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131. Salao vs. Salao, 70 SCRA 65

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132. RESURRECCION DE LEON, ET AL. vs. EMILIANA MOLO- PECKSON, ET AL. (1962)

BAUTISTA ANGELO, J.:

Trustor/Donor: Mariano Molo y Legaspi and Juana Juan (their foster parents)

Trustee/Donees: Emiliana Molo-Peckson and Pilar Perez Nable

Beneficiaries: Resurreccion de Leon, et al.

Moral of the Story: A declaration of trust has been defined as an act by which a person acknowledges that the property, title to which he holds, is held by him for the use of another. And in the absence of any reservation of the power to revoke a voluntary trust, the trust is irrevocable without the consent of the beneficiary

Facts of the Case:

On January 24, 1941, Mariano Molo y Legaspi died leaving a will wherein he bequeathed his entire estate to his wife, Juana Juan.

On May 11, 1948, Juana Juan in turn executed a will naming therein many devisees and legatees, one of whom is Guillermo San Rafael, mother of the plaintiffs de Leon, et al. and of the defendant Pilar.

On June 7, 1948, however, Juana Juan executed a donation inter vivos in favor of Emiliana and Pilar almost all of her entire property leaving only about P16,000.00 worth of property for the devisees mentioned in the will. Among the properties conveyed to Emiliana and Pilar are the ten parcels of land subject of the present action.

Juana Juan died on May 28, 1950.

On December 5, 1950, Emiliana and Pilar executed a document which they called "Mutual Agreement"1 wherein the parties

1Pertinent Portions of the “Mutual Agreement”

That the above named parties hereby mutually agree by these presents . . . that the following lots should be sold at ONE (1) PESO each to the following persons and organization:

TO — JUSTA DE LEON and RESURRECCION DE LEON, several parcels of land located at Calle Tolentino (South of Tenorio and Kapitan Magtibay), Pasay City, share and share alike or half and half of TEN (10) LOTS described in:

Transfer Certificate of Title No. 28157 — and allocated as follows:

(a) To JUSTA DE LEON Five (5) Lots.

mutually agreed to sell ten lots at P1 each, in conformity with the verbal wish of the late Don Mariano Molo y Legaspi and the late Dona Juana Francisco Juan y Molo.

On August 9, 1956, however, the same Emiliana and Pilar, assisted by their husbands, executed another document in which they revoked the so-called mutual agreement mentioned above, and another relating to the same subject matter, stating therein that the parties, "after matured and thorough study, realized that the above-mentioned public instruments . . . do not represent their true and correct interpretation of the verbal wishes of the late spouses Don Mariano Molo y Legaspi and Dona Juana Francisco Juan y Molo."

On August 11, 1956, the beneficiary Resurreccion de Leon and Justa de Leon, thru their counsel demanded the conveyance to them of the ten parcels of land for the consideration of P1.00 per parcel as stated in the document of December 5, 1950. And having the defendants refused to do so, said beneficiaries consigned on July 8, 1957 the amount of P10.00 as the consideration of the ten parcels of land.

TC: Trust has been constituted by the late spouses Mariano Molo and Juana Juan over the ten parcels of land in question in favor plaintiffs as beneficiaries.

SC: Affirmed TC judgment (with minor modifications with regard to accounting)2.

The “Mutual Agreement” creates an express trust in favor of plaintiff-appelees.

(b) To RESURRECCION DE LEON, the remaining Five (5) Lots.

That this agreement is made in conformity with the verbal wish of the late Don Mariano Molo y Legaspi and the late Dona Juana Francisco Juan y Molo. These obligations were repeatedly told to Emiliana Molo Peckson, before their death and that same should be fulfilled after their death.

2 The trial court ordered that the accounting be made from the time appellees demanded

the conveyance of the ten parcels of land on August 11, 1956, in accordance with Article 1164 of the new Civil Code which provides that the creditor has a right to the fruit of the thing from thetime the obligation to deliver it arises. But this cannot be done without first submitting proof that the conditions stated in the mutual agreement hadbeen complied with. And this only happened when the decision of the Supreme Court in G.R. No. L-8774 became final and executory. The ruling of the trialcourt in this respect should therefore be modified in the sense that the accounting should be made from the date of the finality of the said decision.

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The “Mutual Agreement” represents a recognition of pre-existing trust or a declaration of an express trust impressed on the ten parcels of land in question. A declaration of trust has been defined as an act by which a person acknowledges that the property, title to which he holds, is held by him for the use of another.

The document in question clearly and unequivocally declares the existence of the trust even if the same was executed subsequent to the death of the trustor, Juana Juan, for the right creating or declaring a trust need not be contemporaneous or inter-parties.

The contention of appellants that the will and the donation executed by their predecessors-in-interest were absolute for it did not contain a hint that the lots in question will be held in trust by them does not merit weight because the fact that an express trust was created by a deed which was absolute on its face may be shown by a writing separate from the deed itself.

The fact that the beneficiaries were not notified of the existence of the trust or that the latter have not been given an opportunity to accept it is of no importance, for it is not essential to the existence of a valid trust and to the right of the beneficiaries to enforce the same that they had knowledge thereof the time of its creation. Neither is it necessary that the beneficiary should consent to the creation of the trust. In fact it has been held that in case of a voluntary trust the assent of the beneficiary is not necessary to render it valid because as a general rule acceptance by the beneficiary is presumed.

Appellants had no right to revoke the trust without the consent of the cestui que trust

It is true, as appellants contend, that the alleged declaration of trust was revoked, and having been revoked it cannot be accepted, but the attempted revocation did not have any legal effect. The rule is that in the absence of any reservation of the power to revoke a voluntary trust is irrevocable without the consent of the beneficiary. It cannot be revoked by the creator alone, nor by the trustee. Here, there is no such reservation.

Appellants should free said lands from all liens and encumbrances.

Appellants Emiliana and Pilar should free the lands in question from the encumbrance that was created thereon by them in favor of the Development Bank of the Philippines and one Claro Cortez, for as trustees it is their duty to deliver the properties to thecestui que trust free from all liens and encumbrances.

Obiter: On the Validity of the “Mutual Agreement”

Mutual Agreement was executed by appellants on December 5, 1950, or about two years and six months from the time they acquired title to the lands by virtue of the donation inter vivos executed in their favor by their foster mother Juana Juan and six months after the death of the donor. There is nobody who could cajole them to execute it, nor is there any force that could coerce them to make the declaration therein expressed, except the constraining mandate of their conscience to comply with the obligations repeatedly told to Emiliana Molo Peckson before the death of Juana Juan. In fact, the acknowledgement appended to the document they subscribed states that it was "their own free act and voluntary deed."

Emiliana and Pilar both studied in reputable centers (one being a pharmacist and the other a lawyer) so it is to be supposed that they understood and comprehended the legal import of the Mutual Agreement they executed.

Moreover, they have more than ample time — the six months intervening betwen the death of the donor and the execution of the document — to ponder not only wish of their predecessors-in-interest but also on the propriety of putting in writing the mandate they have received. It is, therefore, reasonable to presume that that document represents the real wish of appellants' predecessors-in-interest.

Obiter: On the issue of whether the lower court erred in applying the provisions of the new Civil Code on trust since this express trust was constituted before the effectivity of the NCC

Appellants contend that the lower court erred in applying the provisions of the new Civil Code on trust. This is correct. The express trust was constituted during the lifetime of the predecessor-in-interest of appellants, that is, before the effectivity of the new Civil Code, although the instrument

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recognizing and declaring such trust was executed on December 5, 1950, after the effectivity of said Code. The Civil Code of 1889 and previous laws and authorities on the matter, therefore, should govern the herein trust under the provisions of Article 2253 of the new Civil code.

But the Civil Code of 1889 contains no specific provisions on trust as does the new Civil Code. Neither does the Code of Civil Procedure of 1901 for the same merely provides for the proceeding to be followed relative to trusts and trustees (Chapter XVIII). This silence, however, does not mean that the juridical institution of trust was then unknown in this jurisdiction, for the principles relied upon by the Supreme Court before the effectivity of the new Civil Code were those embodied in Anglo-American jurisprudence as derived from the Roman and Civil Law principles. And these are the same principles on which we predicate our ruling heretofore stated and on which we now rely for the validity of trust in question.

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133. Government vs. Abadilla, 46 Phil. 642

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134. Cristobal vs. Gomez, 50 Phil. 810 (1927)

Street, J

This action was instituted in the CFI of Cavite by Paulina Cristobal, wife of Epifanio Gomez, and her children to recover from Marcelino Gomez (brother of Epifanio) two parcels of land located in the sitio of Japay.

Facts:

1. Property in question belonged to Epifanio. 2. 13 Dec 1891 – Epifanio sold the property under contract of

sale with pacto de retro to Luis Yangco, redeemable in 5 years, for the sum of Php2,500

3. Epifanio remained in possession of the property but in the character of a lessee

4. Property was not redeemed in 5years. But Yangco after many years conceded to the vendor the privilege of repurchasing

5. Epifanio had no means to repurchase applied to Bibiano Banas, a kinsman, for assistance. Bibiano agreed on the condition that Epifanio’s brother, Marcelino, and sister, Telesfora, would make themselves responsible for the loan. Banas eventually advanced Php7,000.00 to be used to repurchase the property in the name of Marcelino and Telesfora.

6. Marcelino and Telesfora will administer the property until the capital advanced by Banas should be paid off afterwhich the property will be returned to Epifanio.

7. Marcelino and Telesfora created a “private partnership in participation” for the purpose of redeeming the property. Marcelino will act as the manager.

8. Among the provisions in the partnership agreement:

a. (h) That all the income, rent, and produce of the aforesaid property of Epifanio Gomez shall be applied exclusively to the amortization of the capital employed by the two parties, that is to say, Don Marcelino Gomez and Doña Telesfora Gomez, with its corresponding interest and other incidental expenses.

b. (i) As soon as the capital employed, with its interest and other incidental expenses, shall have been covered, said properties shall be returned to our brother Epifanio Gomez or to his legitimate children, with the direct intervention, however, of both parties, namely, Don Marcelino Gomez and Doña Telesfora Gomez, or one of them.

c. (j) In order that the property of Epifanio Gomez may be returned, it is made essential that he shall manifest good behavior in the opinion of Don Marcelino Gomez and Doña Telesfora Gomez jointly.

9. Telesfora conveyed her interest and share to Marcelino to free herself from the responsibility she assumed to Banas. Banas consented to such on 10 September 1909.

10. Since Marcelino is now the lone “debtor” , Banas required him to execute a contract of sale with pacto de retro to secure the debt. This was executed also on 10 Sept 1909.

11. 1 April 1918 – Marcelino finally paid off his debt with Banas

Issue:

WON Marcelino acted as a mere trustee despite the improvements made to the property of Epifanio?

Held/Ratio

Yes.

1. The Court said that the trial court made no error in holding that Marcelino must surrender the property in litigation (and that he being dead, the same obligation devolves on his heirs). The so-called partnership between Marcelino and Telesfora created a TRUST for the express purpose of securing the property of Epifanio; and that since the purpose had been accomplished, the property should be returned to Epifanio’s legitimate children.

2. That under Art 1257 of the Civil Code, the successors of Epifanio are entitled to demand fulfilment of the trust. (NCC Art. 1308. The contract must bind both contracting parties; its validity or compliance cannot be left to the will of one of them. (1256a))

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3. Marcelino claimed that the money used by him to redeem the property was his own. However, the Court reasoned that since he was able to obtain enough from income from the property he was already able to reimburse himself for all outlays.

4. Marcelino claimed that the trust agreement was kept secret from Epifanio such that the stipulation could not have accepted by him before revocation of the same. However, the Court pointed out that Banas testified that Epifanio was present when the contract was made

5. Revocation due to the “behavior” of Epifanio should have been when he was still alive.

6. Prescription on favor of Marcelino is not effective. Because Marcelino was not really holding adversely under a claim of title exclusive of any other right and adverse to all other claimants. He was a trustee in possession under a continuing and subsisting trust.

Dissenting:John J

The legal effect of the majority The legal effect of the majority opinion is to penalize the defendant for his thrift and prudent business methods, and to take the property away from him without any compensation for his twenty years of long and faithful service upon the theory that he acquired the title in trust, and at all times held it in trust for the use and benefit of his deceased brother and his heirs. There is no evidence that the defendant acted as trustee or that he ever recognized a trust, or that during the whole period of twenty years he ever rendered any accounting or that any one ever requested him to make an accounting. The evidence is conclusive that at all times he acted, dealt with and treated the property as his own, upon which he spent his own time, his own money, and improved the property, so as to give it a commercial value. Because he did that and the property now has increased in value, it is taken away from him without any compensation for his services, and he is denied the fruits of twenty years of his labor in giving it a commercial value.

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135. PEREZ V ARANETA

CONCEPCION, J.:

Trustor/Donor: Not mentioned

Trustee/Donees: J. Antonio Araneta

Judicial Guardians: Philippine National Bank and Antonio M. Perez3

Beneficiaries: Benigno, Angela and Antonio, all surnamed Perez Y Tuason

Moral of the Story: It is true that some functions of executors or administrators bear a close analogy with those of a trustee. The duties of executors or administrators are, however, fixed and/or limited by law, whereas those of trustee of an express trust are, usually, governed by the intention of the trustor or of the parties, if established by contract.

Facts of the Case:

Two incidents of the trusteeship of the minors Benigno, Angela and Antonio Perez Y Tuason are consolidated in this case:

Issue #1: WON J. Antonio may be allowed to pay a sum of money (P5,500) to the law firm, Araneta & Araneta, of which he is a

3 Lower Court ruled in favor of J. Antonio in both instances. Antonio M. Perez, the guardian of the person of minor beneficiaries, appealed the decision of the lower court.

member, for services4 rendered to him, in his aforementioned capacity as such trustee, in several judicial proceedings. YES.

Contentions of Antonio Perez:

Section 7 of Rule 86 of the Rules of Court: When the executor or administrator is an attorney he shall not charge against the estate any professional fees for legal services rendered by him.

The services above referred to inured to the benefit, not of the trust estate, but of the trustee

The amount is excessive. The lower court should have required the introduction of

evidence on the extent of the services rendered by the aforementioned law firm before making said award.

Held: Section 7 of Rule 86 refers only to "executors or administrators" of the estate of deceased persons, and does not necessarily apply to trustees. A trustee may be indemnified out of trust estate for his expenses in rendering and proving his accounts and for costs and counsel fees. Moreover, P5,500 fixed by the lower court as compensation for such services not excessive.

4 The law firm Araneta & Araneta, through its assistant, Atty. Francisco T. Papa, had

rendered services, as counsel for the appellee, in connection with the following:

1. The approval of his accounts for January to March, 1956, which were objected to by Antonio Perez. Said objection was, on October 19, 1956, overruled by the lower court, the action of which was affirmed by this Court in G.R. No. L-11788, on May 16, 1958, on appeal taken by appellant.law library

2. The appellee's accounts for April to June, 1957; which were approved by the lower court on July 13, 1957, despite Antonio Perez’s objection thereto. Although Antonio Perez appealed to the Supreme Court, he, subsequently, withdrew the appeal.

3. In 1958, Antonio Perez instituted CA-G.R. No. 22810-R of the Court of Appeals for a writ of certiorari and mandamus against J. Antonio Araneta and the lower court, the latter having sustained the action of J. Antonio Araneta in withholding certain sums from the shares of the minors aforementioned in the net income of the trust estate for July to September, 1957, in view of Antonio Perez’s refusal to reimburse to said estate identical sums received in the form of allowances for the period from April to June, 1957, in excess of the shares of said minors in the net income for that period. After appropriate proceedings, the Court of Appeals rendered a decision on June 25, 1958, dismissing said petition.

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It is true that some functions of executors or administrators bear a close analogy with those of a trustee. The duties of executors or administrators are, however, fixed and/or limited by law, whereas those of trustee of an express trust - like that which we have under consideration - are, usually, governed by the intention of the trustor or of the parties, if established by contract (Art. 1441). Besides, the duties of trustees may cover a much wider range than those of executors or administrators of the estate of deceased persons.

The application of Section 7 of Rule 86 to all trusteeships without distinction may dissuade deserving persons from accepting the position of trustee and consequently have a deterrent effect upon the establishment of trusts, at a time when a sizeable part of the burden to undertake important and even essential activities in advanced and/or developing communities or states, particularly in the field of education, science and social welfare, is borne by foundations or other similar organizations based upon the principles of trust. We believe it, therefore, to be the better policy to acknowledge the authority of courts of justice to exercise a sound judgment in determining, in the light of the peculiar circumstances obtaining in each case, whether or not a trustee shall be allowed to pay attorney's fees and charge the same against the trust estate, independently of his compensation as a trustee.

In the case at bar, considering that the appellee was merely defending himself in the proceedings that required the services of counsel; that in each case the stand taken by the appellee was upheld by the court; that the will creating the trust and designating the appellee as trustee explicitly grants him the right to collect for his services such reasonable fees; that, in view of the nature of the relations between the trustor and the trustee, on the one hand, and the trustor and appellant on the other, there can be little doubt but that the trustor would have sanctioned the payment of the attorney's fees involved in this incident; and that it may have been more costly for the trust estate to engage the services of a law firm other than that of Araneta & Araneta, we are not prepared to hold that the lower court

has erred in authorizing the payment of said attorney's fees by herein appellee.

Issue #2: WON the purchase of 118 shares of common stock of Philippine-American Drug Co. at P100 each for the benefit of the trusteeship merits judicial approval. YES.

Contentions of Antonio Perez:

Investment is unwise in that the operation of said company has not proved profitable.

Shares of stock of the San Miguel Brewery pay higher returns than shares of Philippine-American Drug Co.

Investment is unlawful in that it is actually an act of self-dealing between the trustee and the beneficiaries of the trust, because J. Antonio is, also, a stockholder of said company.

Held: Investment neither unwise nor unlawful.

The interest of appellees and his children5 in said company is not such as to warrant the charge that the purchase of 118 common stocks for the trust estate amounts to self-dealing by the appellee with himself. What is more, said purchase by the trustee may be considered as an indication that he had displayed in the management of the trust estate the same interest he had in the protection of his own property.

Enterprise is financially stable and sound based on the statement of accounts of the company for the years 1954 – 1957..

Philippine-American Drug Co. had paid cash dividends in 1954, 1955 and 1957 and declared stock dividends in 1954.6

On the issue that purchase of shares of San Miguel Brewery would have been a better investment: Whether an

5J. Antonio holds, in his individual capacity, 199 out of 30,000 common shares of stock of the Philippine-American Drug Co., whereas his children own 270 out of 5,000 preferred shares of stock of the same enterprise.

6 The book value of each of said 118 common shares of stock, purchased by the trustee at P100 each, is P202.80. In 1954 the Philippine-American Drug Co. had paid a cash dividend of 6%, side from declaring a 33-1/3% stock dividend for its common shares; and that 6-½ % and 4% cash dividends were paid in 1955 and 1957, respectively.

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investment is good or not does not depend upon the general, abstract possibility of better investments. Again, one factor that should be taken into account is the degree of influence that the investor may have upon the management of the enterprise concerned, which appellee admittedly has in the Philippine-American Drug Co., but which it is not claimed he wields in the San Miguel Brewery Co.

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136. Mindanao Development Authority vs. Court of Appeals (1982)

CONCEPCION JR., J.:

FACTS:

It is not disputed that Francisco Ang Bansing was the owner of a big tract of land with an area of about 300,000 sq.m., situated in Barrio Panacan Davao City.

February 25, 1939, Ang Bansing sold a portion thereof, with an area of about 5 hectares to Juan Cruz Yap Chuy The contract provided, among others, the following:

That I hereby agree to work for the titling of the entire area of my land under my own expenses and the expenses for the titling of the portion sold to me shall be under the expenses of the said Juan Cruz Yap Chuy.

After the sale, the land of Ang Bansing was surveyed and designated as Lot 664-B, Psd-1638. Lot 664-B was further subdivided into five (5) lots

The portion sold to Juan Cruz Yap Chuy shortened to Juan Cruz, was designated as Lot 664B-3, with an area of 61.107 square meters, more or less.

June 15-17 and December 15, 1939, a cadastral survey was made and Lot 664-B-3 was designated as Lot 1846-C of the Davao Cadastre.

December 23, 1939, Juan Cruz sold Lot 1846-C to the Commonwealth of the Philippines for the amount of P6,347.50. On that same day, Juan Cruz, as vendor, and C.B. Cam and Miguel N. Lansona as sureties, executed a surety bond in favor of the vendee to guarantee the vendor's absolute title over the land sold.

Cadastral survey plan was approved by the Director of Lands on July 10, 1940

March 7, 1941, Original Certificate of Title No. 26 was issued in the means of Victoriana Ang Bansing, Orfelina Ang Bansing and Francisco Ang Bansing as claimants of the land, pursuant to Decree No. 745358 issued on July 29, 1940. On March 31, 1941,

OCT No. 26 was cancelled pursuant to a Deed of Adjudication and TCTNo. 1783 was issued in the name of Francisco Ang Bansing.

February 25, 1965, the President of the Philippines issued Proclamation No. 459, transferring ownership of certain parcels of land situated in Sasa Davao City, to the Mindanao Development Authority, now the Southern Philippines Development Administration, subject to private rights, if any.

Lot 1846-C, the disputed parcel of land, was among the parcels of land transferred to the Mindanao Development Authority in said proclamation.

March 31, 1969, Atty. Hector L. Bisnar counsel for the Mindanao Development Authority, wrote Ang Bansing requesting the latter to surrender the Owner's duplicate copy of TCT No. 2601 so that Lot 1846-C could be formally transferred to his client but Ang Bansing refused.

Consequently, on April 11, 1969, the MDA filed a complaint against Francisco Ang Bansing before the CFI of Davao City, for the reconveyance of the title over Lot 1846-C, alleging, among others, the following:

ISSUE:

1. WON Francisco Ang Bansing as vendor and the one who worked to secure the title of his entire tract of land which included the portion sold by him. to Juan Cruz Yap Chuy acted in the capacity of and/or served as trustee for any and all parties who become successor-in-interest to Juan Cruz Yap Chuy

2. WON Ang Bansing was bound and obligated to give, deliver and reconvey to Juan Cruz Yap Chuy and/or his successor-in-interest the title pertaining to the portion of land sold and conveyed by him to Juan Cruz Yap Chuy by virtue of the deed of sale and his affidavit.

HELD:

No express trust had been created between Ang Banging and Juan Cruz over Lot 1846-C of the Davao Cadastre.

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

It is fundamental in the law of trusts that certain requirements must exist before an express trust will be recognized. Basically, these elements include

1. Competent trustor and trustee, 2. Ascertainable trust res, and sufficiently certain beneficiaries.

Stilted formalities are unnecessary, but nevertheless each of the above elements is required to be established, and, if any one of them is missing, it is fatal to the trusts.

3. Present and complete disposition of the trust property, notwithstanding that the enjoyment in the beneficiary will take place in the future.

4. The purpose be an active one to prevent trust from being executed into a legal estate or interest, and one that is not in contravention of some prohibition of statute or rule of public policy.

5. Some power of administration other than a mere duty to perform a contract although the contract is for a third-party beneficiary.

6. Declaration of terms which must be stated with reasonable certainty in order that the trustee may administer, and that the court, if called upon so to do, may enforce, the trust.

In this case, the herein petitioner relies mainly upon the following stipulation in the deed of sale executed by Ang Bansing in favor of Juan Cruz to prove that an express trust had been established with Ang Bansing as the settlor and trustee and Juan Cruz as the cestui que trust or beneficiary:

That I hereby agree to work for the titling of the entire area of my land under my own expenses and the expenses for the titling of the portion sold to me shall be under the expenses of said Juan Cruz Yap Chuy.

The above-quoted stipulation, however, is nothing but a condition that Ang Bansing shall pay the expenses for the registration of his land and for Juan Cruz to shoulder the expenses for the registration

of the land sold to him. The stipulation does not categorically create an obligation on the part of Ang Bansing to hold the property in trust for Juan Cruz. Hence, there is no express trust.

It is essential to the creation of an express trust that the settlor presently and unequivocally make a disposition of property and make himself the trustee of the property for the benefit of another.

In case of a declaration of trust, the declaration must be clear and unequivocal that the owner holds property in trust for the purposes named.

While Ang Bansing had agreed in the deed of sale that he will work for the titling of "the entire area of my land under my own expenses," it is not clear therefrom whether said statement refers to the 30-hectare parcel of land or to that portion left to him after the sale. A failure on the part of the settlor definitely to describe the subject-matter of the supposed trust or the beneficiaries or object thereof is strong evidence that he intended no trust.

The intent to create a trust must be definite and particular. It must show a desire to pass benefits through the medium of a trust, and not through some related or similar device.

Clear and unequivocal language is necessary to create a trust and mere precatory language and statements of ambiguous nature, are not sufficient to establish a trust. As the Court stated in the case of De Leon vs. Packson,

a trust must be proven by clear, satisfactory and convincing evidence; it cannot rest on vague and uncertain evidence or on loose, equivocal or indefinite declarations. Considering that the trust intent has not been expressed with such clarity and definiteness, no express trust can be deduced from the stipulation aforequoted.

Nor will the affidavit executed by Ang Bansing on April 23, 1941, be construed as having established an express trust. As counsel for the herein petitioner has stated, "the only purpose of the Affidavit was to clarify that the area of the land sold by Ang Bansing to Juan Cruz Yap Chuy is not only 5 hectares but 61,107 square meters or a little over six (6) hectares."

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That no express trust had been agreed upon by Ang Bansing and Juan Cruz is evident from the fact that Juan Cruz, the supposed beneficiary of the trust, never made any attempt to enforce the alleged trust and require the trustee to transfer the title over Lot 1846-C in his name.

Despite numerous transfers of portions of the original 30-hectare parcel of land of Ang Bansing to Juan Cruz and the issuance of certificates of title in the name of Juan Cruz, the latter never sought the transfer of the title to Lot 1846-C in his name. For sure, if the parties had agreed that Ang Bansing shall hold the property in trust for Juan Cruz until after the former shall have obtained a certificate of title to the land, the latter would have asked for the reconveyance of the title to him in view of the surety bond executed by him in favor of the Commonwealth Government wherein he warrants his title over the property. The conduct of Juan Cruz is inconsistent with a trust and may well have probative effect against a trust.

But, even granting, arguendo, that an express trust had been established, as claimed by the herein petitioner, it would appear that the trustee had repudiated the trust and the petitioner herein, the alleged beneficiary to the trust, did not take any action therein until after the lapse of 23 years.

Needless to say, only an implied trust may have been impressed upon the title of Ang Banging over Lot 1846-C of the Davao Cadastre since the land in question was registered in his name although the land belonged to another. In implied trusts, there is neither promise nor fiduciary relations, the so-called trustee does not recognize any trust and has no intent to hold the property for the beneficiary." It does not arise by agreement or intention, but by operation of law. Thus, if property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes.

If a person obtains legal title to property by fraud or concealment, courts of equity will impress upon the title a so-called constructive trust in favor of the defrauded party.

There is also a constructive trust if a person sells a parcel of land and thereafter obtains title to it through fraudulent misrepresentation.

Such a constructive trust is not a trust in the technical sense and is prescriptible; it prescribes in 10 years. Here, the 10-year prescriptive period began on March 31, 1941, upon the issuance of Original Certificate of Title No. 26 in the names of Victoriana Ang Bansing Orfelina Ang Bansing and Francisco Ang Banging. From that date up to April 11, 1969, when the complaint for reconveyance was filed, more than 28 years had passed. Clearly, the action for reconveyance had prescribed.

Separate Opinion

AQUINO, J., dissenting:

The defense of prescription cannot be set up in an action to recover property held in trust for the benefit of another.

Property held in trust can be recovered by the beneficiary regardless of the lapse of time. Prescription in the case of express trusts can be invoked only from the time the trust is repudiated

And a trustee who takes a Torrens title in his name for the land held in trust cannot repudiate the trust by relying on the registration. That is one of the limitations upon the finality of a decree of title

The rule, that an action for reconveyance prescribes in ten years, applies to an implied trust, not to an express trust

So, as a general rule a trust estate (in an express trust) is exempt from the operation of the statute of limitations. The exception is when the trustee repudiates the trust in which case the trustee may acquire the trust estate by prescription. The repudiation must be known to the cestui que trust and must be direct, clear, open and equivocal.

One who acquires a Torrens title in his own name to property which he is administering for himself and his brothers and sisters as heirs in common by descent from a common ancestor may be compelled

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to surrender to each of his co-heirs his appropriate share". A partition proceeding is an appropriate remedy to enforce this right. An equitable action for reconveyance is also a proper remedy

In any event, the real plaintiff in this case is the Republic of the Philippines and prescription does not run against the State.

The maxim inullum tempus occurrit regi or nullum tempus occurrit reipublicae (lapse of time does not bar the right of the crown or lapse of time does not bar the commonwealth). The rule is now embodied in article 1108(4) of the Civil Code.

It is a maxim of great antiquity in English law. The best reason for its existence is the great public policy of preserving public rights and property from damage and loss through the negligence of public officers. Thus, the right of reversion or reconveyance to the State of lands fraudulently registered or not susceptible of private appropriation or acquisition does not prescribe

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137. Roa, Jr. vs. Court of Appeals, 123 SCRA 3

FACTS: plaintiff and his brothers and sisters Trinidad Reyes Roa, Esperanza Roa de Ongpin, Concepcion Roa and Zosimo Roa, husband of the latter, were the owners pro-indiviso of a parcel of land located in Tagoloan, Misamis Oriental. They filed for the issuance of title but opposition was made by one Pablo Valdehuesa for a portion of the land. Pablo claimed that the portion was his. In order to ensure the issuance of the tittle the siblings entered into an agreement with Pablo (compromise agreement) wherein they would replace the lot with another parcel of land of equivalent size or if the replacement is not to his liking they would pay him 400 pesos. As a result of the agreement Pablo withdrew his opposition. Pablo died so ownership passed to his heirs, however no lot was given as replacement nor were they paid. Also the property described I the original agreement was partitioned already to the plaintiff in this case.

ISSUE: WON the agreement created a trust

HELD: YES

Court cited pertinent AmJur the most releveant being

“A constructive trust, otherwise known as a trust ex maleficio, a trust ex delicto, a trust de son tort, an involuntary trust, or an implied trust, is a trust by operation of law which arises contrary to intention and in invitum, against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy. It is raised by equity to satisfy the demands of justice. However, a constructive trust does not arise on every moral wrong in acquiring or holding property or on every abuse of confidence in business or other affairs; ordinarily such a trust arises and will be declared only on wrongful acquisitions or retentions of property of which equity, in accordance with its

fundamental principles and the traditional exercise of its jurisdiction or in accordance with statutory provision, takes cognizance. It has been broadly ruled that a breach of confidence, although in business or social relations, rendering an acquisition or retention of property by one person unconscionable against another, raises a constructive trust.”

The court said that what was created was not an express trust because in that type of trust the intent nto create one needs to be clear even in the absence of particular words. Furthermore it could not be an implied trust because the law states that “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.” And in this case there was no use of force or fraud in play.

So basically the court concluded that although this type of scenario may not fall under the types of implied trusts enumerated in the CC, the enumeration given does not preclude the existence of other types of trusts that are in line with the general law on trusts. In this case the court resolved the case on the general principles of law on constructive trust which basically rest on equitable considerations in order to satisfy the demands of justice, morality, conscience and fair dealing and thus protect the innocent against fraud.

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138. Perez vs. Araneta, 4 SCRA 430 (1962)

CONCEPCION, J.:

Trustor: Angela S. Tuason

Trustee: J. Antonio Araneta

Beneficiaries: Benigno, Angela and Antonio, all surnamed Perez y Tuason, the grandchildren of the decedent

Sometime in 1948, Angela S. Tuason died leaving a will, paragraph 4 of which reads:

Instituyo como mis unicos herederos a mis mencionados tres hijos, a rason de una novena parte del caudal hereditario que dejare para cada uno de ellos. Lego a mi hijo Antonio otra porcion equivalente a dos novenas partes del caudal hereditario. Lego asimismo a mis nietos que fueren de mi hija Nieves, otra porcion equivalente a dos novenas partes del caudal hereditario. Y finalmente lego a mis nietos que fueren hijos de mi hija Angela otra porcion equivalente de dos novenas partes del caudal hereditario. Dichos tres legados, sin embargo, estan sujetos a la manda que se menciona en el parrafo siguiente. Los dos legados, a favor de mis mencionados nietos seran administrados por mi albacea, J. Antonio Araneta (y en defecto de este, su hermano, Salvador Araneta), con amplios poderes de vender los mismos, y con suproducto adquirir otros bienes, y con derecho a cobrar por su administracion, honorarios razonables. Los poderos de dicho administrador seran los de un trustee con los poderes mas amplios permitidos por la ley. Deberasin embargo, rendir trimestralmente, cuenta de su administracion a los legatarious que fueren mayores de edad. Y asimismo, debera hacerles entrega de la participacion que a cada legatario corresponda en las rentas netas de la administracion. La administracion sobre un grupo cesara cuando todos misnietos de dicho grupo llegare a su mayoria de edad, y una mayoria de los mismos acordaren la terminacion de la administracion. Por nietos, debe entederse no solamente a los nietos varones sino tambien a los nietos mujeres.

In conformity with this provision of said will, the present trusteeship proceedings was instituted and certain properties of the estate of the deceased, valued P900,00 were turned over in 1950 to J. Antonio Araneta, as trustee for the benefit of Benigno, Angela and Antonio, all surnamed Perez y Tuason, the grandchildren of the decedent referred to in her aforementioned will.

Portions of said properties constituting the trust were sold in 1956, 1957 and 1958 at prices exceedingly by P13,418.42, P4,023.52 and P81,386.94, respectively — aggregating P98,828.88 — the original appraised value thereof.

On September 28, 1959, the judicial guardian and father of said minors filed a motion in the trusteeship proceedings alleging that said sum of P98,828.88 represents profits or income (based on the statements of profits and losses attached to the corresponding income tax returns) of the trusteeship to which said minors are entitled, pursuant to the above quoted provision of the will, and praying that the trustee be accordingly instructed to deliver said sum.

TC: Ruled in favor of trustee J. Antonio Araneta. Said sum not income.

SC: Affirmed TC judgment. Aforesaid sum of P98,828.88 is not a profit or income which should be turned over to the guardian of said minors according to the provisions of the will.

To begin with, the issue as to whether or not the minors are entitled to the delivery of said sum of P98,828.88 is a matter dependent exclusively upon the conditions upon which the trust had been established, as provided in the above quoted paragraph of the will of the decedent, which in turn depends upon the latter's intent, as set forth in said paragraph. (The fact that it is treated as profit within the purview of our internal revenue law is not controlling.)

The provision of the will of the decedent explicitly authorizing the trustee to sell the property held in trust and to acquire, with the proceeds of the sale, other property ("con amplios poderos de vender los mismos, y con su producto adquirir otros bienes,") leaves no room for doubt about the intent of the testatrix to keep, as part of the trust,

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said proceeds of the sale, and not to turn the same over to the beneficiary as net rentals ("rentas netas").

Pursuant to the general law on trust, "a provision in the instrument to the effect that the beneficiary shall be entitled to the 'income and profits of' of the trust estate is not ordinarily sufficient to indicate an intention that he should be entitled to receive gains arising from the sale of trust property ..."

It is well settled that profits realized in the sale of trust properties are part of the capital held in trust to which the beneficiaries are not entitled as income.

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139. Cuaycong vs. Cuaycong, 21 SCRA 1192

the main idea is that if the trust is expressed, meaning, clearly understood from the wordings, then a written instrument must be used as proof of the trust.. apparently, the plaintiffs in this case, didn't present any written instrument. instead, they claimed that the trust was implied hence there was no need to present a written document as parole evidence suffices. 

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140. Sinaon vs. Soroñgon, 136 SCRA 407 (1985)

Aquino, J

Facts

1. Canuta Soblingo – on of the 5 children of Domingo Soblingo (the alleged owner of the lot in litigation when it was not yet registered)

2. 4 March 1916 – Judge Carlos Imperial adjudicated to Canuta Soblingo Lot No 4781 of the Sta Barbara, Iloilo cadastre with an area of 5.5 hectares. OCT No 6178-A was issued in 1917 to Canuta

3. 1923- Canuta sold the lot to spouses Patricio Sinaon and Julia Sualibio (granddaughter of Canuta)

a. Canutas were registered owners for more than 40years and had possession of the lot during that period

4. 1968 – Sorongon (et al) amended their complaint filed in 1964 that Canuta and the Sinaons were TRUSTEES of the lot in litigation. As such the heirs of Domingo’s four heirs are entitled to 4/5 share.

5. Trial Court – sustained the “Trustee” theory of Sorongon, and ordered the Sinaons to convey 4/5 of Lot No 4781 to Sorongon et al.

Issue:

WON Canuta and the Sinaons were mere trustees via an implied or express trust of the lot in litigation?

Held/Ratio:

No.

1. Sinaons were registered owners for more than 40 years had become indefeasible and possession could not be disturbed. Any pretension as to the existence of an implied trust should not be countenanced. Sorongon used unreliable oral evidence to prove the trust to which The Court said that title and possession cannot be defeated by oral evidence that can be easily fabricated and contradicted.

2. The Court said that there was no express trust because “Express trusts concerning real property cannot be proven by parol evidence (Art 1443, Civil Code). Citing Suarez vs Tirambulo where it was held that An implied trust “cannot be established contrary to the recitals of a Torrens Title, upon vague and inconclusive proof. No

3. The supposed trust in this case is a constructive trust arising by operation of law. (Art 1465, Civil Code). It is not a trust in the technical sense.

Note: Even assuming that there was an implied trust, prescription would have worked in favor of the Sinaons. In Gerona vs de Guzman, the Court said that “an action for reconveyance of realty, based upon a constructive or implied trust resulting from fraud, may be barred by prescription. The prescriptive period is reckoned from the issuance of the title which operates as a constructive notice”.

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141. EMILIA O'LACO and HUCO LUNA v. VALENTIN CO CHO CHIT, O LAY KIA and CA

G.R. No. 58010 | March 31, 1993 | BELLOSILLO

FACTS:

1. Emilia O'Laco and respondent O Lay Kia are half-sisters2. May 31, 1943 – Philippine Sugar Estate Development Company,

Ltd., sold a parcel of land7 with the Deed of Absolute Sale naming O'Laco as vendee; thereafter, Transfer Certificate of Title No. 66456 was issued in her name.

3. May 17, 1960 – spouses Valentin Co Cho Chit and O Lay Kia (spouses Valentin) learned from the newspapers that O'Laco sold the same property to the Roman Catholic Archbishop of Manila for P230,000.00, with assumption of the real estate mortgage constituted thereon.

4. June 22, 1960 –spouses Valentin sued spouses Emilia O'Laco and Hugo Luna (spouses Hugo) to recover the purchase price of the land before CFI of Rizal.

a. Spouses Valentin: Emilia O'Laco knew that they were the real vendees of the Oroquieta property sold in 1943 by Philippine Sugar Estate Development Company, Ltd., and that the legal title thereto was merely placed in her name.

i. Emilia O'Laco breached the trust when she sold the land to the Roman Catholic Archbishop of Manila.

ii. Asked the trial court to garnish all the amounts still due and payable to spouses Hugo arising from the sale, which was granted on 30 June 1960.

b. Spouses Hugo:deny the existence of any form of trust relation.

i. O'Laco actually bought the property with her own money

ii. she left the Deed of Absolute Sale and the corresponding title with spouses Valentin merely for safekeeping;

7 Lot No. 5, Block No. 10, Plan Psu-10038, situated at Oroquieta St., Sta. Cruz, Manila

iii. when O’Laco asked for the return of the documents evidencing her ownership, spouses Valentin told her that these were misplaced or lost; hence, she filed a petition for issuance of a new title. On August 18, 1944 the CFI Manila granted her petition.

5. CFI Rizal, September 20, 1976 – finding no trust relation between the parties, dismissed the complaint together with the counterclaim.

6. Petitioners and respondents appealed.7. CA, April 9, 1981 (ipapanganak na si Azy nito, hehehe) –

reversed TC decision. MR denied. Appealed to SC.

CONTENTION OF SPOUSES HUGO (PETITIONERS):

1. The complaint fails to allege that earnest efforts toward a compromise were exerted considering that the suit is between members of the same family, and no trust relation exists between them.

2. Spouses Valentin are already barred by laches

ISSUE:

1. WON there was effort on the side of spouses Hugo to settle the controversy - YES

2. WON there was an implied trust - YES3. WON laches came in - NO

HELD: YES!!!

RATIO:

1. Procedural -- Contention no. 1a. The complaint must show that there were efforts

towards compromise, pursuant to Art. 222 of the New

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Civil Code8, or a motion to dismiss could have been filed under Sec. 1, par. (j), Rule 16, of the Rules of Court.

b. An attempt to compromise as well as the inability to succeed is a condition precedent to the filing of a suit between members of the same family.

c. But plaintiff may be allowed to amend his complaint to correct the defect if the amendment does not actually confer jurisdiction on the court in which the action is filed, i.e., if the cause of action was originally within that court's jurisdiction.

d. Spouses Valentin did not formally amend their complaint. They were allowed to introduce evidence purporting to show that earnest efforts toward a compromise had been made.9 Hence, the complaint was deemed accordingly amended to conform to the evidence.

e. If the defendant permits evidence to be introduced without objection and which supplies the necessary allegations of a defective complaint, then the evidence is deemed to have the effect of curing the defects of the complaint.

2. (ISSUE NO. 2) Substantial – existence of trust relationsa. Trust relations between parties may either be express or

implied. i. Express trusts are those which are created by the

direct and positive acts of the parties, by some writing or deed, or will, or by words evincing an intention to create a trust.

ii. Implied trusts are those which, without being express, are deducible from the nature of the transaction as matters of intent, or which are superinduced on the transaction by operation of law as matters of equity, independently of the particular intention of the parties.

8 Superseded by the Family Code, I didn’t try to look for the exact provision: “No suit shall be filed or maintained between members of the same family unless it should appear that earnest efforts toward a compromise have been made, but that the same have failed, subject to the limitations in Article 2035.”9 That is, O Lay Kia pressed O'Laco for the transfer of the title of the Oroquieta property in the name of spouses Valentin, just before O’Laco’s marriage to Hugo. But, instead of transferring the title as requested, Emilia sold the property to the Roman Catholic Archbishop of Manila. This testimony was not objected to by spouses Hugo.

b. Implied trusts may either be resulting or constructive trusts, both coming into being by operation of law.10

i. 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.

1. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another.

ii. Constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment.

1. 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.

c. Express trusts concerning immovables or any interest therein cannot be proved by parol evidence. Implied trusts may be established by oral evidence.

i. In order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation were proven by an authentic document. It cannot be established upon vague and inconclusive proof.

3. (APPLICATION OF NO. 2) There is a resulting trust was indeed intended by the parties under Art. 1448 of the NCC:

a. As stipulated by the parties, the document of sale, the owner's duplicate copy of the certificate of title, insurance policies, receipt of initial premium of insurance coverage and real estate tax receipts ware all in the possession of respondent spouses which they offered in

10 Specific examples of resulting trusts may be found in the Civil Code, particularly Arts. 1448, 1449, 1451,1452 and 1453, 23 while constructive trusts are illustrated in Arts. 1450, 1454, 1455 and 1456.

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evidence. As per O Lay Kia, the reason why these documents of ownership remained with her is that the land in question belonged to her.

i. The only possible reason for these documents to be possessed by the spouses Valentin for 17 years after the purchase of the property in 1943 is O’Laco only held the property for the former.

b. Before buying the property, spouses Valentin purchased another property situated in Kusang-Loob, Sta. Cruz, Manila, where the certificate of title was placed in the name of Ambrosio O'Laco, older brother of Emilia, under similar or identical circumstances.

i. Spouses Valentin: The reason why they did not place these properties in their name was that being Chinese nationals at the time of the purchase they did not want to execute the required affidavit to the effect that they were allies of the Japanese.

1. Spouses Valentin even filed an action for reconveyance against Ambrosio when he claimed the Kusang-Loob property as his own, which they won.

2. Ambrosio O'Laco filed a case against the Anti-Dummy Board, because of this, there was an implied admission by Ambrosio that his sister Emilia, like him, was merely used as a dummy.

c. The circumstances by which O'Laco obtained a new title by reason of the alleged loss of the old title then in the possession of spouses Valentin cast serious doubt on the veracity of her ownership.

i. The petitions respectively filed by Emilia and Ambrosio for both properties were both granted on the same day by the CFI of Manila.

1. It really looks that there was conspiracy between the siblings to defraud and deprive spouses Valentin of their properties.

d. Until the sale of the contested property to the Roman Catholic Archbishop of Manila, Emilia O'Laco actually recognized the trust.

i. Specifically, when spouses Valentin learned that Emilia was getting married to Hugo, O Lay Kia

asked Emilia to have the title to the property already transferred to her and her husband Valentin, and Emilia assured her that "would be arranged (maaayos na)" after her wedding.

e. The TC determined that spouses Valentin had some money with which they could buy the property."

i. Valentin was the Chief Mechanic of the Paniqui Sugar Mills. Emilia failed to convince the Court that she was financially capable of purchasing the property.

1. In fact, she opened a bank account only in 1946 and likewise began filing income tax returns that same year, 39 while the property in question was bought in 1943.

4. (ISSUE NO. 3) In resulting trust, the rule of imprescriptibility may apply for as long as the trustee has not repudiated the trust. Once the resulting trust is repudiated, however, it is converted into a constructive trust and is subject to prescription.

a. A resulting trust is repudiated if the following requisites concur:

i. the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust;

ii. such positive acts of repudiation have been made known to the cestui qui trust; and,

iii. the evidence thereon is clear and convincing.b. The Court categorically ruled that an action for

reconveyance based on an implied or constructive trust must perforce prescribe in ten (10) years, and not otherwise, thereby modifying previous decisions holding that the prescriptive period was four (4) years.

5. (APPLICATION OF NO. 5) Neither the registration of the property in the name of Emilia O'Laco nor the issuance of a new Torrens title in 1944 in her name in lieu of the alleged loss of the original may be made the basis for the commencement of the prescriptive period.

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a. As late as 1959, or just before she got married, Emilia continued to recognize the ownership of spouses Valentin over the Oroquieta property.

b. Immediately after Emilia sold the Oroquieta property spouses Valentin instituted the present suit for breach of trust. Correspondingly, laches cannot lie against them.

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142. Special Services Corporation vs. Centro La Paz, 121 SCRA 748

Trustor: Centro La PazTrustee: Alejandro Estudillo, et. al*

FACTS: The Union Espiritista Cristiana de Filipinas, Inc., is a semi-

religious and charitable organization.

October 10, 1972, judgment was rendered in favor of petitioner Special Services Corporation by the CFI, Branch IV, Manila, against one Alejandro Estudillo in the amount of P94,727.52, more or less, in an action for Replevin with Sum of Money. A writ of execution was thereafter issued but which has remained unsatisfied.

December 15, 1972, the Sheriff of Manila caused the annotation of a notice of levy on TCT No. 51837, in respect of the rights, interest and participation of Alejandro Estudillo, one of the registered owners indicated in said title.

Title covers 2 parcels of land situated in Sampaloc, Manila, consisting 348 square meters and registered in the names of:*

1. Alejandro Estudillo, married to Primitiva Victoria; 2. Joaquina de la Rosa, widow; 3. Pedro Paguio, married to Amor Jose and4. Maximo Victoria, married to Juliana Roberto, all

Chapter members. July 23, 1973: schedule of the public auction sale of Estudillo's

rights and interests in said properties June 27, 1973, Alejandro Estudillo filed a "Motion to Dissolve

and/or Cancel the Notice of Levy" alleging that he and the other registered owners indicated on the title merely held in trust the properties and improvements thereon in favor of Centro La Paz (Samahang Espiritista Sa Lunduyang La Paz) a Chapter of Union Espiritista Cristiana de Filipinas, Inc. as evidenced by "Acknowledgments" executed by them on October 20, 1961 and October 2, 1971.

Estudillo further alleged that CENTRO's ownership was also evidenced by letters sent to the City Assessor by him and Crispulo Romero, President of CENTRO, long before the filing of the replevin case on December 28, 1971 praying for the

revocation of tax assessments on said properties as the same, were used for religious purposes. Date of letters are as follows

1. February 15, 19632. November 29, 1963 and3. August 8, 1966

July 21, 1973, CENTRO submitted a third party claim to the Sheriff of Manila likewise averring exclusive ownership of the properties in question.

ISSUE/s:

I. WON Estudillo is merely the trustee of Centro La Paz?II. WON the “Acknowledgements” of registered owners not

being annotated on TCT No. 51837 is conclusive of all matters, valid and binding?

III. Whether or not Centro La Paz which is merely a Chapter of Union Espiritista de Filipinas, Inc. has a juridical personality of its own in accordance with the provisions of our laws;

HELD:

I.

1. CENTRO reiterated ownership of the properties in question and emphasized that the registered owners thereof had publicly acknowledged their possession of said properties in the concept of trustees.

2. Preponderance of evidence CENTRO had established that it was "really and true and lawful owner of the property in dispute, and that the persons registered therein as its owners are merely trustees of the plaintiff, the series of documents executed even as early as 1957, long before the issue of whether Alejandro Estudillo really has an interest and/or participation in the property in dispute, attest to plaintiff's ownership of the property in question.

The Deed of Donation dated March 13, 1957 Deed of Absolute Sale executed by Joaquina

dela Rosa in favor of Alejandro Estudillo, Pedro Paguio and Maximo Victoria of the

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same property covered by the Deed of Donation;

Deed of Sale of two parcels in dispute described under T.C.T. No. 51837 executed by Sta. Mesa Realty, Inc. in favor of Alejandro Estudillo, Joaquina dela Rosa, Pedro Q. Paguio and Maximo Victoria

Deed of Acknowledgment dated October 30, 1961 also executed by Estudillo de la Rosa and Victoria acknowledging that the property described under the aforementioned T.C.T. No. 51837, together with the improvements thereon are being possessed by them only as trustees;

Deed of Acknowledgment executed on October 22, 1971, jointly by Amor Jose, widow of Paguio and the latter's daughters, Sumilang Paguio and Filipina Paguio (co-registered owner of Estudillo) likewise declaring that their possession of the said property is merely that of trustees and not as owners;

Petitions for revocation of tax assessments Nos. 3187 and 3188

Petition to exempt said parcels from taxation, being owned by a religious organization and;

Follow-up letters addressed to the City Assessor of Manila, dated February 15, 1963; December 29,1963 and May 29, 1962 respectively

Deed of Sale executed by Estudillo, heirs of dela Rosa and Paguio of the two parcels in favor of Centro La Paz, indubitably point to one and inescapable conclusion that the plaintiff is really the true and lawful owner of the property in dispute and that persons registered therein as its owners, are merely trustees of the plaintiff.

II. As found by both the Trial Court and Appellate Court, the evidence sufficiently establishes that the registered owners of the parcels of land covered by TCT 51837, all of whom are members of CENTRO, hold the properties in trust for CENTRO by virtue of the indubitable documents executed

even before the institution of suit. In the same manner that the real property, registered solely in the name of a husband, can be proven to be conjugal property with his wife, the fact of registration in the name of Alejandro Estudillo and others does not bar evidence to show that the registered owners hold the properties in trust for CENTRO.

Admittedly, the trust was not registered in accordance with section 65 of Act 496 (the former Land Registration Law). The absence of said registration, however, cannot be taken against CENTRO inasmuch as, if the public auction sale had actually been held, with Special Service Corp. (SSC) as the successful buyer, SSC could not have been considered a purchaser for value and in good faith at said sale since it had knowledge of CENTRO's claim, particularly when the latter had filed a third-party-claim with the Sheriff of Manila before the scheduled auction sale, which knowledge was equivalent to registration of the several "Acknowledgments" in the Registry of Deeds.

III. Evident from the record that although it was CENTRO that was actively prosecuting the case, in substance, it was representing the mother organization, the Union Espiritista Cristiana de Filipinas, Inc., which is the real party in interest and is itself named in the Complaint. It is an organization that is duly registered with the Securities and Exchange Commission, and thus possessed of a juridical personality to sue and be sued.

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143. Chiao Liong Tan vs. Court of Appeals, 228 SCRA 75

FACTS: Chiao Long Tan claims to be the owner of a 1976 Isuzu Elf van.  As owner thereof,  petitioner  says  he  has  been  in  possession,  enjoyment,  and utilization of the van until his older brother, Tan Ban Yong, unlawfully took it away from him. Chiao claims that the van is registered under his name, that he bought the vehicle from isuzu balintawak, that  he  sent  his  brother  to  pay  for  the  van  and  the  receipt  was issued in his name because it was his money that was used to pay for the vehicle, that he allowed his brother to use the vehicle because the latter was working for the company, and  that  his  brother  later  refused  to  return  the  vehicle  and appropriated the same for himself.  

According to respondent CLT Industries is the family business and it was under the name of petitioner  since  at  the  that  time,  he  was  leaving  for  the  US  and petitioner is the only Filipino left in the Philippines. When the family business needed a vehicle, he asked petitioner to look  for  a  vehicle  and  gave  him  money  as  downpayment  for  an Isuzu Elf van. After a month, he paid for the van by getting a loan from a friend. As  much  as  the  receipt  was  placed  in  the  name  of  petitioner, private  respondent  allowed  the  registration  under  the  name  of petitioner. There  was  also  agreement  that  he  would  use  the  vehicle  as  he paid for the same. All  the  abovementioned  allegations  of  private  respondent  has  been corroborated  by  witnesses.    The  trial  court  hence  ruled  in  favor  of  the private respondent and the CA affirmed this decision.

ISSUE: WON there was an Implied trust created when the Van was registered under petitioners name but was paid for and really owned by respondent

HELD: YES

The New Civil Code recognizes cases of implied trust other than those enumerated therein. Thus, although no specific provision could be cited to apply to the parties herein, it is undeniable that an implied trust was created when the certificate of registration of the motor vehicle was placed in the name of the petitioner although the price thereof was not paid by him but by private respondent. The principle that a trustee who puts a

certificate of registration in his name cannot repudiate the trust by relying on the registration is one of the well-known limitations upon a title. A trust, which derives its strength from the confidence one reposes on another especially between brothers, does not lose that character simply because of what appears in a legal document.

On the side issue of replevin, the court said that respondent should have filed for recovery of possession on the basis of ownership, but due to the policy to settle in one action all the conflicting claims of the parties to the possession of the property in controversy, the question of ownership may be resolved in the same proceeding.

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144. SABAS H. HOMENA and ILUMINADA JUANEZA v. DIMAS CASA AND MARIA CASTOR and the REGISTER OF DEEDS FOR THE PROVINCE OF COTABATO

G.R. No. L-32749 | January 22, 1988 | YAP

FACTS:

1. Homena and Juaneza filed a case against Casa and Castor for unlawful dispossession disturbing the former’s peaceful, continuous, open, uninterrupted adverse and public possession of the property in question.

a. Homena and Juaneza sought to annul the original certificate of title in favor of Casa and Castor pursuant to a Homestead Patent on the ground that said patent was obtained fraudulently by stating that the lot was not claimed and occupied by another person.

b. Homena and Juaneza allege than on June 15, 1967, they purchased from Casa and Castro 2 hectares of land with the agreement that the deed of sale would be given to the former after the 5-year prohibitive period provided in the Homestead Patent Law. However, they never got the title from Casa and Castro.

2. Casa and Castro’s motion to dismiss:a. complaint is barred by prescription, since thirteen years

had elapsed from the issuance of the homestead patent before the action was filed;

b. The deed of sale executed on June 15, 1952 or prior to the approval of the application and issuance of the homestead patent was null and void and inoperative to convey the land in question, which was at that time still public land; and

c. Homena and Juaneza are not the proper party to institute the action to annul the homestead patent.

3. Homena and Juaneza’s opposition to the motion to dismiss:a. The validity of the patent as a whole was not assailed,

only with respect to the 2 hectares that Casa and Castro were able to register.

b. Because of the fraud in registration, it needs 4 years to be prescribed, action was started before that time elapsed.

c. The defense of prescription cannot be set up in an action to recover property held in trust by a person for another.

4. TC dismissed the case. MR denied. Appealed to CA, which certified the case to SC.

ISSUE: WON there was an implied trust among the parties

HELD: NO!!!!

RATIO:

1. Under the Public Land Act, the homestead owner was prohibited from transferring his rights. Hence, the agreement is clearly illegal and void ab initio; it is intended to circumvent and violate the law.

2. As parties to a void contract, the Homena and Juaneza have no rights which they can enforce and the court cannot lend itself to its enforcement.

3. Homena and Juaneza cannot invoke the doctrine of implied trust based on an illegal contract. The issue of prescription or laches becomes irrelevant in a case such as this, where plaintiffs clearly have no cause of action.

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145. Heirs of Candelaria vs. Romero, 109 Phil. 500. (1960)

GUTIERREZ DAVID, J.:

Trustee: Lucas Candelaria (land was registered under his name)

Beneficiaries: Emilio Candelaria (actually paid for said land)

Emilio Candelaria and his brother Lucas Candelaria bought each a lot in the Solokan Subdivision on installment basis.

Lucas paid the first two installments corresponding to his lot, but faced with the inability of meeting the subsequent installments because of sickness which caused him to be bedridden, he sold his interest to his brother Emilio, who then reimbursed him the amount he had already paid, and thereafter continued payment of the remaining installments until the whole purchase price had been fully satisfied. Said payments done by Emilio were however made in the name of Lucas, with the understanding that the necessary documents of transfer will be made later.

In 1918 a transfer certificate of title for said lot was issued by the register of deeds of Manila in the name of "Lucas Candelaria married to Luisa Romero".

Lucas held the title to said lot merely in trust for Emilio and that this fact was acknowledged not only by him but also by the defendants (Lucas’ heirs) on several occasions.

Lucas' possession of the lot was merely tolerated by Emilio and his heirs. Lucas had been collecting all its rents for his own use as financial aid by Emilio to him as a brother in view of the fact that he was bedridden without any means of livelihood and with several children to support, although from 1926, when Emilio was confined at the Culion Leper Colony up to his death on February 5, 1936, Lucas had been giving part of the rents to Fortunata Bautista, the second wife of Emilio, in accordance with the Emilio's wishes.

Lucas died in August, 1942, survived by the present defendants, who are his spouse Luisa Romero and several children; and that

said defendants are still in possession of the lot, having refused to reconvey it to plaintiff despite repeated demands.

Heirs of Emilio filed complaint for reconveyance of real property with damages.

TC: Dismissed complaint on the ground that cause of action is unenforceable under the NCC and that the action has already prescribed.

In the order granting the motion to dismiss, the lower court held that an express and not an implied trust was created as may be gleaned from the facts alleged in the complaint, which is unenforceable without any writing, and that since Transfer Certificate of Title No. 9584 covering the land in question had been issued to Lucas Candelaria way-back in 1918 or 38 years before the filing of the complaint, the action has already prescribed.

SC: Implied trust, not express trust. As to whether action is barred by lapse of time, the case is remanded for further proceedings to allow them to present proof in support of their claim.

Where property is taken by a person under an agreement to hold it for, or convey it to another or the grantor, a resulting or implied trust arises in favor of the person for whose benefit the property was intended. This rule, which has been incorporated in the new Civil Code in Art. 1453 thereof, is founded upon equity.

An implied trust arises where a person purchases land with his own money and takes a conveyance thereof in the name of another. In such a case, the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears. The trust which results under such circumstances does not arise from contract or agreement of the parties, but from the facts and circumstances, that is to say, it results because of equity and arises by implication or operation of law.

In the present case, the complaint expressly alleges that "although Lucas Candelaria had no more interest over the

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lot, the subsequent payments made by Emilio Candelaria until fully paid were made in the name of Lucas Candelaria, with the understanding that the necessary documents of transfer will be made later, the reason that the transaction being brother to brother." From this allegation, it is apparent that Emilio Candelaria who furnished the consideration intended to obtain a beneficial interest in the property in question. Having supplied the purchase money, it may naturally be presumed that he intended the purchase for his own benefit. Indeed, it is evident from the above-quoted allegation in the complaint that the property in question was acquired by Lucas Candelaria under circumstances which show it was conveyed to him on the faith of his intention to hold it for, or convey it to the grantor, the plaintiff's predecessor in interest.

Constructive or implied trusts may, of course, be barred by lapse of time. The rule in such trusts is that laches constitutes a bar to actions to enforce the trust, and repudiation is not required, unless there is a concealment of the facts giving rise to the trust. Continuous recognition of a resulting trust, however, precludes any defense of laches in a suit to declare and enforce the trust.