G.R. No.

L-16962

February 27, 1962

TRUSTEESHIP OF THE MINORS BENIGNO, NGEL a!" NTONIO, a## $ur!a%e" PERE& ' TU SON, NTONIO M. PERE&, judicial-guardian-appellant, vs. (. NTONIO R NET , trustee-appellee. Alfonso L. Felix, Jr. for judicial-guardian-appellant. Araneta and Araneta for trustee-appellee. )ON)EP)ION, J.: Appeal from an order denying a motion. Sometime in 1948, Angela S. Tuason died leaving a will, paragrap 4 of w ic reads! "Spanis # $n conformity wit t is provision of said will, t e present trustees ip proceedings was instituted and certain properties of t e estate of t e deceased, valued %9&&,&& were turned over in 19'& to (. Antonio Araneta, as trustee for t e )enefit of *enigno, Angela and Antonio, all surnamed %ere+ y Tuason, t e grandc ildren of t e decedent referred to in er aforementioned will. %ortions of said properties constituting t e trust were sold in 19',, 19'- and 19'8 at prices e.ceedingly )y %1/,418.40, %4,&0/.'0 and %81,/8,.94, respectively 1 aggregating %98,808.88 1 t e original appraised value t ereof. 2n Septem)er 08, 19'9, t e judicial guardian and fat er of said minors filed a motion in t e trustees ip proceedings alleging t at said sum of %98,808.88 represents profits or income of t e trustees ip to w ic said minors are entitled, pursuant to t e a)ove 3uoted provision of t e will, and praying t at t e trustee )e accordingly instructed to deliver said sum to t e movant. T e trustee o)jected to t e motion, w ic , after due earing, was denied )y an order dated 4arc 1&, 19,&, from w ic said guardian as appealed. T e appeal inges on w et er or not t e aforesaid sum of %98,808.88 is a profit or income w ic s ould )e turned over to t e guardian of said minors according to t e provisions of t e will 3uoted a)ove. Appellant maintains t at it is, )ecause said sum was included as profit in t e statements of profits and losses attac ed to t e corresponding income ta. returns. T is pretense is untena)le. To )egin wit , t e issue as to w et er or not t e minors are entitled to t e delivery of said sum of %98,808.88 is a matter dependent e.clusively upon t e conditions upon w ic t e trust ad )een esta)lis ed, as provided in t e a)ove 3uoted paragrap of t e will of t e decedent, w ic in turn depends upon t e latter5s intent, as set fort in said paragrap . 6pon t e ot er and, t e 3uestion w et er t e sum in 3uestion is a profit or not wit in t e purview of our internal revenue law depends upon t e provisions of t e latter, regardless of t e will of t e decedent. 1wph1. t Secondly, t e proceeds of t e sale of portions of t e real estate eld in trust, merely ta7e t e place of t e property sold. 8 at is more, t e provision of t e will of t e decedent e.plicitly aut ori+ing t e trustee to sell t e property eld in trust and to ac3uire, wit t e proceeds of t e sale, ot er property "9con amplios poderos de vender los mismos,
BusOrg Summer (trust cases)

y con su producto ad3uirir otros )ienes,9# leaves no room for dou)t a)out t e intent of t e testatri. to 7eep, as part of t e trust, said proceeds of t e sale, and not to turn t e same over to t e )eneficiary as net rentals "9rentas netas9#. T irdly, under t e principles of general law on trust, insofar as not in conflict wit t e :ivil :ode, t e :ode of :ommerce, t e ;ules of :ourt and Special laws, are now part of our laws "Article 1440, :ivil :ode of t e % ilippines#. %ursuant to t e general law on trust, 9a provision in t e instrument to t e effect t at t e )eneficiary s all )e entitled to t e 5income and profits of5 of t e trust estate is not ordinarily sufficient to indicate an intention t at e s ould )e entitled to receive gains arising from t e sale of trust property ...9 " $n re Account of <ouston5s Trustees, 1,' Atl. 1/0= >auman v. ?oster, '& A.>.;. '/1= @ut rie5s Trustee v. A7ers, 1'- Ay. ,49= Bstate of @artenlaule, 198 :al. 0&4, 044 %ac. /48, 48 A.>.;. C4.S. -9/D#. $ndeed!. T e corpus of t e estate, no matter w at c anges of form it undergoes, s ould )e regarded as t e same property. T at t e trust property is originally money, later )ecomes )onds, and still later real estate, oug t not to affect t e status of t e property as t e capital fund. "$n re @ra am5s Bstate, 198 %a. 01,, 019, 4- A. 11&8= See *ogert on Trusts, 0d Bd., p. 4/,.# <ence, it is well settled t at profits reali+ed in t e sale of trust properties are part of t e capital eld in trust to w ic t e )eneficiaries are not entitled as income. "?irst Eat. *an7 of :arlisle v. >ee, 0/ Ay. >. ;ep. 189-= :oleman vs. @rimes, // Ay. >. ;ep. 4''= *ains v. @lo)e *an7 F Trust :o., 1/, Ay. //0= Smit v. <ooper, 9' 4d. 1,= : ase v. 6nion Eational *an7, 0-' 4ass. '&/= ?irst Eational *an7 of :anton vs. 4ul olland, 1/ A.>.;. 1&&& C190&D ClandD= Stewart v. % elps, -' E. F Supp. '0, ;at )un v. :olton, 1' %ic7. 4-1= @i)son v. :oo7e, 1 4et. -'= See Scott on Trusts Gol. 0 p. 10'9.# $n t e language of t e ;estatement of t e >aw!. Su)ject to t e allocation of receipts from unproductive or wasting property, and e.cept as stated in :omment c, money or ot er property received )y t e trustee as t e proceeds of a sale or e.c ange of t e principal of trust property is principal. Similarly, w ere trust property is ta7en on eminent domain, t e proceeds received )y t e trustee are principal. $f trust property is destroyed )y fire or ot er casualty, t e proceeds of insurance t ereon received )y t e trustee are principal. .... 98 ere it is provided )y t e terms of t e trust t at t e 5income and profits5 of t e trust estate s all )e paid to t e life )eneficiary, it is a 3uestion of interpretation w et er t e life )eneficiary is to receive more t an e would receive if it were provided t at t e 5income5 s ould )e paid to im. 2rdinarily t e inference is t at e is not to receive more, and if trust property is sold at a profit, t e profit is principal. ";estatement of t e >aw, Trusts, Gol. $, pp. ,80 and ,91.# 8<B;B?2;B, t e order appealed from is ere)y affirmed, wit costs against appellant, Antonio 4. %ere+. $t is so ordered.

/1, 19-'. 7 G.R. No. 96727 u*u$+ 2,, 1996 RI& L SURET' - INSUR N)E )OMP N', petitioner, vs. )OURT OF PPE LS a!" TR NSO)E N TR NSPORT )ORPOR TION, respondents. 2n Eovem)er 18, 19-', private respondent and ;B%A:24 re3uested petitioner to pay t e insurance proceeds in t eir joint names, , despite pro)lems regarding t e amount of t eir respective claims. 2n Eovem)er 0&, 19-', t e :* aut ori+ed petitioner to receive t e insurance proceeds from t e Bnglis re-insurance firm in foreign currency and to deposit it in t e same currency wit any local )an7 in a non-interest )earing account, jointly in t e names of private respondent and ;B%A:24. 9 2n Iecem)er 0, 19-', upon t e re3uest of petitioner, 11 :* aut ori+ed it to receive and deposit t e dollar insurance proceeds in a non-interest )earing account in the na"e of petitioner and for t e joint account of ;B%A:24 and private respondent. 11 2n (anuary /, 19-,, petitioner informed private respondent and ;B%A:24 t at t e entire insurance proceeds for t e loss of t e vessel 4JG 9Transocean S ipper9, consisting of! "a# %0,,14,1'&.&& from local insurance companies and reinsurers, and ")# 6SK/,&8/,8'&.&& from t e petitioner5s >ondon insurance )ro7er, ad )een deposited wit %rudential *an7 and Trust :ompany, Bscolta *ranc , 4anila, t e latter sum in a non-interest )earing account as aut ori+ed )y :*. 12 2n (anuary 09, 19-,, private respondent and ;B%A:24 entered into a partial compromise agreement, 1.w erein t ey agreed to divide and distri)ute t e insurance proceeds in suc a manner t at eac would receive as its initial s are t ereof t at portion not disputed )y t e ot er party "t us, ;B%A:24 1 6SK4/4,,18.&&, and private respondent 1 6SK1,9/1,1'/.&&#, leaving t e )alance in dispute for future settlement, eit er )y way of compromise agreement or court litigation, pending w ic t e said )alance would continue to )e 7ept in t e same )an7 account in trust for private respondent and ;B%A:24 unless t e parties ot erwise agree to transfer said )alance to anot er )an7 account. :opies of t is compromise agreement were sent to petitioner. $n response to t e 4arc 1&, 19-, letter-re3uest of t e parties, t e :* on 4arc 1', 19-, aut ori+ed private respondent and ;B%A:24 to transfer t e )alance of t e insurance proceeds, amounting to 6SK-18,&-8.0&, into an interest-#earing special dollar account wit any local commercial )an7. 1/ T e :*5s letteraut ori+ation was addressed to ;B%A:24, wit private respondent and petitioner duly copy-furnis ed. <aving o)tained t e :* aut ori+ation, ;B%A:24 and private respondent t en wrote t e petitioner on April 01, 19-,, re3uesting t e latter to remit t e said 6SK-18,&-8.0& to t e % ilippine Eational *an7, Bscolta *ranc for t eir joint account. 10 $n a reply dated 4ay 1&, 19-,, petitioner indicated t at it would effect t e re3uested remittance w en )ot ;B%A:24 and private respondent s all ave unconditionally and a)solutely released petitioner from all lia)ilities under its policies )y e.ecuting and delivering t e >oss and Su)rogation ;eceipt prepared )y petitioner. 16 *ecause t e parties proposed certain amendments and corrections

P NG NIB N, J.:p 8as a trust relationship esta)lis ed )etween an insurer and t e two insureds over t e )alance of t e insurance proceeds )eing eld )y t e insurer for t e account of t e two insureds, pending a final settlement )y and )etween t e two insureds of t eir respective claims to said proceedsH :an t e insurer 1 w et er or not considered a trustee 1 )e eld lia)le for interest on t e said insurance proceeds, w ic proceeds t e said insurer failed or neglected to deposit in an interest-)earing account, contrary to t e specific written instructions of t e two insuredsH And s ould attorney5s fees )e awarded in t is caseH T ese 3uestions confronted t e :ourt in resolving t e instant petition for review on certiorari, w ic assailed t e Iecision 1 of t e :ourt of Appeals 2 promulgated 2cto)er 0', 199& affirming and modifying t e decision . dated Septem)er 19, 198, of t e ;egional Trial :ourt of 4anila, *ranc //, / in :ivil :ase Eo. 10'88,. !he Facts As culled from t e stipulations )etween t e parties and t e assailed Iecision, t e factual )ac7ground of t is case is as follows! 2n Iecem)er ', 19,1, t e ;eparations :ommission " ereinafter referred to as ;B%A:24# sold to private respondent Transocean Transport :orporation t e vessel 54JG T;AES2:BAE S<$%%B;5 paya)le in twenty "0&# annual installments. 2n (une 00, 19-4, t e said vessel was insured wit petitioner ;i+al Surety F $nsurance :ompany for 6SK/,'&&,&&&.&&, wit stipulated value in % ilippine :urrency of %0/,-,/,&&&.&& under 4arine <ull %olicy 4<-1/00 and 4<-1//1. 0 T e said policies named ;B%A:24 and erein private respondent as t e insured. Su)se3uently, petitioner reinsured t e vessel wit a foreign insurance firm. Sometime in ?e)ruary, 19-', during t e effectivity of t e aforementioned marine insurance policies, t e vessel 54JG T;AES2:BAE S<$%%B;5 was lost in t e 4editerranean Sea. T e insured filed claims against erein petitioner for t e insurance proceeds. S ortly t ereafter, a partial compromise agreement was entered into )etween t e ;B%A:24 and respondent Transocean regarding t e insurance proceeds. 2n April 18, 19-', anticipating payment of t e insurance proceeds in dollars, private respondent re3uested t e :entral *an7 ":*# to allow it to retain t e e.pected dollar insurance proceeds for a period of t ree "/# mont s, to ena)le it to complete its study and decide on ow to utili+e t e said amount 6. T e :* granted t e re3uest su)ject to conditions, one of w ic was t at t e proceeds )e deposited wit a local commercial )an7 in a special dollar account up to and until (uly
BusOrg Summer (trust cases)

to t e >oss and Su)rogation ;eceipt, a revised version t ereof was finally presented to t e 2ffice of t e Solicitor @eneral, and on 4ay 0', 19--, t en Acting Solicitor @eneral Gicente G. 4endo+a wrote petitioner demanding t at it pay interest on t e dollar )alance per t e :* letter-aut ority. <is letter read in relevant part. 17 ?rom t e foregoing, it is clear t at effective as of t e date of your receipt of a copy of t e letter of t e :entral *an7 aut ori+ing t e deposit of t e amount in an interest-)earing special dollar account . . . , t e same s ould )ear interest at t e aut ori+ed rates, and it was your duty as trustee of t e said funds to see to it t at t e same earned t e interest aut ori+ed )y t e :entral *an7. As trustee, you were morally and legally )ound to deposit t e funds under terms most advantageous to t e )eneficiaries. $f you did not wis to transfer t e deposit from t e %rudential *an7 and Trust :ompany, w ic we understand is your sister company, to anot er )an7 w ere it could earn interest, it was your o)ligation to re3uire t e %rudential *an7 and Trust :ompany, at least, to place t e deposit to an interest)earing account. $n view ereof, we ere)y demand in )e alf of t e ;eparations :ommission payment of interest on t e dollar deposit from t e date of your receipt of t e aut ori+ation )y t e :entral *an7 at t e aut ori+ed rates. $n a reply dated (une 14, 19--, petitioner t roug counsel rejected t e Acting Solicitor @eneral5s demand, asserting t at "i# t ere was no trust relations ip, e.press or implied, involved in t e transaction= "ii# t ere was no o)ligation on t e part of petitioner to transfer t e dollar deposit into an interest-)earing account )ecause t e :* aut ori+ation was given to ;B%A:24 and not to petitioner, "iii# ;B%A:24 did not as7 petitioner to place t e dollars in an interest)earing account, and, "iv# no >oss and Su)rogation ;eceipt was e.ecuted. 2n 2cto)er 1&, 19--, private respondent and ;B%A:24 sent petitioner t e duly e.ecuted >oss and Su)rogation ;eceipt, dated (anuary /1, 19--, wit out prejudice to t eir claim for interest on t e dollar )alance from t e time :* aut ori+ed its placement in an interest )earing account. 2n ?e)ruary 0-, 19-8, a final compromise agreement 1, was entered into )etween private respondent and ;B%A:24, w ere)y t e latter, in consideration of an additional sum of one million pesos paid to it )y t e former, transferred, conveyed and assigned to t e former all its rig ts, interests and claims in and to t e insurance proceeds. T e dollar )alance of t e insurance proceeds was t en remitted to t e % ilippine Eational *an7, Bscolta )ranc for t e sole account of private respondent. 2n April 14, 19-8, a demand letter for interest on t e said dollar )alance was sent )y private respondent5s counsel to petitioner and %rudential *an7, w ic neit er replied t ereto nor complied t erewit .
BusOrg Summer (trust cases)

2n August 1', 19-9, private respondent filed wit t e ;egional Trial :ourt of 4anila, *ranc //, a complaint for collection of unearned interest on t e dollar )alance of t e insurance proceeds. 2n Septem)er 19, 198,, t e trial court issued its decision olding t at "i# a trust relations ip e.isted )etween petitioner as trustee and private respondent and ;B%A:24 as )eneficiaries, "ii# from April 01, 19-,, petitioner s ould ave deposited t e remaining dollar deposit in an interest-)earing account eit er )y remitting t e same to t e %E* in compliance wit t e re3uest of ;B%A:24 and private respondent, or )y transferring t e same into an interest-)earing account wit %rudential *an7, and "iii# t is duty to deposit t e funds in an interest-)earing account ended w en private respondent signed t e >oss and Su)rogation ;eceipt on (anuary /1, 19--. T us, petitioner was ordered to pay "1# interest on t e )alance of 6SK-18,&-8.0& at ,L per annu", computed from April 01, 19-, until (anuary /1, 19-- )ased on t e t en prevailing peso-dollar rate of e.c ange= "0# interest of ,Lper annu" on t e accrued interest earned until fully paid= "/# 1&L of t e total amount claimed as attorney5s fees and "4# costs of suit. 19 T e complaint against defendant %rudential *an7 and Trust was dismissed for lac7 of merit. *ot petitioner and private respondent appealed t e trial court5s decision. %rivate respondent alleged t at t e trial court erred w en it a)solved defendant %rudential *an7 from lia)ility and w en it ruled t at t e interest on t e )alance of t e dollar deposit, for w ic petitioner was eld lia)le, s ould )e computed only until (anuary /1, 19-- "w en t e >oss and Su)rogation ;eceipt was signed# instead of (anuary 1&, 19-8 "w en t e actual transfer of t e dollar deposit was made to t e )an7 c osen )y private respondent#. 21 2n t e ot er and, petitioner c arged t at t e trial court ad seriously erred in finding t at a trust relations ip, e.isted and t at petitioner was lia)le for t e interest on t e dollar )alance despite t e e.ecution of t e >oss and Su)rogation ;eceipt w erein petitioner was unconditionally and a)solutely released from all its lia)ilities under t e marine ull policies. 21 2n 2cto)er 0', 199&, t e :ourt of Appeals up eld t e judgment of t e trial court, and confirmed t at a trust ad in fact )een esta)lis ed and t at petitioner )ecame lia)le for interest on t e dollar account in its capacity as trustee, not as insurer. As for t e >oss and Su)rogation document, t e appellate :ourt ruled t at petitioner gave undue importance t ereto, and t at t e e.ecution t ereof did not )ar t e claims for accrued interest. *y virtue of t at document, petitioner was released only from its lia)ilities arising from t e insurance policies, i.e., in respect of t e principal amount representing t e insurance proceeds, )ut not insofar as its lia)ility for accrued interest was concerned, w ic arose from t e violation of its duty as trustee 1 i.e., its refusal to deposit t e dollar )alance in an interest-)earing account, under terms most advantageous to t e )eneficiaries. T e respondent :ourt modified t e trial court5s judgment )y ordering petitioner to pay said interest computed from April 01, 19-, up to (anuary 1&, 19-8. 2n Iecem)er 1-, 199&, t e :ourt of Appeals denied t e petitioner5s motion for reconsideration. <ence, t is petition. Assign"ent of $rrors

%etitioner alleges t at t e :ourt of Appeals erred! $. . . . w en it eld t at ;i+al is lia)le to Transocean for supposed interest on t e )alance of 6SK-18,&-8.0& after admitting t at Transocean and ;B%A:24 ad unconditionally and a)solutely released and disc arged ;i+al from its total lia)ilities w en t ey signed t e loss and su)rogation receipt . . . on (anuary /1, 19--= $$. . . . in assuming t at ;B%A:24 and Transocean on one and and ;i+al, on t e ot er, intended to create a trust= $$$. . . . in not olding t at Transocean ad acted in palpa)le )ad fait and wit malice in filing t is clearly unfounded civil action, and in not ordering Transocean to pay to ;i+al moral and punitive damages . . . , plus attorney5s fees and e.penses of litigation . . . = and $G. . . . in affirming t e ;T: decision w ic incorrectly awarded attorney5s fees and costs of suit to Transocean. 22 T e foregoing grounds are almost e.actly t e same grounds pleaded )y petitioner )efore t e respondent :ourt. At t e eart of t e matter is t e 3uestion of w et er t e petitioner is lia)le for accrued interest on t e dollar )alance of t e insurance proceeds. ;eiterating t e arguments it ventilated )efore t e respondent appellate :ourt, petitioner continues to deny t e e.istence of t e trust, alleging t at it never intended to enter into a fiduciary relations ip wit private respondent and ;B%A:24 and t at it eld on to t e dollar )alance only as a means to protect its interest. ?urt ermore, petitioner insists t at t e >oss and Su)rogation ;eceipt signed )y t e insureds released and a)solved petitioner from all lia)ilities, including t e claimed interest. *riefly, t e 7ey issues in t is case may )e re-stated t us! $. T e e.istence of a trust relations ip= $$. T e significance of t e >oss and Su)rogation ;eceipt= $$$. %etitioner5s lia)ility for accrued interest on t e dollar )alance= and $G. :orrectness of t e award of attorney5s fees. !he %ourt&s 'uling T e s op-worn arguments recycled )y petitioner are mainly devoid of merit. 8e searc ed for arguments t at could constitute reversi)le errors committed )y t e respondent :ourt, )ut found only one in t e last issue. First (ssue! !he !rust 'elationship
BusOrg Summer (trust cases)

:rucial in t e resolution of t is case is t e determination of t e role played )y petitioner. Iid it act merely as an insurer, or was it also a trusteeH $n ruling t at petitioner was a trustee of t e private respondent and ;B%A:24, t e :ourt of Appeals ratiocinated t us! T e respondent "trial# court sustained t e t eory of T;AES2:BAE and was of t e view t at ;$MA> eld t e dollar )alance of 6SK-18,&-8.0& as trustee for t e )enefit of ;B%A:24 and plaintiff corporation "private respondent erein# upon consideration of t e following facts and t e said court5s o)servation 1 1. T at pursuant to ;$MA>5s letter to t e :entral *an7 dated Eovem)er 0', 19-', it re3uested t at is aut ority to deposit t e dollar proceeds wit any local )an7 )e amended )y allowing it to deposit t e same in t e name of 9;i+al Surety F $nsurance :ompany for t e joint account of t e ;eparations :ommission and Transocean Transport :orporation.9 $t furt er states, to wit! T is is in conformity wit our agreement on t is matter wit t e respective officers of our insureds, ;eparations :ommission and Transocean Transport :orporation, during our conference eld in t e office of Solicitor @eneral Bstelito 4endo+a, last 18 Eovem)er 19-'. "B. i)it $# ?rom t ese facts, it is very clear t at t e parties t ereto intended t at t e entire dollar insurance proceeds )e eld in trust )y defendant ;$MA> for t e )enefit of ;B%A:24 and plaintiff corporation. 0. T is agreement was furt er fortified )y t e :entral *an75s reply to t e a)ove-mentioned letter aut ori+ing ;$MA> to deposit t e dollar insurance proceeds in t e name of 9;i+al Surety F $nsurance :ompany for t e joint account of Transocean Transport :orporation and ;eparations :ommission9 "B. i)it (#. /. >i7ewise, defendant ;$MA>5s letter to ;B%A:24 and plaintiff corporation confirming t e fact t at t e insurance proceeds were t en deposited wit %rudential *an7 and it was recorded under t e name of ;i+al Surety F $nsurance :ompany for t e joint account of Transocean Transport :orporation and ;B%A:24 "B. i)it >#. 4. T e partial compromise agreement entered into )etween t e insureds on (anuary 09, 19-, over t e division of t e insurance proceeds w ic provides as follows! 4. T e disputed portion or t e )alance of t e insurance proceeds remaining after deducting t e undisputed portions as agreed a)ove s all )e 7ept in t e same )an7 deposit in trust for and in t e joint name of ;B%A:24 and T;AES2:BAE until suc time as t ere is a court decision or a compromise agreement on t e full amount or portion t ereof, or until suc time as ;B%A:24 and T;AES2:BAE s all agree jointly to transfer suc )alance to anot er )an7 account. $t appears clearly t at even from t e start of t e communications among t emselves, especially )etween defendant ;$MA> on one and and ;B%A:24 and t e plaintiff corporation, on t e ot er and, it s ows t at t e

parties intended t at t e dollar insurance proceeds )e eld in t e name of defendant ;$MA> for t e joint )enefit of ;B%A:24 and plaintiff corporation. Eo repudiation was ever made or any one of t e parties for t at matter 3uestioned said agreement. T ere was, t erefore, created a trust relations ip )etween ;$MA> on one and and t e ;B%A:24 and plaintiff corporation on t e ot er, over t e dollar insurance proceeds of t e lost vessel. . . . $ndeed, t e aforesaid enumerated facts sufficiently manifest t e intention )etween ;B%A:24 and T;AES2:BAE on one and and ;$MA>, on t e ot er, to create a trust. $t was ;$MA> itself w ic re3uested t e :entral *an7 t at it )e allowed to deposit t e dollars in its name and 9for t e joint account of ;B%A:24 and T;AES2:BAE9 instead of in t e joint account of ;B%A:24 and T;AES2:BAE as originally aut ori+ed. 4oreover, t e %artial :ompromise Agreement e.plicitly states t at t e dollars 9s all )e 7ept in t e same )an7 deposits in trust for and in t e joint name of ;B%A:24 and T;AES2:BAE9. 8 ile it is true, t at ;$MA> was not a party to t e :ompromise Agreement, nevert eless, ;$MA> was furnis ed a copy of t e same and did not in any way manifest o)jection t ereto. 2n t e contrary, ;$MA> even implemented certain provisions t ereof. ... ... ... T e intention to create a trust relation can )e inferred from t e surrounding factual circumstances. T us! Suc a manifestation can in fact )e determined merely )y construction of, and inference from, t e surrounding factual circumstances, so long as t e proof t ereof is clear, satisfactory, and convincing, and does not rest on loose, e3uivocal or indefinite declarations "4edina vs. :A, 1&9 S:;A 4/-#. %etitioner claims t at respondent :ourt was misled )y t e trial court5s crucial mis-assumption t at petitioner was t e one w ic too7 t e initiative of re3uesting 2. aut ori+ation from :* to deposit t e dollar proceeds in its name, into concluding t at a trust relations ip ad )een created. %etitioner insists t at it did so only in reaction to t e earlier :* letter dated Eovem)er 0&, 19-' w ic first ordered petitioner to receive t e dollar insurance proceeds and deposit t e same wit any local )an7 in a non-interest )earing account in t e names of Transocean and ;B%A:24 jointly, and t at it "petitioner# made suc re3uest to avoid aving t e dollar proceeds paid directly to t e account of t e two insured, as t at would )e tantamount to full payment of t e loss wit out first securing petitioner5s release from its lia)ilities under t e insurance policies. $n s ort, petitioner claims it was just trying to protect its interest w en it made suc re3uest. %etitioner furt er scores t e respondent :ourt for relying on t e two insured5s arrangement contained in t e %artial :ompromise Agreement t at t e dollar )alance )e 7ept in t e same )an7 deposit " eld )y petitioner# 9in trust for and in t e joint name of ;B%A:24 and T;AES2:BAE9. %etitioner insists it was never a party to said compromise agreement, and t at t erefore, it s ould not )e eld )ound )y anyt ing contained t erein, and simply )ecause it 9did not in any way manifest o)jection t ereto9 2/ %etitioner5s arguments notwit standing, we old t at t e courts )elow
BusOrg Summer (trust cases)

were correct in concluding t at a trust relations ip e.isted. $t is )asic in law t at a trust is t e rig t, enforcea)le solely in e3uity, to t e )eneficial enjoyment of property, t e legal title to w ic is vested in anot er. 20 $t is a fiduciary relations ip 26 concerning property w ic o)liges a person olding it "i.e., t e trustee# to deal wit t e property for t e )enefit of anot er "i.e. t e )eneficiary#. T e :ivil :ode provides t at! Art. 1441. Trusts are eit er e.press or implied. B.press trusts are created )y t e intention of t e trustor or of t e parties. . . . Art. 1444. Eo particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended. B.press trusts are created )y direct and positive acts of t e parties, )y some writing or deed, or will, or )y words eit er e.pressly or impliedly evincing an intention to create a trust. 27 T e evidence on record is clear t at petitioner eld on to t e dollar )alance of t e insurance proceeds )ecause "1# private respondent and ;B%A:24 re3uested it to do so as t ey ad not yet agreed on t e amount of t eir respective claims, and t e ?inal :ompromise Agreement was yet to )e e.ecuted, and "0# t ey ad not, prior to (anuary /1, 19--, signed t e >oss and Su)rogation ;eceipt in favor of petitioner. ?urt ermore, petitioner5s letter dated Eovem)er 0&, 19-' addressed to t e :* e.pressly stated t at t e deposit in %rudential *an7 was )eing made in its name for t e joint account of t e private respondent and ;B%A:24. %etitioner never claimed owners ip over t e funds in said deposit. $n fact, it made several tenders of payment to t e private respondent and ;B%A:24, al)eit t e latter declined to accept since t e dispute as to t eir respective claims could not yet )e resolved at t at time. *y its own allegation, petitioner eld on to t e dollar )alance of t e insurance proceeds to protect its interest, as it was not yet granted t e rig t of su)rogation over t e total loss of t e vessel. As petitioner continued olding on to t e deposit for t e )enefit of private respondent and ;B%A:24, petitioner o)viously recogni+ed its fiduciary relations ip wit said parties. T is is t e essence of t e trust flowing from t e actions and communications of petitioner. $n )indanao *e+elop"ent Authorit, +s. %ourt of Appeals, 2, t is :ourt eld! . . . $t is fundamental in t e law of trusts t at certain re3uirements must e.ist )efore an e.press trust will )e recogni+ed. *asically, t ese elements include a competent trustor and trustee, an ascertaina)le trust res, and sufficiently certain )eneficiaries. Stilted formalities are unnecessary, )ut nevert eless eac of t e a)ove elements is re3uired to )e esta)lis ed, and, if any one of t em is missing, it is fatal to t e trusts "sic#. ?urt ermore, t ere must )e a present and complete disposition of t e trust property, notwit standing t at t e enjoyment in t e )eneficiary will ta7e place in t e future. $t is essential, too, t at t e purpose )e an active one to prevent trust from )eing e.ecuted into a legal estate or interest, and one t at is not in

contravention of some pro i)ition of statute or rule of pu)lic policy. T ere must also )e some power of administration ot er t an a mere duty to perform a contract alt oug t e contract is for a t ird-party )eneficiary. A declaration of terms is essential, and t ese must )e stated wit reasona)le certainty in order t at t e trustee may administer, and t at t e court, if called upon so to do, may enforce, t e trust. "citing Sec. /1, Trusts, Am (ur 0d, pp. 0-8-0-9.# 6ndenia)ly, all t e a)ovementioned elements are present in t e instant case. %etitioner5s argument t at it was never a party to t e %artial :ompromise Agreement is unavailing, since, upon )eing furnis ed a copy of t e same, it undou)tedly )ecame aware 1 if it was not already aware even prior t ereto 1 t at t e parties to said agreement considered petitioner as t eir trustee in respect of said dollar )alance= in s ort, it is all too evident t at petitioner fully grasped t e situation and reali+ed t at private respondent and ;B%A:24 were constituting petitioner t eir trustee. Net, petitioner not only did not manifest any o)jection t ereto, )ut it instead proceeded to accept its role and responsi)ility as suc trustee )y implementing t e compromise agreement. B3ually as significant, petitioner never committed any act amounting to an une3uivocal repudiation of its role as trustee. %etitioner5s desperate attempt to esta)lis a via)le defense )y way of its allegation t at no fiduciary relations ip could ave e.isted )ecause of t e joint insured5s adversary positions wit respect to t e insurance proceeds deserves scant consideration. T e so-called adversary positions of t e parties ad no effect on t e trust as it never c anged t e position of t e parties in relation to eac ot er and to t e dollar proceeds, i.e., petitioner eld it for private respondent and ;B%A:24, w ic were t e real owners of t e money. -econd (ssue! !he -ignificance .f !he Loss and -u#rogation 'eceipt T e respondent :ourt committed no reversi)le error in its appreciation of t e >oss and Su)rogation ;eceipt, w ic reads in relevant part. . . . we ave unconditionally and a)solutely accepted full payment from ;i+al Surety F $nsurance :ompany, as insurer, of its total lia)ilities. $n consideration of t is full payment, we ere)y assign, cede and transfer to said $nsurance :ompany any and all claims, interests and demands of w atever nature against any person, entity, corporation or property arising from or ot erwise connected wit suc total loss of t e insured property and we ere)y ac7nowledge t at t e said :ompany is su)rogated in our place and stead to any and all claims, interests and demands t at we ave, or in t e future mig t ave, against all persons, entities, corporations or properties to t e full e.tent of t e a)ovementioned payment received )y us.
BusOrg Summer (trust cases)

Said receipt a)solved t e petitioner only from all claims arising from t e insurance policies it issued. $t did not e.culpate petitioner from its lia)ility for t e accrued interest as t is o)ligation arose in connection wit its role as trustee and its unjustified refusal to deposit t e money in an interest-)earing account as re3uired. T e respondent :ourt correctly eld t at! ;$MA> gives undue importance to t e >oss and Su)rogation ;eceipt "B. . 6-1# signed )y T;AES2:BAE and ;B%A:24 in an effort to a)solve itself from lia)ility. T e e.ecution of t e said >oss and Su)rogation ;eceipt did not preclude t e joint insured from claiming t e accrued interest. T;AES2:BAE and ;B%A:24 released ;$MA> only from its ";$MA># lia)ilities arising from t e insurance policies issued, t at is, in regard to t e principal amount representing t e insurance proceeds )ut not to t e accrued interest w ic stemmed from its refusal to deposit t e disputed dollar portion in violation of its duty as a trustee to deposit t e same under t e terms most advantageous to T;AES2:BAE and ;B%A:24. :orollary t ereto, ;$MA> was su)rogated to t e rig ts w ic stemmed from t e insurance contract )ut not to t ose w ic arise from t e trust relations ip= ot erwise, t at would lead to an a)surd situation. At most, t e signing of t e >oss and Su)rogation ;eceipt was a valid pre-condition )efore petitioner could )e compelled to turn over t e w ole amount of t e insurance proceeds to t e two insured. T us, in response to t e letter of private respondent and ;B%A:24 to petitioner dated April 01, 19-', petitioner reiterated its offer to pay t e )alance of t e insurance claim provided t e former sign t e >oss and Su)rogation ;eceipt. *ut t is was done only on 2cto)er 1&, 19--. !hird (ssue! Lia#ilit, .f /etitioner For Accrued (nterest %etitioner argues, rat er unconvincingly, t at it was of t e )elief t at, as it was never t e trustee for t e insured and t us was under no o)ligation to e.ecute t e instruction to transfer t e dollar )alance into an interest-)earing account, t erefore, it was also not o)ligated 1 and ence it did not )ot er 1 to advise private respondent and ;B%A:24 t at it would neit er remit t e dollar )alance to t e insured5s )an7 of c oice as specifically instructed, nor just deposit t e same in an interest-)earing account at %rudential *an7. %etitioner5s ot er contention t at it was not )ound )y t e :* order, despite its aving )een informed t ereof and copy furnis ed )y private respondent and ;B%A:24, simply )ecause said order was not directed to it, is even more ridiculous and undeserving of furt er comment. 2riginally, petitioner, as s own )y its Eovem)er 0', 19-' letter, only agreed to receive and deposit t e money under its name for t e joint account of t e private respondent and ;B%A:24 in a non-interest )earing account. At t at point, as trustee, it could ave easily disc arged its o)ligation )y simply transferring and paying t e dollar

)alance to private respondent and ;B%A:24 and )y so doing, would ave dissolved t e trust. <owever, w en t e trustors instructed petitioner as trustee to deposit t e funds in an interest-)earing account, t e latter oug t, as a matter of ordinary common sense and common decency, to ave at least informed t e insured t at it could not or would not, for w atever reason, carry out said instructions. T is is t e very least it could ave done if indeed it wanted to repudiate its role as trustee or )e relieved of its o)ligations as suc trustee at t at point. $nstead of doing t us, petitioner c ose to remain silent. After petitioner5s receipt of t e April 01, 19-, letter of private respondent and ;B%A:24 re3uesting petitioner to remit t e t e dollar )alance to an interest-)earing account, petitioner merely tendered payment of t e said dollar )alance in e.c ange for t e signed >oss and Su)rogation ;eceipt. T is falls far s ort of t e re3uirement to clearly inform t e trustor-)eneficiaries of petitioner5s refusal or ina)ility to comply wit said re3uestJinstruction. Suc silence and inaction in t e face of specific written instructions from t e trustors-)eneficiaries could not )ut ave misled t e latter into t in7ing t at t e trustee was amena)le to and was carrying out t eir instructions, t ere )eing no reason for t em to t in7 ot erwise. T is in turn prevented t e trustors-)eneficiaries from early on ta7ing action to disc arge t e unwilling trustee and appointing a new trustee in its place or from ot erwise effecting t e transfer of t e deposit into an interest-)earing account. T e result was t at t e trustors)eneficiaries, private respondent and ;B%A:24, suffered prejudice in t e form of loss of interest income on t e dollar )alance. As already mentioned, suc prejudice could ave )een prevented ad petitioner acted promptly and in good fait )y communicating its real intentions to t e trustors. *eyond t e foregoing considerations, we must also ma7e mention of t e matter of undue enric ment. 8e agree wit private respondent t at t e dollar )alance of 6SK-18,&-8.0& was certainly a large sum of money. >eaving suc an enormous amount in a non-interest )earing )an7 account for an e.tended period of time 1 a)out one year and nine mont s 1 would undou)tedly ave not only prejudiced t e owner"s# of t e funds, )ut, e3ually as true, would ave resulted to t e immense )enefit of %rudential *an7 "w ic appens to )e a sister company of t e petitioner#, w ic )eyond t e s adow of a dou)t must ave earned income t ereon )y utili+ing and relending t e same wit out aving to pay any interest cost t ereon. <owever one loo7s at it, it is grossly unfair for anyone to earn income on t e money of anot er and still refuse to s are any part of t at income wit t e latter. And w et er petitioner )enefited directly, or indirectly as )y ena)ling its sister company to earn income on t e dollar )alance, is immaterial. T e fact is t at petitioner5s violation of its duty as trustee was at t e e.pense of private respondent, and for t e ultimate )enefit of petitioner or its stoc7 olders. T is we cannot let pass. Fourth (ssue! Award of Attorne,&s Fees is ("proper %etitioner argues t at respondent :ourt erred in affirming t e ;T:5s award of attorney5s fees and costs of suit, repeating t e oft- eard refrain t at it is not sound pu)lic policy to place a premium on t e rig t to litigate. $t is well settled t at attorney5s fees s ould not )e awarded in t e a)sence of stipulation e.cept under t e instances enumerated in Art. 00&8 of t e Eew :ivil :ode. As eld )y t is :ourt in -olid 0o"es, (nc. +s. %ourt of Appeals! 29
BusOrg Summer (trust cases)

Article 00&8 of t e :ivil :ode allows attorney5s fees to )e awarded )y a court w en its claimant is compelled to litigate wit t ird persons or to incur e.penses to protect is interest )y reason of an unjustified act or omission of t e party from w om it is soug t. 8 ile judicial discretion is ere e.tant, an award t ereof demands, nevert eless, a factual, legal or e3uita)le justification. T e matter cannot and s ould not )e left to speculation and conjecture "4irasol vs. Ie la :ru+, 84 S:;A //-= Strong old $nsurance :ompany, $nc. vs. :ourt of Appeals, 1-/ S:;A ,19#. $n t e case at )enc , t e records do not s ow enoug )asis for sustaining t e award for attorney5s fees and to adjudge its payment )y petitioner. . . . >i7ewise, t is :ourt eld in -tronghold (nsurance %o"pan,, (nc. +s. %ourt of Appeals .1 t at! $n A#rogar +. (nter"ediate Appellate %ourt C@.;. Eo. ,-9-&, (anuary 1', 1988, 1'- S:;A '-D t e :ourt ad occasion to state t at 9CtD e reason for t e award of attorney5s fees must )e stated in t e te.t of t e court5s decision, ot erwise, if it is stated only in t e dispositive portion of t e decision, t e same must )e disallowed on appeal. . . . T e :ourt finds t at t e same situation o)tains in t is case. A perusal of t e te.t of t e decisions of t e trial court and t e appellate :ourt reveals t e a)sence of any justification for t e award of attorney5s fees made in t e falloor dispositive portions. <ence, t e same s ould )e disallowed and deleted. 8<B;B?2;B, t e petition is IBE$BI, and t e assailed Iecision is ere)y A??$;4BI wit t e sole modification t at t e award of attorney5s fees in favor of private respondent is IB>BTBI.

G.R. No. L-26117 No2e%ber 27, 19,1 THE HEIRS OF PE3RO ME3IN , re4re$e!+e" by M RG RIT ME3IN , petitioners vs. THE HON. )OURT OF PPE LS, 5 RESTITUT &URBITO 63 . 3E ME3IN a!" N3RES N 6 RRO, (R.,respondents.

TEEH N7EE, Acting C.J.: T e :ourt up olds t e decision of t e :ourt of Appeals w ic dismissed petitioners5 complaint to recover from private respondents a parcel of land situated in 2ac, 4ilagros, 4as)ate, toget er wit t e Spanis title "Titulo ;eal Eo. /49'81# covering it. T e :ourt of Appeals correctly found t at petitioners failed to prove t eir claim t at respondents were olding t e property on t e )asis of an e.press trust, t e e.istence of w ic , according to law and to esta)lis ed jurisprudence, cannot )e proven )y mere parol evidence and cannot rest on vague and uncertain evidence or on loose, e3uivocal or indefinite declarations. T us, assuming t at t ere e.isted a constructive trust in petitioners5 favor, petitioners5 action to recover t e property ad )een lost )y )ot e.tinctive and ac3uisitive prescription )y virtue of respondents5 continuous, uninterrupted and unc allenged possession and occupancy of t e premises adversely and in t e concept of owner-)uyer for t irty-t ree years, counted from t e e.ecution in 1904 of t e deed of sale in respondents5 favor to t e filing of t e action in 19'-. T e late ?rancisco 4edina ad eig t c ildren, namely, @regorio, -otero, 1arciso, Gictorina, Simona, :armen,/edro and <ospicia, all of w om are deceased. %etitioner 4argarita 4edina, w o filed t e complaint on )e alf of t e eirs of %edro 4edina in t e :ourt of ?irst $nstance of 4as)ate, is t e daug ter of %edro 4edina 1 w o predeceased is fat er ?rancisco 4edina. ;estituta Mur)ito Gda. de 4edina, erein private respondent, and defendant in t e trial court, is t e widow of Sotero 4edina ")rot er of %edro 4edina#= and Andres Eavarro, (r., er erein co-respondent and codefendant in t e trial court, is er grandson. 2n 4arc ,, 19'-, erein petitioners filed t e complaint in t e trial court see7ing to recover from erein respondents a parcel of land situated in t e sitio of 2ac, municipality of 4ilagros, province of 4as)ate, containing an area of /01.11', ectares and praying t at respondents )e ordered to deliver to t em possession and owners ip t ereof wit accounting, damages and costs and litigation e.penses. Among ot ers, t e complaint alleged t at petitioner 4argarita 4edina as plaintiff in erited wit er sister Ana 4edina t e said parcel of land from t eir fat er %edro 4edina= t at upon t eir fat er5s deat , s e and er sister Ana 4edina )eing t en minors were placed under t e care and custody of t e spouses Sotero 4edina and ;estituta Mur)ito, as guardians of t eir persons and property= t at t e land in dispute was placed under t e management of Sotero 4edina as administrator t ereof, and upon Sotero5s deat under t e management of is widow, ;estituta Mur)ito= t at s e later discovered t at t e land in 3uestion was surreptitiously declared for ta.ation purposes in t e name of Andres Eavarro, (r., grandson of
BusOrg Summer (trust cases)

;estituta Mur)ito= t at said respondents as defendants ad wit out color of title denied petitioners5 owners ip and instead ad claimed owners ip t ereof since t e year 1948 and e.ercised acts of possession and owners ip t ereon to t e e.clusion of petitioners= t at petitioners ad demanded t at respondents vacate t e premises and deliver possession and owners ip t ereof, )ut t e latter failed and refused to do so= t at respondent Andres Eavarro, (r. ad e.cavated soil from t e land in 3uestion and sold t e same to t e %rovincial @overnment of 4as)ate wit out t e 7nowledge and consent of petitioners and appropriated t e proceeds t ereof to is personal )enefit to t e damage and prejudice of t e plaintiff= and t at respondent ;estituta Mur)ito Gda. de 4edina never rendered an accounting of t e income of t e property in 3uestion in spite of t eir repeated demands and instead appropriated all t e income t erefrom to er personal use and )enefit. ;espondents as defendants alleged on t e ot er and t at petitioner 4argarita and er deceased sister Ana were )ut illegitimate c ildren of %edro 4edina and for t at reason did not enjoy t e status of recogni+ed natural c ildren, suc t at w en %edro died intestate, ?rancisco 4edina, %edro5s fat er w o was still living, succeeded to is properties= t at upon t e deat of ?rancisco, is c ildren succeeded to is properties and t e land in dispute was adjudicated to @regorio, Sotero, and Earciso 4edina= t at in a deed of e.trajudicial partition t e land was later adjudicated solely to Earciso 4edina= t at Earciso 4edina aving )ecome sole and e.clusive owner of t e land in 3uestion )y virtue of said partition sold t e same to ;estituta and er us)and Sotero 4edina on (une 09, 1904, as evidenced )y a deed of sale= t at from t at day, respondents ad actually possessed t e land in 3uestion in t e concept of owners, pu)licly, openly and continuously and adversely against t e w ole world so t at w atever rig t, interest, title or participation petitioners ad or mig t ave ad in t e property ad )een lost )y e.tinctive prescription and )y virtue of t e // years of e.clusive actual possession in t e concept of owner of t e spouses Sotero and ;estituta 4edina w o ad t ere)y ac3uired title t ereto )y ac3uisitive prescription, even granting arguendo t at petitioners ad some title, rig t or interest over t e land. After trial, judgment was rendered declaring petitioner 4argarita 4edina wit er co- eirs as t e lawful owners of t e land in 3uestion= ordering respondents to deliver unto t em t e 9titulo real Eo. /49'81 9 and to restore to t em t e actual possession t ereof= and ordering respondents to pay t em certain amounts representing t e produce of t e land and attorneys5 fees and costs of litigation. 6pon appeal, respondent :ourt of Appeals reversed t e trial court5s decision and sustaining respondents5 defenses of prescription of action and ac3uisitive prescription, ordered t e dismissal of t e complaint. %etitioners twice moved in vain to reconsider t e appellate court5s adverse decision. <ence, t is petition for review, w ic we find to )e wit out merit. At t e outset, it s ould )e mentioned t at t e avowed status of petitioner 4argarita 4edina and er deceased sister Ana 4edina as 9legitimate daug ters9 of %edro 4edina, w ic assertion ad )een vigorously o)jected )ot in t e trial and appellate courts )y respondents "w o c allenged t e trial court5s admission of petitioners5 amended reply asserting t eir status as 9legitimate

c ildren,9 c anging and amending t e statement in t eir original reply t at t ey were 9ac7nowledged natural daug ters9 of t eir fat er %edro 4edina and recogni+ed )y t eir 9deceased natural grandparents9 2 #, was determined positively in favor of petitioners )y t e :ourt of Appeals w ic ruled t at t ere was sufficient 5evidence up olding t e trial court5s finding on t eir legitimate filiation )ased on t e testimonies of witnesses w o testified on t e fact of t e marriage of t eir parents %edro 4edina and ;osario ;amire+. Said findings of fact may no longer )e distur)ed in t ese proceedings, and at any rate do not affect t e disposition of t e case. T e decisive issue at )ar, )earing in mind t e legitimate filiation of petitioners, and t us t e would )e validity of t eir claim to t e land, is simply w et er or not petitioners5 action for recovery t ereof as )een )arred )y prescription. T e validity of respondents5 defense of prescription in turn rests upon w et er or not an express trust over t e property in litigation as )een constituted )y petitioners5 fat er %edro 4edina "w o predeceased is fat er ?rancisco 4edina# upon is )rot er Sotero and Sotero5s wife ;estituta Mur)ito for t e )enefit of is c ildren, petitioner 4argarita 4edina and er deceased sister Ana 4edina and t e latter5s eirs. As provided )y our :ivil :ode, 9Trusts are eit er e.press or implied. B.press trusts are created )y t e intention of t e trusts are of t e parties. $mplied trusts come into )eing )y operation of law.9 "Art. 1441# 9Eo e.press trusts concerning an immova)le or any interest t erein may )e proven )y parol evidence.9 "Art. 144/# 9An implied trust may )e proven )y oral evidence.9 "Art. 14'-# . Applied to t e case at )ar, if an express trust ad )een constituted upon t e occupancy of t e property )y respondents in favor of t e petitioners, prescription of action would not lie, t e )asis of t e rule )eing t at t e possession of t e trustee is not adverse to t e )eneficiary. *ut if t ere were merely a constructive or implied trust, t e action to recover may )e )arred )y prescription of action or )y ac3uisitive prescription )y virtue of respondents5 continuous and adverse possession of t e property in t e concept of owner-)uyer for t irty-t ree years. T e appellate court correctly eld t at t e facts and evidence of record do not support petitioners5 claim of t e creation of an e.press trust and imprescripti)ility of t eir claim, ruling s3uarely t at 9t e facts do not warrant t e conclusion t at an e.press trust was created over t e land in dispute. Alt oug no particular words are re3uired for t e creation of an e.press trust, a clear intention to create a trust must )e s own "Article 1444, :ivil :ode of t e % ilippines#= and t e proof of fiduciary relations ip must )e clear and convincing g "Ouiogue vs. Aram)ulo, 4' 2. @. /&'= Bspinosa vs. Tumula7, :A-@. ;. Eo. /&&-';, (une 0,, 19,4#. B.press trusts are t ose intentionally created )y t e direct and positive act of t e trustor, )y some writing, deed or win, or oral declaration "'4 Am. (ur. //-/4#. T e creation of an e.press trust must )e manifested wit reasona)le certainty and cannot )e inferred from loose and vague declarations or from am)iguous circumstances suscepti)le of ot er interpretations "'4 Am. (ur. 4849#. Eow ere in t e record is t ere any evidence, and t e plaintiffs do not even raise t e pretention, t at t e original owner of t e property %edro 4edina, fat er of plaintiff 4argarita 4edina, appointed, designated or constituted Sotero 4edina "t e us)and of defendant ;estituta Mur)ito 4edina# as t e trustee of t e land in
BusOrg Summer (trust cases)

dispute. %laintiffs5 contention t at t ere was an e.press trust must, t erefore, fail.9 / :oncretely, petitioners anc or t eir claim of an e.press trust on t e following circumstances! "1# respondents5 possession of t e titulo real covering t e land= "0# t e deed of partition of t e estate of t e common predecessor ?rancisco 4edina dated ?e)ruary /, 1904, adjudicating t e land solely to is son Earciso 4edina= "/# t e deed of sale of t e land dated (une 09, 1904, e.ecuted )y Earciso 4edina in favor of is )rot er Sotero 4edina= and "4# t e testimony of respondent ;estituta Mur)ito Gda. de 4edina "Sotero5s wife# to t e effect t at er us)and used to 9administer9 and t en later on, s e erself 9administered9 t e land. T ese circumstances do not ma7e out t e creation of an e.press trust. ;espondents5 possession of t e Spanis title issued in t e late %edro 4edina5s name may just )e t e conse3uence of t e sale of t e land )y Earciso "to w om it ad )een adjudicated in t e partition# to t e spouses Sotero 4edina and ;estituta Mur)ito on (une 09, 1904 and is )y no means an evidence of an e.press trust created for t e )enefit of petitioners. Spanis titles are defeasi)le, and 9alt oug evidences of owners ip . ... may )e lost t roug prescription.9 0 Eeit er is t e deed of partition "w ic apparently e.cluded %edro 4edina# entered into earlier any indication of an e.press creation of a trust. $n fact, t ese documents are adverse to petitioners5 cause, and are evidences of transfer of owners ip of t e land from one ownerJowners to anot er or ot ers and t ey in fact negate t e creation or e.istence of an e.press trust. Eeit er does t e testimony of Sotero5s widow, ;estituta Mur)ito, to t e effect t at er us)and and t en later s e erself 9administered9 t e land support petitioners5 claim of an e.press trust. T ere is no s owing t at t e term 9administration9 as used )y said respondent in er testimony is )y reason of an appointment as suc on )e alf of anot er owner or )eneficiary, suc as to support t e e.istence of an e.press trust. 2n t e contrary, it appears clear from t e conte.t of er testimony t at er use of t e term 9administer9 was in t e concept of an owner-)uyer 9administering9 and managing isJ er property, T us, petitioner cite er following testimony! O. $n w at manner did you possess t is property from t e time you )oug t it from Earciso 4edinaH 1 A. ?irst my us)and was t e one w o administered t e property and t en later on, $ administered t ere. "T.s.n., Iec. 4, 19,/, p. 119.# *ut continuing er testimony, s e clearly declared, as follows! O. <ow did you old t e propertyH $n w at mannerH A. *ecause $ )oug t it, $ was t e one possessing it. O. ?rom t e date of t is document w ic is (une 1904, "B. i)it 0# as t ere )een any)ody w o distur)ed you in your possession of your propertyH A. Eo sir, we were not distur)ed t ere. 6 T e appellate court t us li7ewise correctly eld, a)sent t e e.istence

of an e.press trust, t at 9T e legal construction most favora)le to "petitioners# t at can )e impressed upon t e facts of t e case is t at a constructive or implied trust was created )y operation of law upon t e property in 3uestion,9 7 )ut petitioners5 cause of action ad prescri)ed upon t e lapse of t e ten-year period of ac3uisitive prescription provided )y t e t en applica)le statute "section 41 of Act 19&# , for unregistered lands suc as t e land erein involved. As found )y t e :ourt of Appeals, t e land was sold to Sotero 4edina on (une 09, 1904 from w ic date Sotero and is wife too7 open, pu)lic, continuous and adverse possession of t e land in t e concept of owner. $n 19'- w en t e present action was filed, t irtyt ree "//# years, muc more t an t e 1&-year statutory period for ac3uisitive prescription, ad already elapsed. $n addition, t e appellate court furt er eld t at petitioners5 action to recover was li7ewise time-)arred, pointing out t at 9t e ten-year period under t e statute of limitation wit in w ic plaintiffs could file an action for recovery of real property commenced to run, in 19// w en plaintiff 4argarita 4edina was informed t at t e land in dispute )elonged to er fat er %edro 4edina, for in t at year s e could ave )roug t an action for reconveyance. T e period of prescription commences to run from t e day t e action may )e )roug t "Article 11'&, :ivil :ode of t e % ilippines#, and in an action )ased on fraud, as is t e )asis of t e present action, t e period of prescription )egins from t e discovery of t e fraud "$G Tolentino5s :ivil :ode of t e % ilippines 4&, citing Anuran vs. A3uino, /8 % il. 09 and Solatorio vs. Solatorio, '0 % il. 444#= t e reasons a party mig t ave ad for not immediately ta7ing judicial action is immaterial and does not stop t e running of t e period ">am7o vs. Iioso Eo. >-,90/, 2cto)er /1, 19''#.9 9 ;espondent court ad referred to suc non-action as 9per aps in deference to t e defendants w o ad raised and clot ed er.9 11 T e similar case of %ua,cong +s. %ua,cong, 11 w ere t e :ourt, after finding t e non-e.istence of an e.press trust applying Article 144/ of t e :ivil :ode w ic )ars parol evidence in proving t e alleged creation of an e.press trust over immova)les, eld t at 9even assuming t e alleged trust to )e an implied one, t e rig t alleged )y plaintiffs would ave already prescri)ed since starting in 19/, w en t e trustor died, plaintiffs ad already )een allegedly refused )y t e aforesaid defendants in t eir demands over t e land, and t e compliance filed only in 19,1 P more t an t e 1 year period of prescription for t e enforcement of suc rig ts under t e trust. $t is settled t at t e rig t to enforce an implied trust in one5s favor prescri)es in. ten "1&# years. And even under t e :ode of :ivil %rocedure, action to recover real property suc as lands prescri)es in ten years "Sec. 4&, Act 19&#,9 fully supports t e correctness of t e decision under review. A::2;I$E@>N, t e appealed decision is ere)y affirmed.

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G.R. No. L-.,11, O8+ober .1, 197,M R)ELO SOTTO, "%9!9$+ra+or o: +;e E$+a+e o: F9#e%o! So++o, 4e+9+9o!er, 2$. PIL R TE6ES, FLORENTINO TE6ES, 3UL)E TE6ES 7I M7O a$$9$+e" by ;u$ba!" FELIPE 7I M7O 3OLORES TE6ES R)EN S, a$$9$+e" by ;u$ba!" M RI NO R)EN S, M RI ) M R GUMB N, a$$9$+e" by ;u$ba!" NI) NOR GUMB N, BELEN ) M R BRO<N, a$$9$+e" by ;u$ba!" ROGER BRO<N a!" +;e HONOR BLE )OURT OF PPE LS, re$4o!"e!+$.

defendant t at Atty. Sotto was at t e time of is deat t e owner of t e five lots in 3uestion. $n life, Atty. ?ilemon Sotto was a very prestigious man. <e wielded tremendous social and political influence. Successively, e was municipal councilor, vice-president of :e)u :ity, Assem)lyman, Senator and Ielegate to t e :onstitutional :onvention of 19/4. <e was editor and pu)lis er of many newspapers among w ic was t e famous 9>a ;evolucion9 w ic featured 3uite prominently in t e cele)rated 8ood-Sotto li)el case. 8 en is life, owever, was almost at an end, e was declared incompetent. $n 19,0, w ile Atty. Sotto was under guardians ip, :esar Sotto, is nep ew and protegee and one of t e guardians judicially appointed to ta7e care of is estate, delivered to %ilar Teves, one of t e erein plaintiffs, certain documents w ic ad lain in secrecy in t e private files of Atty. Sotto. All along, t e direct descendants and )lood relatives of ?lorentino ;allos ad rested on t e )elief t at t e properties in 3uestion, w ic are t e fruits of t e sweat and toil of t eir grandfat er, would one day )e delivered unto t em. T e revelation of :esar Sotto, owever, led t e plaintiffs to t e discovery t at all t e properties in 3uestion were now titled in t e name of Atty. Sotto. and were in danger of falling into t e ands of is c ildren out of wedloc7, w o are total strangers to t e spouses ;allos and ?adullon. 6pon suc discovery, t e plaintiffs initiated t e present lawsuit fort wit .9 2n (une 1/, 19,-, t e erein private respondents filed suit in t e :ourt of ?irst $nstance of :e)u against petitioner 4arcelo Sotto, as administrator of t e intestate estate of ?ilemon Sotto, for t e recovery of possession and owners ip of t e ' parcels of land descri)ed in t e complaint, wit damages. T e complaint was )ased mainly upon t e t eory t at a trust relation was esta)lis ed and created wit respect to t e said properties, wit Atty. ?ilemon Sotto as trustee and as cestuis 2ue trust, is mot er-in-law, 4aria ?adullon Gda. de ;allos= is wife, :armen ;allos= and is sister-in-law, :oncepcion ;allos "predecessor in interest of erein private respondents#= and t at in gross violation of t e trust reposed upon im )y :oncepcion ;allos and after er deat , )y er eirs, t e said Atty. ?ilemon Sotto, t roug s eer manipulation, fraudulent acts and means, non-e.istent and void decrees, fictitious sales and transfers, succeeded in causing t e transfer of t e owners ip of t e properties to t e name of is wife :armen ;allos, and finally to is name alone. T e complaint alleged five causes of action. 6nder t e first cause of action, it is alleged t at on (anuary 0', 191/, Atty. ?ilemon Sotto as counsel, not only for t e widow, 4aria ?adullon Gda. de ;allos, )ut also for er daug ters, :armen and :oncepcion )ot surnamed ;allos, filed a motion in said Special %roceedings Eo. /,'-& praying to relieve t e e.ecutri. 4aria ?adullon Gda. de ;allos from presenting a project of partition inasmuc as is clients ad t e desire to conserve pro-indi+iso t e properties in t eir possession, w ic motion / is as follows! "Spanis # 6pon approval )y t e :ourt of t e a)ove 3uoted )ocion -o#re La *isposicion de los 3ienes, t e said pro)ate proceedings was terminated. T e complaint furt er alleged t at at t at time Atty. ?ilemon Sotto "t en 7nown as Ion ?ilemon Sotto# was still single, )ut e already enjoyed considera)le prestige and influence and was well-7nown for

T is is a petition for review on certiorari of t e ;esolution of t e :ourt of Appeals, Special Iivision of ?ive 1 dated Sept. 14, 19-/ in :A@.;. Eo. 44/'1 ; w ic reconsidered t e decision of t e Big t Iivision 2, same :ourt dated Eovem)er 0', 19-0 and from t e ;esolution dated Iecem)er 1/, 19-/ of t e said Special Iivision of ?ive, denying t e motion for reconsideration of t e previous ;esolution. T e dispositive portion of t e appealed ;esolution states! 8<B;B?2;B, t e decision rendered in t e a)ove-entitled case is ere)y reconsidered. T e appealed judgment is ere)y reversed and set aside. %laintiffs are ere)y declared t e a)solute owners of >ots Eos. -'4-, 840, 01-9-A, 10/ and 1/-&. ;econveyance and delivery of possession of t e aforesaid five lots to plaintiffs are ere)y ordered. Iefendant is ere)y sentenced to pay plaintiffs t e sum corresponding to %4,'&&.&& a mont from 2cto)er 1&, 19,, until t e reconveyance and delivery of possession as a)ove ordered ave )een effected, wit legal interest t ereon from said date until fully paid, and t e sum of %',&&&.&& as and for attorney5s fees, wit costs of )ot instances against t e defendant. . T e voluminous records and pleadings in t is case esta)lis t e following undisputed facts w ic are stated in t e appealed ;esolution of t e Special Iivision of ?ive dated Sept. 14, 19-/, as follows! Su)ject of t e plaintiffs5 action for declaration of owners ip andJor reconveyance, and for t e recovery of possession, rentals, damages and attorney5s fees, are five "'# parcels of land, all located in :e)u :ity, more particularly descri)ed in t e complaint, and denominated as >ots Eos. -'4-, 840, 01-9-A, 10/, and 1/-&. T ere is no dispute as to t e fact t at t e aforesaid properties originally )elonged to t e conjugal partners ip of t e spouses ?lorentino ;allos and 4aria ?adullon. 8 en ?lorentino ;allos died on 4arc 14, 1910 in t e :ity of :e)u, t e parcels of land in 3uestion, toget er wit t e ot er properties comprising t e estate of t e deceased, descended in testate succession to is sole eirs, is widow, 4aria ?adullon, and two c ildren, named :oncepcion ;allos and :armen ;allos. T e lawyer to w om t e ;allos eirs entrusted t e settlement of t e estate was Atty. ?ilemon Sotto. S ortly after t e closure of t e pro)ate proceeding in 191/, Atty. Sotto married :armen ;allos. :armen died in 194' wit out leaving any issue. :oncepcion died later leaving many c ildren. 4aria ?adullon predeceased er two daug ters. Atty. Sotto died intestate on 2cto)er 1&, 19,,. :ompeting for t e owners ip of t e five lots are t e direct descendants and )lood relatives of ?lorentino ;allos and 4aria ?adullon, opposed )y t e administrator of t e intestate estate of Atty. Sotto. T e c ildren of :oncepcion ;allos, or t e grandc ildren of ?lorentino ;allos and 4aria ?adullon, some of w om are assisted )y t eir spouses, are t e plaintiffs in t is case. Iefendant administrator represents Atty. Sotto5s c ildren out of wedloc7. $t is claimed )y t e
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is sagacity e aving )ecome a municipal councilor, municipal vicemayor, fiscal and assem)lyman= t at e married :armen (. ;allos on Sept. 0-, 191/ and e later )ecame senator, delegate to t e :onstitutional :onvention and editor, )esides )eing a practicing lawyer. $t is furt ermore alleged t at Atty. ?ilemon Sotto, aving married :armen ;allos, t ere)y virtually ma7ing im a mem)er of t e ;allos family, was loo7ed upon as t e ead of t e ;allos family to loo7 after t e properties in erited from t e deceased ?lorentino ;allos including t e ' parcels of land erein)efore mentioned, t ere)y esta)lis ing a trust relation wit Ion ?ilemon Sotto as trustee of t e said properties for t e )enefit of is mot er-in-law 4aria ?adullon Gda. de ;allos, is wife :armen ;allos de Sotto and sister-in-law :oncepcion ;allos and t e eirs of t e latter, as cestuis 2ue trust= t at t e aforesaid trust reposed upon im continued even after t e deat s of 4aria ?adullon Gda. de ;allos, :armen ;allos de Sotto and :oncepcion ;allos, t e latter w o married twice, first to 4ariano Teves and second to 4ariano :amara, and lasted up to Ion ?ilemon Sotto5s deat on 2cto)er 1&, 19,,= t at on Eovem)er 09, 191,, Ion ?ilemon Sotto in violation of t e trust reposed upon im )y, and is duty as attorney for, t e eirs of t e deceased ?lorentino ;allos, illegally caused Iecree Eo. ,41&1 dated (an. 0,, 1918 to )e issued in :ase Eo. 9, @.;.>.2 Eo. 94,' of t e :ourt of ?irst $nstance of :e)u on t e entire >ot Eo. -'4- in 3uestion, in t e name alone of :armen ;allos de Sotto, t e wife of ?ilemon Sotto, to t e great prejudice and damage of t e ot er co-owners t ereof namely 4aria ?adullon Gda. de ;allos and :oncepcion ;allos de :amara= t at said Iecree is ine.istent, null and void a# initio and wit out force and effect for it s ould ave )een issued not in t e name of :armen ;allos de Sotto )ut in t e names of 4aria ?adullon Gda. de ;allos 1 Q s are and t e remaining Q s are t ereof in t e names of :armen ;allos de Sotto and :oncepcion ;allos de :amara in e3ual proportion of R s are eac = t at on ?e)ruary 9, 1918, as a result of t e said ine.istent, null and void Iecree Eo. ,41&1, 2riginal :ertificate of Title Eo. 1&/4 was issued in t e name of :armen ;allos de Sotto, wife of ?ilemon Sotto= t at sometime in 1900, Atty. ?ilemon Sotto ad caused >ot Eo. -'4- to )e transferred )y is wife to t e name of anot er person as a result of w ic 2.:.T. Eo. 1&/4 was cancelled and Transfer :ertificate of Title Eo. ,0-8 was issued, for fear t at said lot mig t )e attac ed in connection wit t e li)el suit filed against t e newspaper, La 'e+olucion edited )y Ion ?ilemon Sotto at t e instance of t e t en @ov. @en. >eonard 8ood= t at on (une ', 19//, Ion ?ilemon Sotto caused Transfer :ertificate of Title Eo. ,0-8 of >ot -'4- to )e reconveyed not in t e name of is wife )ut in is own name under Transfer :ertificate of Title Eo. 10-4& and was t ereafter reconstituted administratively )y t e guardian of is properties as Transfer :ertificate of Title Eo. ;T-,89& in t e name of ?ilemon Sotto, widower,and finally t e present :ertificate of Title Eo. 0--1& was issued )y t e ;egister of Ieeds in t e name of ?ilemon Sotto, widower. 6nder t e second, t ird, fourt and fift causes of action, respondents alleged specific similar violations of t e trust relation reposed upon im wit respect to t e ot er 4 parcels of land in t at Atty. ?ilemon Sotto illegally caused said lots to )e registered eit er in t e name of is wife :armen ;allos de Sotto alone or jointly wit 4aria ?adullon Gda. de ;allos, to t e prejudice of t e ot er coowner, :oncepcion ;allos, and t ereafter t ru manipulations and fraudulent means, unregistered deeds of sale, fictitious and simulated transfers, incum)rances and reconstitution, t ese properties were in gross violation of t e trust reposed upon im )y t e eirs, finally titled
BusOrg Summer (trust cases)

in t e name alone of :armen ;allos de Sotto and ultimately to t at of is name as Ion ?ilemon Sotto, widower. 6nder t e si.t cause of action, demand was made for t e payment of rental income of t e lots in 3uestion at %4,'&&.&& a mont from 2ct. 1&, 19,, until delivery of possession and owners ip of said lots as actual or compensatory damages, %0&,&&&.&& as moral damages, %1&,&&&.&& as e.emplary damages and %0&,&&&.&& for professional services. Answering t e complaint, petitioner 4arcelo Sotto as administrator of t e estate of Atty. ?ilemon Sotto, denied t at t ere was any trust relation )etween Ion ?ilemon Sotto on one and and 4aria ?adullon Gda. de ;allos, :armen ;allos and :oncepcion ;allos on t e ot er= t at granting t at suc relations ip e.isted )etween Ion ?ilemon Sotto and :oncepcion ;allos, suc a relations ip could not ave endured until t e deat of Ion ?ilemon Sotto= t at t e decree of >ot Eo. -'4- was issued in t e name of :armen ;allos pursuant to an agreement among t e eirs of ?lorentino ;allos t at t is parcel of land, toget er wit t e ot er parcels of land involved in t is case, )e adjudicated to :armen ;allos as er s are in t e estate of ?lorentino ;allos, in t e same manner t at several parcels of land were li7ewise adjudicated to, and decrees issued in t e name of :oncepcion ;allos, as er s are in t e estate of ?lorentino ;allos= t at t e partition agreement adjudicating >ots Eo. -'4- and Q eac of >ots Eos. 840, 01-9-A and >ots Eos. 10/ and 1/-& were adjudicated to :armen ;allos and t e ot er alves of >ot Eos. 840 and 01-9 were adjudicated to 4aria ?adullon Gda. de ;allos and decrees were accordingly issued later on )y t e :adastral :ourt relative to t e said properties of land in pursuance to said partition agreement= t at more t an 1 year aving elapsed from t eir issuance, t e decrees ad )ecome indefeasi)le= t at t e parcels of land, aving )een transferred to t e purc asers for value and in good fait , t e present action for reconveyance will not prosper= t at t e plaintiffs ave no cause of action as t e same is )arred )y prescription, lac es and estoppel= and assuming t at t ere was any trust relation )etween Atty. Sotto and :oncepcion ;allos, t e trust was repudiated )y Atty. ?ilemon Sotto a long time ago as s own )y t e series of transfers of t ese lots made )y im personally. A counterclaim for e.emplary damages, moral damages and attorney5s fees were also set up. T e issues aving )een joined and trial concluded, t e :ourt of ?irst $nstance of :e)u rendered its decision 0dismissing t e complaint, olding t at no e.press trust relation e.isted )etween Atty. ?ilemon Sotto on one and and 4aria ?adullon Gda. de ;allos, :armen ;allos and :oncepcion ;allos on t e ot er wit respect to t e lots in 3uestion= t at t ere was no implied trust su)sisting )etween Atty. Sotto and t e said eirs and t at t ere was actual partition )etween t em w ere)y t e ' lots were given to :armen ;allos as er s are= t at :armen ;allos e.ercised acts of owners ip over t e ' city lots in 3uestion to t e e.clusion of :oncepcion ;allos and 4aria ?adullon Gda. de ;allos, registering t em in er name under t e Torrens system= t at :oncepcion ;allos and er c ildren after er deat were t us notified constructively and actually )y :armen ;allos de Sotto5s raising t e flag of e.clusive owners ip and repudiation of t e trust relation, if t ere was any, and since t en t e period of prescription of 1& years for )ringing t e action tolled against an implied trust. >ac es or inaction on t e part of :oncepcion ;allos and er eirs ave t us rendered t eir demand sale or no longer enforcea)le. T e eirs of :oncepcion ;allos appealed to t e :ourt of Appeals. $n

12

t e Iecision 6 promulgated Eov. 0', 19-0, t e :ourt of Appeals, Big t Iivision, affirmed t e judgment of t e lower court. T e appellate court agreed wit t e conclusion of t e lower court t at no e.press trust was created )etween Atty. ?ilemon Sotto and t e eirs of ?lorentino ;allos )y t e mere signing of t e )ocion in )e alf of t e eirs of ?lorentino ;allos= t at w en t e surviving eirs of t e deceased manifested in t e petition filed )y Atty. ?ilemon Sotto during t e pro)ate of t e will t at it is t eir desire not to partition t e estate so as to preserve and maintain co-owners ip over t e properties, t ere can )e no dou)t t at )y direct and positive acts in olding t e estate pro-indi+iso, t ey intended to create an e.press trust among t emselves= t at ?ilemon Sotto w o merely represented t e eirs in t at pro)ate proceedings and filed t e petition in court was not made a co-trustee )y reason of is marriage to :armen ;allos even if e was t e lawyer of t e ;allos family enjoying t e prestige of )eing a prominent lawyer wit political influence= t at t e estate of ?lorentino ;allos was already partitioned w et er in 190', prior or su)se3uent t ereto, does not matter )ut t e fact is t at t e 2riginal Transfer :ertificates of Title covering t e ' parcels of land were originally issued in t e name of :armen ;allos alone wit respect to lot Eo. -'4- and jointly in t e name of :armen ;allos and 4aria ?adullon Gda. de ;allos as regards >ots Eos. 840, 01-9-A, 10/ and 1/-&, to t e e.clusion of :oncepcion ;allos! t at t ere was repudiation of t e trust relation among t e co-owners, t e date of w ic t e :ourt can only )e guided )y t e registration and issuance of t e certificates of title w en :armen ;allos put t e sta7es of e.clusive owners ip over t e lands and repudiated w atever trust was reposed in er )y er co- eirs= t at from t e moment :armen ;allos asserted er title over t e 3uestioned properties, t e statute of limitation operated against er co- eirs, irrespective of plain -otto +s. !e+es, plaintiffs5 pretension t at t ey discovered muc too late t at t e ' lots were already titled in t e name of :armen ;allos, for suc discovery is deemed to ave ta7en place w en t e certificates of title to t e properties were issued in favor of :armen ;allos. T e a)ove decision of t e Appellate :ourt aving )een assailed on a 4otion for ;econsideration 7 filed )y plaintiffs-appellants, now t e erein private respondents, t e :ourt of Appeals, Special Iivision of ?ive, reversed t e said decision in its ;esolution of Sept. 14, 19-/. T e :ourt, owever, agreed wit t e ruling of t e original decision declaring t at t e eirs of ?lorentino ;allos ad 9)y manifesting to t e pro)ate court t at it was t eir desire to preserve and maintain t e owners ip of t e in erited properties t ere)y intended and created )y direct and positive acts an e.press trust among t emselves,9 as it was in conformity wit t e evidence and t e law. ,T e court also noted t at 9"t# e parties ceased to de)ate t e 3uestion as to w et er or not an e.press trust was created )y and among t e ;allos eirs after our decision was promulgated. T ey came to agree t at suc a relations ip was indeed created and t at it e.isted. $n t e present motion for reconsideration, t e dispute centers on t e issue as to w et er t e e.press trust su)sisted or it was repudiated. T e parties are also in disaccord on t e 3uestion as to w et er Atty. Sotto s ould )e considered a party in t e e.press trust or s ould )e regarded merely as a constructive trust.9 9 T e respondent :ourt of Appeals said t at upon t e facts and under t e law, Atty. Sotto can )e regarded as t e constructive trustee of is wife and of t e widow and descendants of ?lorentino ;allos= t at Atty. Sotto5s special relations wit t e ;allos eirs in i)ited im from any act or conduct t at could put is interests a)ove or in direct collision wit t e interests of t ose w o ad reposed t eir trust and confidence in im.
BusOrg Summer (trust cases)

T e :ourt also found t at t e trust continued to su)sist and did not terminate in 190' )y an adjudication of t e lots to :armen ;allos, for no suc adjudication too7 place= t at t e registration of t e lots was not t e result of suc adjudication or partition and said registration did not amount to a repudiation of t e e.press trust. T e titling of t e lots in t e names of :armen ;allos and 4aria ?adullon Gda. de ;allos was done in t eir capacities as trustees and not as a)solute and e.clusive owners t ereof. $n 190' an oral agreement founded upon and in reaffirmation of t e 191/ written agreement was reac ed among t e ;allos eirs under w ic t e ' lots would remain under co-owners ip of t e / eirs, wit :armen ;allos as administratri. w o would )e entitled to a lifetime of usufruct of t e properties )ut upon er deat , owners ip of t e lots would devolve to :oncepcion ;allos and er eirs. T e :ourt ruled t at :armen ;allos could not legally deprive :oncepcion ;allos and er eirs of t eir rig ts to t e properties t roug t e e.ecution of a will in favor of er us)and ?ilemon Sotto, considering t at t e same were trust properties eld )y er in trust for t e )enefit of :oncepcion ;allos and er eirs, ence, Atty. ?ilemon Sotto must )e deemed to ave received t e properties impressed wit t e su)sisting trust, not for imself )ut for t e )enefit of t e cestuis 2ue trust. :oncluding, t e :ourt said! 96pon t e facts, under t e applica)le laws, and even on t e )asis of e3uity, plaintiffs are entitled to )e declared t e owners of t e properties w ic admittedly originated from t eir ancestor and )lood relative, t eir grandfat er ?lorentino ;allos. As owners of t e lots in 3uestion plaintiffs are also entitled to t e fruits t ereof. ... 11
%etitioner5s motion for reconsideration aving )een denied, e now comes to 6s to review t e reversal of t e original decision of t e appellate court and ma7es t e following assignment of errors! $. T e :ourt of Appeals erred in finding t at an e.press trust was created among t e eirs of ?lorentino ;allos )y virtue of t e 4ocion So)re la Iisposicion de los *ienes filed )y ?ilemon Sotto. $$. T e :ourt of Appeals erred in not finding t at t e legal relations ips created )y t e said 4ocion So)re >a Iisposicion Ie los *ienes was a simple co-owners ip. $$$. T e :ourt of Appeals erred in finding t at Ion ?ilemon Sotto )ecame a co-trustee )y virtue of is su)se3uent marriage to :armen ;allos. $G. T e :ourt of Appeals erred in not finding t at t e eirs of ?lorentino ;allos entered into an actual, effective and mutually accepted partition of t e estate. G. T e :ourt of Appeals erred in finding t at an e.press trust e.isted )y t e use of parol evidence, disregarding t e weig t of a torrens title and a pu)lic document mutually admitted )y t e parties. G$. T e :ourt of Appeals erred in not finding t at even if an e.press trust was created, t e same was e.pressly repudiated )y )ot parties. G$$. T e :ourt of Appeals erred not finding t e respondents guilty of lac es and estoppel.

T e first and second assignments of error relate to t e )ocion -o#re la *isposicion de los 3ienes ence 8e are constrained to consider and resolve t em toget er. %etitioner faults t e :ourt of Appeals in finding t at an e.press trust was created among t e eirs of ?lorentino ;allos )y virtue of t e )ocion filed )y Atty. Sotto, and in not finding t at t e legal relations ip created )y t e )ocion was a simple co-owners ip. %etitioner contends t at t e 9motion is very clear and categorical and t e only purpose of t at 4otion is to 7eep t e properties in a co-owners ip )y t e eirs of ?lorentino ;allos, not to create a relations ip of e.press trust among t e eirs.9 11 <e argues t at 9"s#ince t e alleged source of e.press trust is a written document, applying t erefore t e document aforecited it is necessary

13

t at t e document e.pressly state and provide for t e e.press trust,9 12 and t at it is a contradiction in terms for t e :ourt of Appeals to imply from t e document an e.press trust. %etitioner5s contention is wit out merit. $t may )e true t at t e eirs of ?lorentino ;allos intended and desired to 7eep t e properties in coowners ip pro-indi+iso w en t ey signed t e )ocion filed in t eir )e alf )y Atty. ?ilemon Sotto in t e pro)ate proceedings to terminate t e same )ut t e legal effect of said agreement to preserve t e properties in co-owners ip as e.pressed in writing and em)odied in t e )ocion was to create a form of an e.press trust among t emselves as co-owners of t e properties. $n t e case of %astrillo, et al. +s. %ourt of Appeals, et al., 1& S:;A '49, t e Supreme :ourt, spea7ing t ru : ief (ustice 4a7alintal, said t at 9co-owners ip is a form of trust and every co-owner is a trustee for t e ot er.9 $n coowners ip, t e relations ip of eac co-owner to t e ot er co-owners is fiduciary in c aracter and attri)ute. 8 et er esta)lis ed )y law or )y agreement of t e co owners, t e property or t ing eld proindiviso is impressed wit a fiducial nature t at eac co-owner )ecomes a trustee for t e )enefit of is co-owners and e may not do any act prejudicial to t e interest of is co-owners. 6nder t e law on Trusts, it is not necessary, as petitioner insists, t at t e document e.pressly state and provide for t e e.press trust, for no particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended. "Art. 1444, E.:.:.# An e.press trust is created )y t e direct and positive acts of t e parties, )y some writing or deed or will or )y words evidencing an intention to create a trust. :uaycong et al. vs. :uaycong, et al., @.;. Eo. >01,1,, Iec. 11, 19,-#. 8e agree wit t e findings of t e respondent :ourt of Appeals t at an e.press trust was created )y t e eirs of ?lorentino ;allos in respect to t e properties in litigation w en t ey agreed to preserve said properties in co-owners ip among t emselves as manifested and e.pressed into writing and filed as a pleading captioned )ocion -o#re la *isposicion de los 3ienes. $ncidentally, t is is t e same finding of t e original decision of t e Big t Iivision, same :ourt w ic was, owever, reconsidered on ot er grounds. 8e find no reason to distur) t is finding of t e respondent :ourt, t e same )eing in accordance wit law and t e facts as clearly esta)lis ed. 8e now consider t e t ird assignment of error. %etitioner contends t at t e :ourt of Appeals erred in finding t at Ion ?ilemon Sotto )ecame a co-trustee )y virtue of is su)se3uent marriage to :armen ;allos. %etitioner, w ile admitting t at as a lawyer some form of trust devolved upon t e s oulders of ?ilemon Sotto= t at as t e us)and of :armen Sotto, some form of trust devolved on is s oulders= t at )ecause of overw elming social and political standing during is time some form of trust was carried )y ?ilemon Sotto, 1. argues t at t is is not t e Trust t at is defined in our :ivil :ode most especially if it is t e e.press trust under Articles 1441 and 1444 w ic is relied upon )y t e respondent :ourt of Appeals, Special Iivision of ?ive. T e trust on t e s oulder of ?ilemon Sotto as t e family lawyer in t e intestate proceedings of ?lorentino ;allos was only coterminous wit t e duration of t e proceedings itself. T e trust on t e s oulder of ?ilemon Sotto )y virtue of is marriage to :armen ;allos was only as muc as t e trust on t e s oulders of t e two us)ands of :oncepcion ;allos, 4ariano Teves and 4ariano :amara, and t is trust is not t e trust defined in our :ivil :ode on e.press trust.9 1/
BusOrg Summer (trust cases)

8e find no merit in petitioner5s contention. $n t e first place, petitioner5s argument is )ased on an incorrect assumption. %etitioner assumes t at t e respondent :ourt of Appeals found t e e.istence of an e.press trust )etween Atty. ?ilemon Sotto and t e eirs of ?lorentino ;allos, w ic is not correct. 8 at t e appellate court eld is t at Atty. Sotto can )e regarded as t e constructive trustee of is wife and of t e widow and descendants of ?lorentino ;allos. $n fact t e :ourt declared, t us 1 6pon t e record, we ave no dou)t )ut t at t ere e.isted more t an mere professional relations ip of attorney and client )etween Atty. Sotto and t e mem)ers of t e family of ?lorentino ;allos. S ortly after t e closure of t e testate proceeding, Atty. Sotto contracted marriage wit one of t e daug ters of ?lorentino ;allos. T e attorney t ere)y )ecame not only a family lawyer )ut also an actual mem)er on t e ;allos family )y affinity. *y reason of is marriage to :armen ;allos, and on account of is prestige and tremendous social and political influence, Atty. Sotto enjoyed and e.ercised a personal, domestic, social, political and moral ascendancy and superiority not only over is wife )ut also over 4aria ?adullon, :oncepcion ;allos, and t e latter5s c ildren. T e evidence reveals t at t e ;alloses loo7ed up to Atty. Sotto as protector and )enefactor, as one on w om t ey could repose t eir trust and confidence and w o would ta7e care of t e properties in erited from ?lorentino ;allos, and on is part, Atty. Sotto ac7nowledged is position as protector of t e rig ts and interests of t e ;allos family. >i7e a pater fa"ilias, e attended to t e financial and medical needs of t e direct descendants of ?lorentino ;allos and 4aria ?adullon "B. s. 6 and T#. 8 en one of t e five parcels in 3uestion, >ot -'4-, was )eing claimed )y a certain 4anuel 2cejo, Atty. Sotto represented t e ;allos family as defendants in :ivil :ase Eo. 1,41 of t e :ourt of ?irst $nstance of :e)u, and t e lot was adjudicated in favor of t e ;allos family. T e acts and conduct of t e ;alloses and Atty. Sotto fostered a close and fiduciary relations ip )etween t em. 6pon t e facts and under t e law, Atty. Sotto can )e regarded as t e constructive trustee of is wife and of t e widow and descendants of ?lorentino ;allos. ?or t e settled rule is t at! T e relation )etween parties, in order to )e a fiduciary relation9 need not )e legal, )ut may )e moral, social, domestic or merely personal= and w ere )y reason of 7ins ip, )usiness association, disparity in age or p ysical or mental condition or ot er reason, t e grantee is in an especially intimate position wit regard to anot er and t e latter reposes a degree of trust and confidence in t e former, confidential relations ip e.ists w ic pro i)its t e one entrusted from see7ing a selfis )enefit for imself during t e course of relations ip, and affords a )asis for imposing a constructive trust. "89 :(S Art. 1'1, pp. 1&'4-1&'-# Atty. Sotto5s special relations ip wit t e ;allos eirs in i)ited im from any act or conduct t at would put is interests a)ove, or in direct collision wit , t e interests of t ose w o ad reposed t eir trust and confidence in im.9 10 Secondly, it is also not 3uite correct for petitioner to claim t at t e respondent :ourt ruled t at Ion ?ilemon Sotto )ecame a co-trustee )y virtue of is su)se3uent marriage to :armen ;allos. T e trut of t e matter is t at, according to t e :ourt, Atty. Sotto )ecame a constructive trustee not only )y reason of is marriage to :armen ;allos )ut also on account of is prestige and tremendous social and

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political influence, also )ecause Atty. Sotto enjoyed and e.ercised a personal, domestic, social, political and moral ascendancy and superiority over is wife, over 4aria ?adullon, :oncepcion ;allos and t e latter5s c ildren, )esides )eing t e protector of t e rig ts and interests of t e ;allos family acting li7e a pater fa"ilias attending to t eir financial and medical needs, as well as t e family lawyer. 8e are in full accord wit t ese findings and conclusion of t e respondent :ourt as t e same are final, conclusive and )inding upon 6s, t ere )eing no e.ceptional circumstances or reasons to review or revise t e same. 8it respect to t e fourt assignment of error, petitioner impugns t e :ourt of Appeals in not finding t at t e eirs of ?lorentino ;allos entered into an actual, effective and mutually accepted partition of t e estate. %etitioner claims t at partition of t e in erited properties too7 place )etween t e eirs in 190' in accordance wit w ic t e ' parcels of land under litigation were adjudicated to :armen ;allos and t at )y reason of t e partition and adjudication, t e lots were granted to :armen ;allos and titles were secured and issued in er favor and name. 2n t e ot er and, t e private respondents claim t at t ere was suc a partition agreed upon in 190' w en, on t e occasion of t e visit of 4aria ?adullon Gda. de ;allos and :armen ;allos to :oncepcion ;allos after t e latter5s delivery of a c ild, it was agreed t at t e properties in :armen, :e)u and one lot in *asa7, :e)u :ity, all assessed at %9,&&&.&& were to remain wit :oncepcion ;allos, w ile t e ' lots now in litigation, t en owned in common among t e t ree eirs, and assessed at %'',&&&.&& would )e administered )y :armen ;allos, t e fruits t ereof to )e received )y :armen ;allos during er lifetime and t at upon t e deat of :armen t e properties will devolve to :oncepcion and to er c ildren. T e respondent :ourt rejected petitioner5s claim of partition and adjudication, declaring t at 1 8e cannot em)race t e t eory advanced )y defendant, w ic is )ereft of evidentiary support, t at in 190', on t e occasion of t e visit paid )y 4aria ?adullon and :armen ;allos to :oncepcion ;allos, t e five lots in 3uestion were adjudicated to :armen ;allos. To )egin wit , t ere is no concrete evidence of record on w ic to lay suc claim. $t is our )elief t at t e realities of t e situation of t e parties and t e practica)le and e3uita)le utility of t e in eritance of ?lorentino ;allos are )etter determinants of t e 3uestion as to w et er defendant5s t eory would )e accepted or rejected. :armen ;allos was admittedly wit out any c ild to support. 2n t e ot er and, :oncepcion ;allos was )urdened wit many c ildren. T e lots in :armen and *asa7, w ic were allowed to )e retained )y :oncepcion, were assessed at a mere %9,&&&.&&, w ereas t e five lots in 3uestion ad an assessed value of %'',&&&.&& in 190'. $t is very difficult to )elieve t at :armen ;allos and 4aria ?adullon ad gone to :oncepcion, on t e occasion w en anot er c ild ad just )een added to t e latter5s )urden, to tell er t at t ey were depriving er of a valua)le s are in t e in eritance, suc s are to )e given to :armen w o was c ildless. Suc t eory of defendant is utterly un ?ilipino and is t oroug ly irreconcila)le wit our customs and ways of treating close relatives. T e more pro)a)le and )elieva)le is t e testimony of %ilar Teves t at 4aria ?adullon and :armen ;allos came to :oncepcion, as 4agis )earing gifts, to tell er t at t e five lots
BusOrg Summer (trust cases)

would go to er and to er c ildren upon :armen5s deat . T e testimony of %ilar ji)es wit t e evidence t at ?lorentino ;allos ad e.pressed t e wis t at a portion of t e in erited properties s ould )e devoted to defray t e e.penses for t e education of is grandc ildren. 9 16 8e up old t e stand of t e respondent :ourt of Appeals, Special Iivision of ?ive in giving credence and )elief to respondents5 claim of partition as testified to )y %ilar Teves, one of t e private respondents, )ecause t e :ourt5s findings and its ruling is )ased on t e grounds of uman e.perience, t e ordinary course of t ings and our own native customs, culture and tradition to revere t e memory of our ancestor )y 7eeping intact t e estate in in eritance as long as possi)le, and to elp one5s )rot ers and sisters to )enefit from t e sweat and toil of our parents, rat er t an dispossess t em or given t e in eritance away to perfect strangers, strangers to family ties and filial affection. $t is unconsciona)le and contrary to morals t at a parent s ould deprive is c ildren of w at lawfully )elongs to t em. "Ie @u+man vs. A3uino, /4 S:;A 0/,#. %etitioner5s version of t e partition and adjudication is, from a factual viewpoint, clearly untena)le= it is even inconsistent wit is evidence. T e facts s ow t at all t e lots were registered originally )efore t e alleged partition and adjudication in 190'. >ots 10/ and 1/-& were registered on Sept. 0/, 191/= >ot 840 on ?e). ', 1918= >ot 01-9-A on (une 1-, 1901 and >ot -'4- on ?e)ruary 9, 1918. *ase on t eir respective dates, t e acts of registration preceded t e supposed partition and adjudication w ic ine.plica)ly reversed t e usual order of occurrence w ic is, t at partition and adjudication normally precede registration. 4ore t an t at, t e first 4 lots mentioned a)ove were registered jointly in t e names of 4aria ?adullon Gda. de ;allos and :armen ;allos, w ic strongly )elied petitioner5s contention t at all t e ' lots were adjudicated to :armen ;allos alone. T e conclusion is inescapa)le t at petitioner5s version did not ta7e place and t at t e registration of t e lots could not ave resulted from t e supposed partition and adjudication. As 8e ave eretofore stressed, t e findings of fact of t e :ourt of Appeals are conclusive. >i7ewise, 3uestion of credi)ility is left to t e :ourt of Appeals. "Ie @arcia vs. :ourt of Appeals, /- S:;A 109#. Appreciation of evidence is wit in t e domain of t e :ourt of Appeals )ecause its findings of facts are not reviewa)le )y t e Supreme :ourt. "Talosig vs. Gda. de Eie)a, 4/ S:;A 4-0= Tingco vs. de la 4erced, '8 S:;A 89#. T e Supreme :ourt will not review findings of facts of t e :ourt of Appeals, "Bvangelista F :o. vs. Santos, '1 S:;A 41,#. 2n appeal from a decision of t e :ourt of Appeals, t e findings of fact made in said decision are final, e.cept! "1# 8 en t e conclusion is a finding grounded entirely on speculations, surmises or conjectures= "0# 8 en t e inference is manifestly mista7en, a)surd or impossi)le= "/# 8 en t ere is a grave a)use of discretion= "4# 8 en t e judgment is )ased on a misappre ension of facts= "'# 8 en t e findings of fact are conflicting, ",# 8 en t e :ourt of Appeals, in ma7ing its findings, went )eyond t e issues of t e case and t e same is contrary to t e admissions of )ot appellant and appellee. "Eapolis vs. :ourt of Appeals, 4/ S:;A /&1#. $n t e case at )ar, 8e are convinced and satisfied t at t e a)ove e.ceptions do not o)tain. %etitioner e.acer)ates t at t e :ourt of Appeals erred in finding t at an e.press trust e.isted )y t e use of parol evidence, disregarding

15

t e weig t of a torrens title and a pu)lic document mutually admitted )y t e parties, in is fift assignment of error. 8e reject petitioner5s contention as )aseless. $n t e first place, t e respondent :ourt did not find t at an e.press trust e.isted )y t e use of parol evidence. Actually, t e :ourt, on t is point said! 92n t e )asis of undisputed facts, we eld in our decision t at t e eirs of ?lorentino ;allos, )y manifesting to t e pro)ate court t at it was t eir desire to preserve and maintain t e co-owners ip over t e in erited properties, t ere)y intended and created, )y direct positive acts, an e.press trust among t emselves. "pp. 19, 04, Iecision#. $t is our view t at t is olding s ould )e maintained )ecause it is in conformity wit t e evidence and t e law.9 17 $n a later portion of t e ;esolution appealed from, t e :ourt said! 9As early as in 191/, t e ;allos eirs ad already agreed e.pressly and in writing t at t e five parcels s all remain in co-owners ip, and t at in regard to t em eac one of t e eirs s all )e a trustee for t e ot ers.9 1, $n t e second place, t e oral testimony of %ilar Teves simply affirmed t e e.istence of suc trust relation= it gave proof t at t e eirs desired to continue t e e.press trust and co-owners ip over t e five lots. $t was not necessary t at t e eirs create a new agreement of co-owners ip over t e said properties. T ey merely reiterated t eir written agreement made in 191/ t at t e five parcels would )e preserved in co-owners ip )ut made provisions for t eir administration, collection of rentals and final disposition upon t e deat of :armen ;allos. T ere is, t erefore, no violation of Art. 144/, E.:.: w ic provides t at 9no e.press trust concerning an immova)le or any interest t erein may )e proved )y parol evidence,9 as t e same is not applica)le erein. As to t e pretension t at t e respondent appellate court disregarded t e weig t of a torrens title and a pu)lic document mutually admitted )y t e parties, t e latter refering to t e will e.ecuted )y :armen ;allos in 1940 )e3ueat ing all er properties to er us)and, Atty. ?ilemon Sotto, petitioner5s reasoning olds no water )ecause from t e very nature of a trust relation w ic e.isted )etween :armen ;allos and er co-owners, s e cannot o)tain and secure a torrens title to t e properties in er name muc less dispose of t em )y testament to er us)and, a constructive trustee, to t e prejudice and deprivation of t e rig ts and interests of said co- eirs. A fiduciary relations ip may e.ist even if t e title to t e property su)ject to t e trust appears in t e name of t e trustee alone, )ecause in cases of trustees ip, t e legal title usually appears in t e name of t e trustee, w ile t e e3uita)le title remains wit t e cestui 2ue trust. "%alma vs. :risto)al, -- % il. -10#. True it is t at Torrens titles were issued in t e name of :armen ;allos, )ut t e principle olds t at a trustee w o ta7es a Torrens title in is name cannot repudiate t e trust )y relying on t e registration, w ic is one of t e well- 7nown stations upon t e finality of a decree of title. "Alvare+, et al. vs. B spiritu, >-188//, August 14, 19,', 14 S:;A 890= %aterno Gda. de %adilla vs. *i))y de %adilla, -4 % il. /--= Eery vs. >oren+o, >-0/&9,, April 0-, 19-0, 44 S:;A 4/1, 4/9 and t e cases cited t erein#. Eeit er an t e will e.ecuted )y :armen ;allos deprive t e private respondents of t eir owners ip over t e five parcels of land. T ese lots were trust properties= :armen ;allos was olding t em in trust
BusOrg Summer (trust cases)

for er sister :oncepcion ;allos and t e latter5s c ildren. Eot )eing t e a)solute owner t ereof, :armen ;allos could not legally convey t eir owners ip )y including t em in t eir will. To all intents and purposes, t e will and last testament of :armen ;allos was merely a ve icle of an e.isting trust and t erefore, Atty. ?ilemon Sotto must )e deemed to ave received t e properties not for imself )ut for t e )enefit of t e cestui 2ue trust. And as a trustee of t ese trust properties, Atty. Sotto never alienated or disposed any of t ese properties during is lifetime, t ere)y recogni+ing is position as trustee and t at e eld t em for t e )enefit and interest of t e cestuis 2ue trust. 2n t e penultimate and ultimate assignments of error, petitioner fulminates against t e appellate court in not finding t at, assuming t at an e.press trust was created, t e same was e.pressly repudiated )y t e parties and in not finding respondents guilty of lac es and estoppel. T e resolution of t ese supposed errors, t e ,t and t e -t , must follow as a conse3uence to 2ur ruling a propos petitioner5s 4t and 't assignments of error. 8e sustained t e respondent :ourt in rejecting petitioner5s version of t e partition and adjudication and t at t e registration of t e lots could not ave resulted from t e supposed partition and adjudication. 8e affirmed t at t e e.press trust and coowners ip over t e ' parcels of land created and agreed in 191/ )y and among t e ;allos eirs did not terminate in 190' )ut su)sisted and was maintained )y t em t ereafter. 8e also declared t at t e registration of t e 4 lots in t e names of :armen ;allos and 4aria ?adullon Gda. de ;allos and 1 lot in favor of :armen ;allos alone was done in t eir capacities as trustees and not as a)solute or e.clusive owners, and not only in t eir own )e alf and )enefit )ut also for t e ot er co-owner, :oncepcion ;allos. 8it t ese previous pronouncements in mind, 8e must overrule petitioner5s stand t at t e trust was e.pressly repudiated )y t e parties alt oug e ma7es capital of t e fact of registration of t e properties in t e names of :armen ;allos and 4aria ?adullon Gda. de ;allos, contending strongly t at suc registration is evidence of repudiation of t e e.press trust. T e rationale of 2ur conclusion in meeting petitioner5s 4t assignment of error, including t e aut orities cited t ereunder, olds wit e3ual force and persuasion over petitioner5s contention of alleged repudiation )y t e parties. T e registration of t e property in t e name of t e trustee in possession t ereof must )e deemed to ave )een effected for t e )enefit of t e cestui 2ue trust. "Severino vs. Severino, 44 % il /4/= *aretto vs. Tuason, '& % il. 888#. %etitioner points to t e fact t at :oncepcion ;allos ad e.pressly repudiated t e trust )y selling t e *asa7 properties w ic were converted into a su)division, as well as to acts of e.clusive owners ip over t e properties of t e estate )y eac of t e co-owners to s ow t at t e trust relations ip and co-owners ip was repudiated, renounced and terminated w en t e parties agreed to an actual partition of t e estate. %etitioner5s advocation is futile. *esides t e falsity of its )asis for t e reason t at 8e found no partition as t eori+ed )y petitioner and t at t e trust relation su)sisted and was maintained in 190' and t ereafter, t e acts of e.clusive owners ip pointed )y petitioner do not appear to )e clear, open and une3uivocal repudiation of t e trust. T us 1 1. T e sale )y :oncepcion ;allos of some of t e properties originally

16

forming part of t e estate of ?lorentino ;allos cannot )e considered as a repudiation of t e e.press trust )y :oncepcion erself. Said properties were given to er in t e aforementioned agreement testified to )y %ilar Teves and did not form part of t e five parcels of land over w ic an e.press trust was esta)lis ed in 191/ and reiterated in 190'. 0. 8it respect to >ots 10/ and 1/-&, Atty. ?ilemon Sotto, soon after t e creation of t e e.press trust in 191/, caused t e registration of t ese two lots and t e issuance of 2riginal :ertificate of Title Eo. 0'1-0'/ dated Sept. 0/, 191/ in t e names of 4aria ?adullon and :armen ;allos, to t e e.clusion of :oncepcion ;allos. T ereafter, Atty. Sotto caused t e deed of sale to )e e.ecuted )y 4aria ?adullon w ere)y s e purportedly sold er s are in t e two lots to :armen ;allos, and )y virtue of suc deed, Atty. Sotto was a)le to o)tain Transfer :ertificate of Title in t e name of is wife :armen ;allos. T at t e registration of t ese two lots too7 place in 191/, )arely 8 mont s after t e creation of t e e.press trust, and )eing inconsistent wit t e terms of said 4otion t at t ey preserve t e in eritance in coowners ip and in e3ual s ares, do not clearly s ow t at :armen ;allos intended to repudiate t eir original agreement as contained in t e )ocion. Since t e titles were issued in t e name of :armen ;allos t ru t e professional services of er lawyer- us)and Atty. ?ilemon Sotto, it is more )elieva)le and consistent wit t e e.press trust relation created under t e )ocion dated and filed on (an 0', 191/ t at t e title was ta7en in t e name of :armen ;allos )ut for t e )enefit of t e ot er eirs, namely 4aria ?adullon ;allos and :oncepcion ;allos. /. 8it respect to >ot 01-9-A, t e 2riginal :ertificate of Title was o)tained )y Atty. ?ilemon Sotto on (une 1-, 1901 in t e name of 4aria ?adullon de ;allos and :armen ;allos, again e.cluding :oncepcion ;allos. 8 en @ov. @en. 8ood sued Atty. Sotto for damages in t e famous 8ood-Sotto li)el case, Atty. Sotto, fearful of t e issuance of attac ments proceedings, caused 4aria ?adullon and :armen ;allos to sell >ot 01-9-A in favor of t e spouses Agustin (ere+a and *eatri+ de (ere+a, in w ose names t e 2riginal :ertificate of Title were t en transferred. <owever, Atty. Sotto o)liged t e (ere+as to e.ecute a counter deed of sale in is favor and conse3uently a Transfer :ertificate of Title was issued in t e name of Atty. ?ilemon Sotto. T e fictitious transfer of t e lot to t e (ere+a spouses w ic was proved )y t e testimony of t e %rivate Secretary of Atty. ?ilemon Sotto does not indicate a clear repudiation of t e trust or of t e co-owners ip= t e alleged repudiation was not open, pu)lic and deli)erate. T e acts, on t e contrary, were secretive and fraudulent assertions of e.clusive owners ip. 4. 8it regards to >ot 840, t e same was registered on ?e). ', 1918 in t e name of :armen ;allos and er mot er 4aria ?adullon ;allos, also to t e e.clusion of :oncepcion ;allos. A deed of sale e.ecuted )y 4aria ?adullon purported to sell er Q s are of t e lot in favor of :oncepcion ;allos. T is deed was among t e documents 7ept in t e private files of Atty. Sotto w ic were delivered )y :esar Sotto to t e respondents. T is deed was not registered in t e 2ffice of t e ;egister of Ieeds )ut was 7ept secret in t e files of Atty. Sotto. T ereafter, anot er deed was registered w ere)y 4aria ?adullon sold er s are to :armen ;allos and upon t e registration of t e latter deed, title was consolidated in t e name of :armen ;allos, w o was issued a new Transfer :ertificate of Title. T at t e deed of sale supposedly asserting a claim of owners ip and transfer t ereof was 7ept under seal of secrecy cannot )e considered as une3uivocal acts
BusOrg Summer (trust cases)

of repudiation of t e trust and of t e co-owners ip. Alt oug t e title to t e lot was finally consolidated in t e name of :armen ;allos t ru t is secret manner, 8e must regard t e registration to )e for t e )enefit of t e ot er co- eirs w o cannot )e prejudiced )y suc furtive and stealt y act. T e finding of t e respondent :ourt of Appeals t at 9"t# e issuance of titles and t e e.ecution of t e purported sales and transfers, w ic all culminated in Atty. Sotto5s ac3uisition of titles in is name, occurred during t e e.istence of t e e.press trust, and were s rouded )y a cloud of secrecy, at least as far as :oncepcion ;allos was concerned. A6 t e papers and documents pertaining to t e issuance of titles and to t e transfers and sales were 7ept in Atty. Sotto5s possession, and concealed from t e 7nowledge of :oncepcion ;allos. At t e time :oncepcion ;allos was )eing deprived of a valua)le s are in t e in eritance, s e was 7ept completely in t e dar7. 6nder t e facts, appellee cannot rely on t e certificates of title in t e names of Atty. Sotto to defeat t e plaintiffs5 rig t and cause of action,9 19 clearly appears to )e correct and well-founded t at t e same will not )e distur)ed )y 6s in t e present petition for review on certiorari. $n *ia4, et al. +s. 5orricho and Aguado /hil. 671, t e Supreme :ourt, spea7ing t ru (ustice (.*.>. ;eyes, said. T e e.press trusts disa)le t e trustee from ac3uiring for is own )enefit t e property committed to is management or custody, at least w ile e does not openly repudiate t e trust, and ma7es suc repudiation 7nown to t e )eneficiary or cestui 2ue trust. ?or t is reason, t e old :ode of :ivil %rocedure "Act 19&# declared t at t e rules on adverse possession do not apply to 9continuing and su)sisting9 "i.e., unrepudiated# trusts.9 $n 8alde4, et al +s. .larga et al., 91 -%'A :1, t e Supreme :ourt, wit Acting : ief (ustice 4a7alintal asponente, eld! 9And from t e standpoint of ac3uisitive prescription, or prescription of owners ip, t is :ourt as eld in numerous decisions involving fiduciary relations suc as t ose occupied )y a trustee wit respect to t ecestui 2ue trust t at as a general rule t e former5s possession is not adverse and t erefore cannot ripen into a title )y prescription. Adverse possession in suc a case re3uires t e concurrence of t e following circumstances! "a# t at t e trustee as performed une3uivocal acts of repudiation amounting to an ouster of t e cestui 2ue trust= ")# t at suc positive acts of repudiation ave )een made 7nown to t e cestui 2ue trust and "c# t at t e evidence t ereon s ould )e clear and conclusive.9 $n t e lig t of t e a)ove doctrinal , 8e rule t at t e registration of t e lots in t e names of :armen ;allos and er mot er 4aria ?adullon Gda de ;allos and t eir su)se3uent transfers and consolidation to :armen ;allos5 name alone in a manner s own to )e fictitious, fraudulent and secretive, t ere)y 7eeping t e cestuis 3ue trust in t e dar7 did not constitute acts of repudiation of t e e.press trust. Suc registrations were ineffective and not )inding upon t e cestui 3ue trust. 8e are persuaded and convinced t at t e circumstances re3uired )y said decisions are not present in t e case at )ar. %etitioner finally raises a num)er of points w ic according to im constitute acts of repudiation )y :oncepcion ;allos suc as er failure and t at of er eirs to oppose t e pro)ate of t e will of :armen and t at t is failure also constitute lac es= t at t e failure of t e t ree inventories of properties su)mitted in t e intestate

17

proceedings of :oncepcion ;allos to include t e five parcels of land in 3uestion is a repudiation= t at t is omission as also placed t e respondents in estoppel to claim now t e properties= and t at t e failure of respondents to ta7e any action to recover t e properties during t e lifetime of ?ilemon Sotto constitute lac es. >ac es as )een defined as t e failure or neglect, for an unreasona)le and une.plained lengt of time, to do t at w ic )y e.ercising due diligence, could or s ould ave )een done earlier= it is negligence or omission to assert a rig t wit in a reasona)le time, warranting a presumption t at t e party entitled to assert it eit er as a)andoned it or declined to assert it. "Tijam, et al. v. Si)ong anoy, et al., Eo. >-014'&, April 1', 19,8, 0/ S:;A 09, /'#. T e defense of lac es is an e3uita)le one and does not concern itself wit t e c aracter of t e defendant5s title, )ut only wit w et er or not )y reason of t e plaintiff5s long inaction or ine.cusa)le neglect e s ould )e )arred from asserting is claim at all. "%a)alate v. Bc arri, (r., /' S:;A '18#. Bstoppel, on t e ot er and, rests on t is rule! w enever a party as, )y is declaration, act or omission, intentionally and deli)erately led t e ot er to )elieve a particular t ing true, and to act, upon suc )elief, e cannot, in any litigation arising out of suc declaration, act, or omission, )e permitted to falsify it.9 "Ie :astro vs. @inete, >-/&&'8, 4arc 08, 19,9, 0- S:;A ,0/#. Bstoppel as its origin in e3uity and )eing )ased on moral and natural justice, finds applica)ility w atever and w enever t e special circumstances of a case so demand ":astrillo vs. :ourt of Appeals, >-18&4,, 4arc /1, 19,4, 1& S:;A '49= *eronilla vs. @overnment Service $nsurance System, >-01-0/, Eovem)er 0,, 19-&, /, S:;A 44#. $n determining w et er a delay in see7ing to enforce a rig t constitutes lac es, t e e.istence of a confidential relations ip )etween t e parties is an important circumstance for consideration, a delay under suc circumstances not )eing so strictly regarded as w ere t e parties are strangers to eac ot er. T e doctrine of lac es is not strictly applied )etween near relatives, and t e fact t at t e parties are connected )y ties of )lood or marriage tends to e.cuse an ot erwise unreasona)le delay. T e claim t at t e eirs of :oncepcion ;allos are guilty of lac es and are estopped from claiming t e properties deserves scant consideration, for in fiduciary relations ip, t e )eneficiaries ave t e rig t to rely on t e trust and confidence reposed in t e trustee. $n t e case at )ar, t ere )eing no effective repudiation of t e e.press trust created )y and among t e ;allos eirs, t e defense of lac es invo7ed )y petitioner is unvailing. "*uencamino, et al., @.;. Eo. >19&10, 2cto)er /&, 19,-#. 4oreover, under t e facts esta)lis ed and s owing t e complete dominance of Atty. Sotto over t e eirs and descendants of t e ;allos family, t e confidential relations ip )etween t e parties connected )y ties of marriage and t e reliance of t e eirs wit complete and a)solute confidence in t eir uncle-in-law, Atty. Sotto, w o, owever, 7ept t e eirs in total ignorance and suppressed from t em t e real trut regarding said properties t at t ey were already registered in Atty. Sotto5s name as finally revealed to t em )y :esar Sotto, t e nep ew and protegee of Atty. Sotto and were in danger of )eing lost to total strangers, t e doctrine of lac es is not strictly applica)le. ?urt ermore, Atty. Sotto received from is wife, :armen ;allos, t e properties under er will fully impressed wit t eir fiduciary c aracter and in t e full 7nowledge t at said properties were trust properties as far )ac7 in 191/ w en e drafted
BusOrg Summer (trust cases)

and prepared t e )ocion -o#re la *isposicion de los 3ienes and filed t e same in t e pro)ate proceedings. T is 7nowledge e carried into is marriage wit :armen ;allos and t roug out is lifetime so t at t e will e.ecuted )y :armen ;allos )e3ueat ing t e properties to er us)and, Atty. Sotto, was merely a ve icle of an e.isting trust. <e t ere)y )ecame a trustee of t e trust properties, not as an innocent t ird party and neit er for a valua)le consideration. Eotwit standing t e fact t at t e titles to t e properties were ultimately transferred to t e name of Atty. ?ilemon Sotto, widower, t roug administrative proceedings, t e titling t ereof must )e regarded as for t e )enefit and interest of t e cestui 2ue trust, t e private respondents erein. $n passing, it must )e mentioned ere t at Ion ?ilemon Sotto was a distinguis ed figure in t e political istory of t e nation, aving )een elected a delegate from :e)u to t e :onstitutional :onvention t at formulated t e 19/' % ilippine :onstitution. $n recognition of is wisdom and sagacity, Ion ?ilemon was c osen : airman of t e :ommittee of Seven t at drafted and sponsored t e 19/' % ilippine :onstitution. $t is to t e great credit and commendation to t e moral integrity of Ion ?ilemon t at aving preserved and maintained t e properties in 3uestion under is name wit out alienating or transferring t em to t ird persons, and reali+ing t e responsi)ilities of t e trust reposed in im, e must ave intended said properties to )e restored to t eir rig tful owners w o are t e ;allos eirs, t e private respondents erein. 8e are satisfied t at respondents, upon discovery of t e fraudulent transfers, fictitious sales and concealed deeds relating to t e trust properties w ic were revealed to t em )y :esar Sotto, t e very nep ew and protegee of Atty. ?ilemon Sotto and guardian appointed over t e latter5s estate, promptly and seasona)ly filed t e present action for reconveyance. T ere is no a)solute rule as to w at constitutes lac es or staleness of demand= eac case is to e determined according to its particular circumstances. T e 3uestion of lac es is addressed to t e sound discretion of t e court and since lac es is an e3uita)le doctrine, its application is controlled )y e3uita)le considerations. $t cannot )e invo7ed to defeat justice or to perpetrate fraud and injustice. $t would )e ran7 injustice and patently ini3uitous to deprive t e lawful eirs of t eir rig tful in eritance. %rivate respondents are entitled to t e relief prayed for, w ic is for t e reconveyance of t e properties to t em. Since t eir grandmot er, 4aria ?adullon Gda. de ;allos die in 19/8, er pro-indiviso s are in t e properties t en owned in co-owners ip descended )y intestacy to er daug ters, :oncepcion and :armen. 6pon :armen5s deat in 194' wit out issue, t e properties devolved to :oncepcion pursuant to t eir agreement in 190' as testified to )y %ilar Teves. 8 en :oncepcion ;allos died, er eirs, w o are now t e private respondents, are entitled to t ese properties and s ould )e declared owners t ereof. T ey are also entitled to t e fruits t ereof, t e rentals of t e properties, including damages and attorney5s fees as assessed
)y t e appellate court w ic 8e find just and reasona)le. WHEREFORE, IN VIEW OF THE FOREGOING, the judgme t !""e!#ed $%&m '( he%e)* !$$'%med, +'th ,&(t( !g!' (t the "et't'& e%-

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G.R. No. 76590 February 26, 1990

HEIRS OF M RI 3E L )RU& ' GUTIERRE&, petitioners, vs. )OURT OF PPE LS a!" HEIRS OF M RI 3E L )RU& ' GUE6 RR , respondents. P R S, J.: T is is a petition for review on certiorari of t e (une 1-, 198, decision 5 of t e t en $ntermediate Appellate :ourt in A:-@.;. :G Eo. &'-8' reversing t e appealed decision of t e ;egional Trial :ourt of Angeles :ity, and t e Eovem)er 10, 198, resolution of t e same court denying t e motion for reconsideration. <erein petitioners are t e eirs "c ildren# of t e late 4aria de la :ru+ y @utierre+, married to 4ateo del ;osario >ansang, w ile erein private respondents are t e eirs of 4aria de la :ru+ y @uevarra, married to :ali.to Iimalanta, and ?ermin de la :ru+. T e controversy involves a 1,98& s3uare meters portion of >ot 1488. ?rom 1901 until er deat in 19'1, 4aria de la :ru+ y @utierre+ resided in t e 3uestioned lot in t e concept of an owner. S e declared t e lot for ta. purposes in er name. >ater, s e entrusted t e administration of t e said lot to er niece 4aria de la :ru+ y @uevarra. 8 en cadastral proceedings were eld in %orac, in :adastral :ase Eo. 18, on 4arc 1-, 190,, 4aria de la :ru+ y @utierre+ filed an answer to t e 3uestioned lot. $n t e said filed answer, over t e andwritten name 94aria de la :ru+ y @utierre+9 is a t um)mar7 presuma)ly affi.ed )y er, B. i)it 90-:9= t at in paragrap -, a person named t erein as ?ermin de la :ru+ y @utierre+ is stated to ave an interest or participation on t e said lot. <owever, in t e space provided in paragrap 8 to )e filled up wit t e personal circumstances of claimant 4aria de la :ru+ y @utierre+, w at appears t erein is t e name 4aria de la :ru+, married to :ali.to Iimalanta, instead of 4aria de la :ru+ y @utierre+, B. i)it 90A9= and in t e space provided in paragrap 9, intended for t e personal circumstances of ot er person or persons w o may ave an interest on t e said lot, t e name ?ermin de la :ru+, single, appears, B. i)it 90-*9. Accordingly, t e trial court rendered a decision adjudicating >ot Eo. 1488 in favor of 4aria de la :ru+, 0, years old, married to :ali.to Iimalanta and ?ermin de la :ru+, Single. ?inally, 2riginal :ertificate of Title Eo. 1,,84 of t e ;egister of Ieeds of %ampanga was issued in t eir names. %etitioners, claiming to ave learned of t e same only on (uly 1, 19-4, on 2cto)er 1, 19-4 "allegedly )arely t ree mont s after discovery of t e registration, and two years after t e deat of 4aria de la :ru+ y @uevarra w o, )efore s e died in 19-4, revealed to petitioners Ianiel >ansang and $sidro >ansang t at t e lot of t eir mot er 4aria de la :ru+ y @utierre+ ad )een included in er title#, filed wit t e t en :ourt of ?irst $nstance of %ampanga, *ranc $G, presided over )y <on. :esar G. Alejandria, a complaint for reconveyance, doc7eted t erein as :ivil :ase Eo. 0148. T e same was amended on (une 1,, 19-'. T e main t rust of t e complaint is t at t e claimant of >ot 1488 in :adastral :ase Eo. 18 was 4aria de la :ru+ y @utierre+ and not 4aria de la :ru+ y @uevarra w o )y not using er maternal surname
BusOrg Summer (trust cases)

9@uevarra9 succeeded in registering >ot 1488 in er name and t at of er )rot er ?ermin de la :ru+. 6nder t e circumstances, it is claimed t at 4aria de la :ru+ married to :ali.to Iimalanta and ?ermin de la :ru+ old t e property in trust for t e petitioners. $n t eir answer ";ollo, pp. ,0-,'#, private respondents claimed t at t e land in 3uestin is t eir e.clusive property, aving in erited t e same from t eir parents and t e 2:T Eo. 1,,84 was issued in t eir names. 4oreover, t ey asserted t at petitioners ave lost t eir cause of action )y prescription. Iuring t e pre-trial, t e parties stipulated t e following facts! 1. T at >ot Eo. 1488 is t e lot in 3uestion as stated in %aragrap / of t e :omplaint= 0. T at on 4arc 1-, 190,, 4aria de la :ru+ y @utierre+ filed er Answer over t e cadastral lot in 3uestion= /. T at 4aria de la :ru+ y @utierre+ affi.ed er t um)mar7 in t e Answer dated 4arc 1-, 190,= 4. T at )y virtue of t e Answer over :adastral lot in 3uestion filed )y 4aria de la :ru+ y @utierre+ on 4arc 1-, 190,, 2:T Eo. 1,,84 was issued covering t e lot in 3uestion= '. T at t e maternal surname of 4aria de la :ru+ and ?ermin de la :ru+ is @uevarra and not @utierre+= and ,. T at 4aria de la :ru+ y @uevarra and ?ermin de la :ru+ y @uevarra did not file t eir answer over t e lot in 3uestion. "p. /, $ntermediate Appellate :ourt Iecision= p. 4,, ;ollo# T e issues stated are as follows! 1. 8 et er or not t e andwritings in t e Answer of 4aria de la :ru+ y @utierre+ were er andwritings= 0. 8 et er or not t e eirs of 4aria de la :ru+ y @utierre+ are paying t e land ta.es of t e lot in 3uestion proportionately to t eir respective s ares= /. 8 et er or not >ot 1488, t e lot in 3uestion, is declared in t e name of 4aria de la :ru+ y @utierre+= 4. 8 et er or not during t e lifetime of 4aria de la :ru+ y @utierre+ up to t e time of er deat , s e was in actual possession of t e lot in 3uestion= and '. $f t ere was fraud in securing 2:T Eo. 1,,84 in t e name of 4aria de la :ru+, married to :ali.to Iimalanta, and ?ermin de la :ru+, single. "pp. /-4, $ntermediate Appellate :ourt Iecision= pp. 4,4-, ;ollo# After trial, t e trial court, in a decision dated Eovem)er 1-, 198/ "i#id., pp. /4-40#, ruled in favor of t e petitioners. T e decretal portion of t e said decision, reads! 8<B;B?2;B, judgment is ere)y rendered in favor of t e plaintiffs=

19

"a# ordering t e a)ove-named defendants to reconvey to t e plaintiffs a portion of 1,98& s3uare meters of >ot Eo. 1488 covered )y 2riginal :ertificate of Title Eo. 1,,84 of t e ;egister of Ieeds of %ampanga, )y e.ecuting a deed of reconveyance and registering t e same wit t e said 2ffice at t eir own e.pense= ")# ordering t e parties to cause t e survey and division of >ot Eo. 1844 into two e3ual parts in order t at two separate titles, one for t e plaintiffs and t e ot er for t e defendants can )e issued )y t e ;egister of Ieeds of %ampanga in t eir favor and one- alf of t e e.penses t erefore to )e s ouldered )y t e plaintiffs, and t e ot er alf )y t e defendant= "c# ordering t at t e land to )e adjudicated to t e plaintiffs s ould include t e portion w ere t e e.isting ouse of t e late 4aria de la :ru+ y @utierre+ is situated= "d# ordering t e plaintiffs and t e defendants to pay t e corresponding estate and in eritance ta.es if t e parcels of land in erited )y t em are su)ject to t e payment of t e same= "e# ordering t e defendants to pay t e costs of suit. 2n appeal, considering t e action as )ased on an implied trust, t e t en $ntermediate Appellate :ourt in its decision promulgated on (une 1-, 198, "(#id., pp. 44-'/# reversed t e decision of t e trial court. T e dispositive portion reads! 8<B;B?2;B, t e :ourt is constrained to ;BGB;SB t e decision appealed from. A new one is ere)y entered dismissing t e complaint. A 4otion for ;econsideration was filed, )ut t e same was denied in a resolution dated Eovem)er 10, 198, "(#id.,p. ,,#. <ence, t e instant petition. %etitioners raised t ree "/# reasons warranting review, to wit! $ ;BS%2EIBET :26;T B;;BI 8<BE $T ;6>BI T<AT T<B A:T$2E ?2; ;B:2EGBNAE:B ?$>BI *N <B;B$E %BT$T$2EB;S 8$T< T<B >28B; :26;T <AI A>;BAIN %;BS:;$*BI= $$ ;BS%2EIBET :26;T B;;BI $E ;6>$E@ T<AT %BT$T$2EB;S 8B;B @6$>TN 2? >A:<BS= and $$$ ;BS%2EIBET :26;T B;;BI $E ;6>$E@ T<AT T<B;B 8AS E2 BG$IBE:B 2? ?;A6I :244$TTBI *N T<B %;BIB:BSS2;-$E-$ETB;BST 2? %;$GATB ;BS%2EIBETS $E SB:6;$E@ T$T>B T2 T<B >2T $E O6BST$2E. "pp. 1/, 0& and 00, %etition for ;eview pp. 01, 08, and /& ;ollo#
BusOrg Summer (trust cases)

T e instant petition is impressed wit merit. T e main issue in t is case is w et er or not petitioners5 action for reconveyance as already prescri)ed. T e answer is in t e negative. As aptly argued )y petitioners, t e :ourt of Appeals erred w en it ruled t at t eir action as already prescri)ed= o)viously on t e wrong premise t at t e action is one )ased on implied or constructive trust. As maintained )y petitioners, t eir action is one )ased on e.press trust and not on implied or constructive trust. %etitioners5 predecessor-in-interest, 4aria de la :ru+ y @utierre+, was an unlettered woman, a fact )orne out )y er affi.ing er t um)mar7 in er answer in :adastral :ase Eo. 18, B. i)it 90-:9. *ecause of er mental wea7ness, in a prepared document for er, B. i)it 9*-/9, s e consented and aut ori+ed er niece 4aria de la :ru+ y @uevarra to administer t e lot in 3uestion. Suc fact is corro)orated )y t e testimony of Ianiel >ansay, t e son of 4aria de la :ru+ y @utierre+ t at 4aria de la :ru+ y @uevarra was t e one entrusted wit t e paying of land ta.es. %rivate respondents argue t at said B. i)it 9*-/9 is a portion of t e ta. declaration "B. i)it 9*9# w ic was prepared )y t e 2ffice of t e 4unicipal AssessorJTreasurer w ere t e lot in 3uestion is located, and clearly not t e written instrument constituting an e.press trust re3uired under Article 144/ of t e :ivil :ode. T is argument of private respondents, is untena)le. $t as )een eld t at under t e law on Trusts, it is not necessary t at t e document e.pressly state and provide for t e e.press trust, for it may even )e created orally, no particular words are re3uired for its creation "Article 1444, :ivil :ode#. An e.press trust is created )y t e direct and positive acts of t e parties, )y some writing or deed or will or )y words evidencing an intention to create a trust "Sotto v. Teves, 8, S:;A 1'4 C19-8D#. Eo particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended "Gda. de 4apa v. :ourt of Appeals, 1'4 S:;A 094 C198-D#. <ence, petitioner5s action, )eing one )ased on e.press trust, as not yet prescri)ed. *e it noted t at Article 144/ of t e :ivil :ode w ic states 9Eo e.press trusts concerning an immova)le or any interest t erein may )e proved )y parol evidence,9 refers merely to enforcea)ility, not validity of a contract )etween t e parties. 2t erwise stated, for purposes of validity )etween t e parties, an e.press trust concerning an immova)le does not ave to )e in writing. T us, Article 144/ may )e said to )e an e.tension of t e Statute of ?rauds. T e action to compel t e trustee to convey t e property registered in is name for t e )enefit of t e cestui for trust does not prescri)e. $f at all, it is only w en t e trustee repudiates t e trust t at t e period of prescription may run "Bnri3ue+ v. :ourt of Appeals, 1&4 S:;A ,', C1981D#. %;B4$SBS :2ES$IB;BI, t e (une 1-, 198, decision of t e $ntermediate Appellate :ourt is ere)y ;BGB;SBI and t e Eovem)er 1-, 198/ decision of t e trial court is ere)y ;B$ESTATBI, e.cpt as to t e latter court5s finding t at t is case deals wit an implied trust.

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G.R. No. 1//1/,. Mar8; 1,, 2110 SPS. FELI& 3U' N GOME& a!" EUGENIO GOME&, %etitioners, vs. PURISIM 3U' N, ROL N3O 3U' N, EMERIT 3U' N, 3IGN 3U' N, E3U R3O 3U' N, LU)RE)I 3U' N, ROBERTO 3U' N, )RESEN)I 3U' N, RO3RIGO 3U' N, REULGIN 3U' N, 3OMINI)I 3U' N, 6E)EN)IO 3U' N, M RI S LOME 3U' N a!" 3I6IN 3U' N, ;espondents. IB:$S$2E USTRI -M RTINE&, J.! *efore t is :ourt is a petition for review on certiorari assailing t e *ecision1 of t e :ourt of Appeals in :A-@.;. :G Eo. 491,/ ordering t e reconveyance )y t e petitioners to t e respondents of t e property covered )y Transfer :ertificate of Title "T:T# Eo. 08111' and declaring said title cancelled, t ere)y reversing t e *ecision0of t e ;egional Trial :ourt ";T:# of Oue+on :ity, *ranc 8& w ic dismissed t e complaint. T e dispositive portion of t e c allenged *ecision reads as follows! 8<B;B?2;B, premises considered, t e assailed decision of t e ;egional Trial :ourt of Oue+on :ity, *ranc 8& in :ivil :ase Eo. O91-8801 is ere)y ;BGB;SBI and SBT AS$IB. A::2;I$E@>N, defendants-appellees are ere)y ordered to ;B:2EGBN in favor of plaintiffs-appellants t e property covered )y T:T Eo. 08111', w ic title is ere)y declared :AE:B>>BI. 8it costs./ T e facts as culled from t e records are as follows! T e parties in t is case are relatives residing at 9, @eneral Avenue, %roject 8, Oue+on :ity w ic consists of four ouses situated in an eig t undred-s3uare meter "8&& s3.m.# lot, covered )y T:T Eo. 41-1- issued )y t e ;egister of Ieeds of Oue+on :ity in t e name of Bulogio Iuyan "now deceased# married to %urisima Iuyan, one of t e respondents in t is case. T e property in dispute w ic constitutes one- alf of t e property previously covered )y T:T Eo. 41-1- is now covered )y T:T Eo. 08111' issued in t e name of petitioner spouses.4 Bulogio Iuyan and ?eli+a Iuyan are si)lings. $n is desire to elp is sister, Bulogio allowed er to construct a ouse on t e disputed lot sometime in 19,8.' %etitioners ac7nowledged t e fact t at t e disputed property was owned )y Bulogio and t at t ey were staying in t e disputed property solely due to is )enevolence. Accordingly, an instrument entitled /agpapaha,ag was e.ecuted )y t e si)lings on ' 4ay 19-4. T e instrument provides t at in t e event t at t e property will )e registered in ?eli+aSs name, s e will continue to ac7nowledge Bulogio as t e owner and will never assert owners ip over t e same, e.cept in accordance wit er )rot erSs wis es. , T e pertinent portions of t e instrument read! Ea napag7asunduan naming magcapatid na )ouin ang documentong ito )ilang 7ati)ayan ang la at= ....
BusOrg Summer (trust cases)

4. Ea 7aming mag7apatid ay magtutulongan at magdadamayan maging sa irap at gin awa alang-alang sa i7a)u)uti ng aming mga ma al sa )u ay= '. Ea ito ay mailagay sa pangalan man ng aming Ama o pangalan 7o ay itoSy indi 7o pag-aari 7undi ari ito ng a7ing 7uya, Bulogio G. Iuyan, at,. Ea ito ay aming igagalang maging saan man ma7arating ngayon at 7ailan man.2n 11 4ay 19-4, a deed of sale covering a residential ouse situated on t e disputed lot was e.ecuted )y Bulogio and ;egina Gelas3ue+, a common-law wife of t e former, in favor of petitioners for t e sum of 2ne T ousand %esos "%1,&&&.&&#. T ereafter, petitioners allegedly asserted owners ip not only over t e said ouse )ut over t e w ole lot covered )y T:T Eo. 41-1-.8 T is prompted BulogioSs legal wife, %urisima, to file a complaint for recovery of possession and damages against petitioners wit t e t en :ourt of ?irst $nstance of ;i+al, *ranc $G-*, Oue+on :ity.9 Ieciding t e case in favor of %urisima, t e trial court ordered petitioners to surrender possession of t e property to er. 2n appeal, t e :ourt of Appeals dismissed t e case after t e parties entered into an amica)le settlement.1& 2n 0' (anuary 19-8, Bulogio and %urisima t is time, as vendors, e.ecuted a Ieed of A)solute Sale in favor of petitioners wit respect to t e disputed lot for t e sum of Twenty T ousand %esos "%0&,&&&.&&#.11 %urisima claims t at t e deed of sale was e.ecuted merely to give color of legality to petitionersS stay in t e disputed property so t at s e and er c ildren will not drive t em away after t ey "%urisima and er c ildren# manifested t eir opposition to BulogioSs decision to let t em stay t erein.10 %etitioners claim ot erwise, contending t at t e sale was freely agreed upon )y t e parties t ereto= ence, it was aut entic and validly e.ecuted.1/ Su)se3uent to t e e.ecution of t e deed of sale or on 1& ?e)ruary 19-8,14 anot er /agpapaha,ag was e.ecuted )etween Bulogio and ?eli+a, w ere t e latter ac7nowledged t at t e lot su)ject of t e deed of sale1' will eventually )e transferred to respondents erein w o are er nep ews and nieces and t e c ildren of Bulogio. 1,T e pertinent portions of t e second /agpapaha,ag read! Ea pag7atapos ng la at ng idwaan sa <usgado ay aming isasagawa agad and conwaring pag)i)ili muli ng nasa)ing ... aming )inili sa a7ing capatid na si @g. Bulogio G. Iuyan. At pag mangyari ang nasa)ing atian ng lote, ay aming ilalagay agad sa pangalan ng aming mga pamang7in na sina Salome G. Iuyan, Iivina G. Iuyan, :resencia G. Iuyan, ;eulgina G. Iuyan, Iomincia, ;odrigo at Avencio :. Iuyan.1Eotwit standing t e second /agpapaha,ag, petitioners caused t e registration of t e deed of sale dated 0' (anuary 19-8 wit t e ;egister of Ieeds of Oue+on :ity. As a conse3uence, T:T Eo. 08111' covering t e disputed lot was issued on 00 Septem)er 1981 in t e name of petitioners.18

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2n 0& 4ay 1991, respondents filed a suit for reconveyance of real property and cancellation of T:T Eo. 08111' wit damages against petitioners )efore *ranc 8& of t e Oue+on :ity ;T:. 2n ' Septem)er 1994, t e trial court rendered a decision, dismissing t e complaint and ordering respondents to pay jointly and severally defendants t erein, now petitioners, t e amount of Ten T ousand %esos "%1&,&&&,&&# as reasona)le attorneySs fees and to pay t e costs of t e suit.19 $n dismissing t e case, t e trial court eld t at! TCt eD T:T Eo. 08111' "B. . 4# was validly issued pursuant to t e A)solute Ieed of Sale dated (anuary 0', 19-8 "B. . /# duly registered at t e 2ffice of t e ;egistry of Ieeds of Oue+on :ity. T e same )ecame indefeasi)le and conclusive upon t e e.piration of one year period from its entry as it was not attac7ed directly )y anyone due to fraud.0& 2n appeal, t e :ourt of Appeals reversed t e decision and eld t at an implied trust arose in favor of respondents over t e disputed property )y virtue of t e /agpapaha,ag dated 1& ?e)ruary 19-8. $t eld t at t e action for reconveyance of property was properly filed )y respondents against petitioners.01 %etitionersS motion for reconsideration aving )een denied )y t e appellate court in a 'esolution0/ promulgated on 08 (une 0&&&, t e case was elevated to t is :ourt )y way of a petition for review. %etitioners in t eir petition for review 04 contend t at t e :ourt of Appeals 9acted wit grave a)use of discretion90'w en it reversed t e ;T: decision and t at t e error, if not corrected, will cause t em great injustice.0, T ey claim t at t e :ourt of Appeals erred w en it ordered t e reconveyance )y petitioners to respondents of t e property covered )y T:T Eo. 08111' and declared t e cancellation of said title0-. T e contention is wit out merit. T e :ourt of Appeals did not err in ordering t e reconveyance of t e property in dispute. As found )y t e appellate court, t e trial court failed to consider t e law on trusts despite t e e.istence of uncontroverted evidence esta)lis ing t e creation of a trust as it anc ored its decision solely on t e indefeasi)ility of title aspect. Alt oug it recogni+ed t e instruments creating t e trust, t e trial court nevert eless eld t at! $n t e document entitled 9%agpapa ayag9 "B. . *#, alt oug t e defendant ?elisa @ome+ stipulated t erein t at s e will not claim owners ip over t e lot covered )y T:T Eo. 41-1-, even in t e event t at t e same will )e transferred in er name, t e same does not )ar er totally from )ecoming as owner )ecause of t e e.ception provided t erein t at s e can still own t e lot or part t ereof in accordance wit t e wis es of t e deceased w ic was clearly manifested w en t e A)solute Ieed of Sale of t e alf of t e lot covered )y T:T Eo. 41-1- was e.ecuted )etween t e deceased and is spouse %urisima Iuyan "plaintiff# and t e defendants. 08 8 ile citing t e provisions of t e /agpapaha,ag dated ' 4ay 19-4 and concluding t erefrom t at ?eli+a was not actually pro i)ited from claiming owners ip over t e property, t e trial court completely
BusOrg Summer (trust cases)
00

disregarded and missed t e import of t e ot er /agpapaha,ag dated 1& ?e)ruary 19-8. $n e.press terms, ?eli+a undertoo7 in t e su)se3uent /agpapaha,ag to convey t e property su)ject of t e fictitious deed of sale to er own nep ews and nieces w o are t e c ildren of er )rot er Bulogio. To reiterate, ?eli+a stated ;<At pag "ang,ari ang nasa#ing hatian ng lote, a, a"ing ilalaga, agad sa pangalan ng a"ing "ga pa"ang=in na sina -alo"e 8. *u,an, *i+ina 8. *u,an, %resencia 8. *u,an, 'eulgina 8. *u,an, *o"incia, 'odrigo at A+encio %. *u,an;.09 $t must )e noted t at t is %agpapa ayag was entered into )y Bulogio and ?eli+a after t e supposed sale of t e property on 0' (anuary 19-8. *ased on t e clear provisions of t is document, t e intent of t e si)lings to create a trust was manifest wit Bulogio as t e trustor, ?eli+a as t e trustee and BulogioSs c ildren as t e )eneficiaries or t e cestui 2ui trust/& of t e res/1 w ic was t e disputed property. T is is )ased on t e provision of t e law on trusts w ic states t at! Art. 144&. A person w o esta)lis es a trust is called t e trustor= one in w om confidence is reposed as regards property for t e )enefit of anot er person is 7nown as t e trustee= and t e person for w ose )enefit t e trust as )een created is referred to as t e )eneficiary. /0 <owever, t e trust created was not merely implied as eld )y t e :ourt of Appeals )ut )elongs to t e e.press 7ind. *ased on t e provisions of t e :ivil :ode and jurisprudence, 9B.press trusts are t ose w ic t e direct and positive acts of t e parties create, )y some writing, deed or will, or words evincing an intention to create a trust.9// $n t is case, t e provisions of t e /agpapaha,ag dated 1& ?e)ruary 19-8 left no room for dou)t. $t was clearly intended t erein )y Bulogio and ?eli+a t at t e property su)ject of t e sale will su)se3uently )e placed )y t e latter in t e name of respondents, t us creating a trust relations ip over t e property in dispute. Bven if t e word 9trust9 was not e.pressly used )y t e signatories to t e 1& ?e)ruary 19-8 /agpapaha,ag and t e document did not e.pressly state t at a trust was )eing esta)lis ed )y reason t ereof, t e esta)lis ment of an e.press trust cannot )e discounted. 6nder t e :ivil :ode, 9Eo particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended.9/4 $n a decision penned )y (ustice %aras, t is :ourt eld t at 9Tunder t e law on Trusts, it is not necessary t at t e document e.pressly state and provide for t e e.press trust, for it may even )e created orally, no particular words are re3uired for its creation "Art. 1444, :ivil :ode#.9/' T e /agpapaha,ag dated 1& ?e)ruary 19-8 aving )een freely entered into )y Bulogio and ?eli+a, it ad t e force of law )etween t em. $t was t erefore incum)ent upon ?eli+a as trustee to comply wit t e provisions of t e instrument and ave t e su)ject property registered in t e names of er nep ews and nieces. %etitionersS su)se3uent act of registering t e disputed property in t eir own names and resisting t e action for reconveyance later filed )y respondents was clearly a )etrayal of t e provisions of t e e.press trust created )y t e 1& ?e)ruary 19-8 /agpapaha,ag. *y t ese actions, petitioners not only failed to comply wit t e provisions of t e /agpapaha,ag, )ut actually circumvented t em. $t is wort y of note t at petitioners never denied t e e.istence,

22

aut enticity and due e.ecution of t e 1& ?e)ruary 19-8 %agpapa ayag as t ey merely o)jected to t e purpose of its presentation./, As eld )y t e appellate court! Eeit er refutation nor denial of t e e.istence of suc document e.ist in t e records of t e case at )ar. %articularly, ?eli+a did not even raise any o)jection as to t e due e.ecution and aut enticity of t e 9%agpapa ayag9 dated 1& ?e)ruary 19-8. $n relation t ereto, it is wort y to note t at an o)jection as to t e purpose of its presentation is not tantamount to an o)jection as to t e aut enticity and due e.ecution of t e document. $n view of t e a)sence of suc o)jection, t e @24BMBS as signatories t ereto, are deemed )ound )y t e stipulations t erein./9A trust T is sacred and inviola)le. T e courts ave t erefore s ielded fiduciary relations against every manner of c icanery or detesta)le design cloa7ed )y legal tec nicalities.9/8 :onsidering t is pronouncement of t e Supreme :ourt and t e )etrayal )y petitioners of t e provisions of t e /agpapaha,ag creating t e trust in t is case, t e :ourt of Appeals rig tly ordered t e reconveyance of t e disputed property to respondents and t e cancellation of T:T Eo. 0188'. 4oreover, petitioners admitted in t e /agpapaha,ag itself t at t e 0' (anuary 19-8 sale was fictitious. T is is evident )y t e use of t e p rase ;conwaring pag#i#ili9/9 w ic means 9simulated or fictitious sale.9 T us, petitioners are estopped from claiming or asserting owners ip over t e su)ject property )ased on t e 0' (anuary 19-8 deed of sale. ?eli+aSs admission in t e said /agpapaha,ag of t e falsity of t e sale is deemed conclusive upon er and er copetitioner Bugenio @ome+. 6nder t e :ivil :ode, 9T roug estoppel an admission or representation is rendered conclusive upon t e person ma7ing it, and cannot )e denied or disproved as against t e person relying t ereon.94& T at admission cannot now )e denied )y ?eli+a as against Bulogio and is successors-in-interest, t e latter aving relied upon er representation. %etitioners argue t at t e action for reconveyance filed )y respondents against t em is not proper, t e latter not )eing t e owners of t e property in 3uestion.41 $nvo7ing t e 0' (anuary 19-8 deed of sale despite ?eli+aSs admission adverted to a)ove t at suc sale was fictitious, petitioners assert t at t ey are t e owners of t e su)ject property. T ey claim t at t e )est proof of owners ip of a piece of land is t e certificate of title, and t e T:T )eing in t eir name, t ey are t e rig tful owners t ereof.40 T ey furt er argue t at )ased on t e case of*ela /ea +s. %ourt of Appeals4/ among ot ers, reconveyance is a remedy granted only to t e owner of t e property alleged to )e wrongfully titled in anot erSs name.44 T e argument )egs t e 3uestion. ;econveyance is precisely t e proper action for respondents to ta7e against petitioners since t e former are claiming t at t ey are t e rig tful owners of t e property in 3uestion, not petitioners. *y filing an action for reconveyance, a party see7s to s ow t at t e person w o secured t e registration of t e 3uestioned property is not t e real owner t ereof. 4' %etitioners cannot rely on t e registration of t e disputed property and t e corresponding issuance of a certificate of title in t eir name as vesting owners ip on t em simply )ecause an e.press trust over t e property was created in favor of respondents. $t as )een eld t at a trustee w o o)tains a Torrens title over t e property eld in
BusOrg Summer (trust cases)

trust )y im for anot er cannot repudiate t e trust )y relying on t e registration.4, T e law safeguards t e rig tful partySs interest in titled land from fraud and improper tec nicalities )y allowing suc party to )ring an action for reconveyance of w atever e as )een deprived of as long as t e property as not )een transferred or conveyed to an innocent purc aser for value.4- T e action w ile respecting t e registration decree as incontroverti)le, see7s to transfer or reconvey t e land from t e registered owner to t e rig tful owner. 48 As t is :ourt eld in t e case of $sco#ar +s. Locsin, 9T e Torrens system was never calculated to foment )etrayal in t e performance of a trust.9 49 $n a furt er effort to )olster t e claim t at t ey own t e property in dispute, petitioners attempt to introduce new evidence anne.ed to t eir petition in t e form of a purported declaration made )y Bulogio dated 19 ?e)ruary 19-9.'& T e declaration purports to state t at t e previous instruments entered into )y im and t e petitioners are void )ecause e ad already sold t e lot to t em.'1 T is declaration, alt oug anne.ed to t e %etition for ;eview appears now ere in t e records of t e trial court and t e appellate court. T is is a piece of factual evidence w ic s ould ave )een presented )efore t e trial court to )e considered and to allow respondents t e opportunity to re)ut it or to present evidence to t e contrary. T e ;ules of :ourt specifically provides t at 9T e court s all consider no evidence w ic as not )een formally offeredT9'0 T e alleged declaration not aving )een formally offered in evidence is deemed to )e a mere scrap of paper w ic as no evidentiary value. >astly, petitioners contend t at t e conflict )etween t e decision of t e appellate court and t at of t e trial court provides t is :ourt wit a ground to review t e decisions of )ot courts.'/ T at may )e true )ut t e circumstance does not suffice to warrant t e reversal of t e :ourt of AppealsS Iecision. Ouite t e contrary, t e undisputed facts and t e applica)le law inelucta)ly support t e conclusion t at t e appellate court did not commit any reversi)le error. <HEREFORE, t e petition is IBE$BI due course and t e Iecision of t e :ourt of Appeals is A??$;4BI. :osts against petitioners.

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G.R. No. L-19112

O8+ober .1, 1967

of my o)ligation wit anot er farm of more t an four= "4# ectares, t at is, one planted to four cavanes of seedlings, more or less=D '. Ea indi maaring pilitin ang a7ing mga ana7 "B4$>$AE2 AT 4A;$A IA>AEIAE#, na ingin ang ani ng )u7id na na)angit sa itaas ng salaysay na ito= CT at my c ildren "B4$>$AE2 AEI 4A;$A IA>AEIAE# may not )e forced to give up t e arvest of t e farm erein a)ove mentioned=D ,. Ea indi rin maaring ingin 7aaggad sa lalong madaling pana on ang 7apalit ng )u7id na may apat na 7a)ang )in i= CT at neit er may t e land 1 w ic was e.c anged for t e farm wit four cavanes of seedlings 1 )e demanded immediately=D Gictoria (ulio, in turn, joined :lemente Ialandan in t e e.ecution of, and also swore to, t e said document, in t is wise! Ea, a7o G$:T2;$A (6>$2, na )ina)anggit sa itaas nito sa salaysay ni :>B4BETB IA>AEIAE, ay nagpapatunay na tutoong la at ang 7anyang salaysay na iyon at tinatanggap 7o ang 7anyang mga sinasa)i. CT at $, G$:T2;$A (6>$2, mentioned in t e a)ove statement of :>B4BETB IA>AEIAE, attest to t e trut of, and accept, all t at e stated t erein.D *ac7 to t e complaint erein. %laintiff went on to aver t at t e land of :lemente Ialandan set fort in t e document, Anne. 9A9 of t e complaint, referred to si. small parcels descri)ed in paragrap 4 t ereof wit a total area of )arely two ectares 1 9t e only land owned )y :lemente Ialandan at t e time of t e e.ecution of t e document9 1 except fifty plots or 9)anigan9 "salt)eds#, w ic were previously conveyed to plaintiff5s mot er )y mean of pacto de retro sale and title to w ic ad already )een vested in t e latter= t at after t e deat of :lemente Ialandan, plaintiff re3uested from defendants, :lemente5s legitimate and surviving eirs w o succeeded in t e possession of t e land t us conveyed, to deliver t e same to er= t at defendants 9insisted t at according to t e agreement9, neit er delivery of t e land nor t e fruits t ereof could immediately )e demanded, and t at 9plaintiff acceded to t is contention of defendants and allowed t em to continue to remain in possession9 t ereof= t at demands ave 9)een made upon defendants to fi. t e period wit in w ic t ey would deliver to t e erein plaintiff t e a)ove-descri)ed parcels of land )ut defendants ave refused and until now still refuse to fi. a specific time wit in w ic t ey would deliver to plaintiff t e aforementioned parcels of land.9 %redicated upon t e foregoing allegations, plaintiff prayed for judgment against defendants! "a# Adjudging t e erein plaintiff as owner of t e land descri)ed in paragrap 4 ereof= ")# ?i.ing a time wit in w ic defendants s ould deliver t e said parcels of land to t e erein plaintiff as well as t e

6I)TORI (ULIO, plaintiff-appellant, vs. EMILI NO 3 L N3 N a!" M RI 3 L N3 N, defendantsappellees. /edro )agsalin and ..). 0errera for plaintiff-appellant. %ornelio '. )agsarili for defendants-appellees. S N)HE&, J.: Iisputing t e correctness of t e lower court5s order of April 09, 19,1 dismissing t e complaint, plaintiff elevated t e case 1 to t is :ourt on appeal. %laintiff5s complaint 1 w ic defendants, )y a motion to dismiss, successfully overturned in t e court )elow 1 is planted upon a document Anne. 9A9 of t e complaint, la)eled in t e national language 9SA>ANSAN9 "Statement#. $t was in t e form of an affidavit su)scri)ed and sworn to )y one :lemente Ialandan on Septem)er 8, 19'&. *y t e terms of t is writing, :lemente Ialandan, deceased fat er of defendants Bmiliano and 4aria Ialandan, ac7nowledged t at a four- ectare piece of riceland in >as ac7nowledged t at a fourectare piece of riceland in >as %iUas, ;i+al )elonging to Gictoriana Ialandan, w ose only c ild and eir is plaintiff Gictoria (ulio, was posted as security for an o)ligation w ic e, :lemente Ialandan, assumed )ut, owever, failed to fulfill. T e result was t at Gictoriana5s said land was foreclosed. T e 7ey provisions of said document are!0 /. Ea ang lupang palayang ito na pagaari ni G$:T2;$AEA IA>AEIAE at sa 7asalu7uyan ay walang i)ang tagapagmana 7ung di si G$:T2;$A (6>$2, ay napafian+a sa a7in nuong )ago pa dumating ang uling digmaan at da il sa indi a7o na7atupad sa a7ing pananagutang na sasagutan ng )u7id niyang ito ay naem)argo ang nasa)i niyang lupa= CT at t is riceland owned )y G$:T2;$AEA IA>AEIAE w ose sole eir is G$:T2;$A (6>$2 was posted as security for an o)ligation assumed )y me even )efore t e out)rea7 of t e last war and )ecause $ failed to fulfill t e o)ligation secured )y er said farm t e same was foreclosed=D 4. Ea da il dito ay a7o sama7atuwid ay nanagot sa 7anya "G$:T2;$A (6>$2#, sa pag7a7aem)argo ng lupa niyang iyong 7ung 7aya5t nag7asundo 7ami na a7o ay nanagot sa 7anya sa pag7aem)argong iyon at ipinanga7o 7o sa 7anya na ang lupa niyang iyon na naem)argo ng da il sa a7ing pananagutan ay a7ing papalitan ng )u7id din na may ma igit na A%AT "4# na ectarea "o umigit 7umulang sa A%AT EA AA*AE@ *$E<$#= CT at )ecause of t is, and as agreed upon )etween us, $ accordingly eld myself lia)le to Gictoria (ulio for t e foreclosure of er said land, and $ promised er t at $ would replace er aforesaid land w ic was foreclosed )ecause
BusOrg Summer (trust cases)

24

fruits t ereof= "c# Adjudging t at upon t e e.piration of t e said time defendants convey and deliver to t e erein plaintiff t e said parcels of land as well as t e fruits t ereof= "d# 2rdering t e defendants to pay t e plaintiff t e sum of %0,&&&.&& as attorneys5 fees= "e# 2rdering t e defendants to pay t e costs of t e suit= and granting suc ot er relief and remedy as may )e just and e3uita)le in t e premises. Iefendants met t e complaint wit a motion to dismiss grounded on! "1# prescription of plaintiff5s action= "0# pendency of anot er suit )etween t e same parties for t e same cause= and "/# release andJor a)andonment of t e claim set fort in plaintiff5s complaint. *y its order of April 09, 19,1, t e lower court ruled t at plaintiff5s suit, viewed eit er as an action for specific performance or for t e fi.ing of a term, ad prescri)ed. ;eason! t e 1&-year period from t e date of t e document ad elapsed. T e lower court found it unnecessary to pass upon t e ot er grounds for t e motion to dismiss. <ence, t is appeal. 1. T e t res old pro)lem, )asic to an understand of t e issues erein involved, is t e meaning to )e attac ed to t e document now under review. 6ndou)tedly, )ad more felicitous terms )een employed, t e intention of t e parties could easily )e read. 6nfortunately, ineptness of e.pression e.acts of us an e.amination of t e document. ?amiliar rules of interpretation of documents tell us t at in ascertaining t e intention of t e parties, t e contents t ereof s ould not )e interpreted piecemeal= all parts, provisions or terms are to )e considered= eac paragrap clause or p rase must )e read not in isolation, )ut in t e lig t of t e entire writing= dou)tful ones s ould )e given t at sense w ic may result from all of t em, considered as a w ole. Suc construction will )e adopted as will result from an overall view of t e document itself. $t is, in t is perspective t at we now loo7 into t e writing. Adverting to paragrap 4 of t e deed, defendants ta7e t e position t at t e deceased :lemente Ialandan simply 9promised9 to Gictoria (ulio a farm of a)out four ectares to replace t e land of Gictoriana Ialandan "mot er of Gictoria (ulio# w ic was foreclosed. *ut t is view loses sig t of t e later provisions t ereof. *y paragrap ', :lemente5s c ildren may not )e forced to give up t e arvest of t e farm mentioned in t e deed. T is was followed )y paragrap , w ic states t at Gictoria (ulio may not immediately demand t e su)stitute "7apalit# for t e forfeited land. T ese last two statements in t e deed e.press t e dominant purpose of t e instrument. T ey convey t e idea t at t e na7ed owners ip of t e land in su)stitution was, indeed, transferred to Gictoria (ulio. Blse t ere would ave )een no sense in t e proviso t at t e fruits as well as t e p ysical possession of t e land could not immediately )e demanded )y Gictoria (ulio from :lemente5s c ildren, t e erein defendants. ?or, t e rig t to demand fruits and p ysical possession of property as )een 7nown to )e attri)utes of owners ip. T e disputed complaint in paragrap s , and - t ereof, in essence, avers plaintiff5s re3uest for t e delivery of t e real property=
BusOrg Summer (trust cases)

defendants5 answer t at 9according to t e agreement9 neit er land nor fruits t ereof could immediately )e ta7en away from t em, and plaintiff5s conformity t ereto= and plaintiff5s demands t at t e period for delivery )e fi.ed and defendants5 refusal. T e allegations of t e complaint just noted carry us to anot er aspect of t e document! defendants5 rig ts over t e land vis-a-vis plaintiff5s. 8 at rig ts were transmitted to defendants )y t eir fat er, :lemente IalandanH %aragrap s , and - of t e document supply t e answer. T ey are usufructuaries for an undetermined lengt of time. ?or so long as t at period as not )een fi.ed and as not elapsed, t ey old t e property. T eirs is to enjoy t e fruits of t e land and to old t e same as trustees of Gictoria (ulio. And t is )ecause, )y t e deed, :lemente Ialandan divested imself of t e owners ip 1 3ualified solely )y wit olding enjoyment of t e fruits and p ysical possession. $n conse3uence, :lemente Ialandan cannot transmit to is eirs, t e present defendants, suc owners ip./ 1e"o dat 2uod non ha#et. And t en, t e document is a declaration )y :lemente Ialandan, now deceased, against is own proprietary interests. Suc document is )inding upon is eirs.4 0. *ut, defendants aver t at recognition of t e trust may not )e proved )y evidence aliunde. T ey argue t at )y t e e.press terms of Article 144/ of t e :ivil :ode, 9CnDo e.press trusts concerning an immova)le or any interest t erein may )e proved )y parol evidence.9 T is argument overloo7s t e fact t at no oral evidence is necessary. T e e.press trust imposed upon defendants )y t eir predecessor appears in t e document itself. ?or, w ile it is true t at said deed did not in definitive words institute defendants as trustees, a duty is t erein imposed upon t em 1 w en t e proper time comes 1 to turn over )ot t e fruits and t e possession of t e property to Gictoria (ulio. Eot t at t is view is wit out statutory support. Article 1444 of t e :ivil :ode states t at! 9Eo particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended.9 $n reality, t e development of t e trust as a met od of disposition of property, so jurisprudence teac es, 9seems in large part due to its freedom from formal re3uirements.9' T is principle per aps accounts for t e provisions in Article 1444 just 3uoted. ?or, 9tec nical or particular forms of words or p rases are not essential to t e manifestation of intention to create a trust or to t e esta)lis ment t ereof.9, Eor would t e use of some suc words as 9trust9 or 9trustee9 essential to t e constitution of a trust as we ave eld in Loren4o +s. /osadas, ,4 % il. /'/, /,8. :onversely, t e mere fact t at t e word 9trust9 or 9trustee9 was employed would not necessarily prove an intention to create a trust. 8 at is important is w et er t e trustor manifested an intention to create t e 7ind of relations ip w ic in law is 7nown as a trust. $t is unimportant t at t e trustor s ould 7now t at t e relations ip 9w ic e intends to create is called a trust, and w et er or not e 7nows t e precise c aracteristics of t e relations ip w ic is called a trust.9- <ere, t at trust is effective as against defendants and in favor of t e )eneficiary t ereof, plaintiff Gictoria (ulio, w o accepted it in t e document itself. 8 /. %laintiff is not to )e andicapped )y a lac7 of a clear statement as to t e actual description of t e land referred to in t e trust deed, )asis of plaintiff5s cause of action. 2)viously, t e document was not prepared )y a learned scrivener. $t imperfectly spea7s of a 9farm of more t an four "4# ectares.9 *ut averment in t e complaint is not lac7ing to clear t e uncertainty as to t e identity of t e land mentioned in t at document. %laintiff points out in paragrap 4 of er complaint t at w ile said deed does not specifically define its

25

)oundaries 9t e parties to t e said document actually refer9 to t e land w ic was 9the onl, land owned #, %le"ente *alandan at the ti"e of the execution9 t ereof, and w ic is set fort in small parcels under said paragrap . T is allegation in t e complaint does not add any new term or stipulation to t e writing. ;at er, it e.plains an o)scurity occasioned )y lac7 of precision in a clumsily prepared document. T us it is, t at aut orities are not wanting in support of t e view t at 9in so far as t e identity of land involved9 in a trust is concerned, 9it as also )een eld t at t e writings, in )eing considered for t e purpose of satisfying t e statute of frauds, are to )e considered in t eir setting, and t at parol e+idence is admissi)le to ma7e clear t e terms of a trust t e e.istence of w ic is esta)lis ed )y a writing, . . .99 4. T is case aving )een )roug t )efore us on a motion to dismiss, we need )ut stress t at we are to )e guided solely )y t e averments of t e complaint. So guided, we must say t at t ere is sufficient s owing in t e complaint t at t ere is an ac7nowledgment on t e part of defendants t at t ey old t e property not as t eir own, )ut in trust. T ere is no statement in t e complaint intimating disavowal of suc trust= t e complaint alleges refusal to deliver possession. $n t e sense in w ic we understand t e complaint to )e, it cannot )e said t at plaintiff5s action to recover t e property t us eld in trust as prescri)ed. @iven t e fiduciary relation w ic according to t e complaint is recogni+ed )y defendants, t e latter may not invo7e t e statute of limitations as a )ar to plaintiff5s action. 1& '. Bven on t e assumption t at defendants ave not )een constituted as trustees under t e document in 3uestion, still we arrive at t e same conclusion. ?or, plaintiff5s action is aimed, )y an alleged owner of real property at recovery of possession t ereof, conditioned upon t e fi.ing of t e period t erefor. Since plaintiff claims owners ip, possession, in t e words of t is :ourt 9is a mere conse3uence of owners ip.911 $t may not )e said t at plaintiff5s suit is )arred )y t e statute of limitations. S e is protected )y Article 1141 of t e :ivil :ode, w ic reads! 9;eal actions over immova)les prescri)e after t irty years.9 8e ta7e t is view for t e o)vious reason t at defendants5 motion to dismiss on t is score is directed at t e prescription of plaintiff5s action 1 not on ac3uisitive prescription. ,. Iefendants in t eir )rief draw attention, )y way of counterassignment of error, to t eir claim t at t is case s ould also )e dismissed upon t e ground t at t ere e.ists anot er action pending )etween t e same parties for t e same cause, and on t e furt er ground of release andJor a)andonment. T e facts )earing on t is issue are! $n >and ;egistration :ase E--&,, @.>.;.2. ;ecord Eo. E--&14, :ourt of ?irst $nstance of ;i+al, defendants are applicants. T at case 1 so defendants aver 1 covers t e very same land set fort in plaintiff5s complaint. $n t eir opposition to t at application, erein plaintiff prayed t at t e same land 1 t e su)ject of t is suit 1 "covered )y %lan %S6 109'14# )e registered 9in t e names of t e erein applicants and oppositor wit t e specific mention t erein t at t e erein oppositor owns fifty salt )eds t erein and aving an a)solute rig t to t e use of t e depositories.9 Iefendants argue t at if plaintiff was t e real owner of t e entire area, opposition s ould ave )een presented on t e w ole, not merely as to fifty salt )eds. %arent etically, t e 3uestion of owners ip over t e portion of fifty salt )eds ad already )een resolved )y t is :ourt in a decision
BusOrg Summer (trust cases)

promulgated on ?e)ruary 09, 19,4 in >-191&1 "Bmiliano Ialandan and 4aria Ialandan, plaintiffs, vs. Gictoria (ulio, et al., defendants#. T ere, t is :ourt affirmed t e order dismissing t e complaint filed )y defendants erein, plaintiffs t erein, for t e repurc ase of fifty salt )eds w ic were t e su)ject of a sale wit pacto de retro e.ecuted on Septem)er 04, 19/0 )y :lemente Ialandan in favor of Gictoriana Ialandan, predecessor of plaintiff. T ere is no point in t e argument t at an action is pending )etween plaintiff and defendants. *ecause, wit t e e.ception of t e fifty salt )eds 1 w ic according to t e complaint is not included in t e deed 1 plaintiff filed no opposition to defendants5 application for land registration. ?ailure to so o)ject in reference to t e registration of a )igger portion of t e land, simply means t at t ere is no case )etween t e parties in reference t ereto in t e land registration proceeding. Eot t at plaintiff released or a)andoned t e claim to t at )igger portion. ?or, t ere is an averment in t e complaint t at an agreement e.ists )etween plaintiff and defendants to defer delivery t ereof= and t at defendants t ereafter refused to fi. t e period for suc delivery. So t at, on t e assumption t at defendants s ould succeed in o)taining title to t e property in t e land registration case, suc would not )ar Gictoria (ulio from re3uiring t em to e.ecute a conveyance of t e property in er favor, in t e event s e "plaintiff erein# prevails in t e present case. And t is, )ecause defendants could ere )e declared as mere trustees of plaintiff, if t e averments of t e complaint are found to )e true.910 ?or t e reasons given, t e order of t e :ourt of ?irst $nstance of ;i+al dated April 09, 19,1 dismissing t e complaint is ere)y reversed and set aside, wit instructions to remand t e case to t e court )elow for furt er proceedings.

26

"a# (ovita *uan - undivided one-t ird "1J/# s are= G.R. No. 11.6.0 February 1, 1996 ")# ;icardo*uan - 6ndivided one-t ird "1J/# s are= "c# 4elody 2coner - 6ndivided one-si.t "1J,# s are= "d# >eopoldo 2coner - 6ndivided one-si.t "1J,# s are= /. T2 :2ESTAE:$A, %BI;2, *BE(A4$E and B>BE$TA, all Surnamed BS:2EIB, are adjudicated, in undivided e3ual s ares eac , t e following! "a# >ot Eo. 10&8 Samal :adastre, su)ject to t e encum)rance of t e rig t of owners ip of Arturo Iomingue+ on t e ?$GB >6AE@= 4. !. /$*'. $-%.1*$ is adjudicated exclusi+el, Lot 1o. 1:>> of the %adastral -ur+e, of -a"al= "Bmp asis supplied.# T e deed )ears t e t um)mar7 of :atalina *uan and t e signature of :onstancia Bsconde, as well as t e approval and signature of (udge *asilio *autista.' %ursuant to t e same deed, transfer certificates of title were issued to t e new owners of t e properties., Transfer :ertificate of Title Eo. /94 for >ot Eo. 1-&& was issued on ?e)ruary 11, 194- in t e name of private respondent )ut :atalina 7ept it in er possession until s e delivered it to im in 1949 w en private respondent got married. 4eanw ile, *enjamin constructed t e family ome on >ot Eo. 1,98*- w ic is adjacent to >ot Eo. 1-&&. A portion of t e ouse occupied an area of twenty "0&# s3uare meters, more or less, of >ot Eo. 1-&&. *enjamin also )uilt a concrete fence and a common gate enclosing t e two "0# lots, as well as an artesian well wit in >ot Eo. 1-&&. Sometime in Iecem)er, 1980, *enjamin discovered t at >ot Eo. 1-&& was registered in t e name of is )rot er, private respondent. *elieving t at t e lot was co-owned )y all t e c ildren of Bulogio Bsconde, *enjamin demanded is s are of t e lot from private respondent. 8 <owever, private respondent asserted e.clusive owners ip t ereof pursuant to t e deed of e.trajudicial partition and, in 198' constructed a 9#uho9 fence to segregate >ot Eo. 1-&& from >ot Eo. 1,98-*. <ence, on (une 09, 198-, petitioners erein filed a complaint )efore t e ;egional Trial :ourt of *ataan against private respondent for t e annulment of T:T Eo. /94. T ey furt er prayed t at private respondent )e directed to enter into a partition agreement wit t em, and for damages ":ivil :ase Eo. '''0#. $n its decision of (uly /1, 1989, t e lower court dismissed t e complaint and t e counterclaims. $t found t at t e deed of e.trajudicial partition was an unenforcea)le contract as far as >ot Eo. 1-&& was concerned )ecause petitioner :atalina *uan vda. de Bsconde, as mot er and judicial guardian of er c ildren, e.ceeded er aut ority as suc in 9donating9 t e lot to private respondent or

) T LIN BU N 63 . 3E ES)ON3E, )ONST N)I ES)ON3E 63 . 3E PER LT , ELENIT ES)ON3E a!" BEN( MIN ES)ON3E, petitioners, vs. HONOR BLE )OURT OF PPE LS a!" PE3RO ES)ON3E, respondents. 3E)ISION ROMERO, J.= T is petition for review on certiorari see7s t e reversal of t e (anuary 00, 1990 decision1 in :A @.;. :G Eo. 0,-9' of t e :ourt of Appeals affirming t e Iecision of t e ;egional Trial :ourt of *ataan, *ranc 0.0 T e lower court declared t at petitioners5 action for reconveyance of real property )ased on an implied trust as )een )arred )y prescription and lac es. %etitioners :onstancia, *enjamin and Blenita, and private respondent %edro, are t e c ildren of t e late Bulogio Bsconde and petitioner :atalina *uan. Bulogio Bsconde was one of t e c ildren/ and eirs of Andres Bsconde. Andres is t e )rot er of Bstanislao Bsconde, t e original owner of t e disputed lot w o died wit out issue on April 1940. Survived )y is only )rot er, Andres, Bstanislao left an estate consisting of four "4# parcels of land in Samal, *ataan, namely! "a# >ot Eo. 18,' wit 00,-10 s3uare meters= ")# >ot Eo. 19&0 wit '4,-/' s3uare meters= "c# >ot Eo. 10&8 wit 0&,08' s3uare meters= and "d# >ot Eo. 1-&& wit '4- s3uare meters. Bulogio died in April, 1944 survived )y petitioners and private respondent. At t at time, >a+ara and :iriaca, Bulogio5s sisters, ad already died wit out aving partitioned t e estate of t e late Bstanislao Bsconde. 2n Iecem)er ', 194,, t e eirs of >a+ara, :iriaca and Bulogio e.ecuted a deed of e.trajudicial partition,4 wit t e eirs of >a+ara identified t erein as t e %arty of t e ?irst %art, t at of :iriaca, t e %arty of t e Second %art and t at of Bulogio, t e %arty of t e T ird %art. Since t e c ildren of Bulogio, wit t e e.ception of :onstancia, were t en all minors, t ey were represented )y t eir mot er and judicial guardian, petitioner :atalina *uan vda. de Bsconde w o renounced and waived er usufructuary rig ts over t e parcels of land in favor of er c ildren in t e same deed. Salient provisions of t e deed state as follows! 1. T2 A;T6;2 I24$E@6BM, minor, %arty of t e ?irst %art is adjudicated! "a# >ot Eo. 18,' of Samal :adastre= ")# %ortion of >ot no. 10&8, Samal :adastre, w ic portion as an area of ?$GB "'# >uang= 0. T2 (2G$TA *6AE, ;$:A;I2 *6AE, and 4B>2IN and >B2%2>I2 2:2EB;, are adjudicated >ot Eo. 19&0 Samal :adastre, and to de "sic# divided as follows!
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waiving t e rig ts t ereto of *enjamin and Blenita in favor of private respondent. *ecause of t e unenforcea)ility of t e deed, a trust relations ip was created wit private respondent as trustee and *enjamin and Blenita as )eneficiaries. T e court said! Alt oug t e parties to t e partition did not eit er contemplate or e.press it in said document, t e resulting trust arose or was created )y operation of Article 14', of t e new :ivil :ode, w ic reads! 9$f property is ac3uired t roug "ista=e or fraud, t e person o)taining it is, #, force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes.9 T e persons from w om t e two-t irds portion of >ot 1-&& came are plaintiffs 3enja"in and $lenita $sconde and t e trustee was defendant /edro $sconde, w o ac3uired suc portion t roug "ista=e )y virtue of t e su)ject partition. T e mista7e was t e allotment or assignment of suc portion to %edro Bsconde alt oug it ad rig tfully )elonged to said two plaintiffs more t an two "0# years )efore.9 <owever, t e lower court ruled t at t e action ad )een )arred )y )ot prescription and lac es. >ot Eo. 1-&& aving )een registered in t e name of private respondent on ?e)ruary 11, 194-, t e action to annul suc title prescri)ed wit in ten "1&# years on ?e)ruary 11, 19'or more t an t irty "/&# years )efore t e action was filed on (une 09, 198-. T us, even if Art. 19,/ of t e old :ivil :ode providing for a /&year prescriptive period for real actions over immova)le properties were to )e applied, still, t e action would ave prescri)ed on ?e)ruary 11, 19--. <ence, petitioners elevated t e case to t e :ourt of Appeals w ic affirmed t e lower court5s decision. T e appellate court eld t at t e deed of e.trajudicial partition esta)lis ed 9an implied trust arising from t e mista7e of t e judicial guardian in favoring one eir )y giving im a )igger s are in t e ereditary property.9 $t stressed t at 9an action for reconveyance )ased on implied or constructive trust9 prescri)es in ten "1&# years 9counted from t e registration of t e property in t e sole name of t e co- eir.9 1& %etitioners are now )efore t is :ourt c arging t e :ourt of Appeals wit aving erred in! "a# denying t eir appeal )y reason of prescription and lac es, and ")# not reversing t e decision of t e lower court insofar as awarding t em damages is concerned. Trust is t e legal relations ip )etween one person aving an e3uita)le owners ip in property and anot er person owning t e legal title to suc property, t e e3uita)le owners ip of t e former entitling im to t e performance of certain duties and t e e.ercise of certain powers )y t e latter. 11 Trusts are eit er e.press or implied. An e.press trust is created )y t e direct and positive acts of t e parties, )y some writing or deed or will or )y words evidencing an intention to create a trust. 10 Eo particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended. 1/ 2n t e ot er and, implied trusts are t ose w ic , wit out )eing e.pressed, are deduci)le from t e nature of t e transaction as matters of intent or w ic are superinduced on t e transaction )y operation of law as matters of e3uity, independently of t e particular intention of t e parties. 14 $n turn, implied trusts are eit er resulting or constructive trusts. T ese two are differentiated from eac ot er as
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follows! ;esulting trusts are )ased on t e e3uita)le doctrine t at valua)le consideration and not legal title determines t e e3uita)le title or interest and are presumed always to ave )een contemplated )y t e parties. T ey arise from t e nature or circumstances of t e consideration involved in a transaction w ere)y one person t ere)y )ecomes invested wit legal title )ut is o)ligated in e3uity to old is legal title for t e )enefit of anot er. 2n t e ot er and, constructive trusts are created )y t e construction of e3uity in order to satisfy t e demands of justice and prevent unjust enric ment. T ey arise contrary to intention against one w o, )y fraud, duress or a)use of confidence, o)tains or olds t e legal rig t to property w ic e oug t not, in e3uity and good conscience, to old. 1' 8 ile t e deed of e.trajudicial partition and t e registration of >ot Eo. 1-&& occurred in 194- w en t e :ode of :ivil %rocedure or Act Eo. 19& was yet in force, we old t at t e trial court correctly applied Article 14',. $n *ia4 et al. +. 5orricho and Aguado, 1, t e :ourt categorically eld t at w ile it is not a retroactive provision of t e new :ivil :ode, Article 14', 9merely e.presses a rule already recogni+ed )y our courts prior to t e :ode5s promulgation.9 T is article provides! Art. 14',. $f property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes. :onstruing t is provision of t e :ivil :ode, in /hilippine 1ational 3an= +. %ourt of Appeals, t e :ourt stated! A deeper analysis of Article 14', reveals t at it is not a trust in t e tec nical sense for in a typical trust, confidence is reposed in one person w o is named a trustee for t e )enefit of anot er w o is called t ecestui 2ue trust, respecting property w ic is eld )y t e trustee for t e )enefit of t e cestui 2ue trust. A constructive trust, unli7e an e.press trust, does not emanate from, or generate a fiduciary relation. 8 ile in an e.press trust, a )eneficiary and a trustee are lin7ed )y confidential or fiduciary relations, in a constructive trust, t ere is neit er a promise nor any fiduciary relation to spea7 of and t e so-called trustee neit er accepts any trust nor intends olding t e property for t e )eneficiary. 1$n t e case at )enc , petitioner :atalina *uan vda. de Bsconde, as mot er and legal guardian of er c ildren, appears to ave favored er elder son, private respondent, in allowing t at e )e given >ot Eo. 1-&& in its entirety in t e e.trajudicial partition of t e Bsconde estate to t e prejudice of er ot er c ildren. Alt oug it does not appear on record w et er :atalina intentionally granted private respondent t at privileged )estowal, t e fact is t at, said lot was registered in private respondent5s name. After T:T Eo. /94 was anded to im )y is mot er, private respondent e.ercised e.clusive rig ts of owners ip t erein to t e e.tent of even mortgaging t e lot w en e needed money. $f, as petitioners insist, a mista7e was committed in allotting >ot Eo. 1-&& to private respondent, t en a trust relations ip was created

28

)etween t em and private respondent. <owever, private respondent never considered imself a trustee. $f e allowed is )rot er *enjamin to construct or ma7e improvements t ereon, it appears to ave )een out of tolerance to a )rot er. :onse3uently, if indeed, #, "ista=e, 18 private respondent was given t e entirety of >ot Eo. 1-&&, t e trust relations ip )etween im and petitioners was a constructi+e, not resulting, implied trust. %etitioners, t erefore, correctly 3uestioned private respondent5s e.ercise of a)solute owners ip over t e property. 6nfortunately, owever, petitioners assailed it long after t eir rig t to do so ad prescri)ed. T e rule t at a trustee cannot ac3uire )y prescription owners ip over property entrusted to im until and unless e repudiates t e trust, applies to e.press trusts 19 and resulting implied trusts. 0& <owever, in constructi+eimplied trusts, prescription may supervene 01 even if t e trustee does not repudiate t e relations ip. Eecessarily, repudiation of t e said trust is not a condition precedent to t e running of t e prescriptive period. Since t e action for t e annulment of private respondent5s title to >ot Eo. 1-&& accrued during t e effectivity of Act Eo. 19&, Section 4& of : apter $$$ t ereof applies. $t provides! Sec. 4&. /eriod of prescription as to real estate. - An action for recovery of title to, or possession of, real property, or an interest t erein, can only )e )roug t wit in ten years after t e cause of suc action accrues. T us, in 0eirs of Jose .l+iga +. %ourt of Appeals, 00 t e :ourt ruled t at t e ten-year prescriptive period for an action for reconveyance of real property )ased on implied or constructive trust w ic is counted from t e date of registration of t e property, applies w en t e plaintiff is not in possession of t e contested property. $n t is case, private respondent, not petitioners w o instituted t e action, is in actual possession of >ot Eo. 1-&&. <aving filed t eir action only on (une 09, 198-, petitioners5 action as )een )arred )y prescription. Eot only t at. >ac es as also circumscri)ed t e action for, w et er t e implied trust is constructive or resulting, t is doctrine applies. 0/ As regards constructive implied trusts, t e :ourt eld in *ia4, et al. +. 5orricho and Aguado 04 t at! . . . in constructive trusts "t at are imposed )y law#, t ere is neit er promise nor fiduciary relation= t e so-called trustee does not recogni+e any trust and as no intent to old for t e )eneficiary= t erefore, t e latter is not justified in delaying action to recover is property. $t is is fault if e delays= ence, e may )e estopped )y is own lac es. $t is tragic t at a land dispute as once again driven a wedge )etween )rot ers. <owever, credit must )e given to petitioner *enjamin Bsconde 0' for resorting to all means possi)le in arriving at a settlement )etween im and is )rot er in accordance wit Article 000 of t e :ivil :ode. 0, Ger)ally and in two letters, 0- e demanded t at private respondent give im and is sisters t eir s are in >ot Eo. 1-&&. <e even reported t e matter to t e )arangay aut orities for w ic t ree conferences were eld. 08 6nfortunately, is efforts droved fruitless. Bven t e action e )roug t )efore t e court was filed too late.

2n t e ot er and, private respondent s ould not )e unjustly enric ed )y t e improvements introduced )y is )rot er on >ot Eo. 1-&& w ic e imself ad tolerated. <e is o)liged )y law to indemnify is )rot er, petitioner *enjamin Bsconde, for w atever e.penses t e latter ad incurred. 8<B;B?2;B, t e instant petition for review on certiorari is ere)y IBE$BI and t e 3uestioned decision A??$;4BI su)ject to t e modification t at private respondent s all indemnify petitioner *enjamin Bsconde t e e.penses t e latter ad incurred for t e improvements on >ot Eo. 1-&&. Eo costs. S2 2;IB;BI.

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G.R. No. 1/,1,1 3e8e%ber 19, 2111 ) T LIN 63 . 3E RETUERTO S SUR6I6ING <I3O< OF THE L TE P NFILO RETUERTO> LORETO RETUERTO, REPRESENTE3 B' HIS SUR6I6ING HEIRS N MEL'= ROMEO RETUERTO> NTONI RETUERTO, N R)IS RETUERTO, )OR &ON RETUERTO, N3 P TRO)INI RETUERTO> G U3EN)IO, FR N)IS) , )RU&, FR N)IS)O, EFIGENI N3 GUILLERMO, LL SURN ME3 RETUERTO> N3 SPOUSES (OSE N3 ROS GES LEM, 4e+9+9o!er$, 2$. NGELO P. B R& N3 MERLIN3 B R&, re$4o!"e!+$.

T is is a petition for review on certiorari of t e decision of t e :ourt of Appeals, dated Iecem)er 09, 0&&& in :A-@; :G Eo. '99-', affirming t e decision of t e ;egional Trial :ourt, *ranc '', of 4andaue :ity in a case for 3uieting of title wit damages filed )y erein respondents Angelo and 4elinda *ar+ against petitioners, as surviving eirs of t e late %anfilo ;etuerto. T e ;T:5s decision declared respondents as t e a)solute owners of t e lot su)ject of t e litigation. T e facts as found )y t e :ourt of Appeals and admitted )y erein petitioners are as follows! Iuring t e period from Septem)er to 2cto)er, 1911, a survey was made of a parcel of land, located in 4andaue, :e)u, identified as 9>ot Eo. 89,9 of %lan Eo. $$-'101, a part of t e 9<acienda de 4andaue9 occupied )y t e Spouses Bste)an %ere+ and >oren+a Sanc e+. T e survey was amended during t e period from Eovem)er, 190, to 4arc 01, 190-, identified as Amendment Eo. 0, Ap-,04/, wit an area of 0&,48, s3uare meters, )earing t e following )oundaries "description# 8 en t e Spouses Bste)an %ere+ and >oren+a Sanc e+ died intestate, t eir rig ts over t e property were in erited )y t eir daug ter, (uana %ere+, married to Eumeriano *ar+, w o t en declared t e properly, for ta.ation purposes, under er name, under Ta. Ieclaration Eo. 019,9, )ut wit an area of only 1/,1,& s3uare meters, more or less, )ounded on t e nort , )y a piece of land, under t e name of %ampila "sic# ;etuerto, as follows! "description# 2n April 1,, 1909, (uana %ere+, widow of Eumeriano *ar+, e.ecuted a deed confirming er e.ecution of a 9Ieed of A)solute Sale,9 in favor of %anfilo ;etuerto, married to :atalina :eni+a, over a parcel of land, located in *arrio %agsa)ungan, 4andaue, :e)u, identified as >ot Eo. 89,-A, a portion of t e 9<acienda de 4andaue,9 :e)u, wit an appro.imate area of 0,'&' s3uare meters, descri)ed as follows! "description# <owever, on April 0,, 19/', %anfilo ;etuerto purc ased t e aforementioned parcel of land, t is time, from t e Arc )is op of :e)u, under a 9Ieed of A)solute Sale,9 for t e price of %1'&.&& "B. i)it 949# and declared t e same for ta.ation purposes under Ta. Ieclaration Eo. /4,'0, effective 19/- "B. i)it 909#. $n t e meantime, t e San :arlos Seminary in :e)u filed a %etition wit t e t en (u+gado de %rimera $nstancia in :e)u "now t e ;egional Trial :ourt# entitled and doc7eted 9Bl Seminario de San :arlos de :e)u,9 Solicitante, B.pediente Eo. /, @.>.;.2. ;ecord 4&/& for t e issuance of titles over several parcels of land in 9<acienda de 4andaue,9 including >ot Eo. 89,-A, earlier
BusOrg Summer (trust cases)

purc ased )y %anfilo ;etuerto from (uana %ere+ and from t e Arc )is op of :e)u. $n August, 19/-, t e :ourt promulgated a Iecision finding and declaring %anfilo ;etuerto t e owner of t e said lot "B. i)it 999#. 2n (uly 00, 194&, t e :ourt issued an 2rder directing t e @eneral del ;egistro de Terrenos "later t e >and ;egistration :ommission# for t e issuance of t e appropriate Iecree in favor of %anfilo ;etuerto over t e said parcel of land. <owever, no suc Iecree was issued as directed )y t e :ourt )ecause, )y Iecem)er 8, 1941, t e Second 8orld 8ar ensued in t e %acific. <owever, %anfilo ;etuerto failed to secure t e appropriate decree after t e war. Two "0# decades elapsed. $n t e meantime, (uana %ere+ *ar+ died intestate and was survived )y er son, %edro *ar+, w o filed an application, wit t e t en :ourt of ?irst $nstance of :e)u, sometime in 19,,, for t e confirmation of is title over >ot 89, of %lan Eo. $$-'101, entitled and doc7eted as 9$E T<B 4ATTB; 2? T<B ;B@$ST;AT$2E 2? T$T>B, %edro *ar+, Applicant,9 >and ;egistration :ase Eo. E-'09, >;: ;ecord Eo. E04-/,. T e Spouses %anfilo ;etuerto did not file any opposition to t e application. After appropriate proceedings, t e :ourt promulgated a decision in favor of %edro *ar+ declaring im t e lawful owner of t e said property. 2n August 18, 19,,, Iecree Eo. E-11&08- was issued over t e property, in favor of %edro *ar+, on t e )asis of w ic 2riginal :ertificate of Title Eo. '01 was issued, on Eovem)er 1/, 19,8, )y t e ;egister of Ieeds over t e property "B. i)it 9A9#. T e property was t en su)divided into four "4# lots namely, >ot 89,-A, wit an area of '&- s3uare meters "B. i)it 9*'9#, >ot 89,-*, wit an area of 0,140 s3uare meters "B. i)it 9*-,9#, >ot 89,-:, wit an area of ','8& s3uare meters "B. i)it 9*--9#, and >ot 89,-I, wit an area of 10,0'/ s3uare meters "B. i)it *89#. 2n 2cto)er 18, 19,-, %edro *ar+ e.ecuted a 9Ieed of A)solute Sale9 over su)division >ot 89,-: in favor of (ose @esalem for %-,&&&.&&. 2n t e )asis of t e said deed, 2riginal :ertificate of Title was partially cancelled and, in lieu t ereof, Transfer :ertificate of Title Eo. -'&9 was issued over said lot in favor of t e vendee. $n t e interim, %anfilo ;etuerto declared t e property covered )y Ta. Ieclaration Eo. /4,'0, under is name, under Ta. Ieclaration Eo. '49,&, effective 19-4 "B. i)it 9/9#. Su)se3uently, %anfilo ;etuerto died intestate, on Iecem)er 09, 19-', and was survived )y is widow, :atalina ;etuerto and t eir c ildren, namely @audencio ;etuerto, >oreto ;etuerto, ?rancisca ;etuerto, ?rancisco ;etuerto, Bfigenia ;etuerto and @uillerma ;etuerto. T e said eirs e.ecuted, on (anuary 4, 19-,, 9B.trajudicial Settlement and Sale of t e Bstate of %anfilo ;etuerto9 adjudicating unto t emselves, as owners, t e said property and deeding t e same unto >oreto ;etuerto a portion t ereof, wit an area of 1,-&/ s3uare meters, and t e rest of t e property, wit an area of 44& s3uare meters, to Bfigenia ;etuerto, as follows! 9?2; 2; T2 >2;BT2 ;BT6B;T2! 5a portion of t e a)ove descri)ed parcel of land containing an area of 2EB T<26SAEI SBGBE <6EI;BI T82 "1,-&0# SO6A;B 4BTB;S and )ounded )y t e following! on t e Eort east )y %agsa)ungan ;oad= on t e Sout east )y >ot 89,= on t e Eort west )y >ot 89-= and on t e Sout west )y t e portion sold to Bfigenia ;etuerto= ?2; 2; T2 B?$@BE$A ;BT6B;T2! 5a portion of t e parcel of

30

land descri)ed in paragrap no. - ereof containing an area of ?26; <6EI;BI ?2;TN "44&# SO6A;B 4BTB;S and )ounded as follows! on t e Eort east )y t e portion sold to >oreto ;etuerto= on t e Sout east )y >ot 89,= on t e Eort west )y >ot 89- and on t e Sout west )y >ot 89,.9 "at page /8, ;ecords# >oreto ;etuerto and Bfigenia ;etuerto t en declared t e property, for ta.ation purposes, under t eir names, under Ta. Ieclaration Eo. ,9&84, effective 19-, "B. i)it 9-9#. T e property covered )y Ta. Ieclaration Eo. ,9&84 was su)divided into two "0# lots, one wit an area of 44& s3uare meters, and t e ot er, wit an area of 1,-&0 s3uare meters. Bfigenia ;etuerto declared t e property, wit an area of 44& s3uare meters, under er name, under Ta. Ieclaration Eo. ,9&8/, effective 19-, "B. i)it 9--A9# w ile >oreto ;etuerto declared t e property, wit an area of 1,-&0 s3uare meters, for ta.ation purposes, under is name, under Ta. Ieclaration Eo. &1098 effective 19-,. "B. i)it 9--*9#. $n t e meantime, %edro *ar+ died intestate and was survived )y is eirs, Angelo %. *ar+ and 4erlinda *ar+. >oreto ;etuerto li7ewise, died intestate and was survived )y is eirs, namely, ;omeo ;etuerto, Antonia ;etuerto, Earcisa ;etuerto, :ora+on ;etuerto and %atrocinia ;etuerto. 2minously, t e eirs of %anfilo ;etuerto claimed owners ip over su)division >ot 89,-* and a part of su)division >ot 89,-A, covered )y 2riginal :ertificate of Title Eo. '01 under t e name of Teofilo *ar+. As it was, su)division >ot 89,-* was su)divided )y t e eirs of %anfilo ;etuerto, one of w ic su)division lots, wit an area of 44& s3uare meters, was fort wit sold to t e Spouses (ose @esalem and ;osa @esalem. 8 en apprised of t e aforementioned events, Angelo *ar+ and 4erlinda *ar+, t e eirs of Teofilo *ar+, and t e eirs of %anfilo ;etuerto, including t e Spouses (ose @esalem ad a confrontation during w ic t e Spouses (ose @esalem admitted aving purc ased a portion of su)division >ot 89,-* wit an area of 44& s3uare meters. 2n Septem)er ', 1989, Angelo %. *ar+ and 4erlinda *ar+ filed a complaint against :atalina ;etuerto and t e ot er eirs of %anfilo ;etuerto, including >oreto, w o t e %laintiffs )elieved, was still alive, and t e Spouses (ose @esalem, wit t e ;egional Trial :ourt of 4andaue for 9Ouieting of Title, Iamages and Attorney5s ?ees.9 T e %laintiffs alleged, inter alia, t at su)division >ots 89,-A and 89,-* were portions of >ot 89, su)ject of >;: '09 and covered )y 2riginal :ertificate of Title Eo. '01 under t e name of Teofilo *ar+ after w ose deat , t e %laintiffs in erited t e property, despite w ic t e Iefendants claimed owners ip over >ots 89,-A and 89,-* covered )y 2riginal :ertificate of Title Eo. '01. . . . ;omeo ;etuerto, Antonia ;etuerto, Earcisa ;etuerto, :ora+on ;etuerto, %atrocinia ;etuerto, t e eirs of >oreto ;etuerto, filed an Answer to t e complaint alleging, inter alia, )y way of affirmative defense, t at t eir fat er, >oreto ;etuerto, was already dead and was survived, )y t em as is eirs= w at was sold to t e Iefendants Spouses (ose @esalem was a portion of >ot 89,, wit an area of 44& s3uare meters, w ic was conveyed to Bfigenia ;etuerto and not t at portion of >ot 89,-* deeded to >oreto ;etuerto under t e 9B.trajudicial Settlement of ;eal %roperty of %anfilo ;etuerto, w o was t e lawful owner of t e said property, 9t at t ey were not aware of >;: :ase Eo. '09 andJor t at t e
BusOrg Summer (trust cases)

property, sold )y (uana %ere+ to %anfilo ;etuerto, ad )een included in 2riginal :ertificate of Title Eo. '01 under t e name of Teofilo *ar+. . . . $n t eir Answer to t e complaint, t e Iefendants Spouses (ose @esalem averred, inter alia, )y way of affirmative defense, t at t ey purc ased a portion of su)division >ot 89,-*, wit an area of 44& s3uare meters, more or less= >ot 89,-* "formerly >ot 89,-A# w ic ad )een sold )y (uana %ere+ *ar+ to %anfilo ;etuerto ad )een t e su)ject of >;: :ase Eo. / w erein %anfilo ;etuerto was declared t e lawful owner of t e property= t at t e inclusion of t e su)ject property in 2riginal :ertificate of Title Eo. '01 issued to and under t e name of Teofilo *ar+ did not vest owners ip over t e title in favor of %edro *ar+ )ut constituted t e latter merely as a trustee under a constructive trust wit t e concomitant o)ligation to convey t e said property to t e Iefendants <eirs of %anfilo ;etuerto and to t e Iefendants Spouses, as vendees of t e said property= %laintiffs5 action was )arred )y lac es. . . . 2n April /, 199-, t e ;egional Trial :ourt of 4andaue :ity promulgated its decision declaring erein respondents as t e a)solute owners in fee simple of >ots 89,-A and >ot 89,-*= declaring t e documents adduced )y erein petitioners unenforcea)le and ineffective against 2:T Eo. '01= nullifying t e deed of sale )etween erein petitioners and t e spouses @esalem= and ordering erein petitioners to vacate t e premises of >ots 89,-A and 89,-*. 1 T e :ourt of Appeals, on Iecem)er 09, 0&&&, affirmed t e decision of t e trial court e.cept as to t e award of attorney5s fees w ic was deleted.0 <ence, t is appeal )y t e eirs of %anfilo ;etuerto and t e spouses @esalem, assigning t e following errors! $ T e :ourt of Appeals gravely erred in concluding t at petitioners ad only ten years from t e date of issuance of 2:T Eo. '01, w ic erroneously included t eir >ot Eo. 89,-A, wit in w ic to as7 for its reconveyance, in t e lig t of t eir judicially declared and recogni+ed possession t ereof since time immemorial. $$ T e :ourt of Appeals erred in not finding t at it was respondents5 rig t to 3uestion petitioners5 owners ip and possession over t e su)ject property t at as )een lost t ru lac es. $$$ T e :ourt of Appeals erred in concluding t at petitioners could not ventilate t eir claim of title over t e su)ject property )y way of affirmative defense as t is would constitute collateral attac7 on respondents5 original certificate of title. 8e do not find merit in t e petition. *ot t e :ourt of Appeals and t e ;egional Trial :ourt correctly applied t e principles of t e Torrens system of land registration to t e present case. $t is a fundamental principle in land registration t at a certificate of

31

title serves as evidence of an indefeasi)le and incontroverti)le title to t e property in favor of t e person w ose name appears t erein./ Suc indefeasi)ility commences after t e lapse or e.piration of one year from t e date of entry of t e decree of registration. 4 T e act of registration is considered a constructive notice to all persons' respecting title to property= ence, after t e lapse of one year, title to t e property can no longer )e contested. T is system was so effected in order to 3uiet title to land. ;ecords s ow t at in 19,,, an application for confirmation of title over >ot 89, was filed )y %edro *ar+, erein respondents5 predecessor-in-interest, wit t e :ourt of ?irst $nstance of :e)u doc7eted as >;: :ase Eo. E-'09. T ereafter, a decision declaring %edro *ar+ as t e lawful owner of t e said property was rendered )y t e court and conse3uently, an original certificate of title, 2:T Eo. '01, was issued in is name on Eovem)er 1/, 19,8. T us, after t e lapse of one year, w ic was Eovem)er 1/, 19,9, private respondent5s title to t e property already )ecame indefeasi)le and can no longer )e controverted. %etitioners contest suc title and claim t at as early as 1909, t eir predecessor-in-interest, %anfilo ;etuerto, )oug t t e property from (uana %ere+ *ar+ and t at in 19/-, t e t en (u+gado de %rimera $nstancia de :e)u adjudicated said property to %anfilo ;etuerto in @>;2 ;ecord Eo. 4&/&. <owever, now ere as it )een s own t at a decree of registration was ever issued affecting t e property T e alleged earlier sale of t e su)ject property )y petitioners5 predecessor-in-interest to respondents5 predecessor-in-interest was not registered. Also, despite t e alleged decision in 19/- )y t e (u+gado de %rimero (ustancia in favor of %anfilo ;etuerto, t e latter failed to intervene and introduce t e said decision in t e petition for confirmation of title filed )y %edro *ar+ in 19,,. Also, since t e issuance of 2:T Eo. '01 in t e name of %edro *ar+ in 19,8, no action ad )een ta7en )y petitioners directly attac7ing said title and see7ing reconveyance of t e property. $t was only sometime in 1989 or twenty-one "01# years later, w en t ey were finally impleaded )y private respondents in an action for 3uieting of title t at petitioners actively asserted owners ip of t e su)ject property in t eir answer to t e complaint. %etitioners insist t at despite t e indefeasi)ility of private respondents5 title, t ey can still maintain an action for reconveyance of t e said property on t e ground of fraud pursuant to Section /0 of %residential Iecree Eo. 1'09. $t is alleged t at respondents5 predecessor-in-interest, %edro *ar+ misrepresented wit t e land registration court t at e in erited t e w ole of >ot 89, w en in trut and in fact a portion t ereof designated as >ot 89,-A ad already )een disposed of to %anfilo ;etuerto= ence, a constructive trust was created over t e property for and in )e alf of %anfilo ;etuerto and is eirs. T e contention is )ereft of merit. :onstructive trusts are created in e3uity to prevent unjust enric ment, arising against one w o, )y fraud, duress or a)use of confidence, o)tains or olds t e legal rig t to property w ic e oug t not, in e3uity and good conscience, to old., %etitioners failed to su)stantiate t eir allegation t at t eir predecessor-in-interest ad ac3uired any legal rig t to t e property su)ject of t e present controversy. Eor ad t ey adduced any evidence to s ow t at t e certificate of title of %edro *ar+ was o)tained t roug fraud.
BusOrg Summer (trust cases)

Bven assuming arguendo t at %edro *ar+ ac3uired title to t e property t roug mista7e or fraud, petitioners are nonet eless )arred from filing t eir claim of owners ip. An action for reconveyance )ased on an implied or constructive trust prescri)es wit in ten years from t e time of its creation or upon t e alleged fraudulent registration of t e property.- Since registration of real property is considered a constructive notice to all persons, t en t e ten-year prescriptive period is rec7oned from t e time of suc registering, filing or entering.8 T us, petitioners s ould ave filed an action for reconveyance wit in ten years from t e issuance of 2:T Eo. '01 in Eovem)er 1,, 19,8. T is, t ey failed to do so. ;elying on t e case of 0eirs of Jose .l+iga +s. %ourt of Appeals,9 petitioners argue t at t e ten-year period for filing an action for reconveyance of property arising from an implied or constructive trust applies only w en t e person enforcing t e trust is not in possession of t e property, since if a person claiming to )e t e owner is in actual possession of t e property, t e action to see7 reconveyance or to 3uiet title does not prescri)e. %etitioners claim t at t ey and t eir predecessors-in-interest were t e ones in actual possession of t e su)ject property alleging t at in t e survey made )y @eodetic Bngineer >eopoldo Tuastum)an, it was reported t at t ere were 9nine ouses and one rattan s op owned )y t e eirs of >oreto ;etuerto constructed t ereon.91& Again, t e contention does not persuade us. $n t e 19,, decision of t e >and ;egistration :ourt in >;: Eo. '09, it was found t at %edro *ar+, private respondents5 predecessor-in-interest, was t e lawful owner of t e su)ject property as e and is predecessors-in-interest ad )een in peaceful, continuous and open possession t ereof in t e concept of owner since 191'. Said court declared t at! >ot 89,! T is lot is covered )y Ta. Ieclaration Eo. 019,9 in t e name of (uana %ere+, B. . 92-%edro *ar+,9 containing an area of 0&,48, s3. meters. $t originally )elonged to t e spouses Bste)an %ere+ and >oren+a Sanc e+. After t eir deat , t e same was in erited )y (uana %ere+ w o died in 1940 and was succeeded )y er lone eir son %edro *ar+, ?ilipino citi+en, married to Teofila %edro+a and resident of 4andaue, :e)u. (uana %ere+ owned and possessed t is lot since 191' up to er deat in 1940 w en %edro *ar+ reac ed t e age of consciousness or w en e was around 8 years old= t at er possession ad )een peaceful, continuous, open and in concept of owner. Fro" 1?@6 up to the present, the possession of /edro 3ar4 o+er this propert, had #een li=ewise peaceful, continuous and in concept of owner as he was religious in the pa,"ent of real estate taxes, as shown in $xh. ;1-6 /edro 3ar4.911 As previously stated, no action for reconveyance as )een filed )y erein petitioners. T ey interposed t eir claim of owners ip for t e first time in t eir Answer and )y way of Affirmative Iefenses to t e complaint for 3uieting of title filed )y erein respondents in 1989. T is cannot )e allowed. 6nder Section 48 of %I 1'09 or t e %roperty ;egistration Iecree, 9a certificate of title cannot )e su)ject to collateral attac7= it cannot )e altered, modified or cancelled e.cept in a direct proceeding.910 T e issue of t e validity of title, i.e., w et er or not it was fraudulently issued, can only )e raised in an action e.pressly instituted for t at purpose.1/ 8<B;B?2;B, t e Iecision of t e :ourt of Appeals dated Iecem)er 09, 0&&& in :A-@; :G Eo. '99-' is ere)y A??$;4BI.

32

G.R. No. 119.17 No2e%ber 20, 1999 TEO3OR S LTIG 3E ROMERO, PRESENT )ION ROMERO M M , Re4re$e!+e" by S B3ULL H M M , LU)IT ROMERO P ) S, GLORIOS ROMERO R SON BLE a!" MIN3 LIN ROMERO NUEN ',4e+9+9o!er$, 2$.THE HONOR BLE )OURT OF PPE LS, THE HONOR BLE SE6ENTEENTH 3I6ISION a!" LUTERO ROMERO a!" N TI6I3 3 ROMERO a!" THE 3E6ELOPMENT B N7 OF THE PHILIPPINES, ILIG N BR N)H, ILIG N )IT' a!" THE REGISTER OF 3EE3S OF L N O 3EL NORTE, re$4o!"e!+$.

*efore us is a %etition for ;eview on %ertiorari of t e decision of t e :ourt of Appeals 1 in :A-@.;. :G Eo. //1,4 entitled !$.*.'A -AL!(5A *$ '.)$'. $!. AL. +s. LA%$'. '.)$'. $!. AL. and LA!$'. '.)$'., $!. AL. +s. -/.A-$- )$L(!.1 /A%A-, $!. AL. involving two civil cases w ic were tried jointly )y t e ;egional Trial :ourt of >anao Iel Eorte, *ranc -, namely! 1. :ivil :ase Eo. '91, w ic was filed )y erein %etitioners Teodora Saltiga Ie ;omero, %resentacion ;omero-4ama "%;BSBETA:$2E#, >ucita ;omero-%acas ">6:$TA#, @loriosa ;omero-;asona)le "@>2;$2SA#, and 4indalina ;omero-Euenay "4$EIA>$EA# against >utero ;omero ">6TB;2# and t e Ievelopment *an7 of t e % ilippines "I*%# for reconveyance of t eir s are in a parcel of land, >ot 0/ %ls-/', titled in t e name of >6TB;2= and 0. :ivil :ase Eo. 1&',, w ic was filed )y >6TB;2 and is wife Eatividad S. ;omero against >6:$TA and er us)and 4eliton %acas, %;BSBETA:$2E and er us)and Sa)dulla 4ama and @>2;$2SA and er us)and Iionisio ;asona)le for annulment of t ree affidavits w erein >6TB;2 supposedly sold to t em s ares over >ot Eo. 0/ %ls-/'. T e facts as found )y t e :ourt of Appeals are as follows! ?rom t e evidence presented )y t e appellants, it appears t at on Iecem)er 10, 19/9 Bugenio ;omero )oug t from spouses :eledonio (aug and Sofia 4acan t e latter5s 9rig ts, interest, participation, owners ip and possession9 of 10 ectares of land. T e land in 3uestion was t en pu)lic land. 8 en Bugenio ;omero applied for a omestead patent for said land, t e same was disapproved )y t e *ureau of >ands )ecause said ;omero already ad applied for a omestead patent for 04 ectares and was dis3ualified from owning t e additional 10 ectares. Bugenio ;omero placed t e application in t e name of is eldest son, Buti3uio ;omero, allegedly in trust for all t e c ildren of Bugenio. 8 en Buti3uio got married and ad c ildren, is )rot ers and sisters got worried t at is eirs may claim t e land so t e application was transferred in t e name of >utero ;omero, t e second son of Bugenio w o was t en still single. 8 en >utero in turn got married, e relin3uis ed t e application in favor of is younger )rot er ;icardo t roug an instrument dated (uly ', 19'0. T e spouses Bugenio ;omero and Teodora Saltiga ad nine "9# c ildren. 2t er t an t e t ree "/# sons aforenamed, t ey ad si. ",# daug ters, namely @enerosa, Iiosdada, 4indalina, >ucita, %resentacion and @loriosa. Bugenio ;omero died sometime in 1948. $n 19,1 is widow Teodora caused t e land in 3uestion to )e su)divided among si.
BusOrg Summer (trust cases)

",# of er c ildren, t e ot er t ree "/# aving already )een given t eir s ares in t e ot er properties of t e ;omero spouses. T e twelve "10# ectares were supposedly divided e3ually among >utero, ;icardo, 4indalina, >ucita, %resentacion, and @loriosa w o all got a)out two "0# ectares eac . Su)se3uently, owever, ;icardo conveyed is s are to >ucita and @loriosa w o t erefore ad / ectares eac . 2n t e ot er and, 4indalina left er s are in t e care of er mot er Teodora and er sister %resentacion )ecause s e left for Iavao :ity. >utero later re3uested t at e )e allowed to farm t is s are of 4indalina, t us e occupied a total of 4 ectares wit t e consent of is mot er Teodora and sister %resentacion. T e appellants furt er claimed t at after t e partition, t ey ad )een in occupancy of t eir respective s ares t roug t eir tenants. <owever, appellee >utero ;omero presented evidence to t e effect t at sometime in 19,9 a policeman pic7ed im up and )roug t im to t e office of 4ayor %a)lito A)ragan of Aapatagan w ere e found is mot er Teodora and is t ree "/# sisters @loriosa, %resentacion and >ucita and t e respective us)ands of t e latter two. <e testified t at w en e arrived at t e office, e was presented t ree "/# affidavits for is signature. Said affidavits were to t e effect t at e sold t ree "/# ectares eac out of t e 10 ectares of land to is sister @loriosa, is )rot er-in-law Sa)dulla 4ama married to %resentacion ;omero, and to 4eliton %acas married to >ucita ;omero for a consideration of %/,&&&.&& eac . Appellee >utero ;omero testified t at e told t e mayor t at e was not selling t e land and t at e could not do so )ecause t e five-year period ad not yet elapsed )ut t e mayor told im to just sign t e affidavits )ecause after five "'# years is sisters will get t e land and pay for t em and t at if t ey would not pay, t e mayor will ta7e steps to return t e land personally to im. >utero stated t at e as not )een paid for t e land )y is sisters. >utero ;omeo claimed t at as early as 194&-1941 e ad already )een in occupancy of t e 10 ectares in 3uestion w en it was s own to im )y t is fat er w o owned t e adjoining parcel= and t at t e said land ad )een titled in is name even w ile is fat er Bugenio was still alive. $ndeed it appears t at t e title to t e property, 2.:.T Eo. %-0,0,1, ad )een issued to >utero ;omero as early as April 0,, 19,-, after t e omestead patent was issued in is favor on April -, 19,-. <e said t at is t ree "/# sisters occupied portions of t e property only in 19,9, after e was forced to sign t e affidavits )y 4ayor A)ragan. >utero ;omero ad t ereafter repudiated t e t ree "/# affidavits on August 10, 19-4. *ecause of t is, estafa c arges were filed against im )y t e t ree "/# parties concerned )ut said c arges were dismissed. $t furt er appears t at >utero ;omero o)tained a loan from t e Ievelopment *an7 of t e % ilippines on Iecem)er /, 19-' and mortgaged t e land in 3uestion as collateral for said loan. Appellants claim t at only t en did t ey 7now t at t e land ad )een titled in t e name of >utero ;omero. T ereafter, t roug a letter dated August 0, 19-,, >utero ;omero as7ed is sisters to vacate t e land in 3uestion. A few days t ereafter, or on August 14, 19-,, :ivil :ase Eo. '91

33

was filed against >utero ;omero. 2 2n 4arc 11, 1991, t e ;T: rendered a decision t e dispositive portion of w ic reads! 8<B;B?2;B, judgment is ere)y rendered!
1. Ieclaring t e t ree "/# affidavits of sale as null and void and no effect= 0. 2rdering t e plaintiffs in :ivil :ase Eo. '91 and defendants in :ivil :ase Eo. 1&',, namely Sa)dulla 4ama, %resentation ;omero-4ama @loriosa ;omero ;asona)le, 4eliton %acas and >ucita ;omero to surrender and to deliver to >utero ;omero t e possession of all t e portions of >ot 0/, %ls-/'= /. 2rdering t e 4unicipal Assessor of Aapatagan, >anao del Eorte to cancel Ta. Ieclaration Eos. ,&09, ,&/&, ,&/1 and ,&/0 in t e names of defendants ":ivil :ase Eo. 1&',# Sa)dulla 4ama, @loriosa ;asona)le, plaintiff >utero ;omero and defendant 4eliton %acas and to restore Ta. Ieclaration Eo. 1/4- in t e name of >utero ;omero for t e entire >ot 0/, %ls-/'= 4. 2rdering t e defendants ":ivil :ase Eo. 1&',# to pay to t e plaintiff t e sum of TBE T<26SAEI "%1&,&&&.&&# %BS2S as actual damages= '. 2rdering t e defendants ":ivil :ase no. 1&',# to pay to t e plaintiffs t e sum of TBE T<26SAEI "%1&,&&&.&&# %esos as moral damages= and ,. 2rdering t e defendants ":ivil :ase Eo. 1&',# to pay t e cost of t is proceeding. S2 2;IB;BI. /

@>2;$2SA, %;BSBETA:$2E and er us)and and >6:$TA and er us)and. T ey claim t at pursuant to t ese t ree affidavits, >6TB;2 no longer as a claim over >ot 0/ %ls-/'. 6 2n t e ot er and, respondents maintain t at >6TB;2 did not commit fraud in t e titling of >ot 0/ %ls-/'. T ey allege t at t e petitioners failed to prove t is during t e trial of t e case. 2n t e contrary, >6TB;2 complied wit all t e re3uirements of t e law w en e successfully o)tained title to t e lot. ;espondents also deny t at >6TB;2 eld t e land in trust for t e )enefit of t e eirs of is fat er B6@BE$2. According to t em, t is violates t e provisions of T e %u)lic >and Act. Bven assuming t at a trust in fact was created, suc is null and void for )eing contrary to law. ?inally, respondents maintain t at t e t ree affidavits of sale e.ecuted in favor of t e petitioners are void since t ey were simulated and not supported )y any consideration= and t ey were e.ecuted wit in t e five-year pro i)itory period from t e issuance of t e patent. 7 T e :ourt of Appeals ruled in favor of >6TB;2, stating! Appellants erein maintain t at t e land was eld )y >utero ;omero, only in trust for is )rot ers and sisters )ecause t e land )elonged to t eir fat er Bugenio ;omero. 8e do not find any )asis for t is posture. Bugenio ;omero was never t e owner of t e land in 3uestion )ecause all e )oug t from t e (aug spouses were t e alleged rig ts and interests, if t ere was any, to t e said land w ic was t en part of t e pu)lic domain. T e (augs could not ave sold said land to Bugenio as t ey did not own it. Bugenio ;omero was not granted, and could not ave )een granted, a patent for said land )ecause e was dis3ualified )y virtue of t e fact t at e already ad applied for t e ma.imum limit of 04 ectares to w ic e was entitled. T e land in 3uestion could not t erefore ave passed on from im to is c ildren. 2n t e ot er and, >utero ;omero applied for a omestead patent over t e land in 3uestion and is application was duly approved. T e appellants ave not esta)lis ed t at t ere was any fraud committed in t is application. $n fact it appears t at t ere was even a earing conducted )y t e *ureau of >ands on t e application )ecause a certain %otenciano (aug ad )een contesting t e application. 6nder t e presumption of law, t at official duty as )een regularly performed, t ere appears to )e no ground to 3uestion t e grant of t e patent to >utero ;omero in 19,-. <is sisters @loriosa, %resentacion, and >ucita apparently recogni+ed >utero5s owners ip of t e property w en in 19,9 t ey soug t t e elp of t e mayor of Aapatagan to convince >utero to e.ecute affidavits of sale in t eir favor. <owever, >utero could not ave sold any portion of t e property to t em. Any suc sale e.ecuted wit in five "'# year period from t e date of t e issuance of t e title is null and void even if t e sale was made )y t e omesteader in favor of isJ er descendants "@ayapano vs. $A:, 199 S:;A /&9#. ?urt ermore, it as )een esta)lis ed t at t e t ree supposed vendees never paid any consideration for t e supposed sale of t e lots t ey occupied. 8e agree wit t e o)servation of t e appellee t at under t e t eory of t e appellants, t e latter ad soug t to circumvent t e law. $t would appear t at )ecause Bugenio ;omero could not legally 3ualify to ave t e land in 3uestion, e ad allegedly soug t to place t e application in anot er5s name wit t e same intention

Eot satisfied wit t e decision of t e ;T:, petitioners appealed to t e :ourt of Appeals, w ic affirmed t e decision of t e ;T: in favor of >6TB;2. <ence t is petition w ere t e petitioners assign t e following issues! 8<BT<B; 2; E2T >6TB;2 ;24B;2 $S A T;6STBB 2? >2T 0/ %>S-/' ?2; T<B *BEB?$T 2? T<B <B$;S 2? B6@BE$2 ;24B;2. 8<BT<B; 2; E2T 8$T< 2; 8$T<26T SA$I T<;BB "/# A??$IAG$TS $E O6BST$2E %BT$T$2EB;S5 GA>$I :A6SB 2? A:T$2E :AE STAEI 2; E2T./ I*% filed its comment to t e petition and see7s t e dismissal of t e case against it considering t at t e agricultural loan in favor of >6TB;2 as )een paid in full. I*% maintains t at since t e mortgage was already cancelled, petitioners ave no cause of action against it. 0 %etitioners contend t at >6TB;2 merely olds >ot 0/ %ls-/' in trust for t e )enefit of t e eirs of is fat er B6@BE$2 since it was actually B6@BE$2 w o first applied for t e omestead )ut considering t at B6@BE$2 was already granted a omestead, t e application ad to )e placed in t e name of is eldest son B6T$O6$2. T e application was su)se3uently transferred to t e name of >6TB;2 w o later transferred t e application in t e name of ;icardo ;omero ";$:A;I2#, is younger )rot er. To support t eir contention, petitioners point to t e testimony of >6TB;2 during t e investigation of t e omestead application of ;$:A;I2 to t e effect t at e transferred and relin3uis ed is rig ts as trustee of t e lot to ;$:A;I2. T e fact t at >6TB;2 was a)le to cause t e issuance of t e <omestead title of t e land in 3uestion under is name clearly s ows t at >6TB;2 employed fraud in procuring t e same. :onse3uently, erein petitioners are entitled to recover t e said lot. %etitioners also rely on t e t ree affidavits of sale e.ecuted )y >6TB;2 w erein e sold portions of >ot 0/ %ls-/' in favor of
BusOrg Summer (trust cases)

34

to own it t roug anot er. T is certainly cannot )e countenanced. , 8e find no reversi)le error committed )y t e :ourt of Appeals. T e core issue in t is case is w et er >6TB;2 ac3uired >ot 0/ %ls/' in trust for t e )enefit of t e eirs of B6@BE$2. 9A trust is t e legal relations ip )etween a person aving an e3uita)le owners ip in property and anot er person owning t e legal title to suc property, t e e3uita)le owners ip of t e former entitling im to performance of certain duties and t e e.ercise of certain powers )y t e latter.9 9 Trust relations )etween parties may )e e.press or implied. 11 B.press trusts are t ose w ic are created )y t e direct and positive acts of t e parties, )y some writing or deed, or will, or )y words evidencing an intention to create a trust. 11 $mplied trusts are t ose w ic wit out )eing e.press, are deduci)le from t e nature of t e transaction as matters of intent, or w ic are superinduced on t e transaction )y operation of law as a matter of e3uity, independently of t e particular intention of t e parties. 12 $mplied trusts may eit er )e resulting or constructive trusts, )ot coming into )y operation of law. ;esulting trusts are )ased on t e e3uita)le doctrine t at valua)le consideration and not legal title determines t e e3uita)le title or interest and are presumed always to ave )een contemplated )y t e parties. T ey arise from t e nature or circumstances of t e consideration involved in a transaction w ere)y one person t ere)y )ecomes invested wit legal title )ut is o)ligated in e3uity to old is legal title for t e )enefit of anot er. 2n t e ot er and, constructive trusts are created )y t e construction of e3uity in order to satisfy t e demands of justice and prevent unjust enric ment. T ey arise contrary to intention against one w o, )y fraud, duress or a)use of confidence, o)tains or old t e legal rig t to property, w ic e oug t not, in e3uity and good conscience, to old. 1. <owever, it as )een eld t at a trust will not )e created w en, for t e purpose of evading t e law pro i)iting one from ta7ing or olding real property, e ta7es a conveyance t ereof in t e name of a t ird person. 1/ $n t e present case, t e petitioners did not present any evidence to prove t e e.istence of t e trust. %etitioners merely alleged t at >6TB;2, t roug fraudulent means, ad t e title of >ot 0/ %ls-/' issued in is name contrary to t e alleged agreement )etween t e family t at >6TB;2 would merely old t e lot in trust for t e )enefit of B6@BE$25s eirs. T e alleged agreement was not proven and even assuming t at t e petitioners duly proved t e e.istence of t e trust, said trust would )e of dou)tful validity considering t at it would promote a direct violation of t e provisions of t e %u)lic >and Act as regards t e ac3uisition of a omestead patent. A omestead applicant is re3uired )y law to occupy and cultivate t e land for is own )enefit, and not for t e )enefit of someone else. 10?urt ermore, under Section 10 of T e %u)lic >and Act ":A 141#, a person is allowed to enter a omestead not e.ceeding twenty-four "04# ectares. $n t e present case, it is not disputed t at B6@BE$2 already applied for a omestead patent for twenty-four "04# ectares of land and was dis3ualified from applying for an additional twelve "10# ectares. $f we up old t e t eory of t e petitioners and rule t at a trust in fact e.isted, we would )e a)etting a circumvention of t e statutory pro i)itions stated under t e %u)lic >and Act. 8e t erefore find no legal or factual )asis to sustain t e contention of t e
BusOrg Summer (trust cases)

petitioners t at >6TB;2 merely eld >ot 0/ %ls-/' in trust for t e )enefit of t e eirs of B6@BE$2. As for t e alleged sale of t ree portions of t e lot for a consideration of %/,&&&.&& eac evidenced )y t e t ree affidavits of sale e.ecuted )y >6TB;2 in favor of @>2;$2SA, %;BSBETA:$2E and >6:$TA, t e :ourt of Appeals correctly declared t e t ree conveyances void. :A 141 pro i)its t e alienation of a omestead wit in five years from t e issuance of t e patent and grant under Section 118, w ic states! Sec. 118. B.cept in favor of t e @overnment or any of its )ranc es, units, or institutions, lands ac3uired under free patent or omestead provisions s all not )e su)ject to encum)rance or alienation from t e date of t e approval of t e application and for a term of five years from and after t e date of issuance of t e patent and grant, nor s all t ey )ecome lia)le to t e satisfaction of any de)t contracted prior to t e e.piration of said period, )ut t e improvements or crops on t e land may )e mortgaged or pledged to 3ualified persons, associations, or corporations. Eo alienation, transfer, or conveyance of any omestead after five years and )efore twenty-five years after t e issuance of title s all )e valid wit out t e approval of t e Secretary of Agriculture and :ommerce, w ic approval s all not )e denied e.cept on constitutional and legal grounds. 9T e conveyance of a omestead )efore t e e.piration of t e fiveyear pro i)itory period following t e issuance of t e omestead patent is null and void and cannot )e enforced, for it is not wit in t e competence of any citi+en to )arter away w at pu)lic policy )y law see7s to preserve.9 16 $n t e present case, since t e sales were made on (anuary 1-, 19,9 or less t an two years after t e issuance of >6TB;25s title to t e omestead on April -, 19,-, t e sales are clearly void. ?inally, we cannot grant I*%5s prayer to )e dropped from t e case even if t e mortgage in its favor as )een cancelled. I*% did not appeal t e decision of t e :ourt of Appeals and cannot t erefore see7 affirmative relief from t is :ourt ot er t an t e ones granted in t e decision of t e court )elow. 17 All t at said appellee can do is to ma7e a counter-assignment of errors or to argue on issues raised at t e trial only for e purpose of sustaining t e judgment in is favor, even on grounds not included in t e decision of t e court a 2uo nor raised in t e appellant5s assignment of errors or arguments. IBE$BI.

35

G.R. No. 116211 Mar8; 7, 1997ME'N R3O POLI) RPIO, 4e+9+9o!er, 2$.)OURT OF PPE LS a!" ROSITO PUE)HI S. U', re$4o!"e!+$.

T e :ourt finds occasion to apply t e general principles of constructive trust as aut ori+ed )y t e :ivil :ode in granting t is petition and in compelling private respondent to implement is trust relations ip wit petitioner. T is is a petition under ;ule 4' of t e ;ules of :ourt to reverse t e Iecision 1 of pu)lic respondent 2 in :A-@.;. :G Eo. /0801 promulgated on 4arc 01, 1994, and t e ;esolution . promulgated on (uly ', 1994, denying petitioner5s motion for reconsideration. T e dispositive portion of t e assailed Iecision reads! / 8<B;B?2;B, in view of t e foregoing, judgment is ere)y rendered! 1. ;BGB;S$E@ and SBTT$E@ AS$IB t e appealed decision dated 1& Septem)er 199&= 0. I$S4$SS$E@ t e :omplaint= and /. 8it out pronouncement as to costs. !he Facts T e facts of t e case, as culled from t e c allenged Iecision, are simple. %etitioner "along wit is co-plaintiffs in t e antecedent cases, namely, ;odolfo @ayatin, (ose Gillacin and (ocelyn 4ontinola 0# and private respondent were former tenants of t e /&door *arretto Apartments formerly owned )y Serapia ;ealty, $nc.. Sometime in April 1984, private respondent was elected %resident of t e *arretto Tenants Association " ereafter referred to as t e 9Association9# w ic was formed, among ot ers, 9to promote, safeguard and protect t e general interest and welfare of its mem)ers.9 6 $n a letter dated (uly /&, 1984, private respondent as president of t e Association soug t t e assistance of t e t en 4inister of <uman Settlements to cause t e e.propriation of t e su)ject property under t e 6r)an >and ;eform %rogram for su)se3uent resale to its tenants. T e matter was endorsed to t e <uman Settlements ;egulatory :ommission, w ic in a letter dated Eovem)er ', 1984, signed )y :ommissioner and : ief B.ecutive 2fficer Brnesto :. 4endiola, rejected t e tenant5s re3uest for e.propriation. T e letter stated in part! 7 At t e moment, t e effects of t e provisions of %I 1'1-, ot erwise 7nown as t e 6r)an >and ;eform Iecree, are limited only to t e proclaimed 04' A%I5s andJor 6>;M5s. *e informed furt er t at, pursuant to ;ule G$$$ F $V of t e ;ules and ;egulations of t e a)ovementioned Iecree, e.propriation will )e availed of only as a last resort as t ere are various modes of >and Ac3uisitionJIisposition tec ni3ues w ic t e 4inistry can avail of to elp )onafide "sic# tenantsJresidents of a certain area. ?ailing to get t e assistance of t e government, t e tenants
BusOrg Summer (trust cases)

undertoo7 to negotiate directly wit t e owners of t e *arretto Apartments. $nitially, %rivate ;espondent ;osito 6y orally e.pressed to 4rs. ;osita *arretto 2c oa t e tenants5 desire to purc ase t eir respective units. >ater, in a letter dated 4ay 09, 198', signed )y t irty "/&# tenants of t e commercial and residential units, t e tenants formally e.pressed to 4rs. 2c oa t eir intent to purc ase. 2n (uly 0-, 198', Serapia ;eal Bstate, $nc., sent to ;osito 6y, in is capacity as president of t e Association, t e following letter! , Sir! T is is in response to your letter regarding your intent to )uy our property toget er wit its improvements located at corners <aig and ;omualde+ Streets and along @en. Aalentong Street, 4andaluyong, 4etro 4anila. 8e would li7e to inform you t at we are offering to sell t e said property at a price of ?26; 4$>>$2E ?$GB <6EI;BI T<26SAEI "%4,'&&,&&&.&&# %BS2S 2E>N, under t e following Terms and :onditions! A;BA! 0,0/- s3uare meters 4anner of %ayment! An earnest money of %1&&,&&&.&& wit in /& days T isoffer is on a 9?$;ST :24B ?$;ST SB;GBI *AS$S9 and our price is good only wit in ,& days or until Septem)er /&, 198' only. T an7 Nou. $n addition, Serapia ;ealty, $nc., sent to spouses @ayatin a mimeograp ed letterstating. 4r.?Mr$. Gaya+9! SIR?M 3 M= P#ea$e be 9!:or%e" +;a+ @e are 9!+e!"9!* +o $e## +;e u!9+ you are !o@ o88u4y9!*. <e are +;ere:ore *929!* you +;e :9r$+ 4r9or9+y +o 4ur8;a$e +;e $a%e, 9: you "e$9re. <e are *929!* you a 4er9o" o: +e! A11B "ay$ :ro% re8e94+ ;ereo: +o $ee u$A,B o+;er@9$e, @e @9## 8o!$9"er your 9!a8+9o! a @a92er 9! AsicB your 4ar+ +o 4ur8;a$e +;e $a%e. 2n Eovem)er 0&, 198', ;odolfo @ayatin ac7nowledged receipt of t e said letter wit a re3uest t at e )e furnis ed wit t e following information! 1& a. :onsideration of t e sale= ). Terms and conditions of t e sale= and c. %lan indicating t e areas and )oundaries of eac unit. >etters ac7nowledging receipt of 4rs. 2c oa5s letter of intent to sell

36

t e apartment unit occupied )y t e tenants were sent )y Iionisio Bnri3ue+ and Blena (. *aUares. T e tenants designated and appointed private respondent as t eir president to negotiate wit Serapia ;ealty, $nc.. *ut t e negotiations apparently did not ripen into a perfected sale. 2ne and a alf years later, on 4arc 10, 198-, petitioner and is coplaintiffs were notified t at private respondent was t e new owner of t e apartment units occupied )y t em. *elieving t at t ey ad )een )etrayed )y t eir Association president, petitioner sued for 9;edemption and Iamages wit %rayer ?or %reliminary $njunction.9 %rivate respondent counter-sued for Iamages and Accion /u#liciana wit %reliminary Attac ment. (oint trial of t e two cases ensued. T e trial court found t at private respondent ad )een designated and entrusted )y plaintiffs to negotiate wit t e *arretto family for t e sale of t e units. $t also found t at a constructive trust was created )etween t e private respondent as 9t e cestui 2ue trust Cs ould )e trusteeD and plaintiffs as )eneficiaries Cor cestuis 2ue trustD +is-a-+is t e su)ject units.9 11 T e dispositive portion of t e trial court decision reads! 10
8<B;B?2;B, judgment is ere)y rendered in t e a)ove-entitled cases in favor of plaintiffs ;odolfo @ayatin, (ose Gillacin, (ocelyn 4ontinola and 4eynardo %olicarpio, and against defendant, ;osito %uec i S. 6y, 1 1. 2rdering said defendant to e.ecute t e corresponding deeds of conveyance in favor of plaintiffs 4eynardo %olicarpio, (ocelyn 4ontinola, (ose Gillacin and ;odolfo @ayatin covering Ioor 8, >ot 14= Ioor /, >ot 9= Ioor 0, >ot 9= and Ioor 1, >ot 9, upon refund )y t e plaintiffs to t e defendant of t e sums of %/',0&&.&&= %/','0&.&&= %/',,&&.&& and %4-,0&&.&& respectively, wit out any interest. S ould defendant 6y fail to so e.ecute t e deeds of conveyance erein ordered wit in fifteen "1'# days from finality of judgment, t e :ler7 of t is :ourt will e.ecute t e same and t e ;egister of Ieeds will )e ordered to nullify t e certificates of title in t e name of said defendant and to issue ot er certificates of title in favor of t e four a)ove-named plaintiffs, respectively= and to pay to t e plaintiffs t e following sums! a# %1',&&&.&& as attorney5s fees= )# %4&,&&&.&& as moral damages= and c# %0&,&&&.&& as e.emplary damages, all wit interest at 10L per annum from date of t is decision= 0. Iismissing t e :omplaint in :ivil :ase Eo. '4444 as far as defendant Serapia ;eal Bstate $nc. is concerned= /. Iismissing defendants5 counterclaims in :ivil :ase Eo. '4444= and 4. Iismissing ;osito %uec i 6y5s complaint in :ivil :ase Eo. ''-/9. :osts against defendant 6y.

court t at a constructive trust e.isted )etween t e plaintiffs and t e defendant. %u)lic respondent, in finding t at a constructive trust ad not )een created, ruled! 1, T e contemporary and su)se3uent acts of t e parties erein fail to convince 6s t at a constructive trust e.ists for t e )enefit of t e appellees "tenants#. A reading of t e Articles of $ncorporation of *arretto Apartment Tenants Association, $nc. "B. . 9(9# s ows t at t e purpose for its formation is couc ed in general terms wit out specifically stipulating t e proposed purc ase and sale of t e apartment units. 8 ile it may )e conceded t at t e sale to t e tenants was a general concern t at would ave redounded to t eir )enefit, still it cannot )e denied t at t e transaction could not ave )een effected unless t e tenants and t e owners came to terms regarding t e sale. T e record reveals t at appellant " erein private respondent# did in fact send several communications, first to t e 4inistry of <uman Settlements and w en t is avenue did not prosper, to t e *arretto family in an effort to pursue t eir common desire to own t eir respective unit"s#. T e letter to t e 4inister of <uman Settlements is dated (uly /&, 1984 "B. . 9(9# a)out a year )efore t e e.ecution of t e Articles of $ncorporation on &, August 198'. $ncidentally, no evidence appears on record to s ow t at t e Association filed t e re3uisite documents for incorporation wit t e Securities and B.c ange :ommission. T e Ieeds of A)solute Sale in favor of appellant over appellees5 unit appear to ave )een e.ecuted on &' August 198, "B. s. 9*9 to 9?9# or a)out two "0# years after appellant was designated %resident of t e Association and appro.imately one "1# year after t e Articles of $ncorporation were drawn up and signed )y t e parties. "B. i)it 9S9# %u)lic respondent contended t at plaintiffs were informed of t e negotiations for t e purc ase and sale of property. ?urt er, pu)lic respondent said! it appears incum)ent upon t e tenants to verify from time to time on "sic# t e progress of t e negotiations not only from 4rs. 2c oa )ut also from appellant w o live "sic# in t e same apartment comple.. T eir inaction leads to t e impression t at t ey lac7ed interest to pursue t eir original plan to purc ase t e property or t ey could not agree on t e terms and conditions for t e sale. 1*efore us, petitioner argues t at pu)lic respondent erred in stating t at 9t ere was no common interest on t e pan of t e mem)ers of t e association to purc ase units t ey were occupying.9 18 <e also maintains t at it is immaterial w et er t e intent to )uy t e units was specifically stated in t e purposes of t e Association. 8 at is important is t at t e 9contemporary and su)se3uent acts of parties indicated suc a purpose.9 %etitioner insists t at t e tenants ad aut ori+ed and private respondent ad agreed to negotiate wit t e owners regarding t e terms of t e sale, precisely to conform to t e desire of t e owners to deal wit only one person. %etitioner ve emently denies t at t e co-tenants of private respondent 9 ad revo7ed or wit drawn t e aut ority and trust reposed on t e private respondent to act as negotiator in t eir )e alf.9 19 %rivate respondent re)uts )y saying t at t e entire property consisting of t irty "/&# doors was not sold on one particular date.

%rivate respondent appealed t e decision to pu)lic respondent w ic as earlier stated reversed t e decision and denied t e su)se3uent motion for reconsideration. <ence, t is petition only )y 4eynardo %olicarpio. <is co-plaintiff in t e antecedent case, (ose Gillacin, filed a %etition for $ntervention 1/ on 4arc 08, 199', w ic t e ?irst Iivision of t is :ourt in a ;esolution dated (une 0,, 199', denied for lac7 of merit, )ecause Gillacin5s earlier petition doc7eted as @.;. Eo. 11,1/- "(ose Gillacin vs. :ourt of Appeals, et al.# ad already )een dismissed for failure to attac an affidavit of service. 14 !he (ssue T e sole issue raised )y petitioner in t is appeal is! 1' T e respondent :ourt erred in reversing t e finding of t e trial
BusOrg Summer (trust cases)

37

;at er, t ere were actually two )atc es of sale. <e asserts t at petitioner, in feigning ignorance of t e two )atc es of sale and siting private respondent, ad created an ali)i to suspend payment of rental for years. 0& $t s ould also )e considered, states private respondent, t at upon denial of t e tenants5 re3uest for e.propriation )y t e 4inistry of <uman Settlements, and t e revelation t at *arretto5s apartments were eavily encum)ered, tenants 9completely a)andoned t e plan to organi+e a formal association.9 Assuming for t e sa7e of argument, adds private respondent, t at t e informal Association created a relations ip among t e parties, 9t e same ceased and e.pired )y virtue of t e act of t e owners of t e apartment w o directly deal wit t e tenants9 under Article 1904 01 of t e :ivil :ode. 00 !he %ourt&s 'uling 8e find for petitioner. As a rule, t e jurisdiction of t is :ourt in cases )roug t )efore it from t e :ourt of Appeals is limited to t e review and revision of errors of law allegedly committed )y t e appellate court. <owever, w en t ere is conflict )etween t e factual findings of t e :ourt of Appeals and t e trial court, 0/ t e :ourt may review suc findings and conclusions, as we now do. 8e old t at an implied trust was created )y t e agreement )etween petitioner "and t e ot er tenants# and private respondent. $mplied trusts are t ose w ic , wit out )eing e.pressed, are deduci)le from t e nature of t e transaction )y operation of law as matters of e3uity, independently of t e particular intention of t e parties. 04 :onstructive trusts are created in order to satisfy t e demands of justice and prevent unjust enric ment. T ey arise against one w o, )y fraud, duress or a)use of confidence, o)tains or olds t e legal rig t to property w ic e oug t not, in e3uity and good conscience, to old.0' $t is not necessary t at t e intention of t e tenants to purc ase t eir apartments units )e categorically stated in t e purposes of t eir Association. A constructive trust as invo7ed )y petitioner can )e implied from t e nature of t e transaction as a matter of e3uity, regardless of t e a)sence of suc intention in t e purposes of t eir Association. Iuring is negotiations wit Serapia ;ealty, $nc., private respondent admitted t at e was not only representing imself )ut also t e ot er tenants as president of t e Association. T is admission recogni+ed t e confidence reposed in im )y is co-tenants. <e testified! 0,
O Apart from t e ;egulatory :ommission, and from t e ?irst >ady $melda 4arcos, you did not ma7e any communication to any person or )ody in your capacity as %resident of t e Association anymoreH A 8e also tried to negotiate wit 4r. 2c oa. O 8 at was your purpose of attempting to communicate wit 4r. 2c oaH A So t at t ose w o cannot afford to pay in cas can )e allowed to pay in installment. O Nou used t e word 9we9, to w om are you referring toH A 4y co-tenants in t e apartment. O And w en you made representations wit t e owner of t e apartment, you were doing t is in your capacity as %residentH A *ot as individual mem)er and as %resident. O $n your capacity as )ot individual mem)er and %residentH A Nes, sir.

Alfonso *arretto, president of Serapia ;eal Bstate :orporation, testified t at t e owners wanted to deal wit one 9spo7esman.9 0- <ence, t e tenants aut ori+ed private respondent to negotiate on t eir )e alf. 6nfortunately, private respondent negotiated for imself only, and successfully purc ased eig t "8# apartment units and secured an aut ority to sell t e remaining twenty-two "00# units. %rivate respondent alleges t at, after )eing informed )y t e owner, petitioner, toget er wit t e latter5s co-plaintiffs in t e action for redemption, did not want to contri)ute funds to redeem t e encum)ered apartment. "Suc redemption was re3uired )efore t e units could )e sold.# T e trial court de)un7ed t is allegation t us! 08 . . . . $t ta.es t e mind no end to accept defendant5s claim t at w en t e units w ic t e tenants ave for years )een dreaming of owning one day were ready to )e sold to t em, all of t em would suddenly )ecome 9reluctant,9 to 3uote is word, to )uy t em. :onsidering t e virtually "sic# give-away considerations "%40,0&&.&&, %/',,&&.&&, %/','0&.&& and %/',0&&.&&# for t e su)ject units all of w ic were uniformly two-storey apartments wit 90 )edrooms, living and dining rooms and 7itc en9 "citing TSE, (anuary 10, 199&, p. -# situated in a strategic and prime area, it is un)elieva)le and inconsistent wit t e ordinary imperatives of uman e.perience for t e plaintiffs to suddenly s ow reluctance towards t e opportunity t ey ave )een e.pecting and preparing for all along. $f only t e tenants ad )een informed )y private respondent of t is predicament of t e owners, surely t ey would ave raised t e re3uired amount to redeem t e property and, in turn, ac3uired t e units )eing rented )y t em. T e incriminating admission of private respondent t at e ad not informed t e plaintiffs in t e redemption case of t e prices at w ic t e apartment units were sold demonstrated )eyond cavil is )etrayal of t eir trust! 09
O Iid you inform vergally "sic# t ese 4 plaintiffs t at t eir apartments were )eing )oug t at %4-,0&&.&&, %/',,&&, %/','0& and %/',0&&H A $ did not. O As %resident of t e association w o got t e trust and confidence of t e mem)ers including t e 4 plaintiffs, did you not consider it in 7eeping wit trust and confidence to officially inform t em t at t ese apartments is "sic# )eing sold at t at "sic# prices and if you could )uy t is "sic#, you pay t is "sic# amount. Nou did not inform t em, is it notH ATTN. *A>>B>2S "counsel for private respondent#! Already answered. <e did not inform t em )ut as far as t e amount is concerned as a matter of discretion.

T e a)ility of t e tenants to pay t e purc ase price for t eir units was clearly found )y trial court to )e sufficient= and t is finding was not contested )y private respondent, to wit! /& T e a)ility of t e plaintiffs to pay for t eir respective apartment units in 3uestion is demonstrated w en t ey promptly complied wit t e :ourt5s 2rder of 4arc 1', 199& 9to pay to t e *ranc :ler7 of t is :ourt all t e rentals due on t eir respective units from t e time t ey stopped paying up to t is mont of 4arc , w ic amounts were ordered to )e deposited 9wit t e % ilippine Eational *an7, %asig *ranc , S aw *lvd., %asig, in self-renewing 10&-day time deposits,9 w ic now stands at %10,,4/4.84 "including 9t e mont ly rentals in t e same amount t at t ey were last paying to defendant Serapia ;eal Bstate, $nc.,9 from t e mont

BusOrg Summer (trust cases)

38

of April 199& to (uly 199&# per %E* :ertificates of Time Ieposit Eos. -1/,/--:, -1/,/8-:, -1/,/9-:, -1/,4&-: and ,-1/,41-:, all dated August /&, 199&, now in t e possession of t e *ranc :ler7 of t is :ourt. T e tenants could not )e faulted for not in3uiring into t e status of private respondent5s negotiation wit t e owners of t e apartments. T ey ad a rig t to e.pect private respondent to )e true to is duty as t eir representative and to ta7e t e initiative of informing t em of t e progress of is negotiations. T e sale of t e apartments in favor of private respondent was on August ,, 198,. Net, it was only on 4arc 0-, 198-, t at e informed t e tenants of suc sale. $f e was in good fait , w y t e delayH 2)viously, e id t e perfection of t e sale from t em. 8 y did e not inform t e tenants t at e was t e owner as soon as t e sale was consummated if, according to im, is co-tenants were unwilling to s are t e e.penses of redemptionH <is co-tenants could not ave )lamed im for ac3uiring t e entire property= after all, t ey supposedly did not ave t e money to contri)ute. Truly, t e actuations of private respondent s ow not ing )ut greed on is part= e purc ased t e units for imself at )argain prices so e could resell t em at a profit at t e e.pense of t e tenants. T is violation of t e trust reposed in im warrants t e sanction provided )y t e e3uita)le rule on w ic constructive trust is founded. 6nfortunately, owever, not all t e plaintiffs in t e original redemption case will )e a)le to avail of t is award )ecause a party w o as not appealed from t e decision may not o)tain any affirmative relief from t e appellate court ot er t an w at e ad o)tained from t e lower court, if any, w ose decision is )roug t up on appeal. /1 T e conclusion we t us reac in t is case, finding constructive trust under Article 144- /0 of t e Eew :ivil :ode, rests on t e general principles on trust w ic , )y Article 1440, ave )een adopted or incorporated into our civil law, to t e e.tent t at suc principles are not inconsistent wit t e :ivil :ode, ot er statutes and t e ;ules of :ourt. T is :ourt as ruled in t e case of -u"aoang +s. Judge, '!%, 3r. BBB(, 5ui"#a, 1ue+a $cija // t at! A constructive trust, ot erwise 7nown as a trust e. maleficio, a trust e. delicto, a trust de son tort, an involuntary trust, or an implied trust, is a trust )y operation of law w ic arises contrary to intention and in invitum, against one w o, )y fraud, actual or constructive, )y duress or a)use of confidence, )y commission of wrong, or )y any form of unconsciona)le conduct, artifice, concealment, or 3uestiona)le means, or w o in any way against e3uity and good conscience, eit er as o)tained or olds t e legal rig t to property w ic e oug t not, in e3uity and good conscience, old and enjoy. $t is raised )y e3uity to satisfy t e demands of justice. <owever, a constructive trust does not arise on every moral wrong in ac3uiring or olding property or on every a)use of confidence in )usiness or ot er affairs= ordinarily suc a trust arises and will )e declared only on wrongful ac3uisitions or retentions of property of w ic e3uity, in accordance wit its fundamental principles and t e traditional e.ercise of its jurisdiction or in accordance wit statutory provision, ta7es cogni+ance. $t as )een )roadly ruled t at a )reac of confidence, alt oug in )usiness or social relations, rendering an ac3uisition or retention of property )y one person unconsciona)le against anot er, raises a
BusOrg Summer (trust cases)

constructive trust. And specifically applica)le to t e case at )ar is t e doctrine t at 9A constructive trust is su)stantially an appropriate remedy against unjust enric ment. $t is raised )y e3uity in respect of property, w ic as )een ac3uired )y fraud, or w ere alt oug ac3uired originally wit out fraud, it is against e3uity t at it s ould )e retained )y t e person olding it.9 T e a)ove principle is not in conflict wit t e Eew :ivil :ode, :odes of :ommerce, ;ules of :ourt and special laws. And since 8e are a court of law and of e3uity, t e case at )ar must )e resolved on t e general principles of law on constructive trust w ic )asically rest on e3uita)le considerations in order to satisfy t e demands of justice, morality, conscience and fair dealing and t us protect t e innocent against fraud. As t e respondent court said, 9$t )e ooves upon t e courts to s ield fiduciary relations against every manner of c icanery or detesta)le design cloa7ed )y legal tec nicalities.9 Alt oug t e citations in t e said case originated from American jurisprudence, t ey may well )e applied in our jurisdiction. 9"S#ince t e law of trust as )een more fre3uently applied in Bngland and in t e 6nited States t an it as )een in Spain, we may draw freely upon American precedents in determining t e effects of trusts, especially so )ecause t e trusts 7nown to American and Bnglis e3uity jurisprudence are derived from t e fidei co""issa of t e ;oman >aw and are )ased entirely upon civil law principles.9 /4 <aving concluded t at private respondent willfully violated t e trust reposed in im )y is co-tenants, we consider it a serious matter of 9justice, morality, conscience and fair dealing9 t at e s ould not )e allowed to profit from is )reac of trust. 9Bvery person w o t roug an act of performance )y anot er, or any ot er means, ac3uires or comes into possession of somet ing at t e e.pense of t e latter wit out just or legal ground, s all return t e same to im.9 /' T us, petitioner is granted t e opportunity to purc ase t e property w ic s ould ave )een is long ago ad private respondent )een fait ful to is trust. 8e only regret t at we cannot grant t e same opportunity to t e ot er )eneficiaries or cestuis 2ue trustfor t eir failure to perfect t eir petitions for review of t e respondent :ourt5s Iecision. 8<B;B?2;B, t e petition is ere)y @;AETBI. T e assailed Iecision and ;esolution are ere)y ;BGB;SBI and SBT AS$IB. :onsistent wit t e trial court5s decision, %rivate ;espondent ;osito %uec i S. 6y is 2;IB;BI to BVB:6TB a deed of conveyance covering Ioor 8, >ot 14, in favor of %etitioner 4eynardo %olicarpio upon t e latter5s payment of %/',0&&.&& wit out any interest. Eo costs.

39

G.R. No. 0,111. Mar8; .1, 199.. EMILI OCL )O a!" HU)O LUN , 4e+9+9o!er$, 2$. 6 LENTIN )O )HO )HIT, O L ' 7I a!" )OURT OF PPE LS, re$4o!"e!+$.

SN>>A*6S 1. ;B4BI$A> >A8= :$G$> %;2:BI6;B= A:T$2ES= :2EI$T$2E %;B:BIBET T2 ?$>$E@ 2? S6$T *BT8BBE 4B4*B;S 2? T<B SA4B ?A4$>N= B??B:T 2? ?A$>6;B T2 :24%>N 8$T< :2EI$T$2E. 1 Admittedly, t e present action is )etween mem)ers of t e same family since petitioner Bmilia 25>aco and respondent 2 >ay Aia are alf-sisters. :onse3uently, t ere s ould )e an averment in t e compliant t at earnest efforts toward a compromise ave )een made, pursuant to Art. 000 of t e Eew :ivil :ode, or a motion to dismiss could ave )een filed under Sec. 1, par. "j#, ;ule 1, of t e ;ules of :ourt. ?or, it is well-settled t at t e attempt to compromise as well as t e ina)ility to succeed is a condition precedent to t e filing of a suit )etween mem)ers of t e same family. <ence, t e defect in t e complaint is assaila)le at any stage of t e proceedings, even on appeal, for lac7 of cause of action. 0. $I.= $I.= A4BEI4BET T2 :24%>A$ET= 8<BE %;2%B;= A4BEI4BET T2 :2E?2;4 T2 BG$IBE:B. 1 %laintiff may )e allowed to amend is complaint to correct t e defect if t e amendment does not actually confer jurisdiction on t e court in w ic t e action is filed, i.e., if t e cause of action was originally wit in t at court5s jurisdiction. $n suc case, t e amendment is only to cure t e perceived defect in t e complaint, t us may )e allowed. $n t e case )efore 6s, w ile respondent-spouses did not formally amend t eir complaint, t ey were nonet eless allowed to introduce evidence purporting to s ow t at earnest efforts toward a compromise ad )een made, t at is, respondent 2 >ay Aia importuned Bmilia 25>aco and pressed er for t e transfer of t e title of t e 2ro3uieta property in t e name of spouses 2 >ay Aia and Galentin :o : o : it, just )efore Bmilia5s marriage to <ugo >una. *ut, instead of transferring t e title as re3uested, Bmilia sold t e property to t e ;oman :at olic Arc )is op of 4anila. T is testimony was not o)jected to )y petitioner-spouses. <ence, t e complaint was deemed accordingly amended to conform to t e evidence, pursuant to Sec. ', ;ule 1& of t e ;ules of :ourt w ic reads 1 9Sec. '. Amendment to conform to or aut ori+e presentation of evidence. 1 8 en issues not raised )y t e pleadings are tried )y e.press or implied consent of t e parties, t ey s all )e treated in all respects, as if t ey ad )een raised in t e pleadings . . .9 $ndeed, if t e defendant permits evidence to )e introduced wit out o)jection and w ic supplies t e necessary allegations of a defective complaint, t en t e evidence is deemed to ave t e effect of curing t e defects of t e complaint. T e insufficiency of t e allegations in t e complaint is deemed ipso facto rectified. /. :$G$> >A8= 2*>$@AT$2ES AEI :2ET;A:TS= T;6STS= BV%;BSS T;6ST= IB?$EBI= $4%>$BI T;6ST= IB?$EBI. 1 *y definition, trust relations )etween parties may eit er )e e.press or implied. B.press trusts are t ose w ic are created )y t e direct and positive acts of t e parties, )y some writing or deed, or will, or )y words evincing an intention to create a trust. $mplied trusts are t ose w ic , wit out )eing e.press, are deduci)le from t e nature of t e transaction as matters of intent, or w ic are superinduced on t e transaction )y operation of law as matters of e3uity, independently of t e particular intention of t e parties.
BusOrg Summer (trust cases)

4. $I.= $I.= $I.= $4%>$BI T;6STS= ;BS6>T$E@ T;6ST= *AS$S T<B;B2?= :2EST;6:T$GB T;6ST= *AS$S T<B;B2?. 1 $mplied trust may eit er )e resulting or constructive trusts, )ot coming into )eing )y operation of law. ;esulting trusts are )ased on t e e3uita)le doctrine t at valua)le consideration and not legal title determines t e e3uita)le title or interest and are presumed always to ave )een contemplated )y t e parties. T ey arise from t e nature or circumstances of t e consideration involved in a transaction w ere)y one person t ere)y )ecomes invested wit legal title )ut is o)ligated in e3uity to old is legal title for t e )enefit of anot er. 2n t e ot er and, constructive trusts are created )y t e construction of e3uity in order to satisfy t e demands of justice and prevent unjust enric ment. T ey arise contrary to intention against one w o, )y fraud, duress or a)use of confidence, o)tains or olds t e legal rig t to property w ic e oug t not, in e3uity and good conscience, to old. '. $I.= $I.= $I.= BV%;BSS T;6STS :2E:B;E$E@ $442GA*>BS E2T %;2GBI *N %A;2> BG$IBE:B= $4%>$BI T;6ST $E ;BA> %;2%B;TN BSTA*>$S<BI *N %A;2> BG$IBE:B= %;22? ;BO6$;BI= :ASB AT *A;. 1 6nli7e e.press trusts concerning immova)les or any interest t erein w ic cannot )e proved )y parol evidence, implied trusts may )e esta)lis ed )y oral evidence. <owever, in order to esta)lis an implied trust in real property )y parol evidence, t e proof s ould )e as fully convincing as if t e acts giving rise to t e trust o)ligation were proven )y an aut entic document. $t cannot )e esta)lis ed upon vague and inconclusive proof. After a t oroug review of t e evidence on record, 8e old t at a resulting trust was indeed intended )y t e parties under Art. 1448 of t e Eew :ivil :ode w ic states 1 9Art. 1448. T ere is an implied trust w en property is sold, and t e legal estate is granted to one party )ut t e price is paid )y anot er for t e purpose of aving t e )eneficial interest of t e property. T e former is t e trustee, w ile t e latter is t e )eneficiary . . .9 As stipulated )y t e parties, t e document of sale, t e owner5s duplicate copy of t e certificate of title, insurance policies, receipt of initial premium of insurance coverage and real estate ta. receipts were all in t e possession of respondentspouses w ic t ey offered in evidence. As emp atically asserted )y respondent 2 >ay Aia, t e reason w y t ese documents of owners ip remained wit er is t at t e land in 3uestion )elonged to er. $ndeed, t ere can )e no persuasive rationali+ation for t e possession of t ese documents of owners ip )y respondent-spouses for seventeen "1-# years after t e 2ro3uieta property was purc ased in 194/ t an t at of precluding its possi)le sale, alienation or conveyance )y Bmilia 25>aco, a)sent any mac ination or fraud. T is continued possession of t e documents, toget er wit ot er corro)orating evidence spread on record, strongly suggests t at Bmilia 25>aco merely eld t e 2ro3uieta property in trust for respondent-spouses. ,. $I.= $I.= $I.= :2EST;6:T$GB T;6ST S6*(B:T T2 %;BS:;$%T$2E= ;BS6>T$E@ T;6ST $4%;BS:;$%T$*>B= ;BS6>T$E@ T;6ST :2EGB;TBI T2 :2EST;6:T$GB T;6ST *N ;B%6I$AT$2E= ;BO6$S$TBS= %;BS:;$%T$GB %B;$2I ?2; A:T$2E ?2; ;B:2EGBNAE:B *ASBI 2E :2EST;6:T$GB T;6ST. 1 As differentiated from constructive trusts, w ere t e settled rule is t at prescription may supervene, in resulting trust, t e rule of imprescripti)ility may apply for as long as t e trustee as not repudiated t e trust. 2nce t e resulting trust is repudiated, owever, it is converted into a constructive trust and is su)ject to prescription. A resulting trust is repudiated if t e following re3uisites concur! "a# t e trustee as performed une3uivocal acts of repudiation amounting

40

to an ouster of t e cestui 3ui trust= ")# suc positive acts of repudiation ave )een made 7nown to t e cestui 3ui trust= and, "c# t e evidence t ereon is clear and convincing. $n Tale v. :ourt of Appeals t e :ourt categorically ruled t at an action for reconveyance )ased on an implied or constructive trust must perforce prescri)e in ten "1&# years, and not ot erwise, t ere)y modifying previous decisions olding t at t e prescriptive period was four "4# years. So long as t e trustee recogni+es t e trust, t e )eneficiary may rely upon t e recognition, and ordinarily will not )e in fault for omitting to )ring an action to enforce is rig ts. T ere is no running of t e prescriptive period if t e trustee e.pressly recogni+es t e resulting trust. Since t e complaint for )reac of trust was filed )y respondentspouses two "0# mont s after ac3uiring 7nowledge of t e sale, t e action t erefore as not yet prescri)ed. IB:$S$2E *B>>2S$>>2, ( p! <istory is replete wit cases of erstw ile close family relations put asunder )y property disputes. T is is one of t em. $t involves alfsisters eac claiming owners ip over a parcel of land. 8 ile petitioner Bmilia 25>aco asserts t at s e merely left t e certificate of title covering t e property wit private respondent 2 >ay Aia for safe7eeping, t e latter w o is t e former5s older sister insists t at t e title was in er possession )ecause s e and er us)and )oug t t e property from t eir conjugal funds. To )e resolved t erefore is t e issue of w et er a resulting trust was intended )y t em in t e ac3uisition of t e property. T e trial court declared t at t ere was no trust relation of any sort )etween t e sisters. 1 T e :ourt of Appeals ruled ot erwise. 0 <ence, t e instant petition for review on certiorari of t e decision of t e appellate court toget er wit its resolution denying reconsideration. / $t appears t at on /1 4ay 194/, t e % ilippine Sugar Bstate Ievelopment :ompany, >td., sold a parcel of land, >ot Eo. ', *loc7 Eo. 1&, %lan %su-1&&/8, situated at 2ro3uieta St., Sta. :ru+, 4anila, wit t e Ieed of A)solute Sale naming Bmilia 25>aco as vendee= t ereafter, Transfer :ertificate of Title Eo. ,,4', was issued in er name. 2n 1- 4ay 19,&, private respondent-spouses Galentin :o : o : it and 2 >ay 8a learned from t e newspapers t at Bmilia 25>aco sold t e same property to t e ;oman :at olic Arc )is op of 4anila for %0/&,&&&.&&, wit assumption of t e real estate mortgage constituted t ereon. 4 2n 00 (une 19,&, respondent-spouses Galentin :o : o : it and 2 >ay Aia sued petitioner-spouses Bmilia 25>aco and <ugo >una to recover t e purc ase price of t e land )efore t e t en :ourt of ?irst $nstance of ;i+al, respondent-spouses asserting t at petitioner Bmilia 25>aco 7new t at t ey were t e real vendees of t e 2ro3uieta property sold in 194/ )y % ilippine Sugar Bstate Ievelopment :ompany, >td., and t at t e legal title t ereto was merely placed in er name. T ey contend t at Bmilia 25>aco )reac ed t e trust w en s e sold t e land to t e ;oman :at olic Arc )is op of 4anila. 4eanw ile, t ey as7ed t e trial court to garnis all t e amounts still due and paya)le to petitioner-spouses arising from t e sale, w ic was granted on /& (une 19,&. ' %etitioner-spouses deny t e e.istence of any form of trust relation.
BusOrg Summer (trust cases)

T ey aver t at Bmilia 25>aco actually )oug t t e property wit er own money= t at s e left t e Ieed of A)solute Sale and t e corresponding title wit respondent-spouses merely for safe7eeping= t at w en s e as7ed for t e return of t e documents evidencing er owners ip, respondent-spouses told er t at t ese were misplaced or lost= and, t at in view of t e loss, s e filed a petition for issuance of a new title, and on 18 August 1944 t e t en :ourt of ?irst $nstance of 4anila granted er petition. 2n 0& Septem)er 19-,, finding no trust relation )etween t e parties, t e trial court dismissed t e complaint toget er wit t e counterclaim. %etitioners and respondents appealed. 2n 9 April 1981, t e :ourt of Appeals set aside t e decision of t e trial court t us 1 9. . . 8e set aside t e decision of t e lower court dated Septem)er 0&, 19-, and t e order of (anuary ', 19-- and anot er one is ere)y entered ordering t e defendants-appellees to pay plaintiffs-appellants jointly and severally t e sum of %0/&,&&&.&& representing t e value of t e property su)ject of t e sale wit assumption of mortgage to t e ;oman :at olic Arc )is op of 4anila wit legal interest from t e filing of t e complaint until fully paid, t e sum of %1&,&&&.&& as attorney5s fees, plus costs.9 2n - August 1981, t e :ourt of Appeals denied reconsideration of its decision, prompting petitioners to come to t is :ourt for relief. %etitioners contend t at t e present action s ould ave )een dismissed. T ey argue t at t e complaint fails to allege t at earnest efforts toward a compromise were e.erted considering t at t e suit is )etween mem)ers of t e same family, and no trust relation e.ists )etween t em. Bven assuming e. argumenti t at t ere is suc a relation, petitioners furt er argue, respondents are already )arred )y lac es. 8e are not persuaded. Admittedly, t e present action is )etween mem)ers of t e same family since petitioner Bmilia 25>aco and respondent 2 >ay Aia are alf-sisters. :onse3uently, t ere s ould )e an averment in t e complaint t at earnest efforts toward a compromise ave )een made, pursuant to Art. 000 of t e Eew :ivil :ode, , or a motion to dismiss could ave )een filed under Sec. 1, par. "j#, ;ule 1,, of t e ;ules of :ourt. - ?or, it is well-settled t at t e attempt to compromise as well as t e ina)ility to succeed is a condition precedent to t e filing of a suit )etween mem)ers of t e same family. 8 <ence, t e defect in t e complaint is assaila)le at any stage of t e proceedings, even on appeal, for lac7 of cause of action. 9 *ut, plaintiff may )e allowed to amend is complaint to correct t e defect if t e amendment does not actually confer jurisdiction on t e court in w ic t e action is filed, i.e., if t e cause of action was originally wit in t at court5s jurisdiction. 1& $n suc case, t e amendment is only to cure t e perceived defect in t e complaint, t us may )e allowed. $n t e case )efore 6s, w ile respondent-spouses did not formally amend t eir complaint, t ey were nonet eless allowed to introduce evidence purporting to s ow t at earnest efforts toward a compromise ad )een made, t at is, respondent 2 >ay Aia

41

importuned Bmilia 25>aco and pressed er for t e transfer of t e title of t e 2ro3uieta property in t e name of spouses 2 >ay Aia and Galentin :o : o : it, just )efore Bmilia5s marriage to <ugo >una. 11 *ut, instead of transferring t e title as re3uested, Bmilia sold t e property to t e ;oman :at olic Arc )is op of 4anila. T is testimony was not o)jected to )y petitioner-spouses. <ence, t e complaint was deemed accordingly amended to conform to t e evidence, 10 pursuant to Sec. ', ;ule 1& of t e ;ules of :ourt w ic reads 1 9SB:T$2E '. Amendment to conform to or aut ori+e presentation of evidence. 1 8 en issues not raised )y t e pleadings are tried )y e.press or implied consent of t e parties, t ey s all )e treated in all respects, as, if t ey ad )een raised in t e pleadings . . .9 "emp asis supplied#. $ndeed, if t e defendant permits evidence to )e introduced wit out o)jection and w ic supplies t e necessary allegations of a defective complaint, t en t e evidence is deemed to ave t e effect of curing t e defects of t e complaint. 1/ T e insufficiency of t e allegations in t e complaint is deemed ipso facto rectified. 14 *ut t e more crucial issue )efore 6s is w et er t ere is a trust relation )etween t e parties in contemplation of law. 8e find t at t ere is. *y definition, trust relations )etween parties may eit er )e e.press or implied. 1' B.press trusts are t ose w ic are created )y t e direct and positive acts of t e parties, )y some writing or deed, or will, or )y words evincing an intention to create a trust. 1, $mplied trusts are t ose w ic , wit out )eing e.press, are deduci)le from t e nature of t e transaction as matters of intent, or w ic are superinduced on t e transaction )y operation of law as matters of e3uity, independently of t e particular intention of t e parties.1- $mplied trusts may eit er )e resulting or constructive trusts, )ot coming into )eing )y operation of law. 18 ;esulting trusts are )ased on t e e3uita)le doctrine t at valua)le consideration and not legal title determines t e e3uita)le title or interest 19 and are presumed always to ave )een contemplated )y t e parties. T ey arise from t e nature or circumstances of t e consideration involved in a transaction w ere)y one person t ere)y )ecomes invested wit legal title )ut is o)ligated in e3uity to old is legal title for t e )enefit of anot er. 0& 2n t e ot er and, constructive trusts are created )y t e construction of e3uity in order to satisfy t e demands of justice 01 and prevent unjust enric ment. T ey arise contrary to intention against one w o, )y fraud, duress or a)use of confidence, o)tains or olds t e legal rig t to property w ic e oug t not, in e3uity and good conscience, to old. 00 Specific e.amples of resulting trusts may )e found in t e :ivil :ode, particularly Arts. 1448, 1449, 14'1,14'0 and 14'/, 0/ w ile constructive trusts are illustrated in Arts. 14'&, 14'4, 14'' and 14',. 04 6nli7e e.press trusts concerning immova)les or any interest t erein w ic cannot )e proved )y parol evidence, 0' implied trusts may )e esta)lis ed )y oral evidence. 0, <owever, in order to esta)lis an implied trust in real property )y parol evidence, t e proof s ould )e as fully convincing as if t e acts giving rise to t e trust o)ligation were proven )y an aut entic document. 0- $t cannot )e esta)lis ed upon vague and inconclusive proof. 08
BusOrg Summer (trust cases)

After a t oroug review of t e evidence on record, 8e old t at a resulting trust was indeed intended )y t e parties under Art. 1448 of t e Eew :ivil :ode w ic states 1 9A;T$:>B 1448. T ere is an implied trust w en property is sold, and t e legal estate is granted to one party )ut t e price is paid )y anot er for t e purpose of aving t e )eneficial interest of t e property. T e former is t e trustee, w ile t e latter is t e )eneficiary . . .9 "emp asis supplied#. ?irst. As stipulated )y t e parties, t e document of sale, t e owner5s duplicate copy of t e certificate of title, insurance policies, receipt of initial premium of insurance coverage and real estate ta. receipts ware all in t e possession of respondent spouses w ic t ey offered in evidence. As emp atically asserted )y respondent 2 >ay Aia, t e reason w y t ese documents of owners ip remained wit er is t at t e land in 3uestion )elonged to er. 09 $ndeed, t ere can )e no persuasive rationali+ation for t e possession of t ese documents of owners ip )y respondent-spouses for seventeen "1-# years after t e 2ro3uieta property was purc ased in 194/ t an t at of precluding its possi)le sale, alienation or conveyance )y Bmilia 25>aco, a)sent any mac ination or fraud. T is continued possession of t e documents, toget er wit ot er corro)orating evidence spread on record, strongly suggests t at Bmilia 25>aco merely eld t e 2ro3uieta property in trust for respondent-spouses. Second. $t may )e wort to mention t at )efore )uying t e 2ro3uieta property, respondent-spouses purc ased anot er property situated in Ausang->oo), Sta. :ru+, 4anila, w ere t e certificate of title was placed in t e name of Am)rosio 25>aco, older )rot er of Bmilia, under similar or identical circumstances. T e testimony of former counsel for respondent-spouses, t en Associate (ustice Antonio @. >ucero of t e :ourt of Appeals, is enlig tening 1

.O $n t

e same conversation e told you ow e would )uy t e property "referring to t e 2ro3uieta property#, e and is wifeH 9A Nes, Sir, e did. 9O 8 at did e sayH ... ... ...

9A <e said e and is wife as "sic# already ac3uired )y purc ase a certain property located at Ausang->oo), Sta. :ru+, 4anila. <e told me e would li7e to place t e 2ro3uieta 4aternity <ospital in case t e negotiation materiali+e"s# in t e name of a sister of is wife "25>aco#9 "emp asis supplied#. /& 2n t e part of respondent-spouses, t ey e.plained t at t e reason w y t ey did not place t ese 2ro3uieta and Ausang->oo) properties in t eir name was t at )eing : inese nationals at t e time of t e purc ase t ey did not want to e.ecute t e re3uired affidavit to t e effect t at t ey were allies of t e (apanese. /1 Since 2 >ay Aia too7 care of Bmilia w o was still young w en er mot er died, /0 respondent-spouses did not esitate to place t e title of t e 2ro3uieta property in Bmilia5s name. Ouite significantly, respondent-spouses also instituted an action for reconveyance against Am)rosio 25>aco w en t e latter claimed t e Ausang->oo) property as is own. A similar stipulation of facts was li7ewise entered, i.e., respondent-spouses ad in t eir possession

42

documents s owing owners ip of t e Ausang->oo) property w ic t ey offered in evidence. $n t at case, t e decision of t e trial court, now final and e.ecutory, declared respondent-spouses as owners of t e Ausang->oo) property and ordered Am)rosio 25>aco to reconvey it to t em. // $ncidentally, Am)rosio 25>aco t us c arged respondent spouses Galentin :o : o :it and 2 >ay Aia )efore t e Anti-Iummy *oard, doc7eted as :ase Eo. 0404, for t eir ac3uisition of t e Ausang->oo) and 2ro3uieta properties. /4 <e claimed t at respondent-spouses utili+ed is name in )uying t e Ausang->oo) property w ile t at of petitioner 25>aco was used in t e purc ase of t e 2ro3uieta property. $n effect, t ere was an implied admission )y Am)rosio t at is sister Bmilia, li7e im, was merely used as a dummy. <owever, t e Anti-Iummy *oard e.onerated respondent-spouses since t e purc ases were made in 194/, or during 8orld 8ar $$, w en t e AntiIummy >aw was not enforcea)le. T ird. T e circumstances )y w ic Bmilia 25>aco o)tained a new title )y reason of t e alleged loss of t e old title t en in t e possession of respondent-spouses cast serious dou)t on t e veracity of er owners ip. T e petitions respectively filed )y Bmilia 25>aco and Am)rosio 25>aco for t e 2ro3uieta and t e Ausang->oo) properties were )ot granted on t e same day, 18 August 1944, )y t e t en :ourt of ?irst $nstance of 4anila. T ese orders were recorded in t e %rimary Bntry *oo7 of t e ;egister of Ieeds of 4anila at t e same time, 0!/' o5cloc7 in t e afternoon of 1 Septem)er 1944, in consecutive entries, Bntries Eos. 04,11--18. /' T is coincidence lends credence to t e position of respondent-spouses t at t ere was in fact a conspiracy )etween t e si)lings Am)rosio and Bmilia to defraud and deprive respondents of t eir title to t e 2ro3uieta and Ausang->oo) properties. ?ourt . 6ntil t e sale of t e 2ro3uieta property to t e ;oman :at olic Arc )is op of 4anila, petitioner Bmilia 25>aco actually recogni+ed t e trust. Specifically, w en respondent spouses learned t at Bmilia was getting married to <ugo, 2 >ay Aia as7ed er to ave t e title to t e property already transferred to er and er us)and Galentin, and Bmilia assured er t at 9would )e arranged "maaayos na#9 after er wedding. /, <er answer was an e.press recognition of t e trust, ot erwise, s e would ave refused t e re3uest outrig t. %etitioners never o)jected to t is evidence= nor did t ey attempt to controvert it. ?ift . T e trial court itself determined t at 9Galentin :o : o : it and 2 >ay Aia ad some money wit w ic t ey could )uy t e property.9 /- $n fact, Galentin was t e : ief 4ec anic of t e %ani3ui Sugar 4ills, was engaged in t e )uy and sell )usiness, operated a gasoline station, and owned an auto supply store as well as a ten-door apartment in :aloocan :ity. /8 $n contrast, Bmilia 25>aco failed to convince t e :ourt t at s e was financially capa)le of purc asing t e 2ro3uieta property. $n fact, s e opened a )an7 account only in 194, and li7ewise )egan filing income ta. returns t at same year, /9 w ile t e property in 3uestion was )oug t in 194/. ;espondent-spouses even elped Bmilia and er )rot ers in t eir e.penses and liveli ood. Bmilia could only give a vague account on ow s e raised t e money for t e purc ase of t e property. <er narration of t e transaction of sale a)ounds wit 9$ don5t 7now9 and 9$ don5t remem)er.9 4& <aving esta)lis ed a resulting trust )etween t e parties, t e ne.t 3uestion is w et er prescription as set in.
BusOrg Summer (trust cases)

As differentiated from constructive trusts, w ere t e settled rule is t at prescription may supervene, in resulting trust, t e rule of imprescripti)ility may apply for as long as t e trustee as not repudiated t e trust. 41 2nce t e resulting trust is repudiated, owever, it is converted into a constructive trust and is su)ject to prescription. A resulting trust is repudiated if t e following re3uisites concur! "a# t e trustee as performed une3uivocal acts of repudiation amounting to an ouster of t e cestui 3ui trust= ")# suc positive acts of repudiation ave )een made 7nown to t e cestui 3ui trust= and, "c# t e evidence t ereon is clear and convincing. 40 $n Tale v. :ourt of Appeals 4/ t e :ourt categorically ruled t at an action for reconveyance )ased on an implied or constructive trust must perforce prescri)e in ten "1&# years, and not ot erwise, t ere)y modifying previous decisions olding t at t e prescriptive period was four "4# years. Eeit er t e registration of t e 2ro3uieta property in t e name of petitioner Bmilia 25>aco nor t e issuance of a new Torrens title in 1944 in er name in lieu of t e alleged loss of t e original may )e made t e )asis for t e commencement of t e prescriptive period. ?or, t e issuance of t e Torrens title in t e name of Bmilia 25>aco could not )e considered adverse, muc less fraudulent. %recisely, alt oug t e property was )oug t )y respondent-spouses, t e legal title was placed in t e name of Bmilia 25>aco. T e transfer of t e Torrens title in er name was only in consonance wit t e deed of sale in er favor. :onse3uently, t ere was no cause for any alarm on t e part of respondent-spouses. As late as 19'9, or just )efore s e got married, Bmilia continued to recogni+e t e owners ip of respondent-spouses over t e 2ro3uieta property. T us, until t at point, respondent-spouses were not aware of any act of Bmilia w ic would convey to t em t e idea t at s e was repudiating t e resulting trust. T e second re3uisite is t erefore a)sent. <ence, prescription did not )egin to run until t e sale of t e 2ro3uieta property, w ic was clearly an act of repudiation. *ut immediately after Bmilia sold t e 2ro3uieta property w ic is o)viously a disavowal of t e resulting trust, respondent-spouses instituted t e present suit for )reac of trust. :orrespondingly, lac es cannot lie against t em. After all, so long as t e trustee recogni+es t e trust, t e )eneficiary may rely upon t e recognition, and ordinarily will not )e in fault for omitting to )ring an action to enforce is rig ts. 44 T ere is no running of t e prescriptive period if t e trustee e.pressly recogni+es t e resulting trust. 4' Since t e complaint for )reac of trust was filed )y respondent-spouses two "0# mont s after ac3uiring 7nowledge of t e sale, t e action t erefore as not yet prescri)ed.
IBE$BI. T e Iecision of t e :ourt of Appeals of 9 April 1981, w ic reversed t e trial court, is A??$;4BI. :osts against petitioners.

43

anot er certificate of title in er name.1-

G.R. No. 160488

1

September 3, 2004

FELOMIN BELL N , petitioner, vs. SPOUSES ROMEO PON)E a!" LU)IL PON)E a!" +;e REGISTER OF 3EE3S o: BUTU N )IT',respondents. T is is a petition for review on certiorari assailing t e (une 1,, 0&&/ decision0 of t e :ourt of Appeals in :A-@.;. :G Eo. ,901/, w ic reversed and set aside t e August 08, 0&&& decision / of t e ;egional Trial :ourt of *utuan :ity, *ranc 0, in :ivil :ase Eo. 40-&. T e facts as testified to )y petitioner ?elomina A)ellana are as follows! 2n (uly 1', 1981, ?elomina, a spinster, p armacist and aunt of private respondent >ucila %once, purc ased from t e late Bstela :aldo+a-%acres a 44,09-4 s3uare meter agricultural lot' wit t e intention of giving said lot to er niece, >ucila. T us, in t e deed of sale,, t e latter was designated as t e )uyer of >ot /, %cs-1&&&&198, covered )y 2riginal :ertificate of Title Eo. %-0-, <omestead %atent Eo. G-1''1 and located at >os Angeles, *utuan :ity. -T e total consideration of t e sale was %1,,'&&.&&, )ut only %4,'&&.&& was stated in t e deed upon t e re3uest of t e seller. 8 Su)se3uently, ?elomina applied for t e issuance of title in t e name of er niece. 2n April 08, 1990, Transfer :ertificate of Title "T:T# Eo. 08-49 over t e su)ject lot was issued in t e name of >ucila. 1& Said title, owever, remained in t e possession of ?elomina w o developed t e lot t roug (uanario Torreon11 and paid real property ta.es t ereon.10 T e relations ip )etween ?elomina and respondent spouses ;omeo and >ucila %once, owever, turned sour. T e latter allegedly )ecame disrespectful and ungrateful to t e point of urling er insults and even attempting to urt er p ysically. <ence, ?elomina filed t e instant case for revocation of implied trust to recover legal title over t e property.1/ %rivate respondent spouses >ucila, also a p armacist, and ;omeo, a marine engineer, on t e ot er and, claimed t at t e purc ase price of t e lot was only %4,'&&.&& and t at it was t em w o paid t e same. T e payment and signing of t e deed of sale allegedly too7 place in t e office of Atty. Teodoro Bm)oy in t e presence of t e seller and er si)lings namely, A3uilino :aldo+a and t e late >ilia :aldo+a.14 A year later, (uanario approac ed >ucila and volunteered to till t e lot, to w ic s e agreed.1' $n 198-, t e spouses consented to ?elominaSs proposal to develop and lease t e lot. T ey, owever, s ouldered t e real property ta.es on t e lot, w ic was paid t roug ?elomina. $n 199&, t e spouses demanded rental from ?elomina )ut s e refused to pay )ecause er agricultural endeavor was allegedly not profita)le.1, 8 en >ucila learned t at a certificate of title in er name ad already )een issued, s e confronted ?elomina w o claimed t at s e already gave er t e title. T in7ing t at s e mig t ave misplaced t e title, >ucila e.ecuted an affidavit of loss w ic led to t e issuance of
BusOrg Summer (trust cases)

2n August 08, 0&&&, t e trial court rendered a decision olding t at an implied trust e.isted )etween ?elomina and >ucila, suc t at t e latter is merely olding t e lot for t e )enefit of t e former. $t t us ordered t e conveyance of t e su)ject lot in favor of ?elomina. T e dispositive portion t ereof, reads! $E G$B8 2? T<B ?2;B@2$E@, judgment is ere)y rendered declaring, directing and ordering t at!
a# An implied trust was created wit plaintiff as trustor and private defendant >ucila A. %once married to private defendant Bngr. ;omeo I. %once as trustee pursuant to Article 1448 of t e Eew :ivil :ode= )# T e implied trust, aving )een created wit out t e consent of t e trustee and wit out any condition, is revo7ed= c# T e private defendants, w o are spouses, e.ecute t e necessary deed of conveyance in favor of t e plaintiff of t e land, covered )y and em)raced in T:T E2. T-08-4, in controversy and in t e event private defendants refuse to e.ecute t e deed of conveyance, t e pu)lic defendant :ity ;egister of Ieeds of *utuan to cancel T:T Eo. T-08-4 and issue a new one in lieu t ereof in t e name of t e plaintiff= d# T e private defendants spouses to pay jointly and severally plaintiff t e sum of % %0',&&&.&& as attorneySs fees and % %4,&&&.&& as e.penses of litigation= e# T e dismissal of t e counterclaim of private defendants spousesC=D and f# T e private defendants to pay t e costs. S2 2;IB;BI.18

%rivate respondent spouses appealed to t e :ourt of Appeals w ic set aside t e decision of t e trial court ruling t at ?elomina failed to prove t e e.istence of an implied trust and up eld respondent spousesS owners ip over t e litigated lot. T e appellate court furt er eld t at even assuming t at ?elomina paid t e purc ase price of t e lot, t e situation falls wit in t e e.ception stated in Article 1448 of t e :ivil :ode w ic raises a disputa)le presumption t at t e property was purc ased )y ?elomina as a gift to >ucila w om s e considered as er own daug ter. T e decretal portion t ereof, states P 8<B;B?2;B, premises considered, t e appealed decision of t e ;egional Trial :ourt, *ranc 0, *utuan :ity, in :ivil :ase Eo. 40-&, is ere)y ;BGB;SBI AEI SBT AS$IB. A new one is eretofore rendered dismissing t e complaint )elow of plaintiffappellee, ?CeDlomina A)ellana. S2 2;IB;BI.19 ?elomina filed a motion for reconsideration )ut t e same was denied.0& <ence, t e instant petition. T e issue )efore us is! 8 o, as )etween ?elomina and respondent spouses, is t e lawful owner of t e controverted lotH To resolve t is issue, it is necessary to determine w o paid t e purc ase price of t e lot. After a t oroug e.amination of t e records and transcript of stenograp ic notes, we find t at it was ?elomina and not >ucila w o truly purc ased t e 3uestioned lot from Bstela. T e positive and consistent testimony of ?elomina alone, t at s e was t e real vendee of t e lot, is credi)le to de)un7 t e contrary claim of respondent spouses. $ndeed, t e lone testimony of a witness, if credi)le, is sufficient as in t e present case.01 4oreover, A3uilino :aldo+a, )rot er of t e vendor and one of t e witnesses00 to t e deed of sale, categorically declared t at ?elomina was t e )uyer and t e one w o

44

paid t e purc ase price to er sister, Bstela.0/ T en too, (uanario, w o was allegedly ired )y >ucila to develop t e lot, ve emently denied t at e approac ed and convinced >ucila to let im till t e land. According to (uanario, e ad never spo7en to >ucila a)out t e lot and it was ?elomina w o recruited im to )e t e careta7er of t e litigated property.04 T e fact t at it was ?elomina w o )oug t t e lot was furt er )olstered )y er possession of t e following documents from t e time of t eir issuance up to t e present, to wit! "1# t e transfer certificate of title0' and ta. declaration in t e name of >ucila=0, "0# t e receipts of real property ta.es in t e name of ?elomina A)ellana for t e years 1980-1984, 1990-1994 and 199'=0- and "/# t e survey plan of t e lot.08 <aving determined t at it was ?elomina w o paid t e purc ase price of t e su)ject lot, t e ne.t 3uestion to resolve is t e nature of t e transaction )etween er and >ucila. $t appears t at ?elomina, )eing of advanced age 09 wit no family of er own, used to purc ase properties and afterwards give t em to er nieces. $n fact, aside from t e lot s e )oug t for >ucila "mar7ed as B. i)it 9;-09#, s e also purc ased 0 lots, one from A3uilino :aldo+a "mar7ed as B. i)it 9;-19# and t e ot er from Iomiciano :aldo+a "mar7ed as B. i)it 9;-/9#, w ic s e gave to Maida *ascones "sister of >ucila#, t us!
O $ am s owing to you again B. i)it ;, according to youC,D you )oug t B. i)its ;-1, ;-0 and ;-/, do you remem)er t atH A Nes sir. ... ... ... O A3uilinCoD :aldo+a conveyed t is land in B. i)it ;-1 to youH A Nes, sir. O $s t is now titled in your nameH A Eo. $ was planning to give t is land to my nieces. 2ne of w ic CwasD already given to 4rs. C>ucilaD %once. O $ am tal7ing only a)out t is lot in B. i)it ;-1C.D A Eot in my name. O $n w ose name was t is lot in B. i)it ;-1 nowH A $n t e name of Maida *ascones. O 8 o prepared t e deed of saleH A At t e start it was in t e name of ;udy CTorreonD./& *ecause ;udy CTorreonD 7new t at t ere is some trou)le already a)out t at lot e made a deed of sale to t e name of Maida *ascones, w ic $ planned to give t at land to er "sic#. O As regards B. i)it ;-1, you )oug t it actuallyH A Nes, sir. O *ut t e T original deed of sale was in t e name of ;udolfo CTorreonDH A Nes, sir. O And later on ;udolfo CTorreonD again transferred it to Maida *asconesH A Nes, sir./1

)ecause since 1981 up to 1990 4rs. >ucila %once as no jo). O 8 ere is t e land locatedH A $n >os Angeles, *utuan :ity. O 8 o was t e owner of t is landH A T e owner of t at land is 4rs. Bstela :aldo+a-%acrCeDs. T e us)and is %acrCeDs. ... ... ...

O 8 at did you do wit t is land )elonging to 4rs. Bstela:aldo+a- %acrCeDsH A $ paid t e lot, t en wor7ed t e lot, since at t e start of my )uying t e lot until now "sic#. O 'ou $a9" +;a+ you +o#" Lu89#a Po!8e +;a+ you @ou#" *92e +;e #a!" +o ;er #a+er o!, @;a+ "9" you "o 9! 8o!!e8+9o! @9+; +;9$ 9!+e!+9o! o: your$ +o *92e +;e #a!" +o ;erD A So I 4u+ +;e !a%e o: +;e +9+#e 9! ;er !a%e 9! *oo" :a9+; "sic#. O Nou mean to tell t e court t at w en you purc ased t is land located at >os Angeles, *utuan :ity, t e instrument of sale or t e deed of sale was in t e name of >ucila %onceH A Nes, sir./0 ... ... ...

O Iid you not as7 your adviser ;udolfo CTorreonD w et er it was wise for you to place t e property in t e name of >ucila %once w en you are t e one w o is t e ownerH A Be8au$e @e ;a2e rea##y +;e 9!+e!+9o! +o *92e 9+ +o ;er.// @enerally, contracts are o)ligatory in w atever form t ey may ave )een entered into, provided all t e essential re3uisites for t eir validity are present. 8 en, owever, t e law re3uires t at a contract )e in some form in order t at it may )e valid, t at re3uirement is a)solute and indispensa)le. $ts non-o)servance renders t e contract void and of no effect./4 T us, under Article -49 of t e :ivil :ode P Article -49. $n order t at t e donation of an immova)le property may )e valid, it must )e made in a pu)lic document, specifying t erein t e property donated and t e value of t e c arges w ic t e donee must satisfy. T e acceptance may )e made in t e same deed of donation or in a separate pu)lic document, )ut it s all not ta7e effect unless it is done

>i7ewise, in t e case of >ucila, t oug it was ?elomina w o paid for t e lot, s e ad >ucila designated in t e deed as t e vendee t ereof and ad t e title of t e lot issued in >ucilaSs name. $t is clear t erefore t at ?elomina donated t e land to >ucila. T is is evident from er declarations, +i4! 8itness A $n 1981 t ere was a riceland offered $o I +o#" ;er +;a+ I @9## buy +;a+ #a!" a!" I @9## *92e +o ;er later "sic#,
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during t e lifetime of t e donor. $f t e acceptance is made in a separate instrument, t e donor s all )e notified t ereof in an aut entic form, and t is step s all )e noted in )ot instruments. $n t e instant case, w at transpired )etween ?elomina and >ucila was a donation of an immova)le property w ic was not em)odied in a pu)lic instrument as re3uired )y t e foregoing article. *eing an oral donation, t e transaction was void./' 4oreover, even if ?elomina enjoyed t e fruits of t e land wit t e intention of giving effect to t e donation after er demise, t e conveyance is still a void donation "ortis causa, for non-compliance wit t e formalities of a will./, Eo valid title passed regardless of t e intention of ?elomina to donate t e property to >ucila, )ecause t e na7ed intent to convey wit out t e re3uired solemnities does not suffice for gratuitous alienations, even as )etween t e parties inter se./- At any rate, ?elomina now see7s to recover title over t e property )ecause of t e alleged ingratitude of t e respondent spouses. 6nli7e ordinary contracts "w ic are perfected )y t e concurrence of t e re3uisites of consent, o)ject and cause pursuant to Article 1/18/8 of t e :ivil :ode#, solemn contracts li7e donations are perfected only upon compliance wit t e legal formalities under Articles -48/9 and -49.4& 2t erwise stated, a)sent t e solemnity re3uirements for validity, t e mere intention of t e parties does not give rise to a contract. T e oral donation in t e case at )ar is t erefore legally ine.istent and an action for t e declaration of t e ine.istence of a contract does not prescri)e.41<ence, ?elomina can still recover title from >ucila. Article 144840 of t e :ivil :ode on implied trust finds no application in t e instant case. T e concept of implied trusts is t at from t e facts and circumstances of a given case, t e e.istence of a trust relations ip is inferred in order to effect t e presumed intention of t e parties.4/ T us, one of t e recogni+ed e.ceptions to t e esta)lis ment of an implied trust is w ere a contrary intention is proved,44 as in t e present case. ?rom t e testimony of ?elomina erself, s e wanted to give t e lot to >ucila as a gift. To er mind, t e e.ecution of a deed wit >ucila as t e )uyer and t e su)se3uent issuance of title in t e latterSs name were t e acts t at would effectuate er generosity. $n so carrying out w at s e conceived, ?elomina evidently displayed er une3uivocal intention to transfer owners ip of t e lot to >ucila and not merely to constitute er as a trustee t ereof. $t was only w en t eir relations ip soured t at s e soug t to revo7e t e donation on t e t eory of implied trust, t oug as previously discussed, t ere is not ing to revo7e )ecause t e donation was never perfected. $n declaring >ucila as t e owner of t e disputed lot, t e :ourt of Appeals applied, among ot ers, t e second sentence of Article 1448 w ic states P 9. . . <owever, if t e person to w om t e title is conveyed is a c ild, legitimate or illegitimate, of t e one paying t e price of t e sale, no trust is implied )y law, it )eing disputa)ly presumed t at t ere is a gift in favor of t e c ild.9 Said presumption also arises w ere t e property is given to a person to w om t e person paying t e price stands in loco parentis or as a
BusOrg Summer (trust cases)

su)stitute parent.4' T e a)ovecited provision, owever, is also not applica)le ere )ecause, first, it was not esta)lis ed t at ?elomina stood as a su)stitute parent of >ucila= and second, even assuming t at s e did, t e donation is still void )ecause t e transfer and acceptance was not em)odied in a pu)lic instrument. 8e note t at said provision merely raised a presumption t at t e conveyance was a gift )ut not ing t erein e.empts t e parties from complying wit t e formalities of a donation. Iispensation of suc solemnities would give rise to anomalous situations w ere t e formalities of a donation and a will in donations inter +i+os, and donations "ortis causa, respectively, would )e done away wit w en t e transfer of t e property is made in favor of a c ild or one to w om t e donor stands in loco parentis. Suc a scenario is clearly repugnant to t e mandatory nature of t e law on donation. 8 ile ?elomina soug t to recover t e litigated lot on t e ground of implied trust and not on t e invalidity of donation, t e :ourt is clot ed wit ample aut ority to address t e latter issue in order to arrive at a just decision t at completely disposes of t e controversy. 4, Since rules of procedure are mere tools designed to facilitate t e attainment of justice, t ey must )e applied in a way t at e3uita)ly and completely resolve t e rig ts and o)ligations of t e parties. 4As to t e trial courtSs award of attorneySs fees and litigation e.penses, t e same s ould )e deleted for lac7 of )asis. Aside from t e allegations in t e complaint, no evidence was presented in support of said claims. T e trial court made t ese awards in t e dispositive portion of its decision wit out stating any justification t erefor in t eratio decidendi. T eir deletion is t erefore proper.48 ?inally, in deciding in favor of ?elomina, t e trial court ordered respondent spouses to e.ecute a deed of sale over t e su)ject lot in favor of ?elomina in order to effect t e transfer of title to t e latter. T e proper remedy, owever, is provided under Section 1& "a#, ;ule /9 of t e ;evised ;ules of :ivil %rocedure w ic provides t at 9. . . CiDf real or personal property is situated wit in t e % ilippines, t e court in lieu of directing a conveyance t ereof may )y an order divest t e title of any party and vest it in ot ers, w ic s all ave t e force and effect of a conveyance e.ecuted in due form of law.9 <HEREFORE, in view of all t e foregoing, t e petition is GR NTE3 and t e (une 1,, 0&&/ decision of t e :ourt of Appeals in :A-@.;. :G Eo. ,901/ is RE6ERSE3 and SET SI3E. T e August 08, 0&&& decision of t e ;egional Trial :ourt of *utuan :ity, *ranc 0, in :ivil :ase Eo. 40-&, is REINST TE3 wit t e followingMO3IFI) TIONS! "1# Ieclaring petitioner ?elomina A)ellana as t e a)solute owner of >ot /, %cs-1&-&&&198= "0# 2rdering t e ;egister of Ieeds of *utuan :ity to cancel T:T Eo. T-08-4 in t e name of respondent >ucila %once and to issue a new one in t e name of petitioner ?elomina A)ellana= and "/# Ieleting t e awards of attorneySs fees and litigation e.penses for lac7 of )asis.

46

Eo pronouncement as to costs.

Bduardo5s wis es )y causing t e issuance in is name of certificates of title covering said properties. 4. As t e two aciendas were t e su)ject of transactions )etween t e spouses and (usto and >uis :uaycong, Bduardo told (usto and >uis, and t e two agreed, to old in trust w at mig t )elong to is )rot ers and sister as a result of t e arrangements and deliver to t em t eir s are w en t e proper time comes. '. T at as far )ac7 as 19/, >ino demanded from (usto and >uis is s are and especially after Bduardo5s and :lotilde5s deat , t e plaintiffs demanded t eir s ares. ,. T at t eir demands ad )een refused and in 19,& during t e estate proceedings of %ra.edes Bscalon, deceased wife of >uis I. :uaycong, t e latter fraudulently made it appear t at t e plaintiffs ad not ing to do wit t e land= t at >uis :uaycong ad possessed t e lands since (une 01, 19/, from w ic time e s ould )e made to account for t e plaintiffs5 s are= and t at %1,'&& attorney5s fees s ould )e paid in t eir favor. >uis I. :uaycong on 2cto)er 0&, 19,1 moved to dismiss t e complaint on t e grounds of unenforcea)ility of t e claim under t e statute of frauds, no cause of action ";ule 8, Sec. 1 CfD of t e ;ules of :ourt#, and )ar of causes of action )y t e statute of limitations ";ule 8, Sec. 1CeD#. Su)se3uently, opposition t ereto, answer and reply were filed= t e plaintiffs also soug t to ave *enjamin :uaycong declared in default for is failure to answer. 2n Iecem)er 1,, 19,1, t e :ourt of ?irst $nstance ruled t at t e trust alleged, particularly in paragrap 8 of t e complaint, refers to an immova)le w ic under Article 144/ of t e :ivil :ode may not )e proved )y parole evidence. %laintiffs were given 1& days to file an amended complaint mentioning or alleging t erein t e written evidence of t e alleged trust, ot erwise t e case would )e dismissed. >ater, on Iecem)er 0/, 19,1, t e court decreed t at since t ere was no amended complaint filed, t us, no enforcea)le claim, it was useless to declare *enjamin :uaycong in default. %laintiff t ereafter manifested t at t e claim is )ased on an implied trust as s own )y paragrap 8 of t e complaint. T ey added t at t ere )eing no written instrument of trust, t ey could not amend t e complaint to include suc instrument. 2n (anuary 1/, 19,0, t e court dismissed t e case for failure to amend t e complaint= it furt er refused to reconsider its order denying t e motion to declare *enjamin :uaycong in default, stating t at suc a default declaration would )e of no purpose. ?ailing in t eir efforts to ave t e dismissal reconsidered, plaintiffs appealed to 6s. T e resolution of t e appeal inges on w et er t e trust is e.press or implied. %aragrap 8 of t e complaint state! T at as t e said two aciendas were t en t e su)ject of certain transactions )etween t e spouses Bduardo :uaycong and :lotilde de >eon on one and, and (usto and >uis I. :uaycong on t e ot er, Bduardo :uaycong

G.R. No. L-21616

3e8e%ber 11, 1967

GERTRU3ES F. )U ')ONG, ET L., plaintiffs-appellants, vs. LUIS 3. )U ')ONG, ET L., defendants-appellees. 3enito %. Jalandoni and ). -. 5o"e4 for plaintiffs-appellants. 0ilado and 0ilado for defendants-appellees. BENG&ON, (.P., J.: Bduardo :uaycong, married to :lotilde de >eon, died on (une 01, 19/, wit out issue )ut wit t ree )rot ers and a sister surviving im! >ino, (usto, 4eliton and *asilisa. 6pon is deat , is properties were distri)uted to is eirs as e willed e.cept two aciendas in Gictorias, Eegros 2ccidental, devoted to sugar and ot er crops 1 t e <aciendas Sta. :ru+ and %usod )ot 7nown as <acienda *acayan. <acienda *acayan is comprised of eig t "8# lots 1 Eo. 08, covered )y T.:.T. Eo. T-001/&= Eos. 8, 1-, 18 F 1/', covered )y T.:.T. Eo. T-001/1= Eos. 01, 00, 0/, covered )y T.:.T. Eo. 001/0 1 all of w ic are titled in t e name of >uis I. :uaycong, son of (usto :uaycong. >ino :uaycong died on 4ay 4, 19/- and was survived )y is c ildren %a+, :arolina, @ertrudes, :armen, Girgilio, *enjamin, %ra.edes and Anastacio. %ra.edes :uaycong, married to (ose *etia, is already deceased and is survived )y er c ildren (ose (r., (esus, 4ildred, Eenita and Eilo, all surnamed *etia. Anastacio :uaycong, also deceased, is survived )y is c ildren Bster, Armando, >ourdes, >uis T., Bva and Aida, all surnamed :uaycong. 4eliton and *asilisa died wit out any issue. 2n 2cto)er /, 19,1, t e surviving c ildren of >ino :uaycong! @ertrudes, :armen, %a+, :arolina, Girgilio= t e surviving c ildren of Anastacio! Bster, Armando, >ourdes, >uis T., Bva and Aida= as well as (ose, (r., (esus, 4ildred, Eenita, Eilo, all surnamed *etia, c ildren of deceased %ra.edes :uaycong *etia, filed as pauper litigants, a suit against (usto, >uis and *enjamin :uaycong1 for conveyance of in eritance and accounting, )efore t e :ourt of ?irst $nstance of Eegros 2ccidental ":ivil :ase Eo. ,/14#, alleging among ot ers t at! 1. Bduardo :uaycong ad on several occasions, made 7nown to is )rot ers and sisters t at e and is wife :lotilde de >eon "died in 194&# ad an understanding and made arrangements wit >uis :uaycong and is fat er (usto :uaycong, t at it was t eir desire to divide <aciendas Sta. :ru+ and %usod among is )rot ers and sister and is wife :lotilde. 0. 8it t e consent of is wife, Bduardo ad as7ed is )rot ers and sister to pay is wife %-',&&& "t e aciendas were wort %1'&,&&&# and t en divide e3ually t e remaining one- alf s are of Bduardo. /. T e )rot ers and sister failed to pay t e 1J0 s are of :lotilde over t e two aciendas w ic were later ac3uired )y >uis :uaycong t ru clever strategy, fraud, misrepresentation and in disregard of
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told is )rot er (usto and is nep ew, defendant >uis I. :uaycong, to old in trust w at mig t )elong to is )rot ers and sister as a result of t e arrangements and to deliver to t em t eir s ares w en t e proper time comes, to w ic (usto and >uis I. :uaycong agreed. T e plaintiffs claim t at an inplied trust is referred to in t e complaint w ic , under Article 14'- of t e :ivil :ode, may )e proved )y parole evidence. 2ur :ivil :ode defines an e.press trust as one created )y t e intention of t e trustor or of t e parties, and an implied trust as one t at comes into )eing )y operation of law.0 B.press trusts are t ose created )y t e direct and positive acts of t e parties, )y some writing or deed or will or )y words evidencing an intention to create a trust. 2n t e ot er and, implied trusts are t ose w ic , wit out )eing e.pressed, are deduci)le from t e nature of t e transaction )y operation of law as matters of e3uity, in dependently of t e particular intention of t e parties./T us, if t e intention to esta)lis a trust is clear, t e trust is e.press= if t e intent to esta)lis a trust is to )e ta7en from circumstances or ot er matters indicative of suc intent, t en t e trust is implied. ?rom t ese and from t e provisions of paragrap 8 of t e complaint itself, 8e find it clear t at t e plaintiffs alleged an e.press trust over an immova)le, especially since it is alleged t at t e trustor expressl, told t e defendants of is intention to esta)lis t e trust.lawphil Suc a situation definitely falls under Article 144/ of t e :ivil :ode. Appellants point out t at not only paragrap 8 s ould )e considered )ut t e w ole complaint, in w ic case t ey argue t at an implied trust s ould )e construed to e.ist. Article 14'/, one of t e cases of implied trust, is also cited! 98 en property is conveyed to a person in reliance upon is declared intentions to old it for or transfer it to anot er or t e grantor, t ere is an implied trust in favor of t e person w ose )enefit is contemplated.9 Said arguments are untena)le, even considering t e w ole complaint. T e intention of t e trustor to esta)lis t e alleged trust may )e seen in paragrap s ' and ,.4 Article 14'/ would apply if t e person conveying t e property did not e.pressly state t at e was esta)lis ing t e trust, unli7e t e case at )ar w ere e was alleged to ave e.pressed suc intent. :onse3uently, t e lower court did not err in dismissing t e complaint. *esides, even assuming t e alleged trust to )e an implied one, t e rig t alleged )y plaintiffs 8ould ave already prescri)ed since starting in 19/, 8 en t e trustor died, plaintiffs ad already )een allegedly refused )y t e aforesaid defendants in t eir demands over t e land, and t e complaint was filed only in 19,1 1 more t an t e 1&-year period of prescription for t e enforcement of suc rig ts under t e trust.lawphil $t is settled t at t e rig t to enforce an implied trust in one5s favor prescri)es in ten "1&# years.' And even under t e :ode of :ivil %rocedure, action to recover real property suc as lands prescri)es in ten years "Sec. 4&, Act 19&#. And for t e a)ove reasons, 8e agree t at it was pointless to declare *enjamin :uaycong in default, considering t at wit out a written instrument as evidence of t e alleged trust, t e case for t e plaintiffs must )e dismissed. 8<B;B?2;B, t e order of dismissal of t e lower court appealed from is ere)y affirmed, wit out costs. So ordered.
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G.R. No. L-2729/ (u!e 2,, 19,. LFRE3O RO , (R., LETI)I RO 3E BOR( , RUBEN RO , )ORNELIO RO a!" ELSIE RO -) )NIO Aa$ ;e9r$ o: +;e #a+e #:re"o Roa, Sr.B. 4e+9+9o!er$, 2$. HON. )OURT OF PPE LS a!" +;e $4ou$e$ (O EUIN ) SIFO a!" )USTO3I 6 L3EHUES ,re$4o!"e!+$.

ST$%6>AT$2E 2? ?A:TS T at parties erein, assisted )y t eir respective attorneys, ave agreed on t e following facts! 1. T at t e plaintiff and t e defendants are all of age and wit capacity to sue and )e sued. 0. T at t e plaintiff and is )rot ers and sisters Trinidad ;eyes ;oa, Bsperan+a ;oa de 2ngpin, :oncepcion ;oa and Mosimo ;oa, us)and of t e latter, were t e owners pro-indiviso of a parcel of land located in Tagoloan, 4isamis 2riental, containing an area of several undred ectares, and sometime in 190', and for t e purpose of registering t eir title to said parcel of land, t e said co- owners filed an application wit t e :ourt of ?irst $nstance of 4isamis 2riental, and said application was doc7eted in said :ourt as B.pediente Eo. 10, @.>.;.2. ;ecord Eo. 1&&&/. /. T at in t e application as well as in t e plans accompanying said application in B.pediente Eo. 10, @.>.;.2. Eo. 1&&&/, was included a parcel of land w ic is now t e portion in litigation in t is case. 4. T at one %a)lo Galde uesa filed an opposition in said B.pediente Eo. 10, @.>.;.2. ;ecord Eo. 1&&&/. claiming a)solute and e.clusive owners ip over a portion w ic is now t e property under litigation. '. T at sometime during t e year 190', t e co-owners, said :oncepcion ;oa, Bsperan+a ;oa de 2ngpin and Trinidad ;eyes ;oa and Mosimo ;oa entered into an agreement wit t e said %a)lo Galde uesa, and t e terms of t eir agreement are contained in t e document ereto attac ed, made a part ereof, and mar7ed as B. i)it 919. ,. T at in compliance wit is o)ligation under and )y virtue of said B. i)it 9 19 t e said %a)lo Galde uesa wit drew t e opposition filed )y im in said case B.pediente Eo. 10, @.>.;.2. ;ecord Eo. 1&&&/, and as t e result of said wit drawal, t e plaintiff and is co-owners succeeded in registering t eir title to t eir property, including t e portion owned )y %a)lo Galde uesa as claimed in is opposition. -. T at t e said %a)lo Galde uesa died in 4ay of 1908, and upon is deat is estate passed to t e owners ip of is widow and legitimate c ildren including all is rig ts under said B. i)it 9 1 9 to t e property in 3uestion. 8. T at since t en t e property in 3uestion as )een in t e possession of t e defendants, and t eir possession toget er wit t e possession of t eir predecessors in said property as )een open, continuous and uninterrupted to t is date. 9. T at sometime after t e issuance of title in favor of t e plaintiff "Transfer :ertificate of Title Eo. 01-A# and is aforementioned )rot ers and sisters covering t e parcel of land su)ject matter of t e application filed )y t em in B.pediente Eo. 10, @.>.;.2. ;ecord Eo. 1&&&/, t e said plaintiff and is )rot ers and sisters partitioned among t emselves said

Appeal )y way of certiorari from t e Iecision of t e :ourt of Appeals 1 in :A-@.;. Eo. /4-4,-; entitled 9Alfredo ;oa, %laintiffAppellant, versus (oa3uin :asiUo et al., Iefendants-Appellees,9 and from t e ;esolution of t e said :ourt 2 denying plaintiff-appellant5s motion for reconsideration of t e said Iecision. 2n Septem)er 1, 19'', an action for recovery of possession of a parcel of land was filed )efore t e :ourt of ?irst $nstance of 4isamis 2riental )y Alfredo ;oa, Sr. "now deceased and su)se3uently su)stituted )y is eirs, t e erein petitioners# against respondent spouses, (oa3uin :asiUo and :ustodia Galde uesa "real name appears to )e Teodosia Galde uesa#, successors-in- interest of one %a)lo Galde uesa, now deceased. $n is complaint, Alfredo ;oa, Sr. alleged t at t e said land is agricultural= t at it is situated in *ugo, formerly wit in t e municipality of Tagoloan, 4isamis 2riental, now comprised wit in t e limits of t e :ity of :agayan de 2ro= t at it is registered in is name under 2riginal :ertificate of Title Eo. T-01I= t at e found t e private respondents occupying said land. <e prayed t at possession of t e same )e returned to im and t at e )e awarded actual and moral damages in t e sum of %1&,&&&.&&. $n answer to t e complaint, respondent spouses alleged t at t e land in 3uestion formerly )elonged to one %a)lo Galde uesa, fat er of respondent :ustodia "Teodosia# Galde uesa and now deceased= t at it was owever titled in t e name of Alfredo ;oa, Sr., Trinidad ;eyes ;oa, Bsperan+a ;oa de 2ngpin, :oncepcion ;oa and er us)and Mosimo ;oa in >and ;egistration :ase Eo. 10, @.;.>.2. ;ecord Eo. 1&&&/ of t e :ourt of ?irst $nstance of 4isamis 2riental )y virtue of an agreement entered into )etween t e ;oas and said %a)lo Galde uesa= t at t e conditions of t e said compromise agreement were never complied wit )y t e ;oas notwit standing t e deat of %a)lo Galde uesa in 1908 and despite repeated demands for compliance t ereof= t at t e eirs of said %a)lo Galde uesa sold t e land in 3uestion to t em on April /&, 19/&, after rescinding t e aforementioned compromise agreement= and t at t ey now enjoy t e privileges of a)solute owners ip over said land )y reason of t eir continuous and adverse possession t ereof since time immemorial. *y way of counterclaim, t e respondents prayed for t e reconveyance of t e said parcel of land contending t at t e compromise agreement created an implied trust )etween t e parties to it, and for damages in t e amount of %1&,&&&.&&. $n answer to private respondent5s counterclaim, Alfredo ;oa, Sr. maintained t at t e eirs of %a)lo Galde uesa cannot rescind t e compromise agreement )y t eir own act alone or wit out going to court= and t at t e alleged sale of t e said eirs to private respondents was null and void, in view of t e fact t at respondent spouses 7new t at t e land was t en titled in t e name of t e ;oas under Act 49,. 2n Iecem)er 00, 19'9, t e parties su)mitted to t e :ourt a 2uo an agreed Stipulation of ?acts, to wit!
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property, and plaintiff was adjudicated a s are in said property, of w ic t e parcel of land covered )y t e opposition of %a)lo Galde uesa wit drawn under t e terms of B. i)it 9 19 is a part or portion of said c arge, and covered )y T-01-I "copy attac ed as B. . 9A9#. 1&. T at t e portion in litigation as correctly descri)ed in paragrap / of t e complaint is covered )y t e certificate of title referred to a)ove. 11. T at in 19'' t e plaintiff ad a surveyor relocate t e corners and )oundaries of is land as descri)ed in is title and t at t e portion of a)out 0 ectares on t e eastern end of t e land is in t e possession and is actually occupied )y t e defendant. T is is t e portion in litigation descri)ed in par. / of t e complaint . 10. T at B.pediente Eo. 10, @.>.;.2. ;ecord Eo. 1&&&/ ave )een totally destroyed during t e last 8orld 8ar, and t e parties reserve t e rig t to present additional evidence during t e earing of t is case. :agayan de 2ro :ity, Iecem)er 00, T e aforesaid compromise agreement mentioned in paragrap ' of t e agreed Stipulation of ?acts was t ereafter ratified on 4ay 11, 190- as s own in B. i)it 9 19 as follows! "Spanis # %ursuant to said B. i)it 919, :oncepcion, Bsperan+a, Trinidad and Mosimo, all surnamed ;oa, agreed to replace t e land of %a)lo Galde uesa wit anot er parcel of land wit an area of 1.49'9 ectares to )e given to %a)lo Galde uesa in e.c ange for t e land occupied )y im, or if said land was not accepta)le to im, to pay im t e amount of %4&&.&&. Eeit er of t ese underta7ings was complied wit )y t e ;oas and %a)lo Galde uesa continued in possession of t e land occupied )y im until t e same was sold )y t e eirs of %a)lo Galde uesa to t e respondent spouses on April /&, 19/&. 2n 4arc ,, 19,4, t e lower court rendered t e decision ordering t e plaintiff Alfredo ;oa to reconvey t e land in dispute to t e defendants, now t e respondent spouses, on t e ground t at same could not ave )een registered in t e name of t e plaintiff and is )rot er and sisters if not for t e compromise agreement aforestated and furt er to pay said defendants t e amount of %1,&&&.&& as attorney5s fees plus costs. 2n appeal ta7en )y Alfredo ;oa, t e appellate court affirmed t e decision of t e lower court and declared t at "a# t e compromise agreement created an e.press trust )etween t e ;oa )rot ers and sisters, including Alfredo, Sr., ")# t at t e respondent spouses5 action for reconveyance was imprescripti)le on t e aut ority of )ira#iles, et al. +. Cuito, et al., >- 14&&8, 2cto)er 18, 19',= and "c# t at Alfredo ;oa cannot invo7e t e indefeasi)ility and imprescripti)ility of t e Torrens title issued in is name for t e land in dispute since t e said title was secured )y im in )reac of an e.press trust, and t us, t e :ourt ordered t e reconveyance of t e property wit in fifteen "1'# days from t e finality of t e decision. Alfredo ;oa, now su)stituted )y is eirs, t e erein petitioners
BusOrg Summer (trust cases)

Alfredo ;oa, (r., >eticia ;oa de *orja, ;u)en ;oa, :ornelio ;oa and Blsie ;oa-:acnio, moved to reconsider t e adverse decision. Acting on t is motion for reconsideration, t e :ourt of Appeals in a majority resolution denied t e said motion, and w ile conceding t at 9t e creation of an e.press trust leaves room for dou)t,9 t e said :ourt ruled t at t e compromise agreement, at t e least gave rise to an implied trust under Art. 14', of t e Eew :ivil :ode. <ence, petitioners filed t is present petition on t e following assignment of errors! $. T e respondent :ourt of Appeals erred w en it ruled t at Alfredo ;oa, t e petitioners5 predecessor-in-interest, was )ound )y t e compromise agreement "B. . 9$9# in t e e.ecution of w ic , according to t e Stipulation of ?acts, said Alfredo ;oa neit er participated nor signed. $$. 2n t e assumption t at t e aforementioned compromise agreement was )inding upon Alfredo ;oa, t e respondent :ourt of Appeals erred w en it eld t e said agreement, w ic stipulated t e conveyance of t e property in dispute for a consideration, as aving esta)lis ed a trust relations ip )etween t e parties to it. $$$. T e respondent :ourt of Appeals erred w en it eld t at t e ruling in t e case of @erona, et al. va. Ie @u+man, @.;. Eo. >19&,&, 4ay 09, 19,4, is inapplica)le to t e case at )ar. 2n t e first assigned error, 8e reject t e contention of t e petitioners t at Alfredo ;oa, Sr. was not )ound )y t e compromise agreement for not )eing a participant or signatory t ereto. $t may )e true t at Alfredo ;oa, Sr. did not sign t e compromise agreement, B. . 9 1 9, for e was t en in 4anila wor7ing as a newspaperman )ut e certainly )enefited from t e effects of t e compromise agreement w ic o)liged %a)lo Galde uesa to wit draw, as e did wit draw is opposition to t e registration of t e ;oa property under t e Torrens system. T e ;oa property was su)se3uently registered wit out opposition and title was issued t ereto in t e name of Alfredo ;oa, is )rot er Mosimo and is sisters Trinidad, Bsperan+a and :oncepcion, all surnamed ;oa as co-owners t ereof. :ertainly, t e ;oas may not escape compliance from t eir o)ligation under t e compromise agreement )y partitioning t e property and assigning t e property in dispute as part of t e s are of t e petitioners. 4oreover, it will )e a pure and simple case of unjust enric ment for petitioners to ac3uire and own t e property of %a)lo Galde uesa, wit out paying t e value t ereof or e.c anging t e land wit anot er wit an e3ual area as originally agreed. 8it respect to t e second assignment of error, 8e do not agree wit t e olding of t e respondent appellate court t at an e.press trust was created )etween t e parties )y reason of t e compromise agreement entered into )etween t em. B.press trusts are created )y t e intention of t e trustor or one of t e parties "Article 1441, Eew :ivil :ode#. 8 ile no particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended "Article 1444, Eew :ivil :ode#, in t e case at )ar, 8e find no direct and positive intent to create a trust relations ip )etween t e parties to t e compromise agreement under w ic %a)lo Galde uesa agreed to wit draw is opposition to t e application for registration upon t e commitment of t e ;oas to give Galde uesa anot er piece of land of e3ual area or pay its price of % 4&&.&&. $t seems clear to 6s t at t e ;oas under t e compromise agreement did not commit t emselves to old t e lot claimed )y %a)lo Galde uesa for %a)lo Galde uesa

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and in %a)lo Galde uesa5s name. $f t e compromise agreement did not result to an e.press trust relations ip, did it, owever, give rise to an implied trustH %rivate respondents claim t at under t e terms of t e compromise agreement, t e land claimed )y %a)lo Galde uesa s ould )e deemed eld in trust )y t e ;oas w en t e latter failed to relocate im or pay t e price t erefor. T e respondent appellate court too7 private respondents5 position, and opined, . t us 1 $t could t us )e gleaned t at ad it not )een for t e promise of t e ;oas contained in B. i)it 1, Galde uesa would not ave )een induced to wit draw is opposition in t e land registration case. 8 en, t erefore, t e ;oas turned t eir )ac7 to a solemn agreement entered in a court proceedings, t ey were guilty of fraud. ?raud is every 7ind of deception, w et er in t e form of insidious mac inations, manipulations, concealments or misrepresentations, for t e purpose of leading anot er party into error and t en e.ecute a particular act. $t must ave a determining influence on t e consent of t e victim.9 "4 Tolentino, :ivil :ode, p. 4,0# $t results from t e foregoing t at alt oug t e creation of an e.press trust leaves room for dou)t, )y operation of law, an implied trust is created, Art. 14',. $f property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes. "E.:.:#9. 8e cannot sustain t e olding of t e respondent appellate court in its ;esolution denying petitioners5 motion for reconsideration t at )y operation of law an implied trust was created under t e terms of t e compromise agreement in t e lig t of Article 14', of t e Eew :ivil :ode cited a)ove. 8e rule t at Art. 14', is not applica)le )ecause it is 3uite clear t at t e property of %a)lo Galde uesa was ac3uired )y t e ;oas not t roug mista7e or fraud )ut )y reason of t e voluntary agreement of Galde uesa to wit draw is opposition to t e registration of t e land under t e Torrens system. T ere is incontroverti)le evidence t at t e ;oas intended to a)ide )y t e compromise agreement at t e time of t e e.ecution of t e same. T e private respondents t emselves introduced additional evidence w ic s owed t at on 4ay 11, 190-, Trinidad ;oa, Bsperan+a ;oa de 2ngpin, :oncepcion ;oa and Mosimo ;oa confirmed in writing t e terms and conditions of t e agreement t ey ad entered into wit %a)lo Galde uesa in t e land registration proceedings. Bven t e respondent appellate court e.pressly determined t e aforesaid failure of t e ;oas to comply wit t e terms of t e compromise agreement to )e an aftert oug t= t us, T e c ange of mind of t e plaintiff-appellant later is of no moment in t e case at )ar. / 8 ile it is 2ur ruling t at t e compromise agreement )etween t e parties did not create an e.press trust nor an implied trust under Art. 14', of t e Eew :ivil :ode, 8e may, owever, ma7e recourse to t e
BusOrg Summer (trust cases)

principles of t e general law of trusts, insofar as t ey are not in conflict wit t e Eew :ivil :ode, :ode of :ommerce, t e ;ules of :ourt and special laws w ic under Art. 1440 of t e Eew :ivil :ode are adopted. 8 ile Articles 1448 to 14', of t e Eew :ivil :ode enumerates cases of implied trust, Art. 144- specifically stipulates t at t e enumeration of t e cases of implied trust does not e.clude ot ers esta)lis ed )y t e general law of trusts, )ut t e limitations laid down in Art 1440 s ag )e applica)le. $n American law and jurisprudence, 8e find t e following general principles! A constructive trust, ot erwise 7nown as a trust e. maleficio, a trust e. delicto, a trust de son tort, an involuntary trust, or an implied trust, is a trust )y operation of law w ic arises contrary to intention and in invitum, against one w o, )y fraud, actual or constructive, )y duress or a)use of confidence, )y commission of wrong, or )y any form of unconsciona)le conduct, artifice, concealment, or 3uestiona)le means, or w o in any way against e3uity and good conscience, eit er as o)tained or olds t e legal rig t to property w ic e oug t not, in e3uity and good conscience, old and enjoy. $t is raised )y e3uity to satisfy t e demands of justice. <owever, a constructive trust does not arise on every moral wrong in ac3uiring or olding property or on every a)use of confidence in )usiness or ot er affairs= ordinarily suc a trust arises and will )e declared only on wrongful ac3uisitions or retentions of property of w ic e3uity, in accordance wit its fundamental principles and t e traditional e.ercise of its jurisdiction or in accordance wit statutory provision, ta7es cogni+ance. $t as )een )roadly ruled t at a )reac of confidence, alt oug in )usiness or social relations, rendering an ac3uisition or retention of property )y one person unconsciona)le against anot er, raises a constructive trust. "-, Am. (ur. 0d, Sec. 001, pp. 44,-44-#. And specifically applica)le to t e case at )ar is t e doctrine t at 9A constructive trust is su)stantially an appropriate remedy against unjust enric ment. $t is raised )y e3uity in respect of property, w ic as )een ac3uired )y fraud, or where, although ac2uired originall, without fraud, it is against e3uity t at it s ould )e retained )y t e person olding it.9 "-, Am. (ur. 0d, Sec. 000, p. 44-#. T e a)ove principle is not in conflict wit t e Eew :ivil :ode, :ode of :ommerce, ;ules of :ourt and special laws. And since 8e are a court of law and of e3uity, t e case at )ar must )e resolved on t e general principles of law on constructive trust w ic )asically rest on e3uita)le considerations in order to satisfy t e demands of justice, morality, conscience and fair dealing and t us protect t e innocent against fraud. As t e respondent court said, 9$t )e ooves upon t e courts to s ield fiduciary relations against every manner of c ic7anery or detesta)le design cloa7ed )y legal tec nicalities.9 T e ne.t point to resolve is w et er t e counterclaim of private respondents for t e reconveyance of t e property in dispute as already prescri)ed in t e lig t of esta)lis ed jurisprudence t at t e rig t to enforce an implied trust prescri)es in ten years. Admittedly, %a)lo Galde uesa and is eirs remained in possession of t e property in 3uestion in 190' w en )y reason of t e compromise agreement Galde uesa wit drew is opposition to t e registration applied for )y t e ;oas for w ic reason t e latter were a)le to o)tain a Torrens title to t e property in t eir name. <owever,

51

Galde uesa and is eirs continued t eir possession of t e land until e sold t e property in 3uestion to private respondents erein on April /&, 19/& and t e latter remained in possession and were never distur)ed in t eir occupancy until t e filing of t e original complaint for recovery of possession on Sept. 1, 19'' after demand was made upon t em w en a relocation survey initiated )y petitioners esta)lis ed t at private respondents were actually occupying a)out 0 ectares on t e eastern end of t e property. 6pon t ese facts, t e prescriptive period may only )e counted from t e time petitioners repudiated t e trust relation in 19'' upon t e filing of t e complaint for recovery of possession against private respondents so t at t e counterclaim of t e private respondents contained in t eir amended answer of (une 10, 19', w erein t ey asserted a)solute owners ip of t e disputed realty )y reason of t eir continuous and adverse possession of t e same is well wit in t e ten-year prescriptive period. ?inally, t e case at )ar is 3uite similar to t e case of *olores /acheco +s. -antiago Arro, 8' % il. '&', w erein t e claim to t e lots in t e cadastral case was wit drawn )y t e respondents relying upon t e assurance and promise made in open court )y Ir. 4. N. in )e alf of (. N. y ;., t e predecessor-in-interest of t e petitioners and t e :ourt eld t at a trust or a fiduciary relation )etween t em arose, or resulted t erefrom, or was created t ere)y and t e trustee cannot invo7e t e statute of limitations to )ar t e action and defeat t e rig t of t e cestuis 3ue trustent. ":ited in Tolentino, :ivil :ode of t e % ilippines, Gol. $G, p. ,0-#. 8<B;B?2;B, $E G$B8 2? T<B ?2;B@2$E@, t e judgment appealed from is ere)y A??$;4BI.

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G.R. No. L-/91,7 4r9# 0, 19,2 MIN3 N O 3E6ELOPMENT UTHORIT', !o@ +;e SOUTHERN PHILIPPINES 3E6ELOPMENT 3MINISTR TION, 4e+9+9o!er, 2$. THE )OURT OF PPE LS a!" FR N)IS)O NG B NSING, re$4o!"e!+$.

)ON)EP)ION (R., J.= %etition for review on certiorari of t e decision of t e :ourt of Appeals in :A-@.;. Eo. 48488-;, entitled! 9)indanao *e+elop"ent Authorit,, etc., plaintiff-appellee, +ersus Francisco Ang 3ansing defendantappellant;,w ic reversed t e decision of t e :ourt of ?irst $nstance of Iavao and dismissed t e complaint filed in :ivil :ase Eo. ,48& of t e said court. $t is not disputed t at t e respondent ?rancisco Ang *ansing was t e owner of a )ig tract of land wit an area of a)out /&&,&&& s3.m., situated in *arrio %anacan Iavao :ity. 2n ?e)ruary 0', 19/9, Ang *ansing sold a portion t ereof, wit an area of a)out ' ectares to (uan :ru+ Nap : uy T e contract provided, among ot ers, t e following! T at $ ere)y agree to wor7 for t e titling of t e entire area of my land under my own e.penses and t e e.penses for t e titling of t e portion sold to me s all )e under t e e.penses of t e said (uan :ru+ Nap : uy. 1 After t e sale, t e land of Ang *anging was surveyed and designated as >ot ,,4-*, %sd-1,/8. >ot ,,4-* was furt er su)divided into five "'# lots and t e portion sold to (uan :ru+ Nap : uy s ortened to (uan :ru+, was designated as >ot ,,4*-/, wit an area of ,1.1&s3uare meters, more or less. 2 2n (une 1'-1- and Iecem)er 1', 19/9, a cadastral survey was made and >ot ,,4-*-/ was designated as >ot 184,-: of t e Iavao :adastre. 2n Iecem)er 0/, 19/9, (uan :ru+ sold >ot 184,-: to t e :ommonwealt of t e % ilippines for t e amount of %,,/4-.'&. . 2n t at same day, (uan :ru+, as vendor, and :.*. :am and 4iguel E. >ansona as sureties, e.ecuted a surety )ond in favor of t e vendee to guarantee t e vendor5s a)solute title over t e land sold. / T e cadastral survey plan was approved )y t e Iirector of >ands on (uly 1&, 194&, 0 and on 4arc -, 1941, 2riginal :ertificate of Title Eo. 0, was issued in t e means of Gictoriana Ang *ansing, 2rfelina Ang *ansing and ?rancisco Ang *ansing as claimants of t e land, pursuant to Iecree Eo. -4'/'8 issued on (uly 09, 194&. 2n 4arc /1, 1941, 2:T Eo. 0, was cancelled pursuant to a Ieed of Adjudication and Transfer :ertificate of Title Eo. 1-8/ was issued in t e name of ?rancisco Ang *ansing. 6 2n t at day, 4arc /1, 1941, Ang *anging sold >ot 184,-A to (uan :ru+ and T:T Eo. 1-8/ was cancelled. T:T Eo. 1-84 was issued in t e name of (uan :ru+, for >ot 184,-A and T:T Eo. 1-8' was issued in t e name of Ang *ansing for t e remaining >ots 184,-*, 184,-:, 184,-I, and 184,-B. >ater, Ang *ansing sold two su)division lots of >ot 184,-*, namely! >ot 184,-*-0-: and >ot 184,-*-1 to Gedasto :orcuera for w ic T:T Eo. 0''1 and T:T Eo. 0''0, respectively, were issued in t e name of t e said Gedasto :orcuera on August 1&, 194,. T ereafter, >ot 1848-A, wit an area of 9.,'&8 ectares, and >ots 184,-*-A and 1848- *-0-I all su)divided portions of >ot 184,*, were similarly conveyed to (uan :ru+ for w ic T:T Eo. 0'99 and T:T Eo. 0,&&, respectively, were issued in t e name of (uan :ru+
BusOrg Summer (trust cases)

on Septem)er 0,, 194,. T:T Eo. 0,&1 was issued in t e name of Ang *ansing for t e remainder of t e property, including t e lot in 3uestion. T en, anot er portion of 184,-*, designated in t e su)division plan as >ot 1848-*-0-* was sold to (uan :ru+ for w ic T:T Eo. 184 was issued in t e latter5s name. 2n Eovem)er 08, 194,, after t ese conveyances, t ere remained in t e possession of Ang *ansing under T:T Eo. 0,&1, >ot 184,-:, t e lot in 3uestion= >ot 184,-I= and >ot 184,-B. <owever, T:T Eo. 0,&1 was again partially cancelled w en Ang *ansing sold >ot 184,-I to Gedasto :orcuera. 7 2n ?e)ruary 0', 19,', t e %resident of t e % ilippines issued %roclamation Eo. 4'9, transferring owners ip of certain parcels of land situated in Sasa Iavao :ity, to t e 4indanao Ievelopment Aut ority, now t e Sout ern % ilippines Ievelopment Administration, su)ject to private rig ts, if any. >ot 184,-:, t e disputed parcel of land, was among t e parcels of land transferred to t e 4indanao Ievelopment Aut ority in said proclamation. , 2n 4arc /1, 19,9, Atty. <ector >. *isnar counsel for t e 4indanao Ievelopment Aut ority, wrote Ang *ansing re3uesting t e latter to surrender t e 2wner5s duplicate copy of T:T Eo. 0,&1 so t at >ot 184,-: could )e formally transferred to is client )ut Ang *ansing refused. 9 :onse3uently, on April 11, 19,9, t e 4indanao Ievelopment Aut ority filed a complaint against ?rancisco Ang *ansing )efore t e :ourt of ?irst $nstance of Iavao :ity, doc7eted t erein as :ivil :ase Eo. ,48&, for t e reconveyance of t e title over >ot 184,-:, alleging, among ot ers, t e following! ... ... ... 9. T at t e deed of sale, mar7ed as Anne. 5A5, it was stipulated )y t e parties t at t e defendant would wor7 to secure title of is entire tract of land of a)out /& ectares defraying t e e.penses for t e same and t e e.penses for t e title of t e portion sold )y t e defendant to (uan :ru+ Nap : uy s all )e )orned )y t e latter= 1&. T at t e defendant as vendor and t e one w o wor7ed to secure t e title of is entire tract of land w ic included t e portion sold )y im. to (uan :ru+ Nap : uy acted in t e capacity of andJor served as trustee for any and all parties w o )ecome successorin-interest to (uan :ru+ Nap : uy and t e defendant was )ound and o)ligated to give, deliver and reconvey to (uan :ru+ Nap : uy andJor is successor-in-interest t e title pertaining to t e portion of land sold and conveyed )y im to (uan :ru+ Nap : uy )y virtue of t e deed of sale mar7ed as Anne. 5A5 and is affidavit mar7ed as Anne. 5:5. 11 $n answer, Ang *ansing replied! ... ... ... 9. T at defendant admits t at in Anne.5A5of t e complaint, it was agreed and stipulated in paragrap , t ereof t at! T at $ ere)y agree to wor7 for t e titling of t e entire area of my land under my own e.pense and t e e.penses for t e titling of t e portion sold to me s all )e under t e e.penses of t e said (uan :ru+ Nap : uy.

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and defendant in fact secured at is e.pense is 2:T Eo. 0, for is entire land= t at in t e process of defendant5s securing is title neit er (uan :ru+ Nap : uy nor t e :ommonwealt of t e % ilippines asserted any rig t to owners ip of t e su)ject property and t at was almost /& years ago until plaintiff filed its complaint, t us plaintiff is forever )arred from claiming any rig t over t e su)ject property. T ere was no real sale made )ut only t e intention to sell a portion of t e land as stated )y defendant in Anne. 5:5 of t e complaint. 1&. T at defendant denies allegations contained in paragrap 1& of t e complaint t at e acted as t e trustee of (uan :ru+ Nap : uy Iefendant was never suc = matter of fact (uan :ru+ Nap : uy for t e last 0, years, t at is until e. died in 2cto)er, 19,', never made any demand to ave t e title of t e su)ject property transferred in is name )ecause e 7new all t e time t at t e alleged sale in is favor was per se null and void e also 7new t at no sale was ever consummated. 11 After trial, t e :ourt of ?irst $nstance of Iavao :ity found t at an e.press trust ad )een esta)lis ed and ordered t e reconveyance of t e title to >ot 184,-: of t e Iavao :adastre to t e plaintiff 4indanao Ievelopment Aut ority. 12 Ang *anging appealed to t e :ourt of Appeals and t e said appellate court ruled t at no e.press trust as )een created and, accordingly, reversed t e judgment and dismissed t e complaint. 1. <ence, t e present recourse. T e petition is wit out merit. As found )y t e respondent :ourt of Appeals, no e.press trust ad )een created )etween Ang *anging and (uan :ru+ over >ot 184,-: of t e Iavao :adastre. 9Trusts are eit er e.press or implied. B.press trusts are created )y t e intention of t e trustor or of t e parties. $mplied trusts come into )eing )y operation of law.9 1/ $t is fundamental in t e law of trusts t at certain re3uirements must e.ist )efore an e.press trust will )e recogni+ed. *asically, t ese elements include a competent trustor and trustee, an ascertaina)le trust res, and sufficiently certain )eneficiaries. Stilted formalities are unnecessary, )ut nevert eless eac of t e a)ove elements is re3uired to )e esta)lis ed, and, if any one of t em is missing, it is fatal to t e trusts. ?urt ermore, t ere must )e a present and complete disposition of t e trust property, notwit standing t at t e enjoyment in t e )eneficiary will ta7e place in t e future. $t is essential, too, t at t e purpose )e an active one to prevent trust from )eing e.ecuted into a legal estate or interest, and one t at is not in contravention of some pro i)ition of statute or rule of pu)lic policy. T ere must also )e some power of administration ot er t an a mere duty to perform a contract alt oug t e contract is for a t ird-party )eneficiary. A declaration of terms is essential, and t ese must )e stated wit reasona)le certainty in order t at t e trustee may administer, and t at t e court, if called upon so to do, may enforce, t e trust.9 10 $n t is case, t e erein petitioner relies mainly upon t e following stipulation in t e deed of sale e.ecuted )y Ang *ansing in favor of (uan :ru+ to prove t at an e.press trust ad )een esta)lis ed wit Ang *ansing as t e settlor and trustee and (uan :ru+ as t e cestui 2ue trust or )eneficiary! T at $ ere)y agree to wor7 for t e titling of t e entire area of my
BusOrg Summer (trust cases)

land under my own e.penses and t e e.penses for t e titling of t e portion sold to me s all )e under t e e.penses of said (uan :ru+ Nap : uy. T e a)ove-3uoted stipulation, owever, is not ing )ut a condition t at Ang *ansing s all pay t e e.penses for t e registration of is land and for (uan :ru+ to s oulder t e e.penses for t e registration of t e land sold to im. T e stipulation does not categorically create an o)ligation on t e part of Ang *ansing to old t e property in trust for (uan :ru+. <ence, t ere is no e.press trust. $t is essential to t e creation of an e.press trust t at t e settlor presently and une3uivocally ma7e a disposition of property and ma7e imself t e trustee of t e property for t e )enefit of anot er. 16 $n case of a declaration of trust, t e declaration must )e clear and une3uivocal t at t e owner olds property in trust for t e purposes named. 17 8 ile Ang *ansing ad agreed in t e deed of sale t at e will wor7 for t e titling of 9t e entire area of my land under my own e.penses,9 it is not clear t erefrom w et er said statement refers to t e /&ectare parcel of land or to t at portion left to im after t e sale. A failure on t e part of t e settlor definitely to descri)e t e su)jectmatter of t e supposed trust or t e )eneficiaries or o)ject t ereof is strong evidence t at e intended no trust. 1, T e intent to create a trust must )e definite and particular. $t must s ow a desire to pass )enefits t roug t e medium of a trust, and not t roug some related or similar device. 19 :lear and une3uivocal language is necessary to create a trust and mere precatory language and statements of am)iguous nature, are not sufficient to esta)lis a trust. As t e :ourt stated in t e case of *e Leon +s. /ac=son,21 a trust must )e proven )y clear, satisfactory and convincing evidence= it cannot rest on vague and uncertain evidence or on loose, e3uivocal or indefinite declarations. :onsidering t at t e trust intent as not )een e.pressed wit suc clarity and definiteness, no e.press trust can )e deduced from t e stipulation afore3uoted. Eor will t e affidavit e.ecuted )y Ang *anging on April 0/, 1941, 21 )e construed as aving esta)lis ed an e.press trust. As counsel for t e erein petitioner as stated, 9t e only purpose of t e Affidavit was to clarify t at t e area of t e land sold )y Ang *ansing to (uan :ru+ Nap : uy is not only ' ectares )ut ,1,1&- s3uare meters or a little over si. ",# ectares.9 22 T at no e.press trust ad )een agreed upon )y Ang *ansing and (uan :ru+ is evident from t e fact t at (uan :ru+, t e supposed )eneficiary of t e trust, never made any attempt to enforce t e alleged trust and re3uire t e trustee to transfer t e title over >ot 184,-: in is name. T us, t e records s ow t at t e deed of sale, covering >ot 184,-:, was e.ecuted )y Ang *ansing in favor of (uan :ru+ on ?e)ruary 0', 19/9. Two years later, or on 4arc /1, 1941, Ang *ansing sold >ot 184,-A to t e said (uan :ru+ for w ic T:T Eo. 1-84 was issued in t e name of (uan :ru+. Su)se3uently t ereafter, >ot 1848-A, wit an area of 9.,'&8 ectares, and >ots 184,-A and 1848-*-0-I, all su)divided portions of >ot 184,-*, were similarly conveyed to t e said (uan :ru+ for w ic T:T Eo. 0'99 and T:T Eo. 0,&&, respectively, were issued in t e name of (uan :ru+ on Septem)er 0,, 194,. T en, anot er portion of 5>ot 1W84,-*,

54

designated in t e su)division plan as >ot 1848-*-0-1/, was sold to (uan :ru+ for w ic T:T Eo. 184 was issued in is name on Eovem)er 08, 1948. Iespite t ese numerous transfers of portions of t e original /&- ectare parcel of land of Ang *ansing to (uan :ru+ and t e issuance of certificates of title in t e name of (uan :ru+, t e latter never soug t t e transfer of t e title to >ot 184,-: in is name. ?or sure, if t e parties ad agreed t at Ang *ansing s all old t e property in trust for (uan :ru+ until after t e former s all ave o)tained a certificate of title to t e land, t e latter would ave as7ed for t e reconveyance of t e title to im in view of t e surety )ond e.ecuted )y im in favor of t e :ommonwealt @overnment w erein e warrants is title over t e property. T e conduct of (uan :ru+ is inconsistent wit a trust and may well ave pro)ative effect against a trust. *ut, even granting, arguendo, t at an e.press trust ad )een esta)lis ed, as claimed )y t e erein petitioner, it would appear t at t e trustee ad repudiated t e trust and t e petitioner erein, t e alleged )eneficiary to t e trust, did not ta7e any action t erein until after t e lapse of 0/ years. T us, in its ;eply to t e Iefendant5s Answer, filed on (une 09, 19,9, t e erein petitioner admitted t at 9after t e last war t e :ity Bngineer5s 2ffice of Iavao :ity made repeated demands on t e defendants for t e delivery and conveyance to t e :ommonwealt @overnment, now t e ;epu)lic of t e % ilippines, of t e title of land in 3uestion, >ot 184,-:, )ut t e defendant ignored and evaded t e same.9 2. :onsidering t at t e demand was made in )e alf of t e :ommonwealt @overnment, it is o)vious t at t e said demand was made )efore (uly 4, 194,, w en t e :ommonwealt @overnment was dismantled and t e ;epu)lic of t e % ilippines came into )eing. ?rom 194, to 19,9, w en t e action for reconveyance was filed wit t e :ourt, 0/ years ad passed. ?or sure, t e period for enforcing t e rig ts of t e alleged )eneficiary over t e land in 3uestion after t e repudiation of t e trust )y t e trustee, ad already prescri)ed. Eeedless to say, only an implied trust may ave )een impressed upon t e title of Ang *anging over >ot 184,-: of t e Iavao :adastre since t e land in 3uestion was registered in is name alt oug t e land )elonged to anot er. $n implied trusts, t ere is neit er promise nor fiduciary relations, t e so-called trustee does not recogni+e any trust and as no intent to old t e property for t e )eneficiary.9 2/ $t does not arise )y agreement or intention, )ut )y operation of law. T us, if property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes. 20 $f a person o)tains legal title to property )y fraud or concealment, courts of e3uity will impress upon t e title a so-called constructive trust in favor of t e defrauded party. 26 T ere is also a constructive trust if a person sells a parcel of land and t ereafter o)tains title to it t roug fraudulent misrepresentation. 27 Suc a constructive trust is not a trust in t e tec nical sense and is prescripti)le= it prescri)es in 1& years. 2, <ere, t e 1&-year prescriptive period )egan on 4arc /1, 1941, upon t e issuance of 2riginal :ertificate of Title Eo. 0, in t e names of Gictoriana Ang *ansing 2rfelina Ang *ansing and ?rancisco Ang *anging. ?rom t at date up to April 11, 19,9, w en t e complaint for reconveyance was filed, more t an 08 years ad passed. :learly, t e
BusOrg Summer (trust cases)

action for reconveyance ad prescri)ed. *esides, t e enforcement of t e constructive trust t at may ave )een impressed upon t e title of Ang *ansing over >ot 184,-: of t e Iavao :adastre is )arred )y lac es. 29 $t appears t at t e deed of sale in favor of t e :ommonwealt @overnment was e.ecuted )y (uan :ru+ on Iecem)er 0/, 19/9, during t e cadastral proceedings, and even )efore t e cadastral survey plan was approved )y t e Iirector of >ands on (uly 1&, 194&. *ut, t e vendee t erein did not file an answer, muc less an opposition to t e answer of Ang *ansing in t e said :adastral proceedings. T e judgment rendered in t e said cadastral proceeding, awarding t e lot in 3uestion to Ang *ansing is already final. After an ine.cusa)le delay of more t an 08 years and ac3uiescence to e.isting conditions, it is now too late for t e petitioner to complain. 8<B;B?2;B, t e petition s ould )e, as it is ere)y, IBE$BI. Eo costs.

55

G.R. No. L-//0/6 (a!uary 29, 19,, RUSTI)O 3ILLE, petitioner, vs. THE HONOR BLE )OURT OF PPE LS, EMETERI SE(O, TEO3ORI) SE(O, 3OMINGO SE(O, (OSEF SE(O a!" S NTI GO SE(O, respondents.

defendant in is position t at e was and )ecame a)solute owner, e was not a trustee, and t erefore, dismissed case and also condemned plaintiff occupant, Bmeteria to vacate= it is )ecause of t is t at plaintiffs ave come ere and contend t at trial court erred in! $. ... declaring t e defendant a)solute owner of t e property= $$. ... not ordering t e partition of t e property= and $$$. ... ordering one of t e plaintiffs w o is in possession of t e portion of t e property to vacate t e land, p. 1 Appellant5s )rief. w ic can )e reduced to simple 3uestion of w et er or not on t e )asis of evidence and law, judgment appealed from s ould )e maintained. . ... ... ... T e respondent :ourt of appeals reversed t e trial :ourt, / and ruled for t e plaintiffs-appellants, t e private respondents erein. T e petitioner now appeals, )y way of certiorari, from t e :ourt5s decision. 8e re3uired t e private respondents to file a comment and t ereafter, aving given due course to t e petition, directed t e parties to file t eir )riefs. 2nly t e petitioner, owever, filed a )rief, and t e private respondents aving failed to file one, we declared t e case su)mitted for decision. T e petition raises a purely legal issue! 4ay a co-owner ac3uire e.clusive owners ip over t e property eld in commonH Bssentially, it is t e petitioner5s contention t at t e property su)ject of dispute devolved upon im upon t e failure of is co- eirs to join im in its redemption wit in t e period re3uired )y law. <e relies on t e provisions of Article 1'1' of t e old :ivil Article 1,1/ of t e present :ode, giving t e vendee a retro t e rig t to demand redemption of t e entire property. T ere is no merit in t is petition. T e rig t of repurc ase may )e e.ercised )y a co-owner wit aspect to is s are alone. 0 8 ile t e records s ow t at t e petitioner redeemed t e property in its entirety, s ouldering t e e.penses t erefor, t at did not ma7e im t e owner of all of it. $n ot er words, it did not put to end t e e.isting state of co-owners ip. Eecessary e.penses may )e incurred )y one co-owner, su)ject to is rig t to collect reim)ursement from t e remaining coowners. 6 T ere is no dou)t t at redemption of property entails a necessary e.pense. 6nder t e :ivil :ode! A;T. 488. Bac co-owner s all ave a rig t to compel t e ot er co-owners to contri)ute to t e e.penses of preservation of t e t ing or rig t owned in common and to t e ta.es. Any one of t e latter may e.empt imself from t is o)ligation )y renouncing so muc of is undivided interest

S RMIENTO, J.: $n issue erein are property and property rig ts, a familiar su)ject of controversy and a wellspring of enormous conflict t at as led not only to protracted legal entanglements )ut to even more )itter conse3uences, li7e strained relations ips and even t e forfeiture of lives. $t is a 3uestion t at li7ewise reflects a tragic commentary on prevailing social and cultural values and institutions, w ere, as one o)server notes, wealt and its accumulation are t e )asis of selffulfillment and w ere property is eld as sacred as life itself. 9$t is in t e defense of is property,9 says t is modern t in7er, t at one 9will mo)ili+e is deepest protective devices, and any)ody t at t reatens is possessions will arouse is most passionate enmity.9 1 T e tas7 of t is :ourt, owever, is not to judge t e wisdom of values= t e )urden of reconstructing t e social order is s ouldered )y t e political leaders ip-and t e people t emselves. T e parties ave come to t is :ourt for relief and accordingly, our responsi)ility is to give t em t at relief pursuant to t e decree of law. T e antecedent facts are 3uoted from t e decision 2 appealed from! ... ... ... ... CTD e land in 3uestion >ot 14,94 of :adastral Survey of Al)ay located in >egaspi :ity wit an area of some 11,/0' s3. m. originally )elonged to one ?elisa Al+ul as er own private property= s e married twice in er lifetime= t e first, wit one *erna)e Adille, wit w om s e ad as an only c ild, erein defendant ;ustico Adille= in er second marriage wit one %rocopio Asejo, er c ildren were erein plaintiffs, 1 now, sometime in 19/9, said ?elisa sold t e property in pacto de retro to certain /rd persons, period of repurc ase )eing / years, )ut s e died in 1940 wit out )eing a)le to redeem and after er deat , )ut during t e period of redemption, erein defendant repurc ased, )y imself alone, and after t at, e e.ecuted a deed of e.tra-judicial partition representing imself to )e t e only eir and c ild of is mot er ?elisa wit t e conse3uence t at e was a)le to secure title in is name alone also, so t at 2:T. Eo. 011/- in t e name of is mot er was transferred to is name, t at was in 19''= t at was w y after some efforts of compromise ad failed, is alf-)rot ers and sisters, erein plaintiffs, filed present case for partition wit accounting on t e position t at e was only a trustee on an implied trust w en e redeemed,-and t is is t e evidence, )ut as it also turned out t at one of plaintiffs, Bmeteria Asejo was occupying a portion, defendant counterclaimed for er to vacate t at, 1 8ell t en, after earing t e evidence, trial (udge sustained
BusOrg Summer (trust cases)

56

as may )e e3uivalent to is s are of t e e.penses and ta.es. Eo suc waiver s all )e made if it is prejudicial to t e co-owners ip. T e result is t at t e property remains to )e in a condition of coowners ip. 8 ile a vendee a retro, under Article 1,1/ of t e :ode, 9may not )e compelled to consent to a partial redemption,9 t e redemption )y one co- eir or co-owner of t e property in its totality does not vest in im owners ip over it. ?ailure on t e part of all t e co-owners to redeem it entitles t e vendee a retro to retain t e property and consolidate title t ereto in is name. 7*ut t e provision does not give to t e redeeming co-owner t e rig t to t e entire property. $t does not provide for a mode of terminating a coowners ip. Eeit er does t e fact t at t e petitioner ad succeeded in securing title over t e parcel in is name terminate t e e.isting co-owners ip. 8 ile is alf-)rot ers and sisters are, as we said, lia)le to im for reim)ursement as and for t eir s ares in redemption e.penses, e cannot claim e.clusive rig t to t e property owned in common. ;egistration of property is not a means of ac3uiring owners ip. $t operates as a mere notice of e.isting title, t at is, if t ere is one. T e petitioner must t en )e said to )e a trustee of t e property on )e alf of t e private respondents. T e :ivil :ode states! A;T. 14',. $f property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes. 8e agree wit t e respondent :ourt of Appeals t at fraud attended t e registration of t e property. T e petitioner5s pretension t at e was t e sole eir to t e land in t e affidavit of e.trajudicial settlement e e.ecuted preliminary to t e registration t ereof )etrays a clear effort on is part to defraud is )rot ers and sisters and to e.ercise sole dominion over t e property. T e afore3uoted provision t erefore applies. $t is t e view of t e respondent :ourt t at t e petitioner, in ta7ing over t e property, did so eit er on )e alf of is co- eirs, in w ic event, e ad constituted imself a negotioru" gestor under Article 0144 of t e :ivil :ode, or for is e.clusive )enefit, in w ic case, e is guilty of fraud, and must act as trustee, t e private respondents )eing t e )eneficiaries, under t e Article 14',. T e evidence, of course, points to t e second alternative t e petitioner aving asserted claims of e.clusive owners ip over t e property and aving acted in fraud of is co- eirs. <e cannot t erefore )e said to ave assume t e mere management of t e property a)andoned )y is coeirs, t e situation Article 0144 of t e :ode contemplates. $n any case, as t e respondent :ourt itself affirms, t e result would )e t e same w et er it is one or t e ot er. T e petitioner would remain lia)le to t e %rivate respondents, is co- eirs. T is :ourt is not unaware of t e well-esta)lis ed principle t at prescription )ars any demand on property "owned in common# eld )y anot er "co-owner# following t e re3uired num)er of years. $n t at event, t e party in possession ac3uires title to t e property and t e state of co-owners ip is ended . , $n t e case at )ar, t e property was registered in 19'' )y t e petitioner, solely in is name, w ile t e claim of t e private respondents was presented in 19-4. <as
BusOrg Summer (trust cases)

prescription t en, set inH 8e old in t e negative. %rescription, as a mode of terminating a relation of co-owners ip, must ave )een preceded )y repudiation "of t e co-owners ip#. T e act of repudiation, in turn is su)ject to certain conditions! "1# a co-owner repudiates t e co-owners ip= "0# suc an act of repudiation is clearly made 7nown to t e ot er co-owners= "/# t e evidence t ereon is clear and conclusive, and "4# e as )een in possession t roug open, continuous, e.clusive, and notorious possession of t e property for t e period re3uired )y law. 9 T e instant case s ows t at t e petitioner ad not complied wit t ese re3uisites. 8e are not convinced t at e ad repudiated t e co-owners ip= on t e contrary, e ad deli)erately 7ept t e private respondents in t e dar7 )y feigning sole eirs ip over t e estate under dispute. <e cannot t erefore )e said to ave 9made 7nown9 is efforts to deny t e co-owners ip. 4oreover, one of t e private respondents, Bmeteria Asejo, is occupying a portion of t e land up to t e present, yet, t e petitioner as not ta7en pains to eject er t erefrom. As a matter of fact, e soug t to recover possession of t at portion Bmeteria is occupying only as a counterclaim, and only after t e private respondents ad first soug t judicial relief. $t is true t at registration under t e Torrens system is constructive notice of title, 11 )ut it as li7ewise )een our olding t at t e Torrens title does not furnis a s ield for fraud. 11 $t is t erefore no argument to say t at t e act of registration is e3uivalent to notice of repudiation, assuming t ere was one, notwit standing t e long-standing rule t at registration operates as a universal notice of title. ?or t e same reason, we cannot dismiss t e private respondents5 claims commenced in 19-4 over t e estate registered in 19''. 8 ile actions to enforce a constructive trust prescri)es in ten years, 12 rec7oned from t e date of t e registration of t e property, 1. we, as we said, are not prepared to count t e period from suc a date in t is case. 8e note t e petitioner5s su# rosa efforts to get old of t e property e.clusively for imself )eginning wit is fraudulent misrepresentation in is unilateral affidavit of e.trajudicial settlement t at e is 9t e only eir and c ild of is mot er ?eli+a wit t e conse3uence t at e was a)le to secure title in is name also.9 1/Accordingly, we old t at t e rig t of t e private respondents commenced from t e time t ey actually discovered t e petitioner5s act of defraudation. 10 According to t e respondent :ourt of Appeals, t ey 9came to 7now Cof itD apparently only during t e progress of t e litigation.9 16 <ence, prescription is not a )ar. 4oreover, and as a rule, prescription is an affirmative defense t at must )e pleaded eit er in a motion to dismiss or in t e answer ot erwise it is deemed waived, 17 and ere, t e petitioner never raised t at defense. 1, T ere are recogni+ed e.ceptions to t is rule, )ut t e petitioner as not s own w y t ey apply. 8<B;B?2;B, t ere )eing no reversi)le error committed )y t e respondent :ourt of Appeals, t e petition is IBE$BI. T e Iecision soug t to )e reviewed is ere)y A??$;4BI in toto. Eo pronouncement as to costs.

57

G.R. No. 7,17. O8+ober 26, 1992 N3RES SUM O NG, 4e+9+9o!er, 2$.HON. (U3GE, REGION L TRI L )OURT, BR N)H GGGI, GUIMB , NUE6 E)I( a!" TT'. (ORGE . P S)U , re$4o!"e!+$.

$n t e %etition presently )efore us, Andres Sumaoang see7s to annul t e Iecision 1 dated /1 August 1980, rendered )y t e t en :ourt of ?irst $nstance "9:?$9# of Eueva Bcija in :ivil :ase Eo. ,9--@, w ic awarded to private respondent Atty. (orge A. %ascua t e sum of %11&,&&&.&& as attorney5s fees. 2n 1' (uly 19//, t e late Se)astian Sumaoang filed wit t e *ureau of >ands a omestead application over >ot Eo. /&98 of t e :adastral Survey of Santiago, $sa)ela, covering an area of 01./44' ectares. <e t en too7 possession of and cultivated t e lot. Iue to illness and t e dangerous conditions t en prevailing in Santiago, $sa)ela immediately after t e second 8orld 8ar, e transferred is residence to is native town of Sta. $gnacia, Tarlac w ere e died on 00 August 19'0. 4eanw ile, ?lorencio and ;egino, )ot surnamed Iomingo applied for a omestead patent over >ot Eo. /&98 during Se)astian Sumaoang5s a)sence. 2n 11 may 19'&, ?lorencio Iomingo was granted a omestead patent "<% Eo. G-'018# over t e land on t e strengt of w ic t e ;egister of Ieeds of $sa)ela issued 2riginal :ertificate of Title Eo. T-10&0 to im. To protect t eir interests over t e omestead, petitioner and is )rot ers, Gitaliano and %edro Sumaoang, engaged t e services of private respondent Atty. (orge A. %ascua, promising im, in a letter dated 1- Iecem)er 19,4 2 a contingent fee of 9not less t an one- alf "1J0#9 of t e entire omestead, if recovered. As counsel for t e Sumaoangs, Atty. %ascua filed a formal protest wit t e *ureau of >ands contesting t e legality of t e issuance of <omestead %atent Eo. G-'018 to ?lorencio Iomingo. 2n - ?e)ruary 19,0, t e *ureau of >ands rendered a decision . declaring <omestead %atent Eo. G-'018 inoperative and ordered t at steps )e ta7en towards t e filing of a reversion case wit t e view to cancelling t at omestead patent and its corresponding certificate of title, and disposing of t e land to petitioner and is )rot ers 1 as eirs of Se)astian Sumaoang 1 s ould t e facts so warrant. %ursuant to t e a)ove decision of t e *ureau of >ands, t e Solicitor @eneral filed, on )e alf of t e ;epu)lic of t e % ilippines, a reversion case against ?lorencio and ;egino Iomingo for t e cancellation of <omestead %atent Eo. G-'018 and 2riginal :ertificate of Title Eo. T10&1 )efore t e :?$ of $sa)ela. $n t at case, Atty. %ascua filed, on )e alf of petitioner and is )rot ers, a complaint-in-intervention claiming preferential rig ts to t e land in favor of is clients. / After trial, t e lower court rendered a decision 0 dated 1- ?e)ruary 19-1 declaring t e omestead patent, as well as t e certificate of title, null and void and ordered t e reversion of t e land to t e State su)ject to t e rig ts of petitioner and is )rot ers. $n its dispositive portion, t e decision stated t at!
8<B;B?2;B, judgment is rendered! "a# Ieclaring omestead patent Eo. G-'018 and t e corresponding 2riginal :ertificate of Title Eo. T-10&1 )ot in favor of t e defendant ?lorencio Iomingo and covering >ot Eo. /&98, :ad. 011, null and void BusOrg Summer (trust cases)

and ordering t e reversion of t e said lot to t e State su)ject to t e rig ts of t e intervenors as t e facts may warrant= ")# 2rdering defendant ?lorencio Iomingo to surrender to t e defendant ;egister of Ieeds is owner5s duplicate of said torrens title or 2riginal :ertificate of Title Eo. T-10&1 for cancellation and any ot er transfer certificates of title t at mig t ave )een issued )y t e ;egister of Ieeds emanating from 2riginal :ertificate of Title Eo. T-10&1= "c# 2rdering t e ;egister of Ieeds of $sa)ela, upon is receipt of t e owner5s duplicate certificate of title to cancel omestead patent Eo. G'018 and t e original and duplicate of said 2riginal :ertificate of Title Eo. T-10&1 in t e name of ?lorencio Iomingo and any ot er transfer certificates of title issued emanating from 2riginal :ertificate of Title Eo. T-10&1= "d# 2rdering t e defendant ?lorencio Iomingo to pay to t e intervenors t e sum of 1,& 0J/ cavanes of palay or t e value of %1,908.&& computed from %10.&& per cavan, per agricultural year since 19'/ until t is judgment )ecomes final.

T is decision was affirmed )y )ot t e :ourt of Appeals 6 and t e Supreme :ourt. 7 T e decision )ecame final and e.ecutory on 11 ?e)ruary 19-/. $n 19--, petitioner and is )rot ers too7 possession of >ot Eo. /&98 and su)divided it among t emselves. Eot aving received compensation for is professional services as counsel, Atty. %ascua filed sometime in 19-9 a complaint for collection of attorney5s fees against is former clients, petitioner and is )rot ers, )efore t e :?$ of @uim)a, Eueva Bcija. T e trial court stated in its judgment dated /1 August 1980 t at Atty. %ascua was entitled only to 9t e e3uivalent of one- alf of t e property 1 in its peso valuation9 and some ow ordered petitioner and is )rot ers to pay attorney5s fees in t e amount of %11&,&&&.&&. T e dispositive portion of t is decision reads as follows! 8<B;B?2;B, in view of all t e foregoing, judgment is ere)y rendered in favor of t e plaintiff, Atty. (orge A. %ascua, ordering t e defendants Gitaliano, Andres, and %edro all surnamed Sumaoang, to jointly and severally pay t e sum of 2ne <undred Ten %esos "%11&,&&&.&&# as attorney5s fee= t e sum of 2ne T ousand ?ive <undred %esos "%1,'&&.&&# as attorney5s fee in t e prosecution of t e instant case, to pay t e cost of t e suit. T e decision of /1 August 1980 of t e :?$ of @uim)a )ecame final and e.ecutory. 2n motion of Atty. %ascua, t e trial court on 00 April 198/ ordered t e issuance of a writ of e.ecution. T e corresponding writ of e.ecution was issued )y t e *ranc :ler7 of :ourt on 0' (anuary 198'. , T e Ieputy %rovincial S eriff t en levied upon and sold at pu)lic auction t e entire lot of 01./44' ectares ere involved to Atty. %ascua as t e sole and ence t e ig est )idder, for and in consideration of %11&,&&&.&& as partial payment of t e judgment o)ligation. 9 %etitioner )roug t t e present %etition 11 as7ing for t e nullification of t e /1 August 1980 decision of t e @uim)a :?$, as well as t e writ of e.ecution, t e notice of levy and auction sale and t e certificate of sale issued in favor of Atty. %ascua. %etitioner5s cause of action is anc ored principally on t e contention t at t e award of %11&,&&&.&& as attorney5s fees of Atty. %ascua was unconsciona)le. %etitioner argues t at t e Solicitor @eneral, and not Atty. %ascua, ad actively andled t e reversion case and t at Atty. %ascua5s participation t erein was limited to t e filing of a complaint-in-intervention on )e alf of is clients. $n t e complaint-in-intervention, Atty. %ascua

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as7ed for t e same relief as t at soug t )y t e Solicitor @eneral, alt oug t e former added t e additional prayer t at is clients )e accorded preferential rig ts over t e land reverted to t e pu)lic domain. %etitioner furt er contended t at t e contract for legal services )etween petitioner and is )rot ers on t e and and Atty. %ascua on t e ot er, provided only for attorney5s fees of %',&&&.&&, as Atty. %ascua imself allegedly admitted in t e complaint-inintervention filed in t e reversion case. 6pon t e ot er and, Atty. %ascua5s principal contentions are t at award of attorney5s fees )y t e @uim)a :?$ in its /1 August 1980 decision was not unconsciona)le and t at decision ad already )ecome final and e.ecutory. T e ordinary rule is t at a judgment may )e annulled only on certain defined grounds, lac7 of jurisdiction, fraud, or illegality. 11 $n t e case at )ar, petitioner as not adduced any jurisdictional defects vitiating t e judgment assailed= neit er as petitioner s own t at t e judgment, as suc , is in violation of a particular statute. %etitioner5s allegation t at t ere was improper venue would not suffice to nullify t e decision already rendered and final. ?rom t e view we ta7e of t is case, owever, t e circumstances t at t e Iecision of t e @uim)a :?$ of /1 August 1980 )ecame final and e.ecutory and t at t e jurisdiction of t e trial court to render t at Iecision as not )een successfully assailed, are not decisive. $t is essential to note t at t e relations ip )etween an attorney and is client is a fiduciary one. :anon 1- of t e :ode of %rofessional ;esponsi)ility stresses t at 9a lawyer owes fidelity to t e cause of is client and e s all )e mindful of t e trust and confidence reposed in im.9 :anon 1, re3uires a lawyer to 9 old in trust all monies and properties of is client t at may come into is possession. 12 A lawyer it not merely t e defender of is client5s cause and a trustee of is client in respect of t e client5s cause of action and assets= e is also, and first and foremost, an officer of t e court and participates in t e fundamental function of administering justice in society. $t follows t at a lawyer5s compensation for professional services rendered are su)ject to t e supervision of t e court, not just to guarantee t at t e fees e c arges and receives remain reasona)le and commensurate wit t e services rendered, )ut also to maintain t e dignity and integrity of t e legal profession to w ic e )elongs. 6pon ta7ing is attorney5s oat as an officer of t e court, a lawyer su)mits imself to t e aut ority of t e courts to regulate is rig t to c arge professional fees. 1. $n t e instant case, t e :ourt considers t at t e fees w ic private respondent Atty. %ascua received from petitioner and is )rot ers )ecame unreasona)le and unconsciona)le in c aracter, not )ecause t e original agreement )etween Atty. %ascua and is clients was itself unreasona)le and unconsciona)le )ut rat er as a result of t e su)se3uent dispositions of t e trial court. T e Iecision of t e trial court s ows t at respondent (udge up eld t e reasona)leness and t e lawfulness of t e contingent fee contract )etween Atty. %ascua and t e Sumaoang )rot ers. $nstead, owever, of simply awarding Atty. %ascua a one- alf "1J0# portion of t e property involved, respondent (udge would up awarding Atty. %ascua a peso amount. $n ot er words, respondent (udge unilaterally and officiously converted t e form or medium of compensation from
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t e "1J0# portion of t e land recovered )y petitioner and is )rot ers t roug t e efforts of Atty. %ascua, into a peso amount representing, in t e mind of t e (udge, t e value of t at one- alf "1J0# portion. $n is decision, respondent (udge said, among ot er t ings! $t is owever noted )y t is :ourt t at plaintiff s ould only )e awarded t ee2ui+alent of one-half of the propert, as is lawful attorney5s fee in its peso valuation. !he land of the defendants co""ands a high price per hectare in (sa#ela #ecause 1(A had constructed an irrigation canal near it which supplies a#undant water suppl, "a=ing it possi#le for defendants to har+est twice a ,ear./er hectare, the land owned #, the defendants now co""ands /1>,>>>.>> "ini"u" as price. 1/ "Bmp asis supplied# 4ost c arita)ly viewed, respondent (udge was apparently la)oring under t e impression t at t e land involved ad greatly appreciated in value during t e years of litigation. 8it out re3uiring or o)taining any t ird party appraisal of t e actual or fair mar7et value of t e 01./44' ectares involved, respondent (udge fi.ed t e sum of %11&,&&&.&& as t e 9e3uivalent of 1J0 of t e property 1 in its peso valuation.9 T us, t e respondent (udge in fact disregarded t e contingent fee contract )etween attorney and client, after olding t at contract lawful. 8orse, t e (udge turned out to )e grossly uninformed a)out property valuations, especially t e valuation of property sold at pu)lic sale in @uim)a, Eueva Bcija, and is judgment allowed Atty. %ascua to ac3uire t e entire parcel of land w ic ad )een t e su)ject matter of t e litigation and for t e recovery of w ic , Atty. %ascua ad )een retained )y t e Sumaoang )rot ers. $n )rief, Atty. %ascua was a)le to ac3uire all t e 01./44' ectares of land alt oug t e respondent court ad intended to award im only one- alf "1J0# 9t e CassumedD value of suc land.9 $n Licudan +s. %ourt of Appeals, 10 t is :ourt said! . . . !here should ne+er #e an instance where a law,er gets as attorne,&s fees the entire propert, in+ol+ed in the litigation . (t is unconsciona#le for the +ictor in litigation to lose e+er,thing he won to the fees of his own law,er. ... ... ... $n resolving t e issue of reasona)leness of t e attorney5s fees, we up old t e time- onoured legal ma.im t at a lawyer s all at all times up old t e integrity and dignity of t e legal profession so t at is )asic ideal )ecomes one of rendering service and securing justice, not money-ma7ing. For the worst scenario that can ne+er happen to a client is to lose the litigated propert, to his law,er in who" all trust and confidence were #estowed at the +er, inception of the legal contro+ers,. . . . "Bmp asis supplied# 8e )elieve and so old t at respondent Atty. %ascua, under t e circumstances of t is case, must )e regarded as olding t e title of t e property ac3uired )y im at pu)lic sale under an implied trust in favor of petitioner and is )rot ers, to t e e.tent of one- alf "1J0# of t at property. Among t e species of implied trusts recogni+ed )y our :ivil :ode is t at set fort in Article 14',! $f property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes.

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T e 9mista7es9 or 9fraud9 t at results in an implied trust )eing impressed upon t e property involved, may )e t e mista7e or fraud of a third person, and need not )e a mista7e or fraud committed directly )y t e trustee imself under t e implied trust. 16 Accordingly, in t e instant case, an implied trust was esta)lis ed upon t e land ac3uired )y Atty. %ascua even t oug t e operative mista7e was a mista7e of respondent trial judge. ;espondent (udge may )e seen to ave intended to convey only one- alf "1J0# of t e land involved as attorney5s fees to Atty. %ascua. Atty. %ascua, owever, too7 advantage of t e (udge5s mista7e in order to ac3uire all t e 01./44' ectares for imself. Atty. %ascua o)viously 7new t at under is contract wit is clients, e was entitled to as7 only for one- alf "1J0# of t e land. 8 en e purc ased t e entire land at pu)lic auction for %11&,&&&.&& "leaving is clients still owing im %1,'&&.&&#, t e amount and c aracter of is attorney5s fees )ecame unreasona)le and unconsciona)le and constituted unjust enric ment at t e e.pense of is clients. T e conclusion we reac in t is case rests not only on Article 14', of t e :ivil :ode )ut also on t e principles of t e general law of trusts w ic , t roug Article 1440 of t e :ivil :ode, ave )een adopted or incorporated into our civil law, to t e e.tent t at suc principles are not inconsistent wit t e :ivil :ode and ot er statutes and t e ;ules of :ourt. $n 'oa, Jr. +. %ourt of Appeals, 17 w ere petitioner ad retained property t e )eneficial owners ip of w ic )elonged to t e private respondents, t e Supreme :ourt affirmed t e decision of t e :ourt of Appeals directing petitioner to convey title to t at property to private respondents. T e Supreme :ourt rested its decision on t e principles of t e general law of trusts w ic , t e :ourt eld, included t e following general principles em)edded in American law and jurisprudence! A constructi+e trust, ot erwise 7nown as a trust ex "aleficio, a trust ex delicto, a trust de son tort, an involuntary trust, or an i"plied trust, is a trust #, operation of law which arises contrary to intention and in invitum, against one who, )y fraud, actual or constructive, )y duress or a)use of confidence,#, co""ission of wrong, or #, an, for" of unconsciona#le conduct, artifice, concealment, or 3uestiona)le means, or who in an, wa, against e2uit, and good conscience, either has o#tained or holds the legal right to propert, which he ought not, in e2uit, and good conscience, hold and enjo,. $t is raised )y e3uity to satisfy t e demands of justice. <owever, a constructive trust does not arise on every moral wrong in ac3uiring or olding property or on every a)use of confidence in )usiness or ot er affairs= ordinarily suc a trust arises and will )e declared only on wrongful ac3uisitions or retentions of property of w ic e3uity, in accordance wit its fundamental principles and t e traditional e.ercise of its jurisdiction or in accordance wit statutory provision, ta7es cogni+ance. $t as )een )roadly ruled t at a )reac of confidence, alt oug in )usiness or social relations, rendering an ac3uisition or retention of property )y one person unconsciona)le against anot er, raises a constructive trust. And specifically applica)le to t e case at )ar is t e doctrine t at 9A constructive t rust is su)stantially an appropriate remedy against unjust enric ment. $t is raised )y e3uity in respect of property, w ic as )een ac3uired )y fraud, or where, although ac2uired originall, without fraud, it is against e3uity t at it s ould )e
BusOrg Summer (trust cases)

retained )y t e person olding it.9 T e a)ove principle is not in conflict wit t e Eew :ivil :ode, :ode of :ommerce, ;ules of :ourt and special laws. And since De are a court of law and of e2uit,, t e case at )ar must )e resolved on t e general principles of law on constructi+e trust which #asicall, rest on e2uita#le considerations in order to satisf, the de"ands of justice, "oralit,, conscience and fair dealing and t us protect t e innocent against fraud. As t e respondent court said, 9$t )e ooves upon t e courts to s ield fiduciary relations against every manner of c icanery or detesta)le design cloa7ed )y legal tec nicalities.9 1, ":itations omitted= Bmp asis partly supplied and partly in t e original# A constructive trust, in general usage in t e 6nited States, 19 is not )ased on an e.pressed intent t at it s all e.ist, or even on an implied or presumed intent. A constructive trust is created )y a court of e3uity as a means of affording relief. 21 :onstructive trusts constitute a remedial device 9t roug w ic preference of self is made su)ordinate to loyalty to ot ers.9 21 $n particular, fraud on t e part of t e person olding or detaining t e property at sta7e is not essential in order t at an implied trust may spring into )eing. $n ot er words of (udge :ardo+o, in3eatt, +. 5uggenhei" $xploration %o.! 22 CwD en property as )een ac3uired in suc circumstances t at t e older of t e legal title may not in good conscience retain t e )eneficial interest, e3uity converts im into a trustee. T e conse3uences of an implied trust are, principally, t at t e implied trustee s all deliver t e possession and reconvey title to t e property to t e )eneficiary of t e trust, and to pay to t e latter t e fruits and ot er net profit received from suc property during t e period of wrongful or unconsciona)le olding, and ot erwise to adjust t e e3uities )etween t e trustee olding t e legal title and t e )eneficiaries of t e trust. 2. Applying t e provisions of Article 14', of t e :ivil :ode and t e foregoing principles of t e general law of trusts, we treat t e present so-called 9%etition for Annulment of t e Iecision of t e :?$, etc.9 as a 9%etition for ;econveyance9 and, accordingly, re3uire private respondent Atty. %ascua to reconvey or cause t e reconveyance of one- alf "1J0# of t e 01./44' ectares of land ere involved, plus one- alf "1J0# of all profits "net of e.penses and ta.es# w ic Atty. %ascua may ave derived from or in respect of suc land during t e time e as eld t e same, to petitioner and is )rot ers, Gitaliano and %edro Sumaoang. 8<B;B?2;B, for all t e foregoing, and treating t e present %etition as a %etition for ;econveyance of >and, t e :ourt ere)y @;AETS t e same. %rivate respondent Atty. (orge A. %ascua is ere)y 2;IB;BI to reconvey or cause t e reconveyance of one- alf "1J0# of t e land ere involved, plus one- alf "1J0# of t e net profits derived from or in respect of suc land during t e time it as )een eld )y private respondent %ascua, to petitioner and petitioner5s )rot ers, Gitaliano and %edro Sumaoang. Eo pronouncement as to costs.

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G.R. No. 120710 3e8e%ber 29, 199, RI) R3O F. M REUE&, URE M. ) BE& S, EGEEUIEL F. M REUE&, S L6 3OR F. M REUE&, NTONIO F. M REUE&, a!" R F EL F. M REUE&, (R., petitioners, vs. )OURT OF PPE LS, LFRE3O F. M REUE& a!" BELEN F. M REUE&, respondents.

$n view of t e private respondents5 indifference, petitioners, now joined )y ;afael (r., filed a complaint on 4ay /1, 1991 for 9;econveyance and %artition wit Iamages9 )efore t e trial court / alleging t at )ot t e 9Affidavit of Adjudication9 and 9Ieed of Ionation $nter Givos9 were fraudulent since t e private respondents too7 advantage of t e advanced age of t eir fat er in ma7ing im e.ecute t e said documents. $n t eir Answer, private respondents argued t at petitioner5s action was already )arred )y t e statute of limitations since t e same s ould ave )een filed wit in four years from t e date of discovery of t e alleged fraud. 0 After due proceedings, t e trial court, on April 09, 199/, rendered its decision 6 in favor of t e petitioners, in t is wise! %rescription cannot set in )ecause an action to set aside a document w ic is void a# initio does not prescri)e. *ot t e 9Affidavit of Adjudication9 and t e 9Ionation $nter Givos9 did not produce any legal effect and did not confer any rig t w atsoever. B3ually, Transfer :ertificate of Title Eo. ///'& and 4,4,1 issued pursuant t ereto, are li7ewise null and void a# initio. T erefore, t e ine.istence of t ese documents and certificates of title is permanent and cannot )e t e su)ject of prescription. %rivate respondents, dissatisfied wit t e trial court5s ruling, soug t recourse )efore t e :ourt of Appeals. 2n April 09, 199,, t e said court reversed t e trial court5s finding, t us! 7 $n line wit t e decision of t e Supreme :ourt in @erona v. de @u+man, 11 S:;A 14/, 1'-, t e action t erefor may )e filed wit in four "4# years from t e discovery of t e fraud. Suc discovery is deemed to ave ta7en place in t e case at )ar on (une 1,, 1980, w en t e affidavit of selfadjudication was filed wit t e ;egister of Ieeds and new certificate of title "Eo. ///'&# was issued in t e name of ;afael 4ar3ue+, Sr. "B. i)its B and ', page 1,, record#. :onsidering t at t e period from (une 1,, 1980, w en T:T Eo. ///'& was issued in t e name of ;afael 4ar3ue+ Sr., to 4ay /1, 1991, w en appellees5 complaint was filed in court, is eig t "8# years, eleven "11# mont s and fifteen "1'# days, appellants5 action to annul t e deed of selfadjudication is definitely )arred )y t e statute of limitation. %etitioner5s motion for reconsideration proved unavailing. , <ence, t ey are now )efore t is :ourt to raise t e issue of w et er t eir action for reconveyance ad prescri)ed. %etitioners, in contending t at t e action ad not yet prescri)ed, assert t at )y virtue of t e fraudulent 9Affidavit of Adjudication9 and 9Ieed of Ionation9 w erein t ey were allegedly deprived of t eir just s are over t e parcel of land, a constructive trust was created. 9 ?ort wit , t ey maintain t at an action for reconveyance )ased on implied or constructive trust prescri)es in ten "1&# years.

ROMERO, J.: $n our society, tradition and law ens rine t e family as a )asic social institution. $n prose, poetry and song, it is lyrically e.tolled. 8 at a person )ecomes in adult ood, for good or ill, is attri)uted to t e influence of t e ome and family during is formative years. $n t e family one im)i)es desira)le values and personality traits. Eo matter ow far one roams, e invaria)ly turns to is family for security, appro)ation and love. Against t e w ole world, mem)ers of t e family stand solid as @i)raltar. $t is t us eartrending to find mem)ers of t e same family at odds wit eac ot er, eac playing one against t e ot er. T e facts of t e instant case illustrate t e inglorious and unedifying spectacle of a 9family feud.9 all )ecause of a property dispute. Iuring t eir lifetime, t e spouses ;afael 4ar3ue+, Sr. and ?elicidad 4ar3ue+ )egot twelve c ildren, namely! "1# Eatividad= "0# Aurea= "/# <erminigildo= "4# ?ilomena= "'# B.e3uel= ",# Salvador= "-# @uadencio= "8# ;afael, (r., "9# *elen= "1&# Alfredo= "11# ;icardo= and "10# Antonio. Sometime in 194', t e spouses ac3uired a parcel of land wit a lot area of 1,1 s3uare meters in San (uan Iel 4onte, ;i+al, more particularly descri)ed in T:T Eo. 4-'-0, 1w erein t e constructed t eir conjugal ome. $n 19'0, ?elicidad 4ar3ue+ died intestate. T irty years later or in 1980, ;afael 4ar3ue+, Sr. e.ecuted an 9Affidavit of Adjudication9 vesting unto imself sole owners ip to t e property descri)ed in T:T Eo. 4-'-0. :onse3uently, T:T Eo. 4-'-0 was cancelled and T:T Eo. ///'& 2 was issued in is name on (une 1,, 1980. T ereafter, on Iecem)er 09, 198/ ;afael 4ar3ue+, Sr. e.ecuted a 9Ieed of Ionation $nter Givos9 . covering t e land descri)ed in T:T Eo. ///'&, as well as t e ouse constructed t ereon to t ree of t is c ildren, namely! "1# petitioner ;afael, (r.= "0# Alfredo= and "/# *elen, )ot private respondents erein, to t e e.clusion of is ot er c ildren, petitioners erein. As a result of t e donation, T:T Eo. ///'& was cancelled and T:T Eo. 4-'-0 was issued in private respondents5 name. ?rom 198/ to 1991, private respondents were in actual possession of t e land. <owever, w en petitioners learned a)out t e e.istence of T:T Eo. 4-'-0, t ey immediately demanded t at since t ey are also c ildren of ;afael 4ar3ue+, Sr., t ey are entitled to t eir respective s ares over t e land in 3uestion. 6nfortunately, efforts to settle t e dispute proved unavailing since private respondents ignored petitioners5 demands.
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$t must )e noted t at ?elicidad 4ar3ue+ died in 19'0= t us, succession to er estate is governed )y t e present :ivil :ode. 6nder Article 88- t ereof, er compulsory eirs are er legitimate c ildren, petitioners and private respondent t erein, and er spouse, ;afael 4ar3ue+, Sr. Eow, in 1980, ;afael 4ar3ue+, Sr. decided to adjudicate t e entire property )y e.ecuting an 9Affidavit of Adjudication9 claiming t at e is t e sole surviving eir of is deceased wife ?elicidad ?. 4ar3ue+. 11 As suc , w en ;afael 4ar3ue+ Sr., for one reason or anot er, misrepresented in is unilateral affidavit t at e was t e only eir of is wife w en in fact t eir c ildren were still alive, and managed to secure a transfer of certificate of title under is name, a constructive trust under Article 14', was esta)lis ed. 11 :onstructive trusts are created in e3uity in order to prevent unjust enric ment. T ey arise contrary to intention against one w o, )y fraud, duress or a)use of confidence, o)tains or olds t e legal, rig t to property w ic e oug t not, in e3uity and good conscience, to old. 12 %rescinding from t e foregoing discussion, did t e action for reconveyance filed )y t e petitioners prescri)e, as eld )y t e :ourt of AppealsH $n t is regard, it is settled t at an action for reconveyance )ased on an implied or constructive trust prescri)es in ten years from t e isuance of t e Torrens title over t e property. 1. ?or t e purpose of t is case, t e prescriptive period s all start to run w en T:T Eo. ///'& was issued, w ic was on (une 1,, 1980. T us, considering t at t e action for reconveyance was filed on 4ay /1, 1991, or appro.imately nine years later, it is evident t at prescription ad not yet )arred t e action. To )olster t e foregoing position, t e :ourt of Appeal5s reliance on 5erona +. de 5u4"an, 1/ is misplaced. $nA"erol +. 3agu"#aran, 10 we ruled t at t e doctrine laid down in t e earlier @erona case was )ased on t e old :ode of :ivil %rocedure 16 w ic provided t at an action )ased on fraud prescri)es wit in four years from t e date of discovery. <owever, wit t e effectivity of t e present :ivil :ode on August /&, 19'&, t e provisions on prescriptive periods are now governed )y Articles 11/9 to 11''. Since implied or constructive trusts are o)ligations created )y law t en t e prescriptive period to enforce t e same prescri)es in ten years. 17 :ogni+ant of t e fact t at t e disputed land was conjugal property of t e spouses ;afael, Sr. and ?elicidad, owners ip of t e same is to )e e3ually divided )etween )ot of t em. %rescinding t erefrom, can ;afael 4ar3ue+ Sr., as trustee of is wife5s s are, validly donate t is portion to t e respondentsH 2)viously, e cannot, as e.pressly provided in Art. -/, of t e :ivil :ode, t us! Art. -/,. @uardians and trustees cannot donate t e property entrusted to t em. 4oreover, no)ody can dispose of t at w ic does not )elong to im. 1, *e t at as it may, t e ne.t 3uestion is w et er e can validly donate t e ot er alf of t e property w ic e ownsH Again, t e 3uery need not detain us at lengt for t e :ivil :ode itself recogni+es t at one of t e in erent rig ts of an owner is t e rig t to dispose of is
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property. 19 8 et er t is donation was inofficious or not is anot er matter w ic is not wit in t e province of t is :ourt to determine inasmuc as it necessitates t e production of evidence not )efore it. ?inally, w ile we rule in favor of petitioners, we cannot grant t eir plea for moral damages and attorney5s fees 21since t ey ave not satisfactorily s own t at t ey ave suffered 9mental anguis 9 as provided in Article 0019 and Article 009& of t e :ivil :ode. Similarly, t e plea for attorney5s fees must li7ewise )e denied )ecause no premium s ould )e placed on t e rig t to litigate. 21 8<B;B?2;B, in view of t e foregoing, t e decision of t e :ourt of Appeals in :A-@.;. :G Eo. 41014 is ;BGB;SBI and SBT AS$IB. B.cept as to t e award of attorney5s fees w ic is ere)y IB>BTBI, t e judgment of t e trial court in :ivil :ase Eo. ,&88- is ;B$ESTATBI. Eo costs.

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G.R. No. L-./22, February 21, 19,1 SOTERO RM MENTO, plaintiff-appellant, vs. )IPRI NO GUERRERO, defendant-appellee. A case certified )y t e :ourt of Appeals pursuant to section /1 of t e (udiciary Act, as amended, on t e ground t at it raises purely 3uestions of law. %laintiff )roug t t is action against defendant in t e :ourt of ?irst $nstance of :ota)ato "@eneral Santos :ity# on (anuary 0-, 19,-, see7ing t e reconveyance of a parcel of land, or for t e declaration of an implied trust t ereon, and for damages. T e disputed property is >ot Eo. 9-4, %>S-04--I, situated in Alinan ,, %olomolo7, Sout :ota)ato, wit an area of appro.imately 11 ectares. T e property is covered )y 2riginal :ertificate of Title Eo. G-1,1/' issued )y t e ;egister of Ieeds of :ota)ato pursuant to ?ree %atent Eo G-19109 granted )y t e Iirector of >ands on (uly 0&, 19,1 in favor of defendant, )ut w ic plaintiff claims was ac3uired )y defendant t roug fraud and misrepresentation. Iefendant raised t e following affirmative defenses in is Answer! t at plaintiff as no cause of action= t at t e trial :ourt as no jurisdiction over t e su)ject matter= t at t e action as prescri)ed= and t at it as not )een )roug t in t e name of t e real party in interest. T e trial :ourt, in an 2rder dated ?e)ruary 14, 19,8, sustained defendant5s affirmative defenses and dismissed t e :omplaint olding t at plaintiff as no cause of action against defendant= t at if t e action is to )e )ased on fraud, t e action as prescri)ed= and t at if t e action is for cancellation of title, plaintiff as no personality to )ring t e action, t e proper party to institute t e same )eing t e ;epu)lic of t e % ilippines. ?rom t is 2rder, plaintiff appealed to t e :ourt of Appeals assigning t e following errors!
$# T<B T;$A> :26;T B;;BI $E E2T BVB;:$S$E@ $TS BO6$TN (6;$SI$:T$2E AS BE6E:$ATBI *N (6;$S%;6IBE:B 2E T<B 4ATTB;= $$# T<B T;$A>, :26;T B;;BI $E $@E2;$E@ T<B %>A$ET$??A%%B>>AET5S :>A$4 2? %2SSBSS$2E AEI 2? 28EB;S<$% 2GB; T<B >AEI $E O6BST$2E= $$$# T<B T;$A> :26;T B;;BI $E <2>I$E@ T<AT %>A$ET$??A%%B>>AET <AS E2 :A6SB 2? A:T$2E= $G#T<B T;$A> :26;T5 B;;BI $E <2>I$E@ T<AT %>A$ET$??A%%B>>AET5S A:T$2E ?2; ;B:2EGBNAE:B EI IB:>A;AT$2E 2? AE $4%>$BI T;6ST, AEI IA4A@BS <AS %;BS:;$*BI.

of >ands on (uly -, 19'9 t e "correct date is (anuary ,, 19,4#= t at w en e was following up is omestead Application, e was s oc7ed to discover t at defendant, t roug fraud and misrepresentation, succeeded in o)taining ?ree %atent Eo. G-19109 and 2:T Eo. G-1,1/' )y falsely stating in is ?ree %atent Application t at e ad continuously possessed t e lot in 3uestion since (uly 4, 194' or prior t ereto, w en, in trut and in fact, defendant was never in possession t ereof. <e t en prayed t at t e :ourt order defendant to reconvey t e disputed lot to im, or if reconveyance is improper t at t e lot )e declared in trust for t e )enefit of t e ;epu)lic of t e % ilippines, and for im, w o is clearly entitled t ereto. Iefendant, in is Answer, denied t at e was not in possession, alleging t at e ad )een in occupation of said lot and ad even aut ori+ed 4acario :aangay to administer t e same w ile e was temporarily away for missionary wor7 in :agayan de 2ro t at e ad filed is application on August 1, 19'8 prior to plaintiff5s application filed on (uly -, 19'9, and t at title was issued in is favor on (uly 0&, 19,1. Iefendant also attac ed to is Answer a :ertification dated April 1, 19,-, issued )y t e Acting Iistrict >and 2fficer, Iistrict >and 2ffice G$$$-4 @eneral Santos, :ota)ato, to t e effect t at t e parties5 conflicting claims are under investigation in I.>.2. :onflict Eo. 1' "E#. 1 $t will t us )e seen t at t e disputed land was t e su)ject of two %atent Applications. Iefendant filed is ?ree %atent Application on August 1, 19'8. %laintiff filed is <omestead %atent Application appro.imately one year later or on (uly -, 19'9. Iefendant was issued ?ree %atent Eo. G-19109 on (uly 0&, 19,1 and 2riginal :ertificate of Title Eo. G-1,1/' on ?e)ruary 0/, 19,0. %laintiff5s <omestead Application was approved on (anuary ,, 19,4. T e present suit was instituted on (anuary 0-, 19,-. $t is to )e noted t at t e trial :ourt dismissed t e case after a earing on t e affirmative defenses. Eo trial on t e merits was eld. T at dismissal was )ased on t e following grounds! t at plaintiff as no personality to file t e action for reconveyance, t e proper party )eing t e ;epu)lic of t e % ilippines= t at plaintiff as no cause of action in t e a)sence of privity of contract )etween t e parties= t at defendant5s title, issued in 19,0, as )ecome indefeasi)le, conse3uently, t e :ourt is powerless to cancel t e same= and t at even if t e suit were )ased on fraud, t e action as prescri)ed. $t is true t at t e )asic rule is t at after t e lapse of one year, a decree of registration is no longer open to review or attac7, alt oug its issuance is attended wit fraud. 2 T is does not mean, owever, t at t e aggrieved party is wit out remedy at law. $f t e property as not as yet passed to an innocent purc aser for value, an action for reconveyance is still availa)le. . T e sole remedy of t e land owner w ose property as )een wrongfully or erroneously registered in anot er5s name is, after one year from t e date of t e decree, not to set aside t e decree, ... )ut, respecting t e decree as incontroverti)le and no longer open to review, to )ring an ordinary action in t e ordinary court of justice for reconveyance or, if t e property as passed into t e ands of an innocent purc aser for value, for damages. / T is is e.actly w at plaintiff as done. <e as instituted t is action for reconveyance alleging t at defendant ad succeeded in o)taining

$n a ;esolution dated (uly 04, 19-1, and as previously stated t e :ourt of Appeals certified t e case to t is :ourt )ecause t e appeal involves only legal issues. T e :omplaint alleges t at plaintiff is t e possessor-actual occupant of, and t e omestead applicant, over >ot Eo. 9-4, aving continuously possessed and cultivated t e same since 19'' and aving filed is <omestead Application Eo. /--/1, t erefore on (uly -, 19-9= t at t e aforesaid application was approved )N t e *ureau
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title t roug fraud and misrepresentation )y falsely stating in is free patent application t at e ad continuously possessed t e land since (uly 4, 194' w en, in trut and in fact, defendant ad never )een in possession. %laintiff as )een una)le to prove is c arges of fraud and misrepresentation )ecause of t e dismissal 2rder of t e trial :ourt wit out )enefit of a full-dress earing. 8 ile plaintiff is not t e 9owner9 of t e land e is claiming so t at, strictly spea7ing, e as no personality to file t is action, 0 e pleads for e3uity and invo7es t e doctrine of implied trust enunciated in Article 14', of t e :ivil :ode as follows! Art. 14',. $f property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes. T e particular circumstances o)taining erein impel us to e.ercise our e3uity jurisdiction to t e end t at su)stantial justice may )e dispended to t e party litigants. To affirm t e trial :ourt5s 2rder of dismissal would leave t e present controversy unresolved and pending investigation at t e administrative level. Aside from t e lengt of time it would pr pro)a)ly ta7e for t e case to reac t e ig est administrative aut ority, any final adjudication rendered )y t e latter may eventually )e raised to t e appellate :ourts for judicial review. T is circuitous and tedious process can )e eliminated for t e sa7e of t e speedy administration of justice )y remanding t e case to t e trial :ourt for determination on t e merits of t e issue of validity of t e issuance of ?ree %atent Eo. G-19109 and of t e title w ic followed as a matter of course. A court of e3uity w ic as ta7en jurisdiction and cogni+ance of a cause for any purpose will ordinarily retain jurisdiction for all purposes "Te.as v. ?lorida, /&, 6S 098= Narnell v. <ills)oroug %ac7ing :o., 90 A>; 14-'= Br7s7ine v. 6p am 1/0 % 0d 019, and ot er cases cited#, decide all issues w ic are involved in t e su)ject matter of t e dispute )etween t e litigants ";ussel v. :lar7, / > ed 0-1 and ot er cases cited#, and award, relief w ic is complete and finally disposes of t e litigation Aatc en v. >andy /80 6S /0/ and ot er cases cited so as to accomplis full justice )etween t e parties litigants, "<ep)urn v. Iunlop C6SD 4 > ed ,'= <enderson v. <enderson, 4, SB 0d 1& and ot er cases cited#, prevent future litigation "Sonnic7sen v. Sonnic7sen, 11/ % 0d 49' and ot er cases cited#, and ma7e performance of t e court5s decree perfectly safe to t ose w o may )e compelled to o)ey it "8rig t v. Scotton 101 A ,9= 2lsen v. Eational 4emorial @ardens, $nc. 11' E8 0d /10# "cited in 0- Am (ur 0d B3uity, sec. 1&8#. >i7ewise to satisfy t e demands of justice, t e doctrine of implied trust may )e made to operate in plaintiff5s favor, assuming t at e can prove is allegation t at defendant ad ac3uired legal title )y fraud. ... a constructive trust is a trust 5raised )y construction of law, or
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arising )y operation of law. $n a more restricted sense and as contra-distinguis ed from a resulting trust, a constructive trust is a trust not created )y any words, eit er e.pressly or impliedly evincing a direct intention to create a trust, )ut )y t e construction of e3uity in order to satisfy t e demands of justice. $t does not arise )y agreement or intention )ut )y operation )y law.5 "89 :.(.S. -0,-0-#. 9$f a person o)tains legal title to property )y fraud or concealment, courts of e3uity will impress upon t e title a so-called constructive trust in favor of t e defrauded party.9 A constructive trust is not a trust in t e tec nical sense "@ayondato vs. Treasurer of t e % il., 49 % il. 044= see Art, 14', of t e :ivil :ode.# 6 %laintiff5s action for reconveyance may not )e said to ave prescri)ed, for, )asing t e present action on implied trust, t e prescriptive period is ten years. 7 Title was o)tained )y defen dant on ?e)ruary 0/, 19,0. %laintiff commenced t is suit for reconveyance on (anuary 0-, 19,-. And if plaintiff5s cause of action is )ased on fraud, w ic s ould ordinarily )e )roug t wit in four years from t e discovery of t e fraud, deemed to ave ta7en place w en t e certificate of title was issued, , it need only )e recalled t at t e conflicting rig ts of t e parties were already pending investigation )efore Iistrict >and 2ffice G$$$-4 @eneral Santos, :ota)ato, even )efore plaintiff instituted t e present suit for reconveyance. 8<B;B?2;B, t is case is ere)y ordered remanded to t e :ourt of ?irst $nstance of :ota)ato, *ranc $$, at @eneral Santos :ity, for earing on t e merits and rendition of t e corresponding judgment.

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G.R. No. L-.11,9 Mar8; .1, 19,7 MUNI)IP LIT' OF 6I)TORI S, petitioner, vs. THE )OURT OF PPE LS, NORM LEUENBERGER a!" FR N)IS)O SOLI6 , respondents. $nri2ue (. -oriano, Jr. for pri+ate respondents.

t en t at s e discovered t at t e parcel of land, more or less 4 a. or //,-4- s3.m. used )y %etitioner 4unicipality of Gictorias, as a cemetery from 19/4, is wit in er property w ic is now $dentified as >ot -, and covered )y T:T Eo. /4'4, "TSE, (uly 1, 19,4, pp. --9= B. . 94,9 ?older of B. i)its, p. 0/ and B. . 9A,9 ?older of B. i)its, p. 1#. 2n 4ay 0&, 19,/, ;espondent wrote t e 4ayor of Gictorias regarding er discovery, demanding payment of past rentals and re3uesting delivery of t e area allegedly illegally occupied )y %etitioner "B. . 9@, ?older of B. i)its, p. 1'#. 8 en t e 4ayor replied t at %etitioner )oug t t e land s e as7ed to )e s own t e papers concerning t e sale )ut was referred )y t e 4ayor to t e municipal treasurer w o refused to s ow t e same "TSE, (uly 1, 19,4, pp. /0-//#. 2n (anuary 11, 19,4, ;espondents filed a complaint in t e :ourt of ?irst $nstance of Eegros 2ccidental, *ranc 1, for recovery of possession of t e parcel of land occupied )y t e municipal cemetery ";ecord on Appeal, p. 1#. $n its answer, petitioner 4unicipality, )y way of special defense, alleged owners ip of t e lot, su)ject of t e complaint, aving )oug t it from Simeona (ingco Gda. de Iitc ing sometime in 19/4 ";ecord on Appeal, p. -#. T e lower court decided in favor of t e 4unicipality. 2n appeal ;espondent appellate :ourt set aside t e decision of t e lower court ";ecord on Appea> p. 9#= ence, t is petition for review on certiorari. T is petition was filed wit t e :ourt on Eovem)er ,, 19,9 ";ollo, p. 0#, t e ;ecord on Appeal on Iecem)er 19, 19,9 ";ollo, p. 8&#. 2n (anuary ', 19-&, t e :ourt gave due course to t e petition ";ollo, p. 84#. T e *rief for t e %etitioner was filed on April 1, 19-& ";ollo, p. 88#, t e *rief for ;espondents was filed on 4ay 18, 19-& ";ollo, p. 90#. 2n (uly 8, 19-&, t e :ourt resolved to consider t e case su)mitted for decision wit out %etitioner5s ;eply *rief, %etitioner aving failed to file t e )rief wit in t e period w ic e.pired on (une 1&, 19-& ";ollo. p. 99#. 2n motion of counsel for t e ;espondents ";ollo, p. 1&4#, t e :ourt resolved on (une /&, 19-0 to allow respondent ?rancisco Soliva to continue t e appeal in )e alf of t e estate of respondent Eorma >euen)erger w o died on (anuary 0', 19-0, ;espondent ?rancisco Soliva aving )een appointed special administrator in Special %roceedings Eo. 84-G of t e :ourt of ?irst $nstance of Eegros 2ccidental ";ollo, p. 11&#. $n t eir )rief, petitioner raised t e following errors of respondent :ourt of Appeals! "*rief for t e %etitioner, p. 1-/#= $. T e <onora)le :ourt of Appeals erred in olding t at respondents Eorma >euen)erger and ?rancisco Soliva are t e lawful owners of t e land in litigation as t ey are estopped from 3uestioning t e possession and owners ip of erein petitioner w ic dates )ac7 to more t an /& years. $$.

P R S, J.: T is is a %etition for ;eview on certiorari of t e decision 5 of respondent :ourt of Appeals promulgated on Septem)er 09, 19,9 in :A-@.;. Eo. /'&/,-; ";ollo, p. 11# setting aside t e decision 55 of t e :ourt of ?irst $ntance of Eegros 2ccidental, *ranc $, dated Septem)er 04, 19,4 w ic dismissed t e complaint for recovery of possession in :ivil :ase Eo. 181-S and declared t e cemetery site on >ot Eo. -, in Gictorias as property of t e municipality of Gictorias ";ecord on Appeal, p. 9#. T e dispositive portion of t e 3uestioned decision reads as follows! $E G$B8 2? T<B ?2;B@2$E@, t e judgment of t e lower court is ere)y set aside and anot er is ere)y rendered! "1# 2rdering t e defendant municipality andJor t ru its appropriate officials to return and deliver t e possession of t e portion of >ot -, used as cemetery or )urial site of t e plaintiff-appellant. "0# 2rdering defendant municipality to pay t e plaintiff-appellant t e sum of %4&&.&& a year from 19,/ until t e possession of said land is actually delivered. >ot Eo. -, containing an area of 0&8,1'- s3. meters forms a part of :adastral >ot Eo. 14& ";ollo, p. 11#, a 0-.04,& a. sugar land located in *o. 4adaniog, Gictorias, Eegros 2ccidental, in t e name of t e deceased @on+alo Iitc ing under Ta. Ieclaration Eo. /409 of Eegros 2ccidental for t e year 1941 "B. . 9/,9 ?older of B. i)its, p. 00#. <e was survived )y is widow Simeona (ingeo Gda. de Iitc ing and a daug ter, $sa)el, w o died in 1908 "TSE, (uly 1, 19,4, p. -# leaving one off-spring, respondent Eorma >euen)erger, w o was t en only si. mont s old "TSE, (uly 1, 19,4, p. /4#. ;espondent Eorma >euen)erger, married to ?rancisco Soliva, in erited t e w ole of >ot Eo. 14& from er grandmot er, Simeona (. Gda. de Iitc ing "not from er predeceased mot er $sa)el Iitc ing#. $n 19'0, s e donated a portion of >ot Eo. 14&, a)out / a., to t e municipality for t e ground of a certain ig sc ool and ad 4 a. converted into a su)division. "TSE, (uly 1, 19,4, p. 04#. $n 19,/, s e ad t e remaining 01 a. or 0&8.1'- s3. m. relocated )y a surveyor upon re3uest of lessee ;amon (over w o complained of )eing pro i)ited )y municipal officials from cultivating t e land. $t was
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T e <onora)le :ourt of Appeals also erred in ordering t e petition petitioner to deliver t e possession of t e land in 3uestion to t e respondents Eomia >euen)erger and ?rancisco Soliva, )y olding t at non-annotation on t e Torrens :ertificate of Title could not affect t e said land w en t e possession )y t e petitioner of t e said land for over /& years and using it as a pu)lic cemetery for t at lengt of time are sufficient proof of purc ase and transfer of title and non-annotation of t e :ertificate of Title did not render t e sale ineffectual $$$. T e <onora)le :ourt of Appeals furt er erred in ordering t e petitioner 4unicipality of Gictories to pay t e respondents t e sum of %4&&.&& a year from 19,/ until possession is actually delivered )ecause under t e law, an owner of a piece of land as no o)ligation to pay rentals as it owns and possesses t e same. T ere is merit in t e petition. $t is undisputed t at petitioner failed to present )efore t e :ourt a Ieed of Sale to prove its purc ase of t e land in 3uestion w ic is included in t e Transfer :ertificate of Title Eo. T-/4'4, in t e name of private respondent Eorma >euen)erger. T e pivotal issue in t is case is w et er or not t e secondary evidence presented )y t e petitioner municipality is sufficient to su)stantiate its claim t at it ac3uired t e disputed land )y means of a Ieed of Sale. 6nder t e *est Bvidence ;ule w en t e original writing is lost or ot erwise unavaila)le, t e law in point provides! Sec. 4. -econdar, e+idence when original is lost or destro,ed. 1 8 en t e original writing as )een lost or destroyed, or cannot )e produced in court, upon proof of its e.ecution and loss or destruction or unavaila)ility, its contents may )e proved )y a copy, or )y a recital of its contents in some aut entic document, or )y t e recollection of witnesses. ";ule 1/&, ;ules of :ourt#. $n lieu of a Ieed of Sale, petitioner presented a certificate issued )y t e Arc ives Iivision of t e *ureau of ;ecords 4anagement in 4anila, of a page of t e 19/4 Eotarial ;egister of Gicente I. Aragon wit t e following entries!
Eature of $nstrument 1 :ompra venta 0 porciones Terrenos! >otes Eos. 14&-A y 14&-*, Gictorias, Eeg. 2ccidental pago por esso despues apro)acion (usgado la $nstance, Eeg. 2ccidental causa civil '11, Gendedora! 1 Simeona (ingco Gda. de Iitc ing . . . administradora A)int. @. Iitc ing :omprador! 1 4unicipio Gictorias, Eeg. 2ccidental . . . . por su %res.4pal Gicente *. Arnaes Galor! 1 %-'&.&& ... Gease copia correspondiente. Eames of-persons B.ecutingJ Ac7nowledging! Simeona Gda. de Iitc ing Adm. A)int actuacion especial Eo. '11, (usgado la $nstance Eeg. 2ccidental Gendedora Gicente *. Arnaes BusOrg Summer (trust cases)

%res. 4unicipal. Gictorias :omprador 8itnesses to t e Signatures! Bste)an (alandoni @regorio Bli+alde Iate! 4ont 9 (ulio 19/4 ?ees! %0.&& :edulas! B.enta por suse.o ?1&0-88& Bnero 0,J/4 Gictories, Eeg. 2ccidental ;emar7s. Bn Gictorias, Eeg. 2ccidental >os anne.es A. y *. estan unidos solamente en el original de la escritura.

;espondent :ourt of Appeals was of t e view ";ollo, p. 1,# t at a mere entry in t e notarial register of a notary pu)lic of an alleged sale cannot prove t at a particular piece of land was sold )y one person to anot er, one of t e important re3uirements )eing t e indication of t e area and t e tec nical description of t e land )eing sold. $n t e present case, since no deed of sale could )e produced, t ere is no way of telling w at particular portion of t e property was sold to defendant municipality and ow )ig was t e sale of t e land conveyed to t e defendant municipality. $t will )e o)served t at t e entries in t e notarial register clearly s ow! "a# t e nature of t e instrument. 1 a deed of sale= ")# t e su)ject of t e sale 1 two parcels of land, >ot Eos. 14&-A and 14&-*= "c# t e parties of t e contract 1 t e vendor Simeona (. Gda. de Iitc ing in er capacity as Administrator in :ivil :ase Eo. '11, of t e :ourt of ?irst $nstance of Eegros 2ccidental and t e vendee, Gicente *. Ananosa, 4unicipal 4ayor of Gictorias= "d# t e consideration %-'&.&&= "e# t e names of t e witnesses Bste)an (alandoni and @regoria Bli+ado= and t e date of t e sale on (uly 9, 19/4. $t is )eyond 3uestion t at t e foregoing certificate is an aut entic document clearly corro)orated and supported )y! "a# t e testimony of t e municipal councilor of Gictorias, ;icardo Suare+, "2riginal TSE <earing of Septem)er 14, 19,4, pp. 1000# w o negotiated t e sale= ")# t e testimony of Bmilio :uesta, "2riginal TSE <earing of Septem)er 14, 19,4, pp. 00/8# t e municipal treasurer of said municipality, since 19/0 up to t e date of trial on Septem)er 14, 19,4, w o personally paid t e amount of %-'&.&& to ?elipe >euen)erger as consideration of t e :ontract of Sale= "c# :ertificate of Settlement "2riginal B. i)its, p. 0&# 9as evidence of said payment=9 "d# Ta. Ieclaration Eo. 409 "(#id., p. 00# w ic was cancelled and was su)stituted )y Ta. Ieclaration Eo. /,&& covering t e portion of t e property unsold "Iecision, :?$, Eeg. 2ccidental 2rig. ;ecord on Appeal, p. ,# and "e# Ta. Ieclaration Eo. /,&1 " (#id, p. 0/# in t e name of t e 4unicipal @overnment of Gictorias covering t e portion occupied as cemetery. Ta. Ieclaration Eo. /,&1 s ows on its face t e )oundaries as follows!
Eort 1 EB 1 >ot Eo. 14&-: of t e Su)division Sout 1 S8 1 >ot Eo. 14&-: of t e Su)division 8est 1 E8 1 >ots Eos. 14&-: F 14&-* of t e Su)division. T e area is //,-4- s3.m.

66

At t e )ac7 $xh. 4-A, t e sale of a portion of t e lot to t e 4unicipality of Gictorias was clearly e.plained as follows! Eote! T e w ole >ot Eo. 14&, )elongs to Eorma >euen)erger as evidenced )y a Transfer of :ert. of Title Eo. 18,-0. %ortion of t is >ot, "/&,&&& s3.m. was sold to 4unicipality of Gictories for :emetery Site as evidenced )y a Ieed of Sale e.ecuted )y Simeona (ingco Gda. de Iitc ing in favor of t e aforesaid 4unicipality and ratified )y Eotary %u)lic 4r. Gicente Aragon under Ioc. Eo. 1/0= %age Eo. 0= *oo7 Eo. 1&, Series of 19/4. At t e lowest portion under 4emoranda it was e.plained t at 1 T e area under t is declaration includes /,-4, s3. meters donated )y 4rs. Simeona (ingco Gda. de Iitc ing and used as road leading to t e cemetery. 9 "BV$> 4= 2riginal B. i)its, p. 0/#. T e a)ove-mentioned testimonies and documentary evidence sufficiently $dentify t e land sold )y t e predecessors-in-interest of private respondent. To insist on t e tec nical description of t e land in dispute would )e to sacrifice su)stance to form w ic would undou)tedly result in manifest injustice to t e petitioner. 4oreover, it is e.pressly provided )y law t at t e t ing sold s all )e understood as delivered, w en it is placed in t e control and possession of t e vendee. ":ivil :ode Art. 149-#. 8 ere t ere is no e.press provision t at title s all not pass until payment of t e price, and t e t ing gold as )een delivered, title passes from t e moment t e t ing sold is placed in t e possession and control of t e )uyer. "Auen+le F Streiff vs. 8atson F :o., 1/ % i> 0, C19&9D#. Ielivery produces its natural effects in law, t e principal and most important of w ic )eing t e conveyance of owners ip, wit out prejudice to t e rig t of t e vendor to payment of t e price. "2cejo, %ere+ F :o. vs. $nternational *an7ing :orp., /- % i> ,/1 C1918D#. Similarly, w en t e sale is made t roug a pu)lic instrument, t e e.ecution t ereof s all )e e3uivalent to t e delivery of t e t ing w ic is t e o)ject of t e contract, if from t e deed, t e contrary does not appear or cannot )e clearly inferred. ":ivil :ode Art. 1498#. T e e.ecution of t e pu)lic instrument operates as a formal or sym)olic delivery of t e property sold and aut ori+es t e )uyer to use t e document as proof of owners ip. "?lorendo v. ?o+, 0& % i> /88 C1911D#. $n t e case at )ar it is undisputed t at petitioner ad )een in open, pu)lic, adverse and continuous possession of t e land for a period of more t an t irty years. $n fact, according to t e municipal treasurer t ere are over 1&&& graves in t e cemetery. "Iecision, :ourt of Appeals, ;ollo, pp. 11-00#. As correctly o)served )y (ustice 4agno S. @atmaitan in is dissenting opinion ";ollo, pp. 0/-08# in t e decision of t is case )y t e :ourt of Appeals, t e evidence esta)lis es wit out de)ate t at t e property was originally registered in 191,. %laintiff was )orn only in 1908 and cannot possi)ly )e t e registered owner of t e original lot 14& at t e time. $ndeed, according to er own evidence, "B. i)it A= 2riginal ;ecord pp. 1/# s e )ecame t e registered owner only in 19,/. >i7ewise, it is undisputed t at in t e intestate estate of @on+alo Iitc ing, t e grandfat er of private respondent Eorma >eun)erger, it was er grandmot er, Simeona, t e surviving spouse of @on+alo
BusOrg Summer (trust cases)

w o was named judicial administratri.. According to Eorma5s own testimony, $sa)el er mot er, died in 1908 "TSE Aug. 10, 19,4, p. /4# w ile Simeona t e grandmot er died in 1940. "(#id.# T erefore, as of 19/4 w en a document of sale was e.ecuted )y Simeona in favor of t e municipality of Gictories as indu)ita)ly s own in t e notarial register "B. i)it '.A# in 3uestion, Simeona was still t e administratri. of t e properties left )y er us)and, @on+alo and of t eir conjugal partners ip. :onse3uently, s e is t e only person w o could legally dispose of )y sale t is particular four- ectare portion of >ot 14&. And so it is, t at in 19/4, Simeona Iitc ing in er capacity as judicial administratri. made and e.ecuted t e document descri)ed in t e ;eport as >ots 14&-A and 14&-*, s owing clearly t at t ey are portions of t e original )ig >ot 14&. As t is conveyance was e.ecuted )y t e judicial administratri., un3uestiona)ly t e party aut ori+ed to dispose of t e same, t e presumption must )e t at s e did so upon proper aut ority of t e :ourt of ?irst $nstance. As to t e description of t e property sold, t e fact t at a notarial report s ows t at t ey are portions of >ot 14& and t e property in 3uestion occupied )y t e pu)lic cemetery is admittedly a portion of said lot in t e a)sence of evidence t at t ere were ot er portions of >ot 14& ceded unto t e petitioner municipality, t e inevita)le conclusion is t at t e sale e.ecuted in t e Eotarial ;egister refers to t e disputed lot. 6nfortunately, t e purc aser 4unicipality of Gictorias failed to register said Ieed of Sale= ence, w en Simeona (ingco Gda. de Iitc ing died, er grand-daug ter, respondent Eorma >euen)erger claimed to ave in erited t e land in dispute and succeeded in registering said land under t e Torrens system. Said land is now covered )y Transfer :ertificate of Title Eo. T-/4&/, "B. i)it A, supra# issued )y t e ;egister of Ieeds of -Eegros 2ccidental on 4arc 11, 19,/ in t e name of Eorma >euen)erger, married to ?rancisco Soliva, containing an area of 0&8,1'- s3uare meters. As registered owner, s e is un3uestiona)ly entitled to t e protection afforded to a older of a Torrens Title. Admittedly, it is well-settled t at under t e Torrens System 9Bvery person receiving a certificate of title in pursuance of a decree of registration, . . . s all old t e same free of all encum)rance e.cept t ose noted on said certificate ... 9 "Sec. /9, Act 49,= now Sec. 4/, %I 1'09#. $n t e instant case, owever, respondent Eorma >euen)erger admitted t at s e in erited t e land covered )y Transfer :ertificate of Title Eo. T-/4&/, from er grandmot er, w o ad already sold t e land to t e petitioner in 19/4= ence, s e merely stepped into t e s oes of er grandmot er and s e cannot claim a )etter rig t t an er predecessor-in-interest. 8 en s e applied for registration of t e disputed land, s e ad no legal rig t to do so as s e ad no owners ip of t e land since land registration is not a mode of ac3uiring owners ip )ut only of confirming owners ip of t e land. "@rande, et al. vs. :ourt of Appeals, et al., 11' % il. '01.#9T e Torrens System was not esta)lis ed as a means for t e ac3uisition of title to private land, ...9 $t is intended merely to confirm and register t e title w ic one may already ave on t e land. 8 ere t e applicant possesses no title or owners ip over t e parcel of land, e cannot ac3uire one under t e Torrens system of ;egistration. "Torela, et al., vs. Torela, et al., >-0-84/, 2cto)er 11, 19-9#. 8 ile an in erently defective Torrens title may not ordinarily )e

67

cancelled even after proof of its defect, t e lawne+ertheless safeguards t e rig tful party5s interest in t e titled land from fraud and improper use of tec nicalities )y snowing suc party, in appropriate cases, to judicially see7 reconveyance to im of w atever e as )een deprived of as long as t e land as not )een transferred or conveyed to a purc aser in good fait . "%edro %ascua, et al., vs. 4ariano @opuyoc et al., >-0/19-, 4ay /1, 19--.# T e :ivil :ode provides! Art. 14',. $f t e property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes. T us, it as )een eld t at w ere t e land is decreed in t e name of a person t roug fraud or mista7e, suc person is )y operation of law considered a trustee of an implied trust for t e )enefit of t e persons from w om t e property comes. T e )eneficiary s ag ave t e rig t t enforce t e trust, notwit standing t e irrevoca)ility of t e Torrens title and t e trustee and is successors-in-interest are )ound to e.ecute t e deed of reconveyance. "%ac eco vs. Arro, 8' % il. '&'= Bsco)ar vs. >ocsin, -4 % il. 8,#. As t e land in dispute is eld )y private respondents in trust for t e 4unicipality of Gictorias, it is logical to conclude t at t e latter can neit er )e deprived of its possession nor )e made to pay rentals t ereof. %rivate respondent is in e3uity )ound to reconvey t e su)ject land to t e cestui 2ue trust t e 4unicipality of Gictorias. T e Torrens system was never calculated to foment )etrayal in t e performance of a trust. "Bsco)ar vs. >ocsin, -4 % il. 8,#. ?or a more e.peditious disposition of t e case at )ar, ;ule /9 of t e ;ules of :ourt provides! SB:. 1&. (udgment for Specific acts= vesting title. 1 ... $f real or personal property is wit in t e % ilippines, t e court in lieu of directing a conveyance t ereof may enter judgment divesting t e title of any party and vesting it in ot ers and suc judgment s all ave t e force and effect of a conveyance e.ecuted in due form of law. ?inally, t e conclusions and findings of fact )y t e trial court are entitled to great weig t on appeal and s ould not )e distur)ed unless for strong and cogent reasons )ecause t e trial court is in a )etter position to e.amine real evidence, as well as to o)serve t e demeanor of t e witnesses w ile testifying in t e case. ": ase v. *uencamino, Sr., 1/, S:;A /,' C198'D#. %;B4$SBS :2ES$IB;BI, t e judgment of t e respondent appellate court is ere)y SBT AS$IB and t e decision of t e :ourt of ?irst $nstance of Eegros 2ccidental, *ranc $-Silay :ity in :ivil :ase Eo. 181-S declaring t e cemetery site "B. . B-0# on >ot Eo. -, in Gictories as t e property of t e municipality of Gictorias, is ere)y ;B$ESTATBI. Additionally, 8e ere)y order "a# t e petitioner to ave t e disputed land segregated )y a licensed surveyor from t e rest of >ot Eo. -, descri)ed in Transfer :ertificate of Title Eo. T/4&/, and to ave t e corresponding su)division plan, duly approved )y t e >and ;egistration :ommission, su)mitted to t e court of origin for approval= ")# t e private respondents Eorma
BusOrg Summer (trust cases)

>euen)erger and ?rancisco Soliva to )e divested of t eir title to t e disputed land under ;ule /9, Sec. 1&, ;ules of :ourt= and "c# t e ;egister of Ieeds of Eegros 2ccidental to cancel Transfer :ertificate of Title Eo. /4&/, and issue, in lieu t ereof, one title in t e name of t e 4unicipality of Gictories for t e disputed land and anot er title in t e names of t e private respondents Eorma >euen)erger and ?rancisco Soliva for t e rest of >ot Eo. -,. 8it out costs. S2 2;IB;BI.

68

Nongco . . . . . . . . . .9,'&'

G.R. No. L-26699 Mar8; 16, 1976 BENIT S L O, a$$9$+e" by ;er ;u$ba!", GREGORIO M R)ELO> LM RIO L)URI& , RTURO L)URI& , OS) R L)URI& a!" NIT L)URI& , +;e #a++er +@o be9!* %9!or$ are re4re$e!+e" by *uar"9a! ad litem, RTURO L)URI& , plaintiffs-appellants, vs. (U N S. S L O, #a+er $ub$+9+u+e" by P BLO P. S L O, "%9!9$+ra+or o: +;e I!+e$+a+e o: (U N S. S L O> !o@ MER)E3ES P. 63 . 3E S L O, ROBERTO P. S L O, M RI S L O 63 . 3E S NTOS, LU)I N P. S L O, IS BEL S L O 3E S NTOS, a!" P BLO P. S L O, a$ $u88e$$or$-9!-9!+ere$+ o: +;e #a+e (U N S. S L O, +o*e+;er @9+; P BLO P. S L O, "%9!9$+ra+or, defendants-appellants. T is litigation regarding a forty-seven- ectare fis pond located at Sitio :alunuran, <ermosa, *ataan involves t e law of trusts and prescription. T e facts are as follows! T e spouses 4anuel Salao and Galentina $gnacio of *arrio Iampalit, 4ala)on, ;i+al )egot four c ildren named %atricio, Alejandra, (uan "*anli# and Am)rosia. 4anuel Salao died in 188'. <is eldest son, %atricio, died in 188, survived )y is only c ild. Galentin Salao. T ere is no documentary evidence as to w at, properties formed part of 4anuel Salao5s estate, if any. <is widow died on 4ay 08, 1914. After er deat , er estate was administered )y er daug ter Am)rosia. $t was partitioned e.trajudicially in a deed dated Iecem)er 09, 1918 )ut notari+ed on 4ay 00, 1919 "B. . 01#. T e deed was signed )y er four legal eirs, namely, er t ree c ildren, Alejandra, (uan and Am)rosia, and er grandson, Galentin Salao, in representation of is deceased fat er, %atricio. T e lands left )y Galentina $gnacio, all located at *arrio Iampalit were as follows! 1ature of Land
"1# 2ne- alf interest in a fis pond w ic s e ad in erited from er parents, ?eliciano $gnacio and Iamiana 4endo+a, and t e ot er alf of w ic was owned )y er co-owner, (osefa Sta. Ana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 01,-&& "0# ?is pond in erited from er parents . . . . . . . . . . . . -,418 "/# ?is pond in erited from er parents . . . . . . . . . . . . . ,,989 "4# ?is pond wit a )odega for salt . . . . . . . . . . . . . . . . '&,4,9 "'# ?is pond wit an area of one ectare, 10 ares and ' centares purc ased from *erna)e and <onorata $gnacio )y Galentina $gnacio on Eovem)er 9, 189' wit a )odega for salt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,0&' ",# ?is pond . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,&&& "-# 2ne- alf interest in a fis pond wit a total area of 1&,404 s3uare meters, t e ot er alf was owned )y A. Aguinaldo . . . . . . . . . . . . . . . . . . . . . . . ',01"8# ;iceland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . '&,4'4 "9# ;iceland purc ased )y Galentina $gnacio from Bduardo Salao on (anuary 0-, 189& wit a ouse and two camarins t ereon . . . . . . . . . . . . . . . . . . 8,&,' "1&# ;iceland in t e name of Am)rosia Salao, wit an area of 11,,-8 s3uare meters, of w ic 0,1-/ s3uare meters were sold to (usta BusOrg Summer (trust cases)

T2TA> . . . . . . . . . . . . .. 1-9,&00 To eac of t e legal eirs of Galentina $gnacio was adjudicated a

distri)utive s are valued at %8,1/'.0'. $n satisfaction of is distri)utive s are, Galentin Salao "w o was t en already forty-eig t years old# was given t e )iggest fis pond wit an area of '&,4,9 s3uare meters, a smaller fis pond wit an area of ,,989 s3uare meters and t e riceland wit a net area of 9,9&' s3uare meters. T ose parcels of land ad an aggregate appraised value of %1/,'&1 w ic e.ceeded Galentin5s distri)utive s are. So in t e deed of partition e was directed to pay to is co- eirs t e sum of %',/,'.-'. T at arrangement, w ic was o)viously intended to avoid t e fragmentation of t e lands, was )eneficial to Galentin. $n t at deed of partition "B. . 01# it was noted t at 9desde la muerte de Galentina $gnacio y 4endo+a, a venido administrando sus )ienes la referida Am)rosia Salao9 9cuya administracion lo a sido a satisfaccion de todos los erederos y por designacion los mismos9. $t was e.pressly stipulated t at Am)rosia Salao was not o)ligated to render any accounting of er administration 9en consideracion al resultado satisfactorio de sus gestiones, mejoradas los )ienes y pagodas por ella las contri)usiones "pages 0 and 11, B. . 01#. *y virtue of t e partition t e eirs )ecame 9dueUos a)solutos de sus respectivas propiedadas, y podran inmediatamente tomar posesion de sus )ienes, en la forma como se an distri)uido y llevado a ca)o las adjudicaciones9 "page 0&, B. . 01#. T e documentary evidence proves t at in 1911 or prior to t e deat of Galentina $gnacio er two c ildren, (uan N. Salao, Sr. and Am)rosia Salao, secured a Torrens title, 2:T Eo. 18' of t e ;egistry of Ieeds of %ampanga, in t eir names for a forty-seven- ectare fis pond located at Sitio :alunuran, >u)ao, %ampanga "B. . 14#. $t is also 7nown as >ot Eo. '4& of t e <ermosa cadastre )ecause t at part of >u)ao later )ecame a part of *ataan. T e :alunuran fis pond is t e )one of contention in t is case. %laintiffs5 t eory is t at (uan N. Salao, Sr. and is sister Am)rosia ad engaged in t e fis pond )usiness. 8 ere t ey o)tained t e capital is not s own in any documentary evidence. %laintiffs5 version is t at Galentin Salao and Alejandra Salao were included in t at joint venture, t at t e funds used were t e earnings of t e properties supposedly in erited from 4anuel Salao, and t at t ose earnings were used in t e ac3uisition of t e :alunuran fis pond. T ere is no documentary evidence to support t at t eory. 2n t e ot er and, t e defendants contend t at t e :alunuran fis pond consisted of lands purc ased )y (uan N. Salao, Sr. and Am)rosia Salao in 19&', 19&,, 19&- and 19&8 as, s own in t eir B. i)its 8, 9, 1& and 1/. *ut t is point is disputed )y t e plaintiffs. <owever, t ere can )e no controversy as to t e fact t at after (uan N. Salao, Sr. and Am)rosia Salao secured a Torrens title for t e :alunuran fis pond in 1911 t ey e.ercised dominical rig ts over it to t e e.clusion of t eir nep ew, Galentin Salao. T us, on Iecem)er 1, 1911 Am)rosia Salao sold under pacto de

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retro for %8&& t e :alunuran fis pond to Gicente Gillongco. T e period of redemption was one year. $n t e deed of sale "B. 19# Am)rosia confirmed t at s e and er )rot er (uan were t e dueos proindi+isos of t e said pes2ueria. 2n Iecem)er -, 1911 Gillongco, t e vendee a retro, conveyed t e same fis pond to Am)rosia )y way of lease for an anual canon of %108 "B. . 19-a#. After t e fis pond was redeemed from Gillongco or on (une 8, 1914 Am)rosia and (uan sold it under pacto de retro to Bligio Eaval for t e sum of %/,/,&. T e period of redemption was also one year "B. . 0&#. T e fis pond was later redeemed and Eaval reconveyed it to t e vendors a retro in a document dated 2cto)er ', 191, "B. . 0&-a#. T e 19/& survey s own in t e computation s eets of t e *ureau of >ands reveals t at t e :alunuran fis pond as an area of 4-9,0&' s3uare meters and t at it was claimed )y (uan Salao and Am)rosia Salao, w ile t e %inanganacan fis pond "su)se3uently ac3uired )y (uan and Am)rosia# as an area of 9-',9'0 s3uare meters "B. . 00#. >i7ewise, t ere is no controversy as to t e fact t at on 4ay 0-, 1911 Am)rosia Salao )oug t for four t ousand pesos from t e eirs of Bngracio Santiago a parcel of swampland planted to #acawan and nipa wit an area of 9, ectares, '- ares and -/ centares located at Sitio >ewa, *arrio %inanganacan, >u)ao, %ampanga "B. . 1--d#. T e record of :ivil :ase Eo. 1/,, @eneral >and ;egistration 2ffice ;ecord Eo. 10144, :ourt of ?irst $nstance of %ampanga s ows t at Am)rosia Salao and (uan Salao filed an application for t e registration of t at land in t eir names on (anuary 1', 191,. T ey alleged in t eir petition t at 9 an ad3uirido dic o terreno por partes iguales y por la compra a los erederos del finado, Ion Bngracio Santiago9 "B. . 1--a#. At t e earing on 2cto)er 0,, 191, )efore (udge %ercy 4. 4oir, Am)rosia testified for t e applicants. 2n t at same day (udge 4oir rendered a decision, stating, inter alia, t at t e eirs of Bngracio Santiago ad sold t e land to Am)rosia Salao and (uan Salao. (udge 4oir 9ordena la adjudicacion y registro del terreno solicitado a nom)re de (uan Salao, mayor de edad y de estado casado y de su esposa Iiega Santiago y Am)rosia Salao, de estado soltera y mayor de edad, en participaciones iguales; "B. . 1--e#. 2n Eovem)er 08, 191, (udge 4oir ordered t e issuance of a decree for t e said land. T e decree was issued on ?e)ruary 01, 191-. 2n 4arc 10, 191- 2riginal :ertificate of Title Eo. 4-0 of t e ;egistry of Ieeds of %ampanga was issued in t e names of (uan Salao and Am)rosia Salao. T at %inanganacan or >ewa fis pond later )ecame :adastral >ot Eo. '44 of t e <ermosa cadastre "B. . 0/#. $t adjoins t e :alunuran fis pond "See s7etc , B. . 1#. (uan N. Salao, Sr. died on Eovem)er /, 19/1 at t e age of eig ty years "B. . :#. <is nep ew, Galentin Salao, died on ?e)ruary 9, 19// at t e age of si.ty years according to t e deat certificate "B. . A. <owever, if according to B. i)it 01, e was forty-eig t years old in 1918, e would )e si.ty-t ree years old in 19//#. T e intestate estate of Galentin Salao was partitioned e.trajudicially
BusOrg Summer (trust cases)

on Iecem)er 08, 19/4 )etween is two daug ters, *enita Salao4arcelo and Gictorina Salao-Alcuri+a "B. . /0#. <is estate consisted of t e two fis ponds w ic e ad in erited in 1918 from is grandmot er, Galentina $gnacio. $f it were true t at e ad a one-t ird interest in t e :alunuran and >ewa fis ponds wit a total area of 14' ectares registered in 1911 and 191- in t e names of is aunt and uncle, Am)rosia Salao and (uan N. Salao, Sr., respectively, it is strange t at no mention of suc interest was made in t e e.trajudicial partition of is estate in 19/4. $t is relevant to mention t at on April 8, 194& Am)rosia Salao donated to er grandniece, plaintiff *enita Salao, t ree lots located at *arrio Iampalit wit a total area of ',8/0 s3uare meters "B.it. >#. As donee *enita Salao signed t e deed of donation. 2n t at occasion s e could ave as7ed Am)rosia Salao to deliver to er and to t e c ildren of er sister, Gictorina, t e :alunuran fis pond if it were true t at it was eld in trust )y Am)rosia as t e s are of *enita5s fat er in t e alleged joint venture. *ut s e did not ma7e any suc demand. $t was only after Am)rosia Salao5s deat t at s e t oug t of filing an action for t e reconveyance of t e :alunuran fis pond w ic was allegedly eld in trust and w ic ad )ecome t e sole property of (uan Salao y Santiago "(uani#. 2n Septem)er /&, 1944 or during t e (apanese occupation and a)out a year )efore Am)rosia Salao5s deat on Septem)er 14, 194' due to senility "s e was allegedly eig ty-five years old w en s e died#, s e donated er one- alf proindi+iso s are in t e two fis ponds in 3uestion to er nep ew, (uan S. Salao, (r. "(uani# At t at time s e was living wit (uani5s family. <e was already t e owner of t e t e ot er alf of t e said fis ponds, aving in erited it from is fat er, (uan N. Salao, Sr. "*anli# T e deed of denotion included ot er pieces of real property owned )y Am)rosia. S e reserved for erself t e usufruct over t e said properties during er lifetime "B. . 0 or 4#. T e said deed of donation was registered only on April ', 19'& "page /9, Iefendants5 ;ecord on Appeal#. T e lawyer of *enita Salao and t e : ildren of Gictorina Salao in a letter dated (anuary 0,, 19'1 informed (uan S. Salao, (r. t at is clients ad a one-t ird s are in t e two fis ponds and t at w en (uani too7 possession t ereof in 194', e refused to give *enita and Gictorina5s c ildren t eir one-t ird s are of t e net fruits w ic allegedly amounted to %0&&,&&& "B. . A#. (uan S. Salao, (r. in is answer dated ?e)ruary ,, 19'1 categorically stated t at Galentin Salao did not ave any interest in t e two fis ponds and t at t e sole owners t ereof is fat er *anli and is aunt Am)rosia, as s own in t e Torrens titles issued in 1911 and 191-, and t at e (uani was t e donee of Am)rosia5s one- alf s are "B. . A-1#. *enita Salao and er nep ews and niece filed t eir original complaint against (uan S. Salao, (r. on (anuary 9, 19'0 in t e :ourt of ?irst $nstance of *ataan "B. . /,#. T ey amended t eir complaint on (anuary 08, 19''. T ey as7ed for t e annulment of t e donation to

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(uan S. Salao, (r. and for t e reconveyance to t em of t e :alunuran fis pond as Galentin Salao5s supposed one-t ird s are in t e 14' ectares of fis pond registered in t e names of (uan N. Salao, Sr. and Am)rosia Salao. (uan S. Salao, (r. in is answer pleaded as a defense t e indefeasi)ility of t e Torrens title secured )y is fat er and aunt. <e also invo7ed t e Statute of ?rauds, prescription and lac es. As counter-claims, e as7ed for moral damages amounting to %0&&,&&&, attorney5s fees and litigation e.penses of not less t an %00,&&& and reim)ursement of t e premiums w ic e as )een paying on is )ond for t e lifting of t e receivers ip (uan S. Salao, (r. died in 19'8 at t e age of seventy-one. <e was su)stituted )y is widow, 4ercedes %ascual and is si. c ildren and )y t e administrator of is estate. $n t e intestate proceedings for t e settlement of is estate t e two fis ponds in 3uestion were adjudicated to is seven legal eirs in e3ual s ares wit t e condition t at t e properties would remain under administration during t e pendency of t is case "page 181, Iefendants5 ;ecord on Appeal#. After trial t e trial court in its decision consisting of one undred ten printed pages dismissed t e amended complaint and t e counterclaim. $n si.ty-seven printed pages it made a la)orious recital of t e testimonies of plaintiffs5 fourteen witnesses, @regorio 4arcelo, Eor)erto :risostomo, >eonardo 4angali ?idel de la :ru+, Iionisio 4analili, Am)rosio 4analili, %olicarpio Sapno, Blias 4anies *asilio Atien+a, *enita Salao, Bmilio :agui Iamaso de la %eUa, Arturo Alcuri+a and ?rancisco *uensuceso, and t e testimonies of defendants5 si. witnesses, 4arcos @alicia, (uan @alicia, Ti)urcio >ingad, Ioctor 8enceslao %ascual, :iriaco ;amire+ and %a)lo %. Salao. "%laintiffs presented ;egino Eicodemus as a fifteent witness, a re)uttal witness#. T e trial court found t at t ere was no community of property among (uan N. Salao, Sr., Am)rosia Salao and Galentin Salao w en t e :alunuran and %inanganacan ">ewa# lands were ac3uired= t at a coowners ip over t e real properties of Galentina $gnacio e.isted among er eirr after er deat in 1914= t at t e co-owners ip was administered )y Am)rosia Salao and t at it su)sisted up to 1918 w en er estate was partitioned among er t ree c ildren and er grandson, Galentin Salao. T e trial court surmised t at t e co-owners ip w ic e.isted from 1914 to 1918 misled t e plaintiffs and t eir witnesses and caused t em to )elieve erroneously t at t ere was a co-owners ip in 19&' or t erea)outs. T e trial court speculated t at if valentin ad a and in t e conversion into fis ponds of t e :alunuran and >ewa lands, e must ave done so on a salary or profit- s aring )asis. $t conjectured t at Galentin5s c ildren and grandc ildren were given )y Am)rosia Salao a portion of t e earnings of t e fis ponds as a reward for is services or )ecause of Am)rosia5s affection for er grandnieces. T e trial court rationali+ed t at Galentin5s omission during is lifetime to assail t e Torrens titles of (uan and Am)rosia signified t at 9 e was not a co-owner9 of t e fis ponds. $t did not give credence to t e testimonies of plaintiffs5 witnesses )ecause t eir memories could not )e trusted and )ecause no strong documentary evidence supported t e declarations. 4oreover, t e parties involved in t e alleged trust were already dead.
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$t also eld t at t e donation was validly e.ecuted and t at even if it were void (uan S. Salao, (r., t e donee, would nevert eless )e t e sole legal eir of t e donor, Am)rosia Salao, and would in erit t e properties donated to im. *ot parties appealed. T e plaintiffs appealed )ecause t eir action for reconveyance was dismissed. T e defendants appealed )ecause t eir counterclaim for damages was dismissed. T e appeals, w ic deal wit factual and legal issues, were made to t e :ourt of Appeals. <owever, as t e amounts involved e.ceed two undred t ousand pesos, t e :ourt of Appeals elevated t e case to t is :ourt in its resolution of 2ctoter /, 19,, ":A-@.;. Eo. /&&14-;#. /laintiffs& appeal. 1 An appellant5s )rief s ould contain 9a su)ject inde. inde. of t e matter in t e )rief wit a digest of the argu"ent and page references; to t e contents of t e )rief "Sec. 1, CaD, ;ule 4,, 19,4 ;ules of :ourt= Sec. 1-, ;ule 48, 194& ;ules of :ourt#. T e plaintiffs in t eir appellants5 )rief consisting of /&0 pages did not comply wit t at re3uirement. T eir statements of t e case and t e facts do not contain 9page references to t e record9 as re3uired in section 1,CcD and CdD of ;ule 4,, formerly section 1-, ;ule 48 of t e 194& ;ules of :ourt. >awyers for appellants, w en t ey prepare t eir )riefs, would do well to read and re-read section 1, of ;ule 4,. $f t ey comply strictly wit t e formal re3uirements prescri)ed in section 1,, t ey mig t ma7e a competent and luminous presentation of t eir clients5 case and lig ten t e )urden of t e :ourt. 8 at (ustice ?is er said in 1918 is still true now! 9T e pressure of wor7 upon t is :ourt is so great t at we cannot, in justice to ot er litigants, underta7e to ma7e an e.amination of t e voluminous transcript of t e testimony "1,''/ pages in t is case, twenty-one witnesses aving testified#, unless t e attorneys w o desire us to ma7e suc e.amination ave t emselves ta7en t e trou)le to read t e record and )rief it in accordance wit our rules9 "%alara vs. *aguisi /8 % il. 1--, 181#. As noted in an old case, t is :ourt decides undreds of cases every year and in addition resolves in minute orders an e.ceptionally considera)le num)er of petitions, motions and interlocutory matters "Al+ua and Arnalot vs. (o nson, 01 % il. /&8, /9'= See (n re Al"acen, >-0-,'4, ?e)ruary 18, 19-&, /1 S:;A ',0, '-/#. %laintiffs5 first assignment of error raised a procedural issue. $n paragrap s 1 to 14 of t eir first cause of action t ey made certain averments to esta)lis t eir t eory t at Galentin Salao ad a onet ird interest in t e two fis ponds w ic were registrered in t e names of (uan N. Salao, Sr. "*anli# and Am)rosia Salao. (uan S. Salao, (r. "(uani# in is answer 9specifically9 denied eac and all t e allegations9 in paragrap s $ to 1& and 10 of t e first cause of action wit t e 3ualification t at 2riginal certificates of Title Eos. 18' and 4-0 were issued 9more t an /- years ago9 in t e names of (uan "*anli# and Am)rosia under t e circumstances set fort in (uan S. Salao, (r.5s 9positive defenses9 and 9not under t e circumstances stated in t e in t e amended complaint9. T e plaintiffs contend t at t e answer of (uan S. Salao, (r. was in

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effect tin admission of t e allegations in t eir first cause of action t at t ere was a co-owners ip among Am)rosia, (uan, A$ejandra and Galentin, all surnamed Salao, regarding t e Iampalit property as early as 19&4 or 19&'= t at t e common funds were invested t e ac3uisition of t e two fis ponds= t at t e 4-- ectare :alunuran fis pond was ver)ally adjudicated to Galentin Salao in t e l919 partition and t at t ere was a ver)al stipulation to to register 9said lands in t e name only of (uan N. Salao9. T at contention is unfounded. 6nder section ,, ;ule 9 of t e 194& of ;ules of :ourt t e answer s ould 9contain eit er a specific dinial a statement of matters in accordance of t e cause or causes of action asserted in t e complaint9. Section - of t e same rule re3uires t e defendant to 9deal specificaly wit eac material allegation of fact t e trut of wi ic e does not admit and, w enever practica)le s all set fort t e su)stance of t e matters w ic e will rely upon to support is denial9. 94aterial averments in t e complaint, ot er t an t ose as to t e amount damage, s all )e deemed admitted w en specifically denied9 "Sec. 8#. 9T e defendant may set fort set fort )y answer as many affirmative defenses as e may ave. All grounds of defenses as would raise issues of fact not arising upon t e preceding pleading must )e specifically pleaded9 "Sec. 9#. 8 at defendant (uan S. Salao, (r. did in is answer was to set fort in is 9positive defenses9 t e matters in avoidance of plaintiffs5 first cause of action w ic w ic supported is denials of paragrap s 4 to 1& and 10 of t e first cause of action. 2)viously, e did so )ecause e found it impractica)le to state pierceneal is own version as to t e ac3uisition of t e two fis ponds or to ma7e a tedious and repetitious recital of t e ultimate facts contradicting allegations of t e first cause of action. 8e old t at in doing so e su)stantially complied wit ;ule 9 of t e 194& ;ules of :ourt. $t may )e noted t at under t e present ;ules of :ourt a 9negative defense is t e specific denial of t t e material fact or facts alleged in t e complaint essential to plaintiff5s cause of causes of action9. 2n t e ot er and, 9an affirmative defense is an allegation of new matter w ic , w ile admitting t e material allegations of t e complaint, e.pressly or impliedly, would nevert eless prevent or )ar recovery )y t e plaintiff.9 Affirmative defenses include all matters set up 9)y of confession and avoidance9. "Sec. ', ;ule ,, ;ules of :ourt#. T e case of $l 0ogar Filipino +s. -antos (n+est"ents, -4 % il. -9 and similar cases are distinguis a)le from t e instant case. $n t e $l 0ogar case t e defendant filed a laconic answer containing t e statement t at it denied 9generally ans specifically eac and every allegation contained in eac and every paragrap of t e complaint9. $t did not set fort in its answer any matters )y way of confession and avoidance. $t did not interpose any matters )y way of confession and avoidance. $t did not interpose any affirmative defenses. 6nder t ose circumstances, it was eld t at defendant5s specific denial was really a general denial w ic was tantamount to an admission of t e allegations of t e complaint and w ic justified judgment on t e pleadings. T at is not t e situation in t is case. T e ot er nine assignments of error of t e plaintiffs may )e reduced to t e decisive issue of w et er t e :alunuran fis pond was eld in trust for Galentin Salao )y (uan N. Salao, Sr. and Am)rosia Salao. T at issue is tied up wit t e 3uestion of w et er plaintiffs5 action for
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reconveyance ad already prescri)ed. T e plaintiffs contend t at t eir action is 9to enforce a trust w ic defendant9 (uan S. Salao, (r. allegedly violated. T e e.istence of a trust was not definitely alleged in plaintiffs5 complaint. T ey mentioned trust for t e first time on page 0 of t eir appelants5 )rief. To determine if t e plaintiffs ave a cause of action for t e enforcement of a trust, it is necessary to mae7 some e.egesis on t e nature of trusts Efideico"osisF. Trusts in Anglo-American jurisprudence were derived from t efideico""issa of t e ;oman law "@overnment of t e % ilippine $slands vs. A)adilla, 4, % il. ,40, ,4,#. 9$n its tec nical legal sense, a trust is defined as t e rig t, enforcea)le solely in e3uity, to t e )eneficial enjoyment of property, t e legal title to w ic is vested in anot er, )ut t e word 5trust5 is fre3uently employed to indicate duties, relations, and responsi)ilities w ic are not strictly tec nical trusts9 "89 :.(.S. -10#. A person w o esta)lis es a trust is called t e trustor= one in w om confidence is reposed as regards property for t e )enefit of anot er person is 7nown as t e trustee= and t e person for w ose )enefit t e trust as )een created is referred to as t e )eneficiary9 "Art. 144&, :ivil :ode#. T ere is a fiduciary relation )etween t e trustee and t e cestui 2ue trust as regards certain property, real, personal, money or c oses in action "%ac eco vs. Arro, 8' % il. '&'#. 9Trusts are eit er e.press or implied. B.press trusts are created )y t e intention of t e trustor or of t e parties. $mplied trusts come into )eing )y operation of law9 "Art. 1441, :ivil :ode#. 9Eo e.press trusts concerning an immova)le or any interest t erein may )e proven )y parol evidence. An implied trust may )e proven )y oral evidence9 "(#id, Arts. 144/ and 14'-#. 9Eo particular words are re3uired for t e creation of an e.press trust, it )eing sufficient t at a trust is clearly intended9 " (#id, Art. 1444= Tuason de %ere+ vs. :aluag, 9, % il. 981= (ulio vs. Ialandan, >19&10, 2cto)er /&, 19,-, 01 S:;A '4/, '4,#. 9B.press trusts are t ose w ic are created )y t e direct and positive acts of t e parties, )y some writing or deed, or will, or )y words eit er e.pressly or impliedly evincing an intention to create a trust9 "89 :.(.S. -0#. 9$mplied trusts are t ose w ic , wit out )eing e.pressed, are deduci)le from t e nature of t e transaction as"atters of intent, or w ic are superinduced on t e transaction )y operation of law as "atter of e2uit,,independently of t e particular intention of t e parties9 "89 :.(.S. -04#. T ey are ordinarily su)divided into resulting and constructive trusts "89 :.(.S. -00#. 9A resulting trust. is )roadly defined as a trust w ic is raised or created )y t e act or construction of law, )ut in its more restricted sense it is a trust raised )y i"plication of law and presu"ed to ha+e #een conte"plated #, the parties, t e intention as to w ic is to )e found in t e nature of t eir transaction, )ut not e.pressed in t e deed or instrument of conveyance "89 :.(.S. -0'#. B.amples of resulting trusts are found in articles 1448 to 14'' of t e :ivil :ode. "See %adilla vs. :ourt of Appeals, >-/1',9, Septem)er 08, 19-/, '/ S:;A 1,8, 1-9= 4artine+ vs. @raUo 40 % il. /'#. 2n t e ot er and, a constructive trust is -a trust 9raised )y

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construction of law, or arising )y operation of law9. $n a more restricted sense and as contra-distinguis ed from a resulting trust, a constructive trust is 9a trust not created )y any words, eit er e.pressly or impliedly evincing a direct intension to create a trust, )ut )y the construction of e2uit, in order to satisf, the de"ands of justice.; $t does not arise 9)y agreement or intention, )ut )y operation of law.9 "89 :.(.S. -0,--0-#. T us, 9if property is ac3uired t roug mista7e or fraud, t e person o)taining it is, )y force of law, considered a trustee of an implied trust for t e )enefit of t e person from w om t e property comes9 "Art. 14',, :ivil :ode#. 2r 9if a person o)tains legal title to property )y fraud or concealment, courts of e3uity will impress upon t e title a so-called constructive trust in favor of t e defrauded party9. Suc a constructive trust is not a trust in t e tec nical sense. "@ayondato vs. Treasurer of t e %. $., 49 % il. 044#. Eot a scintilla of documentary evidence was presented )y t e plaintiffs to prove t at t ere was an e.press trust over t e :alunuran fis pond in favor of Galentin Salao. %urely parol evidence was offered )y t em to prove t e alleged trust. T eir claim t at in t e oral partition in 1919 of t e two fis ponds t e :alunuran fis pond was assigned to Galentin Salao is legally untena)le. $t is legally indefensi)le )ecause t e terms of article 144/ of t e :ivil :ode "already in force w en t e action erein was instituted# are peremptory and unmista7a)le! parol evidence cannot )e used to prove an e.press trust concerning realty. $s plaintiffs5 massive oral evidence sufficient to prove an implied trust, resulting or constructive, regarding t e two fis pondsH %laintiffs5 pleadings and evidence cannot )e relied upon to prove an implied trust. T e trial court5s firm conclusion t at t ere was no community of property during t e lifetime of Galentina= $gnacio or )efore 1914 is su)stantiated )y defendants5 documentary evidence. T e e.istence of t e alleged co-owners ip over t e lands supposedly in erited from 4anuel Salao in 188' is t e )asis of plaintiffs5 contention t at t e :alunuran fis pond was eld in trust for Galentin Salao. *ut t at co-owners ip was not proven )y any competent evidence. $t is 3uite impro)a)le )ecause t e alleged estate of 4anuel Salao was li7ewise not satisfactorily proven. T e plaintiffs alleged in t eir original complaint t at t ere was a co-owners ip over two ectares of land left )y 4anuel Salao. $n t eir amended complaint, t ey alleged t at t e co-owners ip was over se+en ectares of fis ponds located in *arrio Iampalit, 4ala)on, ;i+al. $n t eir )rief t ey alleged t at t e fis ponds, ricelands and salt)eds owned in common in *arrio Iampalit ad an area of twent,-eight ectares, of w ic si.teen ectares pertained to Galentina $gnacio and eleven ectares represented 4anuel Salao5s estate. T ey t eori+ed t at t e eleven ectares 9were, and necessarily, t e nucleus, nay t e very root, of t e property now in litigation "page ,, plaintiffs-appellants5 )rief#. *ut t e eleven ectares were not proven )y any trustwort y evidence. *enita Salao5s testimony t at in 1918 or 1919 (uan, Am)rosia, Alejandra and Galentin partitioned twenty-eig t
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ectares of lands located in *arrio Iampalit is not credi)le. As noted )y t e defendants, )anuel -alao was not e+en "entioned in plaintiffs& co"plaints. T e 1919 partition of Galentina $gnacio5s estate covered a)out se+enteen ectares of fis ponds and ricelands "B. . 01#. $f at t e time t at partition was made t ere were eleven ectares of land in *arrio Iampalit )elonging to 4anuel Salao, w o died in 188', t ose eleven ectares would ave )een partitioned in writing as in t e case of t e seventeen ectares )elonging to Galentina $gnacio5s estate. $t is incredi)le t at t e forty-seven- ectare :alunuran fis pond would )e adjudicated to Galentin Salao mere )y )y word of mout . $ncredi)le )ecause for t e partition of t e se+enteen ectares of land left )y Galentina $gnacio an ela)orate 9Bscritura de %articion9 consisting of twenty-two pages ad to )e e.ecuted )y t e four Salao eirs. Surely, for t e partition of one undred forty-five ectares of fis ponds among t ree of t e same Salao eirs an oral adjudication would not ave sufficed. T e impro)a)ility of t e alleged oral partition )ecomes more evident w en it is )orne in mind t at t e two fis ponds were registered land and 9t e act of registration9 is 9t e operative act9 t at conveys and affects t e land "Sec. '&, Act Eo. 49,#. T at means t at any transaction affecting t e registered land s ould )e evidenced )y a registera)le deed. T e fact t at Galentin Salao and is successorsin-interest, t e plaintiffs, never )ot ered for a period of nearly forty years to procure any documentary evidence to esta)lis is supposed interest o. participation in t e two fis ponds is very suggestive of t e a)sence of suc interest. T e matter may )e viewed from anot er angle. As already stated, t e deed of partition for Galentina $gnacio5s estate wag notari+ed in 1919 "B. . 01#. T e plaintiffs assert t at t e two fis ponds were ver)ally partitioned also in 1919 and t at t e :alunuran fis pond was assigned to Galentin Salao as is s are. Eow in t e partition of Galentina $gnacio5s estate, Galentin was o)ligated to pay %/,/''.0' to Am)rosia Salao. $f, according to t e plaintiffs, Am)rosia administered t e two fis ponds and was t e custodian of its earnings, t en it could ave )een easily stipulated in t e deed partitioning Galentina $gnacio5s estate t at t e amount due from Galentin would just )e deducted )y Am)rosia from is s are of t e earnings of t e two fis ponds. T ere was no suc stipulation. Eot a s red of documentary evidence s ows Galentin5s participation in t e two fis ponds. T e plaintiffs utterly failed to measure up to t e yardstic7 t at a trust must )e proven )y clear, satisfactory and convincing evidence. $t cannot rest on vague and uncertain evidence or on loose, e3uivocal or indefinite declarations "Ie >eon vs. 4olo-%ec7son, 11, % il. 10,-, 10-/#. !rust and trusteeG esta#lish"ent of trust #, parol e+idenceG certaint, of proof. 1 8 ere a trust is to )e esta)lis ed )y oral proof, t e testimony supporting it must )e sufficiently strong to prove t e rig t of t e alleged )eneficiary wit as muc certainty as if a document proving t e trust were s own. A trust cannot #e esta#lished, contrar, to the recitals of a !orrens title, upon +ague and inconclusi+e proof. "Sylla)us, Suare+ vs. Tiram)ulo, '9 % il.

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/&/#. !rustsG e+idence needed to esta#lish trust on parol testi"on,. 1 $n order to esta)lis a trust in real property )y parol evidence, t e proof s ould )e as fully convincing as if t e act giving rise to t e trust o)ligation were proven )y an aut entic document. Suc a trust cannot )e esta)lis ed upon testimony consisting in large part of insecure surmises )ased on ancient earsay. "Sylla)us, Santa (uana vs. Iel ;osario '& % il. 11&#. T e foregoing rulings are good under article 14'- of t e :ivil :ode w ic , as already noted, allows an implied trust to )e proven )y oral evidence. Trustwort y oral evidence is re3uired to prove an implied trust )ecause, oral evidence can )e easily fa)ricated. 2n t e ot er and, a Torrens title is generally a conclusive of t e owners ip of t e land referred to t erein "Sec. 4-, Act 49,#. A strong presumption e.ists. t at Torrens titles were regularly issued and t at t ey are valid. $n order to maintain an action for reconveyance, proof as to t e fiduciary relation of t e parties must )e clear and convincing "Numul vs. ;ivera and Ii+on, ,4 % il. 1/, 1--18#. T e real purpose of t e Torrens system is, to 3uiet title to land. 92nce a title is registered, t e owner may rest secure, wit out t e necessity of waiting in t e portals of t e court, or sitting in t e "irador de su casa, to avoid t e possi)ility of losing is land9 ">egarda and %rieto vs. Salee)y, /1 % il. '9&, '9/#. T ere was no resulting trust in t is case )ecause t ere never was any intention on t e part of (uan N. Salao, Sr., Am)rosia Salao and Galentin Salao to create any trust. T ere was no constructive trust )ecause t e registration of t e two fis ponds in t e names of (uan and Am)rosia was not vitiated )y fraud or mista7e. T is is not a case w ere to satisfy t e demands of justice it is necessary to consider t e :alunuran fis pond 9 )eing eld in trust )y t e eirs of (uan N. Salao, Sr. for t e eirs of Galentin Salao. And even assuming t at t ere was an implied trust, plaintiffs5 action is clearly )arred )y prescription or lac es ";amos vs. ;amos, >198-0, Iecem)er /, 19-4, ,1 S:;A 084= Ouiniano vs. :ourt of Appeals, >-0/&04, 4ay /1, 19-1, /9 S:;A 001= Garsity <ills, $nc. vs. Eavarro, 9, ?e)ruary 09, 19-0, 4/ S:;A '&/= Al+ona vs. :apunitan and ;eyes, 114 % il. /--#. 6nder Act Eo. 19&, w ose statute of limitation would apply if t ere were an implied trust in t is case, t e longest period of e.tinctive prescription was only ten year "Sec. 4&= Iia+ vs. @orric o and Aguado, 1&/ % il. 0,1, 0,,#. T e :alunuran fis pond was registered in 1911. T e written e.trajudicial demand for its reconveyance was made )y t e plaintiffs in 19'1. T eir action was filed in 19'0 or after t e lapse of more t an forty years from t e date of registration. T e plaintiffs and t eir predecessor-in-interest, Galentin Salao, slept on t eir rig ts if t ey ad any rig ts at all. 8igilanti prospiciunt jura or t e law protects im w o is watc ful of is rig ts "90 :.(.S. 1&11, citing Bsguerra vs. Tecson, 01 % il. '18, '01#. 96ndue delay in t e enforcement of a rig t is strongly persuasive of a lac7 of merit in t e claim, since it is uman nature for a person to
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assert is rig ts most strongly w en t ey are t reatened or invaded9. 9>ac es or unreasona)le delay on t e part of a plaintiff in see7ing to enforce a rig t is not only persuasive of a want of merit )ut may, according to t e circumstances, )e destructive of t e rig t itself.9 "*uenaventura vs. Iavid, /- % il. 4/', 44&-441#. <aving reac ed t e conclusion t at t e plaintiffs are not entitled to t e reconveyance of t e :alunuran fis pond, it is no longer n to %ass upon t e validity of t e donation made )y Am)rosia Salao to (uan S. Salao, (r. of er one- alf s are in t e two fis ponds T e plaintiffs ave no rig t and personality to assil t at donation. Bven if t e donation were declared void, t e plaintiffs would not ave any successional rig ts to Am)rosia5s s are. T e sole legal eir of Am)rosia was er nep ew, (uan, (r., er nearest relative wit in t e t ird degree. Galentin Salao, if living in 194' w en Am)rosia died, would ave )een also er legal eir, toget er wit is first cousin, (uan, (r. "(uani#. *enita Salao, t e daug ter of Galentin, could not represent im in t e succession to t e estate of Am)rosia since in t e collateral line, representation ta7es place only in favor of t e c ildren of )rot ers or sisters w et er t ey )e of t e full or alf )lood is "Art 9-0, :ivil :ode#. T e nep ew e.cludes a grandniece li7e *enita Salao or great-gandnep ews li7e t e plaintiffs Alcuri+a "%avia vs. $turralde ' % il. 1-,#. T e trial court did not err in dismissing plaintiffs5 complaint. *efendants& appeal. 1 T e defendants dispute t e lower court5s finding t at t e plaintiffs filed t eir action in good fait . T e defendants contend t at t ey are entitled to damages )ecause t e plaintiffs acted maliciously or in )ad fait in suing t em. T ey as7 for %0',&&& attorneys fees and litigation e.penses and, in addition, moral damages. 8e old t at defemdamts5 appeal is not meritorious. T e record s ows t at t e plaintiffs presented fifteen witnesses during t e protracted trial of t is case w ic lasted from 19'4 to 19'9. T ey foug t tenaciously. T ey o)viously incurred considera)le e.penses in prosecuting t eir case. Alt oug t eir causes of action turned out to )e unfounded, yet t e pertinacity and vigor wit w ic t ey pressed t eir claim indicate t eir sincerity and good fait . T ere is t e furt er consideration t at t e parties were descendants of common ancestors, t e spouses 4anuel Salao and Galentina $gnacio, and t at plaintiffs5 action was )ased on t eir onest supposition t at t e funds used in t e ac3uisition of t e lands in litigation were earnings of t e properties allegedly in erited from 4anuel Salao. :onsidering t ose circumstances, it cannot )e concluded wit certitude t at plaintiffs5 action was manifestly frivolous or was primarily intended to arass t e defendants. An award for damages to t e defendants does not appear to )e just and proper. T e worries and an.iety of a defendant in a litigation t at was not maliciously instituted are not t e moral damages contemplated in t e law "Solis F Narisantos vs. Salvador, >-1-&00, August 14, 19,', 14 S:;A 88-= ;amos vs. ;amos, supra#. T e instant case is not among t e cases mentioned in articles 0019 and 000& of t e :ivil :ode w erein moral damages may )e recovered. Eor can it )e regarded

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as analogous to any of t e cases mentioned in t ose articles. T e adverse result of an action does not per se ma7e t e act wrongful and su)ject t e actor to t e payment of moral damages. T e law could not ave meant to impose a penalty on t e rig t to litigate= suc rig t is so precious t at moral damages may not )e c arged on t ose w o may e.ercise it erroneously. "*arreto vs. Arevalo, 99 % il. --1. --9#. T e defendants invo7e article 00&8 "4# "11# of t e :ivil :ode w ic provides t at attorney5s fees may )e recovered 9in case of a clearly unfounded civil action or proceeding against t e plaintiff9 "defendant is a plaintiff in is counterclaim# or 9in any ot er case w ere t e court deems it just and e3uita)le9 t at attorney5s fees s ould e awarded. *ut once it is conceded t at t e plaintiffs acted in good fait in filing t eir action t ere would )e no )asis for adjudging t em lia)le to t e defendants for attorney5s fees and litigation e.penses "See ;i+al Surety F $nsurance :o., $nc. vs. :ourt of Appeals, >-0/-09, 4ay 1,, 19,-, 0& S:;A ,1#. $t is not sound pu)lic policy to set a premium on t e rig t to litigate. An adverse decision does not ipso facto justify t e award of attorney5s fees to t e winning party "<errera vs. >uy Aim @uan, 11& % il. 1&0&, 1&08= <eirs of (ustiva vs. @ustilo, ,1 2. @. ,9'9#. T e trial court5s judgment is affirmed. Eo pronouncement as to costs. S2 2;IB;BI.

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