SALAO VS.
SALAO Benita Salao and her nephews and niece asked for the
FACTS:
The spouses Manuel Salao and Valentina Ignacio of
Barrio Dampalit, Malabon, Rizal begot four children
named Patricio, Alejandra, Juan (Banli) and Ambrosia.
Manuel Salao died in 1885. His eldest son, Patricio, died
in 1886 survived by his only child. Valentin Salao.
After Valentina’s death, her estate was administered by
her daughter Ambrosia.
The documentary evidence proves that in 1911 or prior to
the death of Valentina Ignacio her two children, Juan Y.
Salao, Sr. and Ambrosia Salao, secured a Torrens title,
OCT No. 185 of the Registry of Deeds of Pampanga, in
their names
The property in question is the forty-seven-hectare
fishpond located at Sitio Calunuran, Lubao, Pampanga,
wherein Benita Salao-Marcelo daughter of Valentin Salao
claimed 1/3 interest on the said fishpond.
The defendant Juan Y. Salao Jr. inherited from his father
Juan Y. Salao, Sr. ½ of the fishpond and the other half
from the donation of his auntie Ambrosia Salao.
It was alleged in the said case that Juan Y. Salao, Sr and
Ambrosia Salao had engaged in the fishpond business.
Where they obtained the capital and that Valentin Salao
and Alejandra Salao were included in that joint venture,
that the funds used were the earnings of the properties
supposedly inherited from Manuel Salao, and that those
earnings were used in the acquisition of the Calunuran
fishpond. There is no documentary evidence to support
that theory.
The lawyer of Benita Salao and the Children of Victorina
Salao in a letter dated January 26, 1951 informed Juan S.
Salao, Jr. that his clients had a one-third share in the two
fishponds and that when Juani took possession thereof in
1945, in which he refused to give Benita and Victorina’s
children their one-third share of the net fruits which
allegedly amounted to P200,000. However, there was no
mention on the deeds as to the share of Valentin and
Alejandra.
Juan S. Salao, Jr. in his answer dated February 6, 1951
categorically stated that Valentin Salao did not have any
interest in the two fishponds and that the sole owners
thereof his father Banli and his aunt Ambrosia, as shown
in the Torrens titles issued in 1911 and 1917, and that he
Juani was the donee of Ambrosia’s one-half share.
annulment of the donation to Juan S. Salao, Jr. and for the
reconveyance to them of the Calunuran fishpond as
Valentin Salao’s supposed one-third share in the 145
hectares of fishpond registered in the names of Juan Y.
Salao, Sr. and Ambrosia Salao.
ISSUE:
1. Whether or not the Calunuran fishpond was held
in trust for Valentin Salao by Juan Y. Salao, Sr.
and Ambrosia Salao.
2. Whether or not plaintiffs’ action for
reconveyance had already prescribed.
RULING:
1. There was no resulting trust in this case because
there never was any intention on the part of Juan Y.
Salao, Sr., Ambrosia Salao and Valentin Salao to
create any trust. There was no constructive trust
because the registration of the two fishponds in the
names of Juan and Ambrosia was not vitiated by fraud
or mistake. This is not a case where to satisfy the
demands of justice it is necessary to consider the
Calunuran fishpond ” being held in trust by the heirs
of Juan Y. Salao, Sr. for the heirs of Valentin Salao.
Ratio:
A Torrens Title is generally a conclusive evidence of the
ownership of the land referred to therein. (Sec. 47, Act
496). A strong presumption exists that Torrens titles were
regularly issued and that they are valid. In order to
maintain an action for reconveyance, proof as to the
fiduciary relation of the parties must be clear and
convincing.
The plaintiffs utterly failed to prove by clear, satisfactory
and convincing evidence. It cannot rest on vague and
uncertain evidence or on loose, equivocal or indefinite
declarations.
Trust and trustee; establishment of trust by parol
evidence; certainty of proof. — Where a trust is to be
established by oral proof, the testimony supporting it must
be sufficiently strong to prove the right of the alleged
beneficiary with as much certainty as if a document
proving the trust were shown. A trust cannot be
established, contrary to the recitals of a Torrens title,
upon vague and inconclusive proof.
Trusts; evidence needed to establish trust on parol according to the circumstances, be destructive of the right
testimony. — In order to establish a trust in real property itself.”
by parol evidence, the proof should be as fully convincing
Having reached the conclusion that the plaintiffs are not
as if the act giving rise to the trust obligation were proven
entitled to the reconveyance of the Calunuran fishpond, it
by an authentic document. Such a trust cannot be
is no longer to Pass upon the validity of the donation made
established upon testimony consisting in large part of
by Ambrosia Salao to Juan S. Salao, Jr. of her one-half
insecure surmises based on ancient hearsay. (Syllabus,
share in the two fishponds The plaintiffs have no right and
Santa Juana vs. Del Rosario 50 Phil. 110).
personality to assil that donation.
The foregoing rulings are good under article 1457 of the
Even if the donation were declared void, the plaintiffs
Civil Code which, as already noted, allows an implied
would not have any successional rights to Ambrosia’s
trust to be proven by oral evidence. Trustworthy oral
share. The sole legal heir of Ambrosia was her nephew,
evidence is required to prove an implied trust because,
Juan, Jr., her nearest relative within the third degree.
oral evidence can be easily fabricated.
Valentin Salao, if living in 1945 when Ambrosia died,
On the other hand, a Torrens title is generally a conclusive would have been also her legal heir, together with his first
of the ownership of the land referred to therein (Sec. 47, cousin, Juan, Jr. (Juani). Benita Salao, the daughter of
Act 496). A strong presumption exists. that Torrens titles Valentin, could not represent him in the succession to the
were regularly issued and that they are valid. In order to estate of Ambrosia since in the collateral line,
maintain an action for reconveyance, proof as to the representation takes place only in favor of the children of
fiduciary relation of the parties must be clear and brothers or sisters whether they be of the full or half blood
convincing. is (Art 972, Civil Code). The nephew excludes a
grandniece like Benita Salao or great-gandnephews like
The real purpose of the Torrens system is, to quiet title to
the plaintiffs Alcuriza (Pavia vs. Iturralde 5 Phil. 176).
land. “Once a title is registered, the owner may rest
secure, without the necessity of waiting in the portals of
the court, or sitting in the mirador de su casa, to avoid the
possibility of losing his land”.
2. Reconveyance had already prescribed. Plaintiffs’
action is clearly barred by prescription or laches.
Ratio:
Under Act No. 190, whose statute of limitation would
apply if there were an implied trust in this case, the
longest period of extinctive prescription was only ten
year.
The Calunuran fishpond was registered in 1911. The
written extrajudicial demand for its reconveyance was
made by the plaintiffs in 1951. Their action was filed in
1952 or after the lapse of more than forty years from the
date of registration. The plaintiffs and their predecessor-
in-interest, Valentin Salao, slept on their rights if they had
any rights at all. Vigilanti prospiciunt jura or the law
protects him who is watchful of his rights (92 C.J.S. 1011,
citing Esguerra vs. Tecson, 21 Phil. 518, 521).
“Undue delay in the enforcement of a right is strongly
persuasive of a lack of merit in the claim, since it is human
nature for a person to assert his rights most strongly when
they are threatened or invaded”. “Laches or unreasonable
delay on the part of a plaintiff in seeking to enforce a right
is not only persuasive of a want of merit but may,
MINDANAO DEVELOPMENT AUTHORITY VS
CA
FACTS:
FACTS:
It is not disputed that Francisco Ang Bansing was the
owner of a big tract of land with an area of about 300,000
sq.m., situated in Barrio Panacan Davao City.
February 25, 1939, Ang Bansing sold a portion thereof,
with an area of about 5 hectares to Juan Cruz Yap Chuy
The contract provided, among others, the following:
That I hereby agree to work for the titling of the entire
area of my land under my own expenses and the expenses
for the titling of the portion sold to me shall be under the
expenses of the said Juan Cruz Yap Chuy.
After the sale, the land of Ang Bansing was surveyed and
designated as Lot 664-B, Psd-1638. Lot 664-B was
further subdivided into five (5) lots
The portion sold to Juan Cruz Yap Chuy shortened to Juan
Cruz, was designated as Lot 664B-3, with an area of
61.107 square meters, more or less.
June 15-17 and December 15, 1939, a cadastral survey
was made and Lot 664-B-3 was designated as Lot 1846-
C of the Davao Cadastre.
December 23, 1939, Juan Cruz sold Lot 1846-C to the
Commonwealth of the Philippines for the amount of
P6,347.50. On that same day, Juan Cruz, as vendor, and
C.B. Cam and Miguel N. Lansona as sureties, executed a
surety bond in favor of the vendee to guarantee the
vendor's absolute title over the land sold.
Cadastral survey plan was approved by the Director of
Lands on July 10, 1940
March 7, 1941, Original Certificate of Title No. 26 was
issued in the means of Victoriana Ang Bansing, Orfelina
Ang Bansing and Francisco Ang Bansing as claimants of
the land, pursuant to Decree No. 745358 issued on July
29, 1940. On March 31, 1941, OCT No. 26 was cancelled
pursuant to a Deed of Adjudication and TCTNo. 1783 was
issued in the name of Francisco Ang Bansing.
February 25, 1965, the President of the Philippines issued
Proclamation No. 459, transferring ownership of certain
parcels of land situated in Sasa Davao City, to the
Mindanao Development Authority, now the Southern
Philippines Development Administration, subject to
private rights, if any.
Lot 1846-C, the disputed parcel of land, was among the
parcels of land transferred to the Mindanao Development
Authority in said proclamation.
March 31, 1969, Atty. Hector L. Bisnar counsel for the
Mindanao Development Authority, wrote Ang Bansing
requesting the latter to surrender the Owner's duplicate
copy of TCT No. 2601 so that Lot 1846-C could be
formally transferred to his client but Ang Bansing
refused.
Consequently, on April 11, 1969, the MDA filed a
complaint against Francisco Ang Bansing before the CFI
of Davao City, for the reconveyance of the title over Lot
1846-C, alleging, among others, the following:
ISSUE:
1. WON Francisco Ang Bansing as vendor and the
one who worked to secure the title of his entire
tract of land which included the portion sold by
him. to Juan Cruz Yap Chuy acted in the capacity
of and/or served as trustee for any and all parties
who become successor-in-interest to Juan Cruz
Yap Chuy
2. WON Ang Bansing was bound and obligated to
give, deliver and reconvey to Juan Cruz Yap
Chuy and/or his successor-in-interest the title
pertaining to the portion of land sold and
conveyed by him to Juan Cruz Yap Chuy by
virtue of the deed of sale and his affidavit.
HELD:
No express trust had been created between Ang Banging
and Juan Cruz over Lot 1846-C of the Davao Cadastre.
"Trusts are either express or implied. Express trusts are
created by the intention of the trustor or of the parties.
Implied trusts come into being by operation of law."
It is fundamental in the law of trusts that certain
requirements must exist before an express trust will be
recognized. Basically, these elements include
1. Competent trustor and trustee,
2. Ascertainable trust res, and sufficiently certain
beneficiaries. Stilted formalities are unnecessary, but
nevertheless each of the above elements is required to be
established, and, if any one of them is missing, it is fatal
to the trusts.
3. Present and complete disposition of the trust
property, notwithstanding that the enjoyment in the
beneficiary will take place in the future.
4. The purpose be an active one to prevent trust from
being executed into a legal estate or interest, and one that
is not in contravention of some prohibition of statute or
rule of public policy.
5. Some power of administration other than a mere
duty to perform a contract although the contract is for a
third-party beneficiary.
6. Declaration of terms which must be stated with
reasonable certainty in order that the trustee may
administer, and that the court, if called upon so to do, may
enforce, the trust.
In this case, the herein petitioner relies mainly upon the
following stipulation in the deed of sale executed by Ang
Bansing in favor of Juan Cruz to prove that an express
trust had been established with Ang Bansing as the settlor
and trustee and Juan Cruz as the cestui que trust or
beneficiary:
That I hereby agree to work for the titling of the entire
area of my land under my own expenses and the expenses
for the titling of the portion sold to me shall be under the
expenses of said Juan Cruz Yap Chuy.
The above-quoted stipulation, however, is nothing but a
condition that Ang Bansing shall pay the expenses for the
registration of his land and for Juan Cruz to shoulder the
expenses for the registration of the land sold to him. The
stipulation does not categorically create an obligation on
the part of Ang Bansing to hold the property in trust for
Juan Cruz. Hence, there is no express trust.
It is essential to the creation of an express trust that the
settlor presently and unequivocally make a disposition of
property and make himself the trustee of the property for
the benefit of another.
In case of a declaration of trust, the declaration must be
clear and unequivocal that the owner holds property in
trust for the purposes named.
While Ang Bansing had agreed in the deed of sale that he
will work for the titling of "the entire area of my land
under my own expenses," it is not clear therefrom whether
said statement refers to the 30-hectare parcel of land or to
that portion left to him after the sale. A failure on the part
of the settlor definitely to describe the subject-matter of
the supposed trust or the beneficiaries or object thereof is
strong evidence that he intended no trust.
The intent to create a trust must be definite and particular.
It must show a desire to pass benefits through the medium
of a trust, and not through some related or similar device.
Clear and unequivocal language is necessary to create a
trust and mere precatory language and statements of
ambiguous nature, are not sufficient to establish a trust.
As the Court stated in the case of De Leon vs. Packson,
a trust must be proven by clear, satisfactory and
convincing evidence; it cannot rest on vague and
uncertain evidence or on loose, equivocal or indefinite
declarations. Considering that the trust intent has not been
expressed with such clarity and definiteness, no express
trust can be deduced from the stipulation aforequoted.
Nor will the affidavit executed by Ang Bansing on April
23, 1941, be construed as having established an express
trust. As counsel for the herein petitioner has stated, "the
only purpose of the Affidavit was to clarify that the area
of the land sold by Ang Bansing to Juan Cruz Yap Chuy
is not only 5 hectares but 61,107 square meters or a little
over six (6) hectares."
That no express trust had been agreed upon by Ang
Bansing and Juan Cruz is evident from the fact that Juan
Cruz, the supposed beneficiary of the trust, never made
any attempt to enforce the alleged trust and require the
trustee to transfer the title over Lot 1846-C in his name.
Despite numerous transfers of portions of the original 30-
hectare parcel of land of Ang Bansing to Juan Cruz and
the issuance of certificates of title in the name of Juan
Cruz, the latter never sought the transfer of the title to Lot
1846-C in his name. For sure, if the parties had agreed that
Ang Bansing shall hold the property in trust for Juan Cruz
until after the former shall have obtained a certificate of
title to the land, the latter would have asked for the
reconveyance of the title to him in view of the surety bond
executed by him in favor of the Commonwealth
Government wherein he warrants his title over the
property. The conduct of Juan Cruz is inconsistent with a
trust and may well have probative effect against a trust.
But, even granting, arguendo, that an express trust had
been established, as claimed by the herein petitioner, it
would appear that the trustee had repudiated the trust and
the petitioner herein, the alleged beneficiary to the trust,
did not take any action therein until after the lapse of 23
years.
Needless to say, only an implied trust may have been
impressed upon the title of Ang Banging over Lot 1846-
C of the Davao Cadastre since the land in question was
registered in his name although the land belonged to
another. In implied trusts, there is neither promise nor
fiduciary relations, the so-called trustee does not
recognize any trust and has no intent to hold the property
for the beneficiary." It does not arise by agreement or
intention, but by operation of law. Thus, if property is
acquired through mistake or fraud, the person obtaining it
is, by force of law, considered a trustee of an implied trust
for the benefit of the person from whom the property
comes.
If a person obtains legal title to property by fraud or
concealment, courts of equity will impress upon the title
a so-called constructive trust in favor of the defrauded
party.
There is also a constructive trust if a person sells a parcel
of land and thereafter obtains title to it through fraudulent
misrepresentation.
Such a constructive trust is not a trust in the technical
sense and is prescriptible; it prescribes in 10 years. Here,
the 10-year prescriptive period began on March 31, 1941,
upon the issuance of Original Certificate of Title No. 26
in the names of Victoriana Ang Bansing Orfelina Ang
Bansing and Francisco Ang Banging. From that date up
to April 11, 1969, when the complaint for reconveyance
was filed, more than 28 years had passed. Clearly, the
action for reconveyance had prescribed.
RAMOS VS RAMOS
FACTS:
Spouses Martin Ramos and Candida Tanate died on
October 4, 1906 and October 26, 1880, respectively. They
were survived by their 3 children. Moreover, Martin was
survived by his 7 natural children. In December 1906, a
special proceeding for the settlement of the intestate estate
of said spouses was conducted. Rafael Ramos, a brother
of Martin, administered the estate for more than 6 years.
Eventually, a partition project was submitted which was
signed by the 3 legitimate children and 2 of the 7 natural
children. A certain Timoteo Zayco signed in
representation of the other 5 natural children who were
minors. The partition was sworn to before a justice of
peace.
The conjugal hereditary estate was appraised at
P74,984.93, consisting of 18 parcels of land, some head
of cattle and the advances to the legitimate children. ½
thereof represented the estate of Martin. 1/3 thereof was
the free portion or P12,497.98. The shares of the 7 natural
children were to be taken from that 1/3 free portion.
Indeed, the partition was made in accordance with the Old
Civil code. Thereafter, Judge Richard Campbell approved
the partition project. The court declared that the
proceeding will be considered closed and the record
should be archived as soon as proof was submitted that
each he3ir had received the portion adjudicated to him.
On February 3, 1914, Judge Nepumoceno asked the
administrator to submit a report showing that the shares
of the heirs had been delivered to them as required by the
previous decision. Nevertheless, the manifestation was
not in strict conformity with the terms of the judge’s order
and with the partition project itself. 8 lots of the
Himamaylan Cadastre were registered in equal shares in
the names of Gregoria (widow of Jose Ramos) and her
daughter, when in fact the administrator was supposed to
pay the cash adjudications to each of them as enshrined in
the partition project. Plaintiffs were then constrained to
bring the suit before the court seeking for the
reconveyance in their favor their corresponding
participations in said parcels of land in accordance with
Article 840 of the old Civil Code. Note that 1/6 of the
subject lots represents the 1/3 free portion of martin’s
shares which will eventually redound to the shares of his
7 legally acknowledged natural children. The petitioners’
action was predicated on the theory that their shares were
merely held in trust by defendants. Nonetheless, no Deed
of Trust was alleged and proven. Ultimately, the lower
court dismissed the complaint on the grounds of res
judicata, prescription and laches.
ISSUE:
Whether or not the plaintiffs’ action was barred by
prescription, laches and res judicata to the effect that they
were denied of their right to share in their father’s estate.
RULING:
The crucial issue is prescription. With it the question
of res judicata and the existence of a trust are inextricably
interwoven. Inasmuch as trust is the main thrust of
plaintiffs' action, it will be useful to make a brief
disgression of the nature of trusts (fideicomisos) and on
the availability of prescription and laches to bar the action
for reconveyance of property allegedly held in trust.
"In its technical legal sense, a trust is defined as the right,
enforceable solely in equity, to the beneficial enjoyment
of property, the legal title to which is vested in another,
but the words 'trust' is frequently employed to indicate
duties, relations, and responsibilities which are not strictly
technical trusts."
"A person who establishes a trust is called the trust or; one
in whom confidence is reposed is known as the trustee;
and the person for whose benefit the trust has been created
is referred to as the beneficiary" (Art. 1440, Civil Code).
There is a fiduciary relation between the trustee and
the cestui que trust as regards certain property, real,
personal, money or choses inaction.
"Trusts are either express or implied. Express trusts are
created by the intention of the trust or of the parties.
Implied trusts come into being by operation of law." (Art.
1144, Civil Code). "No express trusts concerning an
immovable or any interest therein may be proven by oral
evidence. An implied trust may be proven by oral
evidence".
"No particular words are required for the creation of an
express trust, it being sufficient that a trust is clearly
intend". "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 either expressly or impliedly
evincing an intention to create a trust".
"Implied trust are those which, without being expressed,
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 matters of equity, independently of
the particular intention of the parties". They are ordinarily
subdivided into resulting and constructive trusts.
"A resulting trust is broadly defined as a trust which is
raised or created by the act or construction of law, but in
its more restricted sense it is a trust raised by implication
of law and presumed always to have been contemplated
by the parties, the intention as to which is to be found in
the nature of their transaction, but not expressed in the
deed or instrument of conveyance".
On the other hand, a constructive trust is a trust "raised by
construction of law, or arising by operation of law". In a
more restricted sense and as contra distinguished from a
resulting trust, a constructive trust is "a trust not created
by any words, either expressly or impliedly evincing a
direct intention to create a trust, but by the construction of
equity in order to satisfy the demands of justice. It does
not arise by agreement or intention but by operation of
law." "If a person obtains legal title to property by fraud
or concealment, courts of equity will impress upon the
title a so-called constructive trust in favor of the defrauded
party." A constructive trust is not a trust in the technical
sense.
There is a rule that a trustee cannot acquire by prescription
the ownership of property entrusted to him, or that an
action to compel a trustee to convey property registered
in his name in trust for the benefit of the cestui qui
trust does not prescribed, or that the defense of
prescription cannot be set up in an action to recover
property held by a person in trust for the benefit of
another, or that property held in trust can be recovered by
the beneficiary regardless of the lapse of time.
That rule applies squarely to express trusts. The basis of
the rule is that the possession of a trustee is not adverse.
Not being adverse, he does not acquire by prescription the
property held in trust. Thus, section 38 of Act 190
provides that the law of prescription does not apply "in
the case of a continuing and subsisting trust".
The rule of imprescriptibility of the action to recover
property held in trust may possibly apply to resulting
trusts as long as the trustee has not repudiated the trust.
The rule of imprescriptibility was misapplied to
constructive trusts.
Acquisitive prescription may bar the action of the
beneficiary against the trustee in an express trust for the
recovery of the property held in trust where (a) the trustee
has performed unequivocal acts of repudiation amounting
to an ouster of the cestui qui trust; (b) such positive acts
of repudiation have been made known to the cestui qui
trustand(c) the evidence thereon is clear and conclusive.
With respect to constructive trusts, the rule is different.
The prescriptibility of an action for reconveyance based
on constructive trust is now settled. Prescription may
supervene in an implied trust.
And whether the trust is resulting or constructive, its
enforcement may be barred by laches.
The plaintiffs did not prove any express trust in this case.
The expediente of the intestate proceeding, Civil Case
No. 217, particularly the project of partition, the decision
and the manifestation as to the receipt of shares (Exh. 3,
4 and 6)negatives the existence of an express trust. Those
public documents prove that the estate of Martin Ramos
was settled in that proceeding and that adjudications were
made to his seven natural children. A trust must be proven
by clear, satisfactory, and convincing evidence. It cannot
rest on vague and uncertain evidence or on loose,
equivocal or indefinite declarations. As already noted, an
express trust cannot be proven by parol evidence.
Neither have the plaintiffs specified the kind of implied
trust contemplated in their action. We have stated that
whether it is a resulting or constructive trust, its
enforcement may be barred by laches.
In the cadastral proceedings, which supervened after the
closure of the intestate proceeding, the eight lots involved
herein were claimed by the spouses Jose Ramos and
Gregoria T. Ramos to the exclusion of the plaintiffs (Exh.
8 to 19). After the death of Jose Ramos, the said lots were
adjudicated to his widow and daughter (Exh. 8). In 1932
Gregoria T. Ramos and Candida Ramos leased the said
lots to Felix Yulo (Exh. 20).Yulo in 1934 transferred his
lease rights over Hacienda Calazato Juan S. Bonin and
Nestor Olmedo, the husband of plaintiff Atanacia Ramos
(Exh. 22). Bonin and Olmedo in 1935 sold their lease
rights over Hacienda Calaza to Jesus S. Consing.
Those transactions prove that the heirs of Jose Ramos had
repudiated any trust which was supposedly constituted
over Hacienda Calaza in favor of the plaintiffs.
Under Act 190, whose statute of limitations applies to this
case, the longest period of extinctive prescription was
only ten years.
Atanacia, Modesto and Manuel, all surnamed Ramos,
were already of age in 1914. From that year, they could
have brought the action to annul the partition. Maria
Ramos and Emiliano Ramos were both born in 1896.
They reached the age of twenty-one years in 1917. They
could have brought the action from that year.
The instant action was filed only in 1957. As to Atanacia,
Modesto and Manuel, the action was filed forty-three
years after it accrued and, as to Maria and Emiliano, the
action was filed forty years after it accrued. The delay was
inexcusable. The instant action is unquestionably barred
by prescription and res judicata.
EXPRESS TRUST – CREATION
PNB VS AZNAR
FACTS
In 1958, RISCO ceased operation due to business
reverses. In plaintiffs' desire to rehabilitate RISCO, they
contributed a total amount of P212,720.00 which was
used in the purchase of the three (3) parcels of land
After the purchase of the above lots, titles were issued in
the name of RISCO. The amount contributed by plaintiffs
(Aznar et al) constituted as liens and encumbrances on the
aforementioned properties as annotated in the titles of said
lots. Such annotation was made pursuant to the Minutes
of the Special Meeting of the Board of Directors of
RISCO
Thereafter, various subsequent annotations were made on
the same titles, including the Notice of Attachment and
Writ of Execution both dated August 3, 1962 in favor of
herein defendant PNB
As a result, a Certificate of Sale was issued in favor of
Philippine National Bank, being the lone and highest
bidder of the three (3) parcels of land for the amount of
P31,430.00
Thereafter, a Final Deed of Sale dated May 27, 1991 in
favor of the Philippine National Bank was also issued and
Transfer Certificate of Title No. 24576 for Lot 1328-C
(corrected to 1323-C) was cancelled and a new certificate
of title, TCT 119848 was issued in the name of PNB on
August 26, 1991.
This prompted plaintiffs-appellees to file the instant
complaint seeking the quieting of their supposed title to
the subject properties, declaratory relief, cancellation of
TCT and reconveyance with temporary restraining order
and preliminary injunction. Plaintiffs alleged that the
subsequent annotations on the titles are subject to the prior
annotation of their liens and encumbrances. Plaintiffs
further contended that the subsequent writs and processes
annotated on the titles are all null and void for want of
valid service upon RISCO and on them, as stockholders.
They argued that the Final Deed of Sale and TCT No.
119848 are null and void as these were issued only after
28 years and that any right which PNB may have over the
properties had long become stale.
Defendant PNB on the other hand countered that plaintiffs
have no right of action for quieting of title since the order
of the court directing the issuance of titles to PNB had
already become final and executory and their validity
cannot be attacked except in a direct proceeding for their
annulment. Defendant further asserted that plaintiffs, as
mere stockholders of RISCO do not have any legal or
equitable right over the properties of the corporation.
PNB posited that even if plaintiff's monetary lien had not
expired, their only recourse was to require the
reimbursement or refund of their contribution.
Trial court rendered the November 18, 1998 Decision,
which ruled against PNB on the basis that there was an
express trust created over the subject properties whereby
RISCO was the trustee and the stockholders, Aznar, et al.,
were the beneficiaries or the cestui que trust.
CA set asided the decision of the trial court. Although the
Court of Appeals agreed with the trial court that a
judgment on the pleadings was proper, the appellate court
opined that the monetary contributions made by Aznar, et
al., to RISCO can only be characterized as a loan secured
by a lien on the subject lots, rather than an express
trust. Thus, it directed PNB to pay Aznar, et al., the
amount of their contributions plus legal interest from the
time of acquisition of the property until finality of
judgment.
ISSUE: W/N an express trust was created based on the
language of the minutes of the meeting
RULING: No.
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.[21]
Express trusts, sometimes referred to as direct trusts, are
intentionally created by the direct and positive acts of the
settlor or the trustor - by some writing, deed, or will or
oral declaration. It is created not necessarily by some
written words, but by the direct and positive acts of the
parties.[22] This is in consonance with Article 1444 of the
Civil Code, which states that "[n]o particular words are
required for the creation of an express trust, it being
sufficient that a trust is clearly intended."
In other words, the creation of an express trust must be
manifested with reasonable certainty and cannot be
inferred from loose and vague declarations or from
ambiguous circumstances susceptible of other
interpretations.[23]
No such reasonable certitude in the creation of an express contributions used to purchase the subject properties is
trust obtains in the case at bar. In fact, a careful scrutiny already barred by prescription.
of the plain and ordinary meaning of the terms used in the
The Minutes which was approved on March 14, 1961 is
Minutes does not offer any indication that the parties
considered as a written contract between Aznar, et al., and
thereto intended that Aznar, et al., become beneficiaries
RISCO for the reimbursement of the contributions of the
under an express trust and that RISCO serve as trustor.
former. As such, the former had a period of ten (10) years
from 1961 within which to enforce the said written
Indeed, we find that Aznar, et al., have no right to ask for
contract. However, it does not appear that Aznar, et al.,
the quieting of title of the properties at issue because they
filed any action for reimbursement or refund of their
have no legal and/or equitable rights over the properties
contributions against RISCO or even against
that are derived from the previous registered owner which
PNB. Instead the suit that Aznar, et al., brought before
is RISCO, the pertinent provision of the law is Section 2
the trial court only on January 28, 1998 was one to quiet
of the Corporation Code (Batas Pambansa Blg. 68),
title over the properties purchased by RISCO with their
which states that "[a] corporation is an artificial being
contributions. It is unmistakable that their right of action
created by operation of law, having the right of succession
to claim for refund or payment of their contributions had
and the powers, attributes and properties expressly
long prescribed. Thus, it was reversible error for the
authorized by law or incident to its existence."
Court of Appeals to order PNB to pay Aznar, et al., the
amount of their liens based on the Minutes with legal
As a consequence thereof, a corporation has a personality
interests from the time of PNB's acquisition of the subject
separate and distinct from those of its stockholders and
properties.
other corporations to which it may be connected.[24] Thus,
we had previously ruled in Magsaysay-Labrador v. Court
of Appeals[25] that the interest of the stockholders over the
properties of the corporation is merely inchoate and
therefore does not entitle them to intervene in litigation
involving corporate property.
In the case at bar, there is no allegation, much less any
proof, that the corporate existence of RISCO has ceased
and the corporate property has been liquidated and
distributed to the stockholders. The records only indicate
that, as per Securities and Exchange Commission (SEC)
Certification[27] dated June 18, 1997, the SEC merely
suspended RISCO's Certificate of Registration beginning
on September 5, 1988 due to its non-submission of SEC
required reports and its failure to operate for a continuous
period of at least five years.

Verily, Aznar, et al., who are stockholders of RISCO,

cannot claim ownership over the properties at issue in this
case on the strength of the Minutes which, at most, is
merely evidence of a loan agreement between them and
the company. There is no indication or even a suggestion
that the ownership of said properties were transferred to
them which would require no less that the said properties
be registered under their names. For this reason, the
complaint should be dismissed since Aznar, et al., have
no cause to seek a quieting of title over the subject
properties.

At most, what Aznar, et al., had was merely a right to be

repaid the amount loaned to RISCO. Unfortunately, the
right to seek repayment or reimbursement of their
IMPLIED TRUST – CONCEPT
PNB VS CA
FACTS: Private Respondent B.P. Mata & Co. Inc.
(Mata), is a private corporation engaged in providing
goods and services to shipping companies. Since 1966, it
has acted as a manning or crewing agent for several
foreign firms, one of which is Star Kist Foods, Inc., USA
(Star Kist). As part of their agreement, Mata makes
advances for the crew's medical expenses, National
Seaman's Board fees, Seaman's Welfare fund, and
standby fees and for the crew's basic personal needs.
Subsequently, Mata sends monthly billings to its foreign
principal Star Kist, which in turn reimburses Mata by
sending a telegraphic transfer through banks for credit to
the latter's account.
Against this background, on February 21, 1975, Security
Pacific National Bank (SEPAC) of Los Angeles which
had an agency arrangement with Philippine National
Bank (PNB), transmitted a cable message to the
International Department of PNB to pay the amount of
US$14,000 to Mata by crediting the latter's account with
the Insular Bank of Asia and America (IBAA), per order
of Star Kist. Upon receipt of this cabled message on
February 24, 1975, PNB's International Department
noticed an error and sent a service message to SEPAC
Bank. The latter replied with instructions that the amount
of US$14,000 should only be for US$1,400.
On the basis of the cable message dated February 24, 1975
Cashier's Check No. 269522 in the amount of US$1,400
(P9,772.95) representing reimbursement from Star Kist,
was issued by the Star Kist for the account of Mata on
February 25, 1975 through the IBAA
However, fourteen days after or on March 11, 1975, PNB
effected another payment through Cashier's Check No.
270271 in the amount of US$14,000 (P97,878.60)
purporting to be another transmittal of reimbursement
from Star Kist, private respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981,
PNB requested Mata for refund of US$14,000
(P97,878.60) after it discovered its error in effecting the
second payment.
On February 4, 1982, PNB filed a civil case for collection
and refund of US$14,000 against Mata arguing that based
on a constructive trust under Article 1456 of the Civil
Code, it has a right to recover the said amount it
erroneously credited to respondent Mata.1
After trial, the Regional Trial Court of Manila rendered
judgment dismissing the complaint ruling that the instant
case falls squarely under Article 2154 on solutio
indebiti and not under Article 1456 on constructive trust.
The lower court ruled out constructive trust, applying
strictly the technical definition of a trust as "a right of
property, real or personal, held by one party for the benefit
of another; that there is a fiduciary relation between a
trustee and a cestui que trust as regards certain property,
real, personal, money or choses in action."2
In affirming the lower court, the appellate court added in
its opinion that under Article 2154 on solutio indebiti, the
person who makes the payment is the one who commits
the mistake vis-a-vis the recipient who is unaware of such
a mistake.3 Consequently, recipient is duty bound to
return the amount paid by mistake. But the appellate court
concluded that petitioner's demand for the return of
US$14,000 cannot prosper because its cause of action had
already prescribed; action was filed 7 years after
petitioner mistakenly made payment to private
respondent. It should only be 6 years.
Petitioner naturally opts for an interpretation under
constructive trust as its action filed on February 4, 1982
can still prosper, as it is well within the prescriptive period
of ten (10) years as provided by Article 1144, paragraph
2 of the Civil Code.5
If it is to be construed as a case of payment by mistake
or solutio indebiti, then the prescriptive period for quasi-
contracts of six years applies, as provided by Article 1145.
As pointed out by the appellate court, petitioner's cause of
action thereunder shall have prescribed, having been
brought almost seven years after the cause of action
accrued.
ISSUE: WON petitioner may still claim the US$14,000 it
erroneously paid private resp under a constructive trust.
RULING: No. Although the Court is aware that only
seven (7) years lapsed after petitioner erroneously
credited private respondent with the said amount and that
under Article 1144, petitioner is well within the
prescriptive period for the enforcement of a constructive
or implied trust, the Court rule that petitioner's claim
cannot prosper since it is already barred by laches. It is a
well-settled rule now that an action to enforce an implied
trust, whether resulting or constructive, may be barred not
only by prescription but also by laches.
While prescription is concerned with the fact of delay,
laches deals with the effect of unreasonable delay. It is
amazing that it took petitioner almost seven years before
it discovered that it had erroneously paid private
respondent.
SPECIAL SERVICES CORP VS CENTRO LA PAZ
FACTS
Trustor: Centro La Paz
Trustee: Alejandro Estudillo, et. al*
The Union Espiritista Cristiana de Filipinas, Inc., is a
semi-religious and charitable organization.
October 10, 1972, judgment was rendered in favor of
petitioner Special Services Corporation by the CFI,
Branch IV, Manila, against one Alejandro Estudillo in the
amount of P94,727.52, more or less, in an action for
Replevin with Sum of Money. A writ of execution was
thereafter issued but which has remained unsatisfied.
December 15, 1972, the Sheriff of Manila caused the
annotation of a notice of levy on TCT No. 51837, in
respect of the rights, interest and participation of
Alejandro Estudillo, one of the registered owners
indicated in said title.
Title covers 2 parcels of land situated in Sampaloc,
Manila, consisting 348 square meters and registered in the
names of:*
1. Alejandro Estudillo, married to Primitiva
Victoria;
2. Joaquina de la Rosa, widow;
3. Pedro Paguio, married to Amor Jose and
4. Maximo Victoria, married to Juliana Roberto, all
Chapter members.
July 23, 1973: schedule of the public auction sale of
Estudillo's rights and interests in said properties
June 27, 1973, Alejandro Estudillo filed a "Motion to
Dissolve and/or Cancel the Notice of Levy" alleging that
he and the other registered owners indicated on the title
merely held in trust the properties and improvements
thereon in favor of Centro La Paz (Samahang Espiritista
Sa Lunduyang La Paz) a Chapter of Union Espiritista
Cristiana de Filipinas, Inc. as evidenced by
"Acknowledgments" executed by them on October 20,
1961 and October 2, 1971.
Estudillo further alleged that CENTRO's ownership was
also evidenced by letters sent to the City Assessor by him
and Crispulo Romero, President of CENTRO, long before
the filing of the replevin case on December 28, 1971
praying for the revocation of tax assessments on said
properties as the same, were used for religious purposes.
Date of letters are as follows
1. February 15, 1963
2. November 29, 1963 and
3. August 8, 1966
July 21, 1973, CENTRO submitted a third party claim to
the Sheriff of Manila likewise averring exclusive
ownership of the properties in question.
ISSUE
I. WON Estudillo is merely the trustee of Centro La
Paz?
II. WON the “Acknowledgements” of registered
owners not being annotated on TCT No. 51837 is
conclusive of all matters, valid and binding?
III. Whether or not Centro La Paz which is merely a
Chapter of Union Espiritista de Filipinas, Inc. has
a juridical personality of its own in accordance
with the provisions of our laws;
RULING
I.
1. CENTRO reiterated ownership of the properties
in question and emphasized that the registered
owners thereof had publicly acknowledged their
possession of said properties in the concept of
trustees.
2. Preponderance of evidence CENTRO had
established that it was "really and true and lawful
owner of the property in dispute, and that the
persons registered therein as its owners are
merely trustees of the plaintiff, the series of
documents executed even as early as 1957, long
before the issue of whether Alejandro Estudillo
really has an interest and/or participation in the
property in dispute, attest to plaintiff's ownership
of the property in question.
 The Deed of Donation dated March 13, 1957
 Deed of Absolute Sale executed by Joaquina dela
Rosa in favor of Alejandro Estudillo, Pedro
Paguio and Maximo Victoria of the same
property covered by the Deed of Donation;
 Deed of Sale of two parcels in dispute described
under T.C.T. No. 51837 executed by Sta. Mesa
Realty, Inc. in favor of Alejandro Estudillo,
Joaquina dela Rosa, Pedro Q. Paguio and
Maximo Victoria
  Deed of Acknowledgment dated October 30, said sale since it had knowledge of CENTRO's claim,
1961 also executed by Estudillo de la Rosa and particularly when the latter had filed a third-party-claim
Victoria acknowledging that the property with the Sheriff of Manila before the scheduled auction
described under the aforementioned T.C.T. No. sale, which knowledge was equivalent to registration of
51837, together with the improvements thereon the several "Acknowledgments" in the Registry of Deeds.
are being possessed by them only as trustees;
III. Evident from the record that although it was
 Deed of Acknowledgment executed on October CENTRO that was actively prosecuting the case,
22, 1971, jointly by Amor Jose, widow of Paguio in substance, it was representing the mother
and the latter's daughters, Sumilang Paguio and organization, the Union Espiritista Cristiana de
Filipina Paguio (co-registered owner of Filipinas, Inc., which is the real party in interest
Estudillo) likewise declaring that their possession and is itself named in the Complaint. It is an
of the said property is merely that of trustees and organization that is duly registered with the
not as owners; Securities and Exchange Commission, and thus
possessed of a juridical personality to sue and be
 Petitions for revocation of tax assessments Nos.
sued.
3187 and 3188
 Petition to exempt said parcels from taxation,
being owned by a religious organization and;
 Follow-up letters addressed to the City Assessor
of Manila, dated February 15, 1963; December
29,1963 and May 29, 1962 respectively
 Deed of Sale executed by Estudillo, heirs of dela
Rosa and Paguio of the two parcels in favor of
Centro La Paz, indubitably point to one and
inescapable conclusion that the plaintiff is really
the true and lawful owner of the property in
dispute and that persons registered therein as its
owners, are merely trustees of the plaintiff.
II. As found by both the Trial Court and Appellate
Court, the evidence sufficiently establishes that
the registered owners of the parcels of land
covered by TCT 51837, all of whom are members
of CENTRO, hold the properties in trust for
CENTRO by virtue of the indubitable documents
executed even before the institution of suit. In the
same manner that the real property, registered
solely in the name of a husband, can be proven to
be conjugal property with his wife, the fact of
registration in the name of Alejandro Estudillo
and others does not bar evidence to show that the
registered owners hold the properties in trust for
CENTRO.
Admittedly, the trust was not registered in accordance
with section 65 of Act 496 (the former Land Registration
Law). The absence of said registration, however, cannot
be taken against CENTRO inasmuch as, if the public
auction sale had actually been held, with Special Service
Corp. (SSC) as the successful buyer, SSC could not have
been considered a purchaser for value and in good faith at
B. SALE/PURCHASE OF PROPERTY
VILLARTA V. CUYNO
FACTS:
Plaintiffs Gregorio, Glicerio and Marina Villarta seek to
establish their title to a parcel of land, of about 15
hectares, located in the barrio of Tipolo, Municipality of
Ubay, Province of Bohol, and to recover the possession
thereof.
Defendants denied plaintiffs' alleged ownership and
asserted title in themselves, in addition to pleading
prescription of action.
CFI: declared plaintiff Gregorio Villarta owner of the
Northwestern portion of the land.
The Court refrains from deciding the case regarding the
rest of the disputed land for the reason that most of the co-
owners are not included as parties to this case.
The Court orders the dismissal of this case with respect to
the remaining part of the land in question on the ground
that it belong to the heirs of the late Isidoro Cuyno, most
of which are not made parties to this case.
The present judgment is rendered without special
pronouncement as to costs, and without prejudice to the
right of plaintiff Gregorio Villarta to recover from all the
co-owners of the disputed property the amounts of taxes
he had paid to the municipal treasurer of Ubay, Bohol.
Hence, this appeal by the plaintiffs.
Plaintiff Gregorio Villarta is the father of his co-plaintiffs
Glicerio and Marina Villarta. The disputed land belonged
originally to Isidoro Cuyno, who, prior to May 29, 1924,
had assigned a small portion thereof to one Clemente
Olaybar, who declared it, for real estate tax purposes, in
his name. The remaining portion of said land was declared
in the name of Isidoro Cuyno, which was superseded in
1925 in the same name. Isidoro Cuyno died sometime
before 1936.
For failure of his heirs to pay the real estate taxes due, said
portion, of about 14.8400 hectares, was forfeited to the
Government in 1936. To avoid its eventual sale at public
auction, one of the children of Isidoro Cuyno, namely,
Marciano Cuyno, asked plaintiff Gregorio Villarta, whose
wife (Guardicisima Cuyno) is a granddaughter of said
deceased, to pay the amount of said taxes. Accordingly,
from August 29, 1936 to September 2, 1937, Gregorio
Villarta paid the municipal treasurer of Ubay several sums
of money aggregating P114.52, representing the overdue
real estate tax on said portion of 14.8400 hectares. On
June 11, 1946, Gregorio Villarta caused this portion to be
declared in his name under Tax Declaration. Meanwhile,
or on April 18, 1945, he had purchased from Clemente
Olaybar the aforementioned small portion, of about
0.3100 hectares, which the latter had acquired from
Isidoro Cuyno before May 29, 1924
Gregorio Villarta commenced the present action alleging
that defendants herein forcibly deprived them of the
possession of the land in question. The evidence for the
plaintiffs tend to establish that, despite the payments to
the municipal treasurer of Ubay, Gregorio Villarta had
been unable to take possession of said land, except a small
part thereof, because the other parts of the land,
constituting the bulk thereof, had been allegedly sold
conditionally by Isidoro Cuyno to several parties, from
whom Gregorio Villarta claims to have redeemed said
parts in three (3) separate transactions from March 3,
1942 to April 18, 1945; that on January 28, 1948,
defendants herein filed Civil Case against Gregorio
Villarta to recover the land in question from Gregorio
Villarta, upon the ground that the same represents their
share in the estate of Isidoro Cuyno, as heirs of his now
deceased son Marciano Cuyno; and that sometime in
1953, during the pendency of said case No. 292,
defendants herein illegally deprived Gregorio Villarta of
the possession of said land.
ISSUE:
RULING:
At the outset, it should be noted that plaintiffs' action is
based primarily upon the payment made by Gregorio
Villarta to the municipal treasurer of Ubay of the overdue
real estate tax on the portion of the land in question
covered by Tax Declarations, which had been forfeited to
the Government for delinquency in the payment of said
tax. Plaintiffs contend that Gregorio Villarta had thereby
acquired the rights of the deceased Isidoro Cuyno in and
to said property. However, the delinquent taxpayer was
the estate of Isidoro Cuyno, not Gregorio Villarta, so that
payment by the latter merely subrogated him into the
rights of the Government as creditor for said delinquent
taxes.
As a matter of fact, the municipal treasurer of Ubay
did not, by accepting said payment by Gregorio Villarta,
sell the property to him. Indeed, said officer did not
execute any deed of conveyance in favor of Gregorio
Villarta. What is more, the receipts given to the latter by
said officer were issued, not in his (Gregorio Villarta's)
name, but in that of Isidoro Cuyno.
The fact that Gregorio Villarta accepted said receipts, It cannot be denied, however, that, prima facie, as
issued in the name of Isidoro Cuyno, indicates that the children of Guardicisima Cuyno, one of the daughters of
former, also, understood that he was not thereby Isidoro Cuyno, plaintiffs Glicerio and Marina Villarta are
purchasing the property, but, had made the payment for entitled to share in the property in question. This
the account or benefit of Isidoro Cuyno. notwithstanding, the lower court refrained from
determining the extent of their rights, if any, thereon,
In fact, the letter of the municipal treasurer of Ubay to
because most of the surviving descendants of Isidoro
Gregorio Villarta refers to said payments of Gregorio
Cuyno had not been made parties in this case.
Villarta as part of the process of "repurchase" by his "in
behalf of the declared owner, Mr. Isidoro Cuyno". Thus, In other words, of the nine (9) children of Isidoro Cuyno,
Gregorio Villarta thereby became a trustee for the benefit the heirs of only one of them — namely, Marciano Cuyno
of Isidoro Cuyno, or his heirs. — are fully represented in this case. Glicerio and Marina
Villarta merely represent part of the heirs of Isidoro's son
Plaintiffs, likewise, invoke title to part of the land in
Angel Cuyno, namely his daughter Guardicisima. Angel's
question in consequence of a conveyance allegedly made
other children — Caridad, Maria and Servando Cuyno —
to Gregorio Villarta by Clemente Olaybar, who, plaintiffs
are not parties in this case. Neither is Isidoro's only
allege, acquired it from Benito Cuyno, who, in turn,
surviving son, Bernardo Cuyno. Nor are the descendants
derived his title from Isidoro Cuyno, by virtue of the deed
of Isidoro's other deceased children — Toribia, Gregoria,
of sale. The property described in this instrument is
Vicenta, Bernardo, Urbano, Narciso and Benito.
located, however, in Cabadiangan whereas the land in
question is in Tipolo. Accordingly, the lower court was The lower court acted that, therefore, in not determining
justified in concluding that the subject matter of said deed the precise share of the parties herein in the land formerly
of sale is different from that of the present case. covered by Tax Declaration No. 8042 and in limiting
itself to declaring that said land belongs to the heirs of
Again, plaintiffs invoke title by acquisitive prescription.
Isidoro Cuyno, without prejudice to the right of Gregorio
This pretense is, however, untenable:
Villarta to recover from them the sums by him paid as real
(1) because they admit that, in 1936, Gregorio Villarta estate tax thereon.
was unable to take possession of most of the land in
Wherefore, the decision appealed from is hereby
question, for the same was then being held by those who
affirmed, with costs of this instance against plaintiffs-
had allegedly purchased conditionally portion thereof
appellants.
from Isidoro Cuyno;
(2) because the purchase allegedly made by Gregorio
Villarta from Mr. & Mrs. Embradura, and Juan Gaviola
and Toribia Cuyno, took place only in 1942, and
plaintiffs' possession from this year was interrupted
constructively upon the filing of Civil Case No. 292 in
1948, or before the expiration of ten (10) years;
(3) because, since the aforementioned delinquent taxes
had been paid by Gregorio Villarta "in behalf of Isidoro
Cuyno", the possession acquired by the former, and his
subsequent transactions with the Embraduras and the
Gaviolas, must be deemed effected by Gregorio
Villarta in trust and for the benefit of Isidoro Cuyno, until
the contrary is clearly proven; and
(4) that the first such evidence that can be invoked by
Gregorio Villarta is, at best, Tax Declaration No. 13462
(Exhibit A) in his name, but this declaration was made on
June 11, 1946, and his possession since then was, as above
indicated, interrupted, in contemplation of law, in 1948,
and actually, according to plaintiffs' complaint, in 1953,
or before the expiration of ten (10) years since 1946.
D. LOAN – ART. 1450
NAKPIL VS. IAC, CARLOS J. VALDES and
CAVAL REALTY CORPORATION
FACTS:
Petitioner instituted an action for reconveyance with
damages for breach of trust before RTC of Baguio City
against respondents Valdes and Caval Realty
Corporation. She alleged that her husband Nakpil prior to
his death had requested Valdes to purchase Pulong
Maulap (a summer residence in Baguio City) and
thereafter register the sale and hold the title thereto in trust
for the former, which respondent Valdes did. But after her
husband's death, Valdes concealed and suppressed all
information regarding the trust agreement; instead, he
transferred Pulong Maulap in the name of respondent
Caval Realty Corporation, which is 99.7% owned by him,
in exchange for 1,500 shares of stock.
Respondent Valdes, on the other hand, denied the
existence of any trust agreement over Pulong Maulap. He
averred that he bought the summer residence for himself
with his own funds and without any participation of the
late Nakpil; neither was it bought in trust for the latter.
Valdes claims that he only informed Nakpil of the
acquisition of Pulong Maulap, and the latter merely
showed interest in buying the property if he could have
the money. Meanwhile, considering their avowed
friendship, Valdes offered the usufruct of the property to
the Nakpils who in turn agreed to shoulder its
maintenance expenses, real estate taxes, fire insurance
premiums and servicing of interest on the mortgage
obligation constituted on the property.
The records likewise show that, Valdes assigned Pulong
Maulap to Caval Realty Corporation. Later, after
petitioner allegedly received a P2,000,000.00— offer for
Pulong Maulap from Pasay City Mayor Pablo Cuneta,
petitioner wrote Valdes demanding a reconveyance to
enable her to effect the sale and reimburse the latter from
the proceeds thereof for the advances he made.
However,Valdes allegedly told petitioner that he could
not execute the deed of conveyance because Pulong
Maulap was his and he had no intention of selling it.
RTC rendered a decision holding that a trust relationship
existed since it appears in the letters downpayment of
P50,000.00 and the further sum of P25,000.00 paid to
PNB though paid through respondent’s personal funds,
the same was considered by him as a loan to Nakpil; and
while the remaining P75,000.00, representing the balance
of the mortgage indebtedness of the Garcias to the PNB,
was liquidated with the proceeds of a loan from FUB, the
said loan, although in the name of Valdes, was actually
Nakpil's. In other words, the property was acquired with
funds partly loaned by Valdes to Nakpil and partly
borrowed by Nakpil from FUB albeit in Valdes' name.To
the mind of the Court these are in confirmatory of a pre-
existing express trust relationship between Valdes and the
late Nakpil over the property in dispute, and assuming the
letters could not stand as proof of an express trust, still the
Court believes that they could, as they indeed are, proof
of an implied trust under Article 1450 of the Civil Code.
However, RTC dismissed the petition for reconveyance
on the ground that petitioner, the very documents she
presented to prove the existence of a trust relationship, has
waived her right over Pulong Maulap. Not satisfied with
the decision of the trial court, both parties appealed to
respondent Intermediate Appellate Court which reversed
the trial court.
ISSUE/S:
1. Whether Art. 1450 of the Civil Code applies; (and, if it
so applies)
2. Whether the petitioner can still compel reconveyance
of Pulong Maulap from respondent Valdes.
3. Whether or not there is a pactum commissorium
existing.
RULING:
1. Yes there was a constructive trust between the
parties under Art. 1450.
Consequently, respondent Valdes is estopped from
claiming that he bought Pulong Maulap for himself, and
not merely in trust for the late Nakpil, as this contention
is belied by the following facts:
a. Loans while in his name (Valdes), such was
obtained by late Nakpil
b. P75,000 initially advanced for the Moran
property still remains unpaid.
c. Mortgage of the vendors with PNB (P75,000)
liquidated from proceeds of loan obtained from
FUB- actually secured by late Napkil merely
using respondent’s name.
d. P65,000 loan to FUB proceeds of which were
used to finance repair and renovation of Pulong
Maulap.
e. Down payment (P50,000) and partial payment
(P25,000) to PNB came from personal fund of
Valdes which he considered as advances to late
Napkil.
f. Payment being tendered, while remitting
payment of real estate taxes was made “on
 behalf” of the Napkil’s. - which is an express What the parties merely agreed to under the arrangement
recognition of the implied trust was that respondent Valdes would undertake to "take over
the total loan of P140,000.00 and pay all of the interests
due on the notes" while the heirs of the late Jose Nakpil
Implied trusts, which may either be resulting or
would continue to live in the disputed property for five (5)
constructive, are those which, without being express, are
years without any remuneration save for regular
deducible from the nature of the transaction as matters of
maintenance expenses. This does not mean, however, that
intent, or which are superinduced on the transaction by
if at the end of the five-year period petitioner failed to
operation of law as matter of equity, independently of the
reimburse Valdes for his advances, which respondent
particular intention of the parties.
computed to be P375,056.64 Valdes could already
Article 1450, which petitioner invokes in the case at bar, automatically assume ownership of Pulong Maulap.
is an illustration of an implied trust which is constructive. Instead, the remedy of respondents Carlos J. Valdes and
Article 1450 presupposes a situation where a person, Caval Realty Corporation was to proceed against the
using his own funds, purchases a certain piece of land in estate of the late Jose M. Nakpil and/or the property itself.
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 3. Yes, there exists pactum commissorium.
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 The arrangement entered into between the parties,
that the former can compel conveyance of the purchased whereby Pulong Maulap was to be "considered sold to
property from the latter. him (respondent) . . . in case petitioner fails to reimburse
Valdes, must then be construed as tantamount to a pactum
2. Yes, petitioner may redeem and compel commissorium which is expressly prohibited by Art.
conveyance of the disputed property but only after 2088 of the Civil Code. For, there was to be automatic
reimbursing respondent the sum of P375,056.64, appropriation of the property by Valdes in the event of
with legal interest from 31 July 1978, the amount failure of petitioner to pay the value of the advances.
advanced by Valdes for the purchase of the Pulong
Maulap being a conditio sine qua non for Thus, contrary to respondent's manifestations, all the
compelling conveyance. elements of a pactum commissorium were present: there
was a creditor-debtor relationship between the parties; the
property was used as security for the loan; and, there was
The period within which to compel conveyance of Pulong
automatic appropriation by respondent of Pulong Maulap
Maulap is not imprescriptible. The rule is well-settled that
in case of default of petitioner.
an action for reconveyance based on an implied or
constructive trust prescibes in ten (10) years. But, in the
case, petitioner could still compel conveyance of the
disputed property from respondent provided the former
reimburses the latter for all his expenses. 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-years
period.The trust relations between the parties were
therefore never extinguished. Besides, petitioner could
not have waived the interest of her children with the late
Jose M. Nakpil who are her co-heirs to the Nakpil estate.
E. INHERITANCE – ART. 1451
CUSTODIO VS. CASIANO
FACTS:
Filomena Custodio, et al., who are the children of
Alejandra, Gregoria and Trinidad, all surnamed Custodio,
filed a complaint before the Court of First Instance of
Cavite against Filomena Casiano, et al., the widow and
children, respectively, of Ciriaco Custodio, alleging,
among other things, that their grandfather, Isaac Custodio,
purchased during his lifetime for a valuable consideration
but on installment basis from the Caridad Estate of Cavite,
Inc. a parcel of land situated in the City of Cavite;
that although the title to the land was not placed in the
name of Isaac before he died due to his inability to pay in
full the purchase price, his rights thereto passed to his
children, namely, Ciriaco, Alejandro, Gregoria, and
Trinidad, in the proportion of ¼ each;
that upon payment by Alejandra of the remaining
installments, the Caridad Estate of Cavite, Inc. suggested
that the deed of sale be executed in the name of their
brother Ciriaco since he was the only male in the family,
and having the three sisters agreed to the suggestion, the
document was executed as suggested and, pursuant
thereto, Transfer Certificate of Title No. 5800 covering
the land was issued in the name of Ciriaco Custodio,
married to Filomena Casiano; and that having discovered
later that defendants were intending to sell the land to the
prejudice of the plaintiffs, the latter instituted the present
action.
In the answer they filed after their motion to dismiss was
denied, defendants averred that they are the sole and
exclusive owners of the land since the same was
purchased by their predecessor-in-interest Ciriaco
Custodio from the Caridad Estate of Cavite, Inc. as a
result of which Transfer Certificate of Title No. 5800 was
issued in his name. And as a special defense, defendants
contend that the land having been registered under the
Land Registration Act (Act 496) the title issued in relation
thereto is conclusive as to all matters contained therein,
aside from the fact that the cause of action of plaintiffs, if
any they have against defendants, has already prescribed.
After trial, the court a quo rendered judgment declaring
plaintiffs and defendants, with the exception of Isagani
Geronimo, Filomena Casiano and Sixto Brasero, co-
owners of the land in litigation, and ordering the
cancellation of Transfer Certificate of Title No. 5800 and
the issuance of another in their names in the proportion
therein specified, with costs against defendants.
Dissatisfied with this decision, defendants appealed to the
Court of Appeals.
CA: rendered judgment declaring defendants the sole and
exclusive owners of the land described in Transfer
Certificate of Title No. 5800. Hence, the present petition
for review.
Court of Appeals based its ruling on the theory that since
no trust relation was proven between the predecessors-in-
interest of both petitioners and respondents, or that they
were co-owners of the land in question, for as a matter of
fact the land appears registered in the name of Ciriaco
Custodio, coupled with the fact that petitioners filed the
instant action only after the lapse of 25 years from the date
of the registration of the land in Ciriaco's name, the right
of action of petitioners has already prescribed. This ruling
is now assigned as error.
ISSUE: Whether or not CA erred in its decision.
RULING: YES.
1) We find merit in this petition for review. An
examination of the evidence on record will clearly reveal
that the land in question was formerly a part of a big estate
known as "Hacienda Dona Bartola" which the Caridad
Estate of Cavite, Inc. bought in 1921. This hacienda was
later subdivided into small lots for resale to the public
giving preference to actual occupants.
Isaac Custodio was the occupant of the land in question
he being the lessee of its former owner. Taking advantage
of the offer given by the owner to the occupants, Isaac
bought the land he was occupying for P800.00 in 1922,
making as down payment the value of the share he was
holding with the corporation worth P600.00. When Isaac
died, the title has not yet been issued to him in view of his
inability to pay the purchase price in full, but the balance
of P60.00 was advanced by his daughter Alejandra.
Upon the payment of this balance, the manager of the
corporation suggested that since Ciriaco was the only
male in the family it would be convenient that the title be
issued in his name, to which his three sisters agreed. But
this notwithstanding, after the registration of the title in
the name of Ciriaco in 1928, his sisters took possession of
the land, with the exception of Ciriaco who was never in
possession thereof.
It further appears that, although the title of the land was
issued in the name Ciriaco the same however was at all
times kept in the possession of Alejandra, and later of
Valeriano, an uncle of plaintiffs, and it was only in 1951
when the title was given to Filomena Casiano who had
requested for it in connection with a transaction. It finally
appears that during the lifetime of Ciriaco the latter has
always acknowledged the ownership of his sisters over
the land and after his death, his widow had also
acknowledged on several occasions that the predecessors-
in-interest of the parties were co-owners of the land.
The elements abovementioned are not here present, with
the exception probably of the first one where we stated
that because of the conduct of respondents in requesting
for the delivery of the title, petitioners were prompted to
institute the present action. But not with regard to the rest.

Contrary to the above facts, respondents were not able to It appears that petitioners did not lose time in asserting
advance any proof justifying the purchase by Ciriaco of their right when they came to know of the conduct of
the property in question other than the mere fact that the respondents as regards their design to take advantage of
title was issued in his name, but of course this stand the property. Neither can respondents claim lack of
cannot be sustained for it appears sufficiently refuted by knowledge that petitioners would someday assert their
convincing evidence on record. right for they knew right along that their predecessor-in-
interest was merely a trustee of his other co-heirs. And
It is significant to note that respondents at first claimed respondents cannot finally invoke prejudice on their part
that the property was bought by Ciriaco directly from the in the event relief is accorded to petitioners for that is the
Caridad Estate of Cavite, Inc., but when confronted by consequence they should naturally expect from the
evidence showing that it was originally bought by Isaac relation of trust that existed between their predecessor-in-
Custodio, they later insinuated that it was only given to interest and his co-heirs. As a consequence, respondents
him to Isaac out of gratitude for services he rendered to cannot invoke the defense of laches.
his father. This inconsistent stand cannot but lend
WHEREFORE, the decision appealed from is reversed.
cogency to the claim of petitioners that the title to their
The decision of the court a quo dated April 2, 1956 is
land was issued in the name of Ciriaco merely with the hereby revived.
understanding that he would act as a trustee of his sisters.
There being, therefore, a relation of co-ownership
between the predecessors-in-interest of the parties herein,
it follows that the right of petitioners to bring the present
action cannot be deemed barred by prescription.
Under the foregoing facts, it is evident, and it must be so
declared, that, when the defendant procured the
registration of this land in his own name, he was acting in
a trust capacity and as representative of all of his brothers
and sisters. As a consequence, he is now holding the
registered title thereto in a trust capacity, and it is proper
for the court to declare that the plaintiffs are entitled to
their several pro rata shares, notwithstanding the fact that
the certificate of registration is in the name of the
defendant alone.
2) The contention that petitioners cannot bring the instant
action because of laches cannot also be sustained.
In order that this defense may be invoked, the following
requisites must be present:
(A) conduct on the part of the defendant giving rise to the
situation for which plaintiff seeks a remedy; (B) delay in
asserting complainant's rights after he had knowledge of
the defendant's conduct and after he have had an
opportunity to take action; (C) lack of knowledge on the
part of the defendant that the complainant would assert
the right on which he bases his suit and (D) injury or
prejudice to the defendant in the event relief is accorded
to the complainant..