[SPECIAL PROCEEDINGS | ATTY.
TANTUICO] 1
11. O’LACO v. CO CHO CHIT
G.R. No. 58010 March 31, 1993
Digest by: Santos
TOPIC: Trustees
DOCTRINE:
Express trusts are those which are created by the direct and positive acts of
the parties, by some writing or deed, or will, or by words evincing an
intention to create a trust.
Implied trusts are those which, without being express, are deducible from
the nature of the transaction as matters of intent, or which are
superinduced on the transaction by operation of law as matters of equity,
independently of the particular intention of the parties. Implied trusts may
either be resulting or constructive trusts, both coming into being by
operation of law.
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.
Prescription of implied or constructive trust is 10 years
RECIT-READY SUMMARY:
A case was filed against petitioner-spouses O’Laco and Luna for allegedly
selling a parcel of land in favor of the Archbishop of Manila. Co Cho Chit
argued that petitioner-spouses had no right to sell such property because
she is merely a trustee of the respondents. The Supreme Court held that
there was indeed a trust relationship between O’Laco and Co Cho Chit, the
former being the trustee of the latter. Despite being titled in favor of
O’Laco, it was proven that Co Cho Chit had possession of the property for 17
years and that O’Laco herself confirmed the existence of the trust
relationship in open court.
FACTS:
 Philippine Sugar Estate sold a parcel of land to O’Laco and Luna
(petitioner-spouse) a subsequent TCT was issued in the latter’s
favor in 1943
 May 1960, Respondents herein discovered that O’Laco sold the
subject property to the Archbishop of Manila for Php 230,000
 Respondents filed a case to recover the purchase price, they argued
that O’Laco merely held the property in trust, and that she had no
right to sell such property because such property was only placed
under her name
 O’Laco and her spouse denied such trust further arguing that she,
herself, bought the property from PH Sugar Estate
 Trial Court: Dismissed the complaint filed by respondents
 CA: Set aside the decision of the Trial Court
 Petitioner’s arguments before the SC:
o No trust relation between them
o Even assuming ex argumenti that there is such a relation,
petitioners further argue, respondents are already barred
by laches.
ISSUE/S:
1. WON there exists a trust relation between petitioner-spouses and
Co Cho Chit
HELD:
(GO2) 2018 - 2019
 [SPECIAL PROCEEDINGS | ATTY. TANTUICO] 2

 YES
 We find that there is. By definition, trust relations between parties DISPOSITIVE PORTION / RULING:
may either be express or implied. WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision
 In this case, there can be no persuasive rationalization for the of the Court of Appeals of 9 April 1981, which reversed the trial court, is
possession of these documents of ownership by respondent- AFFIRMED. Costs against petitioners.
spouses for seventeen (17) years after the Oroquieta property was
purchased in 1943 than that of precluding its possible sale,
alienation or conveyance by Emilia O'Laco, absent any machination
or fraud. This continued possession of the documents, together with
other corroborating evidence spread on record, strongly suggests
that Emilia O'Laco merely held the Oroquieta property in trust for
respondent-spouses.
 It may be worth to mention that before buying the Oroquieta
property, respondent-spouses purchased another property situated
in Kusang-Loob, Sta. Cruz, Manila, where the certificate of title was
placed in the name of Ambrosio O'Laco, older brother of Emilia,
under similar or identical circumstances
 Until the sale of the Oroquieta property to the Roman Catholic
Archbishop of Manila, petitioner Emilia O'Laco actually recognized
the trust. Specifically, when respondent spouses learned that Emilia
was getting married to Hugo, O Lay Kia asked her to have the title to
the property already transferred to her and her husband Valentin,
and Emilia assured her that "would be arranged (maaayos na)" after
her wedding. Her answer was an express recognition of the trust,
otherwise, she would have refused the request outright. Petitioners
never objected to this evidence; nor did they attempt to controvert
it.
 O’Laco was not financially capable of purchasing the subject
property at the time it was named under her
 On PRESCRIPTION: the prescriptive period did not run until subject
property was sold to the Archbishop of Manila (act of repudiation of
trust); the respondents were well within the 10 year prescriptive
period because they immediately filed a case right after petitioner-
spouses sold the subject property.

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