TITLE V. TRUST (Chapter 1,2,3) must be a trustee and a cestui que trust.

The Governor
of Tayabas, as the successor of the Civil Governor
THE GOVERNMENT OF THE PHILIPPINE under the Spanish regime, acted as trustee in the
ISLANDS, Petitioner, present case.

vs. If the trustee holds the legal title and the devise is
valid, the natural heirs of the deceased testator have
ANASTASIA ABADILLA, ET AL., claimants. no remaining interest in the land except their right to
THE MUNICIPALITY OF TAYABAS, ET AL., the reversion in the event the devise for some reason
claimants-appellees, should fail, an event which has not yet taken place.
MARIA PALAD, ET AL., claimants-appellants.
The intention of the testator was to have the income
of the property accumulate for the benefit of the
Facts:
proposed school until the same should be established.

On January 25, 1892, Luis Palad executed a

The lands with lot nos. 3464 and 3469 shall hereby
holographic will granting his wife, Dorothea Lopez,
remain in the possession of the Municipality of
the right of exclusive use and possession of several
Tayabas as trustee until the secondary school is
parcels of lands in the Province of Tayabas during
erected. However, the ownership of lot no. 3470 has
her lifetime or until she remarries. The lands shall be
lawfully passed to Dorothea by prescription, having
donated to the secondary school in Tayabas upon
held possession of the land, adverse to all claimants,
Dorothea’s death or second marriage. On December
since 1904.
3, 1896, the testator died.

Sometime in 1900, Dorothea married one Calixto

Dolendo. On April 20, 1903, the testator’s collateral
heirs brought an action for the partition of the lands
on the ground that Dorothea lost her right over the
lands by reason of her second marriage.

During the pendency of the action, the parties arrived

at an agreement delivering the lands with lot nos.
3464 and 3469 to the Municipality of Tayabas as
trustee while lot no. 3470 was left in the possession
of Dorothea. The testator’s collateral heirs filed a
claim over the lands contending that the trust
instituted in the will was ineffective.

Issue:

Whether or not the trust instituted in the will was

effective

Ruling:

Yes. A liberal interpretation of the will revealed that

the testator intended to create a trust for the benefit of
the secondary school, naming the ayuntamiento of
the town or the Civil Governor of the Province as
trustee. In order that a trust may be effective, there

BENITA SALAO VS JUAN SALAO Jr.
Facts:
 The spouses Manuel Salao and Valentina Ignacio of
Rizal begot four children named Patricio, Alejandra,
Juan (Banli) and Ambrosia.
 Manuel Salao died in 1885. His eldest son, Patricio,
died in 1886 survived by his only child. Valentin Salao.
 After Valentina’s death, her estate was administered
by her daughter Ambrosia. It was partitioned
extrajudicially in a deed subsequently notarized.
 The documentary evidence proves that in 1911 or
prior to the death of Valentina Ignacio her two
children, Juan Y. Salao, Sr. and Ambrosia Salao,
secured a Torrens title in their names for a 47-hectare
fishpond located at Sitio Calunuran, Lubao, Pampanga.
 Benita’s (daughter of Valentin), theory is that Juan Y.
Salao, Sr. and his sister Ambrosia had engaged in the
fishpond business. That Valentin Salao and Alejandra
Salao were included in that joint venture, that the
funds used were the earnings of the properties
supposedly inherited from Manuel Salao, and that
those earnings were used in the acquisition of the
Calunuran fishpond. But There is no documentary
evidence to support that theory.
 On the other hand, Juan contend that the Calunuran
fishpond consisted of lands purchased by Juan Y. Salao,
Sr. and Ambrosia Salao in 1905, 1906, 1907 and 1908.
 The lawyer of Benita Salao and the Children of
Victorina Salao in a letter informed Juan S. Salao, Jr.
that his clients had a one-third share in the two
fishponds and that when Juani took possession thereof
in 1945, he refused to give Benita and Victorina's
children their one-third share of the net fruits which
allegedly amounted to P200,000.
 Juan S. Salao, Jr. in his answer categorically stated that
Valentin Salao did not have any interest in the two
fishponds and that the sole owners thereof his father
Banli and his aunt Ambrosia, as shown in the Torrens
titles issued in 1911 and 1917, and that he Juani was
the donee of Ambrosia's one-half share
 Benita Salao and her nephews and niece filed their
original complaint against Juan S. Salao, Jr. They asked
for the annulment of the donation to Juan S. Salao, Jr.
and for the reconveyance to them of the Calunuran
fishpond as Valentin Salao's supposed one-third share
in the 145 hectares of fishpond registered in the
names of Juan Y. Salao, Sr. and Ambrosia Salao which
she alleged was only held in trust
 Juan S. Salao, Jr. in his answer pleaded as a defense
the indefeasibility of the Torrens title secured by his
father and aunt. He also invoked the Statute of Frauds,
prescription and laches.
 The plaintiffs contend that their action is "to enforce a
trust which defendant" Juan S. Salao, Jr. allegedly
violated.
Issues:
1.whether the Calunuran fishpond was held in trust for
Valentin Salao by Juan Y. Salao, Sr. and Ambrosia Salao.
NO
2. whether plaintiffs' action for reconveyance had already
prescribed. YES
HELD:
1. CONCEPTS:
“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"
A person who establishes a trust is called the trustor; one
in whom confidence is reposed as regards property for the
benefit of another person is known as the trustee; and the
person for whose benefit the trust has been created is
referred to as the beneficiary".
"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"
"No express trusts concerning an immovable or any
interest therein may be proven by parol evidence. An
implied trust may be proven by oral evidence"
"No particular words are required for the creation of an
express trust, it being sufficient that a trust is clearly
intended"
"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"
"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 matter of equity,
independently of the particular intention of the parties".
They are ordinarily subdivided into resulting and
constructive trusts
"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 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
or instrument of conveyance
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 contra-distinguished from a
resulting trust, a constructive trust is "a trust not created
by any words, either expressly or impliedly evincing a
direct intension 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."
Thus, "if property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee
of an implied trust for the benefit of the person from
whom the property comes"
Or "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". Such a constructive trust is not a trust in the
technical sense.
APPLICATION
Not a scintilla of documentary evidence was presented
by the plaintiffs to prove that there was an express trust
over the Calunuran fishpond in favor of Valentin Salao.
Purely parol evidence was offered by them to prove the
alleged trust. Their claim that in the oral partition in 1919
of the two fishponds the Calunuran fishpond was assigned
to Valentin Salao is legally untenable.
It is legally indefensible because the terms of article 1443
of the Civil Code are peremptory and unmistakable: parol
evidence cannot be used to prove an express trust
concerning realty.
Also, Plaintiffs' pleadings and evidence cannot be relied
upon to prove an implied trust. The trial court's firm
conclusion that there was no community of property
during the lifetime of Valentina; Ignacio or before 1914 is
substantiated by defendants' documentary evidence. The
existence of the alleged co-ownership over the lands
supposedly inherited from Manuel Salao in 1885 is the
basis of plaintiffs' contention that the Calunuran fishpond
was held in trust for Valentin Salao.But that co-ownership
was not proven by any competent evidence. The claim of
oral partition is quite improbable because the alleged
estate of Manuel Salao was likewise not satisfactorily
proven.
***It is incredible that the forty-seven-hectare Calunuran
fishpond would be adjudicated to Valentin Salao mere by
by word of mouth. Incredible because for the partition of
the seventeen hectares of land left by Valentina Ignacio an
elaborate "Escritura de Particion" consisting of twenty-two
pages had to be executed by the four Salao heirs. Surely,
for the partition of one hundred forty-five hectares of
fishponds among three of the same Salao heirs an oral
adjudication would not have sufficed.
The improbability of the alleged oral partition becomes
more evident when it is borne in mind that the two
fishponds were registered land and "the act of
registration" is "the operative act" that conveys and affects
the land. That means that any transaction affecting the
registered land should be evidenced by a registerable
deed. The fact that Valentin Salao and his successors-in-
interest, the plaintiffs, never bothered for a period of
nearly forty years to procure any documentary evidence to
establish his supposed interest ox participation in the
fishponds is very suggestive of the absence of such
interest***
The plaintiffs utterly failed to measure up to the yardstick
that a trust must be proven by clear, satisfactory and
convincing evidence. It cannot rest on vague and
uncertain evidence or on loose, equivocal or indefinite
declarations
The foregoing rulings are good under article 1457 of the
Civil Code which, as already noted, allows an implied trust
to be proven by oral evidence. Trustworthy oral evidence
is required to prove an implied trust because, oral
evidence can be easily fabricated.
*** If it were true that Valentin had a one-third interest in
the Calunuran fishpond, it is strange that no mention of
such interest was made in the extrajudicial partition of his
estate in 1934.
It is relevant to mention that Ambrosia Salao donated to is not only persuasive of a want of merit but may,
her grandniece, Benita Salao, three lots located at Barrio according to the circumstances, be destructive of the right
Dampalit. As donee Benita Salao signed the deed of itself."
donation. On that occasion she could have asked Ambrosia
Salao to deliver to her and to the children of her sister,
Victorina, the Calunuran fishpond if it were true that it was
held in trust by Ambrosia as the share of Benita's father in
the alleged joint venture. But she did not make any such
demand. It was only after Ambrosia Salao's death that she
(Note: Para han mga hubya han long digest, another
thought of filing an action for the reconveyance of the
case of Salao butu pls refer the latter digest)
Calunuran fishpond which was allegedly held in trust and
which had become the sole property of Juan Salao y
Salao v. Salao
Santiago (Juani).***

Facts: The plaintiffs, all relatives of the defendants,

On the other hand, a Torrens title is generally a conclusive
instituted action for a piece of land in Bataan, alleging it
of the ownership of the land referred to therein. A strong
came from common funds and that there was an oral
presumption exists. that Torrens titles were regularly partition made earlier. They alleged that the defendants,
issued and that they are valid. who became administrators of property in Malabon
inherited from their grandparents, used common funds to
There was no resulting trust in this case because there buy property elsewhere.
never was any intention on the part of Juan Y. Salao, Sr.,
Ambrosia Salao and Valentin Salao to create any trust. Issue: 1. Who is the trustor and who is the trustee?
There was no constructive trust because the registration
of the two fishponds in the names of Juan and Ambrosia 2. Was trust created?
was not vitiated by fraud or mistake. This is not a case
where to satisfy the demands of justice it is necessary to Held:
consider the Calunuran fishpond " being held in trust by
the heirs of Juan Y. Salao, Sr. for the heirs of Valentin
Salao.

1. A person who establishes a trust is called the trustor; one

2. Yes
And even assuming that there was an implied trust,
plaintiffs' action is clearly barred by prescription or laches
Under Act No. 190, whose statute of limitation would
apply if there were an implied trust in this case, the
longest period of extinctive prescription was only ten year
in whom confidence is reposed as regards property for the
benefit of another person is known as the trustee; and the
person for whose benefit the trust has been created is
referred to as the beneficiary" (Art. 1440, Civil Code).
There is a fiduciary relation between the trustee and the
cestui que trust as regards certain property, real, personal,
money or choses in action.

The Calunuran fishpond was registered in 1911. The
written extrajudicial demand for its reconveyance was
made by the plaintiffs in 1951. Their action was filed in
1952 or after the lapse of more than forty years from the
date of registration. The plaintiffs and their predecessor-
in-interest, Valentin Salao, slept on their rights if they
had any rights at all.
"Undue delay in the enforcement of a right is strongly
persuasive of a lack of merit in the claim, since it is human
nature for a person to assert his rights most strongly when
they are threatened or invaded". "Laches or unreasonable
delay on the part of a plaintiff in seeking to enforce a right
2. The court ruled that it was not proven that a trust had
been created. No documentary evidence was presented to
prove an express trust, and Art. 1443 says parol evidence
cannot be used to prove an express trust concerning realty.
Art. 1443. No express trusts concerning an immovable
or any interest therein may be proved by parol
evidence.
Neither can the evidence prove an implied trust. While an
implied trust may be proven by oral evidence, it must be
trustworthy. Neither was it proven that there was fraud or
mistake, enough to create a constructive trust.
TWO KINDS OF TRUST Held:

Express- Created by the parties, or by the intention of the

No. A resulting trust is an "intent-enforcing"
trustor. Express trusts do not prescribe unless repudiated.
trust, based on a finding by the court that in
Implied- Created by operation of law. The rule on implied view of the relationship of the parties their acts
trusts regarding prescription is confusing. In general, express an intent to have a trust, even though
resulting trusts do not prescribe, but constructive trusts do.
they did not use language to that effect.
However, if the purpose of the payor of the
Ramos vs CA
consideration in having title placed in the name
of another was to evade some rule of the
G.R. No. 108121
common or statute law, the courts will not
assist the payor in achieving his improper
Facts:
purpose by enforcing a resulting trust for him in
Herminio Ramos sold to Lydia Celestino, both accordance with the "clean hands" doctrine.
Central Bank employees, his rights to buy a Otherwise stated, as an exception to the law on
parcel of land under the People’s Homesite & trusts, "[a] trust or a provision in the terms of a
Housing Corporation. The corresponding trust is invalid if the enforcement of the trust or
transfer certificate of title was then issued in provision would be against public policy, even
the name of Ramos, and the duplicate copy was though its performance does not involve the
then delivered to Lydia’s possession. A Special commission of a criminal or tortious act by the
Power of Attorney was then executed in favor trustee."
of Lydia to do any act of disposition over the
property in controversy, and this recognized the
existing implied trust between the two parties.
However, in another civil case, the Court
awarded the duplicate copy of the TCT to
Ramos, declaring the same to have been lost.
Hence, Celestino filed an action. The lower
Court recognized that there was an implied
trust and that the action for reconveyance had
not yet prescribed. Petitioners argued that the
lower Court erred in its decision. It was then
revealed that Celestino concealed their
transaction with Ramos, to avoid her
disqualification to acquire a lot from the PHHC.

Issue:

Whether or not Celestino can ask for the

reconveyance of the property on the basis of a
resulting trust.

Heirs of Tranquilino Labiste v. Heirs of Jose
Labiste
TOPIC: Definition and Essential Characteristic of
Express Trusts
FACTS:
1. On 29 September 1919, the late Epifanio
Labiste on his own and on behalf of his
brothers and sisters who were the heirs of
Jose Labiste, purchased from the Bureau of
Lands Lot No. 1054 of the Banilad Friar
Lands Estate, with an area of 13,308 square
meters, located at Guadalupe, Cebu City for
P36.00.
2. Subsequently, then Bureau of Lands
Director Jorge B. Vargas executed Deed of
Conveyance No. 12536 selling and ceding
Lot No. 1054 to Epifanio and his brothers
and sisters who were the heirs of Jose.
3. After full payment of the purchase price but
prior to the issuance of the deed of
conveyance, Epifanio executed an Affidavit
(Affidavit of Epifanio) in Spanish affirming
that he, as one of the heirs of Jose, and his
uncle and petitioners’ predecessor-in-
interest, Tranquilino Labiste then co-owned
Lot No. 1054 because the money that was
paid to the government came from the two
of them.
4. Tranquilino and the heirs of Jose continued
to hold the property jointly.
5. Lot No. 1054. On 2 May 1928, Engineer
Espiritu Bunagan, Deputy Public Land
Surveyor, subdivided Lot No. 1054 into two
lots: Lot No. 1054-A for Tranquilino and
Lot No. 1054-B for Epifanio. The
subdivision plan prepared by Engr. Bunagan
was approved by Jose P. Dans, Acting
Director of Lands.
6. Subsequently, the heirs of Tranquilino
purchased the 1/2 interest of the heirs of
Jose9 over Lot No. 1054 for P300.00, as
evidenced by the Calig-onan sa
Panagpalit10 executed by the parties in the
Visayan dialect. The heirs of Tranquilino
immediately took possession of the entire
lot.
7. When World War II broke out, the heirs of
Tranquilino fled Cebu City and when they
came back they found their homes and
possessions destroyed. The records in the
Office of the Register of Deeds, Office of
the City Assessor and other government
offices were also destroyed during the war.
Squatters have practically overrun the entire
property, such that neither petitioners nor
respondents possess it.
8. In October 1993, petitioners learned that one
of the respondents,Asuncion Labiste, had
filed a petition for reconstitution of title over
Lot No. 1054. Petitioners opposed the
petition at first but by a compromise
agreement between the parties, petitioners
withdrew their opposition to expedite the
reconstitution process.
9. Under the compromise agreement,
petitioners were to be given time to file a
complaint so that the issues could be
litigated in an ordinary action and the
reconstituted title was to be deposited with
the Clerk of Court for a period of sixty (60)
days to allow petitioners to file an action for
reconveyance and to annotate a notice of lis
pendens. T
10. The Register of Deeds of Cebu City issued
the reconstituted title, TCT No. RT-7853,12
in the name of "Epifanio Labiste, married to
Tomasa Mabitad, his brothers and sisters,
heirs of Jose Labiste". However,
respondents did not honor the compromise
agreement.
11. The RTC in a Decision ruled in favor of
petitioners. The RTC found that they are
genuine and authentic as ancient documents
and that they are valid and
enforceable.Moreover, it held that the action
had not prescribed as the complaint was
filed about a year after the reconstitution of
the title by respondents.
12. On appeal, the Court of Appeals, while
affirming petitioners’ right to the property,
nevertheless reversed the RTC’s decision on
the ground of prescription and laches. It
affirmed the RTC’s findings that the
Affidavit and the Calig-onan sa Panagpalit
are genuine and authentic, and that the same
are valid and enforceable documents.
ISSUE(S):
1. W/N the petitioners’ action has been barred
by latches
HELD:
No. The Court of Appeals erred in applying the rules
on prescription and the principle of laches because
what is involved in the present case is an express
trust.
RATIO:
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 the intention of the trustor or of the
parties. An implied trust comes into being by
operation of law.
Express trusts are created by direct and positive acts
of the parties, by some writing or deed, or will, or by
words either expressly or impliedly evincing an
intention to create a trust. Under Article 1444 of the
Civil Code, "[n]o particular words are required for
the creation of an express trust, it being sufficient that
a trust is clearly intended."
repudiation have been made known to the cestui que
trust, and (c) the evidence thereon is clear and
conclusive.
Respondents cannot rely on the fact that the Torrens
title was issued in the name of Epifanio and the other
heirs of Jose. It has been held that a trustee who
obtains a Torrens title over property held in trust by
him for another cannot repudiate the trust by relying
on the registration. The rule requires a clear
repudiation of the trust duly communicated to the
beneficiary. The only act that can be construed as
repudiation was when respondents filed the petition
for reconstitution in October 1993. And since
petitioners filed their complaint in January 1995,
their cause of action has not yet prescribed, laches
cannot be attributed to them.
However, to recover the other half of the property
covered by the private Calig-onan sa Panagpalit and
to have it registered on the title of the property,
petitioners should have filed an action to compel
respondents, as heirs of the sellers in the contract, to
execute a public deed of sale. A conveyance of land
made in a private document does not affect its
validity.

The Affidavit of Epifanio is in the nature of a trust

agreement. Epifanio affirmed that the lot brought in
his name was co-owned by him, as one of the heirs of
Jose, and his uncle Tranquilino. And by agreement,
each of them has been in possession of half of the
property. Their arrangement was corroborated by the
subdivision plan prepared by Engr. Bunagan and
approved by Jose P. Dans, Acting Director of Lands.

As such, prescription and laches will run only from

the time the express trust is repudiated. The Court has
held that for acquisitive prescription to bar the action
of the beneficiary against the trustee in an express
trust for the recovery of the property held in trust it
must be shown that: (a) the trustee has performed
unequivocal acts of repudiation amounting to an
ouster of the cestui que trust; (b) such positive acts of