Francisco Rodriguez with assumption of
mortgage and other debts.
In 1922, Rosario Gayondato brought an action to recover
damages for the erroneous registration of the three parcels of
land against Adela Gasataya, Domingo Cuachon, Francisco
Rodriguez, and the Insular Treasurer. The trial court rendered
judgment in favor of Rosario and ordered Adela Gasataya and
Domingo Cuachon to pay for damages and costs. However,
Insular Treasurer and Francisco Rodriguez were absolved.
Hence, this appeal.
ISSUE/S:
Whether or not the court erred in absolving the Insular
Treasurer? (YES)
RULING:
YES, the Supreme Court held that the trial court erred in
absolving the Insular Treasurer. (Why the Insular Treasurer?
The action for the recovery of damages to be paid out of the
assurance fund under Sections 101 and 102 under the Land
Registration Act is brought against the Insular Treasurer.)
Contrary to the view of the trial court, the liability of the
assurance fund under Sections 101 and 102 of the Land
Registration Act is not confined to cases where the erroneous
registration is due to omission, mistake or malfeasance on the
part of the employees of the registration court, but extends to all
cases where any person is wrongfully deprived of any land or
any interest therein, without negligence on his part, through the
bringing of the same under the provisions of the Land
Registration Act.
Since at the time of the registration of the land, Rosario
Gayondato was a minor, no negligence may be imputed to her.
It is clear from Sections 101 and 102 that in the absence of
special circumstances to the contrary, the assurance fund is
secondarily liable for the damages suffered by any person
through the wrongful registration.
The Supreme Court also held that if a person obtains
legal title to property by fraud or concealment, courts of equity
will impress upon the title, a condition which is generally in a
broad sense termed "constructive trust" in favor of the defrauded
party, but the use of the word "trust" in this sense is not
technically accurate and is not the kind of trust referred to in
Section 106 of the Land Registration Act and which must be
taken in its technical and more restricted sense (contrary to the
contention of the Attorney-General).
62 | P a g e
 If this is the kind of constructive trust referred to in
Section 106, it must be conceded that Rosario Gayondato cannot
recover damages from the assurance fund. Such is not the case,
as contemplated by Sections 101 and 102, in which the right of
recovery from the assurance fund in cases of registration through
fraud or wrongful facts is expressly recognized.

DOCTRINE:
If a person obtains legal title to property by fraud or
concealment, courts of equity will impress upon the title, a
condition which is generally in a broad sense termed
"constructive trust" in favor of the defrauded party. 32

32 Author: Alvaran, Princess Andrea

63 | P a g e
 Escobar v. Locsin
January 30, 1943 / G.R. No. 48309 / Implied Trusts
FACTS:
Eusebia Escobar filed a complaint praying for the
reconveyance of Lot No. 692 and alleging that she is the owner
of said lot. Escobar, being illiterate, asked Domingo Sumangil
to claim the lot for her in the cadastral proceedings, but instead,
Sumangil committed a breach of trust by claiming the lot for
himself. The land was adjudicated in favor of Sumangil. The lot
in question was assigned by partition in the intestate estate of
Sumangil and Honorata Duque to Juana Ringor, whose estate is
being administered by Ramon Locsin.
CFI found that Escobar is the real owner of the lot which
she acquired by donation propter nuptias from Pablo Ringor in
1914. Escobar had since then been in possession of the land and
that the lot had been decreed in the cadastral proceedings in
favor of Sumangil.
The trial court recognized the equitable title of Escobar
and the legal title of Locsin; however, it dismissed the complaint
on the ground that the one year period provided under Section
38 of the Land Registration Act for the review of a decree had
elapsed and that Escobar had not availed of this remedy. Hence,
the present petition.
ISSUE/S:
Whether or not the trial court erred in dismissing the case?
(YES)
RULING:
33 Author: Alvaran, Princess Andrea
YES, the Supreme Court in reversing the dismissal of the
complaint by the trial court held that the complaint seeks the
enforcement of a trust and not the review of the decree or the
reopening of the cadastral case. Hence, Section 38 of the Land
Registration Act does not apply.
The estate of Juana Ringor, as the successor in interest of
the trustee, Sumangil, is in equity bound to execute a deed of
conveyance of this lot to the cestui que trust, Escobar.
The remedy prayed for in this case has been upheld in
previous cases, one of which is Severino v. Severino, where the
Supreme Court ruled that there is no indication of an intention
to cut off, through the issuance of a decree of registration,
equitable rights or remedies such as in this case.
A trust that was created between Escobar and Sumangil
is sacred and inviolable. The courts have therefore shielded
fiduciary relations against every manner of chicanery or
detestable design cloaked by legal technicalities. The Torrens
system was never calculated to foment betrayal in the
performance of a trust.
DOCTRINE:
The Torrens system was never calculated to foment
betrayal in the performance of a trust. 33
64 | P a g e
 Lopez v. CA
December 16, 2008 / G.R. No. 157784 / Implied Trusts
FACTS:
Juliana was married to Jose Lopez Manzano. Their union
did not bear any children. Juliana was the owner of several
properties and the properties subject of this dispute were her
exclusive paraphernal properties.
In March 1968, she executed a notarial will where she
expressed that she wished to constitute a trust fund for her
exclusive paraphernal properties, denominated as Fideicomiso
de Juliana Lopez Manzano (Fideicomiso). The Fideicomiso was
to be administered by her husband, and if her husband were to
die or renounce the obligation, her nephew, Enrique Lopez was
to become administrator. The Fideicomiso indicated that 2/3 of
the income from rentals from the properties were to answer for
the education of deserving but needy honor students, while 1/3
was to shoulder the expenses and fees of the administrator.
Juliana initiated a probate of her will, but she died before
the petition for probate could be heard. The petition was pursued
by her husband, Jose. The CFI admitted the will to probate and
issued letters testamentary to Jose. Jose submitted an inventory
of Juliana s real properties with their appraised values, which
was approved by the probate court. Thereafter, Jose filed a
proposed project of partition which was later approved by the
probate court.
As to the properties to be constituted into the
Fideicomiso, the probate court ordered that the certificates of
title thereto be cancelled, and, in lieu thereof, new certificates be
issued in favor of:
▪ Jose, as trustee of the Fideicomiso covering 1/2 of the
properties listed under paragraph 14 of the project of
partition; and
▪ Jose, as heir of Juliana covering the other half 1/2
The properties which Jose had alleged as registered in his
and Juliana's names, including the disputed lots, were
adjudicated to Jose as heir. The disputed lands were excluded
from the trust.
Jose died leaving a holographic will disposing of the
disputed properties to respondents. Pursuant to this will, the
disputed properties were transferred to the respondents as the
heirs of Jose.
Enrique Lopez, the father of herein petitioner, Richard
Lopez, assumed the trusteeship of Juliana's estate. Richard
Lope was eventuall appointed as trustee of Julianna s estate
and instituted an action for reconveyance of the parcels of land
before the RTC. The RTC rendered a summary judgment
dismissing the action for reconveyance on the ground of
prescription. The CA Affirmed.
ISSUE/S:
1. Whether or not an implied trust was constituted over the
disputed properties when Jose, the trustee, registered
them in his name? (YES)
2. Whether or not the action for reconveyance has
prescribed? (YES)
RULING:
1. YES, the Supreme Court established that an implied
constructive trust was constituted over the disputed
properties.
The disputed properties were excluded from the
Fideicomiso at the outset. Jose registered the disputed properties
in his name partly as his conjugal share and partly as his
inheritance from his wife Juliana. This is the complete reverse
65 | P a g e
of the claim of Richard Lopez, as the new trustee, that the
properties are intended for the beneficiaries of the Fideicomiso.
Furthermore, the exclusion of the disputed properties
from the Fideicomiso was approved by the probate court and,
subsequently, by the trial court having jurisdiction over the
Fideicomiso. The registration of the disputed properties in the
name of Jose was actually pursuant to a court order. Hence, it
enjoys the presumption of regularity.
The apparent mistake in the adjudication of the disputed
properties to Jose created a mere implied constructive trust in
favor of the beneficiaries of the Fideicomiso
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.
The Supreme Court held that Article 1456 applies in this
case, which provides that 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.
Aznar Brothers Realty Company v. Aying differentiated
two kinds of implied trusts: resulting and constructive.
A resulting trust is presumed to have been
contemplated by the parties, the intention as to which is to be
found in the nature of their transaction but not expressed in the
deed itself.
A constructive trust is created, not by any word
evincing a direct intention to create a trust, but by operation of
law in order to satisfy the demands of justice and to prevent
unjust enrichment. It is raised by equity in respect of property,
which has been acquired by fraud, or where although acquired
originally without fraud, it is against equity that it should be
retained by the person holding it.
If a mistake was made in excluding the disputed
properties from the Fideicomiso and adjudicating the same to
Jose as sole heir, the mistake was not rectified as no party
appeared to oppose or appeal the exclusion of the disputed
properties from the Fideicomiso
2. YES, the action for reconveyance has prescribed.
3.
The Supreme Court ruled that the right to seek
reconveyance based on an implied or constructive trust is not
absolute. It is subject to extinctive prescription. An action for
reconveyance based on implied or constructive trust prescribes
in 10 years. This period is reckoned from the date of the issuance
of the original certificate of title or transfer certificate of title.
Since such issuance operates as a constructive notice to the
whole world, the discovery of the fraud is deemed to have taken
place at that time.
Furthermore, in constructive implied trusts, prescription
may supervene even if the trustee does not repudiate the
relationship. Necessarily, repudiation of said trust is not a
condition precedent to the running of the prescriptive period.
Hence, the 10-year prescriptive period to recover the disputed
property must be counted from its registration in the name of
Jose on 15 September 1969, when petitioner was charged with
constructive notice that Jose adjudicated the disputed properties
to himself as the sole heir of Juana and not as trustee of the
Fideicomiso
DOCTRINE:
Where the husband-trustee in a testamentary trust
established by the wife over her paraphernal properties for the
benefit of deserving students obtains a court order from the
66 | P a g e
probate court to register some of the properties as his own as part
of his successional rights to the estate of the deceased wife and
thereby exclude them from the express testamentary trusts, then
a constructive trust has been constituted under Art. 1456 in favor
of the intended beneficiaries, and the action for reconveyance
would be extinguished at the end of 10 years from the
registration of the titles to the properties in the name of the
husband (CLV Outline).34

34 Author: Alvaran, Princess Andrea

67 | P a g e
 Pasiño v. Monterroyo
July 31, 2008 / G.R. No. 159494 / Implied Trusts
FACTS:
Lot No. 2139 was part of a 24-hectare land occupied,
cultivated, and cleared by Laureano Pasiño in 1933. The 24-
hectare land formed part of the public domain which was later
declared alienable and disposable. In 1935, Laureano filed a
homestead application over the entire 24-hectare land. The
homestead application of Laureano was approved by the
Director of Lands.
Laureano died in March 1950, a month later, the Director
of Lands issued an Order for the issuance of a homestead patent
in favor of Laureano, married to Graciana Herbito. Laureano's
heirs did not receive the order and consequently, the land was
not registered under Laureano's name or under that of his heirs.
Between 1949 and 1954, a Cadastral Survey was
conducted in Iligan City and found that a small creek divided the
24-hectare parcel of land into two portions: Lot No. 2138 and
Lot No. 2139.
Jose Pasiño, son of Laureano, secured a title on his name
for Lot No. 2138. Later, Jose alienated Lot No. 2139 in favor of
his children, herein petitioners. The children of Jose
simultaneously filed applications for grant of Free Patent Titles
over their respective shares of Lot No. 2139 before the Land
Management Bureau of the DENR. The DENR granted the
applications and issued OCTs in their favor. The children of Jose
alleged that their possession of Lot No. 2139 was interrupted
when heirs of Dr. Monterroyo forcibly took possession of the
property.
However, the heirs of Dr. Monterroyo alleged that they
had been in open, continuous, exclusive, and notorious
possession of Lot No. 2139, by themselves and through their
predecessors-in-interest, since 10 July 1949. Furthermore, they
alleged that the Land Management Bureau had no authority to
issue the free patent titles because Lot No. 2139 was a private
land. The RTC declared the heirs of Dr. Monterroyo as the
rightful owners and possessors of Lot. No. 2139. The CA
affirmed.
ISSUE/S:
Whether or not the CA erred in affirming the trial court s
decision? (NO)
RULING:
NO, the Supreme Court affirmed the decision of the CA
and held that the principle of constructive trust applies.
Under the principle of constructive trust, registration of
property by one person in his name, whether by mistake or fraud,
the real owner being another person, impresses upon the title so
acquired the character of a constructive trust for the real owner,
which would justify an action for reconveyance.
In the action for reconveyance, the decree of
registration is respected as incontrovertible but what is sought
instead is the transfer of the property wrongfully or erroneously
registered in another's name to its rightful owner or to one with
a better right. 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 heirs of Dr. Monterroyo were able to establish that they
have a better right to Lot No. 2139 since they had long been in
possession of the property in the concept of owners, by
themselves and through their predecessors-in-interest. Hence,
despite the irrevocability of the Torrens titles the heirs of Jose
68 | P a g e
Pasiño may still be compelled under the law to reconvey the
property to respondents

DOCTRINE: 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. 35

35 Author: Alvaran, Princess Andrea

69 | P a g e
 Home Guaranty Corp. v. La Savoje Dev. Corp.
January 28, 2015 / G.R. No. 168616 / Implied Trusts
FACTS:
La Savoie Development Corporation (La Savoie) is a
domestic corporation engaged in the business of real estate
development,
subdivision and brokering. With the onset of the Asian financial
crisis in 1997, La Savoie found itself unable to pay its
obligations to its creditors.
La Savoie filed before the RTC a "petition for the
declaration of state of suspension of payments with approval of
proposed rehabilitation plan." RTC issued the Stay Order which
prohibited La Savoie from selling, encumbering, transferring, or
disposing in any manner any of its properties except in the
ordinary course of business. It is further prohibited from making
any payment of its liabilities outstanding as of the date of the
filing of the petition.
Following the issuance of the Stay Order, La Savoie's
creditors: Planters Development Bank, Philippine Veterans
Bank, and Robinsons Savings Bank, filed their Comments
and/or Oppositions. Home Guaranty Corporation (HGC) filed an
Opposition even though it was not a creditor of La Savoie.
HGC 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 La Savoie. HGC noted that through the "La Savoie Asset
Pool Formation and Trust Agreement" (Trust Agreement), La
Savoie obtained financing for some of its projects through a
securitization process in which Planters Development Bank as
nominal issuer issued P150 million in asset participation
certificates dubbed as the "La Savoie Development Certificates"
(LSDC certificates) to be sold to investors for the development
of real properties in Cavite, Batangas, 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).
The LSDC certificates were covered by a guaranty
extended by HGC through a "Contract of Guaranty '' entered into
by HGC with La Savoie and Planters Development Bank. HGC
added that in the course of its business, La Savoie collected a
total amount of P60,569,134.30 from the buyers of some of the
properties covered by the Asset Pool. This amount, however,
was not remitted by La Savoie to the trust.
With La Savoie's failure to complete some of its projects
and failure to remit sales collections, the Asset Pool defaulted in
redeeming and paying interest on the LSDC certificates. Thus,
La Savoie's investors placed a call on the guaranty. With La
Savoie's failure to remit collections, however, HGC held in
abeyance the settlement of the investors' call. This settlement
was then overtaken by the filing of La Savoie's Petition for
Rehabilitation.
HGC argues 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.
The RTC denied due course to La Savoie's Petition for
Rehabilitation and lifted the Stay Order. La Savoie appealed to
the CA.
HGC filed its Appellee's Brief and argued that all of the
properties comprising the Asset Pool should be excluded from
the rehabilitation proceedings in view of the Deed of
70 | P a g e
Assignment and Conveyance executed in its favor by Planters
Development Bank.
CA reversed and set aside the RTC decision and
reinstated the Stay Order, gave due course to the Petition for
Rehabilitation and remanded the case to the trial court for further
proceedings.
Hence, the present petition for review on certiorari filed
by HGC.
ISSUE/S:
1. Whether or not the conveyance to Home Guaranty
Corporation of the properties comprising the Asset Pool
was valid and effectual? (NO)
2. Whether or not the properties comprising the Asset Pool
should be excluded from the proceedings on La Savoie
Development Corporation's Petition for Rehabilitation?
(NO)
RULING:
1. NO, the conveyance to Home Guaranty Corporation of
the properties comprising the Asset Pool was not valid
and effectual.
The Supreme Court held that Sections 13.1 and 13.2 of
the Trust Agreement spell out what is, for all intents and
purposes, the automatic appropriation by the paying guarantor
of the properties held as security. This is thus a clear case of
pactum commissorium. Hence, it is null and void. Accordingly,
whatever conveyance was made by Planters Development Bank
to HGC in view of this illicit stipulation is ineffectual. It did not
vest ownership in Home Guaranty Corporation. All that this
transfer engendered is a constructive trust in which the
properties comprising the Asset Pool are held in trust by Home
Guaranty Corporation, as trustee, for the trustor, La Savoie.
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.
In Lopez v. Court of Appeals, the properties intended to
be for the benefit of "a trust fund for paraphernal properties,
denominated as Fideicomiso de Juliana Lopez Manzano
(Fideicomiso)," were mistakenly adjudicated by a probate court
in favor of respondents' predecessor-in-interest, Jose Lopez
Manzano. In Lopez, this Supreme Court held that the factual
milieu of that case placed it within the contemplation of Article
1456 of the Civil Code
This case falls squarely under Article 1456 of the Civil
Code. HGC 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.
2. NO, the properties comprising the Asset Pool should not
be excluded from the proceedings on La Savoie
Development Corporation's Petition for Rehabilitation.
Two key points are established from the preceding discussions:
First, the decision of the CA restored La Savoie's status
as a corporation under receivership. The restoration of La
Savoie's status as a corporation under receivership brings into
operation the rule against preference of creditors.
Second, with all but a constructive trust created
between Home Guaranty Corporation and La Savoie, the
71 | P a g e
properties comprising the Asset Pool remain within the
dominion of La Savoie. La Savoie's continuing ownership
entails the continuing competence of the court having
jurisdiction over the rehabilitation proceedings to rule on how
the properties comprising the Asset Pool shall be disposed,
managed, or administered in order to satisfy La Savoie's
obligations and/or effect its rehabilitation.
The cumulative effect of these is that Home Guaranty
Corporation must submit itself, like La Savoie's other creditors,
to how La Savoie's Petition for Rehabilitation shall be resolved.
As a paying guarantor, Home Guaranty Corporation was
subrogated into the rights of La Savoie's creditors and now
stands as the latter's own creditor.
It remains so pending the satisfaction of La Savoie's
obligation and as the void conveyance made to it by Planters
Development Bank failed to terminate in the creditor-debtor
relationship with La Savoie.

DOCTRINE:
Conveyance made by the seller of a property acquired
through pactum commissorium is void, and thus not vest title to
the buyer. Such a situation falls squarely under Article 1456,
where the buyer is deemed to have acquired the property by
mistake or through ineffectual transfer 36

36 Author: Alvaran, Princess Andrea

72 | P a g e
 Tong v. Go Tiat Kun
April 21, 2014 / G.R. No. 196023 / Rules of Prescription on
Trusts
FACTS:
In 1957, Juan Tong had a meeting with all of his 10
children (herein petitioners, Jose Juan Tong et al.), to inform
them of his intention to purchase Lot 998 to be used for the
family's lumber business called "Juan Tong Lumber". However,
since he was a Chinese citizen and was disqualified from
acquiring the said lot, the title to the property will be registered
in the name of his eldest son, Luis, Sr., who at that time was
already of age and was the only Filipino citizen among his
children. Juan Tong bought Lot 998 and accordingly, TCT was
issued by the Registry of Deeds in the name of Luis, Sr
Both the Juan Tong and his wife died intestate. In 1981,
Luis Sr. also died. Go Tiat Kun, et al., herein respondents, being
surviving heirs of Luis Sr., claimed ownership over Lot 998 by
succession, alleging that no trust agreement exists, and it was
Luis, Sr. who bought Lot 998.
Go Tiat Kun, et al. executed a Deed of Extra-Judicial
Settlement of Estate of Luis, Sr., adjudicating among themselves
and claiming that Lot 998 is the conjugal property of Luis, Sr.,
and his wife, Go Tiat Kun. This was approved by court.
Go Tiat Kun, et al. agreed to subdivide Lot 998 (1) Lot 998-
A, in the name of Go Tiat Kun and her children; and (2) Lot 998-
B, in the name of Luis, Jr.
After Lot 998 was subdivided, Luis, Jr. sold Lot 998-B to
Fine Rock Development Corporation (FRDC), which in turn
sold the same to Visayas Goodwill Credit Corporation (VGCC).
It was only after Jose Juan Tong, et al. received a letter from
VGCC, that they discovered about the breach of the trust
agreement committed by the Go Tiat Kun, et al. To protect their
rights, the Jose Juan Tong, et al. filed an action for Annulment
of Sales, Titles, Reconveyance and Damages of Lot 998-B. The
trial court ruled in favor of Jose Juan Tong, et al. which were
later affirmed by the CA and SC on appeal.
This time, Go Tiat Kun executed a Deed of Sale of
Undivided Interest over Lot 998-A in favor of her children
resulting in the issuance of TCT over Lot 998-A. Hence, the Jose
Juan Tong, et al. filed the instant case for Nullification of Titles,
and Deeds of Extra-judicial Settlement and Sale and Damages
claiming as owners of Lot 998-A.
The trial court ruled in favor of Jose Juan Tong, et al. ruling
that there was an implied resulting trust.
However, CA reversed, more particularly ruled that an
express trust was created because there was a direct and
positive act from Juan Tong to create a trust.
ISSUE/S:
1. Whether or not there was an implied resulting trust
constituted over Lot 998 when Juan Tong purchased the
property and registered it in the name of Luis, Sr.? (YES)
2. Whether or not parol evidence may be used as proof of
the establishment of the trust? (YES)
3. Whether or not the action of Jose Juan Tong, et al. was
barred by prescription, estoppel, and laches? (NO)
RULING:
1. YES, the Supreme Court held that what was truly created
was an implied resulting trust, contrary to the ruling of
the CA.
The circumstances surrounding the acquisition of the subject
property show the intent that the equitable or beneficial
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ownership of the property should belong to the Juan Tong
family.
1. Juan Tong had the financial means to purchase the
property for P55,000.00, while Go Tiat Kun, et al. failed
to substantiate their claim that Luis, Sr. bought the
property.
2. The possession of Lot 998 had always been with the Jose
Juan Tong, et al.
3. From the registration in the name of Luis, Sr., Lot 998
remained undivided and it was only after the death of
Luis, Sr. that the Go Tiat Kun, et al. claimed ownership.
4. As the registered owner of Lot 998, it is only natural that
tax declarations and the corresponding tax payment
receipts be in the name of Luis, Sr. so as to effect
payment.
As what has been fully established, in view of the mutual
trust and confidence existing between said parties who are
family members, the only reason why Lot 998 was registered in
the name of Luis, Sr. was to facilitate the purchase of the said
property to be used in the family's lumber business since Luis,
Sr. is the only Filipino Citizen in the Juan Tong family at that
time.
The principle of a resulting trust is 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.
The first sentence of Article 1448 which is 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.
Both elements exist in this case. Luis, Sr. was merely a
trustee of Jose Juan Tong et al. in relation to the subject property,
and it was Juan Tong who provided the money for the purchase
of Lot 998 but the corresponding TCT was placed in the name
of Luis, Sr.
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.
2. YES, Parol evidence may be used as proof of the
establishment of the trust.
What is crucial is the intention to create a trust. Intention,
although only presumed, implied or supposed by law from the
nature of the transaction or from the facts and circumstances
accompanying the transaction, particularly the source of the
consideration is always an element of a resulting trust and may
be inferred from the acts or conduct of the parties rather than
from direct expression of conduct.
Intent as an indispensable element is a matter that necessarily
lies in the evidence, that is, by evidence, even circumstantial, of
statements made by the parties at or before the time title passes.
Because 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
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prove their existence. 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."

3. NO, the action of Jose Juan Tong, et al. was not barred
by prescription, estoppel, and laches.

The action for reconveyance of Lot 998-A, which forms

part of Lot 998, is imprescriptible and Jose Juan Tong, et al. are
not estopped from claiming ownership thereof. As a rule,
implied 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.
The title of Lot 998 was still registered in the name of
Luis Sr. even when he predeceased Juan Tong. Considering that
the implied trust has been repudiated through such death, Lot
998 cannot be included in his estate except only insofar as his
undivided share thereof is concerned.

DOCTRINE:
As a rule, 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.37

37 Author: Alvaran, Princess Andrea

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 ANNEX

INTRODUCTION
Christina Frances Dychioco 1. Morales v. Court of Appeals, 274 SCRA 282 (1997).
2. Panlilio v. Citibank, 539 SCRA 69 (2007).
3. Ramos v. Ramos, 61 SCRA 284, 298 (1974).
EXPRESS TRUSTS
4. Pacheco v. Arro, 85 Phil. 505 (1950).
5. Tan Senguan and Co. v. Phil. Trust Co., 58 Phil. 700 (1933).
Daphne Marie Gomez 6. Rizal Surety & Insurance v. CA, 261 SCRA 69 (1996).
7. Government v. Abadilla, 46 Phil. 642 (1924).
8. Development Bank of the Phils. v. Commission of Audit, 422 SCRA 459 (2004).
9. Mindanao Dev. Authority v. Court of Appeals, 113 SCRA 429 (1982).
10. Julio v. Dalandan, 21 SCRA 543 (1967).
Hazel Ann Mharie Guerrero 11. Cañezo v. Rojas, 538 SCRA 242 (2007).
12. Peñalber v. Ramos, 577 SCRA 509 (2009).
13. Go v. Estate of Felisa Tamio de Buenaventura, 763 SCRA 632 (2015).
14. Cañezo v. Rojas, 538 SCRA 242 (2007).
IMPLIED TRUSTS
15. Juan v. Yap, Sr., 646 SCRA 753 (2011).
16. Heirs of Narvasa, Sr. v. Imbornal, 732 SCRA 171 (2014).
Alyanna Alex Sulaik 17. Salao v. Salao, 70 SCRA 65 (1976).
18. Cañezo v. Rojas, 538 SCRA 242 (2007).
19. PNB v. Court of Appeals, 217 SCRA 347 (1993).
20. Ty v. Ty, 553 SCRA 306 (2008).
21. Philippine National Bank v. Aznar, 649 SCRA 214 (2011).
22. Sime Darby Pilipinas v. Mendoza, 699 SCRA 290 (2013).
Vera Patricia De Vera 23. Gabutan v. Nacalaban, 795 SCRA 115 (2016).
24. Paringit v. Bajit, 631 SCRA 584 (2010).
25. De Ocampo v. Zaporteza, 53 Phil. 442 (1929).
26. Miguel J. Ossorio Pension Foundation, v. CA, 621 SCRA 606 (2010).

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 27. Heirs of Tanak Pangaaran Patiwayon v. Martinez, 142 SCRA 252 (1986).
Michelle Anne Mendoza 28. Heirs of Emilio Candelaria v. Romero, 109 Phil. 500 (1960).
29. Cuaycong v. Cuaycong, 21 SCRA 1192 (1967).
30. Adaza v. Court of Appeals, 171 SCRA 369 (1989).
31. Diaz v. Gorricho and Aguado, 103 Phil. 261 (1958).
32. Sing Juco and Sing Bengco v. Sunyantong and Llorente, 43 Phil. 589 (1922).
33. Hernandez v. Hernandez, 645 SCRA 24 (2011).
Princess Andrea Alvaran 34. Gayondato v. Treasurer, 49 Phil. 244 (1926)
35. Escobar v. Locsin, 74 Phil. 86 (1943)
36. Lopez v. CA, 574 SCRA 26 (2008)
37. Pasiño v. Moneterroyo, 560 SCRA 739 (2008)
38. Home Guarany Corp. v. Lavoje Dev. Corp., 748 SCRA 312 (2015)
RULES OF PRESCRIPTION ON TRUSTS
39. Tong v. Go Tiat Kun, 722 SCRA 623 (2014).

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