FELOMINA ABELLANA, petitioner, vs.

SPOUSES ROMEO PONCE and LUCILA PONCE and the REGISTER OF

DEEDS of BUTUAN CITY, respondents.

Syllabi:

Trusts; Implied Trusts; The concept of implied trusts is that from the facts and circumstances of a given
case, the existence of a trust relationship is inferred in order to effect the presumed intention of the
parties.—The concept of implied trustsis that from the facts and circumstances of a given case,
theexistence of a trust relationship is inferred in order to effect thepresumed intention of the parties.
Thus, one of the recognized exceptions to the establishment of an implied trust is where acontrary
intention is proved, as in the present case.

Facts:

Felomina purchased an agricultural lot with the intention of giving the said lot to her niece Lucila Ponce.
In the deed of sale, the latter was designated as buyer. Felomina applied for the issuance of title in the
name of her niece and a TCT No. 2874 was issued over the subject lot in the name of Lucila. Thus, said
title remained in the possession of Felomina who developed the lot thru Juanario and paid real property
taxes thereon. However, the relationship of aunt and niece became sour which resulted to Felomina
filing an instant case for revocation of implied trust to recover legal title over the property. On the other
hand, spouses Lucila and Romeo claimed that they were the ones who purchased the lot. Juanario then
volunteered to till the lot to which Felomina agreed and of which was consented by the spouses. The
spouses however shouldered the real property taxes on the lot which was paid through Felomina.
Consequently, the spouses demanded rental but Felomina refused because the agricultural lot was not
profitable.

When Lucila learned that a certificate of title in her name had already been issued, she confronted
Felomina who claimed that she already gave her the title. Thinking that she might have misplaced the
title, Lucila executed an affidavit of loss which led to the issuance of another certificate of title in her
name. Then, the trial court rendered a decision holding that an implied trust existed between Felomina
and Lucila, such that the latter is merely holding the lot for the benefit of the former. It thus ordered the
conveyance of the subject lot in favor of Felomina. Private respondent spouses appealed to the Court of
Appeals which set aside the decision of the trial court ruling that Felomina failed to prove the existence
of an implied trust and upheld respondent spouses’ ownership over the litigated lot. The appellate court
further held that even assuming that Felomina paid the purchase price of the lot, the situation falls
within the exception stated in Article 1448 of the Civil Code which raises a disputable presumption that
the property was purchased by Felomina as a gift to Lucila whom she considered as her own daughter.
Felomina filed a motion for reconsideration but the same was denied. Hence, the instant petition.
Issue:

Whether or not Felomina is the real owner of the disputed parcel of land.

Held:

Yes.

In the instant case, what transpired between Felomina and Lucila was a donation of an immovable
property which was not embodied in a public instrument as required by Article 749. Being an oral
donation, the transaction was void.Moreover, even if Felomina enjoyed the fruits of the land with the
intention of giving effect to the donation after her demise, the conveyance is still a void donation mortis
causa, for non-compliance with the formalities of a will. No valid title passed regardless of the intention
of Felomina to donate the property to Lucila, because the naked intent to convey without the required
solemnities does not suffice for gratuitous alienations, even as between the parties inter se. At any rate,
Felomina now seeks to recover title over the property because of the alleged ingratitude of the
respondent spouses.

In the case, absent are the solemnity requirements for validity, the mere intention of the parties does
not give rise to a contract. The oral donation in the case at bar is therefore legally inexistent and an
action for the declaration of the inexistence of a contract does not prescribe. Hence, Felomina can still
recover title from Lucila.

Article 1448 of the Civil Code on implied trust finds no application in the instant case. The concept of
implied trusts is that from the facts and circumstances of a given case, the existence of a trust
relationship is inferred in order to effect the presumed intention of the parties. Thus, one of the
recognized exceptions to the establishment of an implied trust is where a contrary intention is proved,
as in the present case. From the testimony of Felomina herself, she wanted to give the lot to Lucila as a
gift. To her mind, the execution of a deed with Lucila as the buyer and the subsequent issuance of title in
the latter’s name were the acts that would effectuate her generosity. In so carrying out what she
conceived, Felomina evidently displayed her unequivocal intention to transfer ownership of the lot to
Lucila and not merely to constitute her as a trustee thereof. It was only when their relationship soured
that she sought to revoke the donation on the theory of implied trust, though as previously discussed,
there is nothing to revoke because the donation was never perfected.
However, the second sentence of Article 1448 is not applicable in the case at bar because, first, it was
not established that Felomina stood as a substitute parent of Lucila; and second, even assuming that she
did, the donation is still void because the transfer and acceptance was not embodied in a public
instrument. We note that said provision merely raised a presumption that the conveyance was a gift but
nothing therein exempts the parties from complying with the formalities of a donation. Dispensation of
such solemnities would give rise to anomalous situations where the formalities of a donation and a will
in donations inter vivos, and donations mortis causa, respectively, would be done away with when the
transfer of the property is made in favor of a child or one to whom the donor stands in locoparentis.
Such a scenario is clearly repugnant to the mandatory nature of the law on donation.

While Felomina sought to recover the litigated lot on the ground of implied trust and not on the
invalidity of donation, the Court is clothed with ample authority to address the latter issue in order to
arrive at a just decision that completely disposes of the controversy. Since rules of procedure are mere
tools designed to facilitate the attainment of justice, they must be applied in a way that equitably and
completely resolve the rights and obligations of the parties.