Agency Digest

1. Tala Realty vs. Banco Filipino.

FACTS: Banco Filipino Savings and Mortgage Bank
(Banco Filipino) filed before 17 Regional Trial Courts
(RTC) 17 complaints for reconveyance of different
properties against Tala Realty Services Corporation
(Tala Realty) et al. Banco Filipinos complaints
commonly alleged that in 1979, expansion of its
operations required the purchase of real properties for
the purpose of acquiring sites for more branches; that
as Sections 25(a) and 34 of the General Banking Act
limit a banks allowable investments in real estate to
50% of its capital assets, its board of directors decided
to warehouse some of its existing properties and
branch sites. Thus, Nancy L. Ty, a major stockholder
and director, persuaded Pedro Aguirre and his brother
Tomas Aguirre, both major stockholders of Banco
Filipino, to organize and incorporate Tala Realty to hold
and purchase real properties in trust for Banco Filipino;
that after the transfer of Banco Filipino properties to
Tala Realty, the Aguirres sister Remedios prodded her
brother Tomas to, as he did, endorse to her his shares
in Tala Realty and registered them in the name of her
controlled corporation, Add International.

Thus, Nancy, Remedios, and Pedro Aguirre controlled

Tala Realty, with Nancy exercising control through her

nominees Pilar, Cynthia, and Dolly, while Remedios

exercised control through Add International and her
nominee Elizabeth. Pedro Aguirre exercised control
through his own nominees, the latest being Tala
Realtys president, Rubencito del Mundo.
In the course of the implementation of their trust
agreement, Banco Filipino sold to Tala Realty some of
its properties. Tala Realty simultaneously leased to
Banco Filipino the properties for 20 years, renewable
for another 20 years at the option of Banco Filipino
with a right of first refusal in the event Tala Realty
decided to sell them.
Tala Realty repudiated the trust, claimed the titles for
itself, and demanded payment of rentals, deposits, and
goodwill, with a threat to eject Banco Filipino.
Thus arose Banco Filipinos 17 complaints for
reconveyance against Tala Realty.
ISSUE: Whether or not the trust agreement is void
HELD: In Tala Realty Services Corporation v. Banco
Filipino Savings and Mortgage Bank, the Court, by
Decision dated November 22, 2002, ruling on one of
several ejectment cases filed by Tala Realty against
Banco Filipino arising from the same trust agreement
in the reconveyance cases subject of the present
petitions, held that the trust agreement is void and
cannot thus be enforced.

An implied trust could not have been formed between

the Bank and Tala as the Court has held that "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."

The bank cannot use the defense of nor seek

enforcement of its alleged implied trust with Tala since
its purpose was contrary to law. As admitted by the
Bank, it "warehoused" its branch site holdings to Tala
to enable it to pursue its expansion program and
purchase new branch sites including its main branch in
Makati, and at the same time avoid the real property
holdings limit under Sections 25(a) and 34 of the
General Banking Act which it had already reached.

Clearly, the Bank was well aware of the limitations on

its real estate holdings under the General Banking Act
and that its "warehousing agreement" with Tala was a
scheme to circumvent the limitation. Thus, the Bank
opted not to put the agreement in writing and call a
spade a spade, but instead phrased its right to
reconveyance of the subject property at any time as a
"first preference to buy" at the "same transfer price."
This agreement which the Bank claims to be an
implied trust is contrary to law. Thus, while the Court
finds the sale and lease of the subject property
genuine and binding upon the parties, the Court
cannot enforce the implied trust even assuming the

parties intended to create it. In the words of the Court

in the Ramos case, "the courts will not assist the payor
in achieving his improper purpose by enforcing a
resultant trust for him in accordance with the clean
hands doctrine." The Bank cannot thus demand
reconveyance of the property based on its alleged
implied trust relationship with Tala.

2. Ringor vs. Ringor

3. Gomez vs. Duyan

Before this Court is a petition for review

on certiorari assailing the Decision[1] of the Court of
Appeals in CA-G.R. CV No. 49163 ordering the
reconveyance by the petitioners to the respondents of
the property covered by Transfer Certificate of Title
(TCT) No. 281115 and declaring said title cancelled,
thereby reversing the Decision[2] of the Regional Trial
Court (RTC) of Quezon City, Branch 80 which dismissed
the complaint. The dispositive portion of the
challenged Decision reads as follows:
WHEREFORE, premises considered, the assailed
decision of the Regional Trial Court of Quezon City,
Branch 80 in Civil Case No. Q-91-8821 is hereby

REVERSED and SET ASIDE. ACCORDINGLY, defendantsappellees are hereby ordered to RECONVEY in favor of
plaintiffs-appellants the property covered by TCT No.
281115, which title is hereby declared CANCELLED.
With costs.[3]

except in accordance with her brothers wishes.[6] The

pertinent portions of the instrument read:

The facts as culled from the records are as follows:

4. Na kaming magkapatid ay magtutulongan at

magdadamayan maging sa hirap at ginhawa alangalang sa ikabubuti ng aming mga mahal sa buhay;

The parties in this case are relatives residing at 96

General Avenue, Project 8, Quezon City which consists
of four houses situated in an eight hundred-square
meter (800 sq.m.) lot, covered by TCT No. 41717
issued by the Register of Deeds of Quezon City in the
name of Eulogio Duyan (now deceased) married to
Purisima Duyan, one of the respondents in this case.
The property in dispute which constitutes one-half of
the property previously covered by TCT No. 41717 is
now covered by TCT No. 281115 issued in the name of
petitioner spouses.[4]
Eulogio Duyan and Feliza Duyan are siblings. In his
desire to help his sister, Eulogio allowed her to
construct a house on the disputed lot sometime in
1968.[5] Petitioners acknowledged the fact that the
disputed property was owned by Eulogio and that they
were staying in the disputed property solely due to his
benevolence. Accordingly, an instrument
entitled Pagpapahayag was executed by the siblings
on 5 May 1974. The instrument provides that in the
event that the property will be registered in Felizas
name, she will continue to acknowledge Eulogio as the
owner and will never assert ownership over the same,

Na napagkasunduan naming magcapatid na bouin ang

documentong ito bilang katibayan ang lahat;

5. Na ito ay mailagay sa pangalan man ng aming Ama

o pangalan ko ay itoy hindi ko pag-aari kundi ari ito ng
aking kuya, Eulogio V. Duyan, at6. Na ito ay aming igagalang maging saan man
makarating ngayon at kailan man.[7]
On 11 May 1974, a deed of sale covering a residential
house situated on the disputed lot was executed by
Eulogio and Regina Velasquez, a common-law wife of
the former, in favor of petitioners for the sum of One
Thousand Pesos (P1,000.00). Thereafter, petitioners
allegedly asserted ownership not only over the said
house but over the whole lot covered by TCT No.
41717.[8] This prompted Eulogios legal wife, Purisima,
to file a complaint for recovery of possession and
damages against petitioners with the then Court of
First Instance of Rizal, Branch IV-B, Quezon City.[9]
Deciding the case in favor of Purisima, the trial court
ordered petitioners to surrender possession of the
property to her. On appeal, the Court of Appeals

dismissed the case after the parties entered into an

amicable settlement.[10]

Divina V. Duyan, Cresencia V. Duyan, Reulgina V.

Duyan, Domincia, Rodrigo at Avencio C. Duyan.[17]

On 25 January 1978, Eulogio and Purisima this time, as

vendors, executed a Deed of Absolute Sale in favor of
petitioners with respect to the disputed lot for the sum
of Twenty Thousand Pesos (P20,000.00).[11]

Notwithstanding the second Pagpapahayag, petitioners

caused the registration of the deed of sale dated 25
January 1978 with the Register of Deeds of Quezon
City. As a consequence, TCT No. 281115 covering the
disputed lot was issued on 22 September 1981 in the
name of petitioners.[18]

Purisima claims that the deed of sale was executed

merely to give color of legality to petitioners stay in
the disputed property so that she and her children will
not drive them away after they (Purisima and her
children) manifested their opposition to Eulogios
decision to let them stay therein.[12] Petitioners claim
otherwise, contending that the sale was freely agreed
upon by the parties thereto; hence, it was authentic
and validly executed.[13]
Subsequent to the execution of the deed of sale or on
10 February 1978,[14] another Pagpapahayag was
executed between Eulogio and Feliza, where the latter
acknowledged that the lot subject of the deed of
sale[15] will eventually be transferred to respondents
herein who are her nephews and nieces and the
children of Eulogio.[16] The pertinent portions of the
second Pagpapahayag read:
Na pagkatapos ng lahat ng hidwaan sa Husgado ay
aming isasagawa agad and conwaring pagbibili muli
ng nasabing xxx aming binili sa aking capatid na si Gg.
Eulogio V. Duyan. At pag mangyari ang nasabing
hatian ng lote, ay aming ilalagay agad sa pangalan ng
aming mga pamangkin na sina Salome V. Duyan,

On 20 May 1991, respondents filed a suit for

reconveyance of real property and cancellation of TCT
No. 281115 with damages against petitioners before
Branch 80 of the Quezon City RTC.
On 5 September 1994, the trial court rendered a
decision, dismissing the complaint and ordering
respondents to pay jointly and severally defendants
therein, now petitioners, the amount of Ten Thousand
Pesos (P10,000,00) as reasonable attorneys fees and
to pay the costs of the suit.[19]
In dismissing the case, the trial court held that:
[the] TCT No. 281115 (Exh. 4) was validly issued
pursuant to the Absolute Deed of Sale dated January
25, 1978 (Exh. 3) duly registered at the Office of the
Registry of Deeds of Quezon City. The same became
indefeasible and conclusive upon the expiration of one
year period from its entry as it was not attacked
directly by anyone due to fraud.[20]

On appeal, the Court of Appeals reversed the decision

and held that an implied trust arose in favor of
respondents over the disputed property by virtue of
the Pagpapahayag dated 10 February 1978. It held
that the action for reconveyance of property was
properly filed by respondents against petitioners.[21]
Petitioners motion for reconsideration[22] having been
denied by the appellate court in
a Resolution[23] promulgated on 28 June 2000, the
case was elevated to this Court by way of a petition for
review.
Petitioners in their petition for review[24] contend that
the Court of Appeals acted with grave abuse of
discretion[25] when it reversed the RTC decision and
that the error, if not corrected, will cause them great
injustice.[26] They claim that the Court of Appeals
erred when it ordered the reconveyance by petitioners
to respondents of the property covered by TCT No.
281115 and declared the cancellation of said title[27].
The contention is without merit. The Court of Appeals
did not err in ordering the reconveyance of the
property in dispute.
As found by the appellate court, the trial court failed to
consider the law on trusts despite the existence of
uncontroverted evidence establishing the creation of a
trust as it anchored its decision solely on the
indefeasibility of title aspect. Although it recognized
the instruments creating the trust, the trial court
nevertheless held that:

In the document entitled Pagpapahayag (Exh. B),

although the defendant Felisa Gomez stipulated
therein that she will not claim ownership over the lot
covered by TCT No. 41717, even in the event that the
same will be transferred in her name, the same does
not bar her totally from becoming as owner because of
the exception provided therein that she can still own
the lot or part thereof in accordance with the wishes of
the deceased which was clearly manifested when the
Absolute Deed of Sale of the half of the lot covered by
TCT No. 41717 was executed between the deceased
and his spouse Purisima Duyan (plaintiff) and the
defendants.[28]
While citing the provisions of the Pagpapahayag dated
5 May 1974 and concluding therefrom that Feliza was
not actually prohibited from claiming ownership over
the property, the trial court completely disregarded
and missed the import of the
other Pagpapahayag dated 10 February 1978.
In express terms, Feliza undertook in the
subsequent Pagpapahayag to convey the property
subject of the fictitious deed of sale to her own
nephews and nieces who are the children of her
brother Eulogio. To reiterate, Feliza stated At pag
mangyari ang nasabing hatian ng lote, ay aming
ilalagay agad sa pangalan ng aming mga pamangkin
na sina Salome V. Duyan, Divina V. Duyan, Cresencia V.
Duyan, Reulgina V. Duyan, Domincia, Rodrigo at
Avencio C. Duyan.[29] It must be noted that this
Pagpapahayag was entered into by Eulogio and Feliza

after the supposed sale of the property on 25 January

1978. Based on the clear provisions of this document,
the intent of the siblings to create a trust was manifest
with Eulogio as the trustor, Feliza as the trustee and
Eulogios children as the beneficiaries or the cestui qui
trust[30] of the res[31] which was the disputed
property. This is based on the provision of the law on
trusts which states that:
Art. 1440. 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.[32]
However, the trust created was not merely implied as
held by the Court of Appeals but belongs to the
express kind. Based on the provisions of the Civil Code
and jurisprudence, Express trusts are those which the
direct and positive acts of the parties create, by some
writing, deed or will, or words evincing an intention to
create a trust.[33]
In this case, the provisions of the Pagpapahayag dated
10 February 1978 left no room for doubt. It was clearly
intended therein by Eulogio and Feliza that the
property subject of the sale will subsequently be
placed by the latter in the name of respondents, thus
creating a trust relationship over the property in
dispute.

Even if the word trust was not expressly used by the

signatories to the 10 February
1978 Pagpapahayag and the document did not
expressly state that a trust was being established by
reason thereof, the establishment of an express trust
cannot be discounted. Under the Civil Code, No
particular words are required for the creation of an
express trust, it being sufficient that a trust is clearly
intended.[34] In a decision penned by Justice Paras,
this Court 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 (Art. 1444, Civil Code).
[35] The Pagpapahayag dated 10 February 1978
having been freely entered into by Eulogio and Feliza,
it had the force of law between them. It was therefore
incumbent upon Feliza as trustee to comply with the
provisions of the instrument and have the subject
property registered in the names of her nephews and
nieces.
Petitioners subsequent act of registering the disputed
property in their own names and resisting the action
for reconveyance later filed by respondents was clearly
a betrayal of the provisions of the express trust
created by the 10 February 1978 Pagpapahayag. By
these actions, petitioners not only failed to comply
with the provisions of the Pagpapahayag, but actually
circumvented them.

It is worthy of note that petitioners never denied the

existence, authenticity and due execution of the 10
February 1978 Pagpapahayag as they merely objected
to the purpose of its presentation.[36] As held by the
appellate court:
Neither refutation nor denial of the existence of such
document exist in the records of the case at bar.
Particularly, Feliza did not even raise any objection as
to the due execution and authenticity of the
Pagpapahayag dated 10 February 1978. In relation
thereto, it is worthy to note that an objection as to the
purpose of its presentation is not tantamount to an
objection as to the authenticity and due execution of
the document. In view of the absence of such
objection, the GOMEZES as signatories thereto, are
deemed bound by the stipulations therein.[37]
A trust is sacred and inviolable. The courts have
therefore shielded fiduciary relations against every
manner of chicanery or detestable design cloaked by
legal technicalities.[38]Considering this
pronouncement of the Supreme Court and the betrayal
by petitioners of the provisions of
the Pagpapahayag creating the trust in this case, the
Court of Appeals rightly ordered the reconveyance of
the disputed property to respondents and the
cancellation of TCT No. 21885.
Moreover, petitioners admitted in
the Pagpapahayag itself that the 25 January 1978 sale
was fictitious. This is evident by the use of the

phrase conwaring pagbibili[39] which means simulated

or fictitious sale. Thus, petitioners are estopped from
claiming or asserting ownership over the subject
property based on the 25 January 1978 deed of sale.
Felizas admission in the said Pagpapahayag of the
falsity of the sale is deemed conclusive upon her and
her co-petitioner Eugenio Gomez. Under the Civil
Code, Through estoppel an admission or
representation is rendered conclusive upon the person
making it, and cannot be denied or disproved as
against the person relying thereon.[40] That admission
cannot now be denied by Feliza as against Eulogio and
his successors-in-interest, the latter having relied upon
her representation.
Petitioners argue that the action for reconveyance filed
by respondents against them is not proper, the latter
not being the owners of the property in question.
[41] Invoking the 25 January 1978 deed of sale despite
Felizas admission adverted to above that such sale
was fictitious, petitioners assert that they are the
owners of the subject property. They claim that the
best proof of ownership of a piece of land is the
certificate of title, and the TCT being in their name,
they are the rightful owners thereof.[42] They further
argue that based on the case of Dela Pea vs. Court of
Appeals[43] among others, reconveyance is a remedy
granted only to the owner of the property alleged to be
wrongfully titled in anothers name.[44]
The argument begs the question. Reconveyance is
precisely the proper action for respondents to take

against petitioners since the former are claiming that

they are the rightful owners of the property in
question, not petitioners. By filing an action for
reconveyance, a party seeks to show that the person
who secured the registration of the questioned
property is not the real owner thereof.[45]
Petitioners cannot rely on the registration of the
disputed property and the corresponding issuance of a
certificate of title in their name as vesting ownership
on them simply because an express trust over the
property was created in favor of respondents. It has
been held that a trustee who obtains a Torrens title
over the property held in trust by him for another
cannot repudiate the trust by relying on the
registration.[46]
The law safeguards the rightful partys interest in titled
land from fraud and improper technicalities by allowing
such party to bring an action for reconveyance of
whatever he has been deprived of as long as the
property has not been transferred or conveyed to an
innocent purchaser for value.[47] The action while
respecting the registration decree as incontrovertible,
seeks to transfer or reconvey the land from the
registered owner to the rightful owner.[48] As this
Court held in the case of Escobar vs. Locsin, The
Torrens system was never calculated to foment
betrayal in the performance of a trust.[49]
In a further effort to bolster the claim that they own
the property in dispute, petitioners attempt to

introduce new evidence annexed to their petition in

the form of a purported declaration made by Eulogio
dated 19 February 1979.[50] The declaration purports
to state that the previous instruments entered into by
him and the petitioners are void because he had
already sold the lot to them.[51] This declaration,
although annexed to the Petition for Review appears
nowhere in the records of the trial court and the
appellate court. This is a piece of factual evidence
which should have been presented before the trial
court to be considered and to allow respondents the
opportunity to rebut it or to present evidence to the
contrary. The Rules of Court specifically provides that
The court shall consider no evidence which has not
been formally offered[52] The alleged declaration not
having been formally offered in evidence is deemed to
be a mere scrap of paper which has no evidentiary
value.
Lastly, petitioners contend that the conflict between
the decision of the appellate court and that of the trial
court provides this Court with a ground to review the
decisions of both courts.[53] That may be true but the
circumstance does not suffice to warrant the reversal
of the Court of Appeals Decision. Quite the contrary,
the undisputed facts and the applicable law ineluctably
support the conclusion that the appellate court did not
commit any reversible error.
WHEREFORE, the petition is DENIED due course and
the Decision of the Court of Appeals is AFFIRMED.
Costs against petitioners.

SO ORDERED.

4. Canezo vs. Soledad

FACTS: Caezo vs Soledad G.R. No. 148788Facts:

Petitioner alleges she bought the land and only
entrusted to her father for she left and went to
Mindanao. In 1948 she found out that her step mother
was in possession of the land. She filed for recovery
and damages against defendant. It reached the court
of appeals where the land was awarded to the
defendant because there has been a satisfaction that
the father of the petitioner was the owner.

Held: Resolution of the issue hinges on the

determination of trust - express or implied - by the
petitioner and her father. Intention to create a trust
cannot be inferred from the petitioner's testimony; the
petitioner only testified to the effect that her
agreement with her father was that she will be given a
share in the produce of the property. Petitioner should
not have made an issue in the declaration of taxes in
her father's name if there really was trust. There was
no trust that was established. Petitioner is estopped
from asserting ownership by her failure to protest in
the decision of the estate of her father. Her action is
barred by laches.

5. Araneta vs. CA

Issue: Whether or not the action of the respondent

filed out of time.
6. Herbon vs. Palad
ABERTO HERBON, MARGARITO HERBON and GABINO
HERBON, petitioners,vs.LEOPOLDO T. PALAD and
HELENP. CAYETANO, respondents., G.R. No. 149542July
20, 2006
CASE DIGEST
Gonzalo Palad in his lifetime was a coowner of a parcel of agricultural land located inPoblaci
on, Bagac, Bataan known as Lot 421, with an area of
32,944 square meters and coveredby Transfer
Certificate of Title (TCT) No. 4408 of the Register of

Deeds of Bataan. Gonzalosshare was conjugal

property, having been acquired during his marriage
with Alejandra Nava. Alejandra died in1949, Gonzalo
contracted a second marriage with Remedios Torres, a
widowwith three children from her previous marriage,
herein petitioners. The union of Gonzalo andRemedios
bore no children. On November 16,1983, Gonzalo died.
Thereafter, petitioners
tookpossession of a portion of the property and despit
e respondents demand to vacate andturnover
possession of the property, petitioners refused to do
so.On July 22,1997, the RTC rendered its Decision dism
issing the complaint and orderingrespondents to pay
petitioners P 3,000.00 as attorneys fees and cost of
suit. The RTC held thatthe action for recovery of
possession cannot prosper since petitioners proved
that they are co-owners of the subject property based
on the two deeds od absolute sale; that
Remediosinherited a portion of Gonzalos share and
that when Remedios died, her shares were inheritedby
her three son and being co-owners cannot be ejected
since no definite portion of Lot 421was allotted to
petitioners and respondents.Respondents filed an
appeal with the CA, the CA set aside the decision of
the RTC and orderedpetitioners to vacate the premises
in favor of the respondents, thus a petition for review
oncertiorari under Rule 45 assailing the decision of the
CA.The Supreme Court rules in favor of the petitioners.
The Court finds that on matters of impliedtrust, Article
1448 of the Civil Code provides: 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
thebeneficiary. However, if the person 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 disputablypresumed that there is a gift
in favor of the child. The trust created is sometimes
referred to asa purchase money resulting trust, the
elements of which are: a) an actual payment of
money,property or services, or an equivalent, constitut
ing valuable consideration; and b) suchconsideration
must be furnished by the alleged beneficiary of a
resulting trust

7. Heirs of Moreno vs. MACTAN

GR- 156273

October 15, 2003

FACTS:
MORENO: successors of 2 parcels of land
MACTAN wanted to acquire land:
i.
Government assured
landowners that they could repurchase their lands
once Lahug Airport was closed or its operations
transferred to Mactan Airport
ii.

Moreno refused offer.

iii.
Civil Aeronautics
Administration as the successor agency of the National
Airport Corporation filed a complaint with the Court of
First Instance of Cebu, for the expropriation of land.
iv.
Trial court
promulgated public use upon payment of just
compensation.
v.

MORENO were paid;

no appeal.
vi.

Certificates of title

were issued.
LAHUG AIRPORT CEASED OPERATIONS, lands not
utilized.
Moreno plead for repurchase of land.
i.

TRIAL COURT GRANTED RIGHT TO REPURCHASE but

subject to the alleged property rights of Richard E.
Enchuan and the leasehold of DPWH.
CA reversed: rights gained by MCIAA were indicative of
ownership in fee simple
ISSUE:
Do they have right to repurchase? Or right to
reversion?
HELD:
PETITION GRANTED. CA DECISION REVERSED AND SET
ASIDE.

Filed complaint for

reconveyance and damages.

ii.
Averred that they
have been convinced not to oppose since they could
repurchase.
iii.

DPWH claimed it leased in good faith from MCIAA to

Regional Equipment Services and Region 7 Office.

MCIAA did not object.

ENCHUAN FILED FOR MOTION OF TRANSFER

Acquired through deeds of assignment the rights of
land.

1. Return or repurchase of the condemned properties

of petitioners could be readily justified as the manifest
legal effect or consequence of the trial courts
underlying presumption that Lahug Airport will
continue to be in operation when it granted the
complaint for eminent domain and the airport
discontinued its activities.

2. ARTICLE 1454: If an absolute conveyance of

property is made in order to secure the performance of
an obligation of the grantor toward the grantee, a trust

by virtue of law is established. If the fulfillment of the

obligation is offered by the grantor when it becomes
due, he may demand the reconveyance of the
property to him.
a. In the case at bar, government obliged itself to
use of land for the expansion of Lahug Airport
i.
Failure to keep its
bargain: can be compelled to reconvey, otherwise,
petitioners would be denied the use of their properties
upon a state of affairs that was not conceived nor
contemplated when the expropriation was authorized.

3.
ARTICLE 1189: If the thing is improved by its
nature, or by time, the improvement shall inure to the
benefit of the creditor.
a. CREDITOR: person who stands to receive
something as a result of the process of restitution.
i.
Petitioners must
pay MCIAA the necessary expenses in sustaining the
properties and services
ii.
Government may
keep whatever income or fruits it may have obtained
from the parcels of land.
iii.
Petitioners need
not account for the interests that the amounts they

received as just compensation may have earned in the

meantime.

8. Estate of Cabacungan vs. Laigo

FACTS:
Margarita Cabacungan owned three parcels of
unregistered land in La Union which are covered by tax
declaration all in her name. Sometime in 1968,
Margaritas son, Roberto Laigo, Jr. applied for a nonimmigrant 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.
Roberto adopted respondents Pedro Laigo and Marilou
Laigo. In July 1990, Roberto sold the aforementioned
three parcel of land. One parcel of land was sold to
spouses Mario and Julia Campos and the rest were sold
to Pedro Laigo and Marilou Laigo. These sales were not
known to Margarita and her other children.
During Robertos wake, Margarita came to know of the
sales as told by Pedro himself. Margarita, represented
by her daughter, Luz, instituted a 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.

On February 8, 1999, the trial court rendered a Partial

Decision approving the compromise agreement and
dismissing the complaint against the Spouses Campos.
Trial on the merits ensued with respect to Pedro and
Marilou.

Spouses Campos advanced that they were innocent

purchasers for value and in good faith. Further, they
noted that Margaritas claim was already barred by
prescription and laches owing to her long inaction in
recovering the subject properties.

Trial court rendered judgment dismissing the

complaint. It explained that the 1968 Affidavit of
Transfer operated as a simple transfer of the subject
properties from Margarita to Roberto. It found no
express trust created between Roberto and Margarita
by virtue merely of the said document as there was no
evidence of another document showing Robertos
undertaking to return the subject properties. It
concluded that an "implied or constructive trust" was
created between the parties, as if affirming that there
was indeed an agreement to have the properties
returned to Margarita in due time.

Marilou and Pedro contends to be buyers in good faith

and for value. They also 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 substituted by her estate.

Moreover, the trial court barred recovery from

respondents who were found to have acquired the
properties supposedly in good faith and for value. It
also pointed out that recovery could no longer be
pursued in this case because Margarita had likewise
exhausted the ten-year prescriptive period for
reconveyance based on an implied trust which had
commenced to run in 1968 upon the execution of the
Affidavit of Transfer.
The appellate court had found no implied trust relation
in the transaction between Margarita and Roberto,
nevertheless, it held that the ten-year prescriptive

period under Article 1144 of the Civil Code, in relation

to an implied trust created under Article 1456, had
already been exhausted by Margarita because her
cause of action had accrued way back in 1968 and
that while laches and prescription as defenses could
have availed against Roberto, the same would be
unavailing against Pedro and Marilou because the
latter were supposedly buyers in good faith and for
value.
ISSUES:
Whether or not an action for reconveyance under a
constructive implied trust in accordance with Article
1456 does not prescribe.
HELD:
The Court disagree with the Court of Appeals finding
that there was no evidence on record showing that an
implied trust relation arose between Margarita and
Roberto. It finds that petitioner had offered evidence to
prove the intention of Margarita to transfer to Roberto
only the legal title to the properties in question, with
expectation that Roberto would return the same to her
on accomplishment of that specific purpose for which
the transaction was entered into.
It explained that trust is the legal relationship between
one person having an equitable ownership of 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. Express or

direct trusts are created by the direct and positive acts
of the parties, by some writing or deed, or will, or by
oral declaration in words evincing an intention to
create a trust. Implied trusts arise by legal implication
based on the presumed intention of the parties or on
equitable principles independent of the particular
intention of the parties.
Constructive trusts, on the one hand, come about in
the main by operation of law and not by agreement or
intention. They arise not by any word or phrase, either
expressly or impliedly, evincing a direct intention to
create a trust, but one which arises in order to satisfy
the demands of justice. Constructive trusts are
illustrated in Articles 1450, 1454, 1455 and 1456
Roberto is merely a depositary of legal title having no
duties as to the management, control or disposition of
the property except to make a conveyance when
called upon by the cestui que trust. Hence, the sales
he entered into with respondents are a wrongful
conversion of the trust property and a breach of the
trust.
The Court finds that an action for reconveyance under
a constructive implied trust in accordance with Article
1456 does not prescribe unless and until the land is
registered or the instrument affecting the same is
inscribed in accordance with law, inasmuch as it is
what binds the land and operates constructive notice
to the world.

In the present case, however, the lands involved are

unregistered lands. There is no way by which
Margarita, during her lifetime, could be notified of the
furtive and fraudulent sales made in 1992 by Roberto
in favor of respondents, except by actual notice from
Pedro himself in August 1995. Hence, it is from that
date that prescription began to toll. The filing of the
complaint in February 1996 is well within the
prescriptive period. Finally, such delay of only six (6)
months in instituting the present action hardly be
sufficient to justify a finding of inexcusable delay or to
create an inference that Margarita has allowed her
claim to stale by laches.
The Court granted the petition, affirming the judgment
of the Regional Trial Court and reversed the decision of
the Court of Appeals. It also directed the cancellation
of the tax declarations covering the subject properties
in the name of Roberto D. Laigo and his transferees,
nullified the deeds of sale executed by Roberto D.
Laigo in favor of respondents Pedro Roy Laigo and
Marilou Laigo and directed said respondents to
execute reconveyance in favor of petitioner.
9. TIGNO V CA
Facts: Sometime in January, 1980, Bienvenido Sison,
Remedios Sison and their heirs appointed Dominador
Cruz as agent to sell three (3) parcels of land adjoining
each other located at Padilla St., Lingayen,
Pangasinan. Rodolfo Tigno learned that the above
described properties were for sale. Accordingly, he

approached Cruz and told the latter to offer these

parcels of land to his brother, Eduardo Tigno, herein
appellant.
Pursuant thereto, Cruz and Rodolfo Tigno went to
appellant's Makati office to convince the latter to buy
the properties earlier described. Appellant agreed to
buy them and it was agreed that each parcel of land
would cost Ten Thousand Pesos.
The appropriate deeds of sale were prepared by Atty.
Manuel and signed by Bienvenido Sison and his heirs.
In all these deeds of sale, Rodolfo Tigno was named as
"vendee" pursuant to the verbal instruction of herein
appellant 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. Cruz, the agent in the
sale, signed in these three (3) deeds of sale as a
witness.

On May 16, 1989, appellant learned that Rodolfo Tigno

is "negotiating" a portion of his land to the Casipits.
Appellant then sent a letter to the Casipits advising
them to desist from the intended sale, not knowing
that the sale was already consummated as early as
April 29, 1989.
On May 24, 1989, the plaintiff filed a case for
"Reconveyance, Annulment of Document, Recovery of
Possession and Damages" against Rodolfo M. Tigno
and defendant spouses Edualino Casipit and Avelina
Estrada.
Issue: Whether the evidence on record proves the
existence of an implied trust between Rodolfo Tigno
and Eduardo Tigno.

Held: 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.
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,
Eduardo. Declaring the Deed of Sale executed by
Rodolfo M. Tigno in favor of spouses Edualino Casipit
and Avelina Estrada as null and void and of no effect.