1.
SPS RUTH DIZON VS MAXIMA GREENFELL GR 227725 JULY 1 2020
Facts:
Maxima Greenfell, a former Filipino who became an Australian citizen, financed the purchase of a house and two
parcels of land in Botolan, Zambales. Because she was then disqualified from owning land in the Philippines, the
properties were registered in the name of her niece, Ruth Dizon Devisfruto, who executed the deeds of sale in
her own name.
After Greenfell reacquired her Filipino citizenship under R.A. 9225 in 2009, she demanded that Ruth transfer
ownership of the properties to her. Ruth refused, claiming ownership.
Greenfell then filed a Complaint for Reconveyance and Damages, asserting that she was the real owner and that
Ruth merely held the title in trust for her.
The Municipal Circuit Trial Court (MCTC) ruled in favor of Greenfell, holding that a purchase money resulting
trust existed under Article 1448 of the Civil Code, since Greenfell supplied the money for the purchase but the
title was placed in Ruth’s name. The RTC and Court of Appeals (CA) affirmed, ruling that the transaction was
based on confidence—Greenfell trusted Ruth to hold the property until she could legally own it again.
Issue:
Whether or not an implied trust was created between Maxima Greenfell and Spouses Devisfruto.
Ruling:
Yes. An implied (resulting) trust existed under Article 1448 of the Civil Code.
The Court affirmed that the purchase money came from Greenfell, while title was registered in Ruth’s name,
with the understanding that Ruth would later transfer ownership back once Greenfell reacquired Philippine
citizenship.
This arrangement clearly established a purchase money resulting trust, where the one who provides the
consideration (Greenfell) is the beneficial owner, and the one in whose name the property is titled (Ruth) is
merely a trustee.
The Supreme Court rejected the Devisfrutos’ claim that the arrangement was an express trust (which would
require documentary proof) or a donation (which would require written form under Article 748 of the Civil
Code). There was no written proof of a valid donation, nor was there evidence that Greenfell intended to give
the property gratuitously.
The Court further noted that the petitioners raised the distinction between express and implied trust for the first
time on appeal, which is not allowed. Even if considered, the Court said the evidence pointed to an implied trust
since the intent was inferred from conduct and circumstances, not from any written declaration.
Doctrine:
Article 1448, Civil Code:
“There is an implied trust when property is sold, and the legal estate is granted to one party but the price is paid
by another for the purpose of having the beneficial interest of the property. The former is the trustee, while the
latter is the beneficiary.”
A purchase money resulting trust arises when one person pays for the property but title is placed in another’s
name, creating an obligation for the latter to reconvey the property to the true owner.
Disposition: Petition DENIED.
The CA Decision and Resolution were AFFIRMED.
The Devisfruto spouses were directed to reconvey the properties to Maxima Greenfell.
Key Takeaway:
When property is bought using another person’s money and registered in someone else’s name—without intent
to donate—an implied trust arises by operation of law. The person holding title becomes a trustee, bound to
transfer the property to the beneficial owner upon demand.
2. ESTATE OF MARGARITA CABACUNGAN VS MARILOU LAIGO GR 175073 AUGUST 15 2011
FACTS:
Margarita D. Cabacungan owned three parcels of unregistered land in La Union.
In 1968, her son, Roberto Laigo, requested that the tax declarations of the properties be transferred to
his name to support his U.S. visa application.
To accommodate him, Margarita executed an Affidavit of Transfer of Real Property transferring the
lands to Roberto.
The arrangement was merely to help Roberto obtain a visa, not to transfer ownership.
After obtaining his visa and returning from the U.S., Roberto failed to return the properties.
Later, Roberto sold the properties:
o One lot to Spouses Mario and Julia Campos in 1990;
o Two lots to his adopted children, Pedro and Marilou Laigo, in 1992.
Margarita discovered these sales only in 1995 during Roberto’s wake.
In 1996, she filed a complaint for annulment of sale, recovery of ownership, and reconveyance.
DEFENSES:
Respondents (Pedro and Marilou): Claimed they were buyers in good faith and for value, and that
Margarita’s claim was barred by prescription and laches, since the transfer occurred in 1968.
Spouses Campos: Asserted the same defenses but later settled amicably with Margarita.
RTC Ruling:
Dismissed the complaint.
Ruled that no express trust was created since there was no written agreement showing that Roberto
was to return the properties.
However, an implied (constructive) trust might have arisen, but Margarita was barred by laches and
prescription (10 years from 1968).
CA Ruling:
Affirmed the RTC.
Held that no implied trust existed because there was no evidence of intent to create one.
Even if there was, the action prescribed long ago and was also barred by laches.
ISSUE:
Whether an implied trust existed between Margarita and Roberto, and whether the action for reconveyance
was barred by prescription or laches.
RULING:
YES, there was an implied (resulting) trust; NO, it was not barred by prescription or laches.
RATIO DECIDENDI:
1. Existence of a Resulting Trust:
o The Affidavit of Transfer was executed only for accommodation to support Roberto’s visa
application.
o Margarita never intended to donate or transfer ownership to Roberto.
o Testimonies of Luz Laigo-Ali and Hilaria Costales confirmed that Roberto promised to return the
properties after his visa purpose.
o Hence, the transfer only conveyed legal title, while equitable ownership remained with
Margarita — creating a resulting trust under Article 1449 of the Civil Code.
2. Prescription and Laches:
o The 10-year prescriptive period for reconveyance based on implied trust runs from repudiation,
not from creation of the trust.
o Repudiation occurred in 1992 when Roberto sold the properties.
o Since the complaint was filed in 1996, it was well within the prescriptive period.
o Laches does not strictly apply among family members; trust and confidence among relatives
justify delay.
3. Buyers in Good Faith:
o The doctrine of innocent purchaser for value applies only to registered land.
o The subject lands were unregistered, so respondents purchased at their own risk.
o Even if they acted in good faith, they acquired no better right than that of their seller (Roberto),
who had none.
4. Constructive Trust on Respondents:
o Since respondents obtained the properties from Roberto’s wrongful conversion of trust
property, they became constructive trustees under Article 1456 of the Civil Code.
o They are therefore obliged to reconvey the properties to Margarita’s estate.
DOCTRINE:
Resulting Trust (Article 1449, Civil Code):
When property is gratuitously transferred for a specific purpose and the purpose is fulfilled or fails, the
transferee holds the property in trust for the transferor.
Constructive Trust (Article 1456, Civil Code):
One who, through fraud, mistake, or abuse of confidence, obtains property becomes an implied trustee
of that property for the benefit of the rightful owner.
Prescription in Implied Trusts:
The 10-year period begins only upon repudiation of the trust, clearly made known to the trustor.
Laches Not Strictly Applied Among Relatives:
Blood relationship and the trust it implies justify delay in enforcing property rights.
HELD:
The petition was GRANTED.
Respondents were ordered to reconvey the properties to the Estate of Margarita D. Cabacungan.
KEY TAKEAWAY:
When a property is transferred to another merely for convenience or a temporary purpose without intent to
transfer ownership, a resulting trust is created. The transferee cannot dispose of the property, and any sale
thereof amounts to breach of trust. Prescription begins only when the trust is repudiated, not when the
property was first transferred.
3. JOSEPH __ JR. VS UCPB GR 179096 FEB 6, 2013
FACTS:
In 1995, the late Joseph Goyanko, Sr. invested ₱2,000,000 with Philippine Asia Lending Investors, Inc. (PALII).
After his death, both his legitimate and illegitimate heirs claimed entitlement to the investment.
To resolve the conflicting claims, PALII deposited the proceeds with United Coconut Planters Bank (UCPB) under
the account name:
“Phil Asia: ITF (In Trust For) The Heirs of Joseph Goyanko, Sr.”
By September 27, 1997, the account balance was ₱1,509,318.76.
However, on December 11, 1997, UCPB allowed PALII to withdraw ₱1,500,000, leaving only ₱9,318.76. When
UCPB refused to restore the withdrawn amount upon demand, Joseph Goyanko Jr., as administrator of the
estate, filed a complaint for recovery of sum of money, claiming that UCPB violated a trust relationship because
the account was held “in trust for” the heirs.
RTC RULING:
The Regional Trial Court (RTC) dismissed the complaint, ruling that:
The notation “ITF HEIRS” was not sufficient to establish a trust between PALII and the heirs.
The deposit relationship was only between PALII and UCPB as depositor and bank.
Thus, UCPB acted within its rights when it allowed PALII to withdraw the money.
CA RULING:
The Court of Appeals (CA) affirmed the RTC decision (but deleted attorney’s fees).
It held that:
No express trust was created since there was no competent trustor and trustee, and no clear intent to
establish a trust.
The words “ITF HEIRS” alone did not establish a fiduciary relationship or charge UCPB with notice of a
trust.
Therefore, UCPB was not liable for allowing the withdrawal.
ISSUE:
Whether an express trust existed among PALII, UCPB, and the heirs of Goyanko, Sr. such that UCPB may be held
liable for the withdrawal of the funds.
RULING:
NO. There was no express trust, and UCPB cannot be held liable for the withdrawal.
RATIO DECIDENDI:
1. No Express Trust Was Created
o A trust requires:
(a) a competent trustor and trustee,
(b) an ascertainable trust res, and
(c) certain beneficiaries.
o In this case, while the res (money) and beneficiaries (heirs) were identifiable, there was no
competent trustor-trustee relationship between PALII and UCPB.
o UCPB was not given any power of administration or duty to manage the account for the heirs.
o PALII did not intend to relinquish ownership of the funds to UCPB as trustee. It merely deposited
the funds for safekeeping pending resolution of ownership.
2. “ITF HEIRS” Not Sufficient to Establish a Trust
o The mere use of the words “In Trust For” (ITF) does not automatically create a trust.
o A trust arises only if there is clear intent to create one, not by mere labeling.
o The Court found that “ITF HEIRS” was simply used to identify the account and distinguish it from
PALII’s other accounts, not to establish a trust.
3. Nature of Bank Deposit
o Under Article 1980 of the Civil Code, deposits in banks are governed by the contract of simple
loan, not by trust.
o The relationship between a bank and depositor is that of debtor and creditor, not trustee and
beneficiary.
o Thus, UCPB’s duty was only to honor withdrawals by PALII, the depositor of record.
4. No Negligence or Bad Faith by UCPB
o Since the account was opened in PALII’s name, UCPB rightfully allowed PALII to withdraw.
o The bank’s fiduciary obligation to depositors does not make it a trustee of third parties.
o Only PALII, not UCPB, had the duty to turn over the money to Goyanko’s heirs.
5. No Cause of Action Against UCPB
o There was no right of the heirs violated by UCPB, as the bank’s obligation was only to PALII.
o The heirs’ proper recourse was against PALII, which wrongfully withdrew the funds.
DOCTRINE: The mere designation of a bank account as “In Trust For” (ITF) does not automatically create an
express trust. A bank deposit, even if labeled “ITF,” remains governed by the contract of simple loan under Article
1980 of the Civil Code, establishing a debtor-creditor relationship—not a trustee-beneficiary relationship.
HELD:
Petition DENIED.
CA decision AFFIRMED.
No express or implied trust existed; UCPB not liable.
KEY TAKEAWAY:
For an express trust to exist, there must be clear intent, competent parties, and a definite subject matter. The
phrase “In Trust For” (ITF) alone does not create a trust in the absence of an actual fiduciary obligation. A bank
deposit, even if labeled as “trust account,” is generally a loan contract, not a trust relationship, unless proven
otherwise by clear and convincing evidence.
Article 1767: Definition and Formation of Partnership
Text:
By the contract of partnership two or more persons bind themselves to contribute money, property, or industry
to a common fund, with the intention of dividing the profits among themselves. Two or more persons may also
form a partnership for the exercise of a profession.
Explanation:
This article defines a partnership as a contract where two or more persons agree to pool resources (money,
property, or labor) into a common fund, intending to share the profits. It also allows for professional partnerships
(e.g., law or accounting firms).
Example:
Business Partnership: Ana and Ben agree to each contribute ₱100,000 to start a bakery. They agree to
share the profits equally. This is a partnership under Article 1767.
Professional Partnership: Three lawyers agree to form a law firm, contributing their legal expertise and
sharing the income from clients.
Legal Basis:
See Civil Code (1949); also discussed in Lim v. Philippine Fishing Gear Industries, Inc. (1999), where the Supreme
Court recognized a partnership based on the parties’ agreement to contribute capital and share profits.
Article 1768: Juridical Personality of Partnership
Text:
The partnership has a juridical personality separate and distinct from that of each of the partners, even in case of
failure to comply with the requirements of article 1772, first paragraph.
Explanation:
A partnership is considered a separate legal entity from its partners. This means it can own property, incur
obligations, sue, and be sued independently of the individual partners.
Example:
The bakery partnership (Ana and Ben) can open a bank account in the partnership’s name, own the
bakery’s equipment, and enter into contracts as “Ana & Ben Bakery,” separate from Ana or Ben
personally.
Legal Basis:
Article 1768, Civil Code (1949). This principle is also recognized in Lim v. Philippine Fishing Gear Industries, Inc.
(1999).
Article 1769: Rules for Determining Existence of Partnership
Text (summarized):
This article provides guidelines to determine if a partnership exists, emphasizing that:
Co-ownership or sharing profits does not automatically mean partnership.
Sharing gross returns is not conclusive of partnership.
Receiving a share of profits is prima facie evidence of partnership, unless the share is for payment of a
debt, wages, rent, annuity, loan interest, or sale of goodwill.
Explanation and Examples:
Rule Explanation Example
(1) Not partners as to each If people do not consider themselves partners, Carla and Dan co-own a car but never
other, not partners as to they are not partners to outsiders (except as agreed to run a business together. They
third persons provided by law). are not partners.
Three siblings inherit a house and rent it
(2) Co-ownership/co- Merely owning property together, even if
out, sharing the rent. They are co-
possession ≠ partnership sharing profits, does not create a partnership.
owners, not partners.
Two friends agree to split the total sales
(3) Sharing gross returns ≠ Sharing total income (before expenses) does from a garage sale, but do not pool
partnership not by itself create a partnership. resources or share losses. No partnership
exists.
- Debt: If Emma receives ₱10,000 from a
business’s profits as payment for a loan,
she is not a partner.
- Wages: If a manager is paid a
percentage of profits as salary, he is not a
partner.
If a person receives a share of profits, it
(4) Sharing profits = prima - Rent: If a landlord is paid a share of
suggests partnership, unless the share is for:
facie evidence, with profits as rent, he is not a partner.
debt, wages, rent, annuity, loan interest, or
exceptions - Annuity: If a widow receives a share of
sale of goodwill.
profits as an annuity, she is not a partner.
- Loan Interest: If a lender’s interest
depends on profits, he is not a partner.
- Sale of Goodwill: If a former owner is
paid from profits for the sale of the
business, he is not a partner.
Legal Basis:
Article 1769, Civil Code (1949). These rules are applied in cases such as Heirs of Tan Eng Kee v. Court of Appeals
(2000), Jarantilla, Jr., v. Jarantilla (2010), and Santiago v. Garcia (2020).
Table Summary: Article 1769 Examples
Rule Example
Siblings inherit and rent out land, sharing rent. Not a
Co-ownership does not establish partnership
partnership.
Friends split total sales from a one-time event. Not a
Sharing gross returns does not establish partnership
partnership.
Sharing profits is prima facie evidence, unless for A lender receives a share of profits as loan interest. Not a
exceptions partner.
Explanations with Examples (by article)
Article 1770 — Lawful purpose; unlawful profits forfeited
Rule: The partnership’s object must be lawful and for the partners’ common benefit. If a court dissolves
an unlawful partnership, profits are forfeited to the State, without prejudice to criminal confiscations.
Example (lawful): A design studio to provide graphic services and share profits.
Example (unlawful): A group forms to sell illegal drugs; upon judicial dissolution, any profits are forfeited
to the State. Because the object is illegal, the partnership cannot be enforced, and profits are confiscated
under Art. 1770 and applicable penal rules in the Civil Code.
Article 1771 — Form in general; public instrument if immovables/real rights are contributed
Rule: A partnership may be constituted in any form. But if any partner contributes immovable property
or a real right, the partnership contract must be in a public instrument (notarized document).
Example (no immovables): Three engineers verbally agree to pool cash and services to run a consulting
firm; valid as to form.
Example (with immovable): If one contributes a parcel of land to the firm, the contract must be in a
notarized public instrument; otherwise, it fails the Art. 1771 form requirement in the Civil Code.
Article 1772 — Public instrument and SEC recording for ≥ ₱3,000; noncompliance does not shield from third-
party liability
Rule: If capital is ₱3,000 or more, the partnership contract must appear in a public instrument and be
recorded with the SEC. Even if partners fail to comply, the partnership and partners remain liable to third
persons.
Example (compliance): A law firm with ₱500,000 capital executes a notarized Articles of Partnership and
records it with the SEC, as in Saludo v. PNB, which recognized a law partnership as a separate juridical
entity under Arts. 1767, 1771, and 1772.
Example (noncompliance, still liable): Two persons operate a dealership with over ₱3,000 capital but
never record with the SEC. They can still be held liable to suppliers for deliveries on credit, per the
second paragraph of Art. 1772 and applied in Villanueva v. Coca-Cola.
“Failure to comply with the requirements of the preceding paragraph shall not affect the liability of the
partnership and the members thereof to third persons.”
— Civil Code, Art. 1772 (1949)
Cautionary note: Where immovables are involved, the Court requires strict compliance with public
instrument (and the inventory under Art. 1773); absence of such documents undermined the claimed
partnership in Litonjua v. Litonjua and Heirs of Tan Eng Kee.
Article 1773 — Inventory requirement when immovables are contributed
Rule: If immovable property is contributed, the partnership contract is void unless an inventory of the
immovable is made, signed by the parties, and attached to the public instrument.
Example (compliant): Partners contribute a titled lot to the partnership, execute a notarized partnership
contract, attach a signed inventory listing the lot’s details; the partnership is valid.
Example (noncompliant, void): Partners say a building was contributed but the contract lacks a signed
inventory attached to the public instrument; the partnership is void under Art. 1773, consistent with the
Court’s strict approach in Litonjua v. Litonjua.
Article 1774 — Partnership can acquire/transfer immovables in its name
Rule: The partnership may acquire immovable property or interests therein in the partnership name;
title can be conveyed only in that name.
Example (acquisition): “AB Partners” buys a warehouse titled to “AB Partners.” Valid; the title is in the
entity’s name per the Civil Code.
Example (conveyance): Sale of that warehouse must be executed by authorized partners in the
partnership name; a deed signed solely in a partner’s personal name would be defective as to title
transfer.
Article 1775 — Secret associations have no juridical personality; governed by co-ownership
Rule: Associations whose articles are kept secret among members, and where any member may contract
in his own name with third persons, have no juridical personality and are governed by co-ownership
rules.
Example (secret society): A group keeps its agreement hidden and allows members to transact
personally with outsiders. The law treats it as co-ownership, not a partnership; it cannot sue/be sued as
a juridical person under the Civil Code.
Example (practical effect): Creditors must sue individual members, not a non-existent juridical entity;
internal sharing follows co-ownership, not partnership rules.
Article 1776 — Classifications: by object (universal vs particular) and by liability (general vs limited)
Rule: By object: universal (all present property or all profits) vs particular (specific
things/undertaking/profession). By liability: general (all partners are general partners) vs limited (at least
one limited partner with limited liability, pursuant to special law).
Example (universal vs particular): Partners form a partnership to share “all profits” they earn during the
partnership (universal of profits) versus a partnership only to develop a single subdivision project
(particular).
Example (general vs limited): A general partnership of architects (all general partners) versus a limited
partnership formed under the Limited Partnership law where investor-partners’ liability is limited to their
contributions.
Article 1777 — Universal partnership may cover all present property or only all profits
Rule: A universal partnership is either: of all present property, or of all profits.
Example (present property): Partners pool all property they presently own (cash, vehicles, tools) into a
common fund and share resulting profits.
Example (profits): Partners agree to share all profits they may earn from any industry or work during the
partnership’s life, without pooling existing properties into common ownership.
Article 1778 — Universal partnership of all present property: everything presently owned becomes common
Rule: In a universal partnership of all present property, each partner’s property at constitution becomes
common property, along with profits derived therefrom.
Example: A and B agree that all property they currently own becomes partnership property. A’s van and
B’s equipment become owned by the partnership; profits from using them are shared.
Article 1779 — Limits on what can be pooled in a universal partnership of all present property
Rule: Properties owned at constitution and profits become common. Partners may stipulate to share
other profits. But properties acquired later by inheritance, legacy, or donation cannot be included
(except fruits thereof).
Example (inheritance excluded): After formation, C inherits a condo. The condo remains C’s separate
property; only its rents (fruits) may go to the partnership if stipulated in the Civil Code.
Example (stipulated profits): Partners agree to share royalties from side projects; allowed, but
gifts/inheritances themselves remain excluded.
Article 1780 — Universal partnership of profits: industry earnings are shared; only usufruct of existing properties
passes
Rule: The partnership comprises what partners acquire by their industry during the partnership.
Properties each owned at formation remain theirs; only the usufruct (use/fruits) passes to the
partnership.
Example: D keeps ownership of his car, but the partnership may use it and share its rental income;
salaries, fees, and business profits earned during the partnership are shared.
Article 1781 — If “universal” is unspecified, default is universal of profits
Rule: If partners say “universal partnership” without specifying, it is deemed a universal partnership of
profits.
Example: E and F sign “We form a universal partnership” with no further detail; by law, it is of profits, not
of present property.
Article 1782 — Persons disqualified to donate to each other cannot enter into universal partnership
Rule: If parties are prohibited from making donations/advantages to each other (e.g., certain spouses
under family law), they cannot form a universal partnership.
Example: Persons within prohibited degrees who cannot donate to each other attempt a universal
partnership of all present property; it is not allowed under the Civil Code.
Example: The same parties may still form a particular partnership for a specific project (e.g., a store),
subject to other legal constraints.
Article 1783 — Particular partnership: determinate things, their use/fruits, specific undertaking, or a
profession/vocation
Rule: A particular partnership’s object is limited: determinate things (or their use/fruits), a specific
undertaking, or the exercise of a profession/vocation.
Example (determinate things): Partners contribute a specific truck for delivery operations and share its
earnings.
Example (specific undertaking): Partners form a joint venture to construct a single bridge project,
dissolving after completion.
Example (profession): A group of CPAs forms a partnership solely to render audit services.
