G.R. No.

175339

December 16, 2008

PREMIERE DEVELOPMENT BANK, petitioner, vs. ALFREDO C. FLORES, in his Capacity as Presiding Judge of Regional Trial Court of Pasig City, Branch 167, ARIZONA TRANSPORT CORPORATION and PANACOR MARKETING CORPORATION, respondents.

This is a Rule 45 petition for review 1 of the Court of Appeals decision2 in CA-G.R. SP No. 92908 which affirmed the Regional Trial Courts (RTCs) orders3 granting respondent corporations motion for execution of the Courts 14 April 2004 decision in G.R. No. 1593524 and denying5 petitioner Premiere Development Banks motion for reconsideration, as well as the appellate courts resolution 6 denying Premiere Development Banks motion for reconsideration.

The factual antecedents of the case, as found by the Court in G.R. No. 159352, are as follows: The undisputed facts show that on or about October 1994, Panacor Marketing Corporation (Panacor for brevity), a newlyformed corporation, acquired an exclusive distributorship of products manufactured by Colgate Palmolive Philippines, Inc. (Colgate for short). To meet the capital requirements of the exclusive distributorship, which required an initial inventory level of P7.5 million, Panacor applied for a loan of P4.1 million with Premiere Development Bank. After an extensive study of Panacors creditworthiness, Premiere Bank rejected the loan application and suggested that its affiliate company, Arizona Transport Corporation (Arizona for short), should instead apply for the loan on condition that the proceeds thereof shall be made available to Panacor. Eventually, Panacor was granted a P4.1 million credit line as evidenced by a Credit Line Agreement. As suggested, Arizona, which was an existing loan client, applied for and was granted a loan of P6.1 million, P3.4 million of which would be used to pay-off its existing loan accounts and the remaining P2.7 million as credit line of Panacor. As security for the P6.1 million loan, Arizona, represented by its Chief Executive Officer Pedro Panaligan and spouses Pedro and Marietta Panaligan in their personal capacities, executed a Real Estate Mortgage against a parcel of land covered by TCT No. T-3475 as per Entry No. 49507 dated October 2, 1995. Since the P2.7 million released by Premiere Bank fell short of the P4.1 million credit line which was previously approved, Panacor negotiated for a take-out loan with IBA-Finance Corporation (hereinafter referred to as IBA-Finance) in the sum of P10 million, P7.5 million of which will be released outright in order to take-out the loan from Premiere Bank and the balance of P2.5 million (to complete the needed capital ofP4.1 million with Colgate) to be released after the cancellation by Premiere of the collateral mortgage on the property covered by TCT No. T-3475. Pursuant to the said take-out agreement, IBA-Finance was authorized to pay Premiere Bank the prior existing loan obligations of Arizona in an amount not to exceed P6 million. On October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R. Martillano, officer-in-charge of Premiere Banks San Juan Branch, informing her of the approved loan in favor of Panacor and Arizona, and requesting for the release of TCT No. T-3475. Martillano, after reading the letter, affixed her signature of conformity thereto and sent the original copy to Premiere Banks legal office. x x x On October 12, 1995, Premiere Bank sent a letter-reply to [IBA]-Finance, informing the latter of its refusal to turn over the requested documents on the ground that Arizona had existing unpaid loan obligations and that it was the banks policy to require full payment of all outstanding loan obligations prior to the release of mortgage documents. Thereafter, Premiere Bank issued to IBA-Finance a Final Statement of Account showing Arizonas total loan indebtedness. On October 19, 1995, Panacor and Arizona executed in favor of IBA-Finance a promissory note in the amount of P7.5 million. Thereafter, IBA-Finance paid to Premiere Bank the amount of P6,235,754.79, representing the full outstanding loan account of Arizona. Despite such payment, Premiere Bank still refused to release the requested mortgage documents specifically, the owners duplicate copy of TCT No. T-3475. On November 2, 1995, Panacor requested IBA-Finance for the immediate approval and release of the remaining P2.5 million loan to meet the required monthly purchases from Colgate. IBA-Finance explained however, that the processing of the P2.5 million loan application was conditioned, among others, on the submission of the owners duplicate copy of TCT No. 3475 and the cancellation by Premiere Bank of Arizonas mortgage. Occasioned by Premiere Banks adamant refusal to release the mortgage cancellation document, Panacor failed to generate the required capital to meet its distribution and sales targets. On December 7, 1995, Colgate informed Panacor of its decision to terminate their distribution agreement. On March 13, 1996, Panacor and Arizona filed a complaint for specific performance and damages against Premiere Bank before the Regional Trial Court of Pasig City, docketed as Civil Case No. 65577. On June 11, 1996, IBA-Finance filed a complaint-in-intervention praying that judgment be rendered ordering Premiere Bank to pay damages in its favor. On May 26, 1998, the trial court rendered a decision in favor of Panacor and IBA-Finance, the decretal portion of which reads: xxx

Premiere Bank appealed to the Court of Appeals contending that the trial court erred in finding, inter alia, that it had maliciously downgraded the credit-line of Panacor from P4.1 million to P2.7 million. In the meantime, a compromise agreement was entered into between IBA-Finance and Premiere Bank whereby the latter agreed to return without interest the amount of P6,235,754.79 which IBA-Finance earlier remitted to Premiere Bank to pay off the unpaid loans of Arizona. On March 11, 1999, the compromise agreement was approved. On June 18, 2003, a decision was rendered by the Court of Appeals which affirmed with modification the decision of the trial court, the dispositive portion of which reads:7 x x x Incidentally, respondent corporations received a notice of sheriffs sale during the pendency of G.R. No. 159352. Respondent corporations were able to secure an injunction from the RTC but it was set aside by the Court of Appeals in a decision dated 20 August 2004.8 The appellate court denied respondent corporations motion for reconsideration in a resolution dated 5 November 2004.9 The Court, in a resolution dated 16 February 2005, did not give due course to the petition for review of respondent corporations as it did not find any reversible error in the decision of the appellate court.10 After the Court had denied with finality the motion for reconsideration,11 the mortgaged property was purchased by Premiere Development Bank at the foreclosure sale held on 19 September 2005 for P6,600,000.00.12 Respondent corporations filed a motion for execution dated 25 August 200513 asking for the issuance of a writ of execution of our decision in G.R. No. 159352 where we awarded P800,000.00 as damages in their favor.14 The RTC granted the writ of execution sought. The Court of Appeals affirmed the order. Hence, the present petition for review. The only question before us is the propriety of the grant of the writ of execution by the RTC. Premiere Development Bank argues that the lower courts should have applied the principles of compensation or set-off as the foreclosure of the mortgaged property does not preclude it from filing an action to recover any deficiency from respondent corporations loan. It allegedly did not file an action to recover the loan deficiency from respondent corporations because of the pending Civil Case No. MC03-2202 filed by respondent corporations before the RTC of Mandaluyong City entitled Arizona Transport Corp. v. Premiere Development Bank. That case puts into issue the validity of Premiere Development Banks monetary claim against respondent corporations and the subsequent foreclosure sale of the mortgaged property. Premiere Development Bank allegedly had wanted to wait for the resolution of the civil case before it would file its deficiency claims against respondent corporations. Moreover, the execution of our decision in G.R. No. 159352 would allegedly be iniquitous and unfair since respondent corporations are already in the process of winding up.15 The Court finds the petition unmeritorious. A judgment becomes "final and executory" by operation of law. In such a situation, the prevailing party is entitled to a writ of execution, and issuance thereof is a ministerial duty of the court.16 This policy is clearly and emphatically embodied in Rule 39, Section 1 of the Rules of Court, to wit: SECTION 1. Execution upon judgments or final orders. Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected. If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party. The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ of execution. (Emphasis supplied.) Jurisprudentially, the Court has recognized certain exceptions to the rule as where in cases of special and exceptional nature it becomes imperative in the higher interest of justice to direct the suspension of its execution; whenever it is necessary to accomplish the aims of justice; or when certain facts and circumstances transpired after the judgment became final which could render the execution of the judgment unjust.17 None of these exceptions avails to stay the execution of this Courts decision in G.R. No. 159352. Premiere Development Bank has failed to show how injustice would exist in executing the judgment other than the allegation that respondent corporations are in the

process of winding up. Indeed, no new circumstance transpired after our judgment had become final that would render the execution unjust. The Court cannot give due course to Premiere Development Banks claim of compensation or set-off on account of the pending Civil Case No. MC03-2202 before the RTC of Mandaluyong City. For compensation to apply, among other requisites, the two debts must be liquidated and demandable already.18 A distinction must be made between a debt and a mere claim. A debt is an amount actually ascertained. It is a claim which has been formally passed upon by the courts or quasi-judicial bodies to which it can in law be submitted and has been declared to be a debt. A claim, on the other hand, is a debt in embryo. It is mere evidence of a debt and must pass thru the process prescribed by law before it develops into what is properly called a debt.19 Absent, however, any such categorical admission by an obligor or final adjudication, no legal compensation or off-set can take place. Unless admitted by a debtor himself, the conclusion that he is in truth indebted to another cannot be definitely and finally pronounced, no matter how convinced he may be from the examination of the pertinent records of the validity of that conclusion the indebtedness must be one that is admitted by the alleged debtor or pronounced by final judgment of a competent court.20 At best, what Premiere Development Bank has against respondent corporations is just a claim, not a debt. At worst, it is a speculative claim. The alleged deficiency claims of Premiere Development Bank should have been raised as a compulsory counterclaim before the RTC of Mandaluyong City where Civil Case No. MC03-2202 is pending. Under Section 7, Rule 6 of the 1997 Rules of Civil Procedure, a counterclaim is compulsory when its object "arises out of or is necessarily connected with the transaction or occurrence constituting the subject matter of the opposing partys claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction". In Quintanilla v. CA21 and reiterated in Alday v. FGU Insurance Corporation,22 the "compelling test of compulsoriness" characterizes a counterclaim as compulsory if there should exist a "logical relationship" between the main claim and the counterclaim. There exists such a relationship when conducting separate trials of the respective claims of the parties would entail substantial duplication of time and effort by the parties and the court; when the multiple claims involve the same factual and legal issues; or when the claims are offshoots of the same basic controversy between the parties. Clearly, the recovery of Premiere Development Banks alleged deficiency claims is contingent upon the case filed by respondent corporations; thus, conducting separate trials thereon will result in a substantial duplication of the time and effort of the court and the parties. The fear of Premiere Development Bank that they would have difficulty collecting its alleged loan deficiencies from respondent corporations since they were already involuntarily dissolved due to their failure to file reportorial requirements with the Securities and Exchange Commission is neither here nor there. In any event, the law specifically allows a trustee to manage the affairs of the corporation in liquidation, and the dissolution of the corporation would not serve as an effective bar to the enforcement of rights for or against it. As early as 1939,23 this Court held that, although the time during which the corporation, through its own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited to three years from the time the period of dissolution commences, there is no time limit within which the trustees must complete a liquidation placed in their hands. What is provided in Section 12224 of the Corporation Code is that the conveyance to the trustees must be made within the three-year period. But it may be found impossible to complete the work of liquidation within the three-year period or to reduce disputed claims to judgment. The trustees to whom the corporate assets have been conveyed pursuant to the authority of Section 122 may sue and be sued as such in all matters connected with the liquidation. Furthermore, Section 145 of the Corporation Code clearly provides that "no right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation." Even if no trustee is appointed or designated during the three-year period of the liquidation of the corporation, the Court has held that the board of directors may be permitted to complete the corporate liquidation by continuing as "trustees" by legal implication.25 Therefore, no injustice would arise even if the Court does not stay the execution of G.R. 159352. Although it is commendable for Premiere Development Bank in offering to deposit with the RTC the P800,000.00 as an alternative prayer, the Court cannot allow it to defeat or subvert the right of respondent corporations to have the final and executory decision in G.R. No. 159352 executed. The offer to deposit cannot suspend the execution of this Courts decision for this cannot be deemed as consignation. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment, and it generally requires a prior tender of payment. In this case, it is Premiere Development Bank, the judgment debtor, who refused to pay respondent corporations P800,000.00 and not the other way around. Neither could such offer to make a deposit with the RTC provide a ground for this Court to issue an injunctive relief in this case. WHEREFORE, the petition for review is DENIED. The decision of the Court of Appeals in CA-G.R. SP No. 92908 isAFFIRMED. SO ORDERED.

DANTE O. TINGA Associate Justice

WE CONCUR: LEONARDO A. QUISUMBING Associate Justice Chairperson CONCHITA CARPIO MORALES Associate Justice PRESBITERO J. VELASCO, JR. Associate Justice ARTURO D. BRION Associate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. LEONARDO A. QUISUMBING Associate Justice Chairperson, Second Division

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 159494 July 31, 2008

ROGELIO, GEORGE, LOLITA, ROSALINDA, and JOSEPHINE, all surnamed PASIO, represented by their father and attorney-in-fact JOSE PASIO Petitioners, vs. DR. TEOFILO EDUARDO F. MONTERROYO, ROMUALDO MONTERROYO, MARIA TERESA MONTERROYO, and STEPHEN MONTERROYO, Respondents. DECISION CARPIO, J.: The Case Before the Court is a petition for review1 assailing the 31 January 2003 Decision2 and the 5 August 2003 Resolution3 of the Court of Appeals in CA-G.R. CV No. 63199. The Court of Appeals affirmed the Decision4 dated 2 February 1999 of the Regional Trial Court of Iligan City, Branch 6 (trial court), in Civil Case No. 06-3060. The Antecedent Facts This case originated from an action for recovery of possession and damages, with prayer for the issuance of a temporary restraining order or writ of preliminary mandatory injunction, filed by Rogelio, George, Lolita, Rosalinda and Josephine, all surnamed Pasio, represented by their father and attorney-in-fact Jose Pasio (petitioners) against Dr. Teofilo Eduardo F. Monterroyo (Dr. Monterroyo), later substituted by his heirs Romualdo, Maria Teresa and Stephen, all surnamed Monterroyo (respondents). Cad. Lot No. 2139 of Cad. 292, Iligan Cadastre (Lot No. 2139), with an area of 19,979 square meters, located at Panul-iran, Abuno, Iligan City, was part of a 24-hectare land occupied, cultivated and cleared by Laureano Pasio (Laureano) in 1933. The 24-hectare land formed part of the public domain which was later declared alienable and disposable. On 18 February 1935, Laureano filed a homestead application over the entire 24-hectare land under Homestead Application No. 205845.5 On 22 April 1940, the Bureau of Forestry wrote Laureano and informed him that the tract of land covered by his application was not needed for forest purposes.6 On 11 September 1941, the Director of Lands issued an Order7 approving Laureanos homestead application and stating that Homestead Entry No. 154651 was recorded in his name for the land applied for by him.

Laureano died on 24 March 1950. On 15 April 1952, the Director of Lands issued an Order8 for the issuance of a homestead patent in favor of Laureano, married to Graciana Herbito9 (Graciana). Laureanos heirs did not receive the order and consequently, the land was not registered under Laureanos name or under that of his heirs. In 1953, the property was covered by Tax Declaration No. 1110210 in the name of Laureano with Graciana11 as administrator. Between 1949 and 1954, a Cadastral Survey was conducted in Iligan City. The surveyor found that a small creek divided the 24-hectare parcel of land into two portions, identified as Lot No. 2138 and Lot No. 2139. Petitioners claimed that Laureanos heirs, headed by his son Jose, continuously possessed and cultivated both lots. On 16 October 1962, Joses co-heirs executed a Deed of Quitclaim renouncing their rights and interest over the land in favor of Jose. Jose secured a title in his name for Lot No. 2138. Later, Jose alienated Lot No. 2139 in favor of his children (petitioners in this case) who, on 8 January 1994, simultaneously filed applications for grant of Free Patent Titles over their respective shares of Lot No. 2139 before the Land Management Bureau of the Department of Environment and Natural Resources (DENR). On 22 August 1994, the DENR granted petitioners applications and issued Original Certificate of Title (OCT) No. P-1322 (a.f.) in favor of Rogelio Pasio, OCT No. P-1318 (a.f.) in favor of George Pasio, OCT No. P-1317 (a.f.) in favor of Lolita Pasio, OCT No. P-1321 (a.f.) in favor of Josephine Pasio, and OCT No. P-1319 (a.f.) in favor of Rosalinda Pasio. Petitioners alleged that their possession of Lot No. 2139 was interrupted on 3 January 1993 when respondents forcibly took possession of the property. Respondents 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. They alleged that on 10 July 1949, Rufo Larumbe (Larumbe) sold Lot No. 2139 to Petra Teves (Petra). On 27 February 1984, Petra executed a deed of sale over Lot No. 2139 in favor of Vicente Teves (Vicente). On 20 February 1985, Vicente executed a pacto de retro sale over the land in favor of Arturo Teves (Arturo). In 1992, Arturo sold Lot No. 2139 in favor of respondents father, Dr. Monterroyo, by virtue of an oral contract. On 5 January 1995, Arturo executed a Deed of Confirmation of Absolute Sale of Unregistered Land in favor of Dr. Monterroyos heirs. Respondents alleged that Jose was not the owner of Lot No. 2139 and as such, he could not sell the land to his children. They alleged that petitioners OCTs were null and void for having been procured in violation of the Public Land Act. They further alleged that the Land Management Bureau had no authority to issue the free patent titles because Lot No. 2139 was a private land. The Ruling of the Trial Court In its 2 February 1999 Decision, the trial court ruled, as follows: WHEREFORE, judgment is rendered in favor of all the defendants and against the plaintiffs: 1. Dismissing the complaint; 2. Declaring Lot No. 2139, Iligan Cadastre 292, located at Panul-iran, Abuno, Iligan City to have acquired the character of a private land over which the Land Management Bureau has been divested of jurisdiction; 3. Declaring the defendants to be the owners and possessors of the said lot; 4. Declaring OCT Nos. P-1322 (a.f.) of Rogelio Pasio, P-1318 (a.f.) of George Pasio, P-1317 (a.f.) of Lolita Pasio, P-1321 (a.f.) of Josephine Pasio and P-1319 (a.f.) of Rosalinda Pasio to be null and void for having been procured by fraud and for having been issued by the Land Management Bureau which has been divested of jurisdiction over said lot; 5. Declaring the defendants to be entitled to the sum of P6,000.00 deposited with the Office of the Clerk of Court under O.R. No. 1487777; 6. Dismissing the defendants counterclaim for attorneys fees.

Costs against the plaintiffs. SO ORDERED.12 The trial court ruled that as of January 1994, Lot No. 2139 had already acquired the character of a private land by operation of law. Since Lot No. 2139 had already ceased to be a public land, the Land Management Bureau had no power or authority to dispose of it by issuing free patent titles. The trial court ruled that respondents counterclaim stands on the same footing as an independent action. Thus, it could not be considered a collateral attack on petitioners titles. The trial court further ruled that respondents filed their counterclaim within one year from the grant of petitioners titles, which was the reglementary period for impugning a title. The trial court ruled that the order for the issuance of a patent in favor of Laureano lapsed and became functus officio when it was not registered with the Director of Deeds. The trial court ruled that while Laureano was the original claimant of the entire 24 hectares, he ceded the right to possession over half of the property, denominated as Lot No. 2139, to Larumbe sometime in 1947. The trial court found that Laureano offered to sell half of the land to his tenant Gavino Quinaquin (Gavino) but he did not have money. Later, Gavino learned from Larumbe that he (Larumbe) acquired half of the land from Laureano. Gavino then started delivering the owners share of the harvest to Larumbe. Laureano never contested Gavinos action nor did he demand that Gavino deliver to him the owners share of the harvest and not to Larumbe. When Lot No. 2139 was sold, Gavino and his successors delivered the owners share of the harvest to Petra, Vicente, Arturo, Dr. Monterroyo, and Dindo Monterroyo, successively. The trial court also found that the other tenants had never given any share of the harvest to Jose. The trial court ruled that petitioners had failed to present convincing evidence that they and their predecessors-in-interest were in possession of Lot No. 2139 from 1947 to 1994 when they filed their application for free patent. The trial court ruled that petitioners committed actual fraud when they misrepresented in their free patent applications that they were in possession of the property continuously and publicly. Petitioners appealed from the trial courts Decision. The Ruling of the Court of Appeals In its 31 January 2003 Decision, the Court of Appeals affirmed the trial courts Decision. The Court of Appeals ruled that the trial court did not err in allowing respondents counterclaim despite the nonappearance of Dr. Monterroyo, the original defendant, at the barangay conciliation proceedings. The Court of Appeals ruled that petitioners themselves did not personally appear. They were represented by their attorney-in-fact although they were all of legal age, which was a violation of the Katarungang Pambarangay proceedings requiring the personal appearance of the parties. Hence, the Court of Appeals ruled that there was never a valid conciliation proceeding. However, while this would have been a ground for the dismissal of the complaint, the issue was deemed waived because respondents did not raise it in their answer before the trial court. The Court of Appeals ruled that the validity of petitioners titles could be attacked in a counterclaim. The Court of Appeals ruled that respondents counterclaim was a compulsory counterclaim. The Court of Appeals sustained the trial courts ruling that the Land Management Bureau had been divested of jurisdiction to grant the patent because the land already acquired the character of a private land. While the homestead patent was issued in favor of Laureano, the issuance of patent order became functus officio when it was not registered. The Court of Appeals further sustained the trial courts finding that respondents were in physical, open, public, adverse and continuous possession of Lot No. 2139 in the concept of owner for at least 30 years prior to petitioners application for free patent titles over the land. Petitioners filed a motion for reconsideration.

In its 5 August 2003 Resolution, the Court of Appeals denied petitioners motion for reconsideration. Hence, the petition before this Court. The Issue Petitioners raised the sole issue of whether the Court of Appeals erred in sustaining the trial courts Decision declaring respondents as the rightful owners and possessors of Lot No. 2139.13 The Ruling of this Court The petition has no merit. Land Management Bureau Had No Jurisdiction To Issue Free Patent Titles In Director of Lands v. IAC,14 the Court ruled: [A]lienable public land held by a possessor, continuously or through his predecessors-in-interest, openly, continuously and exclusively for the prescribed statutory period (30 years under The Public Land Act, as amended) is converted to private property by the mere lapse or completion of the period, ipso jure.15 In Magistrado v. Esplana,16 the Court ruled that so long as there is a clear showing of open, continuous, exclusive and notorious possession, and hence, a registrable possession, by present or previous occupants, by any proof that would be competent and admissible, the property must be considered to be private. In this case, the trial court found that the preponderance of evidence favors respondents as the possessors of Lot No. 2139 for over 30 years, by themselves and through their predecessors-in-interest. The question of who between petitioners and respondents had prior possession of the property is a factual question whose resolution is the function of the lower courts.17 When the factual findings of both the trial court and the Court of Appeals are supported by substantial evidence, they are conclusive and binding on the parties and are not reviewable by this Court.18 While the rule is subject to exceptions, no exception exists in this case. Respondents were able to present the original Deed of Absolute Sale, dated 10 July 1949, executed by Larumbe in favor of Petra.19 Respondents also presented the succeeding Deeds of Sale showing the transfer of Lot No. 2139 from Petra to Vicente20 and from Vicente to Arturo21 and the Deed of Confirmation of Absolute Sale of Unregistered Real Property executed by Arturo in favor of respondents.22 Respondents also presented a certification23 executed by P/Sr. Superintendent Julmunier Akbar Jubail, City Director of Iligan City Police Command and verified from the Log Book records by Senior Police Officer Betty Dalongenes Mab-Abo confirming that Andres Quinaquin made a report that Jose, Rogelio and Luciana Pasio, Lucino Pelarion and Nando Avilo forcibly took his copra. This belied petitioners allegation that they were in possession of Lot No. 2139 and respondents forcibly took possession of the property only in January 1993. Considering that petitioners application for free patent titles was filed only on 8 January 1994, when Lot No. 2139 had already become private land ipso jure, the Land Management Bureau had no jurisdiction to entertain petitioners application. Non-Registration of Homestead Patent Rendered it Functus Officio Once a homestead patent granted in accordance with law is registered, the certificate of title issued by virtue of the patent has the force and effect of a Torrens title issued under the land registration law.24 In this case, the issuance of a homestead patent in 1952 in favor of Laureano was not registered. Section 103 of Presidential Decree No.

152925 mandates the registration of patents, and registration is the operative act to convey the land to the patentee, thus: Sec. 103. x x x x. The deed, grant, patent or instrument of conveyance from the Government to the grantee shall not take effect as a conveyance or bind the land but shall operate only as a contract between the Government and the grantee and as evidence of authority to the Register of Deeds to make registration. It is the act of registration that shall be the operative act to affect and convey the land, and in all cases under this Decree, registration shall be made in the office of the Register of Deeds of the province or city where the land lies. The fees for registration shall be paid by the grantee. After due registration and issuance of the certificate of title, such land shall be deemed to be registered land to all intents and purposes under this Decree. (Emphasis supplied)
1avvphi1

Further, in this case, Laureano already conveyed Lot No. 2139 to Larumbe in 1947 before the approval of his homestead application. In fact, Larumbe already sold the land to Petra in 1949, three years before the issuance of the homestead patent in favor of Laureano. The trial court found that since 1947, the tenants of Lot No. 2139 had been delivering the owners share of the harvest, successively, to Larumbe, Petra, Vicente and Arturo Teves, Dr. Monterroyo and Dindo Monterroyo. The trial court found no instance when the owners share of the harvest was delivered to Jose Pasio. Hence, we sustain the trial court that the non-registration of Laureanos homestead patent had rendered it functus officio. A Counterclaim is Not a Collateral Attack on the Title It is already settled that a counterclaim is considered an original complaint and as such, the attack on the title in a case originally for recovery of possession cannot be considered as a collateral attack on the title.26 Development Bank of the Philippines v. Court of Appeals27 is similar to the case before us insofar as petitioner in that case filed an action for recovery of possession against respondent who, in turn, filed a counterclaim claiming ownership of the land. In that case, the Court ruled: Nor is there any obstacle to the determination of the validity of TCT No. 10101. It is true that the indefeasibility of torrens title cannot be collaterally attacked. In the instant case, the original complaint is for recovery of possession filed by petitioner against private respondent, not an original action filed by the latter to question the validity of TCT No. 10101 on which petitioner bases its right. To rule on the issue of validity in a case for recovery of possession is tantamount to a collateral attack. However, it should not [b]e overlooked that private respondent filed a counterclaim against petitioner, claiming ownership over the land and seeking damages. Hence, we could rule on the question of the validity of TCT No. 10101 for the counterclaim can be considered a direct attack on the same. A counterclaim is considered a complaint, only this time, it is the original defendant who becomes the plaintiff... It stands on the same footing and is to be tested by the same rules as if it were an independent action. x x x.28 As such, we sustain both the trial court and the Court of Appeals on this issue. 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.29 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 anothers name to its rightful owner or to one with a better right. 30 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.31 In the case before us, respondents 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 issued in their names and even if they

are already the registered owners under the Torrens system, petitioners may still be compelled under the law to reconvey the property to respondents.32 WHEREFORE, we DENY the petition. We AFFIRM the 31 January 2003 Decision and the 5 August 2003 Resolution of the Court of Appeals in CA-G.R. CV No. 63199. Costs against petitioners. SO ORDERED. ANTONIO T. CARPIO Associate Justice WE CONCUR: REYNATO S. PUNO Chief Justice Chairperson MA. ALICIA AUSTRIA-MARTINEZ* Associate Justice RENATO C. CORONA Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I hereby certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

10

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 154096 August 22, 2008

IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G. RESLIN,petitioners, vs. COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCA BENEDICTOPAULINO,respondents. DECISION VELASCO, JR., J.: The Case This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision1 dated October 17, 2001 of the Court of Appeals (CA) in CA-G.R. SP No. 64246 and its Resolution2 of June 20, 2002 denying petitioners' motion for reconsideration. The assailed CA decision annulled and set aside the Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte which admitted petitioners' amended complaint in Civil Case Nos. 3341-17 and 3342-17.
11

The Facts Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now deceased, and his business associates (Benedicto Group) organized Far East Managers and Investors, Inc. (FEMII) and Universal Equity Corporation (UEC), respectively. As petitioner Irene MarcosAraneta would later allege, both corporations were organized pursuant to a contract or arrangement whereby Benedicto, as trustor, placed in his name and in the name of his associates, as trustees, the shares of stocks of FEMII and UEC with the obligation to hold those shares and their fruits in trust and for the benefit of Irene to the extent of 65% of such shares. Several years after, Irene, through her trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance of said 65% stockholdings, but the Benedicto Group refused to oblige. In March 2000, Irene thereupon instituted before the RTC two similar complaints for conveyance of shares of stock, accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary restraining order (TRO). The first, docketed as Civil Case No. 3341-17, covered the UEC shares and named Benedicto, his daughter, and at least 20 other individuals as defendants. The second, docketed as Civil Case No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held by Benedicto and the other defendants named therein. Respondent Francisca Benedicto-Paulino,3 Benedicto's daughter, filed a Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended Motion to Dismiss. Benedicto, on the other hand, moved to dismiss4 Civil Case No. 3342-17, adopting in toto the five (5) grounds raised by Francisca in her amended motion to dismiss. Among these were: (1) the cases involved an intra-corporate dispute over which the Securities and Exchange Commission, not the RTC, has jurisdiction; (2) venue was improperly laid; and (3) the complaint failed to state a cause of action, as there was no allegation therein that plaintiff, as beneficiary of the purported trust, has accepted the trust created in her favor. To the motions to dismiss, Irene filed a Consolidated Opposition, which Benedicto and Francisca countered with a Joint Reply to Opposition. Upon Benedicto's motion, both cases were consolidated. During the preliminary proceedings on their motions to dismiss, Benedicto and Francisca, by way of bolstering their contentions on improper venue, presented the Joint Affidavit5 of Gilmia B. Valdez, Catalino A. Bactat, and Conchita R. Rasco who all attested being employed as household staff at the Marcos' Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene did not maintain residence in said place as she in fact only visited the mansion twice in 1999; that she did not vote in Batac in the 1998 national elections; and that she was staying at her husband's house in Makati City.
12

Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5 community tax certificate6(CTC) issued on "11/07/99" in Curimao, Ilocos Norte to support her claimed residency in Batac, Ilocos Norte. In the meantime, on May 15, 2000, Benedicto died and was substituted by his wife, Julita C. Benedicto, and Francisca. On June 29, 2000, the RTC dismissed both complaints, stating that these partly constituted "real action," and that Irene did not actually reside in Ilocos Norte, and, therefore, venue was improperly laid. In its dismissal order,7 the court also declared "all the other issues raised in the different Motions to Dismiss x x x moot and academic." From the above order, Irene interposed a Motion for Reconsideration8 which Julita and Francisca duly opposed. Pending resolution of her motion for reconsideration, Irene filed on July 17, 2000 a Motion (to Admit Amended Complaint),9 attaching therewith a copy of the Amended Complaint10 dated July 14, 2000 in which the names of Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional plaintiffs. As stated in the amended complaint, the added plaintiffs, all from Ilocos Norte, were Irene's new trustees. Parenthetically, the amended complaint stated practically the same cause of action but, as couched, sought the reconveyance of the FEMII shares only. During the August 25, 2000 hearing, the RTC dictated in open court an order denying Irene's motion for reconsideration aforementioned, but deferred action on her motion to admit amended complaint and the opposition thereto.11 On October 9, 2000, the RTC issued an Order12 entertaining the amended complaint, dispositively stating: WHEREFORE, the admission of the Amended Complaint being tenable and legal, the same is GRANTED. Let copies of the Amended Complaint be served to the defendants who are ordered to answer within the reglementary period provided by the rules. The RTC predicated its order on the following premises: (1) Pursuant to Section 2, Rule 10 of the Rules of Court,13 Irene may opt to file, as a matter of right, an amended complaint. (2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos Norte resident, in the amended complaint setting out the same cause of action cured the defect of improper venue.
13

(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the amended complaint in question in the place of residence of any of Irene's co-plaintiffs. In time, Julita and Francisca moved to dismiss the amended complaint, but the RTC, by Order14 dated December 18, 2000, denied the motion and reiterated its directive for the two to answer the amended complaint. In said order, the RTC stood pat on its holding on the rule on amendments of pleadings. And scoffing at the argument about there being no complaint to amend in the first place as of October 9, 2000 (when the RTC granted the motion to amend) as the original complaints were dismissed with finality earlier, i.e., on August 25, 2000 when the court denied Irene's motion for reconsideration of the June 29, 2000 order dismissing the original complaints, the court stated thusly: there was actually no need to act on Irene's motion to admit, it being her right as plaintiff to amend her complaints absent any responsive pleading thereto. Pushing its point, the RTC added the observation that the filing of the amended complaint on July 17, 2000 ipso facto superseded the original complaints, the dismissal of which, per the June 29, 2000 Order, had not yet become final at the time of the filing of the amended complaint. Following the denial on March 15, 2001 of their motion for the RTC to reconsider its December 18, 2000 order aforestated, Julita and Francisca, in a bid to evade being declared in default, filed on April 10, 2001 their Answer to the amended complaint.15 But on the same day, they went to the CA via a petition for certiorari, docketed as CA-G.R. SP No. 64246, seeking to nullify the following RTC orders: the first, admitting the amended complaint; the second, denying their motion to dismiss the amended complaint; and the third, denying their motion for reconsideration of the second issuance. Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only Francisca's signature, the CA required the joint petitioners "to submit x x x either the written authority of Julita C. Benedicto to Francisca B. Paulino authorizing the latter to represent her in these proceedings, or a supplemental verification and certification duly signed by x x x Julita C. Benedicto."16Records show the submission of the corresponding authorizing Affidavit17 executed by Julita in favor of Francisca. Later developments saw the CA issuing a TRO18 and then a writ of preliminary injunction19 enjoining the RTC from conducting further proceedings on the subject civil cases. On October 17, 2001, the CA rendered a Decision, setting aside the assailed RTC orders and dismissing the amended complaints in Civil Case Nos. 3341-17 and 3342-17. The fallo of the CA decision reads:

14

WHEREFORE, based on the foregoing premises, the petition is hereby GRANTED. The assailed Orders admitting the amended complaints are SET ASIDE for being null and void, and the amended complaints a quo are, accordingly, DISMISSED.20 Irene and her new trustees' motion for reconsideration of the assailed decision was denied through the equally assailed June 20, 2002 CA Resolution. Hence, this petition for review is before us. The Issues Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following submissions that the appellate court erred in: (1) allowing the submission of an affidavit by Julita as sufficient compliance with the requirement on verification and certification of non-forum shopping; (2) ruling on the merits of the trust issue which involves factual and evidentiary determination, processes not proper in a petition for certiorari under Rule 65 of the Rules of Court; (3) ruling that the amended complaints in the lower court should be dismissed because, at the time it was filed, there was no more original complaint to amend; (4) ruling that the respondents did not waive improper venue; and (5) ruling that petitioner Irene was not a resident of Batac, Ilocos Norte and that none of the principal parties are residents of Ilocos Norte.21 The Court's Ruling We affirm, but not for all the reasons set out in, the CA's decision. First Issue: Substantial Compliance with the Rule on Verification and Certification of Non-Forum Shopping Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as defective for non-compliance with the requirements of Secs. 422 and 523 of Rule 7 of the Rules of Court at least with regard to Julita, who failed to sign the verification and certification of nonforum shopping. Petitioners thus fault the appellate court for directing Julita's counsel to submit a written authority for Francisca to represent Julita in the certiorari proceedings. We are not persuaded. Verification not Jurisdictional; May be Corrected Verification is, under the Rules, not a jurisdictional but merely a formal requirement which the court maymotu proprio direct a party to comply with or correct, as the case may be. As the Court articulated inKimberly Independent Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and Agriculture (OLALIA) v. Court of Appeals:
15

V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an assurance that the allegations therein made are done in good faith or are true and correct and not mere speculation. The Court may order the correction of the pleading, if not verified, or act on the unverified pleading if the attending circumstances are such that a strict compliance with the rule may be dispensed with in order that the ends of justice may be served.24

Given this consideration, the CA acted within its sound discretion in ordering the submission of proof of Francisca's authority to sign on Julita's behalf and represent her in the proceedings before the appellate court. Signature by Any of the Principal Petitioners is Substantial Compliance Regarding the certificate of non-forum shopping, the general rule is that all the petitioners or plaintiffs in a case should sign it.25 However, the Court has time and again stressed that the rules on forum shopping, which were designed to promote the orderly administration of justice, do not interdict substantial compliance with its provisions under justifiable circumstances.26 As has been ruled by the Court, the signature of any of the principal petitioners27 or principal parties,28 as Francisca is in this case, would constitute a substantial compliance with the rule on verification and certification of non-forum shopping. It cannot be overemphasized that Francisca herself was a principal party in Civil Case No. 3341-17 before the RTC and in the certiorari proceedings before the CA. Besides being an heir of Benedicto, Francisca, with her mother, Julita, was substituted for Benedicto in the instant case after his demise. And should there exist a commonality of interest among the parties, or where the parties filed the case as a "collective," raising only one common cause of action or presenting a common defense, then the signature of one of the petitioners or complainants, acting as representative, is sufficient compliance. We said so in Cavile v. Heirs of Clarita Cavile.29 Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and Julita, as petitioners before the CA, had filed their petition as a collective, sharing a common interest and having a common single defense to protect their rights over the shares of stocks in question. Second Issue: Merits of the Case cannot be Resolved on Certiorari under Rule 65 Petitioners' posture on the second issue is correct. As they aptly pointed out, the CA, in the exercise of its certiorari jurisdiction under Rule 65, is limited to reviewing and correcting errors of jurisdiction only. It cannot validly delve into the issue of trust which, under the premises, cannot be judiciously resolved without first establishing certain facts based on evidence. Whether a determinative question is one of law or of fact depends on the nature of the dispute. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain given set of facts; or when the issue does
16

not call for an examination of the probative value of the evidence presented, the truth or falsehood of facts being admitted. A question of fact obtains when the doubt or difference arises as to the truth or falsehood of facts or when the query invites the calibration of the whole evidence considering mainly the credibility of the witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and to the whole, and the probability of the situation.30 Clearly then, the CA overstepped its boundaries when, in disposing of private respondents' petition for certiorari, it did not confine itself to determining whether or not lack of jurisdiction or grave abuse of discretion tainted the issuance of the assailed RTC orders, but proceeded to pass on the factual issue of the existence and enforceability of the asserted trust. In the process, the CA virtually resolved petitioner Irene's case for reconveyance on its substantive merits even before evidence on the matter could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even reached the pre-trial stage. To stress, the nature of the trust allegedly constituted in Irene's favor and its enforceability, being evidentiary in nature, are best determined by the trial court. The original complaints and the amended complaint certainly do not even clearly indicate whether the asserted trust is implied or express. To be sure, an express trust differs from the implied variety in terms of the manner of proving its existence.31 Surely, the onus of factually determining whether the trust allegedly established in favor of Irene, if one was indeed established, was implied or express properly pertains, at the first instance, to the trial court and not to the appellate court in a special civil action for certiorari, as here. In the absence of evidence to prove or disprove the constitution and necessarily the existence of the trust agreement between Irene, on one hand, and the Benedicto Group, on the other, the appellate court cannot intelligently pass upon the issue of trust. A pronouncement on said issue of trust rooted on speculation and conjecture, if properly challenged, must be struck down. So it must be here. Third Issue: Admission of Amended Complaint Proper As may be recalled, the CA veritably declared as reversibly erroneous the admission of the amended complaint. The flaw in the RTC's act of admitting the amended complaint lies, so the CA held, in the fact that the filing of the amended complaint on July 17, 2000 came after the RTC had ordered with finality the dismissal of the original complaints. According to petitioners, scoring the CA for its declaration adverted to and debunking its posture on the finality of the said RTC order, the CA failed to take stock of their motion for reconsideration of the said dismissal order. We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides: SEC. 2. Amendments as a matter of right. -- A party may amend his pleading once as a matter of right at any time before a responsive pleading is served or in the case of a reply, at any time within ten (10) days after it is served.
17

As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a matter of right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive pleadings are those which seek affirmative relief and/or set up defenses,32 like an answer. A motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule 10.33 Assayed against the foregoing perspective, the RTC did not err in admitting petitioners' amended complaint, Julita and Francisca not having yet answered the original complaints when the amended complaint was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the option of amending her underlying reconveyance complaints. As aptly observed by the RTC, Irene's motion to admit amended complaint was not even necessary. The Court notes though that the RTC has not offered an explanation why it saw fit to grant the motion to admit in the first place. In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended complaint before a responsive pleading is filed, wrote:
W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following this Court's ruling in Breslin v. Luzon Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative duty of the trial court to accept the amended complaint; otherwise, mandamus would lie against it. In other words, the trial court's duty to admit the amended complaint was purely ministerial. In fact, respondent should not have filed a motion to admit her amended complaint.34

It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It should be pointed out, however, that the finality of such dismissal order had not set in when Irene filed the amended complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration thereof. Irene's motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 2000, the order of dismissal was not yet final, implying that there was strictly no legal impediment to her amending her original complaints.35 Fourth Issue: Private Respondents did not Waive Improper Venue Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together, signify a waiver of private respondents' initial objection to improper venue. This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which, in personal actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The ground of improperly laid venue must be raised seasonably, else it is deemed waived. Where the defendant failed to either file a motion to dismiss on the ground of improper venue or include the same as an affirmative defense, he is deemed to have waived his right to object to improper venue.36In the case at bench,
18

Benedicto and Francisca raised at the earliest time possible, meaning "within the time for but before filing the answer to the complaint,"37 the matter of improper venue. They would thereafter reiterate and pursue their objection on venue, first, in their answer to the amended complaints and then in their petition for certiorari before the CA. Any suggestion, therefore, that Francisca and Benedicto or his substitutes abandoned along the way improper venue as ground to defeat Irene's claim before the RTC has to be rejected. Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper Venue Subject Civil Cases are Personal Actions It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in question partakes of a real action involving real properties located outside the territorial jurisdiction of the RTC in Batac. This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a contract, or the recovery of damages.38 Real actions, on the other hand, are those affecting title to or possession of real property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper court which has territorial jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. The venue of personal actions is the court where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.39 In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to acknowledge holding in trust Irene's purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irene's favor the necessary conveying deed over the said 65% shareholdings. In other words, Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group. The fact that FEMII's assets include real properties does not materially change the nature of the action, for the ownership interest of a stockholder over corporate assets is only inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon the liquidation of the corporation that the stockholders, depending on the type and nature of their stockownership, may have a real inchoate right over the corporate assets, but then only to the extent of their stockownership. The amended complaint is an action in personam, it being a suit against Francisca and the late Benedicto (now represented by Julita and Francisca), on the basis of their alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or 1972. They are not actions in rem where the actions are against the real properties instead of against persons.40 We particularly note that possession or title to the real properties of FEMII and
19

UEC is not being disputed, albeit part of the assets of the corporation happens to be real properties. Given the foregoing perspective, we now tackle the determinative question of venue in the light of the inclusion of additional plaintiffs in the amended complaint. Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4 We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in the confines of this case, the factual determination of the trial court and the premises holding it together. Accordingly, Irene cannot, in a personal action, contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place "where the plaintiff or any of the principal plaintiffs resides" at the time she filed her amended complaint. That Irene holds CTC No. 1701945141 issued sometime in June 2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let alone the fact that one can easily secure a basic residence certificate practically anytime in any Bureau of Internal Revenue or treasurer's office and dictate whatever relevant data one desires entered, Irene procured CTC No. 17019451 and appended the same to her motion for reconsideration following the RTC's pronouncement against her being a resident of Batac. Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is the proper court venue, asseverate that Batac, Ilocos Norte is where the principal parties reside. Pivotal to the resolution of the venue issue is a determination of the status of Irene's coplaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows: Rule 3 PARTIES TO CIVIL ACTIONS SEC. 2. Parties in interest. -- A real party in interest is the party who stands to be benefited or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless otherwise authorized by law or these Rules, every action must be prosecuted or defended in the name of the real party in interest. SEC. 3. Representatives as parties. -- Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity, the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. A representative may be a trustee of an express trust, a guardian, an executor or administrator, or a party authorized by law or these Rules. An agent acting in his own name and for the benefit of an undisclosed principal may
20

sue or be sued without joining the principal except when the contract involves things belonging to the principal. Rule 4 VENUE OF ACTIONS SEC. 2. Venue of personal actions. -- All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a nonresident defendant where he may be found, at the election of the plaintiff. Venue is Improperly Laid There can be no serious dispute that the real party-in-interest plaintiff is Irene. As selfstyled beneficiary of the disputed trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as co-plaintiffs in the amended complaint as Irene's new designated trustees. As trustees, they can only serve as mere representatives of Irene. Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly been laid should not be difficult. Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the residences of the principal parties should be the basis for determining proper venue. According to the late Justice Jose Y. Feria, "the word 'principal' has been added [in the uniform procedure rule] in order to prevent the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue."42 Eliminate the qualifying term "principal" and the purpose of the Rule would, to borrow from Justice Regalado, "be defeated where a nominal or formal party is impleaded in the action since the latter would not have the degree of interest in the subject of the action which would warrant and entail the desirably active participation expected of litigants in a case."43 Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced and prosecuted at the place where Irene resides. Principal Plaintiff not a Resident in Venue of Action As earlier stated, no less than the RTC in Batac declared Irene as not a resident of Batac, Ilocos Norte. Withal, that court was an improper venue for her conveyance action.

21

The Court can concede that Irene's three co-plaintiffs are all residents of Batac, Ilocos Norte. But it ought to be stressed in this regard that not one of the three can be considered as principal party-plaintiffs in Civil Case Nos. 3341-17 and 3342-17, included as they were in the amended complaint as trustees of the principal plaintiff. As trustees, they may be accorded, by virtue of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the beneficiary who must be included in the title of the case and shall be deemed to be the real party-in-interest. In the final analysis, the residences of Irene's coplaintiffs cannot be made the basis in determining the venue of the subject suit. This conclusion becomes all the more forceful considering that Irene herself initiated and was actively prosecuting her claim against Benedicto, his heirs, assigns, or associates, virtually rendering the impleading of the trustees unnecessary. And this brings us to the final point. Irene was a resident during the period material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub, Batac, Ilocos Norte, although jurisprudence44 has it that one can have several residences, if such were the established fact. The Court will not speculate on the reason why petitioner Irene, for all the inconvenience and expenses she and her adversaries would have to endure by a Batac trial, preferred that her case be heard and decided by the RTC in Batac. On the heels of the dismissal of the original complaints on the ground of improper venue, three new personalities were added to the complaint doubtless to insure, but in vain as it turned out, that the case stays with the RTC in Batac. Litigants ought to bank on the righteousness of their causes, the superiority of their cases, and the persuasiveness of arguments to secure a favorable verdict. It is high time that courts, judges, and those who come to court for redress keep this ideal in mind. WHEREFORE, the instant petition is hereby DISMISSED. The Decision and Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 3342-17 on the ground of lack of jurisdiction due to improper venue, are hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000, and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED. Costs against petitioners. SO ORDERED. PRESBITERO J. VELASCO, JR. Associate Justice

WE CONCUR:
22

LEONARDO A. QUISUMBING Associate Justice Chairperson CONCHITA CARPIO MORALES Associate Justice ARTURO D. BRION Associate Justice DANTE O. TINGA Associate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. LEONARDO A. QUISUMBING Associate Justice Chairperson

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. REYNATO S. PUNO Chief Justice

23

SECOND DIVISION
RICHARD B. LOPEZ, in his Capacity as Trustee of the Trust Estate of the late Juliana LopezManzano, Petitioner, G.R. No. 157784 Present: QUISUMBING, J., Chairperson, CARPIO MORALES, TINGA, VELASCO, JR., and BRION, JJ.

- versus -

COURT OF APPEALS, CORAZON LOPEZ, FERNANDO LOPEZ, ROBERTO LOPEZ, represented by LUZVIMINDA LOPEZ, MARIA Promulgated: ROLINDA MANZANO, MARIA ROSARIO MANZANO SANTOS, JOSE MANZANO, JR., NARCISO MANZANO (all represented by December 16, 2008 Attorney-in-fact, MODESTO RUBIO), MARIA CRISTINA MANZANO RUBIO, IRENE MONZON and ELENA MANZANO, Respondents. x--------------------------------------------------------------------------------x

DECISION
24

TINGA, J.:
This is a petition for review on certiorari [1]under Rule 45 of the 1997 Rules of Civil Procedure, assailing the Decision[2] and Resolution[3] of the Court of Appeals in CA-G.R. CV No. 34086. The Court of Appeals decision affirmed the summary judgment of the Regional Trial Court (RTC), Branch 10, Balayan,Batangas, dismissing petitioners action for reconveyance on the ground of prescription. The instant petition stemmed from an action for reconveyance instituted by petitioner Richard B. Lopez in his capacity as trustee of the estate of the late Juliana Lopez Manzano (Juliana) to recover from respondents several large tracts of lands allegedly belonging to the trust estate of Juliana. The decedent, Juliana, was married to Jose Lopez Manzano (Jose). Their union did not bear any children. Juliana was the owner of several properties, among them, the properties subject of this dispute. The disputed properties totaling more than 1,500 hectares consist of six parcels of land, which are all located in Batangas. They were the exclusive paraphernal properties of Juliana together with a parcel of land situated in Mindoro known as Abra de Ilog and a fractional interest in a residential land on Antorcha St., Balayan, Batangas. On 23 March 1968, Juliana executed a notarial will,[4] whereby she expressed that she wished to constitute a trust fund for her paraphernal properties, denominated as Fideicomiso de Juliana Lopez Manzano (Fideicomiso), to be administered by her husband. If her husband were to die or renounce the obligation, her nephew, Enrique Lopez, was to become administrator and executor of the Fideicomiso. Two-thirds (2/3) of the income from rentals over these properties were to answer for the education of deserving but needy honor students, while one-third 1/3 was to shoulder the expenses and fees of the administrator. As to her conjugal properties, Juliana bequeathed the portion that she could legally dispose to her husband, and after his death, said properties were to pass to her biznietos or great grandchildren. Juliana initiated the probate of her will five (5) days after its execution, but she died on 12 August 1968, before the petition for probate could be heard. The petition was pursued instead in Special Proceedings (S.P.) No. 706 by her husband, Jose, who was the designated executor in the will. On 7 October 1968, the Court of First Instance, Branch 3, Balayan, Batangas, acting as probate court, admitted the will to probate and issued the letters testamentary to Jose. Jose then
25

submitted an inventory of Julianas real and personal properties with their appraised values, which was approved by the probate court. Thereafter, Jose filed a Report dated 16 August 1969, which included a proposed project of partition. In the report, Jose explained that as the only compulsory heir of Juliana, he was entitled by operation of law to one-half (1/2) of Julianas paraphernal properties as his legitime, while the other one-half (1/2) was to be constituted into the Fideicomiso. At the same time, Jose alleged that he and Juliana had outstanding debts totaling P816,000.00 excluding interests, and that these debts were secured by real estate mortgages. He noted that if these debts were liquidated, the residuary estate available for distribution would, value-wise, be very small. From these premises, Jose proceeded to offer a project of partition. The relevant portion pertaining to the Fideicomiso stated, thus:
PROJECT OF PARTITION 14. Pursuant to the terms of the Will, one-half (1/2) of the following properties, which are not burdened with any obligation, shall be constituted into the Fidei-comiso de Juliana LopezManzano and delivered to Jose Lopez Manzano as trustee thereof: Location Abra de Ilog, Mindoro Antorcha St. Balayan, Batangas Title No. TCT - 540 TCT 1217-A Area (Sq. M.) 2,940,000 13,040 Improvements pasture, etc. residential (1/6 thereof)

and all those properties to be inherited by the decedent, by intestacy, from her sister, Clemencia Lopez y Castelo. 15. The other half (1/2) of the aforesaid properties is adjudicated to Jose Lopez Manzano as heir.

Then, Jose listed those properties which he alleged were registered in both his and Julianas names, totaling 13 parcels in all. The disputed properties consisting of six (6) parcels, all located in Balayan, Batangas, were included in said list. These properties, as described in the project of partition, are as follows:
Location Pantay, Calaca, Batangas Title No. Area (Sq. M.) Improvements 91,283
26

coconuts

Mataywanak, Tuy, Batangas Patugo, Balayan, Batangas Cagayan, Balayan, Batangas Pook, Baayan Batangas Bolbok, Balayan, Batangas Calzada, Balayan, Batangas Gumamela, Balayan, Batangas Bombon, Balayan, Batangas Paraaque, Rizal Paraaque, Rizal Modesto St., Manila

OCT-29[6]94 OCT-2807

485,486 16,757,615

sugar coconut, sugar, citrus, pasteur sugar sugar sugar sugar

TCT-1220 TCT-1281 TCT-18845 TCT 1978 TCT-2575

411,331 135,922 444,998 2,312 829 4,532

TCT-282340 TCT-11577 TCT-52212

800 800 137.8

residential residential residential

and the existing sugar quota in the name of the deceased with the Central Azucarera Don Pedro at Nasugbo. 16. The remaining shall likewise go to Jose Lopez Manzano, with the condition to be annotated on the titles thereof, that upon his death, the same shall pass on to Corazon Lopez, Ferdinand Lopez, and Roberto Lopez: Location Title No. Area (Sq. M.) 482,872 523 Improvements sugar residential

Dalig, Balayan, TCT-10080 Batangas San Juan, Rizal TCT-53690

On 25 August 1969, the probate court issued an order approving the project of partition. 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 one-half (1/2) of the properties listed under paragraph 14 of the project of partition; and regarding the other half, to be registered in the name of Jose as heir of Juliana. The properties which Jose had alleged as registered in his and Julianas names, including the disputed lots, were adjudicated to Jose as heir, subject to the
27

condition that Jose would settle the obligations charged on these properties. The probate court, thus, directed that new certificates of title be issued in favor of Jose as the registered owner thereof in its Order dated 15 September 1969. On even date, the certificates of title of the disputed properties were issued in the name of Jose. The Fideicomiso was constituted in S.P No. 706 encompassing one-half (1/2) of the Abra de Ilog lot on Mindoro, the 1/6 portion of the lot in Antorcha St. inBalayan, Batangas and all other properties inherited ab intestato by Juliana from her sister, Clemencia, in accordance with the order of the probate court in S.P. No. 706. The disputed lands were excluded from the trust. Jose died on 22 July 1980, leaving a holographic will disposing of the disputed properties to respondents. The will was allowed probate on 20 December 1983 in S.P. No. 2675 before the RTC of Pasay City. Pursuant to Joses will, the RTC ordered on 20 December 1983 the transfer of the disputed properties to the respondents as the heirs of Jose. Consequently, the certificates of title of the disputed properties were cancelled and new ones issued in the names of respondents. Petitioners father, Enrique Lopez, also assumed the trusteeship of Julianas estate. On 30 August 1984, the RTC of Batangas, Branch 9 appointed petitioner as trustee of Julianas estate in S.P. No. 706. On 11 December 1984, petitioner instituted an action for reconveyance of parcels of land with sum of money before the RTC of Balayan, Batangas against respondents. The complaint[5] essentially alleged that Jose was able to register in his name the disputed properties, which were theparaphernal properties of Juliana, either during their conjugal union or in the course of the performance of his duties as executor of the testate estate of Juliana and that upon the death of Jose, the disputed properties were included in the inventory as if they formed part of Joses estate when in fact Jose was holding them only in trust for the trust estate of Juliana. Respondents Maria Rolinda Manzano, Maria Rosario Santos, Jose Manzano, Jr., Narciso Manzano, Maria Cristina Manzano Rubio and Irene Monzon filed a joint answer[6] with counterclaim for damages. Respondents Corazon, Fernando and Roberto, all surnamed Lopez, who were minors at that time and represented by their mother, filed a motion to dismiss,[7] the resolution of which was deferred until trial on the merits. The RTC scheduled several pre-trial conferences and ordered the parties to submit pre-trial briefs and copies of the exhibits.
28

On 10 September 1990, the RTC rendered a summary judgment,[8] dismissing the action on the ground of prescription of action. The RTC also denied respondents motion to set date of hearing on the counterclaim. Both petitioner and respondents elevated the matter to the Court of Appeals. On 18 October 2002, the Court of Appeals rendered the assailed decision denying the appeals filed by both petitioner and respondents. The Court of Appeals also denied petitioners motion for reconsideration for lack of merit in its Resolution dated3 April 2003. Hence, the instant petition attributing the following errors to the Court of Appeals:
I. THE COURT OF APPEALS CONCLUSION THAT PETITIONERS ACTION FOR [RECONVEYANCE] HAS PRESCRIBED TAKING AS BASIS SEPTEMBER 15, 1969 WHEN THE PROPERTIES IN DISPUTE WERE TRANSFERRED TO THE NAME OF THE LATE JOSE LOPEZ MANZANO IN RELATION TO DECEMBER 12, 1984WHEN THE ACTION FOR RECONVEYANCE WAS FILED IS ERRONEOUS. II. THE RESPONDENT COURT OF APPEALS CONCLUSION IN FINDING THAT THE FIDUCIARY RELATION ASSUMED BY THE LATE JOSE LOPEZ MANZANO, AS TRUSTEE, PURSUANT TO THE LAST WILL AND TESTAMENT OF JULIANA LOPEZ MANZANO WAS IMPLIED TRUST, INSTEAD OF EXPRESS TRUST IS EQUALLY ERRONEOUS.

None of the respondents filed a comment on the petition. The counsel for respondents Corazon, Fernando and Roberto, all surnamed Lopez, explained that he learned that respondents had migrated to the United States only when the case was pending before the Court of Appeals. [9] Counsel for the rest of the respondents likewise manifested that the failure by said respondents to contact or communicate with him possibly signified their lack of interest in the case.[10] In a Resolution dated 19 September 2005, the Court dispensed with the filing of a comment and considered the case submitted for decision.[11]

The core issue of the instant petition hinges on whether petitioners action for reconveyance has prescribed. The resolution of this issue calls for a determination of whether an implied trust was constituted over the disputed properties when Jose, the trustee, registered them in his name. Petitioner insists that an express trust was constituted over the disputed properties; thus the registration of the disputed properties in the name of Jose as trustee cannot give rise to
29

prescription of action to prevent the recovery of the disputed properties by the beneficiary against the trustee. Evidently, Julianas testamentary intent was to constitute an express trust over her paraphernal properties which was carried out when the Fideicomiso was established in S.P. No. 706.[12] However, the disputed properties were expressly excluded from the Fideicomiso. The probate court adjudicated the disputed properties to Jose as the sole heir of Juliana. 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. Moreover, the exclusion of the disputed properties from the Fideicomiso bore the approval of the probate court. The issuance of the probate courts order adjudicating the disputed properties to Jose as the sole heir of Juliana enjoys the presumption of regularity.[13] On the premise that the disputed properties were the paraphernal properties of Juliana which should have been included in the Fideicomiso, their registration in the name of Jose would be erroneous and Joses possession would be that of a trustee in an implied 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 matters of equity, independently of the particular intention of the parties.[14] The provision on implied trust governing the factual milieu of this case is provided in Article 1456 of the Civil Code, which states:
ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

In Aznar Brothers Realty Company v. Aying,[15] the Court differentiated two kinds of implied trusts, to wit:
x x x In turn, implied trusts are either resulting or constructive trusts. These two are differentiated from each other as follows: Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature of circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity in order to satisfy the demands of
30

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.[16]

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. [17] Specific examples of resulting trusts may be found in the Civil Code, particularly Arts. 1448, [18] 1449,[19] 1451,[20] 1452[21] and 1453.[22] 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.[23] 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.[24] Constructive trusts are illustrated in Arts. 1450,[25] 1454, [26] 1455[27] and 1456.[28] 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, which is the complete reverse of the claim of the petitioner, 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. The apparent mistake in the adjudication of the disputed properties to Jose created a mere implied trust of the constructive variety in favor of the beneficiaries of theFideicomiso. Now that it is established that only a constructive trust was constituted over the disputed properties, may prescription for the recovery of the properties supervene? Petitioner asserts that, if at all, prescription should be reckoned only when respondents caused the registration of the disputed properties in their names on 13 April 1984 and not on 15 September 1969, when Jose registered the same in his name pursuant to the probate courts order adjudicating the disputed properties to him as the sole heir of Juliana. Petitioner adds, proceeding on the premise that the prescriptive period should be counted from the repudiation of the trust, Jose had not performed any act indicative of his repudiation of the trust or otherwise declared an adverse claim over the disputed properties. The argument is tenuous.
31

The right to seek reconveyance based on an implied or constructive trust is not absolute. It is subject to extinctive prescription.[29] An action for reconveyancebased 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.[30] In the instant case, the ten-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 theFideicomiso. It should be pointed out also that Jose had already indicated at the outset that the disputed properties did not form part of the Fideicomiso contrary to petitioners claim that no overt acts of repudiation may be attributed to Jose. It may not be amiss to state that in the project of partition submitted to the probate court, Jose had indicated that the disputed properties were conjugal in nature and, thus, excluded from Julianas Fideicomiso. This act is clearly tantamount to repudiating the trust, at which point the period for prescription is reckoned. In any case, the rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the trust applies only to express trusts and resulting implied trusts. However, 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.[31] Thus, for the purpose of counting the ten-year prescriptive period for the action to enforce the constructive trust, the reckoning point is deemed to be on 15 September 1969 when Jose registered the disputed properties in his name. WHEREFORE, the instant petition for review on certiorari is DENIED and the decision and resolution of the Court of Appeals in CA-G.R. CV No. 34086 are AFFIRMED. Costs against petitioner. SO ORDERED.

DANTE O. TINGA Associate Justice

32

WE CONCUR:

LEONARDO A. QUISUMBING Associate Justice Chairperson

CONCHITA CARPIO MORALES Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

ARTURO D. BRION Associate Justice ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

LEONARDO A. QUISUMBING Associate Justice Chairperson, Second Division

33

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Chief Justice

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. 165696 April 30, 2008

ALEJANDRO B. TY, petitioner, vs. SYLVIA S. TY, in her capacity as Administratrix of the Intestate Estate of Alexander Ty, respondent. DECISION AZCUNA, J.: This is a petition for review on certiorari under Rule 45 of the Rules of Court against the Decision1 of the Court of Appeals (CA) in CA-G.R. No. 66053 dated July 27, 2004 and the Resolution therein dated October 18, 2004. The facts are stated in the CA Decision: On May 19, 1988, Alexander Ty, son of Alejandro B. Ty and Bella Torres, died of cancer at the age of 34. He was survived by his wife, Sylvia Ty, and his only daughter, Krizia Katrina Ty. A few months after his death, a petition for the settlement of his intestate estate was filed by Sylvia Ty in the Regional Trial Court of Quezon City. Meanwhile, on July 20, 1989, upon petition of Sylvia Ty, as Administratrix, for settlement and distribution of the intestate estate of Alexander in the County of Los Angeles, the Superior Court of California ordered the distribution of the Hollywood condominium unit, the Montebello lot, and the 1986 Toyota pick-up truck to Sylvia Ty and Krizia Katrina Ty. On November 23, 1990, Sylvia Ty submitted to the intestate Court in Quezon City an inventory of the assets of Alexanders estate, consisting of shares of stocks and a schedule of real estate properties, which included the following:

34

1. EDSA Property a parcel of land with an area of 1,728 square meters situated in EDSA, Greenhills, Mandaluyong, Metro Manila, registered in the name of Alexander Ty when he was still single, and covered by TCT No. 0006585; 2. Meridien Condominium A residential condominium with an area of 167.5 square meters situated in 29 Annapolis Street, Greenhills, Mandaluyong, Metro Manila, registered in the name of the spouses Alexander Ty and Sylvia Ty, and covered by Condominium Certificate of Title No. 3395; 3. Wack-Wack Property A residential land with an area of 1,584 square meters situated in Notre Dame, Wack-Wack, Mandaluyong, Metro Manila, registered in the name of the spouses Alexander Ty and Sylvia Ty, and covered by TCT No. 62670. On November 4, 1992, Sylvia Ty asked the intestate Court to sell or mortgage the properties of the estate in order to pay the additional estate tax of P4,714,560.02 assessed by the BIR. Apparently, this action did not sit well with her father-in-law, the plaintiff-appellee, for on December 16, 1992, Alejandro Ty, father of the deceased Alexander Ty, filed a complaint for recovery of properties with prayer for preliminary injunction and/or temporary restraining order. Docketed as Civil Case No. 62714, of the Regional Trial Court of Pasig, Branch 166, the complaint named Sylvia Ty as defendant in her capacity as [Administratrix] of the Intestate Estate of Alexander Ty. Forthwith, on December 28, 1992, defendant Sylvia Ty, as Administratrix of the Intestate Estate of Alexander Ty, tendered her opposition to the application for preliminary injunction. She claimed that plaintiff Alejandro Ty had no actual or existing right, which entitles him to the writ of preliminary injunction, for the reason that no express trust concerning an immovable maybe proved by parole evidence under the law. In addition, Sylvia Ty argued that the claim is barred by laches, and more than that, that irreparable injury will be suffered by the estate of Alexander Ty should the injunction be issued. To the aforementioned opposition, plaintiff filed a reply, reiterating the arguments set forth in his complaint, and denying that his cause of action is barred by laches. In an order dated February 26, 1993, the Regional Trial Court granted the application for a writ of preliminary injunction. As to the complaint for recovery of properties, it is asserted by plaintiff Alejandro Ty that he owns the EDSA property, as well as the Meridien Condominium, and the Wack-Wack property, which were included in the inventory of the estate of Alexander Ty. Plaintiff alleged that on March 17, 1976, he bought the EDSA property from a certain Purificacion Z. Yujuico; and that he registered the said property in the name of his son, Alexander Ty, who was to hold said property in trust for his brothers and sisters in the event of his (plaintiffs) sudden demise. Plaintiff further alleged that at the time the EDSA property was purchased, his son and name-sake was still studying in the United States, and was financially dependent on him. As to the two other properties, plaintiff averred that he bought the Meridien Condominium sometime in 1985 and the Wack-Wack property sometime in 1987; that titles to the aforementioned properties were also placed in the name of his son, Alexander Ty, who was also to hold these properties in trust for his brothers and sisters. Plaintiff asserted that at [the] time the subject properties were purchased, Alexander Ty and Sylvia Ty were earning minimal income, and were thus financially incapable of purchasing said properties. To bolster his claim, plaintiff presented the income tax returns of Alexander from 1980-1984, and the profit and loss statement of defendants Joji San General Merchandising from 1981-1984. Plaintiff added that defendant acted in bad faith in including the subject properties in the inventory of Alexander Tys estate, for she was well aware that Alexander was simply holding the said properties in trust for his siblings.

35

In her answer, defendant denied that the subject properties were held in trust by Alexander Ty for his siblings. She contended that, contrary to plaintiffs allegations, Alexander purchased the EDSA property with his own money; that Alexander was financially capable of purchasing the EDSA property as he had been managing the family corporations ever since he was 18 years old, aside from the fact that he was personally into the business of importing luxury cars. As to the Meridien Condominium and Wack-Wack property, defendant likewise argued that she and Alexander Ty, having been engaged in various profitable business endeavors, they had the financial capacity to acquire said properties. By way of affirmative defenses, defendant asserted that the alleged verbal trust agreement over the subject properties between the plaintiff and Alexander Ty is not enforceable under the Statute of Frauds; that plaintiff is barred from proving the alleged verbal trust under the Dead Mans Statute; that the claim is also barred by laches; that defendants title over the subject properties cannot be the subject of a collateral attack; and that plaintiff and counsel are engaged in forum-shopping. In her counterclaim, defendant prayed that plaintiff be sentenced to pay attorneys fees and costs of litigation. On November 9, 1993, a motion for leave to intervene, and a complaint-in-intervention were filed by Angelina Piguing-Ty, legal wife of plaintiff Alejandro Ty. In this motion, plaintiff-intervenor prayed that she be allowed to intervene on the ground that the subject properties were acquired during the subsistence of her marriage with the plaintiff, hence said properties are conjugal. On April 27, 1994, the trial court issued an Order granting the aforementioned motion. During the hearing, plaintiff presented in evidence the petition filed by defendant in Special Proceedings No. Q-88-648; the income tax returns and confirmation receipts of Alexander Ty from 1980-1984; the profit and loss statement of defendants Joji San General Merchandising from 1981-1984; the deed of sale of the EDSA property dated March 17, 1976; the TCTs and CCT of the subject properties; petty cash vouchers, official receipts and checks to show the plaintiff paid for the security and renovation expenses of both the Meridien Condominium and the Wack-Wack property; checks issued by plaintiff to defendant between June 1988 November 1991 to show that plaintiff provided financial support to defendant in the amount ofP51,000.00; and the articles of incorporations of various corporations, to prove that he, plaintiff, had put up several corporations. Defendant for her presented in evidence the petition dated September 6, 1988 in Special Proceedings No. Q-88-648; the TCTs and CCT of the subject properties; the deed of sale of stock dated July 27, 1988 between the ABT Enterprises, Incorporated, and plaintiff; the transcript of stenographic notes dated January 5, 1993 in SEC Case No. 4361; the minutes of the meetings, and the articles of incorporation of various corporations; the construction agreement between the defendant and the Home Construction, for the renovation of the Wack-Wack property; the letters of Home Construction to defendant requesting for payment of billings and official receipts of the same, to show that defendant paid for the renovation of the Wack-Wack property; the agreement between Drago Daic Development International, Incorporated, and the spouses Alexander Ty and Sylvia Ty, dated March, 1987, for the sale of the Wack-Wack property covered by TCT No. 55206 in favor of the late Alexander Ty and the defendant; a photograph of Krizia S. Ty; business cards of Alexander Ty; the Order and the Decree No. 10 of the Superior Court of California, dated July 20, 1989; the agreement between Gerry L. Contreras and the Spouses Alexander Ty and Sylvia Ty, dated January 26, 1988, for the Architectural Finishing and Interior Design of the Wack-Wack property; official receipts of the Gercon Enterprises; obituaries published in several newspapers; and a letter addressed to Drago Daic dated February 10, 1987.2 Furthermore, the following findings of facts of the court a quo, the Regional Trial Court of Pasig City, Branch 166 (RTC), in Civil Case No. 62714, were adopted by the CA, thus: We adopt the findings of the trial court in respect to the testimonies of the witnesses who testified in this case, thus:

36

"The gist of the testimony of defendant as adverse witness for the plaintiff: "Defendant and Alexander met in Los Angeles, USA in 1975. Alexander was then only 22 years old. They married in 1981. Alexander was born in 1954. He finished high school at the St. Stephen High School in 1973. Immediately after his graduation from high school, Alexander went to the USA to study. He was a fulltime student at the Woodberry College where he took up a business administration course. Alexander graduated from the said college in 1977. He came back to the Philippines and started working in the Union Ajinomoto, Apha Electronics Marketing Corporation and ABT Enterprises. After their marriage in 1981, Alexander and defendant lived with plaintiff at the latters residence at 118 Scout Alcaraz St.[,] Quezon City. Plaintiff has been engaged in manufacturing and trading business for almost 50 years. Plaintiff has established several corporations. While in the USA, Alexander stayed in his own house in Montebello, California, which he acquired during his college days. Alexander was a stockholder of companies owned by plaintiffs family and got yearly dividend therefrom. Alexander was an officer in the said companies and obtained benefits and bonuses therefrom. As stockholder of Ajinomoto, Royal Porcelain, Cartier and other companies, he obtained stock dividends. Alexander engaged in buy and sell of cars. Defendant cannot give the exact amount how much Alexander was getting from the corporation since 1981. In 1981, defendant engaged in retail merchandising i.e., imported jewelry and clothes. Defendant leased two (2) units at the Greenhills Shoppesville. Defendant had dividends from the family business which is real estate and from another corporation which is Perway. During their marriage, defendant never received allowance from Alexander. The Wack-Wack property cost P5.5 million. A Car Care Center was established by Alexander and defendant was one of the stockholders. Defendant and Alexander spent for the improvement of the Wack-Wack property. Defendant and Alexander did not live in the condominium unit because they followed the Chinese tradition and lived with plaintiff up to the death of Alexander. Defendant and Alexander started putting improvements in the Wack-Wack property in 1988, or a few months before Alexander died. "The gist of the testimony of Conchita Sarmiento: "In 1966, Conchita Sarmiento was employed in the Union Chemicals as secretary of plaintiff who was the president. Sarmiento prepared the checks for the school expenses and allowances of plaintiffs children and their spouses. Sarmiento is familiar with the Wack-Wack property. Plaintiff bought the Wack-Wack property and paid the architect and spent for the materials and labor in connection with the construction of the WackWack property (Exhs. M to Z inclusive; Exhs. AA to ZZ, inclusive; Exhs. AAA to ZZZ, inclusive; Exhs. AAAA to FFFF, inclusive). Plaintiff entrusted to Alexander the supervision of the construction of the WackWack property, so that Exhibit M shows that the payment was received from Alexander. Plaintiff visited the Wack-Wack property several times and even pointed the room which he intended to occupy. Sarmiento was told by plaintiff that it was very expensive to maintain the house. The documents, referring to the numerous exhibits, were in the possession of plaintiff because they were forwarded to him for payment. Sarmiento knows the residential condominium unit because in 1987 plaintiff purchased the materials and equipments for its renovation, as shown by Exhs. GGGG to QQQQ inclusive. Plaintiff supported defendant after the death of Alexander, as shown by Exhs. RRRR to TTTT inclusive. Sarmiento was plaintiffs secretary and assisted him in his official and personal affairs. Sarmiento knew that Alexander was receiving a monthly allowance in the amount of P5,000.00 from Alpha. "The gist of the testimony of the plaintiff: Plaintiff is 77 years old and has been engaged in business for about 50 years. Plaintiff established several trading companies and manufacturing firms. The articles of incorporation of the companies are shown in Exhs. UUUUU (Manila Paper Mills, Inc.); UUUUU-1 (Union Chemicals Inc.); UUUUU-2 (Starlight Industrial Company Inc.); UUUUU-3 (Hitachi Union, Inc.); UUUUU-4 (Philippine Crystal Manufacturing Corp.). Alexander completed his elementary education in 1969 at the age of 15 years and finished high school education in 1973. Alexander left in 1973 for the USA to study in the Woodberry College in Los Angeles. Alexander returned to the Philippines in 1977. When Alexander was 18 years old, he was still in high school, a full-time student. Alexander did not participate in the business operation. While in High School Alexander, during his free time attended to his hobby about cars Mustang, Thunderbird and Corvette. Alexander was not employed. Plaintiff took care of Alexanders financial needs. Alexander was plaintiffs

37

trusted son because he lived with him from childhood until his death. In 1977 when Alexander returned to the Philippines from the USA, he did not seek employment. Alexander relied on plaintiff for support. After Alexander married defendant, he put up a Beer Garden and a Car Care Center. Plaintiff provided the capital. The Beer Garden did not make money and was closed after Alexanders death. Defendant and Alexander lived with plaintiff in Quezon City and he spent for their needs. Plaintiff purchased with his own money the subject properties. The EDSA property was for investment purposes. When plaintiff accompanied Alexander to the USA in 1973, he told Alexander that he will buy some properties in Alexanders name, so that if something happens to him, Alexander will distribute the proceeds to his siblings. When the EDSA property was bought, Alexander was in the USA. Plaintiff paid the real estate taxes. With plaintiffs permission, Alexander put up his Beer Garden and Car Care Center in the EDSA property. It was Alexander who encouraged plaintiff to buy the condominium unit because Alexander knew the developer. The condominium unit was also for investment purposes. Plaintiff gave Alexander the money to buy the condominium unit. After sometime, Alexander and defendant asked plaintiffs permission for them to occupy the condominium unit. Plaintiff spent for the renovation of the condominium unit. It was Alexander who encouraged plaintiff to buy the Wack-Wack property. Plaintiff spent for the renovation of the condominium unit. It was Alexander who encouraged plaintiff to buy the Wack-Wack property. Plaintiff paid the price and the realty taxes. Plaintiff spent for the completion of the unfinished house on the Wack-Wack property. Plaintiff bought the Wack-Wack property because he intended to transfer his residence from Quezon City to Mandaluyong. During the construction of the house on the Wack-Wack property plaintiff together with Conchita Sarmiento, used to go to the site. Plaintiff even told Sarmiento the room which he wanted to occupy. Alexander and defendant were not in a financial position to buy the subject properties because Alexander was receiving only minimal allowance and defendant was only earning some money from her small stall in Greenhills. Plaintiff paid for defendants and Alexander income taxes (Exhs. B, C, D, E, and F). Plaintiff kept the Income Tax Returns of defendant and Alexander in his files. It was one of plaintiffs lawyers who told him that the subject properties were included in the estate of Alexander. Plaintiff called up defendant and told her about the subject properties but she ignored him so that plaintiff was saddened and shocked. Plaintiff gave defendant monthly support of P 51, 000.00 (Exhs. RRRR to TTTTT," inclusive) P 50,000.00 for defendant andP1,000.00 for the yaya. The Wack-Wack property cost about P5.5 million. "The gist of the testimony of Robert Bassig: "He is 73 years old and a real estate broker. Bassig acted as broker in the sale of the EDSA property from Purificacion Yujuico to plaintiff. In the Deed of Sale (Exh. G) it was the name of Alexander that was placed as the vendee, as desired by plaintiff. The price was paid by plaintiff. Bassig never talked with Alexander. He does not know Alexander. "The gist of the testimony of Tom Adarne as witness for defendant: Adarne is 45 years old and an architect. He was a friend of Alexander. Adarne was engaged by defendant for the preparation of the plans of the Wack-Wack property. The contractor who won the bidding was Home Construction, Inc. The Agreement (Exh. 26) was entered into by defendant and Home Construction Inc. The amount of P955,555.00 (Exh. 26-A) was for the initial scope of the work. There were several letterproposals made by Home Construction (Exhs. 27-34-A, inclusive). There were receipts issued by Home Construction Inc. (Exhs. 35, 36 and 37). The proposal were accepted and performed. The renovation started in 1992 and was finished in 1993 or early 1994. "The gist of the testimony of Rosanna Regalado: "Regalado is 43 years old and a real estate broker. Regalado is a close friend of defendant. Regalado acted as broker in the sale of the Wack-Wack property between defendant and Alexander and the owner. The sale Agreement (Exh. 38) is dated March 5, 1987. The price is P5.5 million in Far East Bank and Trust Company managers checks. The four (4) checks mentioned in paragraph 1 of the Agreement were issued by Alexander but she is not sure because it was long time ago. "The gist of the testimony of Sylvia Ty:

38

"She is 40 years old, businesswoman and residing at 675 Notre Dame, Wack-Wack Village, Mandaluyong City. Sylvia and Alexander have a daughter named Krizia Katrina Ty, who is 16 years old. Krizia is in 11thgrade at Brent International School. Alexander was an executive in several companies as shown by his business cards (Exhs. 40, 40-A, 40-B, 40-C, 40-D, 40-E, 40-F, and 40-G). Before defendant and Alexander got married, the latter acquired a condominium unit in Los Angeles, USA, another property in Montebello, California and the EDSA property. The properties in the USA were already settled and adjudicated in defendants favor (Exhs. 41 and 41-A). Defendant did not bring any property into the marriage. After the marriage, defendant engaged in selling imported clothes and eventually bought four (4) units of stall in Shoppesville Greenhills and derived a monthly income of P50,000.00. the price for one (1) unit was provided by defendants mother. The other three (3) units came from the house and lot at WackWack Village. The P3.5 million managers check was purchased by Alexander. The sale Agreement was signed by Alexander and defendant (Exhs. 38-A and 38-B). After the purchase, defendant and Alexander continued the construction of the property. After Alexanders death, defendant continued the construction. The first architect that defendant and Alexander engaged was Gerry Contreras (Exhs. 42, 42-A and 42-A1 to 42-A-7). The post-dated checks issued by Alexander were changed with the checks of plaintiff. After the death of Alexander, defendant engaged the services of Architect Tom Adarne. Home Construction, Inc. was contracted to continue the renovation. Defendant and Alexander made payments to Contreras from January to May 1998 (Exhs. 43, 43-A to 43-H, inclusive). A general contractor by the name of Nogoy was issued some receipts (Exhs. 43-J and 43-K). a receipt was also issued by Taniog (Exh. 43-L). the payments were made by defendant and Alexander from the latters accounts. The Agreement with Home Construction Inc. (Exhs. 26) shows defendants signature (Exh. 26-A). the additional works were covered by the progress billings (Exhs. 27 to 34-A). Defendant paid them from her account. The total contract amount was P5,049,283.04. The total expenses, including the furnishings, etc. reached the amount of P8 to 10 million and were paid from defendants and Alexanders funds. After the death of Alexander, plaintiff made payments for the renovation of the house (Exh. M) which plaintiff considered as advantages but plaintiff did not make any claim for reimbursement from the estate of Alexander. Defendants relationship with plaintiff became strained when he asked her to waive her right over the Union Ajinomoto shares. Alexander was a friend of Danding Cojuangco and was able to import luxury cars. Alexander made a written offer to purchase the Wack-Wack property. Alexander graduated from the Woodberry College in 1978 or 1979 and returned to the Philippines in 1979 defendant returned to the Philippines about six (6) months later. Plaintiff was financially well off or wealthy. Alexander was very close to plaintiff and he was the most trusted son and the only one who grew up in plaintiffs house. Plaintiff observed Chinese traditions. Alexander was not totally dependent on plaintiff because he had his own earnings. Upon his return from the USA, Alexander acquired the properties in the USA while studying there. At the time of his death, Alexander was vice president of Union Ajinomoto. Defendant could not say how much was the compensation of Alexander from Union Ajinomoto. Defendant could not also say how much did Alexander earn as vice president of Royal Porcelain Corporation. Alexander was the treasurer of Polymark Paper Industries. Alexander was the one handling everything for plaintiff in Horn Blower Sales Enterprises, Hi-Professional Drilling, Round Consumer, MVR Picture Tubes, ABT Enterprises. Plaintiff supported defendant and her daughter in the amount of P51,000.00 per month from 1988-1990. Defendant did not offer to reimburse plaintiff the advances he made on the renovation of the Wack-Wack property because their relationship became strained over the Ajinomoto shares. Defendant could not produce the billings which were indicated in the post-dated checks paid to Architect Contreras. After the birth of her child, defendant engaged in the boutique business. Defendant could not recall how much she acquired the boutique (for). In 1983 or 1984 defendant started to earn P50,000.00 a month. The properties in the USA which were acquired by Alexander while still single were known to plaintiff but the latter did not demand the return of the titles to him. The Transfer Certificates of Title of the Wack-Wack and EDSA properties were given to defendant and Alexander. The Condominium Certificate of Title was also given to defendant and Alexander. The plaintiff did not demand the return of the said titles. "The gist of the testimony of Atty. Mario Ongkiko: "Atty. Ongkiko prepared the Deed of Sale of the EDSA property. There was only one Deed of Sale regarding the said property. The plaintiff was not the person introduced to him by Yujuico as the buyer.3

39

On January 7, 2000, the RTC rendered its decision, disposing as follows: WHEREFORE, judgment is hereby rendered: 1. Declaring plaintiff as the true and lawful owner of the subject properties, as follows: A. A parcel of land with an area of 1728 square meters, situated along EDSA Greenhills, Mandaluyong City, covered by TCT No. 006585. B. A residential land with an area of 1584 square meters, together with the improvements thereon, situated in Notre Dame, Wack-Wack Village, Mandaluyong City, covered by TCT No. 62670. C. A residential condominium unit with an area of 167.5 square meters, situated in 29 Annapolis St., Greenhills, Mandaluyong City, covered by Condominium Certificate Title No. 3395. 2. Ordering the defendant to transfer or convey the subject properties in favor of plaintiff and the Register of Deeds for Mandaluyong City to transfer and issue in the name of plaintiff the corresponding certificates of title. 3. Ordering the defendant to pay plaintiff the amount of P100,000.00, as moral damages and P200,000.00, as attorneys fees plus the cost of the suit. SO ORDERED.4 Respondent herein, Sylvia S. Ty, appealed from the RTC Decision to the CA, assigning the following as errors: I. THE TRIAL COURT ERRED IN HOLDING THAT APPELLEE PURCHASED THE EDSA PROPERTY BUT PLACED TITLE THERETO IN THE NAME OF ALEXANDER T. TY, SO THAT AN EXPRESS TRUST WAS CREATED BETWEEN APPELLEE, AS TRUSTOR AND ALEXANDER AS TRUSTEE IN FAVOR OF THE LATTERS SIBLINGS, AS BENEFICIARIES EVEN WITHOUT ANY WRITING THEREOF; ALTERNATIVELY, THE TRIAL COURT ERRED IN ANY CASE IN HOLDING THAT AN IMPLIED TRUST EXISTED BETWEEN APPELLEE AND ALEXANDER TY IN FAVOR OF APPELLEE UNDER THE SAME CIRCUMSTANCES. II. THE TRIAL COURT ERRED IN HOLDING THAT APPELLEE PURCHASED THE WACK-WACK AND MERIDIEN CONDOMINIUM PROPERTIES BUT PLACED ITS TITLES THERETO IN THE NAMES OF SPOUSES ALEXANDER AND APPELLANT BECAUSE HE WAS FINANCIALLY CAPABLE OF PAYING FOR THE PROPERTIES WHILE ALEXANDER OR HIS WIFE, APPELLANT SYLVIA S. TY, WERE INCAPABLE. HENCE, A RESULTING TRUST WAS CREATED BETWEEN APPELLEE AND HIS SON, ALEXANDER, WITH THE FORMER, AS OWNER-TRUSTOR AND BENEFICIARY AND THE LATTER AS TRUSTEE CONCERNING THE PROPERTIES. III. THE TRIAL COURT ERRED IN AWARDING MORAL DAMAGES OF P100,000 AND ATTORNEYS FEES OFP200,000 IN FAVOR OF APPELLEE AND AGAINST DEFENDANT-APPELLANT IN HER CAPACITY AS ADMINISTRATRIX OF THE INTESTATE ESTATE OF ALEXANDER TY, INSTEAD OF AWARDING APPELLANT IN HER COUNTERCLAIM ATTORNEYS FEES AND EXPENSES OF LITIGATION INCURRED BY HER IN DEFENDING HER HUSBANDS ESTATE AGAINST THE UNJUST SUIT OF HER

40

FATHER-IN-LAW, HEREIN APPELLEE, WHO DISCRIMINATED AGAINST HIS GRAND DAUGHTER KRIZIA KATRINA ON ACCOUNT OF HER SEX. The arguments in the respective briefs of appellant and appellee are summarized by the CA Decision, as well as other preliminary matters raised and tackled, thus: In her Brief, defendant-appellant pointed out that, based on plaintiff-appellees testimony, he actually intended to establish an express trust; but that the trial court instead found that an implied trust existed with respect to the acquisition of the subject properties, citing Art. 1448 of the Civil Code of the Philippines. It is defendant-appellants contention that the trial court erred: In applying Art. 1448 on implied trust, as plaintiff-appellee did not present a shred of evidence to prove that the money used to acquire said properties came from him; and in holding that both she and her late husband were financially incapable of purchasing said properties. On the contrary, defendant-appellant claimed that she was able to show that she and her late husband had the financial capacity to purchase said properties. Defendant-appellant likewise questioned the admission of the testimony of plaintiff-appellee, citing the Dead Mans Statute; she also questioned the admission of her late husbands income tax returns, citing Section 71 of the NIRC and the case of Vera v. Cusi, Jr. On July 10, 2001, plaintiff-appellee filed his appellees Brief, whereunder he argued: That the trial court did not err in finding that the subject properties are owned by him; that the said properties were merely registered in Alexanders name, in trust for his siblings, as it was plaintiff-appellee who actually purchased the subject properties he having the financial capacity to acquire the subject properties, while Alexander and defendant-appellant had no financial capacity to do so; that defendant-appellant should be sentenced to pay him moral damages for the mental anguish, serious anxiety, wounded feelings, moral shock and similar injury by him suffered, on account of defendant-appellants wrongful acts; and that defendant appellant should also pay for attorneys fees and litigation expenses by him incurred in litigating this case. In a nutshell, it is plaintiff-appellees thesis that in 1973, when he accompanied his son, Alexander, to America, he told his son that he would put some of the properties in Alexanders name, so that if death overtakes him (plaintiff-appellee), Alexander would distribute the proceeds of the property among his siblings. According to plaintiff-appellee, the three properties subject of this case are the very properties he placed in the name of his son and name-sake; that after the death of Alexander, he reminded his daughterin-law, the defendant appellant herein, that the subject properties were only placed in Alexanders name for Alexander to hold trust for his siblings; but that she rejected his entreaty, and refused to reconvey said properties to plaintiff-appellee, thereby compelling him to sue out a case for reconveyance. On September 5, 2001, defendant-appellant filed her reply Brief and a motion to admit additional evidence. Thereafter, several motions and pleadings were filed by both parties. Plaintiff-appellee filed a motion for early resolution dated May 17, 2002 while defendant-appellant filed a motion to resolve dated August 6, 2003 and a motion to resolve incident dated August 12, 2003. Plaintiff-appellee then filed a comment on the motion to resolve incident, to which defendant-appellant tendered a reply. Not to be outdone, the former filed a rejoinder. Thus, on February 13, 2004, this Court issued a resolution, to set the case for the reception of additional evidence for the defendant-appellant. In support of her motion to admit additional evidence, defendant-appellant presented receipts of payment of real estate taxes for the years 1987 to 2004, obviously for the purpose of proving that she and her late husband in their own right were financially capable of acquiring the contested properties. Plaintiff-appellee however did not present any countervailing evidence.

41

Per resolution of March 25, 2004, this Court directed both parties to submit their respective memorandum of authorities in amplification of their respective positions regarding the admissibility of the additional evidence. Defendant-appellant in her memorandum prayed that the additional evidence be considered in resolving the appeal in the interest of truth and substantial justice. Plaintiff-appellee, on the other hand, in his memorandum, argued that the additional evidence presented by the defendant-appellant is forgotten evidence, which can lo longer be admitted, much less considered, in this appeal. Thereafter, the case was submitted for decision. Before taking up the main issue, we deem it expedient to address some collateral issues, which the parties had raised, to wit: (a) the admissibility of the additional evidence presented to this Court, (b) the admissibility of plaintiffs testimony, (c) the admissibility of the income tax return, and (d) laches. On the propriety of the reception of additional evidence, this Court falls backs (sic) upon the holding of the High Court in Alegre v. Reyes, 161 SCRA 226 (1961) to the effect that even as there is no specific provision in the Rules of Court governing motions to reopen a civil case for the reception of additional evidence after the case has been submitted for decision, but before judgment is actually rendered, nevertheless such reopening is controlled by no other principle than that of the paramount interest of justice, and rests entirely upon the sound judicial discretion of the court. At any rate, this Court rules that the tax declaration receipts for the EDSA property for the years 1987-1997, and 1999; for the Wack-Wack property for the years 19861987, 1990-1999; and for the Meridien Condominium for the years 1993-1998 cannot be admitted as they are deemed forgotten evidence. Indeed, these pieces of evidence should have been presented during the hearing before the trial court. However, this Court in the interest of truth and justice must hold, as it hereby holds, that the tax declaration receipts for the EDSA property for the years 2000-2004; the Wack-Wack property for the years 2000-2004; and the Meridien Condominium for the years 2000-2001 may be admitted to show that to this date, it is the defendant-appellant, acting as an administratrix, who has been paying the real estate taxes on the aforestated properties. As regards the admissibility of plaintiff-appellees testimony, this Court agrees with the trial court that: "Defendants argument to the effect that plaintiffs testimony proving that the deceased Alexander Ty was financially dependent on him is inadmissible in evidence because he is barred by the Dead Mans Statute (Rule 130, Sec. 20, Rules of Court) for making such testimony, is untenable. A reading of pages 10 to 45 of the TSN, taken on November 16, 1998, which contain the directexamination testimony of plaintiff, and pages 27, 28, 30, 34, 35, 37, 39, 40 of the TSN, taken on January 15, 1999; page 6 of the TSN taken on December 11, 1998, pages 8, 10, 11, 12, 14, 23 24 of TSN, taken on taken on February 19, 1999; and pages 4,5,6,7,8,11,25 and 27 of the TSN taken on March 22, 1999, will show that defendants lawyer did not object to the plaintiff as witness against defendant, and that plaintiff was exhaustively cross-examined by defendants counsel regarding the questioned testimony, hence, the same is not covered by the Dead Mans Statute (Marella v. Reyes, 12 Phil. 1; Abrenica v. Gonda and De Gracia, 34 Phil. 739; Tongco v. Vianzon, 50 Phil. 698). A perusal of the transcript of stenographic notes will show that counsel for defendant-appellant was not able to object during the testimony of plaintiff-appellee. The only time that counsel for defendant-appellant interposed his objection was during the examination of Rosemarie Ty, a witness (not a party) to this case. Thus the Dead Mans Statute cannot apply. With regard to the income tax returns filed by the late Alexander Ty, this Court holds that the same are admissible in evidence. Neither Section 71 of the NIRC nor the case of Vera v. Cusi applies in this case. The income tax returns were neither obtained nor copied from the Bureau of Internal Revenue, nor produced in court pursuant to a court order; rather these were produced by plaintiff-appellee from his own files, as he was the one who kept custody of the said income tax returns. Hence, the trial court did not err in admitting the income tax returns as evidence. 42

Anent the issue of laches, this Court finds that the plaintiff-appellee is not guilty of laches. There is laches when: (1) the conduct of the defendant or one under whom he claims, gave rise to the situation complained of; (2) there was delay in asserting a right after knowledge defendants conduct and after an opportunity to sue; (3) defendant had no knowledge or notice that the complainant would assert his right; and (4) there is injury or prejudice to the defendant in the event relief is accorded to the complainant. These conditions do not obtain here. In this case, there was no delay on the part of plaintiff-appellee in instituting the complaint for recovery of real properties. The case was files four years after Alexanders death; two years after the inventory of assets of Alexanders estate was submitted to the intestate court; and one month after defendant-appellant filed a motion to sell or mortgage the real estate properties. Clearly, such length of time was not unreasonable. 5 The CA then turned to "the critical, crucial and pivotal issue of whether a trust, express or implied, was established by the plaintiff-appellee in favor of his late son and name-sake Alexander Ty." The CA proceeded to distinguish express from implied trust, then found that no express trust can be involved here since nothing in writing was presented to prove it and the case involves real property. It then stated that it disagrees with the court a quos application of Art. 1448 of the Civil Code on implied trust, the so-called purchase money resulting trust, stating that the very Article provides the exception that obtains when the person to whom the title is conveyed 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. The CA therefore reasoned that even assuming that plaintiff-appellee paid at least part of the price of the EDSA property, the law still presumes that the conveyance was a discretion (a gift of devise) in favor of Alexander. As to plaintiff-appellees argument that there was no donation as shown by his exercise of dominion over the property, the CA held that no credible evidence was presented to substantiate the claim. Regarding the residence condominium and the Wack-Wack property, the CA stated that it did not agree either with the findings of the trial court that an implied trust was created over these properties. The CA went over the testimonies of plaintiff-appellee and the witness Conchita Sarmiento presented to show that spouses Alexander and Sylvia S. Ty were financially dependent of plaintiff-appellee and did not have the financial means or wherewithals to purchase these properties. It stated: Consider this testimony of plaintiff-appellee: Q During the time that Alex was staying with you, did you ever come to know that Alexander and his wife did go to the States? A Q Yes, sir. But I do not know the exact date. But they told me they want to go to America for check up. Was that the only time that Alexander went to the States?

A Only that time, sir. Previously, he did not tell me. That last he come (sic) to me and tell [sic] me that he will go to America for check up. That is the only thing I know. Q Would you say for the past five years before his death Alex and his wife were going to the States at least once a year? A I cannot say exactly. They just come to me and say that I [sic] will go to "bakasyon." They are already grown people. They dont have to tell me where they want to go. Q You are saying that Alexander did not ask you for assistance whenever he goes to the States? 43

A Q A Q A

Sometimes Yes. In what form? I gave him peso, sir. For what purpose? Pocket money, sir.

There is no evidence at all that it was plaintiff-appellee who spent for the cancer treatment abroad of his son. Nor is there evidence that he paid for the trips abroad of Alexander and the defendant-appellant. Admittedly, he only gave his son Alexander pocket money once in a while. Simply put, Alexander was not financially dependent upon the plaintiff-appellee, given that Alexander could afford the costs of his cancer treatment abroad, this on top of the trips he made to the United States at least once a year for five successive years without the support of his father. The fact that Alexander stayed with his father, the plaintiff-appellee in this case, even after he married Sylvia and begot Krizia, does not at all prove that Alexander was dependent on plaintiff-appellee. Neither does it necessarily mean that it was plaintiff-appellee who was supporting Alexanders family. If anything, plaintiffappellee in his testimony admitted that Alexander and his family went to live with him in observance of Chinese traditions. In addition, the income tax returns of Alexander from 1980-1984, and the profit and loss statement of defendant-appellants Joji San General Merchandising from 1981-1984, are not enough to prove that the spouses were not financially capable of purchasing the said properties. Reason: These did not include passive income earned by these two, such as interests on bank deposits, royalties, cash dividends, and earnings from stock trading as well as income from abroad as was pointed out by the defendant-appellant. More importantly, the said documents only covered the years 1980-1984. The income of the spouses from 1985 to 1987 was not shown. Hence, it is entirely possible that at the time the properties in question were purchased, or acquired, Alexander and defendant-appellant had sufficient funds, considering that Alexander worked in various capacities in the family corporations, and his own business enterprises, while defendantappellant had thriving businesses of her own, from which she acquired commercial properties. And this is not even to say that plaintiff-appellee is this case failed to adduce conclusive, incontrovertible proof that the money use to purchase the two properties really came from him; or that he paid for the price of the two properties in order to have the beneficial interest or estate in the said properties. A critical examination of the testimony of plaintiff-appellees witness, Conchita Sarmiento, must also show that this witness did not have actual knowledge as to who actually purchased the Wack-Wack property and the Meridien Condominium. Her testimony that plaintiff-appellee visited the Wack-Wack property and paid for the costs of the construction of the improvements over the said property, in the very nature of things, does not prove that it was the plaintiff-appellee who in fact purchased the Wack-Wack property.6 On the other hand, the CA found defendant-appellants evidence convincing: In contrast, Rosana Regalado had actual knowledge of the transaction she testified to, considering that she was the real estate broker who negotiated the sale of the Wack-Wack property between its previous owner Drago Daic and the spouses Alexander and Sylvia Ty. In her testimony, she confirmed that the checks, which were issued to pay for the purchase price of the Wack-Wack property, were signed and issued by Alexander, thereby corroborating the testimony of defendant-appellant on this point. Significantly, during the trial, Conchita Sarmiento identified some receipts wherein the payor was the late Alexander Ty. Apparently, prior to the death of Alexander, it was Alexander himself who was paying for the

44

construction of the Wack-Wack property; and that the only time plaintiff-appellee paid for the costs of the construction was when Alexander died. Quite compelling is the testimony of defendant-appellant in this respect: Q And after the death and burial of your husband, will you tell this Honorable Court what happened to the construction of this residence in Wack-Wack? A Well, of course, during the period I was mourning and I was reorganizing myself and my life, so I was not mainly focused on the construction, so it took a couple of months before I realized that the post-dated checks issued by my husband was changed through checks by my father-in-law Mr. Alejandro Ty. Q And did you had [sic] any conversation with Mr. Alejandro Ty regarding as to why he did that?

A Yes, sir, that was the beginning of our misunderstanding, so I decided to hire a lawyer and that is Atty. Ongkiko, to be able to settle my estate and to protect myself from with the checks that they changed that my husband issued to Architect Gerry Contreras. Q A Q A Q A Q A Was there any point in time that you yourself took over the construction? Yes, sir, right after a year of that property after I was more settled. And did you engaged [sic] the services of any professional or construction company for the purpose? Yes, sir. Who was that? Architect Tom Adarme. What is his first name, if you recall? Architect Tommy Adarme.

Q And was there any company or office which helped Architect Adarme in the continuation of the construction? A Yes, I also signed a contract with Architect Adarme and he hired Home Construction to finish the renovation and completion of the construction in Wack-Wack, sir. Q Do you have any document to show that you yourself overtook personally the continuation of the construction of your residence? A Yes, sir I have the whole construction documents and also the documents through Arch. Gerry Contreras, that contract that we signed. In other words, plaintiff-appellee took over the management of the construction of the Wack-Wack property only because defendant-appellant was still in mourning. And, If ever plaintiff-appellee did pay for the costs of the construction after the death of Alexander, it would be stretching logic to absurd proportions to say that such fact proved that he owns the subject property. If at all, it only shows that he is entitled to reimbursement for what he had spent for the construction.7 Accordingly, the CA concluded, as follows:

45

Going by the records, we hold that plaintiff-appellee in this case was not able to show by clear preponderance of evidence that his son and the defendant-appellant were not financially capable of purchasing said property. Neither was plaintiff-appellee able to prove by clear preponderance of evidence (i.e., credible documentary evidence) that the money used to purchase the said properties really came from him. (And even if we assume that it came from him, it would still not establish an implied trust, as it would again be considered a donation, or a gift, by express mandate of the saving clause of Art. 1448 of the Civil Code, as heretofore stated). If anything, what is clear from the evidence at bench is that Alexander and the defendant-appellant were not exactly bereft of the means, the financial capability or resources, in their own right, to purchase, or acquire, the Meridien Condominium and the Wack-Wack property. The evidence on record shows that Alexander Ty was 31 years old when he purchased the Meridien Condominium and was 33 years old when he purchased the Wack-Wack property. In short, when he purchased these properties, he had already been working for at least nine years. He had a car care business and a beer garden business. He was actively engaged in the business dealings of several family corporations, from which he received emoluments and other benefits. As a matter of fact, Alexander and plaintiff-appellee had common interest in various family corporations of which they were stockholders, and officers and directors, such as: International Paper Industries, Inc.; Agro-Industries Specialists Services, Inc.; Hi-Professional Drillings and Manufacturing, Inc.; MVR-TV Picture Tube, Inc.; Crown Consumer Products, Inc.; Philippine Crystal Manufacturing Corporation; and Union Emporium, Inc. Furthermore, at the time of his death, the son Alexander was Vice-President of Union Ajinomoto (Exh. "40"); Executive Vice-President of Royal Porcelain Corporation (Exh. "40-A"); Treasurer of Polymart Paper Industries, Inc. (Exh. "40-B"); General Manager of Hornblower Sales Enterprises and Intercontinental Paper Industries, Inc. (Exh. "40-C"); President of High Professional Drilling and Manufacturing, Inc. (Exh. "40-D"); President of Crown Consumer Products, Inc. (Exh. "40-E"); (Executive Vice-President of MVR-TV Picture Tube, Inc. (Exh."40-F"); and Director of ABT Enterprise, Inc. (Exh. "40-G"). He even had a controlling interest in ABT Enterprises, which has a majority interest in Union Ajinomoto, Inc. What is more, the tax declaration receipts for the Wack-Wack property covering the years 2000-2004, and the tax declaration receipts for the Meridien Condominium covering the years 2000-2001, showed that to his date it is still the estate of Alexander that is paying for the real estate taxes thereon. In the context of this formidable circumstances, we are constrained to overturn the judgment of the trial court, which made these findings: Based on the facts at hand and the applicable law, the ineluctable conclusion is that a fiduciary relationship or an implied trust existed between plaintiff and Alexander Ty with the former as the owner, trustor and beneficiary and the latter as the trustee, concerning the subject real properties. The death of Alexander automatically extinguished the said fiduciary relationship, hence, plaintiffs instant action to recover the subject properties from the intestate estate of Alexander Ty is meritorious. We do not agree. To belabor a point, we are not persuaded that an implied trust was created concerning the subject properties. On the assumption, as elsewhere indicated, the plaintiff-appellee at the very least, paid for part of its purchase price, the EDSA property is presumed to be a gift, or donation, in favor of Alexander Ty, defendant-appellants late husband, following the saving clause or exception in Art. 1448 of the Civil Code. To repeat, it is the saving clause, or exception, not the general rule, that should here apply, the late Alexander Ty being the son of Plaintiff-appellee. Nor are we convinced, given the state of the evidence on record, that the plaintiff-appellee paid for the price of the Meridien Condominium and the Wack-Wack property. Therefore, the general rule announced in the first sentence of Art. 1448 of the Civil Code has no application in this case. Or, if the article is to be applied

46

at all, it should be the exception, or the saving clause, that ought to apply here, the deceased Alexander Ty being the son, as stated, of plaintiff-appellee. To sum up: Since plaintiff-appellee has erected his case upon Art. 1448 of the Civil Code, a prime example of an implied trust, viz.: that it was he who allegedly paid for the purchase price of some of the realties subject of this case, legal title or estate over which he allegedly granted or conveyed unto his son and namesake, Alexander Ty, for the latter to hold these realties in trust for his siblings in case of his (plaintiffappellees) demise, plaintiff-appellee is charged with the burden of establishing the existence of an implied trust by evidence described or categorized as "sufficiently strong," "clear and satisfactory," or "trustworthy." As will be presently discussed. Sad to say, plaintiff-appellee has miserably failed to discharge that burden. For, if the records are any indication, the evidence adduced by plaintiff-appellee on this score, can hardly merit the descriptive attributes "sufficiently strong," or "clear and satisfactory," or "trustworthy." If only to emphasize and reiterate what the Supreme Court has in the past declared about implied trusts, these case law rulings are worth mentioning Where a trust is to be established by oral proof, the testimony supporting it must be sufficiently strong to prove that the right of the alleged beneficiary with as much certainty as if a document were shown. A trust cannot be established, contrary to the recitals of a Torrens title, upon vague and inconclusive proof. As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements. While implied trusts may be proved by oral evidence, the evidence must be trustworthy and received by the courts with extreme caution and should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy evidence is required because oral evidence can easily be fabricated. The route to the reversal of the trial courts finding that an implied trust had been constituted over the subject realties is, thus, indubitably clear. As a final point, this Court finds that the plaintiff-appellee is not entitled to moral damages, attorneys fees and costs of litigation, considering that the instant case is clearly a vexatious and unfounded suit by him filed against the estate of the late Alejandro Ty. Hence, all these awards in the judgment a quo are hereby DELETED.8 The CA therefore reversed and set aside the judgment appealed from and entered another one dismissing the complaint. On October 18, 2004 the CA resolved to deny therein plaintiff-appellees motion for reconsideration.9 Hence, this petition. Petitioner submits the following grounds: IN REVERSING THE TRIAL COURTS JUDGMENT, THE COURT OF APPEALS 1. MADE FACTUAL FINDINGS GROUNDED ON MANIFESTLY MISTAKEN INFERENCES, SPECULATIONS, SURMISES, OR CONJECTURES OR PREMISED ON THE ABSENCE OF, OR ARE CONTRADICTED BY, THE EVIDENCE ON RECORD, AND WITHOUT CITATIONS OF THE SPECIFIC EVIDENCE ON WHICH THEY ARE BASED. 2. RULED THAT THERE WAS A "PRESUMED DONATION", WHICH IS A MATTER NEVER RAISED AS AN ISSUE IN THE CASE AS IT, IN FACT, CONFLICTS WITH THE PARTIES RESPECTIVE THEORIES OF THE CASE, AND THUS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL

47

PROCEEDINGS AS TO CALL FOR THIS HONORABLE COURTS EXERCISE OF ITS POWER OF SUPERVISION. 3. APPLIED THE PROVISION ON PRESUMPTIVE DONATION IN FAVOR OF A CHILD IN ARTICLE 1448 OF THE CIVIL CODE DESPITE AB TYS EXPRESS DECLARATION THAT HE DID NOT INTEND TO DONATE THE SUBJECT PROPERTIES TO ALEXANDER AND THUS DECIDED A QUESTION OF SUBSTANCE NOT THERETOFORE DETERMINED BY THIS HONORABLE COURT. 4. REQUIRED THAT THE IMPLIED TRUST BE PROVEN WITH DOCUMENTARY EVIDENCE AND THUS DECIDED A QUESTION OF SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW AND JURISPRUDENCE.10 The Court disposes of the petition, as follows: The EDSA Property Petitioner contends that the EDSA property, while registered in the name of his son Alexander Ty, is covered by an implied trust in his favor under Article 1448 of the Civil Code. This, petitioner argues, is because he paid the price when the property was purchased and did so for the purpose of having the beneficial interest of the property. Article 1448 of the Civil Code provides: Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of 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. The CA conceded that at least part of the purchase price of the EDSA property came from petitioner. However, it ruled out the existence of an implied trust because of the last sentence of Article 1448: x x x However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being disputably presumed that there is a gift in favor of the child. Petitioner now claims that in so ruling, the CA departed from jurisprudence in that such was not the theory of the parties. Petitioner, however, forgets that it was he who invoked Article 1448 of the Civil Code to claim the existence of an implied trust. But Article 1448 itself, in providing for the so-called purchase money resulting trust, also provides the parameters of such trust and adds, in the same breath, the proviso: "However, if the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, NO TRUST IS IMPLIED BY LAW, it being disputably presumed that there is a gift in favor of the child." (Emphasis supplied.) Stated otherwise, the outcome is the necessary consequence of petitioners theory and argument and is inextricably linked to it by the law itself. The CA, therefore, did not err in simply applying the law. Article 1448 of the Civil Code is clear. If the person to whom the title is conveyed is the child of the one paying the price of the sale, and in this case this is undisputed, NO TRUST IS IMPLIED BY LAW. The law, instead, disputably presumes a donation in favor of the child. On the question of whether or not petitioner intended a donation, the CA found that petitioner failed to prove the contrary. This is a factual finding which this Court sees no reason the record to reverse.

48

The net effect of all the foregoing is that respondent is obliged to collate into the mass of the estate of petitioner, in the event of his death, the EDSA property as an advance of Alexanders share in the estate of his father, 11 to the extent that petitioner provided a part of its purchase price. The Meridien Condominium and the Wack-Wack property. Petitioner would have this Court overturn the finding of the CA that as regards the Meridien Condominium and the Wack-Wack property, petitioner failed to show that the money used to purchase the same came from him. Again, this is clearly a factual finding and petitioner has advanced no convincing argument for this Court to alter the findings reached by the CA. The appellate court reached its findings by a thorough and painstaking review of the records and has supported its conclusions point by point, providing citations from the records. This Court is not inclined to reverse the same. Among the facts cited by the CA are the sources of income of Alexander Ty who had been working for nine years when he purchased these two properties, who had a car care business, and was actively engaged in the business dealings of several family corporations, from which he received emoluments and other benefits.12 The CA, therefore, ruled that with respect to the Meridien Condominium and the Wack-Wack property, no implied trust was created because there was no showing that part of the purchase price was paid by petitioner and, on the contrary, the evidence showed that Alexander Ty had the means to pay for the same. WHEREFORE, the petition is PARTLY GRANTED in that the Decision of the Court of Appeals dated July 27, 2004 and its Resolution dated October 18, 2004, in CA-G.R. No. 66053, are AFFIRMED, with the MODIFICATION that respondent is obliged to collate into the mass of the estate of petitioner, in the event of his death, the EDSA property as an advance of Alexander Tys share in the estate of his father, to the extent that petitioner provided a part of its purchase price. No costs. SO ORDERED. ADOLFO S. AZCUNA Associate Justice

WE CONCUR: REYNATO S. PUNO Chief Justice Chairperson ANTONIO T. CARPIO Associate Justice
*

RENATO C. CORONA Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

CERTIFICATION

49

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. REYNATO S. PUNO Chief Justice

50

51