LITONJUA vs LITONJUA shipping, movie theatres and realty development family PGI had yet to complete the services
pment family PGI had yet to complete the services in its contract, and it was
477 SCRA 576
(Case Digest: Ana Lapu)
FACTS:
Aurelio and Eduardo are brothers. In 1973, Aurelio and
Eduardo entered into a contract of partnership/joint venture.
Aurelio showed as evidence a letter sent to him by Eduardo that
the latter is allowing Aurelio to manage their family business (if
Eduardo’s away) and in exchange thereof he will be giving
Aurelio P1 million or 10% equity, whichever is higher. A
memorandum was subsequently made for the said partnership
agreement. The memorandum this time stated that in exchange
of Aurelio, who just got married, retaining his share in the family
business (movie theatres, shipping and land development) and
some other immovable properties, he will be given P1 Million or
10% equity in all these businesses and those to be subsequently
acquired by them whichever is greater.
In 1992 however, the relationship between the brothers
went sour. And so Aurelio demanded an accounting and the
liquidation of his share in the partnership. Eduardo did not heed
and so Aurelio sued Eduardo.
ISSUE: Whether or not a partnership/joint venture exists between
the two parties - NO
RULING:
Art. 1771. A partnership may be constituted in any form, except
where immovable property or real rights are contributed thereto,
in which case a public instrument shall be necessary.
The memorandum on its face, contains typewritten
entries, personal in tone, but is unsigned and undated. As an
unsigned document, there can be no quibbling that it does not
meet the public instrumentation requirements exacted under
Article 1771 of the Civil Code. Moreover, being unsigned and
doubtless referring to a partnership involving more than P3,000.00
in money or property, the memorandum cannot be presented for
notarization, let alone registered with the Securities and Exchange
Commission (SEC), as called for under the Article 1772 of the
Code. Petitioner, in an obvious bid to evade the application of
Article 1773, argues that the immovables in question were not
contributed, but were acquired after the formation of the
supposed partnership. Needless to stress, the Court cannot
accord cogency to this specious argument. For, as earlier stated,
petitioner himself admitted contributing his share in the supposed
businesses which already owned immovables even before the
memorandum was allegedly executed.
Considering thus the value and nature of petitioner’s
alleged contribution to the purported partnership, the Court,
even if so disposed, cannot plausibly extend to the memorandum
the legal effects that petitioner so desires and pleads to be given.
The memorandum in fine, cannot support the existence of the
partnership sued upon and sought to be enforced. The legal and
factual milieu of the case calls for this disposition.
Per the Courts own count, petitioner used in his complaint the
mixed words joint venture/partnership nineteen (19) times and the
term partner four (4) times. He made reference to the law of joint
venture/partnership [being applicable] to the business
relationship between [him], Eduardo and Bobby [Yang] and to his
rights in all specific properties of their joint venture/partnership.
MARSMAN DRYSDALE LAND, INC. VS.PHILIPPINE GEOANALYTICS,
INC. AND GOTESCO PROPERTIES, INC.
(G.R. No. 183374; 29 June 2010)
(Case Digest: Ana Lapu)
FACTS: Marsman Drysdale, Inc. (Marsman) and Gotesco
Properties, Inc. (Gotesco) entered into a joint venture agreement
for the construction and development of an office building on a
land owned by Marsman. They agreed on a 50-50 ratio on the
proceeds of the project, but did not agree on how losses would
be divided.
The joint venture engaged the services of Philippine Geoanalytics,
Inc. (PGI) to provide subsurface soil exploration, seismic study and
geotechnical engineering. PGI completed its seismic study but
failed to complete its subsurface soil exploration because the
area where drilling was to be made had not been cleared. The
building project was subsequently shelved due to unfavorable
economic conditions.
PGI billed the joint venture for work done, but was not paid
despite its repeated demands. PGI, thus, filed a collection case
against Marsman and Gotesco. Marsman passed the obligation
to Gotesco because under the joint venture agreement, Gotesco
was solely liable for the monetary expenses of the project, and
Marsman’s participation was limited to the land. Gotesco, on the
other hand, asserted that PGI had no cause of action against it as
Marsman’s failure to clear the property of debris which prevented
PGI from completing its work.
ISSUE: Whether or not Marsman and Gotesco are both liable to
pay PGI its unpaid claims.
RULING: Yes. Marsman and Gotesco are jointly liable to PGI.
PGI was never a party to the joint venture agreement. While the
joint venture agreement clearly spelled out the capital
contributions of Marsman (land) and Gotesco (cash) and the
funding mechanism, it cannot be used to defeat the lawful claim
of PGI against the two joint venturers- partners. PGI’s contract
clearly listed the joint venturers Marsman and Gotesco as the
beneficial owner of the project, and all billing invoices indicated
the consortium as the client.
When there are two or more debtors, the obligation is presumed
to be joint unless the law or the obligation expressly states that the
liability is solidary, or unless the nature of the obligation requires
solidary liability (Articles 1207 and 1208, Civil Code). In this case,
since solidary liability was not required by law, or the contract, or
by the nature of the obligation, the obligation to PGI was
presumed to be joint between Marsman and Gotesco.
A joint venture being a form of partnership, it is to be governed by
the laws on partnership. Under the laws on partnership,
particularly Article 1797 of the Civil Code, the losses and profits
shall be distributed in accordance with the agreement; if only the
share of each partner in the profits has been agreed upon, the
share of each in the losses shall be in the same proportion.
In the joint venture agreement, Marsman and Gotesco agreed
on a 50-50 ratio on the proceeds of the project, but did not
provide for the splitting of losses. Applying Article 1797, the same
ratio applies in splitting the obligation-loss of the joint venture to
PGI.
J TIOSEJO INVESTMENT CORP VS ANG
630 SCRA 334
(Case Digest: Ana Lapu)
Doctrines: A joint venture is considered in this jurisdiction as a form
of partnership and is accordingly, governed by the law on
partnerships.
Under Article 1824 of the Civil Code of the Philippines, all partners
are solidarily liable with the partnership for everything chargeable
to the partnership, including loss or injury caused to a third person
or penalties incurred due to any wrongful act or omission of any
partner acting in the ordinary course of the business of the
partnership or with the authority of his co-partners. Whether
innocent or guilty, all the partners are solidarily liable with the
partnership itself.
FACTS: This is a petition for review seeking the reversal of the CA’s
Resolution declaring J Tiosejo (petitioner) solidary liable with
Primetown Property Group, Inc. (PPGI) to pay Spouses Ang.
J. Tiosejo entered into a Joint Venture Agreement with PPGI for
the development of a residentialcondominium project known as
Meditel in Mandaluyong City. Petitioner contributed the lot while
PPGI undertook to develop the condominium. The parties further
agreed to a 17%-83% sharing as to developed units. PPGI further
undertook to use all proceeds from the pre-selling of its saleable
units for the completion of the Condominium Project.
Sometime in 1996, PPGI executed a Contract to Sell with Spouses
Ang on a certain condominium unit and parking slot for
P2,077,334.25 and P313,500.00, respectively. On July 1999,
respondent Spouses filed before the Housing and Land Use
Regulatory Board(HLURB) a complaint for therescission of the
Contract to Sell, against J. Tiosejo and PPGI. They claim that they
were promised that the condo unit would be available for turn-
over and occupancy by December 1998, however the project
was not completed as of the said date. Spouses Ang instructed
petitioner and PPGI to stop depositing the post-dated checks
they issued and to cancel said Contracts to Sell.
Despite several demands, petitioner and PPGI have failed and
refused to refund the P611,519.52they already paid under the
circumstances. As defense, PPGI claim that the delay was
attributable to the economic crisis and to force majeure
(unexpected and unforeseen inflation and increase rates and
cost of building materials). They also state that it offered several
alternatives to Spouses Ang to transfer their investment to its other
feasible projects and for the amounts they already paid to be
considered as partial payment for the replacement unit/s.
On a separate answer, petitioner claims that its prestation under
the JVA consisted of contributing the property on which the
condominium was to be contributed. Not being privy to the
Contracts to Sell executed by PPGI and respondents,it did not
receive any portion of the payments made by the latter; and,
that without any contributory fault and negligence on its part,
PPGI (and not the petitioner) breached its undertakings under the
JVA by failing to complete the condominium project.The Housing
and Land Use (HLU) ruled in favor of respondents, rescinding the
contract and ordering petitioner and PPGI to pay refund, interest,
damages, attorney’s fees and administrative fines.
The HLURB Board of Commissioners affirmed the HLU’s order.
Motion for Reconsideration(MR) was denied. The case was
subsequently raised to the Office of the President (OP) which
rendered a decision dismissing petitioner’s appeal on the ground
that the latter’s appeal memorandum was filed out of time and
that the HLURB Board committed no grave abuse of discretion in
rendering the appealed decision. MR was also denied.
Petitioner filed before the CA a motion for extension within which
to file its petition for review,claiming heavy workload of its
counsel. This was denied by the CA. MR was denied for lack of
merit.
ISSUE: Whether or not the CA erred in affirming the HLURB’s
decision insofar as it found J.
Teosejo’s with PPGI to pay Spouses Ang.
HELD: NO, the HLURB Arbiter and Board correctly held petitioner
liable alongside PPGI for
respondents’ claims and the administrative fine.
By express terms of the JVA, it appears that petitioner not only
retained ownership of the property pending completion of the
condominium project but had also bound itself to answer liabilities
proceeding from contracts entered into by PPGI with third parties.
Article VIII, Section 1 of the JVA distinctly provides as follows:
Section 1: Rescission and damages:
xxx
In any case, the Owner shall respect and strictly comply with any
covenant entered into by the Developer and third parties with
respect to any of its units in the Condominium Project. To enable
the owner to comply with this contingent liability, the Developer
shall furnish the Owner with a copy of its contracts with the said
buyers on a month-to-month basis.
xxx
Viewed in the light of the foregoing provision of the JVA,
petitioner cannot avoid liability by
claiming that it was not in any way privy to the Contracts to Sell
executed by PPGI and respondents. Moreover, a joint venture is
considered in this jurisdiction as a form of partnership and is,
accordingly, governed by the law of partnerships. Under Article
1824 of the Civil Code of the Philippines, all partners are solidarily
liable with the partnership for everything chargeable to the
partnership, including loss or injury caused to a third person
or penalties incurred due to any wrongful act or omission of any
partner acting in the ordinary course of the business of the
partnership or with the authority of his co- partners. Whether
innocent or guilty, all the partners are solidarily liable with the
partnership itself.
NARRA NICKEL MINING vs REDMONT CONSOLIDATED MINES CORP
April 21, 2014
(Case Digest: April Pareno)
FACTS: Redmont is a domestic corporation interested in mining
and exploration in some areas in Palawan. Upon finding out that
those areas are covered by MPSA applications of other three
(allegedly) Filipino corporations namely: NARRA, TESORO, and
MACARTHUR, it filed a petition seeking the denial of their permits
on the ground that the three mentioned are foreign-owned
corporations.
In the petitions, Redmont alleged that at least 60% of the capital
stock of McArthur, Tesoro and Narra are owned and controlled by
MBMI Resources, Inc. (MBMI), a 100% Canadian corporation.
Redmont reasoned that since MBMI is a considerable stockholder
of petitioners, it was the driving force behind petitioners’ filing of
the MPSAs over the areas covered by applications since it knows
that it can only participate in mining activities through
corporations which are deemed Filipino citizens. Redmont argued
that given that petitioners’ capital stocks were mostly owned by
MBMI, they were likewise disqualified from engaging in mining
activities through MPSAs, which are reserved only for Filipino
citizens.
In their Answers, petitioners averred that they were qualified
persons under Section 3(aq) of Republic Act No. (RA) 7942 or the
Philippine Mining Act of 1995.
Additionally, they stated that their nationality as applicants is
immaterial because they also applied for Financial or Technical
Assistance Agreements (FTAA) denominated as AFTA-IVB-09 for
McArthur, AFTA-IVB-08 for Tesoro and AFTA-IVB-07 for Narra, which
are granted to foreign-owned corporations. Nevertheless, they
claimed that the issue on nationality should not be raised since
McArthur, Tesoro and Narra are in fact Philippine Nationals as 60%
of their capital is owned by citizens of the Philippines. They
asserted that though MBMI owns 40% of the shares of PLMC
(which owns 5,997 shares of Narra), 40% of the shares of MMC
(which owns 5,997 shares of McArthur) and 40% of the shares of
SLMC (which, in turn, owns 5,997 shares of Tesoro), the shares of
MBMI will not make it the owner of at least 60% of the capital
stock of each of petitioners.
The Panel of Arbitrators gave credit to the petition and declared
their MPA’s null and void.
(Note: There are numerous constitutional issues in this case but
what is related to our topic Joint ventures is the application of the
res inter alios acta rule)
Petitioners question the use of the exception of the res inter alios
acta or the "admission by co-partner or agent" rule and
"admission by privies" under the Rules of Court in the instant case,
by pointing out that statements made by MBMI should not be
admitted in this case since it is not a party to the case and that it
is not a "partner" of petitioners.
Petitioners claim that before the above-mentioned Rule can be
applied to a case, "the partnership relation must be shown, and
that proof of the fact must be made by evidence other than the
admission itself." Petitioners assert no such partnership exists.
ISSUE: WON a mere Joint Venture or a partnership exist between
the parties.
HELD: Partnership exists between the parties.
Joint ventures have been deemed to be "akin" to partnerships
since it is difficult to distinguish between joint ventures and
partnerships. Thus:
[T]he relations of the parties to a joint venture and the nature of
their association are so similar and closely akin to a partnership
that it is ordinarily held that their rights, duties, and liabilities are to
be tested by rules which are closely analogous to and
substantially the same, if not exactly the same, as those which
govern partnership. In fact, in joint venture agreements, rules and
legal incidents governing partnerships are applied.
Accordingly, culled from the incidents and records of this case, it
can be assumed that the relationships entered between and
among petitioners and MBMI are no simple "joint venture
agreements."
As a rule, corporations are prohibited from entering into
partnership agreements; consequently, corporations enter into
joint venture agreements with other corporations or partnerships
for certain transactions in order to form "pseudo partnerships."
Obviously, as the intricate web of "ventures" entered into by and
among petitioners and MBMI was executed to circumvent the
legal prohibition against corporations entering into partnerships,
then the relationship created should be deemed as
"partnerships," and the laws on partnership should be applied.
Thus, a joint venture agreement between and among
corporations may be seen as similar to partnerships since the
elements of partnership are present.
Considering that the relationships found between petitioners and
MBMI are considered to be partnerships, then the CA is justified in
applying Sec. 29, Rule 130 of the Rules by stating that "by entering
into a joint venture, MBMI have a joint interest" with Narra, Tesoro
and McArthur.
GILBERT G. GUY vs THE COURT OF APPEALS
(December 10, 2007)
G.R. No.165849, 170185, 170186, 171066,176650
(Case Digest: April Pareno)
NATURE: The petition composed five (5) consolidated cases which
stemmed from Civil Case No. 04-109444 filed with the Regional
Trial Court. But the focus of the case with respect to trust is GR
176650. The petition filed by Gilbert Guy (Gilbert) and Lincoln
Continental Development Corporation, Inc. (Lincoln Continental)
questioning the decision of the Court of Appeals (CA) in affirming
the Regional Trial Court (RTC) in dismissing their complaint against
the respondents.
FACTS: Gilbert, petitioner, is the son of Francisco and Simny Guy.
Respondents, Geraldine, Gladys and Grace are his sisters. The
family feud involves the ownership and control of 20,160 shares of
stock of Northern Islands Co., Inc. (Northern Islands). Northern
Islands is a family-owned corporation. In November 1986, they
incorporated Lincoln Continental as a holding company of the
50% shares of stock of Northern Islands in trust for their daughters,
respondents. In December 1986, upon instruction of spouses Guy,
Atty. Andres Gatmaitan, president of Lincoln Continental,
indorsed in blank Stock Certificate No. 132 (covering 8,400 shares)
and Stock Certificate No. 133 (covering 11,760 shares) and
delivered them to Simny.
In 1984, spouses Guy found that their son Gilbert has been
disposing of the assets of their corporations without authority. In
order to protect the assets of Northern Islands, the 20,160 shares
covered by the two Stock Certificates were then registered in the
names of respondent sisters, thus enabling them to assume an
active role in the management of Northern Islands. Thereafter,
Simny was elected President; Grace as Vice-President for
Finance; Geraldine as Corporate Treasurer; and Gladys as
Corporate Secretary. Gilbert retained his position as Executive
Vice President. This development started the warfare between
Gilbert and his sisters. Lincoln Continental filed a Complaint for
Annulment of the Transfer of Shares of Stock against respondents.
The complaint basically alleges that Lincoln Continental
owns20,160 shares of stock of Northern Islands; and that
respondents, in order to oust Gilbert from the management of
Northern Islands, falsely transferred the said shares of stock in
respondent sisters’ names.
The trial court held that the complaint was baseless and an
unwarranted suit among family members. That based on the
evidence, Gilbert was only entrusted to hold the disputed shares
of stock in his name for the benefit of the other family members;
and that it was only when Gilbert started to dispose of the assets
of the family’s corporations without their knowledge that
respondent sisters caused the registration of the shares in their
respective names. On appeal, the Court of Appeals affirmed the
Trial Court. Hence this petition.
ISSUE: Whether or not Gilbert was merely trust for the Guy sisters.
RULING: There was no doubt that Lincoln Continental held the
disputed shares of stock of Northern Islands merely in trust for the
Guy sisters as found by the trial court and affirmed by the CA. In
fact, the evidence proffered by Lincoln Continental itself supports
this conclusion. Article 1440 of the Civil Code provides that: A
person who establishes a trust is called the trustor; one in whom
confidence is reposed as regards property for the benefit of
another person is known as the trustee; and the person for whose
benefit the trust has been created is referred to as the
beneficiary.
In the early case of Gayondato v. Treasurer of the Philippine
Island, this Court defines trust, in its technical sense, as “a right of
property, real or personal, held by one party for the benefit of
another.” Differently stated, a trust is “a fiduciary relationship with
respect to property, subjecting the person holding the same to
the obligation of dealing with the property for the benefit of
another person.”
Both Lincoln Continental and Gilbert claim that the latter holds
legal title to the shares in question. However, there was no
evidence to support their claim. Rather, the evidence on record
clearly indicates that the stock certificates representing the
contested shares are in respondents’ possession. Significantly,
there is no proof to support his allegation that the transfer of the
shares of stock to respondent sisters is fraudulent. As aptly held by
the Court of Appeals, fraud is never presumed but must be
established by clear and convincing evidence. Gilbert failed to
discharge this burden. We, agree with the Court of Appeals that
respondent sisters own the shares of stocks, Gilbert being their
mere trustee.
DELACRUZ vs CA
February 26, 1990
(Case Digest: April Pareno)
FACTS: Petitioners are the heirs (children) of the late Maria de la
Cruz y Gutierrez, married to Mateo del Rosario Lansang, while
herein private respondents are the heirs of Maria de la Cruz y
Guevarra, married to Calixto Dimalanta, and Fermin de la Cruz.
The controversy involves a 1,980 square meters portion of Lot
1488.
From 1921 until her death in 1951, Maria de la Cruz y Gutierrez
resided in the questioned lot in the concept of an owner. She
declared the lot for tax purposes in her name. Later, she entrusted
the administration of the said lot to her niece Maria de la Cruz y
Guevarra. Later, the lot was adjudicated to Maria de la Cruz, 26
years old, married to Calixto Dimalanta and Fermin de la Cruz,
Single. Finally, Original Certificate of Title was issued in their
names.
Petitioners, claiming to have learned of the same only on July 1,
1974, on October 1, 1974 (allegedly barely three months after
discovery of the registration, and two years after the death of
Maria de la Cruz y Guevarra who, before she died in 1974,
revealed to petitioners Daniel Lansang and Isidro Lansang that
the lot of their mother Maria de la Cruz y Gutierrez had been
included in her title), filed a complaint for reconveyance.
Private respondents claimed that the land in question is their
exclusive property, having inherited the same from their parents
and the OCT was issued in their names. Moreover, they asserted
that petitioners have lost their cause of action by prescription.
Petitioners' predecessor-in-interest, Maria de la Cruz y Gutierrez,
was an unlettered woman, a fact borne out by her affixing her
thumbmark in her answer in Cadastral Case No. 18. Because of
her mental weakness, in a prepared document for her, Exhibit "B-
3", she consented and authorized her niece Maria de la Cruz y
Guevarra to administer the lot in question. Such fact is
corroborated by the testimony of Daniel Lansay, the son of Maria
de la Cruz y Gutierrez that Maria de la Cruz y Guevarra was the
one entrusted with the paying of land taxes.
Private respondents argue that said Exhibit "B-3" is a portion of the
tax declaration (Exhibit "B") which was prepared by the Office of
the Municipal Assessor/Treasurer where the lot in question is
located, and clearly not the written instrument constituting an
express trust required under Article 1443 of the Civil Code.
ISSUE: WON Exhibit B-3 constitutes an express trust required under
Article 1443 of the Civil Code.
HELD: Yes.
As maintained by petitioners, their action is one based on express
trust and not on implied or constructive trust and thus, has not yet
prescribed.
The argument of private respondents, is untenable. It has been
held that under the law on Trusts, it is not necessary that the
document expressly state and provide for the express trust, for it
may even be created orally, no particular words are required for
its creation (Article 1444, Civil Code).
An express trust is created by the direct and positive acts of the
parties, by some writing or deed or will or by words evidencing an
intention to create a trust. No particular words are required for the
creation of an express trust, it being sufficient that a trust is clearly
intended.
Hence, petitioner's action, being one based on express trust, has
not yet prescribed. Be it noted that Article 1443 of the Civil Code
which states "No express trusts concerning an immovable or any
interest therein may be proved by parol evidence," refers merely
to enforceability, not validity of a contract between the parties.
Otherwise stated, for purposes of validity between the parties, an
express trust concerning an immovable does not have to be in
writing.
Thus, Article 1443 may be said to be an extension of the Statute of
Frauds. The action to compel the trustee to convey the property
registered in his name for the benefit of the cestui for trust does
not prescribe. If at all, it is only when the trustee repudiates the
trust that the period of prescription may run.
ARANETA vs CA
G.R. No. 154096 August 22, 2008
(Case Digest: Cyndall Jardinel)
FACTS:
1. Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto,
now deceased, and his business associates (Benedicto Group)
organized Far East Managers and Investors, Inc. (FEMII) and
Universal Equity Corporation (UEC), respectively.
2. As petitioner Irene Marcos-Araneta would later allege, both
corporations were organized pursuant to a contract or
arrangement whereby Benedicto, as trustor, placed in his name
and in the name of his associates, as trustees, the shares of stocks
of FEMII and UEC with the obligation to hold those shares and
their fruits in trust and for the benefit of Irene to the extent of 65%
of such shares.
3. Several years after, Irene, through her trustee-husband,
Gregorio Ma. Araneta III, demanded the reconveyance of said
65% stockholdings, but the Benedicto Group refused to oblige.
4. In March 2000, Irene thereupon instituted before the RTC two
similar complaints for conveyance of shares of stock, accounting
and receivership against the Benedicto Group with prayer for the
issuance of a temporary restraining order (TRO). The first,
docketed as Civil Case No. 3341-17, covered the UEC shares and
named Benedicto, his daughter, and at least 20 other individuals
as defendants. The second, docketed as Civil Case No. 3342-17,
sought the recovery to the extent of 65% of FEMII shares held by
Benedicto and the other defendants named therein.
5. Respondent Francisca Benedicto-Paulino,3 Benedicto's
daughter, filed a Motion to Dismiss Civil Case No. 3341-17,
followed later by an Amended Motion to Dismiss. Benedicto, on
the other hand, moved to dismiss4 Civil Case No. 3342-17,
adopting in toto the five (5) grounds raised by Francisca in her
amended motion to dismiss. Among these were: (1) the cases
involved an intra-corporate dispute over which the Securities and
Exchange Commission, not the RTC, has jurisdiction; (2) venue
was improperly laid; and (3) the complaint failed to state a cause
of action, as there was no allegation therein that plaintiff, as
beneficiary of the purported trust, has accepted the trust created
in her favor.
ISSUE:
WON the TRUST was established?
WON the issue on the alleged TRUST can be resolved in a petition
for certiorari under Rule 65 of the Rules of Court?
HELD:
Clearly then, the CA overstepped its boundaries when, in
disposing of private respondents' petition for certiorari, it did not
confine itself to determining whether or not lack of jurisdiction or
grave abuse of discretion tainted the issuance of the assailed RTC
orders, but proceeded to pass on the factual issue of the
existence and enforceability of the asserted trust. In the process,
the CA virtually resolved petitioner Irene's case for reconveyance
on its substantive merits even before evidence on the matter
could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact
have not even reached the pre-trial stage. To stress, the nature of
the trust allegedly constituted in Irene's favor and its
enforceability, being evidentiary in nature, are best determined
by the trial court. The original complaints and the amended
complaint certainly do not even clearly indicate whether the
asserted trust is implied or express. To be sure, an express trust
differs from the implied variety in terms of the manner of proving
its existence.31 Surely, the onus of factually determining whether
the trust allegedly established in favor of Irene, if one was indeed
established, was implied or express properly pertains, at the first
instance, to the trial court and not to the appellate court in a
special civil action for certiorari, as here. In the absence of
evidence to prove or disprove the constitution and necessarily
the existence of the trust agreement between Irene, on one
hand, and the Benedicto Group, on the other, the appellate
court cannot intelligently pass upon the issue of trust. A
pronouncement on said issue of trust rooted on speculation and
conjecture, if properly challenged, must be struck down. So it
must be here.
HEIRS OF LABANON vs HEIRS OF LABANON
G.R. No. 160711
(Case Digest: Cyndall Jardinel)
FACTS:
1. During the lifetime of Constancio Labanon, prior to the
outbreak of WWII, he settled upon a piece of alienable and
disposable public agricultural land situated at Brgy. Lanao,
Kidapawan, Cotabato x x x. Constancio cultivated the said lot
and introduced permanent improvements that still exist up to the
present.
2. Being of very limited educational attainment, he found it
difficult to file his public land application over said lot. Constancio
then asked his brother, Maximo Labanon who was better
educated to file the corresponding public land application under
the express agreement that they will divide the said lot as soon as
it would be feasible for them to do so.
3. The offer was accepted by Maximo. During the time of the
application it was Constancio who continued to cultivate the said
lot in order to comply with the cultivation requirement set forth
under Commonwealth Act 141, as amended, on Homestead
applications.
4. After which, on June 6, 1941, due to industry of Constancio,
Homestead Application No. 244742 (E-128802) of his brother
Maximo was approved with Homestead Patent No. 67512.
Eventually, Original Certificate of Title No. P-14320 was issued by
the Register of Deeds of Cotabato over said lot in favor of
Maximo Labanon.
5. On February 11, 1955, Maximo Labanon executed a document
denominated as "Assignment of Rights and Ownership" and was
executed to safeguard the ownership and interest of his brother
Constancio Labanon.
6. On April 25, 1962, Maximo Labanon executed a sworn
statement reiterating his desire that his elder brother Constancio,
his heirs and assigns shall own the eastern portion of the Lot
7. After the death of Constancio Labanon, his heirs executed an
[e]xtra-judicial settlement of estate with simultaneous sale over
the aforesaid eastern portion of the lot in favor of Alberto
Makilang, the husband of Visitacion Labanon, one of the children
of Constancio.
8. However, in March 1991, the defendants heirs of Maximo
Labanon namely, Alicia L. Caniedo, Leopoldo Labanon, Roberto
Nieto and Pancho Labanon, caused to be cancelled from the
records of the defendant Provincial Assessor of Cotabato the
aforesaid TD No. 11593
9. Further, after discovering that the defendant-heirs of Maximo
Labanon were taking steps to deprive the heirs of Constancio
Labanon of their ownership over the eastern portion of said lot,
the latter, thru Alberto Makilang, demanded the owner’s copy of
the certificate of title covering the aforesaid Lot to be
surrendered to the Register of Deeds of Cotabato so that the
ownership of the heirs of Constancio may be fully effected but
the defendants refused and still continue to refuse to honor the
trust agreement entered into by the deceased brothers.
10. Thus, on November 12, 1991, petitioners filed a complaint 5 for
Specific Performance, Recovery of Ownership, Attorney’s Fees
and Damages with Writ of Preliminary Injunction and Prayer for
Temporary Restraining Order against respondents.
ISSUE: WON there exists a TRUST?
HELD: YES.
The trust agreement between Maximo Labanon and Constancio
Labanon may still be enforced
Former Vice-President and Senator Arturo Tolentino, a noted
civilist, explained the nature and import of a trust:
Trust is the legal relationship between one person having an
equitable ownership in property and another person owning the
legal title to such property, the equitable ownership of the former
entitling him to the performance of certain duties and the
exercise of certain powers by the latter.10
This legal relationship can be distinguished from other relationships
of a fiduciary character, such as deposit, guardianship, and
agency, in that the trustee has legal title to the property.11 In the
case at bench, this is exactly the relationship established
between the parties.
Trusts are classified under the Civil Code as either express or
implied. Such classification determines the prescriptive period for
enforcing such trust.
Article 1444 of the New Civil Code on express trust provides that
"[n]o particular words are required for the creation of an express
trust, it being sufficient that a trust is clearly intended."
Civil law expert Tolentino further elucidated on the express trust,
thus:
No particular form of words or conduct is necessary for the
manifestation of intention to create a trust. It is possible to create
a trust without using the word "trust" or "trustee". Conversely, the
mere fact that these words are used does not necessarily indicate
an intention to create a trust. The question in each case is
whether the trustor manifested an intention to create the kind of
relationship which to lawyers is known as trust. It is immaterial
whether or not he knows that the relationship which he intends to
create is called a trust, and whether or not he knows the precise
characteristics of the relationship which is called a trust.12
Correlatively, we ruled in Estate of Edward Miller Grimm v. Estate
of Charles Parsons and Patrick C. Parsons, that:
An express trust is created by the direct and positive acts of the
parties, by some writing or deed or by words evidencing an
intention to create a trust; the use of the word trust is not required
or essential to its constitution, it being sufficient that a trust is
clearly intended.131avvphi1
In the instant case, such intention to institute an express trust
between Maximo Labanon as trustee and Constancio Labanon as
trustor was contained in not just one but two written documents,
the Assignment of Rights and Ownership as well as Maximo
Labanon’s April 25, 1962 Sworn Statement. In both documents,
Maximo Labanon recognized Constancio Labanon’s ownership
and possession over the eastern portion of the property covered
by OCT No. P-14320, even as he recognized himself as the
applicant for the Homestead Patent over the land. Thus, Maximo
Labanon maintained the title over the property while
acknowledging the true ownership of Constancio Labanon over
the eastern portion of the land. The existence of an express trust
cannot be doubted nor disputed.
On the issue of prescription, we had the opportunity to rule in
Bueno v. Reyes that unrepudiated written express trusts are
imprescriptible:
While there are some decisions which hold that an action upon a
trust is imprescriptible, without distinguishing between express and
implied trusts, the better rule, as laid down by this Court in other
decisions, is that prescription does supervene where the trust is
merely an implied one. The reason has been expressed by Justice
J.B.L. Reyes in J.M. Tuason and Co., Inc. vs. Magdangal, 4 SCRA
84, 88, as follows:
Under Section 40 of the old Code of Civil Procedure, all actions
for recovery of real property prescribed in 10 years, excepting
only actions based on continuing or subsisting trusts that were
considered by section 38 as imprescriptible. As held in the case
of Diaz v. Gorricho, L-11229, March 29, 1958, however, the
continuing or subsisting trusts contemplated in section 38 of the
Code of Civil Procedure referred only to express unrepudiated
trusts, and did not include constructive trusts (that are imposed by
law) where no fiduciary relation exists and the trustee does not
recognize the trust at all.14
This principle was amplified in Escay v. Court of Appeals this way:
"Express trusts prescribe 10 years from the repudiation of the trust
(Manuel Diaz, et al. vs. Carmen Gorricho et al., 54 0.G. p. 8429,
Sec. 40, Code of Civil Procedure)."15
In the more recent case of Secuya v. De Selma, we again ruled
that the prescriptive period for the enforcement of an express
trust of ten (10) years starts upon the repudiation of the trust by
the trustee.16
In the case at bar, Maximo Labanon never repudiated the
express trust instituted between him and Constancio Labanon.
And after Maximo Labanon’s death, the trust could no longer be
renounced; thus, respondents’ right to enforce the trust
agreement can no longer be restricted nor prejudiced by
prescription.
ESTATE of GRIMM VS ESTATE OF PARSONS
G.R. No. 159810
(Case Digest: Cyndall Jardinel)
FACTS: 1.
Parsons and Edward Miller Grimm (Grimm), together with
Conrado Y. Simon (Simon), formed in 1952 a partnership for the
stated purpose of engaging in the import/export and real estate
business. Per SEC Certificate #3305,2 the partnership was
registered under the name G - P and Company.
2. After Grimm's demise on November 27, 1977, Parsons and
Simon continued with the partnership under the same name, G –
P and Company, as reflected in Articles of Partnership dated
December 14, 1977.5 The articles of the partnership would later
undergo another amendment to admit Parsons' son, Patrick, in
the partnership.6 After Parsons died on May 12, 1988, Amended
Articles of Partnership of G-P and Company was executed
on September 23, 1988 by and among Parsons' heirs, namely,
Patrick, Michael, Peter and Jose, all surnamed Parsons
3. The herein legal dispute started when brothers Patrick and Jose,
both surnamed Parsons, responding to a letter 8from the Estate of
Grimm, rejected the existence of a trust arrangement between
their father and Grimm involving MC No. 1088. Thus spurned, the
Estate of Grimm filed on August 31, 1992 before the RTC of Makati
City, a suit for recovery of MC No. 1088 with damages against the
Estate of Parsons, Patrick Parsons and MGCC.
4. Patrick Parsons averred that his father was, with respect to MC
No. 1088, a mere trustee of the true owner thereof, G-P & Co.,
ISSUE:
1. WON the transfer of MC No. 590 effected on September 7, 1964
by Grimm in favor of Parsons resulted, as the petitioner would
have it, in the formation of a trust relation between the two?
2. WON the transfer to Parsons of MC No. 590, as replaced by MC
No. 1088, partook of the nature of a trust transaction.
HELD: YES.
HELD: Trust is the legal relationship between one having an
equitable ownership in property and another person owning the
legal title to such property, the equitable ownership of the former
entitling him to the performance of certain duties and the
exercise of certain powers by the latter.26 Trust relations between
parties may be express, as when the trust is created by the
intention of the trustor.27 An express trust is created by the direct
and positive acts of the parties, by some writing or deed or by
words evidencing an intention to create a trust; the use of the
word trust is not required or essential to its constitution, it being
sufficient that a trust is clearly intended.28 Implied trust comes into
existence by operation of law, either through implication of an
intention to create a trust as a matter of law or through the
imposition of the trust irrespective of, and even contrary to any
such intention.29
Judging from their documented acts immediately before and
subsequent to the actual transfer on September 7, 1964 of MC
No. 590, Parsons, as transferee, and Grimm, as transferor,
indubitably contemplated a trust arrangement.
At bottom then, documented events immediately before and
after the February 28, 1968 share certificate conveyance in
question veritably confirm the trust arrangement Parsons had or
intended to have with Grimm and vice versa, vis-à-vis MC No.
1088. If, as herein respondent G-P & Co. posits at every turn,
Parsons was its trustee, then the latter's act of endorsing MC No.
1088 in blank and then delivering the same to the Club for
safekeeping instead of directly to the G-P & Co. was without
sense.
Since the transfer of Grimm's share to Parsons was temporary, a
trust was created with Parsons as the trustee, and Grimm, the
beneficial owner of the share. The duties of trustees have been
said, in general terms, to be: "to protect and preserve the trust
property, and to see to it that it is employed solely for the benefit
of the cestui que trust." xxx Parsons as a mere trustee, it is not
within his rights to transfer the share to G-P and Company (sic).
And lest it be overlooked, Parsons had previously acknowledged
Grimm to be the owner of MC No. 1088, after his earlier repeated
declarations that the transfer of the replaced MC No. 580 was
temporary. Parsons was thus in contextually in estoppel to deny,
thru the Letter of Trust aforementioned, hypothetically assuming its
authenticity, Grimm's ownership of the replacement certificate.
Summing up, the Court finds the evidence adduced and admitted
by the trial court more than adequately supporting a conclusion
that MC No. 1088 was issued to and held by Parsons as the trustee
thereof of Grimm or his estate. The fact that respondent G-P & Co.
may have paid, starting 1992, as evidence discloses, the
membership fees due on MC No. 1088 does not make Grimm less
of a beneficial owner. Such payment, needless to stress, is not a
mode of acquiring ownership.
BENIGNA SECUYA ET. AL vs GERARDA M. VDA. DE SELMA
G.R. No. 136021
(Case Digest: Earvin Alparaque)
BACKGROUND OF THE CASE:
This involves an action for quieting of title filed by Benigna Secuya
et. al. against Gerarda M. Vda. de Selma. The petitioners anchor
their claim of ownership over the lot on the Agreement of Partition
(main issue of the case) and a Deed of Confirmation of Sale
executed in favor of Dalmacio Secuya.
FACTS:
Before the grant of her application for private sale of Lot 5679, a
friar land (12,750 sqm.), Maxima Caballero executed a document
entitled "Agreement of Partition," wherein she stipulated to
transfer one-third (1/3) of the lot to and accepted by Paciencia
Sabellano, her aunt. When the application was approved,
Maxima failed to transfer the agreed portion to Paciencia who
took possession thereof.
Paciencia thereafter sold a portion of the lot (3000 sqm.) to
Dalmacio Secuya. When Paciencia died, her only heir, Ramon
Sabellano, executed a private document, "Deed of Confirmation
of Sale," confirming the sale between Paciencia and Dalmacio.
The document was, however, lost. Meanwhile, Maxima sold the
entire lot to Silverio Aro, husband of Cesaria Caballero. Upon
Silverio's death, the lot was transferred to Cesaria from whom
respondent bought the lot. Respondent was assured that
petitioners who were occupying a portion of the land were
tenants. A clean title to the whole lot was transferred to
respondent.
Petitioners, heirs of Dalmacio Secuya, filed an action for quieting
of title on the ground that respondent's title is a cloud on their title
as owners and possessors of the property subject of litigation. They
claimed that they had been occupying the property for forty-
seven years though they did not pay the land taxes. The trial court
rendered judgment against respondent. It was affirmed, on
appeal, by the Court of Appeals.
ISSUE:
Nature of the Agreement between the parties - An Express Trust,
Not a Partition
RULING:
The duly notarized Agreement of Partition dated January 5, 1938
is worded as follows:
AGREEMENT OF PARTITION
I, MAXIMA CABALLERO, Filipina, of legal age, married to
Rafael Cariño, now residing and with postal address in
the Municipality of Dumaguete, Oriental Negros, depose
the following and say:
1. That I am the applicant of vacant lot No. 5679 of the
Talisay-Minglanilla Estate and the said application has
already been indorsed by the District Land Officer,
Talisay, Cebu, for private sale in my favor;
2. That the said Lot 5679 was formerly registered in the
name of Felix Abad y Caballero and the sale certificate
of which has already been cancelled by the Hon.
Secretary of Agriculture and Commerce;
3. That for and in representation of my brother, Luis
Caballero, who is now the actual occupant of said lot I
deem it wise to have the said lot paid by me, as Luis
Caballero has no means o[r] any way to pay the
government;
4. That as soon as the application is approved by the
Director of Lands, Manila, in my favor, I hereby bind
myself to transfer the one-third (l/3) portion of the above
mentioned lot in favor of my aunt, Paciencia Sabellana y
Caballero, of legal age, single, residing and with postal
address in Tungkop, Minglanilla, Cebu. Said portion of
one-third (1/3) will be subdivided after the approval of
said application and the same will be paid by her to the
government [for] the corresponding portion.
5. That the said portion of one-third (1/3) will be located
adjoining the municipal road;
6. I, Paciencia Sabellana y Caballero, hereby accept
and take the portion herein adjudicated to me by Mrs.
Maxima Caballero of Lot No. 5679 Talisay-Minglanilla
Estate and will pay the corresponding portion to the
government after the subdivision of the same;
IN WITNESS WHEREOF, we have hereunto set our hands
this 5th day of January, 1988, at Talisay, Cebu."
Notwithstanding its purported nomenclature, this Agreement is
not one of partition, because there was no property to partition
and the parties were not co-owners. Rather, it is in the nature of a
trust agreement.
Trust is the right to the beneficial enjoyment of property, the legal
title to which is vested in another. It is a fiduciary relationship that
obliges the trustee to deal with the property for the benefit of the
beneficiary. Trust relations between parties may either be express
or implied. An express trust is created by the intention of the
trustor or of the parties. An implied trust comes into being by
operation of law.
The present Agreement of Partition involves an express trust.
Under Article 1444 of the Civil Code, "[n]o particular words are
required for the creation of an express trust, it being sufficient that
a trust is clearly intended." That Maxima Caballero bound herself
to give one third of Lot No. 5629 to Paciencia Sabellona upon the
approval of the former's application is clear from the terms of the
Agreement. Likewise, it is evident that Paciencia acquiesced to
the covenant and is thus bound to fulfill her obligation therein.
As a result of the Agreement, Maxima Caballero held the portion
specified therein as belonging to Paciencia Sabellona when the
application was eventually approved and a sale certificate was
issued in her name. Thus, she should have transferred the same to
the latter, but she never did so during her lifetime. Instead, her
heirs sold the entire Lot No. 5679 to Silvestre Aro in 1955.
From 1954 when the sale certificate was issued until 1985 when
petitioners filed their Complaint, Paciencia and her successors-in-
interest did not do anything to enforce their proprietary rights over
the disputed property or to consolidate their ownership over the
same. In fact, they did not even register the said Agreement with
the Registry of Property or pay the requisite land taxes. While
petitioners had been doing nothing, the disputed property, as
part of Lot No. 5679, had been the subject of several sales
transactions and covered by several transfer certificates of title.
The Repudiation of the Express Trust
While no time limit is imposed for the enforcement of rights under
express trusts, prescription may, however, bar a beneficiary's
action for recovery, if a repudiation of the trust is proven by clear
and convincing evidence and made known to the beneficiary.
There was a repudiation of the express trust when the heirs of
Maxima Caballero failed to deliver or transfer the property to
Paciencia Sabellona, and instead sold the same to a third person
not privy to the Agreement. In the memorandum of
encumbrances of TCT No. 3087 issued in the name of Maxima,
there was no notation of the Agreement between her and
Paciencia. Equally important, the Agreement was not registered;
thus, it could not bind third persons. Neither was there any
allegation that Silvestre Aro, who purchased the property from
Maxima's heirs, knew of it. Consequently, the subsequent sales
transactions involving the land in dispute and the titles covering it
must be upheld, in the absence of proof that the said
transactions were fraudulent and irregular.
ALEJANDRO B. TY vs SYLVIA S. TY
G.R. No. 165696
(Case Digest: Earvin Alparaque)
BACKGROUND OF THE CASE:
The present controversy involves an action for the settlement of
the estate of Alexander Ty. The case involves three real properties
to which Alejandro Ty claims absolute ownership. The latter
alleged that the properties were merely registered in trust for
Alexander’s siblings.
FACTS:
Alexander Ty, son of Alejandro Ty and husband of Sylvia Ty, dies of
cancer at the age of 34. Sylvia files petition for the settlement of
Alexander’s intestate estate. In line with this, she also asks the
court to sell or mortgage properties in order to pay the estate tax
amounting to P4,714,560.02 assessed by the BIR. The properties
which were subjected to sale were a parcel of land (1,728 sqm.)
in EDSA Greenhills, a residential land (1,584 sqm.) in Notre Dame,
Wack Wack, Mandaluyong and a Meridien condo unit (167.5
sqm.) in Annapolis, Greenhills.
Alejandro Ty opposed the move and filed for recovery of the
property with prayer for preliminary injunction and/or temporary
restraining order. Plaintiff Alejandro claims that he owns the lands
in EDSA, Wack Wack and the Meridien condo unit because he
paid for them. The property was supposedly registered in trust for
Alexander’s brothers and sisters in case plaintiff dies. Plaintiff also
claimed that Alex had no financial capacity to purchase the
disputed property, as the latter was only dependent on the
former.
Sylvia countered that Alexander had purchased the property with
his money. Alexander was financially capable of purchasing it
because he had been managing the family corporations since
he was 18 years old and was also engage in other profitable
businesses.
The RTC granted the application for preliminary injunction and
decides in favor of plaintiff regarding the recovery of the
property. CA reversed the RTC stating that the implication
created by law under Art. 1448 does not apply if the property was
in the name of the purchaser’s child. It was agreed that Alejandro
partly paid for the EDSA property. Plaintiff appealed.
Findings of the CA:
Going by the records, we hold that plaintiff-appellee in this case
was not able to show by clear preponderance of evidence that
his son and the defendant-appellant were not financially
capable of purchasing said property. Neither was plaintiff-
appellee able to prove by clear preponderance of evidence
that the money used to purchase the said properties really came
from him. And even if we assume that it came from him, it would
still not establish an implied trust, as it would again be considered
a donation, or a gift.
If anything, what is clear from the evidence at bench is that
Alexander and the defendant-appellant were not exactly bereft
of the means, the financial capability or resources, in their own
right, to purchase, or acquire, the Meridien Condominium and
the Wack-Wack property.
The evidence on record shows that Alexander Ty was 31 years old
when he purchased the Meridien Condominium and was 33 years
old when he purchased the Wack-Wack property. In short, when
he purchased these properties, he had already been working for
at least nine years. He had a car care business and a beer
garden business. He was actively engaged in the business
dealings of several family corporations, from which he received
emoluments and other benefits. As a matter of fact, Alexander
and plaintiff-appellee had common interest in various family
corporations of which they were stockholders, and officers and
directors.
Furthermore, at the time of his death, the son Alexander was
Vice-President of Union Ajinomoto Executive Vice-President of
Royal Porcelain Corporation; Treasurer of Polymart Paper
Industries; General Manager of Hornblower Sales Enterprises and
Intercontinental Paper Industries, Inc.; President of High
Professional Drilling and Manufacturing, Inc.; President of Crown
Consumer Products, Inc.; Executive Vice-President of MVR-TV
Picture Tube, Inc.; and Director of ABT Enterprise, Inc. He even
had a controlling interest in ABT Enterprises, which has a majority
interest in Union Ajinomoto, Inc.
What is more, the tax declaration receipts for the Wack-Wack
property covering the years 2000-2004, and the tax declaration
receipts for the Meridien Condominium covering the years 2000-
2001, showed that to his date it is still the estate of Alexander that
is paying for the real estate taxes thereon.
ISSUE:
Whether or not there was an implied trust under Art. 1448 of the
Civil Code - NONE
RULING:
The EDSA Property
Petitioner contends that the EDSA property, while registered in the
name of his son Alexander Ty, is covered by an implied trust in his
favor under Article 1448 of the Civil Code. This, petitioner argues,
is because he paid the price when the property was purchased
and did so for the purpose of having the beneficial interest of the
property.
Article 1448 of the Civil Code provides:
Art. 1448. There is an implied trust when property is sold, and the
legal estate is granted to one party but the price is paid by
another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the
beneficiary. However, if the person to whom the title is conveyed
is a child, legitimate or illegitimate, of one paying the price of the
sale, no trust is implied by law, it being disputably presumed that
there is a gift in favor of the child.
The CA conceded that at least part of the purchase price of the
EDSA property came from petitioner. However, it ruled out the
existence of an implied trust because of the last sentence of
Article 1448- However, if the person to whom the title is conveyed
is a child, legitimate or illegitimate, of the one paying the price of
the sale, no trust is implied by law, it being disputably presumed
that there is a gift in favor of the child.
Petitioner now claims that in so ruling, the CA departed from
jurisprudence in that such was not the theory of the parties.
Petitioner, however, forgets that it was he who invoked Article
1448 of the Civil Code to claim the existence of an implied trust.
But Article 1448 itself, in providing for the so-called purchase
money resulting trust, also provides the parameters of such trust
and adds, in the same breath, the proviso: "However, if the person
to whom the title is conveyed is a child, legitimate or illegitimate,
of the one paying the price of the sale, NO TRUST IS IMPLIED BY
LAW, it being disputably presumed that there is a gift in favor of
the child."
Stated otherwise, the outcome is the necessary consequence of
petitioner’s theory and argument and is inextricably linked to it by
the law itself.
The CA, therefore, did not err in simply applying the law. Article
1448 of the Civil Code is clear. If the person to whom the title is
conveyed is the child of the one paying the price of the sale, and
in this case this is undisputed, NO TRUST IS IMPLIED BY LAW. The
law, instead, disputably presumes a donation in favor of the child.
On the question of whether or not petitioner intended a donation,
the CA found that petitioner failed to prove the contrary. This is a
factual finding which this Court sees no reason the record to
reverse.
The net effect of all the foregoing is that respondent is obliged to
collate into the mass of the estate of petitioner, in the event of his
death, the EDSA property as an advance of Alexander’s share in
the estate of his father, to the extent that petitioner provided a
part of its purchase price.
The Meridien Condominium and the Wack-Wack property.
Petitioner would have this Court overturn the finding of the CA
that as regards the Meridien Condominium and the Wack-Wack
property, petitioner failed to show that the money used to
purchase the same came from him.
Again, this is clearly a factual finding and petitioner has
advanced no convincing argument for this Court to alter the
findings reached by the CA.
The appellate court reached its findings by a thorough and
painstaking review of the records and has supported its
conclusions point by point, providing citations from the records.
This Court is not inclined to reverse the same.
Among the facts cited by the CA are the sources of income of
Alexander Ty who had been working for nine years when he
purchased these two properties, who had a car care business,
and was actively engaged in the business dealings of several
family corporations, from which he received emoluments and
other benefits.
The CA, therefore, ruled that with respect to the Meridien
Condominium and the Wack-Wack property, no implied trust was
created because there was no showing that part of the purchase
price was paid by petitioner and, on the contrary, the evidence
showed that Alexander Ty had the means to pay for the same.
TIGNO vs CA
G.R. No. 110115
(Case Digest: Earvin Alparaque)
BACKGROUND OF THE CASE:
The present case stems from the right of ownership over three
parcels of land. Eduardo Tigno bought the said properties but his
brother Rodolfo was named vendee in the Deed of Sale in order
for the latter to develop said properties and derive income from
them. Eduardo is forced to file an action for reconveyance
because his brother sold a portion of the properties without his
consent.
FACTS:
Sometime in January, 1980, Bienvenido Sison, Remedios Sison and
the heirs of Isaac Sison, namely: Manuel Sison, Gerardo Sison and
Adelaida Sison appointed Dominador Cruz as agent to sell three
parcels of land (two parcels of fishpond with an area of 3006.67
sqm. and 3006.66 sqm. respectively and a parcel of unirrigated
riceland with an area of 3006.66 sqm.), adjoining each other
located at Padilla St., Lingayen, Pangasinan.
Sometime in April 1980, Rodolfo Tigno learned that the subject
properties were for sale. Accordingly, he approached Cruz and
told the latter to offer these parcels of land to his brother,
Eduardo Tigno who subsequently bought the properties.
Thereafter, a Deed of Sale was executed and Rodolfo was
named as vendee in order to enable him to mortgage these
properties at PNB for the funds needed for the development of
these parcels of land. On April 29, 1989, Rodolfo Tigno, without the
knowledge and consent of his brother, sold to Spouses Edualino
Casipit and Avelina Casipit, 508.56 square meters of the land
previously owned by Bienvenido Sison. At the time of sale, the
Casipits were aware that the portion of the land they bought was
owned by Eduardo. There being a violation of trust and
confidence by defendant Rodolfo, plaintiff demanded from said
defendants the reconveyance of said lands, the surrender of the
possession thereof to him and the cancellation of the Deed of
Sale of said portion of 508.56 square meters, but all the demands
were unjustifiably refused.
On May 24, 1989, the plaintiff filed a complaint for
Reconveyance, Annulment of Document, Recovery of Possession
and Damages against Rodolfo and defendant spouses. The
complaint alleged, among others, that plaintiff purchased the
three parcels of land in question so that his brother Rodolfo Tigno,
who was then jobless, could have a source of income as a
caretaker of the fishponds; that plaintiff and Rodolfo agreed that
the latter would secure a loan from the Philippine National Bank
at Lingayen using said lands as collateral; that considering the
busy schedule of plaintiff, then as executive vice-president of an
American firm based in Makati, Metro Manila, it was made to
appear in the deeds of sale that Rodolfo M. Tigno was the
vendee so that the latter could, as he actually did, secure a loan
from the PNB without need of plaintiff's signature and personal
presence, the loan proceeds to be used as seed capital for the
fishponds; that there being trust and confidence as brothers
between plaintiff and defendant, the former instructed the
Notary Public, who prepared the Deeds of Sale, to put in said
Deeds the name of Rodolfo as vendee.
Defendants denied the material allegations of the complaint and
alleged, by way of special and affirmative defense, that Rodolf
became the absolute and exclusive owner of the parcels of land
having purchased the same after complying with all legal
requirements for a valid transfer and that in selling a portion
thereof to his co-defendants, he was merely exercising his right to
dispose as owner; and that defendant spouses Casipit acquired
the portion of 508.56 square meters in good faith and for value,
relying upon the validity of the vendor's ownership.
ISSUE:
Whether or not there exists an implied trust between Rodolfo and
Eduardo- YES, Resulting trust
RULING:
Discussion about express and implied trusts
Implied trusts are those which are deducible by operation of law
from the nature of the transaction as matters of equity,
independently of the particular intention of the parties. An
implied trust arises where a person purchases land with his own
money and takes conveyance thereof in the name of another. In
such a case, the property is held on 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 a contract or an
agreement of the parties, but from the facts and circumstances;
that is to say, the trust results because of equity and it arises by
implication or operation of law. The species of implied trust raised
by private respondent was extensively discussed by the Court
in Morales, et al. vs. Court of Appeals, et al.:
A trust is the legal relationship between one person having an
equitable ownership in property and another person owning the
legal title to such property, the equitable ownership of the former
entitling him to the performance of certain duties and the
exercise of certain powers by the latter. The characteristics of a
trust are:
1. It is a relationship;
2. It is a relationship of fiduciary character;
3. It is a relationship with respect to property, not one involving
merely personal duties;
4. It involves the existence of equitable duties imposed upon the
holder of the title to the property to deal with it for the benefit of
another; and
5. It arises as a result of a manifestation of intention to create the
relationship.
Trusts are either express or implied. Express trusts are created by
the intention of the trustor or of the parties, while implied trusts
come into being by operation of law. In turn, implied trusts are
either resulting or constructive trusts. Resulting trusts are based on
the equitable doctrine that valuable consideration and not legal
title determines the equitable title or interest and are presumed
always to have been contemplated by the parties. They arise
from the nature 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. On the other hand, constructive trusts are
created by the construction of equity in order to satisfy the
demands of justice and prevent unjust enrichment. They arise
contrary to intention against one who, by fraud, duress or abuse
of confidence, obtains or holds the legal right to property which
he ought not, in equity and good conscience, to hold.
A resulting trust is exemplified by Article 1448 of the Civil Code,
which reads:
Art. 1448. There is an implied trust when property is sold, and the
legal estate is granted to one party but the price is paid by
another for the purpose of having the beneficial interest of the
property. The former is the trustee, while the latter is the
beneficiary. However, if the person to whom the title is conveyed
is a child, legitimate or illegitimate, of the one paying the price of
the sale, no trust is implied by law, it being disputably presumed
that there is a gift in favor of the child.
The trust created under the first sentence of Article 1448 is
sometimes referred to as a purchase money resulting trust. The
trust is created in order to effectuate what the law presumes to
have been the intention of the parties in the circumstances that
the person to whom the land was conveyed holds it as trustee for
the person who supplied the purchase money.
To give rise to a purchase money resulting trust, it is essential that
there be:
1. An actual payment of money, property or services, or an
equivalent, constituting valuable consideration;
2. The consideration must be furnished by the alleged beneficiary
of a resulting trust.
There are recognized exceptions to the establishment of an
implied resulting trust. The first is stated in the last part of Article
1448 itself. Thus, where A pays the purchase money and title is
conveyed by absolute deed to A's child or to a person to whom
A stands in loco parentis and who makes no express promise, a
trust does not result, the presumption being that a gift was
intended. Another exception is, of course, that in which an actual
contrary intention is proved. Also where the purchase is made in
violation of an existing statute and in evasion of its express
provision, no trust can result in favor of the party who is guilty of
the fraud.
As a rule, the burden of proving the existence of a trust is on the
party asserting its existence, and such proof must be clear and
satisfactorily show the existence of the trust and its
elements. While implied trusts may be proved by oral
evidence, the evidence must be trustworthy and received by the
courts with extreme caution, and should not be made to rest on
loose, equivocal or indefinite declarations. Trustworthy evidence is
required because oral evidence can easily be fabricated.
Ruling of the Court regarding the existence of an implied trust
Petitioners deny that an implied trust was constituted between
the brothers Rodolfo and Eduardo. They contend that, contrary to
the findings of Respondent Court, the documents showing the
receipt of the balance of the purchase price of the parcels of
land were fully authenticated by Dominador Cruz, an instrumental
witness. But these documents are proof merely of the receipt of
money by the seller; they do not show that Rodolfo paid the
balance of the purchase price. On the other hand, Dominador
Cruz was unshakable in testifying that Private Respondent
Eduardo, though not named in the receipts or in the deeds of sale,
was definitely the real buyer.
Aside from the "trust and confidence" reposed in him by his
brother, Petitioner Rodolfo was named as vendee in the deeds of
sale to facilitate the loan and mortgage the brothers were
applying for to rehabilitate the fishponds. Be it remembered that
private respondent was a Makati-based business executive who
had no time to follow up the loan application at the PNB branch
in Lingayen, Pangasinan and, at the same time, to tend the fish
farm on a daily basis. Atty. Modesto Manuel, who prepared and
notarized the deeds of sale, unhesitatingly affirmed the unwritten
agreement between the two brothers.
From the foregoing, it is clear that the name of Rodolfo Tigno
appeared in the deeds of sale not for the purpose of transferring
ownership to him but only to enable him to hold the property in
trust for his brother, herein private respondent.
The trial court's conclusion that defendant-appellee is the true
buyer and owner of the lands in question, mainly relying on the
Deeds of Sale where defendant Rodolfo's name appears as
vendee, and on the Tax Declarations and Tax payment receipts
in his name, must inevitably yield to the clear and positive
evidence of plaintiff. Firstly, as has thus been fully established, the
only reason why defendant Rodolfo was made to appear as the
buyer in the Deeds of Sale was to facilitate their mortgage with
the PNB Branch at Lingayen to generate seed capital for the
fishponds, out of which Rodolfo could derive income. With
Rodolfo's name as vendee, there would be no need anymore for
the personal presence of plaintiff-appellant who was very busy
with his work in Manila. Moreover, aside from the fact that plaintiff
was to travel abroad for thirty (30) days sometime in June, 1980,
he could not have executed a Special Power of Attorney in favor
of Rodolfo, as the Deeds of Sale were not yet prepared on May 2,
1980. Thus, to enable Rodolfo to mortgage the lands, his name
was put as vendee in view of the mutual trust and confidence
existing between said parties who are brothers. Secondly, it is
well-settled that the tax declarations or the payments of real
estate taxes on the land are not conclusive evidence of
ownership of the declarant or payor. Since defendant Rodolfo is
named as vendee in the Deeds of Sale, it is only natural that Tax
Declarations and the corresponding tax payment receipts be in
his name so as to effect payment thereof.
Petitioners contend that there was no fiduciary relationship
created between the brothers Tigno. Petitioners argue that
Rodolfo Tigno had exercised all the acts of dominion and
ownership over the fishponds in question, as nobody shared in the
produce of the fishponds for the past nine years. Therefore,
Rodolfo, being the real purchaser of the parcels of land, could
validly transfer the ownership of a portion to Spouses Casipit.
We firmly reject these contentions and need only to cite
Respondent Court's incisive findings:
After a careful examination of the evidence on record, we hold
that an implied trust was created in favor of Eduardo within the
meaning of Article 1448 of the Civil Code.
It is also the rule that 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 on 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.
On the other hand, the record is replete with clear and
convincing evidence to show that (1) plaintiff Eduardo Tigno is
the real buyer and true owner of the lands in question and (2)
defendant Rodolfo M. Tigno is merely a trustee constituted over
said lands on behalf of plaintiff.
It was established thru plaintiff's testimony that plaintiff paid
P5,000.00 each, as first installment, to the three vendors for a total
of P15,000.00 which was witnessed by Dominador Cruz and Atty.
Manuel. Later, he gave a check to Dominador Cruz, the agent, in
the amount of P26,000.00, representing the following:
a) P15,000.00 as the balance for the three (3) parcels of land;
b) P6,000.00 representing Cruz's commission as agent;
c) P5,000.00 for capital gains tax, registration and other incidental
expenses.
On the other hand, Petitioner Rodolfo, although in possession of
the deeds of sale in his name, failed to present a single witness to
corroborate his claim that he bought the property partly with his
own money and partly with the money he allegedly borrowed
from a certain Jose Manaoat.
From the foregoing, it is ineludible that Article 1448 of the Civil
Code finds application in this case. Although the deeds of sale
were in the name of Petitioner Rodolfo, the purchase price was
paid by private respondent who was the real owner of the
property. Petitioner Rodolfo is the trustee, and private respondent
is the beneficiary.
HUANG VS CA
G.R. No. 108525
(Case Digest: Eliza Devilleres)
FACTS:
 Dolores Sandoval bought two (2) lots in Dasmariñas Village,
Lot 20 and 21. Lot 21 was registered in her name; however,
Lot 20 was registered in her brother’s name, Petitioner
Ricardo Huang. This was because the spouses Milagros and
Ricardo Huang advised Dolores that the subdivision owner
forbade the acquisition of two (2) lots by a single individual.
 Dolores constructed a residential house in Lot 21 and Ricardo
asked Dolores’ permission to construct a small residential
house in Lot 20.
 She agreed and she also allowed Ricardo to mortgage Lot
20 to the Social Security System (SSS) to secure payment for
his loan for putting up the said house.
 Despite the loan, Dolores actually financed the construction
of the house, the swimming pool and the fence in Lot 20
knowing that the Huang Spouses merely holds title in trust for
her beneficial interest.
 Dolores requested the Huangs to execute a Deed of
Absolute Sale with Assumption of Mortgage of Lot 20 with all
its improvements in favor of her to protect her rights, and
they obliged.
 The Huangs then leased the house, years after the execution
of Deed of Sale, to Deltron-Sprague Electronics Corporation
without Dolores’ permission.
 She tolerated it but challenges to her ownership arise when
Deltron started prohibiting Dolores’ family from using the
swimming pool.
 HUANG’S CONTENTION: The implied trust among them was
not supported by evidence and that they were the rightful
owner of Lot 20 and all of its improvements.
ISSUE: W/N an implied trust existed between Dolores and the
Huangs, and was supported by any evidence.
HELD: YES.
TRUSTS; IMPLIED TRUST ESTABLISHED IN CASE AT BAR
The pertinent law is Art. 1448 of the New Civil Code which
provides that there is an implied trust when property is sold and
the legal estate is granted to one party but the price is paid by
another for the purpose of having the beneficial interest of the
property. A resulting trust arises because of the presumption that
he who pays for a thing intends a beneficial interest therein for
himself. In the present case, Dolores provided the money for the
purchase of Lot 20 but the corresponding deed of sale and
transfer certificate of title were placed in the
name ofRicardo Huang because she was advised that the
subdivision owner prohibited the acquisition of two (2) lots by a
single individual. Guided by the foregoing definitions, we are in
conformity with the common finding of the trial court and
respondent court that a resulting trust was created. Ricardo
became the trustee of Lot 20 and its improvements for the
benefit of Dolores as owner.
ACTION TO COMPEL TRUSTEE TO CONVEY PROPERTY TO THE CESTUI
QUE TRUST DOES NOT PRESCRIBE; EXCEPTION.
Petitioners raise the issue of prescription. But the action to compel
the trustee to convey the property registered in his name for the
benefit of the cestui que trust does not prescribe. If at all, it is only
when the trustee repudiates the trust that
period of prescription commences to run.
TEN (10) YEAR PRESCRIPTIVE PERIOD STARTS FROM
REPUDIATION OF THE TRUST
The prescriptive period is ten (10) years from the
repudiation of the trust. It is ten (10) years because just as a
resulting trust is an offspring of the law, so is the corresponding
obligation to convey the property and the title thereto to the true
owner. In this context, and vis-a-vis prescription, Art. 1144 of the
New Civil Code, which is the law applicable, provides: "The
following actions must be brought within ten years from the time
the right of action accrues: (a) Upon a written contract; (b) Upon
an obligation created by law; (c) Upon a judgment." Thus, the
reckoning point is repudiation of the trust by the trustee because
from that moment his possession becomes adverse, which in the
present case gave rise to a cause of action by Dolores against
the Huang spouses.
NECESSITY OF UNEQUIVOCAL ACTS OF OUSTER OF THE CESTUI QUE
TRUST
Before the periodof prescription may start, it must be shown that:
(a) the trustee has performed unequivocal acts of repudiation
amounting to an ouster of the cestui que trust; (b) such positive
acts of repudiation have been made known to the cestui que
trust; and, (c) the evidence thereon is clear and conclusive. In
Laguna v. Levantino and Valdez v. Olorga, we held that acts
which may be adverse to strangers may not be sufficiently
adverse to the cestui que trust. A mere silent possession of the
trustee unaccompanied by acts amounting to an
ouster of the cestui que trustcannot be construed as an adverse
possession. Mere perception of rents and profits by the trustee,
and erecting fences and buildings adapted for the
cultivation of the land held in trust, are not equivalent to
unequivocal acts of ouster of the cestui que trust.
IN THE CASE AT BAR
We agree with the trial court that the action filed by Dolores has
not prescribed. Firstly, Ricardo has not performed any
unequivocal act of repudiation amounting to an
ouster of Dolores. The only acts which may be considered as
indicative of his intention not to respect the trust anymore were
his leasing the house without the prior knowledge of Dolores; his
refusal to carry out the demand of Dolores that he must ask the
the
lessees to vacate the house; and, his refusal to give the necessary
papers to Dolores to enable her to get the title from the SSS.
Secondly, the foregoing acts are not positive acts of repudiation;
and, thirdly, the evidence on such acts is unclear and
inconclusive. But even if the foregoing acts were manifest
acts of repudiation made known to Dolores, the fact remains that
they were done at the earliest only on 15 March 1980 when
Ricardo leased Lot 20 and its improvements to Deltron. Dolores'
complaint before the trial court was filed on 19 February 1981, or
within the 10-year prescriptive period.
PRESCRIPTION; TEN (10) YEAR PRESCRIPTIVE PERIOD FROM
ISSUANCE OF TITLE NOT APPLICABLE TO CASE AT BAR
Petitioners are of the mistaken notion that the 10-year prescriptive
period is counted from the date of issuance of the Torrens
certificate of title. This rule applies only to the
remedy of reconveyance which has its basis on Sec. 53, par.
3, P.D. No. 1529, otherwise known as the Property Registration
Decree, and Art. 1456 of the Civil Code. Reconveyance is
available in caseof registration of property procured
by fraud thereby creating a constructive trust between the
parties, a situation which does not obtain in this case.
||| (Spouses Huang v. Court of Appeals, G.R. No. 108525,
[September 13, 1994])
RAMOS VS CA
G.R. No. 108121
(Case Digest: Eliza Devilleres)
FACTS:
 On or about November 26, 1974, Herminio, together with
Herminia, executed in Lydia's favor an irrevocable special
power of attorney, in sum empowering Lydia to sell,
mortgage, or lease the subject property and to dispose of
the proceeds thereof in any manner she wants. Said special
power of attorney was executed upon the advice of a realty
expert, one Isidro Gonzales, as a practical means of giving
assurance to Lydia that Herminio, together with his spouse
Herminia, was in good faith and recognized the existing
implied trust relationship between them over the subject
land, particularly in view of the restriction annotated on the
title certificate in sum to the effect that within one year from
said certificate's issuance no transfer or alienation of the
property shall be made without the PHHC's written consent.
 RTC issued an order cancelling and declaring null and void
"the owner's duplicate copy of Transfer Certificate of Title No.
204173 that was lost" and ordering the ROD to issue another
owner's duplicate copy. Said Order was issued upon
Herminia's petition, in sum claiming that the original owner's
duplicate copy was lost and missing.

 After learning of the order of the RTC, Lydia filed the herein
petition praying that the order of the RTC be declared null
and void and without legal effect and that the new owner's
duplicate copy issued and delivered to Herminia be
cancelled, on the ground that Herminia secured such new
owner's duplicate copy thru fraud and misrepresentation
because she well knew that the supposedly "lost" owner's
duplicate copy was in Lydia's possession and custody.
 Sometimes later, after having verified that Herminio had
passed away in the early part of 1985 and that Herminia and
his successors-in-interest were disputing the ownership of the
subject property and building thereon, Lydia together with
her spouse Hilario Celestino filed the complaint herein.
HERMINIA AND HERMINIO RAMOS’ CONTENTIONS: No trust was
established in this case because －
(1) there is a restriction expressly imposed by the PHHC in the sale
of the land to Herminio Ramos, to wit:
Within a period of one year from the issuance of TCT by virtue of
this deed no transfer or alienation whatsoever of the property
subject thereof whether in whole or in part shall be made or
registered w/out the written consent of the vendor and such
transfer or alienation may be made only in favor of person
qualified to acquire land under the laws of the Philippines. 20
and (2) even assuming arguendo that Herminio Ramos sold his
rights over the lot, the sale was null and void for being contrary to
the public policy of awarding PHHC lots to Central Bank
employees who are not residential landowners. Private
respondent Lydia Celestino, Herminio's vendee, was disqualified
to acquire any PHHC lot because she already owned a
residential lot in Quezon City.
ISSUE: W/N an implied trust exists in this case.
HELD: No.
TRUST; RULE IF PROVISIONS IN THE TERMS THEREOF BE AGAINST
PUBLIC POLICY
The inevitable conclusion then is that Lydia Celestino, knowing of
her disqualification to acquire a lot from the PHHC at the
subdivision reserved for qualified Central Bank employees, tried to
get one through the backdoor. Otherwise stated, she wanted to
get indirectly that which she could not do so directly. Having
acted with evident bad faith, she did not come to court with
clean hands when she asked for the reconveyance of the
property on the basis of a resulting trust under Article 1448 of the
Civil Code.
A resulting trust is an "intent-enforcing" trust, based on a finding by
the court that in view of the relationship of the parties their acts
express an intent to have a trust, even though they did not use
language to that effect. The trust is said to result in law from the
acts of the parties. However, if the purpose of the payor of the
consideration in having title placed in the name of another was
to evade some rule of the common or statute law, the courts will
not assist the payor in achieving his improper purpose by
enforcing a resulting trust for him in accordance with the "clean
hands" doctrine. The court generally refuses to give aid to claims
from rights arising out of an illegal transaction, such as where the
payor could not lawfully take title to land in his own name and he
used the grantee as a mere dummy to hold for him and enable
him to evade the land laws, 28 e.g., an alien who is ineligible to
hold title to land, who pays for it and has the title put in the name
of a citizen.
Otherwise stated, as an exception to the law on trusts, "[a] trust or
a provision in the terms of a trust is invalid if the enforcement of
the trust or provision would be against public policy, even though
its performance does not involve the commission of a criminal or
tortious act by the trustee." 29 The parties must necessarily be
subject to the same limitations on allowable stipulations in
ordinary contracts, i.e., their stipulations must not be contrary to
law, morals, good customs, public order, or public policy. 30 What
the parties then cannot expressly provide in their contracts for
being contrary to law and public policy, they cannot impliedly or
implicitly do so in the guise of a resulting trust.
(Ramos v. Court of Appeals, G.R. No. 108121, [May 10, 1994])
DE LOS SANTOS VS REYES
G.R. No 45027
(Case Digest: Eliza Devilleres)
FACTS:
 Delos Santos wants to dispute the finding of the CA in this
case which held:
There is no question of trust involved under the proven facts of the
case, as appellant raises in his third assignment of error. The
court a quo made no finding as to the existence or non-existence
of one. As cited by appellant himself, Article 1448, New Civil
Code, provides:
There is an implied trust when property is sold, and the legal
estate is granted to one party but the practice is paid by another
for the purpose of having the beneficial interest of the property.
The former is the trustee, while the latter is the beneficiary.
However, if the person to whom the title is conveyed is a child,
legitimate or illegitimate, of the one paying the price of the sale;
no trust is implied by law, it being disputably presumed that there
is a gift in favor of the child. (Emphasis supplied).
The disputable presumption of a gift as created in the
aforequoted provision has been amply overcome by the
evidence of appellee Reyes, as already demonstrated. If it was a
gift, the land should have been taken possession of by appellant
at least after he married his wife as the supposed beneficiary.
They then should have enjoyed also the fruits, and also paid for
the tax. No evidence, however, of such payment was presented.
To all appearances, appellant knew as a fact that his wife never
was the owner of the land, not even as a gift under the legal
provision he cited. Otherwise, it should not have taken him almost
seven long years to assert ownership with the filing of the present
action. That this action is a mere afterthought, stirred by a legal
mind with a gambling instinct is not just a mild surmise, considering
how long it took the appellant to file it in court and its contingent
nature. It may be well to remember, however, that lawsuits are
not won by chance, as by the turn of the dice, or how the cards
fall on the gambling table — not while the courts sit, anyway.
 CONTENTION OF DELOS SANTOS: An express trust over an
immovable was created when it was made to appear that
the land in question was sold to and registered in the name
of Faustino Reyes' daughter, Virginia — wife of petitioner —
 to conform with the limitation imposed by the vendor that no
vendee could purchase from the former more than two lots.
Consequently, pursuant to Article 1444 of the Civil Code,
such a trust cannot be proved by parol evidence.
ISSUE: W/N there was an express trust in this case.
HELD: NO.
IMPLIED TRUST DEFINITION; SCOPE
If his assumption is correct, Article 1444 is applicable and both the
trial court and the respondent Court then erred in admitting the
oral testimony of Faustino Reyes concerning the facts surrounding
the "sale" of the lot in favor of Virginia. Unfortunately, the
assumption is wrong. There is neither an express nor implied trust in
this case. The applicable provision of the Civil Code, as correctly
pointed out by respondent Court, is Article 1448 which provides as
follows:
There is an implied trust when property is sold, and the legal
estate is granted to one party but the price is paid by another for
the purpose of having the beneficial interest of the property. The
former is the trustee, while the latter is the beneficiary. However, if
the person to whom the title is conveyed is a child, legitimate or
illegitimate, of the one paying the price of the sale, no trust is
implied by law, it being disputably presumed that there is a gift in
favor of the child. (Emphasis supplied).
Accordingly, testimonial evidence, such as that offered by
Faustino Reyes, that the land was not given as a gift to Virginia,
was properly allowed to rebut the disputable presumption
established in the foregoing article.
NAZARENO VS CA
G.R. No. 138842
(Case Digest: Jennifer Lim)
FACTS:
Maximino Nazareno, Sr. and Aurea Poblete were husband and
wife. Aurea died on April 15, 1970, while Maximino, Sr. died on
December 18, 1980. They had five children, namely, Natividad,
Romeo, Jose, Pacifico, and Maximino, Jr. Natividad and
Maximino, Jr. are petitioners in this case, while the estate of
Maximino, Sr., Romeo, and his wife Eliza Nazareno are the
respondents.
After the death of Maximino, Sr., Romeo filed an intestate case
and was appointed administrator of his father's estate. In the
course of the intestate proceedings, Romeo discovered that his
parents had executed several deeds of sale conveying a number
of real properties in favor of his sister, Natividad.
One of the deeds involved six lots in Quezon City which were
allegedly sold by Maximino, Sr., with the consent of Aurea, to
Natividad on January 29, 1970. By virtue of these deeds, TCTs
were issued to Natividad for lots 3-B, 3, 10, 11, 13 & 14.
Unknown to Romeo, Natividad sold Lot 3-B, w/c had been
occupied by Romeo, his wife, & Maximino, Jr.,to Maximino, Jr.
Romeo filed the present case for annulment of salew/ damages
against Natividad & Maximino Jr. on the ground that both sales
were void for lack of consideration-Romeo presented the Deed of
Partition &Distribution executed by Maximino Sr. & Aurea in1962 &
duly signed by all of their children, except Jose, who was then
abroad. However, this deed was not carried out.
In 1969, their parents instead offered to sell to them the lots. He
testified that, although the deeds of sale executed by his parents
in their favor stated that the sale was for a consideration, they
never really paid any amount for the supposed sale. The transfer
was made in this manner in order to avoid the payment of
inheritance taxes. Allegedly, it was only Natividad who bought
the lot sin question because she was the only one financially able
to do so.
The trial court rendered a decision declaring the nullity of the
Deed of Sale dated January 29, 1970,except as to Lots 3, 3-B, 13
and 14 which had passed on to third persons. On appeal to the
Court of Appeals, the decision of the trial court was modified in
the sense that titles to Lot 3 (in the name of Romeo Nazareno)
and Lot 3-B(in the name of Maximino Nazareno, Jr.), as well as to
Lots 10 and 11 were cancelled and ordered restored to the
estate of Maximino Nazareno, Sr.
ISSUE: Whether or not it was the intention of Maximino Nazareno,
Sr. to give the subject lots to Natividad.
HELD:
Yes. It cannot be denied that Maximino, Sr. intended to give the
six Quezon City lots to Natividad. As Romeo testified, their parents
executed the Deed of Sale in favor of Natividad because the
latter was the only female and the only unmarried member of the
family. She was thus entrusted with the real properties in behalf of
her siblings. As she herself admitted, she intended to convey Lots
10 and 11 to Jose in the event the latter returned from
abroad. There was thus an implied trust constituted in her favor.
Art. 1449 of the Civil Code states:
There is also an implied trust when a donation is made to
a person but it appears that although the legal estate is
transmitted to the donee, he nevertheless is either to
have no beneficial interest or only a part thereof.
There being an implied trust, the lots in question are therefore
subject to collation in accordance with Art. 1061 which states:
Every compulsory heir, who succeeds with other
compulsory heirs, must bring into the mass of the estate
any property or right which he may have received from
the decedent, during the lifetime of the latter, by way of
donation, or any other gratuitous title, in order that it may
be computed in the determination of the legitime of
each heir, and in the account of the partition.
As held by the trial court, the sale of Lots 13 and 14 to Ros-Alva
Marketing, Corp. on April 20, 1979 will have to be upheld for Ros-
Alva Marketing is an innocent purchaser for value which relied on
the title of Natividad. The rule is settled that every person dealing
with registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige
him to go behind the certificate to determine the condition of the
property.
ADAZA VS CA
G.R. No. 47354
(Case Digest: Jennifer Lim)
FACTS:
In the lawful wedlock of Victor Adaza and Rosario Gonzales were
born six (6) children: petitioner Horacio, Homero, Demosthenes,
respondent Violeta, Teresita and Victor, Jr. The head of the
family,Victor Adaza, Sr., died in 1956, while the wife died in 1971.
During his lifetime, Victor Adaza, Sr.executed a Deed of Donation
dated 10 June 1953, covering the parcel of land subject matter of
this case located at Sinonok, Dapitan City, Zamboanga del Norte,
in favor of respondent Violeta, then still single. The donation was
accepted in the same instrument, which both donor and donee
acknowledged before Notary Public ex officio Milagros C.
Galeposo.
The land donated was then partof the public domain, being
disposable public land, and had been held and cultivated by
Victor Adaza, Sr. for many years. Violeta, with the aid of her
brother Horacio, filed a homestead application covering the land
involved. Four (4) years later, petitioner Horacio invited
respondent Violeta and theother brothers and sister for a family
gathering in his house. There, Horacio asked Violeta to sign a
Deed of Waiver which had been prepared in respect of the
property in Sinonok donated by theirfather Victor Adaza, Sr.
This Deed stated that the Sinonok property was owned in
common byVioleta and her brother Horacio G. Adaza, even
though the certificate of title had been issued in her name only.
The Deed also provided for the waiver, transfer and conveyance
by Violeta in favor of Horacio of one-half (1/2) of the Sinonok
property, together with all improvements existing in that one-half
(1/2) portion. Violeta signed this Deed of Waiver: the Deed was
also signed by petitioner Horacio and Homero Adaza as witnesses
ISSUE: Whether or not there was an implied trust in favor of
Horacio.
HELD:
Yes. Violeta had admitted in the Deed of Waiver, that is, that the
"property [here involved] is owned in common by [her] and [her]
brother, Horacio G. Adaza, although the certificate of title was
issued only in [her] name." SC believes and so hold that this
statement is an admission that she held half of the land in trust for
petitioner Horacio. The execution of the Deed of Donation of 10
June 1953 by respondent Violeta's father created an implied trust
in favor of Violeta's brother, petitioner Horacio Adaza, in respect
of half of the property donated. Article 1449 of the Civil Code is
directly in point:
Art. 1449. There is also an implied trust when a donation is
made to a person but it appears that although the legal
estate is transmitted to the donee, he nevertheless is
either to have no beneficial interest or only a part
thereof.
Respondent Violeta and her husband also contended that the
long delay and inaction on the part of Horacio in taking any steps
for reconveyance of the one-half (1/2) share claimed by him,
indicates lack of any color of right over the said one-half (1/2)
share. It was also argued by the two (2) that considering that
twelve (12) years had passed since OCT No. P-11111 was issued
and more than nineteen (19) years since the Deed of Donation
was executed, the counterclaim for partition and reconveyance
of Horacio's alleged one-half share was barred by laches, if not
by prescription.
In determining whether delay in seeking to enforce a right
constitutes laches, the existence of a confidential relationship
based upon, for instance, consanguinity, is an important
circumstance for consideration. Delay in a situation where such
circumstance exists, should not be as strictly construed as where
the parties are complete strangers vis-a-vis each other. The
doctrine of laches is not to be applied mechanically as between
near relatives; the fact that the parties in the instant case are
brother and sister tends to explain and excuse what would
otherwise appears as long delay.
Moreover, continued recognition of the existence of the trust
precludes the defense of laches. The two (2) letters noted above
sent by respondent Violeta to petitioner Horacio, one in 1969 and
the other in 1971, show that Violeta as late as 1971 had
recognized the trust imposed on her by law. Conversely, Horacio's
reliance upon his blood relationship with his sister and the trust
and confidence normally connoted in our culture by that
relationship, should not be taken against him. Petitioners' counter-
claim in the trial court for partition and reconveyance cannot be
regarded as barred whether by laches or by prescription.
NAKPIL VS IAC
G.R. No. 74449
(Case Digest: Jennifer Lim)
FACTS:
Carlos Valdes acquired title over a Baguio summer residence
named Pulong Maulap but this was actually in behalf of Jose
Nakpil who arranged that while he does not have the money to
pay Valdes the title remains under Valdes’ name, thereby
creating a trust.
The property cost P150k, P75k of which was paid by Valdes.
Valdes borrowed P75k from First United Bank to pay off the
remainder of the balance and another P65k for the residence’s
maintenance. After Nakpil died, Valdes denied the existence of a
trust relationship and he claims that the property is his. Imelda
Nakpil, widow of Jose, assailed this. Valdes however agreed that
Imelda and her co-heirs can stay in the property under a usufruct,
free from any encumbrance, for 5 years. And in a letter sent to
Imelda, should they fail to reimburse Valdes for his advances, the
property is considered sold to him.
Valdes denied that there is a pactum commissorium existing
because he said there is no creditor-debtor relationship between
him and Imelda; and that there is no trust relationship between
him and the deceased Nakpil.
ISSUE/S:
 Whether Art. 1450 of the Civil Code applies
 Whether petitioner can still compel reconveyance
of Pulong Maulap from respondent Valdes.
HELD:
 Yes. Implied trusts, which may either be resulting or
constructive, are those which, without being express, are
deducible from the nature of the transaction as matters
of intent, or which are super induced on the transaction
by operation of law as matter of equity, independently of
the particular intention of the parties. Article 1450, which
petitioner invokes in the case at bar, is an illustration of an
implied trust which is constructive.
Article 1450 presupposes a situation where a person, using his own
funds, purchases a certain piece of land in behalf of another
who, in the meantime, may not have sufficient funds to purchase
the land. The property is then transferred in the name of the
trustee, the person who paid for the land, until he is reimbursed by
the beneficiary, the person for whom the land is purchased. It is
only after the beneficiary reimburses the trustee of the purchase
price that the former can compel conveyance of the purchased
property from the latter.
From the evidence adduced, it may be concluded that
respondent Valdes, using his own funds, purchased Pulong
Maulap in behalf of the late Nakpil. This is based on the letters to
petitioner of Valdes where he categorically admitted that "[b]oth
of these loans, while in my (respondent Valdes) name, were
obtained by Pinggoy (the late Nakpil) for his person, and that the
"P75,000.00 initially advanced for the Moran property still remains
unpaid. 11
It is evident from these letters that while the balance of P75,000.00
on the mortgage of the vendors with PNB was liquidated from the
proceeds of a loan respondent obtained from FUB, such loan was
actually secured by the late Nakpil by merely using Valdes' name.
Such is also the case with respect to another FUB loan amounting
to P65,000.00, the proceeds of which were used to finance the
repair and renovation of Pulong Maulap. And, while the
downpayment of P50,000.00 and the partial payment of
P25,000.00 to PNB came from the personal funds of Valdes, he
considered them as advances to the late Nakpil. Otherwise,
Valdes would never have deemed the amount as "unpaid" in his
letter to petitioner of 17 September 1974.
The letter of Valdes to the City Treasurer of Baguio made while
remitting payment of real estate taxes is also enlightening. It
provided therein that the payment being tendered was "[o]n
behalf" of the Nakpil's, which is an express recognition of the
implied trust.
 However, petitioner cannot as yet redeem and compel
conveyance of the property. For, Valdes must still be
reimbursed for the advances he made on the disputed
property, such reimbursement being a conditio sine qua
non for compelling conveyance under Art. 1450.
The period within which to compel conveyance of Pulong
Maulap is not imprescriptible. The rule is well-settled that an action
for reconveyance based on an implied or constructive trust
prescribes in ten (10) years. But, in the case before the Court,
petitioner could still compel conveyance of the disputed property
from respondent provided the former reimburses the latter for all
his expenses.
After all, Valdes never repudiated the constructive trust during the
lifetime of the late Jose Nakpil. On the contrary, he expressly
recognized it. The prescriptive period therefore did not begin to
run until after he repudiated the trust. And such repudiation
came when Valdes excluded Pulong Maulap from the list of
properties of the late Jose Nakpil submitted to the intestate
court in 1973. Even then, the present action for conveyance was
filed in 1979 or well within the ten-year period.
ANCOG VS CA
G.R. No. 112260
(Case Digest: Lilybeth Petallo)
FACTS:
A parcel of land used to be the conjugal property of Gregorio
Yap and Rosario Diez. The former died leaving as heirs his wife
and children. Thereafter, Rosario (respondent) applied for a loan
to be secured by the subject land as mortgage. To facilitate the
loan, she executed an extrajudicial settlement of the property,
signed by the heirs except Gregorio Jr. (petitioner), then a minor.
The title was cancelled and a new one was issued in Rosario’s
name. Since then, Rosario exercised the rights of ownership over
the property. Later, she planned to sell the land.
In learning this, Jovita (her daughter) informed her younger
brother Gregorio Jr. of their mother’s plan to sell the land. So,
petitioner-siblings filed an action for partition against Rosario,
alleging that in signing the extrajudicial instrument, they did not
really intend to convey their interests in the property to their
mother, but only to enable her to obtain a loan on the security of
the land to cover expenses for their sister Caridad’s school fees
and for household repairs.
TC dismissed the case, and upheld the validity of the EJS. CA
affirmed. Both ruled that Gregorio Jr. was barred by laches.
Hence, the petition.
ISSUE: (R/T trust issue)
A. WON an implied trust was created in Gregorio Jr.’s favor
when the land was registered in the name of Rosario Diez.
(YES)
B. If so, WON Gregorio Jr. was barred by laches, considering
that he was still a minor at the time the EJS was executed.
(NO)
HELD: An implied trust was created. And Gregorio Jr. was not
barred by laches.
**EJS WAS UPHELD TO BE VALID. ONLY ERROR WAS ON THE ISSUE ON LACHES**
A. AN IMPLIED TRUST WAS CREATED.
At the time the extrajudicial settlement was executed, Gregorio
Jr., was a minor. For this reason, he was not included or informed
of the partition. As he did not take part in the partition, he is not
bound by the settlement. Instead, the registration of the land in
Rosario Diez’s name created an implied trust in his favor by
analogy to Art. 1451 of the Civil Code, which provides:
ART. 1451, NCC. When land passes by succession to any person and he causes the
legal title to be put in the name of another, a trust is established by implication of law
for the benefit of the true owner.
Art. 1451 was held as creating a resulting trust, which is founded
on the presumed intention of the parties, as determined from the facts and
circumstances existing at the time of the transaction out of which it is sought to be established.
In this case, the records disclose that the intention of the parties to
the extrajudicial settlement was to establish a trust in favor of
petitioner Yap, Jr. to the extent of his share. Rosario testified that
she did not claim the entire property, while Atty. de la Serna
added that the partition only involved the shares of the three
participants.
B. HE IS NOT BARRED BY LACHES.
A cestui que trust may make a claim under a resulting trust within
10 years from the time the trust is repudiated.
Although the registration of the land in private respondent Diez’s
name operated as a constructive notice of her claim of
ownership, it cannot be taken as an act of repudiation adverse to
petitioner Gregorio Yap, Jr.’s claim, whose share in the property
was precisely not included by the parties in the partition. Indeed, it has
not been shown whether he had been informed of her exclusive claim over the entire property
before 1985 when he was notified by petitioner Jovita Yap Ancog of their mother’s plan to sell the
property.
For prescription to run in favor of the trustee, the trust must be
repudiated by unequivocal acts made known to the cestui que
trust and proved by clear and conclusive evidence. Furthermore,
the rule that the prescriptive period should be counted from the
date of the issuance of the Torrens certificate of title applies only
to the remedy of reconveyance of property under the Property
Registration Decree. Since the action brought by petitioner Yap
to claim his share was brought shortly after he was informed by
Jovita Ancog of their mother’s effort to sell the property, Gregorio
Yap, Jr.’s claim cannot be considered barred either by
prescription or by laches.
BRITO VS DIANALA
G.R. 171717
(Case Digest: Lilybeth Petallo)
FACTS:
This involves a parcel of land originally owned by spouses Esteban
and Eufemia, who died leaving their children as heirs. The heirs
filed a Complaint for Recovery of said land against a certain
Golez, in which a compromise agreement was made. TCT No. T-
12561 was thereafter issued on September 28, 1990 in the name
of said heirs Margarita, Bienvenido, and Francisco. Margarita is
petitioner’s wife.
Meanwhile, respondents opposed, claiming better rights over the
property. On August 19, 1999, they filed a complaint for
reconveyance and damages against the heirs (petitioner,
included, as he was the husband of one of the heirs). They
claimed that said heirs acquired the subject property by means
of fraud.
PETITIONER’S CONTENTION:
Granting that fraudulent acquisition of property exists,
respondents are barred by prescription for having filed their
complaint for reconveyance only after more than 8 years from
the discovery of fraud allegedly committed by the heirs, arguing
that under the law, the action prescribes in 4years, reckoned
from the discovery of fraud.
ISSUE:
A. WON an implied trust was created. (YES)
B. If so, WON the action for reconveyance has prescribed.
(NOT PRESCRIBED)
HELD: An implied trust was created when a person acquires a
property through fraud. The law thereby creates the obligation of
the trustee to reconvey the property and title to the true owner.
As such, an action for reconveyance based on implied trust may
be filed within 10 years. Here, it was filed on time, and the action
has not prescribed.
A. IMPLIED TRUST WAS CREATED.
Respondents alleged in their complaint for reconveyance and
damages that petitioner and his co-heirs acquired the subject
property by means of fraud. Article 1456 of the Civil Code
provides that a person acquiring property through fraud
becomes, by operation of law, a trustee of an implied trust for the
benefit of the real owner of the property. Hence, an implied trust
was created. Consequently, the law thereby creates the
obligation of the trustee to reconvey the property and the title
thereto in favor of the true owner.
B. ACTION FOR RECONVEYANCE HAS NOT PRESCRIBED.
An action for reconveyance based on an implied trust prescribes
in ten years, the reckoning point of which is the date of
registration of the deed or the date of issuance of the certificate of
title over the property. (P/T ART. 1144 (2))
In the instant case, TCT No. T-12561 was obtained by petitioner
and his co-heirs on September 28, 1990, while respondents filed
their complaint for reconveyance on August 18, 1999. Hence, it is
clear that the ten-year prescriptive period has not yet expired.
Petitioner invokes laches and estoppel on the part of respondent.
The Court found this unmeritorious. As a rule:
a. The prescriptive period applies only if there is an actual need
to reconvey the property as when the plaintiff is not in
possession thereof.
b. Otherwise, if the plaintiff is in possession of the property,
prescription does not commence to run against him. Thus,
when an action for reconveyance is nonetheless filed, it
would be in the nature of a suit for quieting of title, an action
that is imprescriptible. The reason for this is that one who is in actual possession of
a piece of land claiming to be the owner thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right, the rationale for the rule being,
that his undisturbed possession provides him a continuing right to seek the aid of a court of
equity to ascertain and determine the nature of the adverse claim of a third party and its
effect on his own title, which right can be claimed only by the one who is in possession.
In the present case, respondents are in possession of the subject
property as evidenced by the fact that petitioner and his co-heirs
filed a separate action against respondents for recovery of
possession thereof. Thus, their complaint for reconveyance is, in
fact, imprescriptible. As such, respondents should not be held
guilty of laches as the said doctrine, which is one in equity,
cannot be set up to resist the enforcement of an imprescriptible
legal right.
WHEREFORE, the instant petition is DENIED.
RETERTA VS MORES
G.R. No. 159941
(Case Digest: Lilybeth Petallo)
FACTS:
This involves an action for quieting of title and reconveyance filed
by petitioners Reterta, alleging:
a. That they were the true and real owners of the subject parcel
of land, having inherited the land from their father, Teofilo
(who died on July 11, 1983), who had been the grantee of
the land by virtue of his occupation and cultivation;
b. That their late father and his predecessors in interest had
been in open, exclusive, notorious, and continuous possession
of the land for more than 30 years;
c. That they had discovered in 1999 an affidavit dated March 1,
1966 that their father had purportedly executed whereby he
had waived his rights, interests, and participation in the land,
that by virtue of the affidavit, Sales Certificate No. V-769 had
been issued in favor of respondent Lorenzo Mores; and that
TCT had later issued to the respondents.
PETITIONERS’ CONTENTION: That there had been no valid transfer
or assignment from the petitioners' predecessor-in-interest to the
respondents of the rights or interests in the land, since the affidavit
assigning such rights and interests was a forgery and was
procured by fraud.
RESPONDENTS’ CONTENTION: They moved to dismiss the case,
insisting that the RTC had no jurisdiction due to the land being a
friar land.
ISSUE: WON an action for reconveyance is proper to demand
recovery of a property fraudulently/mistakenly registered in
another’s name (respondents). (YES)
HELD: An action for reconveyance is proper to recover the
property fraudulently/mistakenly registered in respondent’s name.
Thus, in this case, the Court directed the RTC to resume the proceedings in order to determine
whether the allegations, if duly established, would warrant the reconveyance of the land from the
respondents to the petitioners.
In this case, petitioners alleged in their complaint for quieting of
title and reconveyance that the transfer of property made in
favor of respondents was procured through fraud.
Truly, petitioner’s predecessor, Teofilo, as grantee had no
perfected title over the said friar land yet. Nevertheless, The
purchaser in the sale of friar lands under Act No. 1120 is already
treated by law as the actual owner of the lot purchased even
before the payment of the full payment price and before the
execution of the final deed of conveyance, subject to the
obligation to pay in full the purchase price, the role or position of
the Government becoming that of a mere lien holder or
mortgagee. In this case, petitioner’s claim alleged that they were
in possession of the land, and that Teofilo had partially paid the
price of the land.
Moreover, Act No. 1120 provided for certain requirements in order
for a grantee to effectively transfer his rights thereon, i.e. a formal
certificate of transfer be drawn up and submitted to the Chief of
the Bureau of Public Lands for his approval and registration. The
law authorizes no other way of transferring the rights of a holder of
a certificate of sale of friar lands. In other words, where a person
considered as a grantee of a piece of friar land transfers his rights
thereon, such transfer must conform to certain requirements of
the law. Hence, the sale in favor of respondents should have
complied with these requirements. Granting they failed, then sale
is considered invalid and, consequently, the interests of Teofilo
should descend to the petitioners (as his heirs) and the deed
should issue in their favor.
Given the foregoing, the petitioners' complaint made out a good
case for reconveyance or reversion, and its allegations, if duly
established, might warrant the reconveyance of the land from
the respondents to the petitioners. It did not matter that the
respondents already held a certificate of title in their names.
In essence, an action for reconveyance respects the
incontrovertibility of the decree of registration but seeks the
transfer of the property to its rightful and legal owner on the
ground of its having been fraudulently or mistakenly registered in
another person's name.
WHEREFORE, the Court grants the petition for certiorari; sets aside the decision the Court of Appeals
promulgated on April 25, 2003; and directs Branch 23 of the Regional Trial Court in Trece Martires
City to resume the proceedings in Civil Case No. TM-983 with dispatch.
Heirs of Valientes vs. Hon. Ramas
G.R. No. 157852: December 15, 2010
FACTS:
Petitioners claim that they are the heirs of Valientes who,
before his death, was the owner of a parcel of land in
Zamboanga del Sur. In 1939, Valientes mortgaged the
subject property to secure his loan to the spouses Belen. In
the 1950s, the Valientes family purportedly attempted, but
failed, to retrieve the subject property from the spouses
Belen. Through an allegedly forged document captioned
VENTA DEFINITIVA purporting to be a deed of sale of the
subject property between Valientes and the spouses Belen,
the latter obtained title over the land. On February 28,
1970, the legitimate children of the late Valientes, had their
Affidavit of Adverse Claim. Upon the death of the spouses
Belen, their surviving heirs executed an extra-judicial
settlement with partition and sale in favor of private
respondent Minor, the present possessor of the subject
property.
On June 20, 1979, Minor filed with the then CFI a "PETITION
FOR CANCELLATION OF MEMORANDUM OF
ENCUMBRANCE APPEARING IN THE TITLE IN HER
POSSESSION" which the RTC granted. On the other hand,
petitioners filed a complaint for the cancellation of the title
in Minors possession and its reconveyance to them. On this
complaint, Minor filed an Omnibus Motion to Dismiss on the
ground of forum shopping and litis pendentia, which the
RTC dismissed. Undeterred, Minor filed a Motion for
Reconsideration which was granted. Petitioners filed a
Motion for Reconsideration based on this decision which
was denied. They appealed it to the CA, which although
found that there was no forum shopping nor litis pendentia,
dismissed the case on the ground of prescription and
laches.
The heirs claim that the complaint is really one of quieting
of title which does not prescribe citing the case of Heirs of
Jose Olviga v. Court of Appeals wherein the court held that
with regard to the issue of prescription, this Court has ruled
a number of times before that an action for reconveyance
of a parcel of land based on implied or constructive trust
prescribes in ten years, the point of reference being the
date of registration of the deed or the date of the issuance
of the certificate of title over the property (Vda. de
Portugal vs. IAC, 159 SCRA 178). But this rule applies only
when the plaintiff is not in possession of the property, since
if a person claiming to be the owner thereof is in actual
possession of the property, the right to seek reconveyance,
which in effect seeks to quiet title to the property, does not
prescribe.
ISSUE:
Whether or not prescription or laches has already set in to
bar the filing of the case at hand.
HELD: The action already prescribed
When the plaintiff is in possession of the subject property,
the action, being in effect that of quieting of title to the
property, does not prescribe. In the case at bar, petitioners
are not in possession of the subject property. In this case, if
it were to be considered as that of enforcing an implied
trust, should have therefore been filed within ten years from
the issuance of TCT to spouses Belen. But, the case was
instituted beyond the prescriptive period.
As to the alternative defense of petitioners, applying Arts.
1141, 1134 and 1137 of the Civil Code, thus entitling them
to a 30 year period to assail the title, the Court ruled that
the applicable law in this instant case is Presidential Decree
No. 1529, otherwise known as the Property Registration
Decree (since it is more specific that the general rules of
the above mentioned articles of the Civil Code). Under the
Torrens System as enshrined in P.D. No. 1529, the decree of
registration and the certificate of title issued become
incontrovertible upon the expiration of one year from the
date of entry of the decree of registration, without
prejudice to an action for damages against the applicant
or any person responsible for the fraud.
It took petitioners 28 before filing this case. This period is
unreasonably long for a party seeking to enforce its right to
file the appropriate case. Thus, petitioners claim that they
had not slept on their rights is patently unconvincing.
The Decision of the CA and the Resolution are AFFIRMED.
LOPEZ v. CA
G.R. No. 157784 December 16, 2008
FACTS:
On 23 March 1968, Juliana executed a notarial will,
whereby she expressed that she wished to constitute a trust
fund for her paraphernal properties, denominated as
Fideicomiso de Juliana Lopez Manzano (Fideicomiso), to
be administered by her husband. If her husband were to
die or renounce the obligation, her nephew, Enrique
Lopez, was to become administrator and executor of the
Fideicomiso. Two-thirds (2/3) of the income from rentals
over these properties were to answer for the education of
deserving but needy honor students, while one-third 1/3
was to shoulder the expenses and fees of the administrator.
As to her conjugal properties, Juliana bequeathed the
portion that she could legally dispose to her husband, and
after his death, said properties were to pass to her biznietos
or great grandchildren. Juliana initiated the probate of her
will five (5) days after its execution, but she died on 12
August 1968, before the petition for probate could be
heard. The petition was pursued instead in Special
Proceedings (S.P.) No. 706 by her husband, Jose, who was
the designated executor in the will. On 7 October 1968, the
Court of First Instance, Branch 3, Balayan,Batangas, acting
as probate court, admitted the will to probate and issued
the letters testamentary to Jose. Jose then submitted an
inventory of Juliana’s real and personal properties with their
appraised values, which was approved by the probate
court.
Thereafter, Jose filed a Report dated 16 August 1969, which
included a proposed project of partition. Jose proceeded
to offer a project of partition. Then, Jose listed those
properties which he alleged were registered in both his and
Juliana’s names, totaling 13 parcels in all. The disputed
properties consisting of six (6) parcels, all located in
Balayan, Batangas, were included in said list. On 25 August
1969, the probate court issued an order approving the
project of partition.
As to the properties to be constituted into the Fideicomiso,
the probate court ordered that the certificates of title
thereto be cancelled, and, in lieu thereof, new certificates
be issued in favor of Jose as trustee of the Fideicomiso
covering one-half (1/2) of the properties listed under
paragraph 14 of the project of partition; and regarding the
other half, to be registered in the name of Jose as heir of
Juliana. The properties which Jose had alleged as
registered in his and Juliana’s names, including the
disputed lots, were adjudicated to Jose as heir, subject to
the condition that Jose would settle the obligations
charged on these properties.
The probate court, thus, directed that new certificates of
title be issued in favor of Jose as the registered owner
thereof in its Order dated 15 September 1969. On even
date, the certificates of title of the disputed properties
were issued in the name of Jose. The Fideicomiso was
constituted in S.P No. 706 encompassing one-half (1/2) of
the Abra de Ilog lot on Mindoro, the 1/6 portion of the lot in
Antorcha St. in Balayan, Batangas and all other properties
inherited ab intestato by Juliana from her sister, Clemencia,
in accordance with the order of the probate court in S.P.
No. 706. The disputed lands were excluded from the trust.
Jose died on 22 July 1980, leaving a holographic will
disposing of the disputed properties to respondents. The will
was allowed probate on 20 December 1983 in S.P. No. 2675
before the RTC of Pasay City.
Pursuant to Jose’s will, the RTC ordered on 20 December
1983 the transfer of the disputed properties to the
respondents as the heirs of Jose. Consequently, the
certificates of title of the disputed properties were
cancelled and new ones issued in the names of
respondents. Petitioner’s father, Enrique Lopez, also
assumed the trusteeship of Juliana’s estate. On 30 August
1984, the RTC of Batangas, Branch 9 appointed petitioner
as trustee of Juliana’s estate in S.P. No. 706. On 11
December 1984, petitioner instituted an action for
reconveyance of parcels of land with sum of money
before the RTC of Balayan, Batangas against respondents.
The complaint essentially alleged that Jose was able to
register in his name the disputed properties, which were the
paraphernal properties of Juliana, either during their
conjugal union or in the course of the performance of his
duties as executor of the testate estate of Juliana and that
upon the death of Jose, the disputed properties were
included in the inventory as if they formed part of Jose’s
estate when in fact Jose was holding them only in trust for
the trust estate of Juliana. The RCT dismissed the petition on
the ground of prescription. The CA denied the appeals
filed by both parties.
Hence, this petition.
ISSUE:
Whether an implied trust was constituted over the disputed
properties when Jose, the trustee, registered them in his
name. YES;
Whether prescription for the recovery of the properties
supervene; NO.
HELD:
The disputed properties were excluded from the
Fideicomiso at the outset. Jose registered the disputed
properties in his name partly as his conjugal share and
partly as his inheritance from his wife Juliana, which is the
complete reverse of the claim of the petitioner, as the new
trustee, that the properties are intended for the
beneficiaries of the Fideicomiso. Furthermore, the exclusion
of the disputed properties from the Fideicomiso was
approved by the probate court and, subsequently, by the
trial court having jurisdiction over the Fideicomiso. The
registration of the disputed properties in the name of Jose
was actually pursuant to a court order. The apparent
mistake in the adjudication of the disputed properties to
Jose created a mere implied trust of the constructive
variety in favor of the beneficiaries of the Fideicomiso.
The right to seek reconveyance based on an implied or
constructive trust is not absolute. It is subject to extinctive
prescription. An action for reconveyance based on implied
or constructive trust prescribes in 10 years. This period is
reckoned from the date of the issuance of the original
certificate of title or transfer certificate of title. Since such
issuance operates as a constructive notice to the whole
world, the discovery of the fraud is deemed to have taken
place at that time.
In the instant case, the ten-year prescriptive period to
recover the disputed property must be counted from its
registration in the name of Jose on 15 September 1969,
when petitioner was charged with constructive notice that
Jose adjudicated the disputed properties to himself as the
sole heir of Juana and not as trustee of the Fideicomiso.
It should be pointed out also that Jose had already
indicated at the outset that the disputed properties did not
form part of the Fideicomiso contrary to petitioners claim
that no overt acts of repudiation may be attributed to
Jose. It may not be amiss to state that in the project of
partition submitted to the probate court, Jose had
indicated that the disputed properties were conjugal in
nature and, thus, excluded from Julianas Fideicomiso. This
act is clearly tantamount to repudiating the trust, at which
point the period for prescription is reckoned.
In any case, the rule that a trustee cannot acquire by
prescription ownership over property entrusted to him until
and unless he repudiates the trust applies only to express
trusts and resulting implied trusts. However, in constructive
implied trusts, prescription may supervene even if the
trustee does not repudiate the relationship. Necessarily,
repudiation of said trust is not a condition precedent to the
running of the prescriptive period. Thus, for the purpose of
counting the ten-year prescriptive period for the action to
enforce the constructive trust, the reckoning point is
deemed to be on 15 September 1969 when Jose registered
the disputed properties in his name.
HEIRS OF POMPOSA SALUDARES VS. COURT OF APPEALS
G.R. No. 128254. January 16, 2004
FACTS:
The heirs and their father, Juan Dator executed a Deed of
Extrajudicial Partition of the share of Pomposa in the Tanza
estate with the eastern portion thereof going to Juan and
the western half to the children. Juan remained in
possession of his share until his death. Isabel Dator applied
for a free patent over the entire Tanza estate in behalf of
the heirs thus it was awarded. Private respondents filed an
action for reconveyance against petitioner heirs. They
alleged that they were the owners in fee simple and they
were in possession of the land, and Isabel Dator obtained
free patent in favor of the heirs by means of fraud and
misrepresentation. Petitioners alleged that they and their
predecessors in interest had been in actual, continuous,
adverse and public possession of the land in the concept
of owners since time immemorial, and the title to the lot
was issued to them after faithful compliance with the
requirements for the issuance of a free patent.
Issues: Whether or not the reconveyance is still available;
NO.
HELD:
They slept on their right to secure title thereto. Their
unexplained inaction for more than 11 years rendered their
demand for reconveyance stale.
The right to seek reconveyance of registered property is
not absolute because it is subject to extinctive prescription.
In Caro vs. Court of Appeals, the prescriptive period of an
action for reconveyance was explained:
Under the present Civil Code, we find that just as an
implied or constructive trust is an offspring of the law (Art.
1456, Civil Code), so is the corresponding obligation to
reconvey the property and the title thereto in favor of the
true owner. In this context, and vis--vis prescription, Article
1144 of the Civil Code is applicable.
Article 1144. The following actions must be brought within
ten years from the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
xxx xxx xxx
An action for reconveyance has its basis in Section 53,
paragraph 3 of Presidential Decree No. 1529, which
provides:
In all cases of registration procured by fraud, the owner
may pursue all his legal and equitable remedies against
the parties to such fraud without prejudice, however, to the
rights of any innocent holder of the decree of registration
on the original petition or application, x x x.
This provision should be read in conjunction with Article
1456 of the Civil Code, which provides:
Article 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.
The law thereby creates the obligation of the trustee to
reconvey the property and the title thereto in favor of the
true owner. Correlating Section 53, paragraph 3 of
Presidential Decree No. 1529 and Article 1456 of the Civil
Code with Article 1144(2) of the Civil Code, supra, the
prescriptive period for the reconveyance of fraudulently
registered real property is ten (10) years reckoned from the
date of the issuance of the certificate of title.
SPOUSES ALFREDO VERSUS SPOUSES BORRAS
G.R. No. 144225
(Case Digest: Weng Resurreccion)
FACTS:
The registered owners of a parcel of land measuring 81,524
square meters (Subject Land) in Barrio Culis, Mabiga, Hermosa,
Bataan were petitioner spouses, Godofredo Alfredo (Godofredo)
and Carmen Limon Alfredo (Carmen). The Subject Land is
covered by Original Certificate of Title No. 284 (OCT No. 284)
issued to Godofredo and Carmen under Homestead Patent No.
V-69196.
On 7 March 1994, the private respondents, spouses
Armando Borras (Armando) and Adelia Lobaton Borras (Adelia),
filed a complaint for specific performance against Godofredo
and Carmen alleging that Spouses Borras mortgaged the
Subject Land for P7,000.00 with the Development Bank of the
Philippines (DBP). To pay the debt, Spouses Borras sold the
Subject Land to Spouses Alfredo for P15,000.00, the buyers to pay
the DBP loan and its accumulated interest, and the balance to
be paid in cash to the sellers.
Spouses Borras gave Spouses Alfredo the money to pay the
loan to DBP which signed the release of mortgage and returned
the owners duplicate copy of OCT No. 284 to Godofredo and
Carmen. Armando and Adelia subsequently paid the balance of
the purchase price of the Subject Land for which Carmen issued
a receipt dated 11 March 1970. Godofredo and Carmen then
delivered to Adelia the owners duplicate copy of OCT No. 284,
with the document of cancellation of mortgage, official receipts
of realty tax payments, and tax declaration in the name of
Godofredo. Godofredo and Carmen introduced Armando and
Adelia, as the new owners of the Subject Land, to the
Natanawans, the old tenants of the Subject Land. Armando and
Adelia then took possession of the Subject Land.
However, on January 1994, Spouses Borras learned that
hired persons had entered the Subject Land and were cutting
trees under instructions of allegedly new owners of the Subject
Land. They later on discovered that the Spouses Alfredo has
resold the property. On 8 February 1994, Armando and Adelia
filed an adverse claim with the Register of Deeds of
Bataan. Armando and Adelia discovered that Godofredo and
Carmen had secured an owners duplicate copy of OCT No. 284
after filing a petition in court for the issuance of a new
copy. Godofredo and Carmen claimed in their petition that they
lost their owners duplicate copy. Hence, the filing of this case.
ISSUE/S: WON the action has already prescribed
HELD: NO.
The petitioners insist that prescription has already set in.
In reality, the ultimate relief sought by Armando and Adelia is
the reconveyance to them of the Subject Land. An action for
reconveyance is one that seeks to transfer property, wrongfully
registered by another, to its rightful and legal owner. The body of
the pleading or complaint determines the nature of an action,
not its title or heading. Thus, the present action should be treated
as one for reconveyance.
Article 1456 of the Civil Code provides that a person
acquiring property through fraud becomes by operation of law
a trustee of an implied trust for the benefit of the real owner of
the property. The presence of fraud in this case created an
implied trust in favor of Armando and Adelia. This gives Armando
and Adelia the right to seek reconveyance of the property from
the Subsequent Buyers.
To determine when the prescriptive period commenced in
an action for reconveyance, plaintiffs possession of the disputed
property is material. An action for reconveyance based on an
implied trust prescribes in ten years. The ten-year prescriptive
period applies only if there is an actual need to reconvey the
property as when the plaintiff is not in possession of the property.
However, if the plaintiff, as the real owner of the property also
remains in possession of the property, the prescriptive period to
recover title and possession of the property does not run against
him. In such a case, an action for reconveyance, if nonetheless
filed, would be in the nature of a suit for quieting of title, an action
that is imprescriptible.
Undoubtedly, it is now well-settled that an action for
reconveyance based on an implied or constructive trust
prescribes in ten years from the issuance of the Torrens title over
the property.
An action for reconveyance has its basis in Section 53,
paragraph 3 of Presidential Decree No. 1529, which provides:
In all cases of registration procured by fraud, the owner may
pursue all his legal and equitable remedies against the parties to
such fraud without prejudice, however, to the rights of any
innocent holder of the decree of registration on the original
petition or application, xxx
This provision should be read in conjunction with Article 1456 of
the Civil Code, which provides:
Article 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.
The law thereby creates the obligation of the trustee to
reconvey the property and the title thereto in favor of the true
owner. Correlating Section 53, paragraph 3 of Presidential Decree
No. 1529 and Article 1456 of the Civil Code with Article 1144(2) of
the Civil Code, supra, the prescriptive period for the
reconveyance of fraudulently registered real property is ten (10)
years reckoned from the date of the issuance of the certificate of
title.
Had Armando and Adelia remained in possession of the
Subject Land, their action for reconveyance, in effect an action
to quiet title to property, would not be subject to prescription.
Prescription does not run against the plaintiff in actual possession
of the disputed land because such plaintiff has a right to wait
until his possession is disturbed or his title is questioned before
initiating an action to vindicate his right. His undisturbed
possession gives him the continuing right to seek the aid of a
court of equity to determine the nature of the adverse claim of a
third party and its effect on his title.
Armando and Adelia lost possession of the Subject Land
when the Subsequent Buyers forcibly drove away from the
Subject Land the Natanawans, the tenants of Armando and
Adelia. This created an actual need for Armando and Adelia to
seek reconveyance of the Subject Land. The statute of limitation
becomes relevant in this case. The ten-year prescriptive period
started to run from the date the Subsequent Buyers registered
their deeds of sale with the Register of Deeds.
The Subsequent Buyers bought the subdivided portions of
the Subject Land on 22 February 1994, the date of execution of
their deeds of sale. The Register of Deeds issued the transfer
certificates of title to the Subsequent Buyers on 24 February
1994. Armando and Adelia filed the Complaint on 7 March
1994. Clearly, prescription could not have set in since the case
was filed at the early stage of the ten-year prescriptive period.
SAMONTE VERSUS CA
G.R. No. 104223
(Case Digest: Weng Resurreccion)
FACTS: The parcel of land (Lot No.216) subject of this dispute is
situated in Nasipit, Agusan del Norte, and originally covered by
Original Certificate of Title No. RO-238(555) issue in the names
Apolonia Abao and her daughter Irenea Tolero, pro indiviso. It
contained an area of 12,753 square meters.
Two cases quieting of title and recovery of possession of a parcel
of land were separately filed in the Regional Trial Court, Branch II
of Nasipit, Agusan del Norte involving the entire lot.
Based on the record of the case, it is shown that that Lot 216 of
the Cadastral survey of Nasipit, containing an area of 12,753
square meters, more or less, situated at Anislagan, Nasipit,
Agusan (now del Norte) is covered by Original Certificate of Title
(OCT) No. R0-238 issue in 1927 in the name of Apolonia Abao and
Irenea Tolero in equal undivided shares (Exhibit E); that OCT No.
RO-238 was administratively reconstituted on August 8, 1957 and
the assigned number of the reconstituted title is OCT No. RO-238
(555) (Exhibit D identical to Exhibit-Samonte); that on August 8,
1957, based on an affidavit of Extra-judicial Settlement and
Confirmation of Sale (Exhibit D-1), OCT No. RO-238 (555) was
cancelled and lieu thereof Transfer Certificate of Title (TCT) No.
RT-476 was issued in the name of Irenea Tolero, 1/2 share and
Nicolas Jadol, 1/2 share (Exhibit C identical to Exhibit 3-Samonte);
that on February 13, 1959, based on subdivision plan, subdividing
Lot 216 into Lot 216-A and Lot 216-B, the Register of Deeds of
Agusan (now del Norte) cancelled TCT No. RT-476 and issued in
its place TCT No. RT-553 in the name of Tiburcio Samonte for Lot
216-A (Exhibit 2-Samonte) and TCT No. RT-554, Irenea Tolero and
Nicolas Jadol for Lot 216-B (Exhibit B); that on February 13, 1959
based on a subdivision plan subdividing Lot 216-B to 216-B-1 and
216-B-2, TCT No. RT-554 was cancelled and in its place TCT No.
RT-555 was issued in the name of Jacob B. Tagorda for Lot 216-B-
1 and TCT No. 556 in the name of Irenea Tolero and Nicolas
Jadol for Lot 216- B-2.
Plaintiffs questioned the series of cancellation of the certificate
of title starting from OCT No. RO-238 (555) and the Deed of
Extrajudicial Settlement and Confirmation of Sale executed by
Ignacio Atupan on August 7, 1957 (Exhibit D-1) adjudicating one-
half(1/2) of the area of Lot 216. Plaintiffs maintain that Ignacio
Atupan is not a son of Apolonia Abao but he only grew up while
living with Apolonia Abao.
Defendant Samonte in his evidence claim that he bought
portions of the Lot 216 in good faith while arguing that the action
has already prescribed.
The two cases are later on consolidated.
ISSUE: WON the action has already prescribe
HELD: NO.
Generally, an action for reconveyance of real property based
on the fraud may be barred by the statute of limitations which
require that the action must be commenced within four (4) years
from the discovery of fraud, and in case of registered land, such
discovery is deemed to have taken place from the date of the
registration of title.
Article 1456 of the Civil Code, however, provides:
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.
As it had been indubitably established that fraud attended the
registration of a portion of the subject property, it can be said
that the Jadol spouses were trustees thereof on behalf of the
surviving heirs of Abao. An action based on implied or
constructive trust prescribes in ten (10) years from the time of its
creation or upon the alleged fraudulent registration of the
property.
Petitioner, as successor-in-interest of the Jadol Spouses, now
argues that the respondents' action for reconveyance, filed only
in 1975, had long prescribed considering that the Jadol spouses
caused the registration of a portion of the subject lot in their
names way back in August 8, 1957. It is petitioner's contention
that since eighteen years had already lapsed from the issuance
of TCT No. RT-476 until the time when respondents filed the action
in the court a quo in 1975, the same was time-barred.
Petitioner's defense of prescription is untenable. The general rule
that the discovery of fraud is deemed to have taken place upon
the registration of real property because it is considered a
constructive notice to all persons" does not apply in this case.
Instead, the CA correctly applied the ruling in Adille vs. Court of
Appeals11 which is substantially on all fours with the present case
where the court held that “It is true that registration under the
Torrens system is constructive notice of title, but it has likewise
been our holding that the Torrens title does not furnish a shield for
fraud. It is therefore no argument to say that the act of
registration is equivalent to notice of repudiation, assuming there
was one, notwithstanding the long-standing rule that registration
operates as a universal notice of title.x x x While actions to
enforce a constructive trust prescribes in ten years, reckoned
from the date of the registration of the property, we, as we said,
are not prepared to count the period from such a date in this
case. We note the petitioner's sub rosa efforts to get hold of the
property exclusively for himself beginning with his fraudulent
misrepresentation in his unilateral affidavit of extrajudicial
settlement that he is "the only heir and child of his mother Feliza
with the consequence that he was able to secure title in his
name [alone]." Accordingly, we hold that the right of the private
respondents commenced from the time they actually
discovered the petitioner's act of defraudation. According to the
respondent Court of Appeals, they "came to know [of it]
apparently only during the progress of the litigation." Hence,
prescription is not a bar. ”
In this case, the CA reckoned the prescriptive period from the
time respondents had actually discovered the fraudulent act of
Atupan which was, as borne out by the records, only during the
trial of Civil Case No. 1672.
ADRIANO VERSUS CA
G.R. No. 124118
(Case Digest: Weng Resurreccion)
Facts: The testator, Lucio Adriano, also known as Ambrocio
Adriano, married Gliceria Dorado on October 29, 1933. Out of
their lawful marriage, they had three children.Sometime in 1942
or prior thereto, Lucio and Gliceria separated, and Gliceria
settled in Rizal, Laguna where she died on June 11, 1968. Also in
1942 or even earlier, Lucio cohabited with Vicenta Villa, with
whom he had eight children.
On November 22, 1968, or five months after the death of
Gliceria, Lucio married Vicenta. Lucio and Vicenta and their
children lived in Candelaria, Quezon until the spouses separated
in 1972.
On October 10, 1980, Lucio executed a last will and
testament disposing of all his properties, and assigning, among
others, his second wife Vicenta and all his children by his first and
second marriages as devisees and legatees therein. Disposing
such properties as follows: (1) to private respondents, Lucio's
children by his first wife, 10,000 square meters of the disputed
property, including the warehouse, rice mill, and equipment
situated thereon; (2) to Vicenta and petitioners, his children by
his second marriage, the remaining 35,000 square meters; and
(3) to private respondents, the residential house also within the
same property.
On February 11, 1981, Lucio died and private respondent
Celestina Adriano, who was instituted in Lucio's will as its
executrix, filed a petition for the probate of the will on February
18, 1981 but on August 17, 1988, while the proceedings for
settlement of estate were pending before the RTC, petitioners
instituted an action for annulment of Lucio Adriano's will which
was docketed as Civil Case No. 88-115. In the complaint,
plaintiffs-petitioners alleged that before the marriage of Lucio
and their mother, Vicenta, on November 22, 1968, the two lived
together as husband and wife and as such, acquired properties
which became the subject of inventory and administration in
Spec. Proc. No. 4442. Plaintiffs claimed that the properties
bequeathed in Lucio's will are undivided "civil partnership and/or
conjugal properties of Lucio Adriano and Vicenta Villa", and
thus, the will sought to be probated should be declared void
and ineffective insofar as it disposes of the rightful share or
properties of Vicenta. Furthermore, they argued that the title to
the property was registered in the name of both Lucio and
Vicenta, she should thereby be deemed owner to half of it
Issue/s: WON the property is conjugal property of Adriano and
Vicenta
Ruling/s: NO.
in Belcodero vs. Court of Appeals,[20] we held that property
acquired by a man while living with a common-law wife during
the subsistence of his marriage is conjugal property, even when
the property was titled in the name of the common-law wife. In
such cases, a constructive trust is deemed to have been created
by operation of Article 1456 of the Civil Code over the property
which lawfully pertains to the conjugal partnership of the
subsisting marriage.
Article 1456. If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the
property comes.
In Vicentas case, it is clear that her designation as a co-owner of
the property in TCT No. T-56553 is a mistake which needs to be
rectified by the application of the foregoing provisions of article
1456 and the ruling in Belcodero. The principle that a trustee who
takes a Torrens title in his or her name cannot repudiate the trust
by relying on the registration, is a well-known exception to the
principle of conclusiveness of a certificate of title.
HORTIZUELA VS TAGUFA
G.R. No. 205867
(Case Digest: Zarah Domingo)
FACTS:
By virtue of the special power of attorney executed by Plaintiff
Mariflor Tagufa Hortizuela, Jovier Tagufa instituted this case
against herein defendants praying for the peaceful surrender of a
parcel of land located at District IV, Tumauini, Isabela unto them
and further ordering Defendant Gregoria Tagufa to reconvey in
plaintiff’s favor the same property which was titled under her
name via fraud.
Before it was titled in the name of Defendant Tagufa, said
property was originally owned by plaintiff’s parents, Spouses
Epifanio Tagufa and Godofreda Jimenez. Although untitled, the
spouses mortgaged the property with the Development Bank of
the Philippines. For failure to redeem the property, DBP foreclosed
the same and sold it to Atty. Romulo Marquez who, in turn, sold it
back to Runsted Tagufa, husband of defendant Gregoria Tagufa,
using the fund sent by plaintiff Hortizuela who was in America and
with the agreement that Runsted will reconvey the said property
to her sister when demanded.
However, plaintiff discovered that the same unregistered property
was titled in the name of Gregoria Tagufa. Investigating further,
plaintiff discovered that Gregoria Tagufa was able to title the said
property by virtue of a free patent application before the
Department of Environment and Natural Resources (DENR) and
the execution of a Deed of Extrajudicial Settlement of the Estate
of the late Spouses Leandro Tagufa and Remedios Talosig.
Plaintiff now seeks to recover possession of the said property
which is presently occupied by Gregoria Tagufa and her co-
defendants and have the same be reconveyed unto them.
Plaintiff’s Argument: Hortizuela claims that respondent Gregoria
Tagufa (Gregoria),being the wife of Runsted, was certainly aware
that the subject land was actually sold by Atty. Romulo Marquez
(Atty. Marquez) to her (Hortizuela). Runsted, only acted as
attorney-in-fact in the sale transaction. Thus, the action for
reconveyance was not a collateral attack on the said title
because Hortizuela was not seeking the nullification of the title,
but rather the reconveyance of the property, covered by the said
title, which Gregoria was holding in trust for her benefit as the real
owner. Gregoria should, therefore, reconvey the property and its
title to her, being the rightful owner.

Respondent’s Argument: Respondents counter that although
Hortizuela’s complaint was denominated as one for
reconveyance and recovery of possession, its main objective was
to nullify the title held by Gregoria over the subject property.
ISSUE: WON an action for reconveyance and recovery of
possession constitutes an indirect or collateral attack on the
validity of the subject certificate of title which is proscribed by law
: NO
HELD:
The complaint of Hortizuela was not a collateral attack on the title
warranting dismissal. As a matter of fact, an action for
reconveyance is a recognized remedy, an action in personam,
available to a person whose property has been wrongfully
registered under the Torrens system in another’s name.
In an action for reconveyance, the decree is not sought to be set
aside. It does not seek to set aside the decree but, respecting it
as incontrovertible and no longer open to review, seeks to transfer
or reconvey the land from the registered owner to the rightful
owner. Reconveyance is always available as long as the property
has not passed to an innocent third person for value.
If the registration of the land is fraudulent, the person in whose
name the land is registered holds it as a mere trustee, and the real
owner is entitled to file an action for reconveyance of the
property.
The fact that Gregoria was able to secure a title in her name does
not operate to vest ownership upon her of the subject land.
"Registration of a piece of land under the Torrens System does not
create or vest title, because it is not a mode of acquiring
ownership. A certificate of title is merely an evidence of
ownership or title over the particular property described therein.
Furthermore, respondents’ argument that the overriding reason
why Hortizuela chose to file a complaint for reconveyance and
recovery of possession was that she failed to avail of the remedy
provided under Section 38 of Act 496 within the prescribed period
of one (1) year, counted from the issuance of the patent by the
government, is weak. As was similarly held in Cervantes v. CA,
with the land obtained by respondent Gregoria through
fraudulent machinations by means of which a free patent and a
title were issued in her name, she was deemed to have held it in
trust for the benefit of Hortizuela who was prejudiced by her
actions. Article 1456 provides:
ARTICLE 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.
The remedy of reconveyance, based on Section 53 of P.D. No.
1529 and Article 1456, prescribes in ten (10) years from the
issuance of the Torrens title over the property.
Furthermore, the Court is not unaware of the rule that a
fraudulently acquired free patent may only be assailed by the
government in an action for reversion pursuant to Section 101 of
the Public Land Act.
In this case, in filing the complaint for reconveyance and
recovery of possession, Hortizuela was not seeking a
reconsideration of the granting of the patent or the decree issued
in the registration proceedings. What she was seeking was the
reconveyance of the subject property on account of the fraud
committed by respondent Gregoria. An action for reconveyance
is a legal and equitable remedy granted to the rightful
landowner, whose land was wrongfully or erroneously registered
in the name of another, to compel the registered owner to
transfer or reconvey the land to him.
HEIRS OF ESPIRITU VS SPOUSES LANDRITO
G.R. No. 169617
(Case Digest: Zarah Domingo)
FACTS:
Petitioners are the only children and legal heirs of the Spouses
Zoilo and Primitiva Espiritu, who both died during the pendency of
the case before the Honorable Court of Appeals.
Respondents Spouses Maximo and Paz Landrito (Spouses
Landrito) are herein represented by their son and attorney-in-fact,
Zoilo Landrito.
Spouses Landrito loaned from the Spouses Espiritu the amount of
₱350,000.00 payable in three months. To secure the loan, the
Spouses Landrito executed a real estate mortgage.
After three months, when the debt became due and
demandable, the Spouses Landrito were unable to pay the
principal, and had not been able to make any interest payments
other than the amount initially deducted from the proceeds of
the loan. The loan was restructured in such a way that the unpaid
interest became part of the principal, thus increasing the
principal.
Due to the continued inability of the Spouses Landritos to settle
their obligations with the Spouses Espiritu, the loan agreement was
renewed three more times. The debt remained unpaid. As a
consequence, the Spouses Espiritu foreclosed the mortgaged
property.
The Spouses Landrito failed to redeem the subject property
although they alleged that they negotiated for the redemption of
the property. While the negotiated price for the land started at
₱1,595,392.79, it was allegedly increased by the Spouses Espiritu
from time to time. Spouses Landrito allegedly tendered two
manager’s checks and some cash, totaling ₱1,800,000.00 to the
Spouses Espiritu on 13 January 1992, but the latter refused to
accept the same. They also alleged that the Spouses Espiritu
increased the amount demanded to ₱2.5 Million and gave them
until July 1992 to pay the said amount. However, upon inquiry,
they found out that on 24 June 1992, the Spouses Espiritu had
already executed an Affidavit of Consolidation of Ownership and
registered the mortgaged property in their name, and that the
Register of Deeds of Makati had already issued Transfer
Certificate in the name of the Spouses Espiritu.
The Spouses Landrito, represented by their son Zoilo Landrito, filed
an action for annulment or reconveyance of title, with damages
against the Spouses Espiritu.
ISSUE: WON an action for reconveyance may still be availed of in
this case: YES, the records show that the property mortgaged was
purchased by the Spouses Espiritu and had not been transferred
to an innocent purchaser for value.
HELD: Since the Spouses Landrito, the debtors in this case, were
not given an opportunity to settle their debt, at the correct
amount and without the iniquitous interest imposed, no
foreclosure proceedings may be instituted. A judgment ordering
a foreclosure sale is conditioned upon a finding on the correct
amount of the unpaid obligation and the failure of the debtor to
pay the said amount. In this case, it has not yet been shown that
the Spouses Landrito had already failed to pay the correct
amount of the debt and, therefore, a foreclosure sale cannot be
conducted in order to answer for the unpaid debt. The
foreclosure sale conducted upon their failure to pay ₱874,125 in
1990 should be nullified since the amount demanded as the
outstanding loan was overstated; consequently it has not been
shown that the mortgagors – the Spouses Landrito, have failed to
pay their outstanding obligation.
As a result, the subsequent registration of the foreclosure sale
cannot transfer any rights over the mortgaged property to the
Spouses Espiritu. The registration of the foreclosure sale, herein
declared invalid, cannot vest title over the mortgaged property.
The Torrens system does not create or vest title where one does
not have a rightful claim over a real property. It only confirms and
records title already existing and vested. It does not permit one to
enrich oneself at the expense of another. Thus, the decree of
registration, even after the lapse of one (1) year, cannot attain
the status of indefeasibility.
Significantly, the records show that the property mortgaged was
purchased by the Spouses Espiritu and had not been transferred
to an innocent purchaser for value. This means that an action for
reconveyance may still be availed of in this case.
Registration of property by one person in his or her name, whether
by mistake or fraud, the real owner being another person,
impresses upon the title so acquired the character of a
constructive trust for the real owner, which would justify an action
for reconveyance. This is based on Article 1465 of the Civil Code
which states that:
Art. 1465. If property acquired through mistakes or fraud, the
person obtaining it is, by force of law, considered a trustee of an
implied trust for benefit of the person from whom the property
comes.
PRESCRIPTION: The action for reconveyance does not prescribe
until after a period of ten years from the date of the registration of
the certificate of sale since the action would be based on implied
trust. Thus, the action for reconveyance filed on 31 October 1992,
more than one year after the Sheriff’s Certificate of Sale was
registered on 9 January 1991, was filed within the prescription
period.
It should, however, be reiterated that the provisions of the Real
Estate Mortgage are not annulled and the principal obligation
stands. In addition, the interest is not completely removed; rather,
it is set by this Court at 12% per annum. Should the Spouses
Landrito fail to pay the principal, with its recomputed interest
which runs from the time the loan agreement was entered into on
5 September 1986 until the present, there is nothing in this Decision
which prevents the Spouses Espiritu from foreclosing the
mortgaged property.
PNB VS JUMAMOY
G.R. No. 169901
(Case Digest: Zarah Domingo)
FACTS:
In December 27,1989, the RTC, Branch 19, of Digos City, Davao
del Sur, rendered a Decision ordering the exclusion of 2.5002
hectares from Lot 13521. The trial court found that said 2.5002
hectares which is part of Lot 13521, a 13,752-square meter parcel
of land covered by OCT No. P-4952 registered in the name of
Antonio Go Pace (Antonio) actually pertains to Sesinando
Jumamoy (Sesinando), Ciriaco’s predecessor-in-interest.
The RTC found that said 2.5002-hectare lot was erroneously
included in Antonio’s free patent application which became the
basis for the issuance of his OCT. It then ordered the heirs of
Antonio (the Paces [represented by Rosalia Paces) to reconvey
said portion to Ciriaco. In so ruling, the RTC acknowledged
Ciriaco’s actual and exclusive possession, cultivation, and claim
of ownership over the subject lot which he acquired from his
father Sesinando, who occupied and improved the lot way back
in the early 1950s.
The RTC Decision became final and executory but the Deed of
Conveyance issued in favor of Ciriaco could not be annotated
since said title was already cancelled.
Apparently, Antonio and his wife Rosalia mortgaged Lot 13521 to
PNB as security for a series of loans dated February 25, 1971, April
26, 1972, and May 11, 1973. After Antonio and Rosalia failed to
pay their obligation, PNB foreclosed the mortgage on July 14,
1986 and title to Lot 13521 was transferred to PNB.
Thus, in February 1996, Ciriaco filed the instant complaint against
PNB and the Paces for Declaration of Nullity of Mortgage,
Foreclosure Sale, Reconveyance and Damages.
In his complaint, Ciriaco averred that Antonio could not validly
mortgage the entire Lot 13521 to PNB as a portion thereof
consisting of 2.5002 hectares belongs to him (Ciriaco). He claimed
that PNB is not an innocent mortgagee/purchaser for value
because prior to the execution and registration of PNB’s deed of
sale with the Register of Deeds, the bank had prior notice that the
disputed lot is subject of a litigation. It would appear that during
the pendency of the case, a notice of lis pendens was annotated
at the back of the title.
PNB contends that the lower courts erred in declaring that it is not
an innocent mortgagee/purchaser for value. PNB also argues
that Ciriaco’s complaint is barred by prescription—PNB’s title was
issued on March 23, 1990, while Ciriaco filed his complaint only six
years thereafter. Thus, the one-year period to nullify PNB’s
certificate of title had lapsed, making PNB’s title indefeasible.
Moreover, PNB claims that an action for reconveyance prescribes
in four years if based on fraud, or, 10 years if based on an implied
trust, both to be counted from the issuance of OCT in July 1971(in
favor of Antonio) which constitutes as a constructive notice to the
whole world. Either way, Ciriaco’s action had already prescribed
since it took him 17 years to file his first complaint for
reconveyance and around 23 years to file his second complaint.
ISSUE:
1.) WON PNB was an innocent purchaser/mortgagee for
value: NO
2.) WON Ciriaco’s action for reconveyance has already
prescribed: NO
HELD:
1.) Undoubtedly, our land registration statute extends its
protection to an innocent purchaser for value, defined as
"one who buys the property of another, without notice
that some other person has a right or interest in such
property and pays the full price for the same, at the time
of such purchase or before he has notice of the claims or
interest of some other person in the property." An
"innocent purchaser for value" includes an innocent
lessee, mortgagee, or other encumbrancer for value.
A banking institution is expected to exercise due
diligence before entering into a mortgage contract. The
ascertainment of the status or condition of a property
offered to it as security for a loan must be a standard and
indispensable part of its operations.
PNB’s contention that Ciriaco failed to allege in his
complaint that PNB failed to take the necessary
precautions before accepting the mortgage is of no
 moment. It is undisputed that the 2.5002-hectare portion
of the mortgaged property has been adjudged in favor
of Ciriaco’s predecessor-in-interest in Civil Case No. 2514.
Hence, PNB has the burden of evidence that it acted in
good faith from the time the land was offered as
collateral. However, PNB miserably failed to overcome
this burden. There was no showing at all that it
conducted an investigation; that it observed due
diligence and prudence by checking for flaws in the title;
that it verified the identity of the true owner and possessor
of the land; and, that it visited subject premises to
determine its actual condition before accepting the
same as collateral.
Both the CA and the trial court correctly observed that
PNB could not validly raise the defense that it relied on
Antonio’s clean title. The land, when it was first
mortgaged, was then unregistered under our Torrens
system. The first mortgage was on February 25, 1971 while
OCT No. P-4952 was issued on July 19, 1971. Since the
Paces offered as collateral an unregistered land, with
more reason PNB should have proven before the RTC that
it had verified the status of the property by conducting an
ocular inspection before granting Antonio his first loan.
Had PNB really taken the necessary precautions, it would
have discovered that a large portion of Lot 13521 is
occupied by Ciriaco.
2.) 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. An action for
reconveyance based on implied trust prescribes in 10
years as it is an obligation created by law, to be counted
from the date of issuance of the Torrens title over the
property. This rule, however, applies only when the
plaintiff or the person enforcing the trust is not in
possession of the property.
In Vda. de Cabrera v. Court of Appeals, we said that
there is no prescription when in an action for
reconveyance, the claimant is in actual possession of the
property because this in effect is an action for quieting of
title.
The reason for this is that one who is in actual possession
of a piece of land claiming to be the owner thereof may
wait until his possession is disturbed or his title is attacked
before taking steps to vindicate his right, the reason for
the rule being, that his undisturbed possession gives him a
continuing right to seek the aid of a court of equity to
ascertain and determine the nature of the adverse claim
of a third party and its effect on his own title, which right
can be claimed only by one who is in possession.
In Ciriaco’s case, as it has been judicially established that
he is in actual possession of the property he claims as his
and that he has a better right to the disputed portion, his
suit for reconveyance is in effect an action for quieting of
title. Hence, petitioner’s defense of prescription against
Ciriaco does not lie.
CABACUNGAN VS LAIGO
G.R. No. 175073
(Case Digest: Zarah Domingo)
FACTS:
Margarita Cabacungan (Margarita) owned three parcels
of UNREGISTERED land in Paringao and in Baccuit, Bauang, La
Union, each measuring 4,512 square meters, 1,986 square meters
and 3,454 square meters. The properties were individually
covered by tax declaration all in her name. Sometime in 1968,
Margaritas son, Roberto Laigo, Jr. (Roberto), applied for a non-
immigrant visa to the United States, and to support his
application, he allegedly asked Margarita to transfer the tax
declarations of the properties in his name. For said purpose,
Margarita, unknown to her other children, executed an Affidavit
of Transfer of Real Property whereby the subject properties were
transferred by donation to Roberto.Not long after, Robertos visa
was issued and he was able to travel to the U.S. as a tourist and
returned in due time. In 1979, he adopted respondents Pedro
Laigo (Pedro) and Marilou Laigo (Marilou),and then he married
respondent Estella Balagot.
In July 1990, Roberto sold the 4,512 sq m property in
Baccuit to the spouses Mario and Julia Campos for P23,000.00.
Then in August 1992, he sold the 1,986 sq m and 3,454 sq m lots in
Paringao, respectively, to Marilou for P100,000.00 and to Pedro
for P40,000.00.Allegedly, these sales were not known to Margarita
and her other children.
It was only in August 1995, at Robertos wake, that
Margarita came to know of the sales as told by Pedro himself. In
February 1996, Margarita, represented by her daughter, Luz,
instituted the instant complaint for the annulment of said sales
and for the recovery of ownership and possession of the subject
properties as well as for the cancellation of Ricardos tax
declarations. She imputed bad faith to Pedro, Marilou and the
Spouses Campos as buyers of the lots, as they supposedly knew
all along that Roberto was not the rightful owner of the
properties. Hence, she principally prayed that the sales be
annulled; that Robertos tax declarations be cancelled; and that
the subject properties be reconveyed to her.
The Spouses Campos advanced that they were innocent
purchasers for value and in good faith, and had merely relied on
Robertos representation that he had the right to sell the property;
and that, hence, they were not bound by whatever agreement
entered by Margarita with her son. They posited that the alleged
gross inadequacy of the price would not invalidate the sale
absent a vitiation of consent or proof of any other
agreement. Further, they noted that Margaritas claim was
already barred by prescription and laches owing to her long
inaction in recovering the subject properties. Finally, they
believed that inasmuch as Roberto had already passed away,
Margarita must have, instead, directed her claim against his
estate.
In much the same way, Marilou and Pedro, who likewise
professed themselves to be buyers in good faith and for value,
believed that Margaritas cause of action had already been
barred by laches, and that even assuming the contrary, the
cause of action was nevertheless barred by prescription as the
same had accrued way back in 1968 upon the execution of the
affidavit of transfer by virtue of which an implied trust had been
created. In this regard, they emphasized that the law allowed
only a period of ten (10) years within which an action to recover
ownership of real property or to enforce an implied trust thereon
may be brought, but Margarita merely let it pass.
Margarita and the Spouses Campos amicably entered
into a settlement whereby they waived their respective claims
against each other. Margarita died two days later and was
forthwith substituted by her estate. On February 8, 1999, the trial
court rendered a Partial Decision approving the compromise
agreement and dismissing the complaint against the Spouses
Campos. Forthwith, trial on the merits ensued with respect to
Pedro and Marilou.
ISSUE:
(a) WON the complaint is barred by laches and prescription: NO
(b) WON the rule on innocent purchaser for value applies in this
case of sale of unregistered land:
(c) WON there is evidence to support the finding that there is an
implied trust created between Margarita and her son Roberto:
YES
HELD:
First, fundamental is the rule in land registration law that the issue
of whether the buyer of realty is in good or bad faith is relevant
only where the subject of the sale is registered land and the
purchase was made from the registered owner whose title to the
land is clean, in which case the purchaser who relies on the clean
title of the registered owner is protected if he is a purchaser in
good faith and for value. Since the properties in question are
unregistered lands, respondents purchased the same at their own
peril. Their claim of having bought the properties in good
faith, i.e., without notice that there is some other person with a
right to or interest therein, would not protect them should it turn
out, as it in fact did in this case, that their seller, Roberto, had no
right to sell them.
Second, prescription and laches, in respect of this resulting trust
relation, hardly can impair petitioners cause of action. On the
one hand, in accordance with Article 1144 of the Civil Code, an
action for reconveyance to enforce an implied trust in ones favor
prescribes in ten (10) years from the time the right of action
accrues, as it is based upon an obligation created by law. It sets
in from the time the trustee performs unequivocal acts of
repudiation amounting to an ouster of the cestui que trust which
are made known to the latter. In this case, it was the 1992 sale of
the properties to respondents that comprised the act of
repudiation which, however, was made known to Margarita only
in 1995 but nevertheless impelled her to institute the action in 1996
still well within the prescriptive period. Hardly can be considered
as act of repudiation Robertos open court declaration which he
made in the 1979 adoption proceedings involving respondents to
the effect that he owned the subject properties, nor even the
fact that he in 1977 had entered into a lease contract on one of
the disputed properties which contract had been subject of a
1996 decision of the Court of Appeals. These do not suffice to
constitute unequivocal acts in repudiation of the trust.
On the other hand, laches, being rooted in equity, is not always
to be applied strictly in a way that would obliterate an otherwise
valid claim especially between blood relatives. The existence of a
confidential relationship based upon consanguinity is an virtue of the wrongful and fraudulent transfer to them of the
important circumstance for consideration; hence, the doctrine is subject properties by Roberto.
not to be applied mechanically as between near relatives.
It is settled that an action for reconveyance based on a
Third, there is a fundamental principle in agency that where
constructive implied trust prescribes in 10 years likewise in
certain property entrusted to an agent and impressed by law with
accordance with Article 1144 of the Civil Code. Yet not like in the
a trust in favor of the principal is wrongfully diverted, such trust
case of a resulting implied trust and an express trust, prescription
follows the property in the hands of a third person and the
supervenes in a constructive implied trust even if the trustee does
principal is ordinarily entitled to pursue and recover it so long as
not repudiate the relationship. In other words, repudiation of said
the property can be traced and identified, and no superior
trust is not a condition precedent to the running of the
equities have intervened. This principle is actually one of trusts,
prescriptive period.
since the wrongful conversion gives rise to a constructive trust
which pursues the property, its product or proceeds, and permits
An action for reconveyance under a constructive implied trust in
the beneficiary to recover the property or obtain damages for
accordance with Article 1456 does not prescribe unless and until
the wrongful conversion of the property. Aptly called the trust
the land is registered or the instrument affecting the same is
pursuit rule, it applies when a constructive or resulting trust has
inscribed in accordance with law, inasmuch as it is what binds the
once affixed itself to property in a certain state or form.
land and operates constructive notice to the world. In the present
case, however, the lands involved are concededly unregistered
Hence, a trust will follow the property through all changes in its
lands; hence, there is no way by which Margarita, during her
state and form as long as such property, its products or its
lifetime, could be notified of the furtive and fraudulent sales
proceeds, are capable of identification, even into the hands of a
made in 1992 by Roberto in favor of respondents, except by
transferee other than a bona fide purchaser for value, or
actual notice from Pedro himself in August 1995. Hence, it is from
restitution will be enforced at the election of the beneficiary
that date that prescription began to toll. The filing of the
through recourse against the trustee or the transferee
complaint in February 1996 is well within the prescriptive
personally. This is grounded on the principle in property law that
period. Finally, such delay of only six (6) months in instituting the
ownership continues and can be asserted by the true owner
present action hardly suffices to justify a finding of inexcusable
against any withholding of the object to which the ownership
delay or to create an inference that Margarita has allowed her
pertains, whether such object of the ownership is found in the
claim to stale by laches.
hands of an original owner or a transferee, or in a different form,
as long as it can be identified. Accordingly, the person to whom is
made a transfer of trust property constituting a wrongful
conversion of the trust property and a breach of the trust, when
not protected as a bona fide purchaser for value, is himself liable
and accountable as a constructive trustee. The liability attaches
at the moment of the transfer of trust property and continues until
there is full restoration to the beneficiary. Thus, the transferee is
charged with, and can be held to the performance of the trust,
equally with the original trustee, and he can be compelled to
execute a reconveyance.
This scenario is characteristic of a constructive trust imposed by
Article 1456 of the Civil Code, which impresses upon a person
obtaining property through mistake or fraud the status of an
implied trustee for the benefit of the person from whom the
property comes. Petitioner, in laying claim against respondents
who are concededly transferees who professed having validly
derived their ownership from Roberto, is in effect enforcing
against respondents a constructive trust relation that arose by