G.R. No.

127005 July 19, 1999

SPS. JOSE ROSARIO AND HERMINIA ROSARIO, petitioners,
vs.
COURT OF APPEALS, LOURDES ILLAHERMOSA, AIDA ILLAHERMOSA, RODULFO
ILLAHERMOSA, NATIIDAD . CE!ALLOS, AND JESUS ILLAHERMOSA, respondents.1wphi1.nt

GON"AGA#RE$ES, J.:
In this petition for review on certiorari, petitioners Spouses Jose and Herminia Rosario seek a reversal of the decision
dated June 14, 1! of the "ourt of #ppeals 1 in "#$%.R. "& 'o.$(!(11 entitled Spouses Jose C. Rosario and Herminia
L. Rosario vs. Lourdes L. Villahermosa, et al. which reversed the decision of the Re)ional *rial "ourt of "e+u in "ivil "ase
'o. R$,-.!1.
/n #u)ust ,0, 1.1, Spouses Jose ". Rosario and Herminia 1ariosa$Rosario 2petitioners herein3 filed an action for
le)al redemption with dama)es and attorne45s fees a)ainst 1ourdes, #ida, Rodulfo, 'atividad, and Jesus, all surnamed
&illahermosa, +efore the Re)ional *rial "ourt of "e+u, "e+u "it4 2, alle)in) that the4 are hus+and and wife6 that
Herminia is the re)istered owner of one$half 217,3 undivided share of a parcel of land desi)nated as 1ot 'o. 88$# of the
su+division plan 21R"3 9sd (0,., +ein) a portion of 1ot 88 of the *alisa4$:in)lanilla ;state, with <ilomena 1ariosa,
sin)le, as the owner of the other one$half 217,3 share, as shown +4 *ransfer "ertificate of *itle 'o. 1,(,! of the Re)istr4 of
=eed of "e+u 9rovince6 that sometime in #pril 1!0, as <ilomena needed funds for the construction of her house, she
o+tained a loan from the %overnment Service Insurance S4stem 2%SIS3 in the amount of Seven *housand 9esos
298,---.--3 and to )uarantee the pa4ment thereof, the a+ove$mentioned lot was mort)a)ed with the %SIS6 that since
Herminia is a co$owner thereof, the latter +ecame a co$si)ner of the promissor4 note and other documents pertinent to said
loan6 that when <ilomena died on /cto+er , 18!, she had not completel4 paid her %SIS loan and since Herminia feared
that the mort)a)e mi)ht +e foreclosed to the pre>udice of her 17, undivided share, she paid the +alance of <ilomena5s %SIS
loan in the total sum of 9.4..-- thus o+tainin) the release of the mort)a)e and the certificate of title6 that +elievin) that she
is the onl4 heir of <ilomena, considerin) that their other sister, 9aulina 1ariosa &illahermosa and mother of the defendants,
had predeceased <ilomena, Herminia +e)an to possess the other half of the su+>ect propert4 and the house erected thereon in
18! until the defendants distur+ed her peaceful possession +4 claimin) the undivided one$half of the propert4 on the +asis
of a deed of sale dated Jul4 ,., 18! alle)edl4 e?ecuted +4 <ilomena in favor of their father, ;milio &illahermosa, sellin)
the su+>ect lot 88$# for a consideration of *HR;; H@'=R;= ;I%H*A 9;S/S 29(.-.--36 that plaintiffs offered the
defendants what their father mi)ht have paid if the4 could prove that there was such a sale made +4 <ilomena 1ariosa to
;milio &illahermosa6 however, the defendants stu++ornl4 insisted that the4 would take possession of the propert4, thus, the
plaintiffs sou)ht the aid of the +aran)a4 for an amica+le settlement and offered to redeem the 17, portion of the su+>ect lot,
+ut the settlement failed6 hence plaintiffs deposited the amount of 9(.-.-- with the trial court +ut the defendants, throu)h
their law4er, refused to accept the amount deposited insistin) that their father had +ou)ht the entire lot from <ilomena
1ariosa.
=efendants 2private respondents herein3 filed their answer den4in) the material alle)ations of the complaint and
interposin) the followin) affirmative defensesB that the complaint states no cause of action6 that there e?ists an e?press
or implied trust +etween plaintiffs and <ilomena and the latter with the defendants6 that the su+>ect lot 88$# was
ori)inall4 a part of lot 88 which +elon)ed to defendants5 deceased parents, 9aulina 1. &illahermosa, married to ;milio
&illahermosa, who purchased the same +4 installment from the Cureau of 1ands, and who after full pa4ment was
issued *"* 'o. 1,0. on <e+ruar4 ,., 10-6 that sometime in 10-, throu)h the intercession of :a?ima 1ariosa, 2the
mother of <ilomena, 9aulina and petitioner Herminia and )randmother of the defendants3 a reDuest was made that
<ilomena +e allowed to occup4 17, of lot 'o. 88 as her place of residence for a consideration of 9(.-.--, su+>ect to
the condition that the said lot would +e held in trust +4 <ilomena to +e returned to the &illahermosas +efore her death,
to which reDuest Spouses &illahermosas a)reed6 thus <ilomena was allowed to use the 17, portion of 1ot 'o. 88 as
her residence6 however no formal deed was actuall4 e?ecuted, althou)h the sum of 9(.-.-- was actuall4 received +4
the &illahermosas6 that 9aulina 1ariosa &illahermosa 2defendants5 mother3 died on <e+ruar4 1,, 1!( and sometime in
the earl4 part of 1!4, <ilomena wanted to demolish the old house standin) on 1ot 'o. 88 and +uild a new house on
the site with %SIS fundin), +ut since the %SIS reDuired that the land on which the house to +e erected should +e
mort)a)ed as collateral, <ilomena reDuested the heirs of her sister 9aulina to formaliEe the sale of one$half of the
propert46 that acknowled)in) the Farran)ementF that the lot would +e held in trust +4 <ilomena to +e returned to the
&illahermosas +efore her death, ;milio and his children 2heirs of 9aulina 1ariosa3 e?ecuted a deed of sale over one$
half of 1ot 'o. 88, to ena+le <ilomena to compl4 with the %SIS reDuirement and accordin)l4, lot no. 88, which
ori)inall4 contained S;&;' H@'=R;= </R*A$<I&; 28403 SG@#R; :;*;RS, was su+divided into 1ot 88$#
with (8, sDuare meters, which was transferred to <ilomena 1ariosa, and 1ot 88$C with (8( sDuare meters, which was
transferred to Rodolfo &illahermosa6 that since %SIS further reDuired a co$si)ner for the loan, <ilomena, without an4
consideration and for the purpose of compl4in) with %SIS reDuirements, e?ecuted a simulated =eed of Sale over an
undivided one$half portion of 1ot 'o. 88$# in favor of the plaintiff Herminia Rosario who thereafter co$si)ned with
<ilomena the %SIS loan and e?ecuted a mort)a)e over 1ot 'o. 88$#. in favor of the %SIS and under such
arran)ement, the 17, undivided share of the plaintiffs spouses Herminia and Jose Rosario was merel4 held in trust, all
for the +enefit of principal +orrower and trustor, <ilomena, to +e returned to the &illahermosas +efore her death6 that
out of the %SIS loan, <ilomena was a+le to +uild a house on 1ot 'o. 88$# and since 1!0 <ilomena solel4 e?ercised
ownership over the house and 1ot 'o. 88$# until her death on /cto+er , 18! and in compliance with the previous
trust arran)ement +etween <ilomena and ;milio &illahermosa and his children, <ilomena returned the lot and allowed
the &illahermosas to +u4 +ack the lot for the same amount of 9(.-.-- throu)h a =eed of Sale dated Jul4 ,., 18!.
#fter trial, the Re)ional *rial "ourt of "e+u, Cranch !, "e+u "it4 rendered its decision on :a4 ,8, 11, the
dispositive portion of which reads as followsB %
HH;R;</R;, this "ourt here+4 orders the defendants to accept the pa4ment of 9(.-.-- for the
purchase price of the lot6 declares the plaintiff Herminia 1. Rosario as the real and a+solute owner of
the entire of 1ot 'o. 88$# of the *alisa4$:in)lanilla estate covered +4 *"* 'o. 1,(,!6 orders the
defendants to e?ecute a deed of conve4ance transferrin) their ri)hts over the one$half undivided
share of 1ot 88$# in favor of plaintiffs Herminia 1. Rosario and Jose Rosario and orders the
defendants to pa4 the plaintiffs 9,,---.-- as attorne45s fees, and 91,---.-- as moral dama)es. "osts
a)ainst the defendants.
*he trial court found that the su+>ect lot 2lot no. 88$#3 as evidenced +4 *"* 'o. 1,(,!, +elon)ed to <ilomena 1ariosa
and Herminia Rosario, each co$owner havin) a one half 217,3 undivided share6 that the validit4 of this title has not
+een assailed +4 the defendants 2private respondents herein3, althou)h defendants tried to show that the su+>ect lot
was onl4 held in trust +4 <ilomena 1ariosa in favor of their parents, which ar)ument cannot +e deemed a modification
of the matters stated in the torrens title6 the title cannot +e the su+>ect of a collateral attack, and as such the title
remains valid and stands as conclusive proof of ownership of the su+>ect lot. *he court concluded that since co$
ownership +etween <ilomena 1ariosa and Herminia Rosario had +een esta+lished, <ilomena could have sold onl4 the
17, undivided portion of the su+>ect lot to ;milio considerin) that the other 17, undivided portion +elon)ed to
Herminia Rosario, and Herminia as the re)istered co$owner has the ri)ht to e?ercise le)al redemption under #rticle
1!,- of the "ivil "ode considerin) that ;milio is a Fthird personF, not +ein) one of the re)istered co$owners.
:oreover, Herminia was not furnished a written notice of such sale nor a cop4 of the deed of sale6 thus Herminia5s
ri)ht to e?ercise le)al redemption never +e)an to run and had not 4et e?pired when she tendered pa4ment to the
&illahermosas of the redemption price and su+seDuentl4 consi)ned the amount in court in 1.1.
=efendants 2private respondents herein3 appealed to the respondent court which reversed the lower court5s findin)6 the
followin) is the dispositive portion of the >ud)mentB
HH;R;</R;, premises considered, the >ud)ment appealed from is R;&;RS;= and S;* #SI=;,
and a new one entered =IS:ISSI'% the complaint and reco)niEin) the =eed of Sale dated Jul4 ,.,
18! as valid and su+sistin). "osts a)ainst the plaintiffs$appellees. &
9etitioners have appealed to this court raisin) the followin) issuesB
Hhether or not respondents and their late father are Fstran)ersF within the contemplation of #rticle
1!,- of the "ivil "ode.
Hhether or not an implied trust under #rticle 140( of the "ivil "ode e?isted +etween the late
<ilomena 1ariosa in favor of the respondents and their late father.
Hhether or not plaintiffs, particularl4 plaintiff Herminia Rosario, complied with the thirt4 2(-3 da4
period provided under #rticle 1!,( of the "ivil "ode.
*he +asic Duestion that needs to +e addressed is 213 whether there is an implied trust that e?isted +etween ;milio
&illahermosa and <ilomena 1ariosa over the su+>ect propert4, and 2,3 whether an implied trust also e?isted +etween
<ilomena 1ariosa and petitioner Herminia Rosario for the +enefit of the &illahermosas.
It is well$settled that the >urisdiction of this court in cases +rou)ht to it from the "ourt of #ppeals +4 wa4 of petition
for review under Rule 40, is limited to reviewin) or revisin) errors of law imputed to it, its findin)s of fact +ein)
conclusive as a matter of )eneral principle. 5 However, since in the instant case there is a conflict +etween the factual
findin)s of the trial court and the respondent court, we have to rule on such factual issue as an e?ception to the )eneral
rule.'
9etitioners contend that there was no implied trust +etween <ilomena 1ariosa and ;milio &illahermosa and that
petitioner Herminia Rosario had no wa4 of knowin) if there was an4 a)reement for <ilomena to return the su+>ect
propert4 to ;milio and could not have refuted the e?ecution and contents of the =eed of Sale dated Jul4 ,., 18!
e?ecuted +4 <ilomena sellin) +ack the su+>ect propert4 to ;milio since she had no wa4 of verif4in) whether the
document was authentic and true from an independent source other than the &illahermosas6 that notwithstandin) the
fact that Herminia did not Duestion the e?ecution of the controverted deed of sale in an4 action thus admittin) the fact
of e?ecution, such admission does not include the truth and veracit4 of the contents of said document since the onl4
fact which can +e said as admitted for the purpose of e?ercisin) the ri)ht of redemption was the conve4ance of the
propert4 +ut not e?traneous matters such as the supposed reason for the sale, considerin) that +oth parties to the
alle)ed =eed of Sale were +oth deceased at the time of the trial6 that there are circumstances appearin) on record
which rendered the =eed of Sale Duestiona+le such as 213 the pro?imit4 of the alle)ed date of e?ecution of the deed of
sale with that of the death of <ilomena on /cto+er , 18! and the admission made +4 respondent 1ourdes
&illahermosa that <ilomena was under the doctor5s care for several months, and 2,3 ;milio was onl4 forced to present
their deed of sale to Herminia when the latter presented her title over the propert4, thus indicatin) that said
conve4ance was tainted with irre)ularit46 when Herminia Rosario acDuired the 17, interest on the su+>ect lot and the
title was made in her and <ilomena5s names, petitioner Herminia was never aware of the alle)ed implied trust +etween
<ilomena and ;milio &illahermosa, thus the a+solute ownership over the su+>ect propert4 was reposed onl4 in the
re)istered owners to the e?clusion of an4 other person includin) ;milio &illahermosa. Hence ;milio would +e
considered as a Fthird personF so that even if ;milio &illahermosa and private respondents are co$heirs and co$owners
of the other properties left +ehind +4 <ilomena 1ariosa, it will not affect the fact that neither ;milio nor the private
respondents are re)istered co$owners of lot 88$# and Herminia can e?ercise her ri)ht of le)al redemption. <inall4,
since petitioners were never )iven an4 written notice of the sale of <ilomena to ;milio as reDuired under #rticle 1!,(
of the "ivil "ode, the (-$da4 period within which petitioners should e?ercise their ri)ht of le)al redemption never
commenced to run so that when petitioner Herminia commenced this action with the trial court, her ri)ht to le)al
redemption still su+sists.
In their comment, private respondents alle)e that the )rounds relied upon +4 petitioner in this petition for review
which are 213 that ;milio &illahermosa is not a Fthird part4F contemplated under #rt. 1!,- and 2,3 that petitioner
Herminia Rosario e?ercised her ri)ht of redemption within the (-$da4 re)lementar4 period, are all moot and academic
in view of the proven fact that trust was full4 esta+lished and accomplished when <ilomena, +efore her death, returned
the su+>ect lot to ;milio &illahermosa, hence redemption is not applica+le. ;ven assumin) redemption is availa+le, the
same is alread4 moot and academic +ecause the alle)ed redemption was made onl4 on :a4 1,, 1.1, 0 4ears from the
time petitioner had actual knowled)e of the sale of the su+>ect lot to ;milio &illahermosa who had alread4 died on
=ecem+er ,4, 1.-, and the redemption is thus unavailin). It is contended that the ri)ht of redemption must +e
e?ercised +4 the redemptioner durin) the lifetime of the seller 2<ilomena 1ariosa3 and +u4er 2;milio &illahermosa,
Sr.3, and that private respondents5 ownership of the su+>ect land is not +4 sale +ut +4 succession, as the4 are the
le)itimate children of the deceased ;milio &illahermosa, Sr., hence not su+>ect to an4 redemption ri)ht6 assumin)
redemption is proper, the written notice reDuired under #rticle 1!,( was complied with +ecause petitioner Herminia
admitted durin) the trial that she learned for the first time in 188 of the e?istence of the deed of sale, and 4et
Herminia allowed four 243 4ears to lapse +efore she commenced the present action for le)al redemption. <inall4,
private respondents contend that the4 are not parties to the documents hence the wron) parties are +ein) sued.
9etitioner filed their repl4 contendin) that private respondents5 ar)ument that petitioners5 ri)ht of redemption over the
su+>ect lot was non$e?istent and was e?ercised on the wron) parties cannot +e valid +ecause private respondents as
heirs of ;milio &illahermosa acDuired onl4 such ri)hts as the said predecessor had over the su+>ect propert4 which in
this case is su+>ect to petitioners5 ri)ht to redeem the propert46 that petitioners were never furnished a written notice of
the sale +4 the vendor nor a cop4 of the =eed of sale nor had the4 directl4 participated in the transaction to )ive them
actual knowled)e of the sale6 thus the (-$da4 period to redeem did not commence to run at the time this action was
filed. <inall4, petitioners note that althou)h the decision of the respondent court reco)niEes the validit4 of the deed of
sale +etween <ilomena 1ariosa and ;milio &illahermosa, the same can onl4 pertain to 17, portion of the lot 88$# since
petitioner Herminia is the re)istered co$owner of the other 17, of lot 88$#.
He find no merit in this petition.1wphi1.nt
*rust is the le)al relationship +etween one person havin) an eDuita+le ownership in propert4 and another person
ownin) the le)al title to such propert4, the eDuita+le ownership of the former entitlin) him to the performance of
certain duties and the e?ercise of certain powers +4 the latter. 7 *rust relations +etween parties ma4 either +e e?press or
implied. ( ;?press trusts are those which are created +4 the direct and positive acts of the parties, +4 some writin) or deed,
or will, or +4 words evidencin) an intention to create a trust. 9 Implied trusts are those which without +ein) e?press, are
deduci+le from the nature of the transaction as matters of intent, or which are superinduced on the transaction +4 operation
of law as a matter of eDuit4, independentl4 of the particular intention of the parties. 10 Implied trusts ma4 either +e resultin)
or constructive trusts, +oth comin) into +ein) +4 operation of law.
Resultin) trusts are +ased on the eDuita+le doctrine that valua+le consideration and not le)al title determines the
eDuita+le title or interest and are presumed alwa4s to have +een contemplated +4 the parties. *he4 arise from the
nature or circumstances of the consideration involved in a transaction where+4 one person there+4 +ecomes invested
with le)al title +ut is o+li)ated in eDuit4 to hold his le)al title for the +enefit of another. /n the other hand,
constructive trusts are created +4 the construction of eDuit4 in order to satisf4 the demands of >ustice and prevent
un>ust enrichment. *he4 arise contrar4 to intention a)ainst one who, +4 fraud, duress or a+use of confidence, o+tains
or hold the le)al ri)ht to propert4 which he ou)ht not, in eDuit4 and )ood conscience, to hold. 11
#fter a review of the evidence on record, we hold that a trust was, indeed created +etween <ilomena, ;milio
&illahermosa and his children when lot 88$# was transferred in the name of <ilomena. Hhere a lot was taken +4 a
person under an a)reement to hold it for, or conve4 it to another or to the )rantor, a resultin) or implied trust arises in
favor of the person for whose +enefit the propert4 was intended 12. #s found +4 the respondent courtB
*he alle)ed e?istence of a *R@S* +etween the parties is alle)edl4 +ased on the
a)reement +etween the defendants5 predecessor$in$interest, ;milio &illahermosa, on
the one hand, and the late <ilomena 1ariosa on the other, premised on the promise or
commitment of the latter to return to the former 1ot 'o. 88$#, title to which was
transferred to her upon her reDuest, to ena+le her to use it for a housin) loan with the
%SIS. *his was testified to +4 defendant 1ourdes &illahermosa, who attested on the
followin) factsB 1ot. 'o. 88 was formerl4 owned +4 her parents, the late spouses
;milio &illahermosa and 9aulina 1ariosa &illahermosa, as shown +4 *"* 'o. 1,0.
issued in their names 2;?hi+it F(F3 and consistin) of 840 sDuare meters. #ctuall4,
her )randmother, :a?ima 1ariosa, had +een occup4in) it and were 2sic3 the one
pa4in) for it with the Cureau of 1ands, +ut she could no lon)er pa4, so she assi)ned
her ri)hts 2;?hi+it F,F3 to 9aulina 2defendant5s mother3. Her )randmother :a?ima
asked 9aulina 2defendant5s mother3 to +u4 the land +ecause she felt insecure while
livin) in it. *his is wh4 it was her parents 29aulina and ;milio3 who +ou)ht the lot
after continuin) to pa4 for it to the Cureau of 1ands, and had it titled in their names
2*S', pp. $1- and 14$10, /cto+er ,(, 1.03. %randmother :a?ima continued to
live in the old house located on the said lot. #unti <ilomena lived with her mother
2)randmother :a?ima3 in that old house until she decided to +uild a new one 2*S',
pp. ,,$,4, Ibid.3. %randmother :a?ima died in 10.. :other 9aulina died in 1!(
2*S', pp. 8$., Sept. 1, 1.03. 1ot 'o. 88 was su+divided upon reDuest of her late
aunt <ilomena who wanted to +uild a house on the lot. *o )et a loan from the %SIS,
it was necessar4 that the lot should +e a )uarant4 for the loan. So she 2#unt
<ilomena3 asked her father 2;milio3 to )et 2have3 part of the lot. *hus, her father
called all the defendants, since their mother was alread4 dead, a+out their aunt5s
reDuest. *he4 2her father, +rothers and sisters3 all a)reed to her aunt5s reDuest on the
condition that when she 2#unt <ilomena3 no lon)er needs it, she will return the lot to
them 2Ibid., pp. $1-3. #nd since her +rother Rodolfo was also contemplatin) to
+uild his office7home, the lot was su+divided into 1ots 88$# and 88$C, thus, # for
her aunt and C for her +rother. *here were two =eeds of Sale e?ecuted +4 them 2her
father, +rothers and sisters3, one in favor of their aunt 2 ;?hi+it F.F or F1F3, and the
other in favor of her +rother, Rodolfo 2;?hi+it F8F or F:F3. Hhen her #unt <ilomena
applied for a %SIS loan, she 2<ilomena3 was >ust a temporar4 pu+lic school teacher
newl4 transferred from 'e)ros. *hus, she 2<ilomena3 was reDuired to have a co$
maker who is a permanent emplo4ee of the :;"S. It was the plaintiff, Herminia 1.
Rosario, who volunteered, +ein) a permanent teacher of the *alisa4 ;lementar4
School and also a mem+er of the %SIS 2pp. 1-$10, Ibid.3. #n4wa4, +efore her #unt
<ilomena died in /cto+er 18!, she returned the lot to her father, +4 e?ecutin) a
=eed of Sale 2;?hi+it FF or F/F3, where it is e?plicitl4 statedB
*hat in compliance with the &;'=/R5S solemn promise to return or to sell +ack to
the &;'=;; 1ot 'o. 88$# 2S;&;'*A$S;&;'$#3, and for and in consideration of
the sum of *HR;; H@'=R;= ;I%H*A 9;S/S /'1A 29(.-.--3, 9hilippine
"urrenc4, the receipt whereof is here+4 acknowled)ed +4 the &;'=/R, said
&;'=/R does +4 these present sells 2sic3, transfers 2sic3 and conve4s 2sic3 to the
&;'=;; herein, his heirs and assi)ns said R;SI=;'*I#1 1/* '/. 88$#
2S;&;'*A$S;&;'$#3, of the su+division 9lan 21R"3 9sd$(0,., to)ether with all
the improvements thereon, situated in the 9o+lacion, :unicipalit4 of *alisa4,
9rovince of "e+u, 9hilippines, with an area of *HR;; H@'=R;= S;&;'*A$
*H/ 2(8,3 SG@#R; :;*;RS, more or less, and which lot is more particularl4
descri+ed in *ransfer "ertificate of *itle 'o. 11!14 2;1;&;' *H/@S#'= SII
H@'=R;= </@R*;;'3 as followsB . . .
*he amount of 9(.-.-- is the same amount which was paid +4 <ilomena to her father 21ourdes5s3 in
1!0 2*S', p. 18, Septem+er 1, 1.03.
He find these declarations indicative of an implied trust +etween <ilomena and ;milio, as
contemplated in #rticle 140( of the "ivil "ode of the 9hilippines, to witB
Hhen propert4 is conve4ed to a person in reliance upon his declared intention to
hold it for, or transfer it to another or to the )rantor, there is an implied trust in favor
of the person whose +enefit is contemplated.
In the instant case, the transfer made to <ilomena was with the declared intention to hold the lot for,
or to transfer it +ack to ;milio, as shown +4 the followin) circumstancesB
a3 *he openin) para)raph of the =eed of Sale as Duoted a+ove is indicative of the intention of the
parties.
+3 *he plaintiffs never contested the authenticit4 or )enuineness of the =eed of Sale 2;?hi+it FF or
F/F3. /n the contrar4, their filin) of a case for le)al redemption is a reco)nition of the validit4 of the
transfer made, al+eit purportedl4 su+>ect to le)al redemption 2which He shall discuss separatel43. In
view thereof, the4 are deemed to have admitted its due e?ecution as well as the facts stated therein.
c3 *he circumstances narrated +4 1ourdes &illahermosa were never refuted or controverted +4 the
plaintiffs with an4 re+uttal evidence. /n the contrar4, man4 of the material facts narrated +4 1ourdes
were also testified to +4 Herminia such as the ori)ins and histor4 of 1ot 'o. 88, the reDuirements for
the %SIS loan, the need for a co$+orrower for <ilomena5s loan, the parties5 a)reement to su+divide
1ot 'o. 88 into two, etc.
d3 *he consideration of 9(.-.-- for the 1!4 sale from ;milio to <ilomena in 1!4 was not increased
+4 an4 sin)le centavo despite the time difference of twelve 21,3 4ears when the lot was resold to the
former in 18!, and the )larin) fact that the 1!4 sale was onl4 for the lot, whereas the 18! sale
includes all the improvements thereon. *his is an indication that the deed was reall4 e?ecuted in
compliance with the promise made +4 <ilomena in 1!4 to return or resell the propert4 to the
&illahermosas.
Hhen ;milio &illahermosa and his children, the respondents herein conve4ed 1ot 'o. 88$# in favor of <ilomena
1ariosa in order to ena+le the latter +uild a house thereon with a %SIS loan, an implied if not e?press trust was created
in favor of the ori)inal re)istered owners of the su+>ect lot, ;milio &illahermosa, to)ether with his children, in view of
<ilomena5s declared intention to hold the lot for them and her promise to return it +ack to ;milio and private
respondents6 in fact, <ilomena, +efore her death, returned the lot with its improvements +4 virtue of the =eed of Sale
dated Jul4 ,., 18! precisel4 pursuant to the trust a)reed upon6 it stated that the sale was Fin compliance with the
vendor5s solemn promise to return or sell +ack to the vendee lot 'o. 88$#.
*he ne?t Duestion is whether such trust in favor of ;milio and his heirs 2private respondents3 is effective or +indin)
upon petitioner Herminia Rosario who is the re)istered co$owner of the su+>ect 1ot 'o. 88$# pursuant to the deed of
sale e?ecuted +4 <ilomena in favor of Herminia on =ecem+er (, 1!4.
He rule in the affirmative.
It is petitioner5s theor4 that when the title to the su+>ect propert4 was re)istered solel4 in the name of <ilomena
1ariosa in 1!4 under *"* 'o. 11!14, there was alread4 a conve4ance and transfer of ownership to <ilomena from
;milio and private respondents so that when petitioner Herminia acDuired the one$half interest over the su+>ect
propert4 and re)istration thereof was made in the names of +oth <ilomena 1ariosa and Herminia Rosario, Herminia
was not aware of such alle)ed e?istin) implied trust6 hence the a+solute ownership over the propert4 was then reposed
onl4 in <ilomena 1ariosa and Herminia Rosario and under #rt. 1!,-, ;milio &illahermosa and an4 other person
would +e considered a Fthird personF6 that when <ilomena 1ariosa conve4ed the propert4 to ;milio &illahermosa in
18!, not +ein) a co$owner, petitioner Herminia has the ri)ht to redeem the propert4.
He are not persuaded +4 petitioners5 ar)ument. It was esta+lished that the su+>ect propert4 was onl4 held +4 <ilomena
in trust for ;milio and private respondents. He sustain private respondents5 alle)ation that the deed of sale dated
=ecem+er (, 1!4 e?ecuted +etween <ilomena 1ariosa and Herminia Rosario was merel4 for the purpose of
facilitatin) and e?peditin) the approval of <ilomena5s loan with the %SIS for the construction of <ilomena5s new
house on the su+>ect lot, the same +ein) +orne out +4 the evidence.
*he proven circumstances clearl4 demonstrated that the =eed of Sale in favor of Herminia was a mere
accommodation arran)ement, hence an a+solutel4 simulated contract of sale. It was shown that sometime in 1!4,
<ilomena 1ariosa wanted to +uilt a new house on the su+>ect lot 2lot no. 88$#3 +4 o+tainin) a loan from the %SIS,
however, the %SIS reDuired that the land title should +e mort)a)ed as collateral, thus, <ilomena 1ariosa reDuested
;milio &illahermosa and his heirs 2private respondents herein3 to e?ecute a =eed of Sale transferrin) lot 88$# in her
favor, and the =eed of Sale was e?ecuted on June !, 1!4. In addition to the title reDuirement, the +orrower5s
e?perience as teacher and her salar4 were also considered. 1% Since <ilomena 1ariosa was onl4 a temporar4 teacher at the
time she decided to o+tain a loan from the %SIS to finance the construction of her house, 1& <ilomena 1ariosa e?ecuted a
=eed of Sale on =ecem+er (, 1!4 over the 17, portion of su+>ect propert4 in favor of her sister, petitioner Herminia
1ariosa Rosario, who was a permanent school teacher, for the price of 91--.--. 15 <ilomena 1ariosa applied for the loan
and petitioner Herminia Rosario was made a co$si)ner on the promissor4 note and other documents pertinent to <ilomena5s
%SIS loan6 *hereafter the loan was approved and the house of <ilomena was constructed on the su+>ect lot. *hese
circumstances unmistaka+l4 show that the sale of the 17, portion of the su+>ect lot +4 <ilomena 1ariosa to Herminia Rosario
and the transfer of the title in +oth the names of <ilomena and Herminia was for the purpose of o+tainin) the %SIS loan.
:oreover, undisputed is the fact that the ph4sical possession of +oth the house and the su+>ect lot remained throu)h the
4ears with <ilomena 1ariosa until her death on /cto+er , 18!. Herminia Rosario never e?ercised her alle)ed ri)ht of a co$
ownership over the su+>ect lot, nor did she assume the +urden of ownership6 Herminia admitted that she never paid the ta?es
on the su+>ect lot durin) <ilomena5s lifetime 1' as this was paid e?clusivel4 +4 <ilomena 1ariosa.
'ota+l4, the new house was constructed on the middle of the su+>ect lot without an4 o+>ection on the part of
petitioners 17 and Herminia Rosario never demanded for a separation or partition of their respective shares 1( despite the
fact that Herminia purportedl4 owns the 17, portion of the su+>ect lot. *he e?ecution of the deed of sale dated Jul4 ,., 18!
+4 <ilomena 1ariosa in favor of ;milio cate)oricall4 stated that it was in compliance with the vendor5s solemn promise to
return or to sell +ack the entire lot 88$# with all its improvements thereon to ;milio &illahermosa and <ilomena never
mentioned the name of petitioner Herminia as her co$owner, thus, confirmin) that the sale made +4 <ilomena to Herminia
was never intended to result in a real transfer of ownership, and the su+seDuent deed of sale of <ilomena to ;milio
&illahermosa was an affirmation of such intention.
*he cumulative effect of the evidence on record as narrated identified +ad)es of simulation showin) that the sale of
the 17, portion of the su+>ect lot made +4 <ilomena to Herminia was not intended to have a le)al effect +etween them,
said parties havin) entered into a sale transaction +4 which the4 did not intend to +e le)all4 +ound. #s such it is void
and is not suscepti+le of ratification, 19 produces no le)al effects, 20 and does not conve4 propert4 ri)hts nor in an4 wa4
alter the >uridical situation of the parties. 21 9etitioner Herminia and <ilomena never +ecame co$owners of the su+>ect land
since the sale which transpired +etween them was onl4 simulated6 when <ilomena returned or sold +ack the propert4 to
;milio &illahermosa +4 virtue of a =eed of Sale dated Jul4 ,., 18!, no ri)ht of le)al redemption 22 accrued in favor of
petitioner Herminia. *he ri)ht of le)al redemption amon) co$owners presupposes the e?istence of a co$ownership, which is
not present in the instant case. #rticle 1!,- which )rants such ri)ht to a co$owner applies onl4 when the co$ownership of an
undivided thin) or ri)ht +elon)s to different person. 2% "o$ownership is the ri)ht of common dominion which two or more
persons have in a spiritual part of thin) which is not ph4sicall4 divided. 2& 9etitioner had never +ecome a co$owner of the
lot 'o. 88$#.
*he fact that the title to the su+>ect lot was issued in 1!0 under *"* 'o. 1,(,! re)istered in the names of +oth
<ilomena and Herminia Rosario and said to +e conclusive as to all matters contained therein, did not operate to vest
upon petitioners5 the ownership over the 17, portion of lot 88$# considerin) the a+ove$mentioned circumstances
surroundin) the issuance of such title. *he torrens s4stem does not create or vest title. It onl4 confirms and records
title alread4 e?istin) and vested. It does not protect a usurper from the true owner. It cannot +e a shield for the
commission of fraud. 25 It does not permit one to enrich himself at the e?pense of another. Hhere one does not have an4
ri)htful claim over a real propert4, the torrens s4stem of re)istration can confirm or record nothin).
Hhen petitioner Herminia o+tained the re)istration of the 17, share of the su+>ect lot +4 virtue of a simulated deed of
sale it impressed upon the title a constructive trust in favor of the true part4, <ilomena 1ariosa. *he conclusion we
reach, findin) constructive trust under #rticle 1448 2' of the 'ew "ivil "ode e?istin) +etween <ilomena and Herminia,
rests on the principles of the )eneral law on trust which, throu)h #rticle 144, of the "ivil "ode, have +een adopted or
incorporated into our civil law, to the e?tent that such principles are not inconsistent with the "ivil "ode, other statutes and
the Rules of "ourt.
*his "ourt has ruled in the case of Sumaoang vs. Judge, RTC, Br. I, !uimba, "ueva #ci$a, 27 *hatB
# constructive trust, otherwise known as a trust e% male&icio, a trust e% delicto, a trust de son tort, an
involuntar4 trust, or an implied trust, is a trust +4 operation of law which arises contrar4 to intention
and in invitum, a)ainst one who, +4 fraud, actual or constructive, +4 duress or a+use of confidence,
+4 commission of wron), or +4 an4 form of unconsciona+le conduct, artifice, concealment, or
Duestiona+le means, or who in an4 wa4 a)ainst eDuit4 and )ood conscience, either has o+tained or
holds the le)al ri)ht to propert4 which he ou)ht not, in eDuit4 and )ood conscience, hold and en>o4. It
is raised +4 eDuit4 to satisf4 the demands of >ustice. However, a constructive trust does not arise on
ever4 moral wron) in acDuirin) or holdin) propert4 or on ever4 a+use of confidence in +usiness or
other affairs6 ordinaril4 such a trust arises and will +e declared onl4 on wron)ful acDuisitions or
retentions of propert4 of which eDuit4, in accordance with its fundamental principles and the
traditional e?ercise of its >urisdiction or in accordance with statutor4 provision, takes co)niEance. It
has +een +roadl4 ruled that a +reach of confidence, althou)h in +usiness or social relations, renderin)
an acDuisition or retention of propert4 +4 one person unconsciona+le a)ainst another, raises a
constructive trust.
#nd specificall4 applica+le to the case at +ar is the doctrine that F# constructive trust is su+stantiall4
an appropriate remed4 a)ainst un>ust enrichment. It is raised +4 eDuit4 in respect of propert4, which
has +een acDuired +4 fraud, or where althou)h acDuired ori)inall4 without fraud, it is a)ainst eDuit4
that it should +e retained +4 the person holdin) it.F
*he a+ove principle is not in conflict with the 'ew "ivil. "ode, "odes of "ommerce, Rules of court
and special laws. #nd since He are a court of law and of eDuit4, the case at +ar must +e resolved on
the )eneral principles of law on constructive trust which +asicall4 rest on eDuita+le considerations in
order to satisf4 the demands of >ustice, moralit4, conscience and fair dealin) and thus protect the
innocent a)ainst fraud. #s the respondent court said, FIt +ehooves upon the courts to shield fiduciar4
relations a)ainst ever4 manner of chicaner4 or detesta+le desi)n cloaked +4 le)al technicalities.F
#lthou)h the citations in the a+ove$mentioned case ori)inated from #merican >urisprudence, the4 ma4 well +e applied
in our >urisdiction. F2S3ince the law of trust has +een more freDuentl4 applied in ;n)land and in the @nited States than
it has +een in Spain, we ma4 draw freel4 upon #merican precedents in determinin) the effects of trusts, especiall4 so
+ecause the trust known to #merican and ;n)lish eDuit4 >urisprudence are derived from the &idei commissa of the
Roman 1aw and are +ased entirel4 upon civil law principles. . . . F 2( # constructive trust is created +4 a court of eDuit4
as a means of affordin)
relief. 29 "onstructive trust constitutes a remedial device Fthrou)h which preference of self is made su+ordinate to lo4alt4 to
others. %0 In particular, fraud on the part of the person holdin) or detainin) the propert4 at stake is not essential in order that
an implied trust ma4 sprin) into +ein). In the words of Jud)e "ardoEo, in Beatt' vs. !uggenheim #%ploration Co. %1
2w3hen propert4 has +een acDuired in such circumstances that the holder of the le)al title ma4 not in
)ood conscience retain the +eneficial interest, eDuit4 converts him into a trustee.
Since the sale was a simulated conve4ance of real propert4, the vendee, Herminia, acDuired no title thereto and she
merel4 +ecame a trustee of the 17, portion of the su+>ect propert4 for the +enefit of its real owner <ilomena who held
the entire propert4 in trust for the &illahermosas. *he +eneficiar4 is entitled to enforce the trust notwithstandin) the
irrevoca+ilit4 of the torrens title. *he torrens s4stem was not intended to foment +etra4al in the performance of a
trust. %2
HH;R;</R;, premises considered, the petition for review is =;'I;= and the Duestioned decision of the
respondent "ourt of #ppeals is #<<IR:;=.1wphi1.nt
S/ /R=;R;=.
Romero, Vitug, (anganiban and (urisima, JJ., concur.
Foo)*o)+,
1 Justice =elilah &idallon$:a)tolis, ponente, concurred in +4 Justices Guirino =. #+ad Santos, Jr. and
#rtemio %. *uDuero.
, =ocketed as "ivil "ase 'o. R$,-.!1.
( Rollo, p. 4(.
4 Rollo, p. 04.
0 *on)o4 vs. "#, 1,( S"R# 11..6 9olicarpio vs. "#, ,! S"R# (446 <loro vs. 1lenado, ,44 S"R# 81(,
%o+onsen) vs. "#, ,4! S"R# 48,6 "o vs. "#, ,48 S"R# 10.
! 9olicarpio vs. "#, supra6 Gue+ral vs. "#, ,0, S"R# (0(6 "a4a+4a+ vs. I#", ,(, S"R# 16 Smodo vs. "#,
,(0 S"R# (-86 <loro vs. 1lenado, supra.
8 vda de ;sconde vs. "#, ,0( S"R# !! citing */1;'*I'/, "ivil "ode of the 9hilippines, &ol. I&, 11
ed., p. !! citing 04 #m Jur. ,1.
. #rt. 1441, 'ew "ivil "ode.
. ".J.S. 8,,6 /5lao vs. "o "ho "hit, ,,- S"R# !!,.
1- *i)no vs. "#, ,.- S"R# ,816 :e4nardo 9olicarpio vs. "#, ,! S"R# (446 /5lao vs. "o "ho "hit, supra
citing . ".J.S. 8,4.
11 :orales, et al. vs. "#, et al., ,84 S"R# ,., citing Huan) vs. "#, ,(! S"R# 4,-6 &da. de ;sconde vs.
"#, ,0( S"R# !!.
1, #rt. 140(, "ivil "ode.
1( *S', =ecem+er 1(, 1.,, p. 1..
14 *S', Jul4 ,, 1.(, p. (.
10 *S', June ,,, 1.(, p. ,,.
1! *S', =ecem+er 1(, 1.,, p. ,-.
18 *S', Jul4 ,, 1.(, p. 8.
1. Ibid, p. !.
1 #rt. 14-.
,- "arino vs. "#, 10, S"R# 0,.
,1 *on)o4 vs. "#, 1,( S"R# .
,, #rt. 1!,- of the "ivil "ode
# co$owner of a thin) ma4 e?ercise the ri)ht of redemption in case the shares of all the other co$
owners or of an4 of them, are sold to a third person. If the price of the alienation is )rossl4 e?cessive,
the redemptioner shall pa4 onl4 a reasona+le one.
Should two or more co$owners desire to e?ercise the ri)ht of redemption, the4 ma4 onl4 do so in proportion
to the share the4 ma4 respectivel4 have in the thin) owned in common.
,( #rt. 4.4, "ivil "ode.
,4 1.8 edition, #m+rosio 9adilla, "ivil "ode, &ol. &.
,0 Santia)o vs. "#, ,8. S"R# ..
,! #rt. 1448 of the "ivil "ode providesB
#rt. 1448. *he enumeration of the followin) cases of implied trust does not e?clude others esta+lished +4 the
)eneral law of trust, +ut the limitation laid down in #rticle 144, shall +e applica+le
,8 ,10 S"R# 1(! citing Roa, Jr. vs. "#, 1,( S"R# (.
,. :i)uel vs. "#, , S"R# 8!- citing %overnment of the 9hilippine Islands vs. #+adilla, 4! 9hil. !4,.
, Sumaoan) vs. Jud)e, R*", Cranch IIII, %uim+a, 'ueva ;ci>a, supra, See, e.g. International Refu)ee
/r)aniEation vs. :ar4land =r4dock "o., 1! <. ,d ,.4 210-36 Heal4 vs. "ommissioner of Internal Revenue,
(40 @S ,8. 210(36 see, )enerall4, %. Co))ert, *rusts 2!d3, p. ,.8 21.83.
(- supra, citing :einhard vs. Salmon, 1!4 '; 040, 04. 21,.3 per "ardoEo, J.
(1 supra citing 1,, '.;. (8. 2113.
(, :unicipalit4 of &ictorias vs. "#, 14 S"R# (,6 ;sco+ar vs. 1ocsin 84 9hil .!.
*he 1awphil 9ro>ect $ #rellano 1aw <oundation