Professional Documents
Culture Documents
DECISION
NACHURA, J : p
This is a petition for review on certiorari from the Decision 1 of the Court of
Appeals, dated September 7, 2000, in CA-G.R. SP No. 53236, and Resolution
dated May 9, 2001.
On January 29, 1997, petitioner Soledad Caezo filed a Complaint 2 for the
recovery of real property plus damages with the Municipal Trial Court (MTC) of
Naval, Biliran, against her father's second wife, respondent Concepcion Rojas.
The subject property is an unregistered land with an area of 4,169 square
meters, situated at Higatangan, Naval, Biliran. Caezo attached to the complaint
a Joint Affidavit 3 executed on May 10, 1979 by Isidro Catandijan and Maximina
Caezo attesting to her acquisition of the property.
In her complaint, the petitioner alleged that she bought the parcel of land in
1939 from Crisogono Limpiado, although the transaction was not reduced into
writing. Thereafter, she immediately took possession of the property. When she
and her husband left for Mindanao in 1948, she entrusted the said land to her
father, Crispulo 4 Rojas, who took possession of, and cultivated, the property.
In 1980, she found out that the respondent, her stepmother, was in possession
of the property and was cultivating the same. She also discovered that the tax
declaration over the property was already in the name of Crispulo Rojas. 5
In her Answer, the respondent asserted that, contrary to the petitioner's claim,
it was her husband, Crispulo Rojas, who bought the property from Crisogono
Limpiado in 1948, which accounts for the tax declaration being in Crispulo's
name. From then on, until his death in 1978, Crispulo possessed and cultivated
the property. Upon his death, the property was included in his estate, which
was administered by a special administrator, Bienvenido Ricafort. The petitioner,
as heir, even received her share in the produce of the estate. The respondent
further contended that the petitioner ought to have impleaded all of the heirs
as defendants. She also argued that the fact that petitioner filed the complaint
only in 1997 means that she had already abandoned her right over the
property. 6 TaCEHA
On July 3, 1998, after hearing, the MTC rendered a Decision in favor of the
petitioner, thus:
SO ORDERED. 7
Despite the respondent's objection that the verbal sale cannot be proven
without infringing the Statute of Frauds, the MTC gave credence to the
testimony of the petitioners' two witnesses attesting to the fact that Crisogono
Limpiado sold the property to the petitioner in 1939. The MTC also found no
evidence to show that Crispulo Rojas bought the property from Crisogono
Limpiado in 1948. It held that the 1948 tax declaration in Crispulo's name had
little significance on respondent's claim, considering that in 1948, the "country
was then rehabilitating itself from the ravages of the Second World War" and
"the government was more interested in the increase in tax collection than the
observance of the niceties of law." 8
The respondent appealed the case to the Regional Trial Court (RTC) of Naval,
Biliran. On October 12, 1998, the RTC reversed the MTC decision on the ground
that the action had already prescribed and acquisitive prescription had set in.
The dispositive portion of the Decision reads:
SO ORDERED. 9
The respondent filed a motion to reconsider the Amended Decision but the
RTC denied the same in an Order dated April 25, 1999.
She then filed a petition for review with the Court of Appeals (CA), which
reversed the Amended Decision of the RTC on September 7, 2000, thus:
SO ORDERED. 12
The CA held that the petitioner's inaction for several years casts a serious doubt
on her claim of ownership over the parcel of land. It noted that 17 years lapsed
since she discovered that respondent was in adverse possession of the property
before she instituted an action to recover the same. And during the probate
proceedings, the petitioner did not even contest the inclusion of the property
in the estate of Crispulo Rojas. 13
The CA was convinced that Crispulo Rojas owned the property, having bought
the same from Crisogono Limpiado in 1948. Supporting this conclusion, the
appellate court cited the following circumstances: (1) the property was declared
for taxation purposes in Crispulo's name and he had been paying the taxes
thereon from 1948 until his death in 1978; (2) Crispulo adversely possessed the
same property from 1948 until his death in 1978; and (3) upon his death in
1978, the property was included in his estate, the proceeds of which were
distributed among his heirs. 14
The CA further held that, assuming that there was an implied trust between the
petitioner and her father over the property, her right of action to recover the
same would still be barred by prescription since 49 years had already lapsed
since Crispulo adversely possessed the contested property in 1948. 15
On May 9, 2001, the CA denied the petitioner's motion for reconsideration for
lack of merit. 16 EATCcI
In this petition for review, the petitioner, substituted by her heirs, assigns the
following errors:
The petitioner insists that the respondent's petition for review before the CA
was filed out of time. The petitioner posits that the CA may not grant an
additional extension of time to file the petition except for the most compelling
reason. She contends that the fact that respondent's counsel needed additional
time to secure the certified copy of his annexes cannot be considered as a
compelling reason that would justify an additional period of extension. She
admits, though, that this issue was raised for the first time in their motion for
reconsideration, but insists that it can be raised at any time since it concerns
the jurisdiction of the CA over the petition.
The petitioner further posits that prescription and laches are unavailing because
there was an express trust relationship between the petitioner and Crispulo
Rojas and his heirs, and express trusts do not prescribe. Even assuming that it
was not an express trust, there was a resulting trust which generally does not
prescribe unless there is repudiation by the trustee.
For her part, the respondent argues that the petitioners are now estopped from
questioning the CA Resolution granting her second motion for extension to file
the petition for review. She notes that the petitioner did not raise this issue in
the comment that she filed in the CA. In any case, the grant of the second
extension of time was warranted considering that the certified true copy of the
assailed RTC orders did not arrive at the office of respondent's counsel in Cebu
City in time for the filing of the petition.
Finally, the respondent maintains that the other co-owners are indispensable
parties to the case; and because they were not impleaded, the case should be
dismissed.
On the second issue, the petitioner insists that her right of action to recover
the property cannot be barred by prescription or laches even with the
respondent's uninterrupted possession of the property for 49 years because
there existed between her and her father an express trust or a resulting trust.
Indeed, if no trust relations existed, the possession of the property by the
respondent, through her predecessor, which dates back to 1948, would already
have given rise to acquisitive prescription in accordance with Act No. 190 (Code
of Civil Procedure). 19 Under Section 40 ofAct No. 190, an action for recovery
of real property, or of an interest therein, can be brought only within ten years
after the cause of action accrues. This period coincides with the ten-year period
for acquisitive prescription provided under Section 41 20 of the same Act. DcAEIS
Thus, the resolution of the second issue hinges on our determination of the
existence of a trust over the property express or implied between the
petitioner and her father.
It is true that in express trusts and resulting trusts, a trustee cannot acquire by
prescription a property entrusted to him unless he repudiates the trust. 25 The
following discussion is instructive:
That rule applies squarely to express trusts. The basis of the rule is that
the possession of a trustee is not adverse. Not being adverse, he does
not acquire by prescription the property held in trust. Thus, Section 38
of Act 190 provides that the law of prescription does not apply "in the
case of a continuing and subsisting trust."
The existence of express trusts concerning real property may not be established
by parol evidence. 29 It must be proven by some writing or deed. In this case,
the only evidence to support the claim that an express trust existed between
the petitioner and her father was the self-serving testimony of the petitioner.
Bare allegations do not constitute evidence adequate to support a conclusion.
They are not equivalent to proof under the Rules of Court. 30
In one case, the Court allowed oral testimony to prove the existence of a trust,
which had been partially performed. It was stressed therein that what is
important is that there should be an intention to create a trust, thus:
Although no particular words are required for the creation of an express trust,
a clear intention to create a trust must be shown; and the proof of fiduciary
relationship must be clear and convincing. The creation of an express trust must
be manifested with reasonable certainty and cannot be inferred from loose and
vague declarations or from ambiguous circumstances susceptible of other
interpretations. 32
In the case at bench, an intention to create a trust cannot be inferred from the
petitioner's testimony and the attendant facts and circumstances. The petitioner
testified only to the effect that her agreement with her father was that she will
be given a share in the produce of the property, thus:
Q: What was your agreement with your father Crispulo Rojas when you
left this property to him?
A: Every time that they will make copra, they will give a share.
Q: And while you were in Bansalan, Davao del Sur, did Crispolo Rojas
comply with his obligation of giving your share the proceeds of
the land?
What distinguishes a trust from other relations is the separation of the legal
title and equitable ownership of the property. In a trust relation, legal title is
vested in the fiduciary while equitable ownership is vested in a cestui que trust.
Such is not true in this case. The petitioner alleged in her complaint that the
tax declaration of the land was transferred to the name of Crispulo without her
consent. Had it been her intention to create a trust and make Crispulo her
trustee, she would not have made an issue out of this because in a trust
agreement, legal title is vested in the trustee. The trustee would necessarily
have the right to transfer the tax declaration in his name and to pay the taxes
on the property. These acts would be treated as beneficial to the cestui que
trust and would not amount to an adverse possession. 34 cCSHET
Neither can it be deduced from the circumstances of the case that a resulting
trust was created. A resulting trust is a species of implied trust that is presumed
always to have been contemplated by the parties, the intention as to which can
be found in the nature of their transaction although not expressed in a deed
or instrument of conveyance. A resulting trust is based on the equitable doctrine
that it is the more valuable consideration than the legal title that determines
the equitable interest in property. 35
While implied trusts may be proved by oral evidence, the evidence must be
trustworthy and received by the courts with extreme caution, and should not
be made to rest on loose, equivocal or indefinite declarations. Trustworthy
evidence is required because oral evidence can easily be fabricated. 36 In order
to establish an implied trust in real property by parol evidence, the proof should
be as fully convincing as if the acts giving rise to the trust obligation are proven
by an authentic document. An implied trust, in fine, cannot be established upon
vague and inconclusive proof. 37 In the present case, there was no evidence of
any transaction between the petitioner and her father from which it can be
inferred that a resulting trust was intended.
In light of the disquisitions, we hold that there was no express trust or resulting
trust established between the petitioner and her father. Thus, in the absence of
a trust relation, we can only conclude that Crispulo's uninterrupted possession
of the subject property for 49 years, coupled with the performance of acts of
ownership, such as payment of real estate taxes, ripened into ownership. The
statutory period of prescription commences when a person who has neither
title nor good faith, secures a tax declaration in his name and may, therefore,
be said to have adversely claimed ownership of the lot. 38 While tax declarations
and receipts are not conclusive evidence of ownership and do not prove title
to the land, nevertheless, when coupled with actual possession, they constitute
evidence of great weight and can be the basis of a claim of ownership through
prescription. 39 Moreover, Section 41 of Act No. 190 allows adverse possession
in any character to ripen into ownership after the lapse of ten years. There could
be prescription under the said section even in the absence of good faith and
just title. 40
All the foregoing notwithstanding, even if we sustain petitioner's claim that she
was the owner of the property and that she constituted a trust over the property
with her father as the trustee, such a finding still would not advance her case.
A constructive trust is one created not by any word or phrase, either expressly
or impliedly, evincing a direct intention to create a trust, but one which arises
in order to satisfy the demands of justice. It does not come about by agreement
or intention but in the main by operation of law, construed against one who,
by fraud, duress or abuse of confidence, obtains or holds the legal right to
property which he ought not, in equity and good conscience, to hold. 43
Second, the action is barred by laches. The petitioner allegedly discovered that
the property was being possessed by the respondent in 1980. 47However, it was
only in 1997 that she filed the action to recover the property. Laches is
negligence or omission to assert a right within a reasonable time, warranting a
presumption that the party entitled to it has either abandoned or declined to
assert it. 48
Finally, the respondent asserts that the court a quo ought to have dismissed
the complaint for failure to implead the other heirs who are indispensable
parties. We agree. We note that the complaint filed by the petitioner sought to
recover ownership, not just possession of the property; thus, the suit is in the
nature of an action for reconveyance. It is axiomatic that owners of property
over which reconveyance is asserted are indispensable parties. Without them
being impleaded, no relief is available, for the court cannot render valid
judgment. Being indispensable parties, their absence in the suit renders all
subsequent actions of the trial court null and void for want of authority to act,
not only as to the absent parties but even as to those present. Thus, when
indispensable parties are not before the court, the action should be
dismissed. 49 At any rate, a resolution of this issue is now purely academic in
light of our finding that the complaint is already barred by prescription,
estoppel and laches.
SO ORDERED.
||| (Caezo v. Rojas, G.R. No. 148788, [November 23, 2007], 563 PHIL 551-572)
[G.R. No. L-26699. March 16, 1976.]
SYNOPSIS
The property was sold a retro and later redeemed. Since then, several of the
parties have died and their estates partitioned and thereafter, interest over
the fishpond has been the bone of contention whether or not the same
was held in trust for Valentin Salao by Juan Y. Salao, Sr. and Ambrosia Salao
and whether the property can still be subject to an action for reconveyance.
Plaintiffs filed their original complaint in the CFI of Bataan against defendants,
asking for the annulment of the donation to Juan S. Salao of a share in the
fishpond and for reconveyance to them of the property as Valentin Salao's
supposed 1/3 share in the 145 hectares of the fishpond registered in the
name of Juan Y. Salao, Sr. and Ambrosia Salao.
Juan S. Salao, Jr., in his answer with counterclaim, pleaded as a defense the
indefeasibility of the Torrens title secured by his father and aunt. He also
invoked the Statute of Frauds, prescription and laches. Upon his death, he was
substituted by his widow, children and the administrator of his estate, the
now defendants.
The trial court found that there was no community of property among Juan
Salao, Sr., Ambrosia Salao and Valentin Salao when the Calunuran lands were
acquired; that a co-ownership over the real properties of Valentina Ignacio
existed among her heirs after her death in 1914; that the co-ownership was
administered by Ambrosia Salao and that it subsisted up to 1918, when her
estate was partitioned among her 3 children and grandson, Valentin Salao. If
further held that the donation was validly executed.
Both parties appealed, the plaintiffs, because their action for reconveyance
was dismissed, and the defendants, because their counterclaim for damages
was likewise dismissed. The Court of Appeals elevated the case to the
Supreme Court as the amount involved exceeded P200,000.00.
The Supreme Court affirmed the trial court's dismissal of plaintiffs' complaint,
ruling that there was no resulting trust over the questioned property as the
plaintiffs failed to measure up to the yardstick that a trust must be proven by
clear, satisfactory and convincing evidence and even assuming that there was
an implied trust, plaintiffs' action for reconveyance is barred by prescription or
laches, as a result of which, they have no right and personality to question the
validity of the donation made to Juan S. Salao, Jr. The Court likewise affirmed
the dismissal of defendants' claim for damages since the circumstances of the
case do not show that plaintiffs' action was manisfestly frivolous or primarily
intended to harass the defendants.
Judgment affirmed.
SYLLABUS
10. ID.; ID.; IMPLIED TRUST MAY BE PROVEN BY ORAL EVIDENCE. Article
1457 of the Civil Code allows an implied trust to be proven by oral evidence.
Trustworthy oral evidence is required to prove an implied trust because oral
evidence can be easily fabricated.
14. ACTIONS; PARTIES; GOOD FAITH IN FILING SUIT SHOWN. The record
shows that the plaintiffs presented fifteen witnesses during the protracted trial
of the case and that they fought tenaciously, incurring considerable expenses
therefor. Their causes of action turned out to be unfounded, yet the
pertinacity and vigor with which they pressed their claim were considered to
indicate their sincerity and good faith.
15. DAMAGES; MORAL DAMAGES; AWARD THEREOF NOT JUST AND PROPER
IN INSTANT CASE. Where it cannot be concluded with certitude that
plaintiffs' action was manisfestly frivolous or was primarily intended to harass
the defendants does not appear to be just and proper. The worries and
anxiety of a defendants an award for moral damages to the defendants does
not appear to be just and proper. The worries and anxiety of a defendant in a
litigation that was not maliciously instituted are not the moral damages
contemplated in the law.
16. ATTORNEYS' FEES; AWARD THEREOF NOT JUST AND PROPER IN INSTANT
CASE. Where it is conceded that the plaintiffs acted in good faith in filing
their action, there would be no basis for adjudging them liable to the
defendants for attorneys' fees and litigation expenses. It is not sound public
policy to set a premium on the right to litigate. An adverse decision does
not ipso facto justify the award of attorney's fees to the winning party.
DECISION
AQUINO, J : p
The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon,
Rizal begot four children named Patricio, Alejandra, Juan (Banli) and Ambrosia.
Manuel Salao died in 1885. His eldest son, Patricio, died in 1886 survived by
his only child, Valentin Salao.
The lands left by Valentina Ignacio, all located at Barrio Dampalit, were as
follows: prcd
In that deed of partition (Exh. 21) it was noted that "desde la muerte de
Valentina Ignacio y Mendoza, ha venido administrando sus bienes la referida
Ambrosia Salao" "cuya administracion lo ha sido a satisfaccion de todos los
herederos y por designacion los mismos". It was expressly stipulated that
Ambrosia Salao was not obligated to render any accounting of her
administration "en consideracion al resultado satisfactorio de sus gestiones,
mejoradas los bienes y pagadas por ella las contribuciones" pages 2 and 11,
Exh. 21).
Plaintiffs' theory is that Juan Y. Salao, Sr. and his sister Ambrosia had engaged
in the fishpond business. Where they obtained the capital is not shown in any
documentary evidence. Plaintiffs' version is that Valentin Salao and Alejandra
Salao were included in that joint venture, that the funds used were the
earnings of the properties supposedly inherited from Manuel Salao, and that
those earnings were used in the acquisition of the Calunuran fishpond. There
is no documentary evidence to support that theory.
On the other hand, the defendants contend that the Calunuran fishpond
consisted of lands purchased by Juan Y. Salao, Sr. and Ambrosia Salao in
1905, 1906, 1907 and 1908 as shown in their Exhibits 8, 9, 10 and 13. But this
point is disputed by the plaintiffs.
However, there can be no controversy as to the fact that after Juan Y. Salao,
Sr. and Ambrosia Salao secured a Torrens title for the Calunuran fishpond in
1911 they exercised dominical rights over it to the exclusion of their nephew,
Valentin Salao.
Thus, on December 1, 1911 Ambrosia Salao sold under pacto de retro for
P800 the Calunuran fishpond to Vicente Villongco. The period of redemption
was one year. In the deed of sale (Exh. 19) Ambrosia confirmed that she and
her brother Juan were the dueos proindivisos of the said pesqueria. On
December 7, 1911 Villongco, the vendee a retro, conveyed the same fishpond
to Ambrosia by way of lease for an annual canonof P128 (Exh. 19-a).
After the fishpond was redeemed from Villongco or on June 8, 1914 Ambrosia
and Juan sold it under pacto de retro to Eligio Naval for the sum of P3,360.
The period of redemption was also one year (Exh. 20). The fishpond was later
redeemed and Naval reconveyed it to the vendors a retro in a document
dated October 5, 1916 (Exh. 20-a). llcd
The 1930 survey shown in the computation sheets of the Bureau of Lands
reveals that the Calunuran fishpond has an area of 479,205 square meters and
that it was claimed by Juan Salao and Ambrosia Salao, while the
Pinaganacan fishpond (subsequently acquired by Juan and Ambrosia) has an
area of 975,952 square meters (Exh. 22).
The record of Civil Case No. 136, General Land Registration Office Record No.
12144, Court of First Instance of Pampanga shows that Ambrosia Salao and
Juan Salao filed an application for the registration of that land in their names
on January 15, 1916. They alleged in their petition that "han adquirido dicho
terreno por partes iguales y por la compra a los herederos del finado, Don
Engracio Santiago" (Exh. 17-a).
At the hearing on October 26, 1916 before Judge Percy M. Moir, Ambrosia
testified for the applicants. On that same day Judge Moir rendered a decision,
stating, inter alia, that the heirs of Engracio Santiago had sold the land to
Ambrosia Salao and Juan Salao. Judge Moir "ordena la adjudicacion y registro
del terreno solicitado a nombre de Juan Salao, mayor de edad y de estado
casado y de s esposa Diega Santiago y Ambrosia Salao, de estado soltera y
mayor de edad, en participaciones iguales" (Exh. 17-e).
On November 28, 1916 Judge Moir ordered the issuance of a decree for the
said land. The decree was issued on February 21, 1917. On March 12, 1917
Original Certificate of Title No. 472 of the Registry of Deeds of Pampanga was
issued in the names of Juan Salao and Ambrosia Salao.
That Pinaganacan or Lewa fishpond later became Cadastral Lot No. 544 of
the Hermosa cadastre (Exh. 23). It adjoins the Calunuran fishpond (See sketch,
Exh. 1).
Juan Y. Salao, Sr. died on November 3, 1931 at the age of eighty years (Exh.
C). His nephew, Valentin Salao, died on February 9, 1933 at the age of sixty
years according to the death certificate (Exh. A. However, if according to
Exhibit 21, he was forty-eight years old in 1918, he would be sixty-three years
old in 1933).
If it were true that he had a one-third interest in the Calunuran and Lewa
fishponds with a total area of 145 hectares registered in 1911 and 1917 in the
names of his aunt and uncle, Ambrosia Salao and Juan Y. Salao, Sr.,
respectively, it is strange that no mention of such interest was made in the
extrajudicial partition of his estate in 1934.
On that occasion she could have asked Ambrosia Salao to deliver to her and
to the children of her sister, Victorina, the Calunuran fishpond if it were true
that it was held in trust by Ambrosia as the share of Benita's father in the
alleged joint venture.
But she did not make any such demand. It was only after Ambrosia Salao's
death that she thought of filing an action for the reconveyance of the
Calunuran fishpond which was allegedly held in trust and which had become
the sole property of Juan Salao y Santiago (Juani).
On September 30, 1944 or during the Japanese occupation and about a year
before Ambrosia Salao's death on September 14, 1945 due to senility (she
was allegedly eighty-five years old when she died), she donated her one-
half proindiviso share in the two fishponds in question to her nephew, Juan S.
Salao, Jr. (Juani). At that time she was living with Juani's family. He was
already the owner of the other half of the said fishponds, having inherited it
from his father, Juan Y. Salao, Sr. (Banli). The deed of donation included other
pieces of real property owned by Ambrosia. She reserved for herself the
usufruct over the said properties during her lifetime (Exh. 2 or M).
The said deed of donation was registered only on April 5, 1950 (page 39,
Defendants' Record on Appeal).
The lawyer of Benita Salao and the children of Victorina Salao in a letter
dated January 26, 1951 informed Juan S. Salao, Jr. that his clients had a one-
third share in the two fishponds and that when Juani took possession thereof
in 1945, he refused to give Benita and Victorina's children their one-third
share of the net fruits which allegedly amounted to P200,000 (Exh. K).
Juan S. Salao, Jr. in his answer dated February 6, 1951 categorically stated that
Valentin Salao did not have any interest in the two fishponds and that the
sole owners thereof were his father Banli and his aunt Ambrosia, as shown in
the Torrens titles issued in 1911 and 1917, and that he (Juani) was the donee
of Ambrosia's one-half share (Exh. K-1).
Benita Salao and her nephews and niece filed their original complaint against
Juan S. Salao, Jr. on January 9, 1952 in the Court of First Instance of Bataan
(Exh. 36). They amended their complaint on January 28, 1955. They asked for
the annulment of the donation to Juan S. Salao, Jr. and for the reconveyance
to them of the Calunuran fishpond as Valentin Salao's supposed one-third
share in the 145 hectares of fishpond registered in the names of Juan Y.
Salao, Sr. and Ambrosia Salao.
Juan S. Salao, Jr. in his answer pleaded as a defense the indefeasibility of the
Torrens title secured by his father and aunt. He also invoked the Statute of
Frauds, prescription and laches. As counter-claims, he asked for moral
damages amounting to P200,000, attorney's fees and litigation expenses of
not less than P22,000 and reimbursement of the premiums which he has been
paying on his bond for the lifting of the receivership. Juan S. Salao, Jr. died in
1958 at the age of seventy-one. He was substituted by his widow, Mercedes
Pascual, and his six children and by the administrator of his estate.
In the intestate proceedings for the settlement of his estate the two fishponds
in question were adjudicated to his seven legal heirs in equal shares with the
condition that the properties would remain under administration during the
pendency of this case (page 181, Defendants' Record on Appeal).
After trial the lower court in its decision consisting of one hundred ten
printed pages dismissed the amended complaint and the counter-claim. In
sixty-seven printed pages it made a laborious recital of the testimonies of
plaintiffs' fourteen witnesses, Gregorio Marcelo, Norberto Crisostomo,
Leonardo Mangali, Fidel de la Cruz, Dionisio Manalili, Ambrosio Manalili,
Policarpio Sapno, Elias Manies, Basilio Atienza, Benita Salao, Emilio Cagui,
Damaso de la Pea, Arturo Alcuriza and Francisco Buensuceso, and the
testimonies of defendants' six witnesses, Marcos Galicia, Juan Galicia, Tiburcio
Lingad, Doctor Wenceslao Pascual, Ciriaco Ramirez and Pablo P. Salao.
(Plaintiffs presented Regino Nicodemus as a fifteenth witness, a rebuttal
witness).
The trial court found that there was no community of property among Juan Y.
Salao, Sr., Ambrosia Salao and Valentin Salao when the Calunuran and
Pinaganacan (Lewa) lands were acquired; that a co-ownership over the real
properties of Valentina Ignacio existed among her heirs after her death in
1914; that the co-ownership was administered by Ambrosia Salao and that it
subsisted up to 1918 when her estate was partitioned among her three
children and her grandson, Valentin Salao.
The trial court surmised that the co-ownership which existed from 1914 to
1918 misled the plaintiffs and their witnesses and caused them to believe
erroneously that there was a co-ownership in 1905 or thereabouts. The trial
court speculated that if Valentin had a hand in the conversion into fishponds
of the Calunuran and Lewa lands, he must have done so on a salary or profit-
sharing basis. It conjectured that Valentin's children and grandchildren were
given by Ambrosia Salao a portion of the earnings of the fishponds as a
reward for his services or because of Ambrosia's affection for her grandnieces.
The trial court rationalized that Valentin's omission during his lifetime to assail
the Torrens titles of Juan and Ambrosia signified that "he was not a co-
owner" of the fishponds. It did not give credence to the testimonies of
plaintiffs' witnesses because their memories could not be trusted and because
no strong documentary evidence supported the declarations. Moreover, the
parties involved in the alleged trust were already dead.
It also held that the donation was validly executed and that even if it were
void Juan S. Salao, Jr., the donee, would nevertheless be the sole legal heir of
the donor, Ambrosia Salao, and would inherit the properties donated to
him. LexLib
Both parties appealed. The plaintiffs appealed because their action for
reconveyance was dismissed. The defendants appealed because their
counterclaim for damages was dismissed.
The appeals, which deal with factual and legal issues, were made to the Court
of Appeals. However, as the amounts involved exceed two hundred thousand
pesos, the Court of Appeals elevated the case to this Court in its resolution of
October 3, 1966 (CA-G.R. No. 30014-R).
Plaintiffs' appeal. An appellant's brief should contain "a subject index of the
matter in the brief with a digest of the argument and page references" to the
contents of the brief (Sec. 16[a] Rule 46, 1964 Rules of Court; Sec. 17, Rule 48,
1940 Rules of Court).
The plaintiffs in their appellants' brief consisting of 302 pages did not comply
with that requirement. Their statements of the case and the facts do not
contain "page references to the record" as required in section 16[c] and [d] of
Rule 46, formerly section 17, Rule 48 of the 1940 Rules of Court.
Lawyers for appellants, when they prepare their briefs, would do well to read
and re-read section 16 of Rule 46. If they comply strictly with the formal
requirements prescribed in section 16, they might make a competent and
luminous presentation of their clients' case and lighten the burden of the
Court.
What Justice Fisher said in 1918 is still true now: "The pressure of work upon
this Court is so great that we cannot, in justice to other litigants, undertake to
make an examination of the voluminous transcript of the testimony (1,553
pages in this case, twenty-one witnesses having testified), unless the attorneys
who desire us to make such examination have themselves taken the trouble
to read the record and brief it in accordance with our rules" (Palarca vs.
Baguisi, 38 Phil. 177, 181), As noted in an old case, this Court decides
hundreds of cases every year and in addition resolves in minute orders an
exceptionally considerable number of petitions, motions and interlocutory
matters (Alzua and Arnalot vs. Johnson, 21 Phil. 308, 395; See In re Almacen,
L-27654, February 18, 1970, 31 SCRA 562, 573).
Juan S. Salao, Jr. (Juani) in his answer "specifically" denied "each and all the
allegations" in paragraphs 1 to 10 and 12 of the first cause of action with the
qualification that Original Certificates of Title Nos. 185 and 472 were issued
"more than 37 years ago" in the names of Juan (Banli) and Ambrosia under
the circumstances set forth in Juan S. Salao, Jr.'s "positive defenses" and "not
under the circumstances stated in the amended complaint".
The plaintiffs contend that the answer of Juan S. Salao, Jr. was in effect an
admission of the allegations in their first cause of action that there was a co-
ownership among Ambrosia, Juan, Alejandra and Valentin, all surnamed Salao,
regarding the Dampalit property as early as 1904 or 1905; that the common
funds were invested in the acquisition of the two fishponds; that the 47-
hectare Calunuran fishpond was verbally adjudicated to Valentin Salao in the
1919 partition and that there was a verbal stipulation to register "said lands in
the name only of Juan Y. Salao".
What defendant Juan S. Salao, Jr. did in his answer was to set forth in his
"positive defenses" the matters in avoidance of plaintiffs' first cause of action
which supported his denials of paragraphs 1 to 10 and 12 of the first cause of
action. Obviously, he did so because he found it impracticable to state
piecemeal his own version as to the acquisition of the two fishponds or to
make a tedious and repetitious recital of the ultimate facts contradicting the
allegations of the first cause of action.
The case of El Hogar Filipino vs. Santos Investments, 74 Phil. 79 and similar
cases is distinguishable from the instant case. In the El Hogar case the
defendant filed a laconic answer containing the statement that it denied
"generally and specifically each and every allegation contained in each and
every paragraph of the complaint". It did not set forth in its answer any
matter by way of confession and avoidance. It did not interpose any
affirmative defenses.
Under those circumstances, it was held that defendant's specific denial was
really a general denial which was tantamount to an admission of the
allegations of the complaint and which justified judgment on the pleadings.
That is not the situation in this case.
The other nine assignments of error of the plaintiffs may be reduced to the
decisive issue of whether the Calunuran fishpond was held in trust for
Valentin Salao by Juan Y. Salao, Sr. and Ambrosia Salao. That issue is tied up
with the question of whether plaintiffs' action for reconveyance had already
prescribed.
The plaintiffs contend that their action is "to enforce a trust which defendant"
Juan S. Salao, Jr. allegedly violated. The existence of a trust was not definitely
alleged in plaintiffs' complaint. They mentioned trust for the first time on
page 2 of their appellants' brief.
To determine if the plaintiffs have a cause of action for the enforcement of a
trust, it is necessary to make some exegesis on the nature of trusts
(fideicomisos). Trusts in Anglo-American jurisprudence were derived from
the fideicommissa of the Roman law (Government of the Philippine Islands vs.
Abadilla, 46 Phil. 642, 646).
"In its technical legal sense, a trust is defined as the right, enforceable solely
in equity, to the beneficial enjoyment of property, the legal title to which is
vested in another, but the word 'trust' is frequently employed to indicate
duties, relations, and responsibilities which are not strictly technical trusts" (89
C.J.S. 712)."A person who establishes a trust is called the trustor; one in whom
confidence is reposed as regards property for the benefit of another person is
known as the trustee; and the person for whose benefit the trust has been
created is referred to as the beneficiary" (Art. 1440, Civil Code). There is a
fiduciary relation between the trustee and the cestui que trust as regards
certain property, real, personal, money or choses in action (Pacheco vs. Arro,
85 Phil. 505).
"Trusts are either express or implied. Express trusts are created by the
intention of the trustor or of the parties. Implied trusts come into being by
operation of law" (Art. 1441, Civil Code). "No express trusts concerning an
immovable or any interest therein may be proven by parol evidence. An
implied trust may be proven by oral evidence" (Ibid, Arts. 1443 and 1457).
"No particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended" (Ibid, Art. 1444; Tuason de Perez vs.
Caluag, 96 Phil. 981; Julio vs. Dalandan, L-19012, October 30, 1967, 21 SCRA
543, 546). "Express trusts are those which are created by the direct and
positive acts of the parties, by some writing or deed, or will, or by words
either expressly or impliedly evincing an intention to create a trust" (89 C.J.S.
722).
"Implied trusts are those which, without being expressed, are deducible from
the nature of the transaction as matters of intent, or which are superinduced
on the transaction by operation of law as matters of equity, independently of
the particular intention of the parties" (89 C.J.S. 724). They are ordinarily
subdivided into resulting and constructive trusts (89 C.J.S. 722).
Thus, "if property is acquired through mistake or fraud, the person obtaining
it is by force of law, considered a trustee of an implied trust for the benefit of
the person from whom the property comes" (Art. 1456, Civil Code).
It is legally indefensible because the terms of article 1443 of the Civil Code
(already in force when the action herein was instituted) are peremptory and
unmistakable: parol evidence cannot be used to prove an express trust
concerning realty.
But that co-ownership was not proven by any competent evidence. It is quite
improbable because the alleged estate of Manuel Salao was likewise not
satisfactorily proven. The plaintiffs alleged in their original complaint that
there was a co-ownership over two hectares of land left by Manuel Salao. In
their amended complaint, they alleged that the co-ownership was
over seven hectares of fishponds located in Barrio Dampalit, Malabon, Rizal. In
their brief they alleged that the fishponds, ricelands and saltbeds owned in
common in Barrio Dampalit had an area of twenty-eighthectares, of which
sixteen hectares pertained to Valentina Ignacio and eleven hectares
represented Manuel Salao's estate.
They theorized that the eleven hectares "were, and necessarily, the nucleus,
nay the very root, of the property now in litigation" (page 6, plaintiffs-
appellants' brief). But the eleven hectares were not proven by any trustworthy
evidence. Benita Salao's testimony that in 1918 or 1919 Juan, Ambrosia,
Alejandra and Valentin partitioned twenty-eight hectares of lands located in
Barrio Dampalit is not credible. As noted by the defendants, Manuel Salao
was not even mentioned in plaintiffs' complaints.
The matter may be viewed from another angle. As already stated, the deed of
partition for Valentina Ignacio's estate was notarized in 1919 (Exh. 21). The
plaintiffs assert that the two fishponds were verbally partitioned also in 1919
and that the Calunuran fishpond was assigned to Valentin Salao as his share.
The plaintiffs utterly failed to measure up to the yardstick that a trust must be
proven by clear, satisfactory and convincing evidence. It cannot rest on vague
and uncertain evidence or on loose, equivocal or indefinite declarations (De
Leon vs. Molo-Peckson, 116 Phil. 1267, 1273).
The foregoing rulings are good under article 1457 of the Civil Code which, as
already noted, allows an implied trust to be proven by oral evidence.
Trustworthy oral evidence is required to prove an implied trust because oral
evidence can be easily fabricated.
The real purpose of the Torrens system is to quiet title to land. "Once a title is
registered, the owner may rest secure, without the necessity of waiting in the
portals of the court, or sitting in the mirador de su casa, to avoid the
possibility of losing his land" (Legarda and Prieto vs. Saleeby, 31 Phil. 590,
593).
There was no resulting trust in this case because there never was any
intention on the part of Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao
to create any trust. There was no constructive trust because the registration of
the two fishponds in the names of Juan and Ambrosia was not vitiated by
fraud or mistake. This is not a case where to satisfy the demands of justice it
is necessary to consider the Calunuran fishpond as being held in trust by the
heirs of Juan Y. Salao, Sr. for the heirs of Valentin Salao.
And even assuming that there was an implied trust, plaintiffs' action is clearly
barred by prescription or laches (Ramos vs. Ramos, L-19872, December 3,
1974, 61 SCRA 284; Quiiano vs. Court of Appeals, L-23024, May 31, 1971, 39
SCRA 221; Varsity Hills, Inc. vs. Navarro, L-30889, February 29, 1972, 43 SCRA
503; Alzona vs. Capunitan and Reyes, 114 Phil 377).
Under Act No. 190, whose statute of limitation would apply if there were an
implied trust in this case, the longest period of extinctive prescription was
only ten years (Sec 40; Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266).
Having reached the conclusion that the plaintiffs are not entitled to the
reconveyance of the Calunuran fishpond, it is no longer necessary to pass
upon the validity of the donation made by Ambrosia Salao to Juan S. Salao,
Jr. of her one-half share in the two fishponds. The plaintiffs have no right and
personality to assail that donation.
Even if the donation were declared void, the plaintiffs would not have any
successional rights to Ambrosia's share. The sole legal heir of Ambrosia was
her nephew, Juan, Jr., her nearest relative within the third degree. Valentin
Salao, if living in 1945 when Ambrosia died, would have been also her legal
heir, together with his first cousin, Juan Jr. (Juani). Benita Salao, the daughter
of Valentin, could not represent him in the succession to the estate of
Ambrosia since in the collateral line; representation takes place only in favor
of the children of brothers or sisters, whether they be of the full or half blood
(Art. 972, Civil Code). The nephew excludes a grandniece like Benita Salao or
great-grandnephews like the plaintiffs Alcuriza (Pavia vs. Iturralde, 5 Phil. 176).
Defendants' appeal. The defendants dispute the lower court's finding that
the plaintiffs filed their action in good faith. The defendants contend that they
are entitled to damages because the plaintiffs acted maliciously or in bad
faith in suing them. They ask for P25,000 attorney's fees and litigation
expenses and, in addition, moral damages.
We hold that defendants' appeal is not meritorious. The record shows that the
plaintiffs presented fifteen witnesses during the protracted trial of this case
which lasted from 1954 to 1959. They fought tenaciously. They obviously
incurred considerable expenses in prosecuting their case. Although their
causes of action turned out to be unfounded, yet the pertinacity and vigor
with which they pressed their claim indicate their sincerity and good faith.
The worries and anxiety of a defendant in a litigation that was not maliciously
instituted are not the moral damages contemplated in the law (Solis &
Yarisantos vs. Salvador, L-17022, August 14, 1965, 14 SCRA 887; Ramos vs.
Ramos, supra).
The instant case is not among the cases mentioned in articles 2219 and 2220
of the Civil Code wherein moral damages may be recovered. Nor can it be
regarded as analogous to any of the cases mentioned in those articles.
"The adverse result of an action does not per se make the act wrongful and
subject the actor to the payment of moral damages. The law could not have
meant to impose a penalty on the right to litigate; such right is so precious
that moral damages may not be charged on those who may exercise it
erroneously." (Barreto vs. Arevalo, 99 Phil. 771, 779).
The defendants invoke article 2208 (4) (11) of the Civil Code which provides
that attorney's fees may be recovered "in case of a clearly unfounded civil
action or proceeding against the plaintiff" (defendant is a plaintiff in his
counterclaim) or "in any other case where the court deems it just and
equitable" that attorney's fees should be awarded.
But once it is conceded that the plaintiffs acted in good faith in filing their
action there would be no basis for adjudging them liable to the defendants
for attorney's fees and litigation expenses (See Rizal Surety & Insurance Co.,
Inc. vs. Court of Appeals, L-23729, May 16, 1967, 20 SCRA 61).
SO ORDERED.
||| (Salao v. Salao, G.R. No. L-26699, [March 16, 1976], 162 PHIL 89-120)
DECISION
BRION, J :
p
BACKGROUND
On May 18, 1972, Chua filed a petition for the cancellation of TCT No.
T-13408 and the issuance of a title evidencing his ownership over a
subdivided portion of Lot No. 4144 covering 803.50 square meters. On May
23, 1972, TCT No. T-18403 was issued in his name. 18
The RTC, after initially denying the motion to dismiss, reconsidered its
ruling and dismissed the complaint in its Order 19 dated May 29, 2000 on
the grounds that: 1) the action, which was filed 32 years after the
property was partitioned and after a portion was sold to Macababbad,
had already prescribed; and 2) there was failure to implead indispensable
parties, namely, the other heirs of Pedro and Pantaleona and the persons
who have already acquired title to portions of the subject property in
good faith. 20
The respondents appealed the RTC's order dated May 29, 2000 to the CA on
the following grounds:
I.
II.
THE CA DECISION 22
The appellate court reversed and set aside the RTC's dismissal of
the complaint. On the first issue, it ruled that the complaint"carve(d) out a
sufficient and adequate cause of action . . . . One can read through the
verbosity of the initiatory pleading to discern that a fraud was committed by
the defendants on certain heirs of the original owners of the property and
that, as a result, the plaintiffs were deprived of interests that should have
gone to them as successors-in-interest of these parties. A positive deception
has been alleged to violate legal rights. This is the ultimate essential fact
that remains after all the clutter is removed from the pleading. Directed
against the defendants, there is enough to support a definitive
adjudication." 24
The Third Division of this Court initially denied 26 the petition for
review on certiorari for the petitioners' failure to show any reversible error
committed by the CA. However, it subsequently reinstated the petition. In
their motion for reconsideration, the petitioners clarified the grounds for
their petition, as follows:
Laches had not set in because the action was immediately filed
after discovery of the fraud. EIcSDC
OUR RULING
first, that they were the co-heirs and co-owners of the inherited
property; second, that their co-heirs-co-owners sold their hereditary
rights thereto without their knowledge and consent; third, that forgery,
fraud and deceit were committed in the execution of the Deed of
Extrajudicial Settlement and Confirmation of Sale since Francisco Ingjug
who allegedly executed the deed in 1967 actually died in 1963, hence,
the thumbprint found in the document could not be his; fourth, that
Eufemio Ingjug who signed the deed of sale is not the son of Mamerto
Ingjug, and, therefore, not an heir entitled to participate in the
disposition of the inheritance; fifth, that respondents have not paid the
taxes since the execution of the sale in 1965 until the present date and
the land in question is still declared for taxation purposes in the name
of Mamerto Ingjug, the original registered owner, as of
1998; sixth, that respondents had not taken possession of the land
subject of the complaint nor introduced any improvement thereon;
and seventh, that respondents are not innocent purchasers for
value. TAaIDH
Since the appeal raised mixed questions of fact and law, no error can
be imputed on the respondents for invoking the appellate jurisdiction of the
CA through an ordinary appeal. Rule 41, Sec. 2 of the Rules of Court provides:
Modes of appeal.
(a) Ordinary appeal The appeal to the Court of Appeals in cases
decided by the Regional Trial Court in the exercise of its original
jurisdiction shall be taken by filing a notice of appeal with the court
which rendered the judgment or final order appealed from and serving
a copy thereof upon the adverse party.
In Murillo v. Consul, 44 this Court had the occasion to clarify the three
(3) modes of appeal from decisions of the RTC, namely: (1) ordinary appeal
or appeal by writ of error, where judgment was rendered in a civil or criminal
action by the RTC in the exercise of original jurisdiction, covered by Rule 41;
(2) petition for review, where judgment was rendered by the RTC in the
exercise of appellate jurisdiction, covered by Rule 42; and (3) petition for
review to the Supreme Court under Rule 45 of the Rules of Court. The first
mode of appeal is taken to the CA on questions of fact or mixed questions
of fact and law. The second mode of appeal is brought to the CA on
questions of fact, of law, or mixed questions of fact and law. The third mode
of appeal is elevated to the Supreme Court only on questions of law.
Prescription
The respondents likewise argue that their action is one for the annulment of
the extrajudicial settlement of estate and sale bearing their forged
signatures. They contend that their action had not yet prescribed because
an action to declare an instrument null and void is imprescriptible. In their
Comment to the petition for review, however, the respondents modified their
position and argued that the sale to the petitioners pursuant to
the extrajudicial settlement of estate and sale was void because it was
carried out through fraud; thus, the appropriate prescription period is four
(4) years from the discovery of fraud. Under this argument, respondents posit
that their cause of action had not yet prescribed because they only learned
of the extrajudicial settlement of estate and sale in March 1999; they filed
their complaint the following month.
The petitioners, on the other hand, argue that the relevant prescriptive
period here is ten (10) years from the date of the registration of title, this
being an action for reconveyance based on an implied or constructive trust.
Based on this conclusion, the necessary question that next arises is:
What then is the effect of the issuance of TCTs in the name of petitioners?
In other words, does the issuance of the certificates of titles convert the
action to one of reconveyance of titled land which, under settled
jurisprudence, prescribes in ten (10) years?
Article 1458 of the New Civil Code provides: "By the contract of sale
one of the contracting parties obligates himself of transfer the
ownership of and to deliver a determinate thing, and the other to pay
therefor a price certain in money or its equivalent." It is essential that
the vendors be the owners of the property sold otherwise they cannot
dispose that which does not belong to them. As the Romans put
it: "Nemo dat quod non habet". No one can give more than what he
has. The sale of the realty to respondents is null and void insofar
as it prejudiced petitioners' interests and participation therein. At
best, only the ownership of the shares of Luisa, Maria and Guillerma
in the disputed property could have been transferred to
respondents.
Similarly, the claim that Francisco Ingjug died in 1963 but appeared to
be a party to the Extrajudicial Settlement and Confirmation of
Saleexecuted in 1967 would be fatal to the validity of the contract, if
proved by clear and convincing evidence. Contracting parties must be
juristic entities at the time of the consummation of the contract. Stated
otherwise, to form a valid and legal agreement it is necessary that there
be a party capable of contracting and party capable of being contracted
with. Hence, if any one party to a supposed contract was already dead
at the time of its execution, such contract is undoubtedly simulated and
false and therefore null and void by reason of its having been made
after the death of the party who appears as one of the contracting
parties therein. The death of a person terminates contractual capacity.
Laches
In Domingo v. Scheer, 50 this Court held that the proper remedy when
a party is left out is to implead the indispensable party at any stage of the
action. The court, either motu proprio or upon the motion of a party, may
order the inclusion of the indispensable party or give the plaintiff
opportunity to amend his complaint in order to include indispensable
parties. If the plaintiff to whom the order to include the indispensable party
is directed refuses to comply with the order of the court, the complaint may
be dismissed upon motion of the defendant or upon the court's own
motion. 51 Only upon unjustified failure or refusal to obey the order to
include or to amend is the action dismissed. 52 STcEIC
SO ORDERED.
Footnotes
||| (Macababbad, Jr. v. Masirag, G.R. No. 161237, [January 14, 2009], 596 PHIL
76-98)
SYLLABUS
2. ID.; ID.; KINDS OF; DISTINGUISHED. Trusts are either express or implied.
Express trusts are created by the intention of the trustor or of the parties,
while implied trusts come into being by operation of law, either through
implication of an intention to create a trust as a matter of law or through the
imposition of the trust irrespective of, and even contrary to. any such
intention.
DECISION
DAVIDE, JR., J :p
In this petition for review on certiorari under Rule 45 of the Rules of Court,
petitioners urge this Court to reverse the 20 April 1994 decision of the Court
of Appeals (Seventeenth Division) in CA-G.R. CV No. 34936, 1 which
affirmed in toto the 26 August 1991 decision of the Regional Trial Court of
Calbayog City in Civil Case No. 265.
Civil Case No. 265 was an action for recovery of possession of land and
damages with a prayer for a writ of preliminary mandatory injunction filed by
private respondents herein, spouses Ranulfo Ortiz, Jr. and Erlinda Ortiz,
against Rodolfo Morales. The complaint prayed that private respondents be
declared the lawful owners of a parcel of land and the two-storey residential
building standing thereon, and that Morales be ordered to remove whatever
improvements he constructed thereon, vacate the premises, and pay actual
and moral damages, litigation expenses, attorney's fees and costs of the suit.
On 26 August 1991 the Trial Court rendered its decision 4 in favor of plaintiffs,
private respondents herein, the dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the Plaintiffs
and against Defendants-Intervenor:
SO ORDERED. 5
The following is trial court's summary of the evidence for the plaintiffs:
The evidence adduced by the Plaintiffs discloses that the Plaintiffs are
the absolute and exclusive owners of the premises in question having
purchased the same from Celso Avelino, evidenced by a Deed of
Absolute Sale (Exh. "C"), a public instrument. They later caused the
transfer of its tax declaration in the name of the female plaintiff (Exh.
"I") and paid the realty taxes thereon (Exh. "K" & series).
The trial court's summary of the evidence for the defendants and intervenor is
as follows:
Defendants'-Intervenor's testimonial evidence tend to show that the
premises is question (land and two-storey building) is originally
owned by the spouses, Rosendo Avelino and Juana Ricaforte, who,
through their son, Celso Avelino, through an Escritura de Venta (Exh.
"2") bought it from the Mendiolas on July 8, 1948. After the purchase
the couple occupied it as owners until they died. Juana died on May
31, 1965 while Rosendo died on June 4, 1980. Upon their demise,
their children: Trinidad A. Cruz, Concepcion A. Peralta, Priscila A.
Morales and Aurea Avelino (who died single) succeeded as owners
thereof, except Celso Avelino who did not reside in the premises
because he was out of Calbayog for more than 30 years until his
death in Cebu City.
The Intervenor would not claim ownership of the premises if her son,
the defendant is not being made to vacate therefrom by the
Plaintiffs. 7
The trial court reached the aforementioned disposition on the basis of its
findings of facts and conclusions, which we quote:
From the evidence adduced by the parties, the following facts are
undisputed:
Three. The foregoing testimony of the Intervenor also show that she
is already in laches.
On the contrary, the last part of Art. 1448 of Our New Civil Code
bolsters Plaintiff's ownership over the disputed premises. It expressly
provides: ". . . However, if the person to whom the title is conveyed is
a child, legitimate or illegitimate, of the one paying the price of the
sale, no trust is implied by law, it being disputably presumed that
there is a gift in favor of the child." (emphasis supplied)
Finally, from the testimony of the Intervenor (p. 22) the truth is out in
that the Intervenor is putting up her pretense of ownership over the
disputed premises only when the defendant was being advised to
vacate and only to shield him from vacating therefrom. Thus, on
question of the Court, she declared:
"Q When your father died, as a co-owner were you not interested to
look at the document so that you can lawfully claim, act as
owner of that land?
Q In other words what you are saying is that if your son was not
dispossessed of the property in question, you would not claim
ownership?
A No, sir."
Dissatisfied with the trial court's decision, defendants heirs of Rodolfo Morales
and intervenor Priscila Morales, petitioners herein, appealed to the Court of
Appeals, which docketed the appeal as CA-G.R. CV No. 34936, and in their
Appellant's Brief they assigned the following errors:
2. . . . in not ruling that Celso Avelino purchased the house and lot in
question as a mere trustee, under an implied trust, for the
benefit of the trustor, his father, Rosendo Avelino, and the
latter's heirs.
3. . . . in ruling that the Intervenor is barred by laches from asserting
her status as a beneficiary of the aforesaid implied trust.
4. . . . in ruling that Celso Avelino validly sold the house and lot in
question to appellees without the consent of the other heirs of
Rosendo Avelino and Juana Ricaforte Avelino.
In its decision of 20 April 1994 10 the Court of Appeals affirmed the decision
of the trial court.
Their motion to reconsider the decision having been denied in the
resolution 11 of 14 September 1994 for lack of merit, petitioners filed the
instant petition wherein they claim that:
1. The Honorable Court erred in not ruling that at the very least,
Rodolfo Morales should have been considered a builder in
good faith who could not be compelled to vacate the disputed
property or to pay monthly rental unless he was first
indemnified for the cost of what he had built.
2. . . . in not ruling that the Court of Appeals and the Trial Court
gravely misapplied the law in ruling that there was no implied
trust over the premises.
3. . . . in not ruling that the Court of Appeals and the Trial Court
gravely misapplied the law in awarding damages to the
respondents.
3. Was there basis for the award of damages, attorney's fees and
litigation expenses to the private respondents?
1. It is a relationship;
A resulting trust is exemplified by Article 1448 of the Civil Code, which reads:
Art. 1448. There is an implied trust when property is sold, and the
legal estate is granted to one party but the price is paid by another
for the purpose of having the beneficial interest of the property. The
former is the trustee, while the latter is the beneficiary. However, if
the person to whom the title is conveyed is a child, legitimate or
illegitimate, of the one paying the price of the sale, no trust is implied
by law, it being disputably presumed that there is a gift in favor of
the child.
The trust created under the first sentence of Article 1448 is sometimes
referred to as a purchase money resulting trust. 17 The trust is created in
order to effectuate what the law presumes to have been the intention of the
parties in the circumstances that the person to whom the land was conveyed
holds it as trustee for the person who supplied the purchase money. 18
To give rise to a purchase money resulting trust, it is essential that there be:
In the instant case, petitioners' theory is that Rosendo Avelino owned the
money for the purchase of the property and he requested Celso, his son, to
buy the property allegedly in trust for the former. The fact remains, however,
that title to the property was conveyed to Celso. Accordingly, the situation is
governed by or falls within the exception under the third sentence of Article
1448, which for convenience we quote:
On this basis alone, the case for petitioners must fall. The preponderance of
evidence, as found by the trial court and affirmed by the Court of Appeals,
established positive acts of Celso Avelino indicating, without doubt, that he
considered the property he purchased from the Mendiolas as his exclusive
property. He had its tax declaration transferred in his name, caused the
property surveyed for him by the Bureau of Lands, and faithfully paid the
realty taxes. Finally, he sold the property to private respondents.
The theory of implied trust with Celso Avelino as the trustor and his parents
Rosendo Avelino and Juan Ricaforte as trustees is not even alleged, expressly
or impliedly, in the verified Answer of Rodolfo Morales 24 nor in the Answer in
Intervention of Priscila A. Morales. 25 In the former, Rodolfo alleged that:
B. [S]aid lot, together with an old house then thereon, were (sic)
acquired by said couple Rosendo Avelino and Juana
Ricaforte on July 8, 1948, which they right away possessed
exclusively in the concept of owner; 26
Priscila, on her part, merely reiterated the foregoing allegations in
subparagraphs A and B of paragraph 2 of her Answer in Intervention. 27
Rodolfo and Priscila likewise even failed to suggest in their respective Special
and Affirmative Defenses that Celso Avelino held the property in trust despite
Rodolfo's claim that:
The separate Answers of Rodolfo and Priscila do not likewise allege that Celso
Avelino committed any breach of the trust by having the property declared in
his name and paying the realty taxes thereon and by having the lot surveyed
by the Bureau of Lands which gave it a lot number: Lot 1949. 30 Even more
telling is that in the Pre-Trial Order 31 of the trial court, petitioners did not
claim the existence of an implied trust; the parties merely agreed that the
main issues were:
Yet, petitioners now want us to reverse the rulings of the courts below that
Celso Avelino was the absolute and exclusive owner of the property in
question, on strength of, primarily, their "implied trust" theory. The problem
with petitioners is that they entirely forgot that the trial court and the Court
of Appeals did not base their rulings on this alone. As shown earlier, the trial
court pointed out numerous other flaws in petitioners' theory, such as laches.
Then, too, the rule is settled that the burden of proving the existence of a
trust is on the party asserting its existence and that such proof must be clear
and satisfactory. 32 As to that, petitioners relied principally on testimonial
evidence. It is, of course; doctrinally entrenched that the evaluation of the
testimony of witnesses by the trial court is received on appeal with the
highest respect, because it is the trial court that has the direct opportunity to
observe them on the stand and detect if they are telling the truth or lying
through their teeth. The assessment is accepted as correct by the appellate
court and binds it, absent a clear showing that it was reached arbitrarily. 33 In
this case, petitioners failed to assail, much less overcome, the following
observation of the trial court:
If indeed the property was merely held in trust by Celso for his parents,
Concepcion would have been entitled to a proportionate part thereof as co-
heir. However, by her Confirmation, Concepcion made a solemn declaration
against interest. Petitioners, realizing that the Confirmation was admissible,
attempted to cushion its impact by offering in evidence as Exhibit
"4" 35 Concepcion's affidavit, dated 16 June 1987, wherein Concepcion stated:
Note that Concepcion seemed to be certain that only the house formed part
of the estate of her deceased parents. In light of the equivocal nature of
Concepcion's later affidavit, the trial court and the Court of Appeals did not
then err in giving more weight to Concepcion's earlier Confirmation.
II
Clearly, Article 448 applies only when the builder, planter or sower believes he
has the right to so build, plant or sow because he thinks he owns the land or
believes himself to have a claim of title. 37 In the instant case Rodolfo Morales
knew from the very beginning that he was not the owner of the land. He
alleged in his answer that the land was acquired by his grandparents Rosendo
Avelino and Juana Ricaforte and he constructed the shop building in 1979
"upon due permission and financial assistance from his mother, Priscila A.
Morales and from his aunts Trinidad A. Cruz and Concepcion A. Peralta . . .,
with the knowledge and consent of his uncle Celso Avelino." 38
This so-called unrebutted testimony was rejected by the courts below, and
with good reason. First, it was clearly self-serving and inconsistent with
petitioners' vigorous insistence that Celso Avelino was away from Calbayog
City continuously for more than 30 years until he died on October 31,
1987." 40 The circumstances of when and where allegedly the consent was
given are unclear. Second, only Celso Avelino could have rebutted it; but the
testimony was given after Avelino's death, thus forever sealing his lips. Reason
and fairness demand that the attribution of an act to a dead man must be
viewed with utmost caution. Finally, having insisted with all vigor that the land
was acquired by Rosendo Avelino and Juanita Ricaforte, it would be most
unlikely that Rodolfo would have taken the trouble of securing Celso's
consent, who had been "continuously away from Calbayog City for more than
30 years," for the construction of the shop building. cda
III
Pursuant to Article 2217 of the Civil Code, moral damages, which include
physical suffering, mental anguish, fright, serious anxiety, besmirched
reputation, wounded feelings, moral shock, social humiliation, and similar
injury may be recovered in the cases enumerated in Article 2219 and 2220 of
the same Code. 41 For moral damages to be recovered, it must be shown that
they are the proximate result of the defendant's wrongful act or omission in
the cases provided for in Articles 2219 and 2220, i.e., it must be shown that
an injury was suffered by the claimant and that such injury sprang from any
of the cases stated in Articles 2219 and 2220. 42 Moral damages are
emphatically not intended to enrich a plaintiff at the expense of the
defendant. They are awarded only to enable the injured party to obtain
means, diversion, or amusements that will serve to alleviate the moral
sufferings he underwent, by reason of the defendant's culpable action and
must, perforce, be proportionate to the suffering inflicted. 43 In the same vein,
moral damages must be understood to be in concept of grants, not punitive
or corrective in nature, calculated to compensate the claimant for the injury
suffered. 44
In the instant case, the private respondents have not convincingly shown that
they suffered "mental anguish" for certain acts of herein petitioner which fell
under any of the cases enumerated in Articles 2219 and 2220 of the Civil
Code. However, the trial court invoked Articles 19, 20, 21, 2217, 2219, 2220 to
support the award for moral damages. Article 2220 is definitely inapplicable
since this is not a case of willful injury to property or breach of contract.
The attendant circumstances in this case also reject the application of Articles
19, 20 and 21 of the Chapter on Human Relations of the Civil Code.
Accordingly, for lack of factual and legal basis, the award of moral damages
must be set aside.
For the same reason the award of attorney's fees and litigation expenses must
suffer the same fate. The award of attorney's fees is the exception rather than
the rule and counsel's fees are not to be awarded every time a party wins a
suit. The power of the court to award attorney's fees under Article 2208 of the
Civil Code demands factual, legal and equitable justification; its basis cannot
be left to speculation and conjecture. 45 The general rule is that attorney's
fees cannot be recovered as part of damages because of the policy that no
premium should be placed on the right to litigate. 46
WHEREFORE, premises considered, except as to the award of moral damages,
attorney's fees and litigation expenses which are hereby DELETED, the
judgment of the respondent Court of Appeals is AFFIRMED.
SO ORDERED.
||| (Morales v. Court of Appeals, G.R. No. 117228, [June 19, 1997], 340 PHIL
397-422)
SYNOPSIS
On February 25, 1939, Ang Bansing, owner of a large tract of land in Davao
City, sold portion thereof to Cruz. Their contract stipulated that Ang Bansing
would work for the titling of the entire area of his land at hit expense, while
the vendee would spend for the titling of the portion sold to him. After the
cadastral survey, where the portion sold to Cruz was designated as Lot 1846-C
and the portion remaining with Ang Bansing was designated as Lots 1846-A,
1846-B, 1846-D, and 1846-E, Cruz sold Lot 1846-C to the Commonwealth of
the Philippines. Thereafter, pursuant to a decree of registration, Original
Certificate of Title No. 26, covering the entire area, including the lot sold to
Cruz, was issued on March 7, 1941 in the names of the original claimants in the
cadastral proceedings. This OCT was however canceled on March 31, 1941 per
Deed of Adjudication in favor of Ang Bansing for which he was issued a transfer
certificate of title. Later, on various dates, Ang Bansing also sold Lot 1846-A,
portions of Lot 1846-B, and Lot 1846-D to Cruz and the Transfer Certificate of
Title corresponding to the said lots in the name of Ang Bansing were canceled
and new ones issued in the name of Cruz. Transfer Certificate of Title No. 2601
was issued in the name of Ang Bansing for the remaining lots, including Lot
1846-C. On February 25, 1965, pursuant to Presidential Proclamation 459,
government ownership of certain parcels of land in Davao City were transferred
to the Mindanao Development Authority (MDA), among which was Lot 1846-C.
MDA accordingly requested Ang Bansing to surrender his owner's duplicate of
TCT 2601 for registration of the government's ownership over Lot 1846-C, but
he refused. MDA thus filed a suit for reconveyance on April 11, 1969, claiming
that Ang Bansing acted as trustee for Cruz when he worked for the titling of
the entire tract of land as per their contract. The trial court found the existence
of an express trust and ordered the reconveyance of the subject lot to MDA.
On appeal, however, the Court of Appeals found no express trust and dismissed
the complaint.
On petition for review, the Supreme Court held that failure on the part of Ang
Bansing to definitely describe the subject-matter of the supposed trust or the
beneficiaries or object thereof is strong evidence that he intended no trust; and
that only an implied trust or constructive trust may have been impressed upon
the title of Ang Bansing over Lot 1846-C but such constructive trust has already
prescribed and has been barred by laches.
Petition denied.
SYLLABUS
1. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRUSTS; KINDS. Trusts are
either express or implied. Express trusts are created by the intention of the
trustor or of the parties. Implied trusts come into being by operation of law
(Article 1441, Civil Code).
2. ID.; ID.; ID.; ID.; EXPRESS TRUST; ELEMENTS. It is fundamental in the law
of trusts that certain requirements must exist before an express trust will be
recognized. Basically, these elements include a competent trustor and trustee,
an ascertainable trust res. and sufficiently certain beneficiaries. Stilted
formalities are unnecessary, but nevertheless each of the above elements is
required to be established, and, if anyone of them is missing, it is fatal to the
trusts. Furthermore, there must be a present and complete disposition of the
trust property, notwithstanding that the enjoyment in the beneficiary will take
place in the future. It is essential, too, that the purpose be an active one to
prevent trust from being executed into a legal estate or interest, and one that
is not in contravention of some prohibition of statute or rule of public policy.
There must also be some power of administration other than a mere duty to
perform a contract although the contract is for a third-party beneficiary. A
declaration of terms is essential, and these must be stated with reasonable
certainty in order that the trustee may administer, and that the court, if called
upon to do so, may enforce, the trust (Sec. 31, Trusts, 76 Am. Jur. 2d, pp. 278-
279).
3. ID.; ID.; ID.; ID.; ID.; ID.; CASE AT BAR. There is no express trust where the
stipulation in the deed of sale executed by Ang Bansing in favor of Juan Cruz
is a mere condition that Ang Bansing shall pay the expenses for the registration
of his land and for Juan Cruz to shoulder the expenses for the registration of
the land sold to him. The stipulation does not categorically create an obligation
on the part of Ang Bansing to hold the property in trust for Juan Cruz. It is
essential to the creation of an express trust that the settler presently and
unequivocally make a disposition of property and make himself the trustee of
the property for the benefit of another (Sec. 35, Trusts, 76 Am. Jur. 2d, 281).
4. ID.; ID.; ID.; ID.; ID.; CLEAR AND UNEQUIVOCAL LANGUAGE NECESSARY TO
CREATE TRUST. Clear and unequivocal language is necessary to create a trust
and mere precatory language and statements of ambiguous nature, are not
sufficient to establish a trust. As the Court stated in De Leon vs. Packson, 11
Phil. 1267, a trust must he proven by clear, satisfactory and convincing evidence;
it cannot rest on vague and uncertain evidence or on loose, equivocal or
indefinite declarations.
5. ID.; ID.; ID.; ID.; ID.; REPUDIATION THEREOF RENDERS TRUST, PRESCRIPTIBLE;
CASE AT BAR. But, even granting arguendo, that an express trust had been
established, it would appear that the trustee had repudiated the trust and the
petitioner did not take any action therein until after the lapse of 23 years. Thus,
in its Reply to the Defendant's Answer, filed on June 29, 1969, petitioner
admitted that "after the last war she City Engineer's Office of Davao City made
repeated demands on the defendants for the delivery and conveyance to the
Commonwealth Government, now the Republic of the Philippines, of the title
of land in question, Lot 1846-C, but the defendant ignored and evaded the
same." Considering that the demand was made in behalf of the Commonwealth
Government, it is obvious that the said demand was made before July 4, 1946,
when the Commonwealth Government was dismantled and the Republic of the
Philippines came into being. From 1946 to 1969, when the action for
reconveyance was filed with the court, 23 years had passed. For sure, the period
for enforcing the alleged beneficiary over the land in question after the
repudiation of the trust by the trustee, had already prescribed.
6. ID.; ID.; ID.; ID.; IMPLIED TRUST; CASE AT BAR. An implied trust may have
been impressed upon the title of Ang Bansing over Lot 1846-C of the Davao
Cadastre since the land in question was registered in his name although the
land belonged to another. In implied trust, there is neither promise nor fiduciary
relations, the so- called trustee does not recognize any trust and has no intent
to hold the property for the beneficiary. It does not arise by agreement or
intention, but by operation of law. Thus, if property is acquired through mistake
or fraud, the person obtaining it is, by force of law, considered a trustee of an
implied trust for the benefit of the person from whom the property comes
(Article 1456, Civil Code).
7. ID.; ID.; ID.; ID.; ID.; PRESCRIPTIBLE; CASE AT BAR. Such constructive trust
is not a trust in the technical sense and prescribes in 10 years. Here, the 10 year
prescriptive period began on March 31, 1941, upon the issuance of Original
Certificate of Title No. 26 in the names of Victoria Ang Bansing, Orfelina Ang
Bansing, and Francisco Ang Bansing. From that date up to April 11, 1969, when
the complaint for reconveyance was filed, more than 28 years had passed.
Clearly, the action for reconveyance had prescribed.
8. ID.; ID.; ID.; ID.; ID.; ACTION FOR RECONVEYANCE OF SUBJECT LOT BARRED
BY LACHES IN CASE AT BAR. The enforcement of the constructive trust that
may have been impressed upon the title of Ang Bansing over Lot I846-C of the
Davao Cadastre is barred by laches. It appears that the deed of me in favor of
the Commonwealth Government was executed by Juan Cruz on December 23,
1939, during the cadastral proceedings, and even before the cadastral survey
plan was approved by the Director of Lands on July 10, 1940. But, the vendee
therein did not file an answer, much less an opposition to the answer of Ang
Bansing, in the said cadastral proceedings. The judgment rendered in the said
cadastral proceeding, awarding the lot in question to Ang Bansing, is already
final. After an inexcusable delay of more than 28 years and acquiescence to
existing conditions, is now too late for the petitioner to complain.
AQUINO, J., dissenting:
2. ID.; ID.; ID.; NOT PRESCRIPTIBLE. There being an express trust in this case,
the equitable action to compel the trustee to reconvey the land registered in
his name in trust for the benefit of the cestui que trust does not prescribe
Manalang vs. Canlas, 94 Phil. 776; Ramos vs. Ramos, 61 SCRA 284). In any event,
the real plaintiff in this case is the Republic of the Philippines and prescription
does not run against the State (De la Viavs. Government of the P.1.; 65 Phil.
262, 265; Republic vs. Ruiz, L-23712 April 29, 1968, 23 SCRA 348).
DECISION
CONCEPCION, JR., J : p
Petition for review on certiorari of the decision of the Court of Appeals in CA-
G.R. No. 48488-R, entitled: "Mindanao Development Authority, etc., plaintiff-
appellee, versus Francisco Ang Bansing, defendant-appellant", which reversed
the decision of the Court of First Instance of Davao and dismissed the complaint
filed in Civil Case No. 6480 of the said court. cdphil
It is not disputed that the respondent Francisco Ang Bansing was the owner of
a big tract of land with an area of about 300,000 sq.m., situated in Barrio
Panacan, Davao City. On February 25, 1939, Ang Bansing sold a portion thereof,
with an area of about 5 hectares to Juan Cruz Yap Chuy. The contract provided,
among others, the following:
"That I hereby agree to work for the titling of the entire area of my
land under my own expenses and the expenses for the titling of the
portion sold to me shall be under the expenses of the said Juan Cruz
Yap Chuy" 1
After the sale, the land of Ang Bansing was surveyed and designated as Lot
664-B Psd-1638 was further subdivided into five (5) lots and the portion sold
to Juan Cruz Yap Chuy, shortened to Juan Cruz, was designated as Lot 664-B-
3, with an area of 61.107 square meters, more or less. 2On June 15-17 and
December 15, 1939, a cadastral survey was made and Lot 664-B-3 was
designated as Lot 1846-C of the Davao Cadastre.
On December 23, 1939, Juan Cruz sold Lot 1846-C to the Commonwealth of
the Philippines for the amount of P6,347.50. 3 On that same day, Juan Cruz, as
vendor, and C.B. Cam and Miguel N. Lansona, as sureties, executed a surety
bond in favor of the vendee to guarantee the vendor's absolute title over the
land sold. 4
The cadastral survey plan was approved by the Director of Lands on July 10,
1940, 5 and on March 7, 1941, Original Certificate of Title No. 26 was issued in
the names of Victoriana Ang Bansing, Orfelina Ang Bansing, and Francisco Ang
Bansing, as claimants of the land, pursuant to Decree No. 745358 issued on July
29, 1940. On March 31, 1941, OCT No. 26 was cancelled pursuant to a Deed of
Adjudication and Transfer Certificate of Title No. 1783 was issued in the name
of Francisco Ang Bansing. 6
On that day, March 31, 1941, Ang Bansing sold Lot 1846-A to Juan Cruz and
TCT No. 1783 was cancelled. TCT No. 1784 was issued in the name of Juan Cruz,
for Lot 1846-A and TCT No. 1785 was issued in the name of Ang Bansing for
the remaining Lots 1846-B, 1846-C, 1846-D, and 1846-E. Later, Ang Bansing
sold two subdivision lots of Lot 1846-B, namely: Lot 1846-B-2-C and Lot 1846-
B-1 to Vedasto Corcuera for which TCT No. 2551 and TCT No. 2552, respectively,
were issued in the name of the said Vedasto Corcuera on August 10, 1946.
Thereafter, Lot 1848-A, with an area of 9.6508 hectares, and Lots 1846-B-A and
1848-B-2-D, all subdivided portions of Lot 1846-B, were similarly conveyed to
Juan Cruz for which TCT No. 2599 and TCT No. 2600, respectively, were issued
in the name of Juan Cruz on September 26, 1946. TCT No. 2601 was issued in
the name of Ang Bansing for the remainder of the property, including the lot
in question. Then, another portion of 1846-B, designated in the subdivision plan
as Lot 1848-B-2-B was sold to Juan Cruz for which TCT No. 184 was issued in
the latter's name. On November 28, 1946, after these conveyances, there
remained in the possession of Ang Bansing under TCT No. 2601, Lot 1846-C,
the lot in question; Lot 1846-D; and Lot 1846-E. However, TCT No. 2601 was
again partially cancelled when Ang Bansing sold Lot 1846-D to Vedasto
Corcuera. 7
On February 25, 1965, the President of the Philippines issued Proclamation No.
459, transferring ownership of certain parcels of land situated in Sasa, Davao
City, to the Mindanao Development Authority, now the Southern Philippines
Development Administration, subject to private rights, if any. Lot 1846-C, the
disputed parcel of land, was among the parcels of land transferred to the
Mindanao Development Authority in said proclamation. 8
On March 31, 1969, Atty. Hector L. Bisnar, counsel for the Mindanao
Development Authority, wrote Ang Bansing requesting the latter to surrender
the Owner's duplicate copy of TCT No. 2601 so that Lot 1846-C could be
formally transferred to his client, but Ang Bansing refused. 9Consequently, on
April 11, 1969, the Mindanao Development Authority filed a complaint against
Francisco Ang Bansing before the Court of First Instance of Davao City,
docketed therein as Civil Case No. 6480, for the reconveyance of the title over
Lot 1846-C, alleging, among others, the following:
"9. That the deed of sale, marked as Annex 'A', it was stipulated by the
parties that the defendant would work to secure title of his entire tract
of land of about 30 hectares defraying the expenses for the same and
the expenses for the title of the portion sold by the defendant to Juan
Cruz Yap Chuy shall be borne by the latter;
"10. That the defendant as vendor and the one who worked to secure
the title of his entire tract of land which included the portion sold by
him to Juan Cruz Yap Chuy acted in the capacity of and/or served as
trustee for any and all parties who become successor-in-interest to Juan
Cruz Yap Chuy and the defendant was bound and obligated to give,
deliver and reconvey to Juan Cruz Yap Chuy and/or his successor-in-
interest the title pertaining to the portion of land sold and conveyed
by him to Juan Cruz Yap Chuy by virtue of the deed of sale marked as
Annex 'A' and his affidavit marked as Annex 'C'." 10
"9. That defendant admits that in Annex 'A' of the complaint, it was
agreed and stipulated in paragraph 6 thereof that:
and defendant in fact secured at his expense his OCT No. 26 for his
entire land; that in the process of defendant's securing his title neither
Juan Cruz Yap Chuy nor the Commonwealth of the Philippines asserted
any right to ownership of the subject property and that was almost 30
years ago until plaintiff filed its complaint, thus plaintiff is forever barred
from claiming any right over the subject property. There was no real
sale made but only the intention to sell a portion of the land as stated
by defendant in Annex 'C' of the complaint.
Ang Bansing appealed to the Court of Appeals and the said appellate court
ruled that no express trust has been created and, accordingly, reversed the
judgment and dismissed the complaint. 13
"That I hereby agree to work for the titling of the entire area of my
land under my own expenses and the expenses for the titling of the
portion sold to me shall be under the expenses of said Juan Cruz Yap
Chuy."
"In case of a declaration of trust, the declaration must be clear and unequivocal
that the owner holds property in trust for the purposes named."17
While Ang Bansing had agreed in the deed of sale that he will work for the
titling of "the entire area of my land under my own expenses," it is not clear
therefrom whether said statement refers to the 30-hectare parcel of land or to
that portion left to him after the sale. A failure on the part of the settlor
definitely to describe the subject-matter of the supposed trust or the
beneficiaries or object thereof is strong evidence that he intended no trust. 18
The intent to create a trust must be definite and particular. It must show a
desire to pass benefits through the medium of a trust, and not through some
related or similar device. 19
Nor will the affidavit executed by Ang Bansing on April 23, 1941, 21 be
construed as having established an express trust. As counsel for the herein
petitioner has stated, "the only purpose of the Affidavit was to clarify that the
area of the land sold by Ang Bansing to Juan Cruz Yap Chuy is not only 5
hectares but 61,107 square meters or a little over six (6) hectares." 22
That no express trust had been agreed upon by Ang Bansing and Juan Cruz is
evident from the fact that Juan Cruz, the supposed beneficiary of the trust,
never made any attempt to enforce the alleged trust and require the trustee to
transfer the title over Lot 1846-C, in his name. Thus, the records show that the
deed of sale, covering Lot 1846-C, was executed by Ang Bansing in favor of
Juan Cruz on February 25, 1939. Two years later, or on March 31, 1941, Ang
Bansing sold Lot 1846-A to the said Juan Cruz for which TCT No. 1784 was
issued in the name of Juan Cruz. Subsequently thereafter, Lot 1848-A, with an
area of 9.6508 hectares, and Lot 1846-A and 1848-B-2-D, all subdivided
portions of Lot 1846-B, were similarly conveyed to the said Juan Cruz for which
TCT No. 2599 and TCT No. 2600, respectively, were issued in the name of Juan
Cruz on September 26, 1946. Then, another portion of Lot 1846-B, designated
in the subdivision plan as Lot 1848-B-2-B, was sold to Juan Cruz for which TCT
No. 184 was issued in his name on November 28, 1948. Despite these numerous
transfers of portions of the original 30-hectare parcel of land of Ang Bansing
to Juan Cruz and the issuance of certificates of title in the name of Juan Cruz,
the latter never sought the transfer of the title to Lot 1846-C in his name. For
sure, if the parties had agreed that Ang Bansing shall hold the property in trust
for Juan Cruz until after the former shall have obtained a certificate of title to
the land, the latter would have asked for the reconveyance of the title to him
in view of the surety bond executed by him in favor of the Commonwealth
Government wherein he warrants his title over the property. The conduct of
Juan Cruz is inconsistent with a trust and may well have probative effect against
a trust.
But, even granting, arguendo, that an express trust had been established, as
claimed by the herein petitioner, it would appear that the trustee had
repudiated the trust and the petitioner herein, the alleged beneficiary to the
trust, did not take any action therein until after the lapse of 23 years. Thus, in
its Reply to the Defendant's Answer, filed on June 29, 1969, the herein petitioner
admitted that "after the last war the City Engineer's Office of Davao City made
repeated demands on the defendants for the delivery and conveyance to the
Commonwealth Government, now the Republic of the Philippines, of the title
of land in question, Lot 1846-C, but the defendant ignored and evaded the
same." 23 Considering that the demand was made in behalf of the
Commonwealth Government, it is obvious that the said demand was made
before July 4, 1946, when the Commonwealth Government was dismantled and
the Republic of the Philippines came into being. From 1946 to 1969, when the
action for reconveyance was filed with the court, 23 years had passed. For sure,
the period for enforcing the rights of the alleged beneficiary over the land in
question after the repudiation of the trust by the trustee, had already
prescribed. prLL
Needless to say, only an implied trust may have been impressed upon the title
of Ang Bansing over Lot 1846-C of the Davao Cadastre since the land in
question was registered in his name although the land belonged to another. In
implied trusts, there is neither promise nor fiduciary relations, the so-called
trustee does not recognize any trust and has no intent to hold the property for
the beneficiary. 24 It does not arise by agreement or intention, but by operation
of law. Thus, if property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes. 25
There is also a constructive trust if a person sells a parcel of land and thereafter
obtains title to it through fraudulent misrepresentation. 27
Such a constructive trust is not a trust in the technical sense and is prescriptible;
it prescribes in 10 years. 28
Here, the 10-year prescriptive period began on March 31, 1941, upon the
issuance of Original Certificate of Title No. 26 in the names of Victoriana Ang
Bansing, Orfelina Ang Bansing, and Francisco Ang Bansing. From that date up
to April 11, 1969, when the complaint for reconveyance was filed, more than 28
years had passed. Clearly, the action for reconveyance had prescribed.
Besides, the enforcement of the constructive trust that may have been
impressed upon the title of Ang Bansing over Lot 1846-C of the Davao Cadastre
is barred by laches. 29 It appears that the deed of sale in favor of the
Commonwealth Government was executed by Juan Cruz on December 23, 1939,
during the cadastral proceedings, and even before the cadastral survey plan
was approved by the Director of Lands on July 10, 1940. But, the vendee therein
did not file an answer, much less an opposition to the answer of Ang Bansing,
in the said cadastral proceedings. The judgment rendered in the said cadastral
proceeding, awarding the lot in question to Ang Bansing, is already final. After
an inexcusable delay of more than 28 years and acquiescence of existing
conditions, it is now too late for the petitioner to complain.
SO ORDERED.
DECISION
TINGA, J :p
After full payment of the purchase price but prior to the issuance of
the deed of conveyance, Epifanio executed an Affidavit 6 (Affidavit of
Epifanio) in Spanish on 10 July 1923 affirming that he, as one of the heirs of
Jose, and his uncle and petitioners' predecessor-in-interest, Tranquilino
Labiste (Tranquilino), then co-owned Lot No. 1054 because the money that
was paid to the government came from the two of them. Tranquilino and
the heirs of Jose continued to hold the property jointly.
The sole issue that the Court has to resolve is whether or not
petitioners' cause of action has prescribed.
Trust is the right to the beneficial enjoyment of property, the legal title
to which is vested in another. It is a fiduciary relationship that obliges the
trustee to deal with the property for the benefit of the beneficiary. 23 Trust
relations between parties may either be express or implied. An express trust
is created by the intention of the trustor or of the parties. An implied trust
comes into being by operation of law. 24 aSACED
Express trusts are created by direct and positive acts of the parties, by
some writing or deed, or will, or by words either expressly or impliedly
evincing an intention to create a trust. 25 Under Article 1444 of the Civil
Code, "[n]o particular words are required for the creation of an express trust,
it being sufficient that a trust is clearly intended". The Affidavit of Epifanio is
in the nature of a trust agreement. Epifanio affirmed that the lot brought in
his name was co-owned by him, as one of the heirs of Jose, and his uncle
Tranquilino. And by agreement, each of them has been in possession of half
of the property. Their arrangement was corroborated by the subdivision plan
prepared by Engr. Bunagan and approved by Jose P. Dans, Acting Director
of Lands.
As such, prescription and laches will run only from the time the express
trust is repudiated. The Court has held that for acquisitive prescription to
bar the action of the beneficiary against the trustee in an express trust for
the recovery of the property held in trust it must be shown that: (a) the
trustee has performed unequivocal acts of repudiation amounting to an
ouster of the cestui que trust; (b) such positive acts of repudiation have been
made known to the cestui que trust, and (c) the evidence thereon is clear
and conclusive. 26 Respondents cannot rely on the fact that the Torrens title
was issued in the name of Epifanio and the other heirs of Jose. It has been
held that a trustee who obtains a Torrens title over property held in trust by
him for another cannot repudiate the trust by relying on the
registration. 27 The rule requires a clear repudiation of the trust duly
communicated to the beneficiary. The only act that can be construed as
repudiation was when respondents filed the petition for reconstitution in
October 1993. And since petitioners filed their complaint in January 1995,
their cause of action has not yet prescribed, laches cannot be attributed to
them. CITaSA
SO ORDERED.
Carpio-Morales, Velasco, Jr., Leonardo-de Castro and Brion, JJ., concur.
||| (Heirs of Labiste v. Heirs of Labiste, G.R. No. 162033, [May 8, 2009], 605 PHIL
495-506)
DECISION
CHICO-NAZARIO, J : p
The factual and procedural antecedents of the case are set forth
hereunder.
Firstly, petitioner alleged in her Complaint that she was the owner of
a parcel of land situated in Ugac Norte, Tuguegarao, Cagayan, with an area
of 1,457 sq.m. and covered by Transfer Certificate of Title (TCT) No. T-
43373 4 of the Register of Deeds for the Province of Cagayan, registered in
petitioner's name. A residential house and a warehouse were constructed on
the said parcel of land which petitioner also claimed to own (the land and
the improvements thereon shall be hereinafter referred to as the Ugac
properties). Petitioner averred that in the middle part of 1986, she
discovered that TCT No. T-43373 was cancelled on 13 May 1983 and TCT
No. T-58043 5 was issued in its stead in the name of respondent spouses
Ramos. Upon verification, petitioner learned that the basis for the
cancellation of her title was a Deed of Donation of a Registered Land,
Residential House and Camarin, 6 which petitioner purportedly executed in
favor of respondent spouses Ramos on 27 April 1983. Petitioner insisted that
her signature on the said Deed of Donation was a forgery as she did not
donate any property to respondent spouses Ramos. When petitioner
confronted the respondent spouses Ramos about the false donation, the
latter pleaded that they would just pay for the Ugac properties in the amount
of P1 Million. Petitioner agreed to the proposition of the respondent spouses
Ramos. TAIaHE
Secondly, petitioner claimed that for many years prior to 1984, she
operated a hardware store in a building she owned along Bonifacio St.,
Tuguegarao, Cagayan. However, the commercial lot (Bonifacio property)
upon which the building stood is owned by and registered in the name of
Maria Mendoza (Mendoza), from whom petitioner rented the same. TADcCS
[1.] The lot would be bought [by herein respondent spouses Ramos]
for and in behalf of [herein petitioner];
[3.] Since [respondent spouses Ramos] have the better credit standing,
they would be made to appear in the Deed of Sale as the
vendees so that the title to be issued in their names could be
used by [them] to secure a loan with which to build a bigger
building and expand the business of [petitioner]. HETDAC
On 27 April 1987, respondent Bartex, Inc. filed before the RTC its own
Answer to petitioner's Complaint, alleging, inter alia, that when a
representative of the corporation inquired about the Ugac properties for
sale, respondent spouses Ramos presented their owner's duplicate copy of
TCT No. T-58043, together with the tax declarations covering the parcel of
land and the buildings thereon. Respondent Bartex, Inc. even verified the
title and tax declarations covering the Ugac properties with the Register of
Deeds and the Office of the Municipal Assessor as to any cloud,
encumbrance or lien on the properties, but none were found. Respondent
spouses Ramos were then actually occupying the Ugac properties and they
only vacated the same after the consummation of the sale to respondent
Bartex, Inc. Respondent Bartex, Inc. claimed that the sale of the Ugac
properties by respondent spouses Ramos to the corporation was already
consummated on 12 January 1987, and the documents conveying the said
properties were by then being processed for registration, when petitioner
caused the annotation of an adverse claim at the back of TCT No. T-58043
on 19 January 1987. As respondent Bartex, Inc. was never aware of any
imperfection in the title of respondent spouses Ramos over the Ugac
properties, it claimed that it was an innocent purchaser in good faith. cSCADE
On the first cause of action, the Court finds the testimony of [herein
petitioner] Lina Penalber (sic) denying her execution of the deed of
donation over the Ugac property in favor of [herein respondent
spouses] Quirino Ramos and Leticia Penalber-Ramos (sic)
insufficient to support the said cause of action. A notarial document
is, by law, entitled to full faith and credit upon its face (Arrieta v. Llosa,
282 SCRA 248) and a high degree of proof is needed to overthrow the
presumption of truth in the recitals contained in a public document
executed with all legal formalities (People vs. Fabro, 277 SCRA 19).
Hence, in order to contradict the facts contained in a notarial document
and the presumption of regularity in its favor, these (sic) must be
evidence that is clear, convincing and more than merely preponderant
(Calahat vs. Intermediate Appellate Court, 241 SCRA 356). In the case
at bench, [petitioner] claims that she did not execute the deed of
donation over the Ugac property in favor of [respondent spouses
Ramos]. Such denial, by itself, is not sufficient to overcome the
presumption of regularity of the notarial deed of donation and its
entitlement to full faith and credit. While it is true that, generally, the
party who asserts the affirmative side of a proposition has the burden
of proof, which in this instance is (sic) the [respondent spouses Ramos]
who are asserting the validity of the deed of donation, [respondent
spouses Ramos] can merely rely on the above-stated presumption
given to notarial documents and need not present any evidence to
support their claim of validity and due execution of the notarized deed
of donation. On the other hand, [petitioner], in addition to her
allegation that she did not execute any such deed of donation in
favor of [respondent spouses Ramos] should have had her allegedly
falsified signature on the deed of donation examined by qualified
handwriting experts to prove that, indeed, she did not execute the
same. Her failure to do so results in the failure of her
cause. 15 (Emphasis ours.) IDETCA
Finding merit in the appeal, the appellate court observed that the
second cause of action involved not only the petitioner and her daughter,
but also her son-in-law, who was not covered by the term "family relations"
under Article 150 21 of the Family Code. Therefore, Article 151 22 of the
Family Code, requiring the exertion of earnest efforts toward a compromise,
did not apply as the impediment arising from the said provision was limited
only to suits between members of the same family or those encompassed
in the term "family relations" under Article 150.
The Court of Appeals also declared that petitioner failed to prove her
claim with the required quantum of evidence. According to the Court of
Appeals:
In the instant case, petitioner maintains that she was able to prove the
existence of a trust agreement between her and respondent spouses Ramos.
She calls attention to the fact that respondent spouses Ramos could not
account for the P116,946.15 difference in the beginning inventory and the
second inventory of the stocks of the hardware store, and they failed to
present proof to support their allegation that the amount was used to pay
the other obligations of petitioner. As respondent spouses Ramos never
denied the existence of the P116,946.15 difference, petitioner contends that
they have the burden of proving where this amount had gone, if indeed they
did not use the same to buy the Bonifacio property. Petitioner asserts that
given the respondent spouses Ramos' failure to discharge such burden, the
only conclusion would be that they did use the amount to purchase the
Bonifacio property.
It bears stressing that petitioner has the burden of proving her cause
of action in the instant case and she may not rely on the weakness of the
defense of respondent spouses Ramos. Burden of proof is the duty of any
party to present evidence to establish his claim or defense by the amount
of evidence required by law, which is preponderance of evidence in civil
cases. Preponderance of evidence 37 is the weight, credit, and value of the
aggregate evidence on either side and is usually considered to be
synonymous with the term "greater weight of the evidence" or "greater
weight of the credible evidence". It is evidence which is more convincing to
the court as worthy of belief than that which is offered in opposition
thereto. 38 Therefore, the party, whether plaintiff or defendant, who asserts
the affirmative of the issue has the burden of proof to obtain a favorable
judgment. For the plaintiff, the burden of proof never parts. 39 For the
defendant, an affirmative defense is one which is not a denial of an essential
ingredient in the plaintiff's cause of action, but one which, if established, will
be a good defense i.e., an avoidance of the claim. 40 TcIHDa
On this score, we subscribe to the ruling of the RTC in its Order dated
17 July 2000 that said spouses were deemed to have waived their objection
to the parol evidence as they failed to timely object when petitioner testified
on the said verbal agreement. The requirement in Article 1443 that the
express trust concerning an immovable or an interest therein be in writing
is merely for purposes of proof, not for the validity of the trust agreement.
Therefore, the said article is in the nature of a statute of frauds. The term
statute of frauds is descriptive of statutes which require certain classes of
contracts to be in writing. The statute does not deprive the parties of the
right to contract with respect to the matters therein involved, but merely
regulates the formalities of the contract necessary to render it
enforceable. 41 The effect of non-compliance is simply that no action can be
proved unless the requirement is complied with. Oral evidence of the
contract will be excluded upon timely objection. But if the parties to the
action, during the trial, make no objection to the admissibility of the oral
evidence to support the contract covered by the statute, and thereby permit
such contract to be proved orally, it will be just as binding upon the parties
as if it had been reduced to writing. 42 HcACST
SO ORDERED.
||| (Pealber v. Ramos, G.R. No. 178645, [January 30, 2009], 597 PHIL 502-524)
DECISION
CARPIO, J : p
The Case
In this special civil action for certiorari, 1 the Development Bank of the
Philippines ("DBP") seeks to set aside COA Decision No. 98-403 2 dated 6
October 1998 ("COA Decision") and COA Resolution No. 2000-212 3 dated 1
August 2000 issued by the Commission on Audit ("COA").The COA affirmed
Audit Observation Memorandum ("AOM") No. 93-2, 4 which disallowed in
audit the dividends distributed under the Special Loan Program ("SLP") to the
members of the DBP Gratuity Plan.
Antecedent Facts
The COA Decision sets forth the undisputed facts of this case as follows:
In 1983, the Bank established a Special Loan Program availed thru the
facilities of the DBP Provident Fund and funded by placements from
the Gratuity Plan Fund. This Special Loan Program was adopted as
"part of the benefit program of the Bank to provide financial
assistance to qualified members to enhance and protect the value of
their gratuity benefits" because "Philippine retirement laws and the
Gratuity Plan do not allow partial payment of retirement benefits."
The program was suspended in 1986 but was revived in 1991 thru
DBP Board Resolution No. 066 dated January 5, 1991.
AOM No. 93-2 did "not question the authority of the Bank to set-up the
[Gratuity Plan] Fund and have it invested in the Trust Services Department of
the Bank." 9 Apart from requiring the recipients of the P11,626,414.25 to
refund their dividends, the Auditor recommended that the DBP record in its
books as miscellaneous income the income of the Gratuity Plan Fund
("Fund").The Auditor reasoned that "the Fund is still owned by the Bank, the
Board of Trustees is a mere administrator of the Fund in the same way that
the Trust Services Department where the fund was invested was a mere
investor and neither can the employees, who have still an inchoate interest
[i]n the Fund be considered as rightful owner of the Fund."10
On 6 October 1998, the COA en banc affirmed AOM No. 93-2, as follows:
The Special Loan Program earns for the GPF an interest of 9% per
annum, subject to adjustment after actuarial valuation. The investment
scheme managed by the TSD accumulated more than that as
evidenced by the payment of P4,568,971.84 in 1991 and
P7,057,442.41 in 1992, to the member-borrowers. In effect, the
program is grossly disadvantageous to the government because it
deprived the GPF of higher investment earnings by the unwarranted
entanglement of its resources under the loan program in the guise of
giving financial assistance to the availing employees. ...
At any rate, the Special Loan Program is not just an ordinary and
regular transaction of the Gratuity Plan Fund, as the Bank innocently
represents. ...It is a systematic investment mix conveniently
implemented in a special loan program with the least participation of
the beneficiaries, by merely filing an application and then wait for the
distribution of net earnings. The real objective, of course, is to give
financial assistance to augment the value of the gratuity benefits, and
this has the same effect as the proscribed supplementary
pension/retirement plan under Section 28 (b) of C(ommonwealth)
A(ct) 186.
This Commission may now draw authority from the case of Conte, et
al v. Commission on Audit (264 SCRA 19 [1996]) where the Supreme
Court declared that "financial assistance" granted to retiring
employees constitute supplementary retirement or pension benefits. It
was there stated:
The Issues
The DBP invokes justice and equity on behalf of its employees because of
prevailing economic conditions. The DBP reiterates that the income of the
Fund should be treated and recorded as separate from the income of DBP
itself, and charges that COA committed grave abuse of discretion:
The central issues for resolution are: (1) whether DBP has the requisite
standing to file the instant petition for certiorari;(2) whether the income of the
Fund is income of DBP; and (3) whether the distribution of dividends under
the SLP is valid.
The OSG nevertheless contends that the DBP cannot question the decisions of
the COA en banc since DBP is a government instrumentality. CitingSection 2,
Article IX-D of the Constitution, 17 the OSG argued that:
Petitioner may ask the lifting of the disallowance by COA, since COA
had not yet made a definitive and final ruling on the matter in issue.
But after COA denied with finality the motion for reconsideration of
petitioner, petitioner, being a government instrumentality, should
accept COA's ruling and leave the matter of questioning COA's
decision with the concerned investor-members. 18
The novel theory advanced by the OSG would necessarily require persons not
parties to the present case the DBP employees who are members of the
Plan or the trustees of the Fund to avail of certiorari under Rule 65. The
petition for certiorari under Rule 65, however, is not available to any person
who feels injured by the decision of a tribunal, board or officer exercising
judicial or quasi judicial functions. The "person aggrieved" under Section 1 of
Rule 65 who can avail of the special civil action of certiorari pertains only to
one who was a party in the proceedings before the court a quo, 22 or in this
case, before the COA. To hold otherwise would open the courts to numerous
and endless litigations. 23 Since DBP was the sole party in the proceedings
before the COA, DBP is the proper party to avail of the remedy of certiorari.
The real party in interest who stands to benefit or suffer from the judgment in
the suit must prosecute or defend an action. 24 We have held that "interest"
means material interest, an interest in issue that the decision will affect, as
distinguished from mere interest in the question involved, or a mere
incidental interest. 25
As a party to the Agreement and a trustor of the Fund, DBP has a material
interest in the implementation of the Agreement, and in the operation of the
Gratuity Plan and the Fund as prescribed in the Agreement. The DBP also
possesses a real interest in upholding the legitimacy of the policies and
programs approved by its Board of Directors for the benefit of DBP
employees. This includes the SLP and its implementing rules, which the DBP
Board of Directors confirmed.
The COA alleges that DBP is the actual owner of the Fund and its income, on
the following grounds: (1) DBP made the contributions to the Fund; (2) the
trustees of the Fund are merely administrators; and (3) DBP employees only
have an inchoate right to the Fund.
The DBP counters that the Fund is the subject of a trust, and that the
Agreement transferred legal title over the Fund to the trustees. The income of
the Fund does not accrue to DBP. Thus, such income should not be recorded
in DBP's books of account. 26
In the present case, the DBP Board of Governors' (now Board of Directors)
Resolution No. 794 and the Agreement executed by former DBP Chairman
Rafael Sison and the trustees of the Plan created an express trust, specifically,
an employees' trust. An employees' trust is a trust maintained by an employer
to provide retirement, pension or other benefits to its employees. 29 It is a
separate taxable entity 30 established for the exclusive benefit of the
employees. 31
Resolution No. 794 shows that DBP intended to establish a trust fund to cover
the retirement benefits of certain employees under Republic Act No.
1616 32 ("RA 1616"). The principal and income of the Fund would be separate
and distinct from the funds of DBP. We quote the salient portions of
Resolution No. 794, as follows:
2. Since the gratuity plan will be tax qualified under the National
Internal Revenue Code and RA 4917, the Bank's periodic contributions
thereto shall be deductible for tax purposes and the earnings
therefrom tax free. 33 (Emphasis supplied)
In the present case, DBP, as the trustor, vested in the trustees of the Fund
legal title over the Fund as well as control over the investment of the money
and assets of the Fund. The powers and duties granted to the trustees of the
Fund under the Agreement were plainly more than just administrative, to wit:
1. The BANK hereby vests the control and administration of the Fund
in the TRUSTEES for the accomplishment of the purposes for which
said Fund is intended in defraying the benefits of the PLAN in
accordance with its provisions, and the TRUSTEES hereby accept the
trust ...
2. The TRUSTEES shall receive and hold legal title to the money
and/or property comprising the Fund,and shall hold the same in trust
for its beneficiaries, in accordance with, and for the uses and
purposes stated in the provisions of the PLAN.
Clearly, the trustees received and collected any income and profit derived
from the Fund, and they maintained separate books of account for this
purpose. The principal and income of the Fund will not revert to DBP even if
the trust is subsequently modified or terminated. The Agreement states that
the principal and income must be used to satisfy all of the liabilities to the
beneficiary officials and employees under the Gratuity Plan, as follows:
5. The BANK reserves the right at any time and from time to time (1)
to modify or amend in whole or in part by written directions to the
TRUSTEES, any and all of the provisions of this Trust Agreement, or
(2) to terminate this Trust Agreement upon thirty (30) days' prior
notice in writing to the TRUSTEES; provided, however, that no
modification or amendment which affects the rights, duties, or
responsibilities of the TRUSTEES may be made without the TRUSTEES'
consent; and provided, that such termination, modification, or
amendment prior to the satisfaction of all liabilities with respect to
eligible employees and their beneficiaries, does not permit any part of
the corpus or income of the Fund to be used for, or diverted to,
purposes other than for the exclusive benefit of eligible employees
and workers as provided for in the PLAN.In the event of termination
of this Trust Agreement, all cash, securities, and other property then
constituting the Fund less any amounts constituting accrued benefits
to the eligible employees, charges, and expenses payable from the
Fund, shall be paid over or delivered by the TRUSTEES to the
members in proportion to their accrued benefits. 37 (Emphasis
supplied)
The resumption of the SLP did not eliminate the trust or terminate the
transfer of legal title to the Fund's trustees. The records show that the Fund's
Board of Trustees approved the SLP upon the request of the DBP Career
Officials Association. 38 The DBP Board of Directors only confirmed the
approval of the SLP by the Fund's trustees.
The beneficiaries or cestui que trust of the Fund are the DBP officials and
employees who will retire under Commonwealth Act No. 186 39 ("CA 186"), as
amended by RA 1616. RA 1616 requires the employer agency or government
instrumentality to pay for the retirement gratuity of its employees who
rendered service for the required number of years. 40 The Government Service
Insurance System Act of 1997 41 still allows retirement under RA 1616 for
certain employees.
As COA correctly observed, the right of the employees to claim their gratuities
from the Fund is still inchoate. RA 1616 does not allow employees to receive
their gratuities until they retire. However, this does not invalidate the trust
created by DBP or the concomitant transfer of legal title to the trustees. As far
back as in Government v. Abadilla, 42 the Court held that "it is not always
necessary that the cestui que trust should be named, or even be in esse at
the time the trust is created in his favor." It is enough that the beneficiaries
are sufficiently certain or identifiable. 43
In this case, the GSIS Act of 1997 extended the option to retire under RA
1616 only to employees who had entered government service before 1 June
1977. 44 The DBP employees who were in the service before this date are
easily identifiable. As of the time DBP filed the instant petition, DBP estimated
that 530 of its employees could still retire under RA 1616. At least 60 DBP
employees had already received their gratuities under the Fund. 45
The Agreement indisputably transferred legal title over the income and
properties of the Fund to the Fund's trustees. Thus, COA's directive to record
the income of the Fund in DBP's books of account as the miscellaneous
income of DBP constitutes grave abuse of discretion. The income of the Fund
does not form part of the revenues or profits of DBP, and DBP may not use
such income for its own benefit. The principal and income of the Fund
together constitute the res or subject matter of the trust. The Agreement
established the Fund precisely so that it would eventually be sufficient to pay
for the retirement benefits of DBP employees under RA 1616 without
additional outlay from DBP. COA itself acknowledged the authority of DBP to
set up the Fund. However, COA's subsequent directive would divest the Fund
of income, and defeat the purpose for the Fund's creation.
SEC. 34. Separation Benefits. All those who shall retire from the
service or are separated therefrom on account of the reorganization
of the Bank under the provisions of this Charter shall be entitled to all
gratuities and benefits provided for under existing laws and/or
supplementary retirement plans adopted by and effective in the
Bank:Provided, that any separation benefits and incentives which may
be granted by the Bank subsequent to June 1, 1986, which may be in
addition to those provided under existing laws and previous
retirement programs of the Bank prior to the said date, for those
personnel referred to in this section shall be funded by the National
Government; Provided, further, that, any supplementary retirement
plan adopted by the Bank after the effectivity of this Chapter shall
require the prior approval of the Minister of Finance.
Being a special and later law,the DBP Charter 47 prevails over RA 4968. The
DBP originally adopted the SLP in 1983. The Court cannot strike down the SLP
now based on RA 4968 in view of the subsequent DBP Charter authorizing
the SLP.
According to DBP Board Resolution No. 0036 dated 25 January 1991, the "SLP
allows a prospective retiree to utilize in the form of a loan, a portion of their
outstanding equity in the Gratuity Plan Fund and to invest [the] proceeds in a
profitable investment or undertaking." 48 The basis of the loanable amount
was an employee's gratuity fund credit, 49 that is to say, what an employee
would receive if he retired at the time he availed of the loan.
In his letter dated 26 October 1983 proposing the confirmation of the SLP,
then DBP Chairman Cesar B. Zalamea stated that:
As Chairman Zalamea himself noted, neither the Gratuity Plan nor our laws on
retirement allow the partial payment of retirement benefits ahead of actual
retirement. It appears that DBP sought to circumvent these restrictions
through the SLP, which released a portion of an employee's retirement
benefits to him in the form of a loan. Certainly, the DBP did this for laudable
reasons, to address the concerns of DBP employees on the devaluation of
their retirement benefits. The remaining question is whether RA 1616 and the
Gratuity Plan allow this scheme.
The right to retirement benefits accrues only upon certain prerequisites. First,
the conditions imposed by the applicable law in this case, RA 1616 must
be fulfilled. 51 Second, there must be actual retirement. 52 Retirement means
there is "a bilateral act of the parties, a voluntary agreement between the
employer and the employees whereby the latter after reaching a certain age
agrees and/or consents to severe his employment with the former." 53
The Gratuity Plan likewise provides that the gratuity benefit of a qualified DBP
employee shall only be released "upon retirement under th(e) Plan." 56 As the
COA correctly pointed out, this means that retirement benefits "can only be
demanded and enjoyed when the employee shall have met the last requisite,
that is, actual retirement under the Gratuity Plan." 57
There was thus no basis for the loans granted to DBP employees under the
SLP. The rights of the recipient DBP employees to their retirement gratuities
were still inchoate, if not a mere expectancy, when they availed of the SLP. No
portion of their retirement benefits could be considered as "actually earned"
or "outstanding" before retirement. Prior to retirement, an employee who has
served the requisite number of years is only eligible for, but not yet entitled
to, retirement benefits.
The DBP contends that the SLP is merely a normal loan transaction, akin to
the loans granted by the GSIS, SSS and the DBP Provident Fund.
In contrast, the amount borrowed by a qualified employee under the SLP was
not even released to him. The implementing rules of the SLP state that:
Simply put, the amount ostensibly loaned from the Fund stayed in the Fund,
and remained under the control and custody of the DBP-TSD. The debtor-
employee never had any control or custody over the amount he supposedly
borrowed. However, DBP-TSD listed new or existing investments of the Fund
corresponding to the "loan" in the name of the debtor-employee, so that the
latter could collect the interest earned from the investments.
In sum, the SLP enabled certain DBP employees to utilize and even earn from
their retirement gratuities even before they retired. This constitutes a partial
release of their retirement benefits, which is contrary to RA 1616 and the
Gratuity Plan. As we have discussed, the latter authorizes the release of
gratuities from the earnings and principal of the Fund only upon retirement.
The Gratuity Plan will lose its tax-exempt status if the retirement benefits are
released prior to the retirement of the employees. The trust funds of
employees other than those of private employers are qualified for certain tax
exemptions pursuant to Section 60(B) formerly Section 53(b) of the
National Internal Revenue Code. 62 Section 60(B) provides:
(B) Exception. The tax imposed by this Title shall not apply to
employee's trust which forms part of a pension, stock bonus or profit-
sharing plan of an employer for the benefit of some or all of his
employees (1) if contributions are made to the trust by such
employer, or employees, or both for the purpose of distributing to
such employees the earnings and principal of the fund accumulated
by the trust in accordance with such plan,and (2) if under the trust
instrument it is impossible, at any time prior to the satisfaction of all
liabilities with respect to employees under the trust, for any part of
the corpus or income to be (within the taxable year or thereafter)
used for, or diverted to, purposes other than for the exclusive benefit
of his employees: ...(Emphasis supplied) EcDTIH
The Gratuity Plan provides that the gratuity benefits of a qualified DBP
employee shall be released only "upon retirement under th(e) Plan." If the
earnings and principal of the Fund are distributed to DBP employees prior to
their retirement, the Gratuity Plan will no longer qualify for exemption under
Section 60(B).To recall, DBP Resolution No. 794 creating the Gratuity Plan
expressly provides that "since the gratuity plan will be tax qualified under the
National Internal Revenue Code ...,the Bank's periodic contributions thereto
shall be deductible for tax purposes and the earnings therefrom tax free." If
DBP insists that its employees may receive the P11,626,414.25 dividends, the
necessary consequence will be the non-qualification of the Gratuity Plan as a
tax-exempt plan.
Finally, DBP invokes justice and equity on behalf of its affected employees.
Equity cannot supplant or contravene the law. 63 Further, as evidenced by the
letter of former DBP Chairman Zalamea, the DBP Board of Directors was well
aware of the proscription against the partial release of retirement benefits
when it confirmed the SLP. If DBP wants "to enhance and protect the value of
. . . (the) gratuity benefits" of its employees, DBP must do so by investing the
money of the Fund in the proper and sound investments, and not by
circumventing restrictions imposed by law and the Gratuity Plan itself.
We nevertheless urge the DBP and COA to provide equitable terms and a
sufficient period within which the affected DBP employees may refund the
dividends they received under the SLP. Since most of the DBP employees
were eligible to retire within a few years when they availed of the SLP, the
refunds may be deducted from their retirement benefits, at least for those
who have not received their retirement benefits.
WHEREFORE, COA Decision No. 98-403 dated 6 October 1998 and COA
Resolution No. 2000-212 dated 1 August 2000 are AFFIRMED with
MODIFICATION. The income of the Gratuity Plan Fund, held in trust for the
benefit of DBP employees eligible to retire under RA 1616, should not be
recorded in the books of account of DBP as the income of the latter.
SO ORDERED.
SYLLABUS
DECISION
OSTRAND, J : p
The three parcels were included in cadastral case No. 11 of the Court
of First Instance of Occidental Negros as lots Nos. 70, 364 and 375, and
when that case same on for hearing in August, 1916, the defendant
Domingo Cuachon appeared on behalf of his wife and stepdaughter and
filed claims for the aforesaid lots by way of an answers in which he stated
that the lots were the property of "his wife Adela Gasataya and of her
daughter, fifteen years of age." Notwithstanding this statement, the Court
of First Instance erroneously decreed the registration of the aforesaid lots
in the name of Adela Gasataya alone. Subsequently Adela, with the
consent of her husband, mortgaged the property to the National Bank and
finally in the year 1920 sold it to the defendant Rodriguez for the sum of
P13,000, the purchaser, in addition thereto, assuming the liability for a
mortgage of P8,000 to the National Bank and for certain other debts
amounting to over P4,000.
The complaint in the present case was filed on August 18, 1922,
Adela Gasataya, Domingo Cuachon, Francisco Rodriguez and the Insular
Treasurer being made parties defendant. Upon the facts above stated the
trial court rendered judgment in favor of the plaintiff Rosario Gayondato,
ordering the defendants Adela Gasataya and Domingo Cuachon jointly and
severally to indemnify the said plaintiff in the sum of P35,000 and to pay
the costs. The Insular Treasurer and Francisco Rodriguez were absolved
from the complaint. From this judgment the plaintiff appealed.
The sum and substance of the assignments of error is that the court
erred in absolving the Insular Treasurer from the complaint, and in this we
agree with the appellant. The court below appears to have been under the
impression that the liability of the assurance fund is confined to cases
where the erroneous registration is due to omission, mistake or
malfeasance on the part of the employees of the registration court. That
this view is erroneous, is evident from the language of sections 101 and
102 of the Land Registration Act, which read as follows:
But the Attorney-General in his brief for the Insular Treasurer raises
the point that Domingo Cuachon and Adela Gasataya prior to the
registration must be considered to have held the property in trust and for
the benefit of the plaintiff; that the relation of trustee and cestui que
trust was thus created; and that the case therefore falls under section 106
of the Land Registration Act, which provides that "the assurance fund shall
not be liable to pay for any loss or damage or deprivation occasioned by a
breach of trust, whether express, implied, or constructive, by any registered
owner who is a trustee, or by the improper exercise of any sale in
mortgage-foreclosure proceedings."
From what has been said it follows that the judgment absolving the
Insular Treasurer from the complaint must be reversed. We also note from
the record that Adela Gastaya died March 1, 1923, before the trial of the
case and that administrator of her estate was appointed. It was therefore
error to render judgment against her personally. It may further be noted
that the measure of damages applied by the court below, i. e. the full
value of the land, is not strictly accurate. The property was subject to a life
estate of one-third in favor of Adela Gasataya as the widow of Domingo
Gayondato, the value of which must be deducted from the total value of
the fee simple. It may also be observed that the amount demanded in the
complaint is only P30,000 and that the land was sold to Francisco
Rodriguez for but little more than P25,000. We are therefore of the opinion
that the damages awarded should be reduced to P25,000.
||| (Gayondato v. Treasurer of the Philippine Islands, G.R. No. 24597, [August 25,
1926], 49 PHIL 244-252)
SYLLABUS
DECISION
BAUTISTA ANGELO, J : p
Resurreccion de Leon, et al. filed on November 13, 1958 before the Court of First
Instance of Rizal a complaint seeking to compel Emiliana Molo-Peckson, et al. to
convey to the former ten parcels of land located in Pasay City with an area of
1,749 sq. m. upon payment of P1.00 per parcel upon the plea that said lots were
willed or donated in 1948 to the latter by their foster parents Mariano Molo y
Legaspi and Juana Juan with the understanding that they should sell them to the
plaintiffs under the terms above-stated.
Defendants, in their answer, disclaimed any legal obligation on their part to sell
the above properties to the plaintiffs for the nominal consideration of P1.00 per
lot alleging that if they executed the document on which the complaint is
predicated it was on the mistaken assumption that their foster parents had
requested them that they donate the properties to plaintiffs for which reason they
executed on August 9, 1956 a document revoking said donation which was
acknowledged before Notary Public Leoncio C. Jimenez.
No testimonial evidence was presented by either party. Instead, both agreed to
submit the case upon the presentation of their respective exhibits which were all
admitted by the trial court.
After trial on the merits, the court a quo rendered on September 21, 1960 a
decision wherein it held that, under the facts established by the evidence, trust
has been constituted by the late spouses Mariano Molo and Juana Juan over the
ten parcels of land in question in favor of plaintiffs as beneficiaries and, as a
consequence, concluded:
"Considering all the foregoing, the Court orders:
"1. The defendants, jointly and severally to free the said
ten (10) parcels of land from the mortgage lien in favor of
the Rehabilitation Finance Corporation (now
Development Bank of the Philippines) and Claro Cortez,
and thereafter to sign and execute in favor of the
plaintiffs a deed of absolute sale of the said properties for
and in consideration of TEN (P10.00) PESOS already
deposited in Court after all conditions imposed in Exhibit
A have been complied with;
"2. That in the event the defendants shall refuse to
execute and perform the above, they are ordered, jointly
and severally, to pay the plaintiffs the value of said ten
(10) parcels of land in question, the amount to be
assessed by the City of Pasay City as the fair market
value of the same, upon orders of the Court to assess
said value;
"3. The defendants jointly and severally to pay the
plaintiffs' Attorney's fees in the amount of P3,000.00, as
defendants acted in gross and evident bad faith in
refusing to satisfy the plaintiffs' plainly valid, just and
demandable claim, under Article 2208 subparagraph 5 of
the New Civil Code;
"4. The defendants to render an accounting of the fruits
of said ten (10) parcels of land from the time plaintiffs
demanded the conveyance of said parcels of land on
August 11, 1956 as per Exhibits B and C, in accordance
with the provisions of Article 1164, New Civil Code which
provides that the creditor has a right to the fruit of the
thing from the time the obligation to deliver it arises; and
"5. The defendants to pay the costs."
Defendants took the present appeal.
On January 24, 1941, Mariano Molo y Legaspi died leaving a will wherein he
bequeathed his entire estate to his wife, Juana Juan. This will was probated in
the Court of First Instance of Pasay City, Rizal, which was affirmed by the
Supreme Court on November 26, 1956 (G.R. No. L-8774). On May 11, 1948,
Juana Juan in turn executed a will naming therein many devisees and legatees,
one of whom is Guillerma San Rafael, mother of the plaintiffs and defendant Pilar
Perez Nable. On June 7, 1948, however, Juana Juan executed a donation inter
vivos in favor of Emiliana Molo-Peckson and Pilar Perez Nable of almost all of
her entire property leaving only about P16,000.00 worth of property for the
devisees mentioned in the will. Among the properties conveyed to the donees
are the ten parcels of land subject of the present action. Juana Juan died on May
28, 1950.
On December 5, 1950, Emiliana Molo-Peckson and Pilar Perez Nable executed
a document which they called "MUTUAL AGREEMENT" the pertinent provisions
of which are:
"That the above named parties hereby mutually agree by
these presents . . . that the following lots should be sold
at ONE (1) PESO each to the following persons and
organization:.
xxx xxx xxx
"TO JUSTA DE LEON and RESURRECCION DE
LEON, several parcels of land located at Calle Tolentino
(South of Tenorio and Kapitan Magtibay), Pasay City,
share and share alike or half and half of ten (10) lots
described in:
"Transfer Certificate of Title No. 28157 and allocated
as follows:
"(a) To JUSTA DE LEON, Five (5) Lots.
"(b) To RESURRECCION DE LEON, the remaining Five
(5) Lots.
"That this agreement is made in conformity with the
verbal wish of the late Don Mariano Molo y Legaspi and
the late Doa Juana Francisco Juan y Molo. These
obligations were repeatedly told to Emiliana Molo
Peckson, before their death and that same should be
fulfilled after their death."
On August 9, 1956, however, the same defendants, assisted by their husbands,
executed another document in which they revoked the so-called mutual
agreement mentioned above, and another relating to the same subject matter,
stating therein that the parties, "after matured and thorough study, realized that
the above-mentioned public instruments . . . do not represent their true and
correct interpretations of the verbal wishes of the late spouses Don Mariano Molo
y Legaspi and Doa Juana Francisco Juan y Molo." But after the execution of
this document, that is, on August 11, 1956, the beneficiaries Resurreccion de
Leon and Justa de Leon, thru their counsel, demanded the conveyance to them
of the ten parcels of land for the consideration of P1.00 per parcel as stated in
the document of December 5, 1950. And having the defendants refused to do so,
said beneficiaries consigned on July 8, 1957 the amount of P10.00 as the
consideration of the ten parcels of land.
In this appeal, appellants assigns the following errors:
"I
THE LOWER COURT ERRED IN HOLDING THAT THE
SPOUSES, MARIANO MOLO AND JUANA JUAN,
CONSTITUTED A TRUST OVER THE PROPERTIES IN
QUESTION WITH PLAINTIFFS-APPELLEES AS
BENEFICIARIES.
II
THE LOWER COURT ERRED IN APPLYING ARTICLES
1440, 1441, 1449, 1453 AND 1457 OF THE NEW CIVIL
CODE TO THE CASE AT BAR.
III
THE LOWER COURT ERRED IN HOLDING
PLAINTIFFS-APPELLEES' EXHIBIT 'A' TO BE A
DECLARATION AGAINST INTEREST AND AN
ADMISSION BY DEFENDANTS-APPELLANTS.
IV
THE LOWER COURT ERRED IN HOLDING THAT
DEFENDANTS-APPELLANTS HAD NO RIGHT TO
REVOKE EXHIBIT 'A'.
V
THE LOWER COURT ERRED IN ORDERING
APPELLANTS TO RENDER AN ACCOUNTING OF THE
FRUITS OF THE PROPERTIES IN QUESTION.
VI
THE LOWER COURT ERRED IN ORDERING
APPELLANTS TO FREE THE PROPERTIES FROM
MORTGAGE LIENS IN FAVOR OF THE
DEVELOPMENT BANK OF THE PHILIPPINES AND
CLARO CORTEZ.
VII
THE LOWER COURT ERRED IN AWARDING
ATTORNEY'S FEES TO THE APPELLEES.
VIII
THE LOWER COURT ERRED IN NOT DISMISSING
THE COMPLAINT."
There is no merit in the claim that the document executed on December 5, 1950
does not represent the true and correct interpretation by appellants of the verbal
wish of their foster parents relative to the conveyance for a nominal consideration
to appellees of the ten parcels of land in question considering the circumstances
obtaining in the present case. To begin with, this document was executed by
appellants on December 5, 1950, or about two years and six months from the
time they acquired title to the lands by virtue of the donation inter vivosexecuted
in their favor by their foster mother Juana Juan and six months after the death of
the donor. There is nobody who could cajole them to execute it, nor is there any
force that could coerce them to make the declaration therein expressed, except
the constraining mandate of their conscience to comply with "the obligations
repeatedly told to Emiliana Molo Peckson," one of appellants, before their death,
epitomized in the "verbal wish of the late Don Mariano Molo y Legaspi and the
late Doa Juana Francisco Juan y Molo" to convey after their death said ten
parcels of land at P1.00 a parcel to appellees. In fact, the acknowledgment
appended to the document they subscribed states that it was "their own free act
and voluntary deed."
||| (De Leon v. Molo-Peckson, G.R. No. L-17809, [December 29, 1962], 116 PHIL
1267-1276)
AQUINO, J : p
The parties appealed from the decision of the Court of First Instance of Negros
Occidental, dismissing plaintiffs' complaint and holding that the intestate estate of
Martin Ramos was settled in Civil Case No. 217, which was terminated on March
4, 1914, and that the judgment therein is res judicata and bars any litigation
regarding the same estate (Civil Case No. 4522).
The documentary evidence reveals the following facts:
The spouses Martin Ramos and Candida Tanate died on October 4, 1906 and
October 26, 1888, respectively. They were survived by their three legitimate
children named Jose, Agustin and Granada. Martin Ramos was also survived by
his seven natural children named Atanacia, Timoteo, Modesto, Manuel, Emiliano,
Maria and Federico.
On December 10, 1906 a special proceeding was instituted in the Court of First
Instance of Negros Occidental for the settlement of the intestate estate of the
said spouses. The case was docketed as Civil Case No. 217 (itsexpediente is
still existing). Rafael O. Ramos, a brother of Martin, was appointed administrator.
The estate was administered for more than six years (Exh. F, G, H, I and J).
A project of partition dated April 25, 1913 was submitted. It was signed by the
three legitimate children, Jose, Agustin and Granada; by the two natural children,
Atanacia and Timoteo, and by Timoteo Zayco in representation of the other five
natural children who were minors. It was sworn to before the justice of the peace
(Exh. 3).
In the project of partition the conjugal hereditary estate was appraised at
P74,984.93. It consisted of eighteen parcels of land, some head of cattle and the
advances to the legitimate children (Exh. 3).
Under that project of partition, the following adjudications were made to the heirs:
Legitimate children: Value
1. To Jose Ramos: (a) Hacienda
Calaza with an area of 328 hectares,
(b) a one-hectare town lot, (c) a
23-hectare lot in Sitio Bigig, and
(d) some head of cattle P25,291.66
2. To Granada Ramos: (a) a
parcel of riceland with a capacity
of 16 cavans of seedlings, located
in Barrio Binicuel, Kabankalan,
Negros Occidental and (b) some
head of cattle 1,891.66.
3. To Agustin Ramos: (a) the
remaining fourteen (14) lots out of
the eighteen lots described in the
inventory, which included the Hacienda
Ylaya with an area of 185 hectares and
(b) some head of cattle 36,291.68
Natural children:
4. To each of the seven (7) natural
children named Atanacia, Modesto,
Timoteo, Federico, Manuel, Emiliano
and Maria, were adjudicated personal
properties valued at P1785.35 consisting
of (a) cash amounting to P1,760.35 and
(b) P25, representing a one-seventh (1/7)
of a one-sixth (1/6) portion in certain head
of cattle allegedly representing one-third
of the free portion of the estate of Martin
Ramos, with an aggregate value of 12.497.51
Total adjudications P75,972.51
It was agreed in the project of partition that Jose Ramos would pay the cash
adjudications to Atanacia, Timoteo and Manuel, while Agustin Ramos would pay
the cash adjudications to Modesto, Federico, Emiliano and Maria. It was further
agreed that Jose Ramos and Agustin Ramos would pay their sister, Granada, the
sums of P3,302.36 and P14,213,78, respectively (Exh. 3).
The record does not show whether assessed or market values were used in
appraising the eighteen parcels of land. By way of explanation, it may be stated
that, inasmuch as the ganancial estate had an appraised value of P74,984.93,
one-half thereof or the sum of P37,492.46 represented the estate of Martin
Ramos. One-third thereof was the free portion or P12,497.48. The shares of the
seven natural children were to be taken from that one-third free portion. Dividing
P12,497.48 by seven gives a result of P1,785.35 which represented the one-
seventh share of each natural child in the free portion of the estate of their
putative father, Martin Ramos. The partition was made in accordance with the old
Civil Code which provides:
"ART. 840. When the testator leaves legitimate children
or descendants, and also natural children, legally
acknowledged, each of the latter shall be entitled to one-
half of the portion pertaining to each of the legitimate
children not bettered, provided that it can be included
within the third for free disposal, from which it must be
taken, after deducting the burial and funeral expenses.
"The legitimate children may satisfy the portion pertaining
to the natural children in cash, or in other property of the
estate, at a fair valuation."
The sum of P1,785.35, as the legal share of each natural child,
was the amount which was indicated in the project of partition
(Exh. 3) and which was to be satisfied in cash. The second
paragraph of article 840 gives the legitimate children the right to
satisfy in cash the hereditary portions of the natural children.
(Article 840 was applied in the project of partition when it stated
that each natural child had "una septima parte de un sexto de
semovientes" but the statement in the project of partition that
each legitimate child was entitled to "un tercio de los
cinco quintos de los semovientes" is erroneous. It should be
"un tercio de los cinco sextosde los semovientes").
Judge Richard Campbell, in his "decision" dated April 28, 1913, approved the
project of partition as well as the intervention of Timoteo Zayco as guardian of
the five heirs, who were minors. The court declared that the proceeding would be
considered closed and the record should be archived as soon as proof was
submitted that each heir had received the portion adjudicated to him (Exh. 4).
In an order dated February 3, 1914 Judge V. Nepomuceno asked the
administrator to submit a report, complete with the supporting evidence, showing
that the shares of the heirs had been delivered to them as required in the
decision of April 28, 1913 (Exh. 5). In a manifestation dated February 24, 1914,
which was signed by Jose, Agustin, Granada, Atanacia and Timoteo, all
surnamed Ramos, and by Timoteo Zayco, the guardian, and which was sworn to
before the justice of the peace on March 2 (not 4), 1914 and filed in court on
March 5, 1914, they acknowledged:
". . . hemos recibido del Administrador Judicial Rafael O.
Ramos todas y cada una de las participaciones a que
respectivamente tenemos derecho en los bienes relictos
de los finados esposos Martin Ramos y Candida Tanate,
de completo acuerdo y conformidad con el proyecto de
reparticion que nosotros mismo sometemos al Juzgado
en 25 de Abril de 1913 . . .." (Exh. 6).
Note that Granada Ramos and the natural children were
assumed to have received their shares from the administrator
although according to the object of partition, Jose Ramos and
Agustin Ramos (not the administrator) were supposed to pay
the cash adjudications to each of them. No receipts were
attached to the manifestation, Exhibit 6. Apparently, the
manifestation was not in strict conformity with the terms of
Judge Nepomuceno's order and with the project of partition
itself.
Lots Nos. 1370, 1371, 1372, 1375, 2158, 2159, 2161 and 2163 (eight lots) of the
Himamaylan cadastre (page 8 of the Record on Appeal does; not mention Lot
1370), which are involved in this case were registered (as of 1958) in equal
shares in the names of Gregoria Ramos and her daughter, Granada Ramos, as
shown below (Exh. 8):
Original
Lot No. Registration Present title Date
1370 Aug. 29, 1923 TCT No. RT-2238 Dec. 1, 1933
1371 do TCT No. RT-2235 do
1372 do TCT No. RT-2237 do
1375 do TCT No. RT-2236 do
2158 Sept. 10, 1923 TCT No. RT-2230 do
2159 do TCT No. RT-2233 do
2161 do TCT No. RT-2232 do
2163 do TCT No. RT-2231 do
Plaintiffs' version of the case. - A summary of plaintiffs' oral evidence is found in
pages 4 to 13 of their well-written brief. It is reproduced below (omitting the
citations of the transcript):
"Martin Ramos, who died in 1906 in the municipality of Himamaylan, Negros
Occidental, left considerable real estate, the most valuable of which were the
Hacienda Calaza and Hacienda Ylaya, both located in Himamaylan, Negros
Occidental. Hacienda Calaza consists of sugar land, palay land and nipa groves
with an area of 400 hectares and with a sugar quota allotment of 10,000 piculs,
more or less, and having as its present actual value P500,000 more or less.
"All the children of Martin Ramos, whether legitimate or acknowledged natural,
lived together in Hacienda Ylaya during his lifetime and were under his care.
Even defendant Gregoria Ramos, widow of Jose Ramos, admitted that she dealt
with plaintiffs as family relations, especially seeing them during Sundays in
church as they lived with their father, and maintained close and harmonious
relations with them even after the death of their father. All said children continued
to live in said house of their father for years even after his death.
"Upon their father's death, his properties were left under the administration of
Rafael Ramos, the younger brother of their father and their uncle. Rafael Ramos
continued to administer those properties of their father, giving plaintiffs money as
their shares of the produce of said properties but plaintiffs not receiving any
property or piece of land however, until 1913 when Rafael Ramos gathered all
the heirs, including plaintiffs, in the house of their father, saying he would return
the administration of the properties. He turned over Hacienda Ylaya to Agustin
Ramos and Hacienda Calaza to Jose Ramos.
"All said children, defendants and plaintiffs alike, continued to live in the same
house of their father in Hacienda Ylaya, now under the support of Agustin
Ramos. Plaintiff Modesto Ramos who 'could understand Spanish a little', only left
said house in 1911; plaintiff Manuel stayed there for one year and lived later with
Jose Ramos for four years. Plaintiff Maria Ramos, who herself testified that she
has 'a very low educational attainment', lived there until 1916 when she got
married. Plaintiff Emiliano lived there with Agustin, helping him supervise the
work in Hacienda Ylaya, until he transferred to Hacienda Calaza where he
helped Jose Ramos supervise the work in said hacienda.
"Agustin Ramos supported plaintiffs, getting the money from the produce of
Hacienda Ylaya, the only source of income of Agustin coming from said
hacienda. Plaintiffs asked money from Agustin pertaining to their share in the
produce of Hacienda Ylaya and received varied amounts, sometimes around P50
at a time, getting more when needed, and receiving P90 or P100 more or less a
year.
"Jose Ramos gave plaintiffs also money as their shares from the products of
Hacienda Calaza. Even Maria Ramos who upon her marriage in 1916 lived in La
Carlota with her husband was given money whenever she went to Himamaylan.
Plaintiffs received varied amounts or sums of money from Jose as their shares in
the produce of Hacienda Ylaya more or less about P100 a year, mostly during
the milling season every year while he was alive up to his death in 1930.
Emiliano Ramos, now deceased and substituted by his widow, Rosario Tragico,
moreover, received P300 from Jose Ramos in 1918 taken from the products of
Hacienda Calaza when he went to the United States to study.
"Upon Jose Ramos death his widow Gregoria Ramos, herself, his first cousin,
their father and mother, respectively being brother and sister, continued to give
plaintiffs money pertaining to their shares in the products of Hacienda Calaza.
She however stopped doing so in 1951, telling them that the lessee Estanislao
Lacson was not able to pay the lease rental.
"There was never any accounting made to plaintiffs by Jose Ramos, plaintiffs
reposing confidence in their elder brother. Nor was any accounting made by his
widow, defendant Gregoria Ramos, upon his death, plaintiff Manuel Ramos
moreover having confidence in her.
"Before the survey of these properties by the Cadastral Court, plaintiff Modesto
Ramos was informed by the Surveying Department that they were going to
survey these properties. Plaintiffs then went to see their elder brother Jose to
inform him that there was a card issued to them regarding the survey and gave
him 'a free hand to do something as an administrator'. They therefore did not
intervene in the said cadastral proceedings because they were promised that
they (defendants Jose and Agustin) would 'be the ones responsible to have it
registered in the names of the heirs'. Plaintiffs did not file any cadastral answer
because defendants Jose and Agustin told them 'not to worry about it as they
have to answer for all the heirs'. Plaintiffs were 'assured' by defendants brothers.
"Plaintiffs did not know that intestate proceedings were instituted for the
distribution of the estate of their father. Neither did plaintiffs Modesto, Manuel,
Emiliano and Maria know (that) Timoteo Zayco, their uncle and brother-in-law of
defendant widow Gregoria was appointed their guardian. There was an express
admission by defendant Gregoria Ramos that Timoteo Zayco was her brother-in-
law.
"Plaintiffs did not know of any proceedings of Civil Case No. 217. They never
received any sum of money in cash the alleged insignificant sum of P1,785.35
each from said alleged guardian as their supposed share in, the estate of their
father under any alleged project of partition.
"Neither did Atanacia Ramos nor her, husband, Nestor Olmedo, sign any project
of partition or any receipt of share in (the) inheritance of Martin Ramos in cash.
Nestor Olmedo did not sign any receipt allegedly containing the signatures of
Atanacia assisted by himself as husband, Timoteo Ramos, and Timoteo Zayco
as guardian ad-litem of the minors Modesto, Manual, Federico, Emiliano and
Maria. As a matter of fact plaintiffs Modesto and Manuel were in 1913 no longer
minors at the time of the alleged project of partition of the estate being approved,
both being of age at that time. No guardian could in law act on their behalf.
"Plaintiffs only discovered later on that the property administered by their elder
brother Jose had a Torrens Title in the name of his widow, Gregoria, and
daughter, Candida, when plaintiff Modesto's children insisted and inquired from
the Register of Deeds sometime in 1956 or 1957. Plaintiffs did not intervene in
the intestate proceedings for (the) settlement of the estate of their brother Jose
as they did not know of it.
"Plaintiffs were thus constrained to bring the present suit before the Court of First
Instance of Negros Occidental on September 5, 1957 seeking for the
reconveyance in their favor by defendants Gregoria and daughter Candida and
husband Jose Bayot of their corresponding participations in said parcels of land
in accordance with article 840 of the old Civil Code and attorney's fees in the sum
of P10,000 plus costs and expenses of this litigation". (4-13 Brief).
Proceedings in the lower court. The instant action was filed on September 5,
1957 against defendants Agustin Ramos, Granada Ramos and the heirs of Jose
Ramos for the purpose of securing a reconveyance of the supposed
participations of plaintiffs Atanacia, Emiliano, Manuel, Maria and Modesto, all
surnamed Ramos, in the aforementioned eight (8) lots which apparently form part
of Hacienda Calaza. (The plaintiffs did not specify that the said shares would
amount to one-sixth of the said eight cadastral lots. One-sixth represented the
one-third free portion of Martin Ramos' one-half shares in the said lots. And the
said one-sixth portion was the share of his seven legally- acknowledged natural
children under article 840 of the old Civil Code).
The action is really directed against the heirs of Jose Ramos, namely, his wife
Gregoria and his daughter Candida in whose names the said eight lots are now
registered as shown in Exhibit 8 and in page 4 hereof. It is predicated on the
theory that plaintiffs' shares were held in trust by the defendants. No deed of trust
was alleged and proven.
The defendants denied the existence of a trust. They pleaded the defenses of (a)
release of claim as shown in the project of partition, the decision and the receipt
of shares forming part of the expediente of Civil Case No. 217 (Exh. 3, 4 and 6),
lack of cause of action, (c) res judicata and (d) prescription.
Timoteo Ramos, who was joined as a co-plaintiff, manifested that he had already
received his own share of the inheritance, that he did not authorize anyone to
include him as a plaintiff and that he did not want to be a party in this case. He
moved that his name be stricken out of the complaint (44-45 Rec. or Appeal;
Exh. 7).
Emiliano Ramos, who died in 1958, was substituted by his widow and their ten
children (Exh. E, 61-64 Rec. on Appeal). The complaint is silent as to the fate of
Federico Ramos, the seventh natural child of Martin Ramos.
As already noted, after trial, the lower court dismissed the complaint on the
ground of res judicata. The plaintiffs as well as the defendants appealed.
Plaintiffs' appeal. The plaintiffs contend that the trial court erred (1) in
dismissing their complaint, (2) in denying their right to share in their father's
estate and (3) in holding that the action was barred by res judicata or the prior
judgment in the special proceeding for the settlement of Martin Ramos' intestate
estate, Civil Case No. 217 of the Court of First Instance of Negros
Occidental, Abintesdado de los finados esposos Martin Ramos y Candida
Tanate (Exh. F to J and 1 to 6).
The plaintiffs vigorously press on this Court their theory that the plaintiffs, as
acknowledged natural children, were grievously prejudiced by the partition and
that the doctrine of res judicata should not bar their action.
A preliminary issue, which should first be resolved, is the correctness of the trial
court's "inexorable conclusion" that the plaintiffs were the legally acknowledged
natural children of Martin Ramos. Plaintiffs' action is anchored on that premise.
The defendants failed to impugn that conclusion in their appellants' brief. Not
having done so, it may be regarded as conclusive against them. That is the
proposition advanced by the plaintiffs in their reply-brief.
The defendants in their appellees' brief assail that conclusion. It is true that an
appellee may make an assignment of error in his brief but that rule refers to an
appellee who is not an appellant (Saenz vs. Mitchell, 60 Phil. 69, 80). However,
since an appellee is allowed to point out the errors committed by the trial court
against him (Relativo vs. Castro, 76 Phil. 563, Lucero vs. De Guzman, 45 Phil.
852), defendants' contention that the plaintiffs were not legally acknowledged
natural children may just as well be passed upon.
The defendants, in contesting the lower court's finding that the plaintiffs were
legally acknowledged children, assume that the legitimate children committed a
mistake in conferring successional rights on the plaintiffs.
We hold that the trial court's conclusion is correct. It is true that the
acknowledgement of the plaintiffs is not evidenced by a record of birth, will or
other public document (Art. 131, Old Civil Code). But the record of Civil Case No.
217, which is relied upon by the defendants to support their defense of res
judicata, indubitably shows that the plaintiffs were treated as acknowledged
natural children of Martin Ramos. The reasonable inference is that they were in
the continuous possession of the status of natural children of Martin Ramos, as
evidenced by his direct acts and the acts of his family (Art. 135, Old Civil Code).
Unacknowledged natural children have no rights whatsoever (Buenaventura vs.
Urbano, 5 Phil. 1; Siguiong vs. Siguiong, 8 Phil. 5, 11; Infante vs. Figueras, 4
Phil. 738; Crisolo vs. Macadaeg, 94 Phil. 862). The fact that the plaintiffs, as
natural children of Martin Ramos, received shares in his estate implies that they
were acknowledged. Obviously, defendants Agustin Ramos and Granada Ramos
and the late Jose Ramos accorded successional rights to the plaintiffs because
Martin Ramos and members of his family had treated them as his children.
Presumably, that fact was well-known in the community. Under the
circumstances, Agustin Ramos and Granada Ramos and the heirs of Jose
Ramos are estopped from attacking plaintiffs' status as acknowledged natural
children (See Arts. 283[4] and 2266[3], New Civil Code).
Even the lower court, after treating the plaintiffs in 1913 in the intestate
proceeding as acknowledged natural children, had no choice but to reaffirm that
same holding in its 1961 decision in this case.
The crucial issue is prescription. With it the questions of res judicata and the
existence of a trust are inextricably interwoven. Inasmuch as trust is the main
thrust of plaintiffs' action, it will be useful to make a brief digression on the nature
of trusts ( fideicomisos) and on the availability of prescription and laches to bar
the action for reconveyance of property allegedly held in trust.
"In its technical legal sense, a trust is defined as the right, enforceable solely in
equity, to the beneficial enjoyment of property, the legal title to which is vested in
another, but the word 'trust' is frequently employed to indicate duties, relations,
and responsibilities which are not strictly technical trusts." (89 C.J.S. 712).
"A person who establishes a trust is called the trustor; one in whom confidence is
reposed is known as the trustee; and the person for whose benefit the trust has
been created is referred to as the beneficiary" (Art. 1440, Civil Code). There is a
fiduciary relation between the trustee and the cestui que trust as regards certain
property, real, personal, money or choses in action (Pacheco vs. Arro, 85 Phil.
505).
"Trusts are either express or implied. Express trusts are created by the intention
of the trustor or of the parties. Implied trusts come into being by operation of law"
(Art. 1441, Civil Code). "No express trusts concerning an immovable or any
interest therein may be proven by oral evidence. An implied trust may be proven
by oral evidence" (Ibid, Arts. 1443 and 1457).
"No particular words are required for the creation of an express trust, it being
sufficient that a trust is clearly intended" (Ibid, Art. 1444; Tuason de Perez vs.
Caluag, 96 Phil. 981; Julio vs. Dalandan, L-19012, October 30, 1967, 21 SCRA
543, 546). "Express trusts are those which are created by the direct and positive
acts of the parties, by some writing or deed, or will, or by words either expressly
or impliedly evincing an intention to create a trust" (89 C.J.S. 122).
"Implied trusts are those which, without being expressed, are deducible from the
nature of the transaction asmatters of intent, or which are superinduced on the
transaction by operation of law as matters of equity,independently of the
particular intention of the parties" (89 C.J.S. 724). They are ordinarily subdivided
into resulting and constructive trusts (89 C.J.S. 722).
"A resulting trust is broadly defined as a trust which is raised or created by the
act or construction of law, but in its more restricted sense it is a trust raised
by implication of law and presumed always to have been contemplated of the
parties, the intention as to which is to be found in the nature of their transaction,
but not expressed in the deed or instrument of conveyance" (89 C.J.S. 725).
Examples of resulting trusts are found in article 1448 to 1455 of the Civil Code.
See Padilla vs. Court of Appeals, L-31569, September 28, 1973, 53 SCRA 168,
179).
On the other hand, a constructive trust is a trust "raised by construction of law, or
arising by operation of law". In a more restricted sense and as
contradistinguished from a resulting trust, a constructive trust is "a trust not
created by any words, either expressly or impliedly evincing a direct intention to
create a trust, but by theconstruction of equity in order to satisfy the demands of
justice. It does not arise by agreement or intention but by operation of law." (89
C.J.S. 726-727). "If a person obtains legal title to property by fraud or
concealment, courts of equity will impress upon the title a so-called constructive
trust in favor of the defrauded party." A constructive trust is not a trust in the
technical sense (Gayondato vs. Treasurer of the P.I., 49 Phil. 244; See Art. 1456,
Civil Code).
There is a rule that a trustee cannot acquire by prescription the ownership of
property entrusted to him (Palma vs. Cristobal, 77 Phil. 712), or that an action to
compel a trustee to convey property registered in his name in trust for the benefit
of the cestui qui trust does not prescribe (Manalang vs. Canlas, 94 Phil. 776;
Cristobal vs. Gomez, 50 Phil. 810), or that the defense of prescription cannot be
set up in an action to recover property held by a person in trust for the benefit of
another (Sevilla vs. De los Angeles, 97 Phil. 875), or that property held in trust
can be recovered by the beneficiary regardless of the lapse of time (Marabilles
vs. Quito, 100 Phil. 64; Bancairen vs. Diones, 98 Phil. 122, 126 Juan vs. Zuiga,
62 O.G. 1351; 4 SCRA 1221; Jacinto vs. Jacinto, L-17957, May 31, 1962. See
Tamayo vs. Callejo, 147 Phil. 31, 37).
That rule applies squarely to express trusts. The basis of the rule is that the
possession of a trustee is not adverse. Not being adverse, he does not acquire
by prescription the property held in trust. Thus, section 38 of Act 190 provides
that the law of prescription does not apply "in the case of a continuing and
subsisting trust" (Diaz vs. Gorricho and Aguado, 103 Phil. 261, 266; Laguna vs.
Levantino, 71 Phil. 566; Sumira vs. Vistan, 74 Phil. 138; Golfeo vs. Court of
Appeals, 63 O.G. 4895, 12 SCRA 199; Caladiao vs. Santos, 63 O.G. 1956, 10
SCRA 691).
The rule of imprescriptibility of the action to recover property held in trust may
possibly apply to resulting trusts as long as the trustee has not repudiated the
trust (Heirs of Candelaria vs. Romero, 109 Phil. 500, 502-3; Martinez vs. Grao,
42 Phil. 35; Buencamino vs. Matias, 63 O. G. 11033, 16 SCRA 849).
The rule of imprescriptibility was misapplied to constructive trusts (Geronimo and
Isidoro vs. Nava and Aquino, 105 Phil. 145, 153. Compare with Cuison vs.
Fernandez and Bengzon, 105 Phil. 135, 139; De Pasion vs. De Pasion, 112 Phil.
403, 407).
Acquisitive prescription may bar the action of the beneficiary against the trustee
in an express trust for the recovery of the property held in trust where (a) the
trustee has performed unequivocal acts of repudiation amounting to an ouster of
the cestui qui trust; (b) such positive acts of repudiation have been made known
to thecestui qui trust and (c) the evidence thereon is clear and conclusive
(Laguna vs. Levantino, supra; Salinas vs. Tuason, 55 Phil. 729. Compare with
the rule regarding co-owners found in the last paragraph of article 494, Civil
Code; Casaas vs. Rosello, 50 Phil. 97; Gerona vs. De Guzman, L-19060, May
29, 1964, 11 SCRA 153, 157).
With respect to constructive trusts, the rule is different. The prescriptibility of an
action for reconveyance based on constructive trust is now settled (Alzona vs.
Capunitan, L-10228, February 28, 1962, 4 SCRA 450; Gerona vs. De
Guzman, supra; Claridad vs. Henares, 97 Phil. 973; Gonzales vs. Jimenez, L-
19073, January 30, 1965, 13 SCRA 80; Boaga vs. Soler, 112 Phil. 651; J. M.
Tuason & Co., vs. Magdangal, L-15539, January 30, 1962, 4 SCRA 84).
Prescription may supervene in an implied trust (Bueno vs. Reyes, L-22587, April
28, 1969, 27 SCRA 1179; Fabian vs. Fabian, L-20449, January 29, 1968; Jacinto
vs. Jacinto, L-17957, May 31, 1962, 5 SCRA 371).
And whether the trust is resulting or constructive, its enforcement may be barred
by laches (90 C.J.S. 887-889; 54 Am Jur. 449-450; Diaz vs. Gorricho and
Aguado, supra. Compare with Mejia vs. Gampona, 100 Phil. 277).
The plaintiffs did not prove any express trust in this case. The expediente of the
intestate proceeding, Civil Case No. 217, particularly the project of partition, the
decision and the manifestation as to the receipt of shares (Exh. 3, 4 and 6)
negatives the existence of an express trust. Those public documents prove that
the estate of Martin Ramos was settled in that proceeding and that adjudications
were made to his seven natural children. A trust must be proven by clear,
satisfactory, and convincing evidence. It cannot rest on vague and uncertain
evidence or on loose, equivocal or indefinite declarations (De Leon vs. Peckson,
62 O. G. 994). As already noted, an express trust cannot be proven by parol
evidence (Pascual vs. Meneses, L-18838, May 25, 1967, 20 SCRA 219, 228;
Cuaycong vs. Cuaycong, L-21616, December 11, 1967, 21 SCRA 1192).
Neither have the plaintiffs specified the kind of implied trust contemplated in their
action. We have stated that whether it is a resulting or constructive trust, its
enforcement may be barred by laches.
In the cadastral proceedings, which supervened after the closure of the intestate
proceeding, the eight lots involved herein were claimed by the spouses Jose
Ramos and Gregoria T. Ramos to the exclusion of the plaintiffs (Exh. 8 to 19).
After the death of Jose Ramos, the said lots were adjudicated to his widow and
daughter (Exh. 8). In 1932 Gregoria T. Ramos and Candida Ramos leased the
said lots to Felix Yulo (Exh. 20). Yulo in 1934 transferred his lease rights over
Hacienda Calaza to Juan S. Bonin and Nestor Olmedo, the husband of plaintiff
Atanacia Ramos (Exh. 22). Bonin and Olmedo in 1935 sold their lease rights
over Hacienda Calaza to Jesus S. Consing (Exh. 23).
Those transactions prove that the heirs of Jose Ramos had repudiated any trust
which was supposedly constituted over Hacienda Calaza in favor of the plaintiffs.
Under Act 190, whose statute of limitations applies to this case (Art. 1116, Civil
Code), the longest period of extinctive prescription was only ten years (Diaz vs.
Gorricho and Aguado, supra.).
Atanacia, Modesto and Manuel, all surnamed Ramos, were already of age in
1914 (Exh. A to D). From that year, they could have brought the action to annul
the partition. Maria Ramos and Emiliano Ramos were both born in 1896. They
reached the age of twenty-one years in 1917. They could have brought the action
from that year.
The instant action was filed only in 1957. As to Atanacia, Modesto and Manuel,
the action was filed forty-three years after it accrued and, as to Maria and
Emiliano, the action was filed forty years after it accrued. The delay was
inexcusable. The instant action is unquestionably barred by prescription and res
judicata.
This case is similar to Go Chi Gun vs. Co, 96 Phil. 622, where a partition
judicially approved in 1916 was sought to be annulled in 1948 on the ground of
fraud. It was contended that there was fraud because the real properties of the
decedent were all adjudicated to the eldest son, while the two daughters, who
were minors, were given only cash and shares of stocks. This Court, in upholding
the petition, said:.
"In any case, the partition was given the stamp of judicial approval, and as a
matter of principle and policy we should sustain its regularity, in the absence of
such cause or reason that the law itself fixes as a ground for invalidity" (on page
634). "As the administration proceedings ended in the year 1916, the
guardianship proceedings in 1931, and the action was brought only in the year
1948, more than 32 years from the time of the distribution and 27 years from the
termination of guardianship proceedings", the action was barred by laches (on
page 637). See Lopez vs. Gonzaga, L-18788, January 31, 1964, 10 SCRA 167;
Cuaycong vs. Cuaycong supra).
The leading case of Severino vs. Severino, 44 Phil. 343, repeatedly cited by the
plaintiffs, does not involve any issue of prescription or laches. In that case, the
action for reconveyance was seasonably brought. The alleged trustee was an
overseer who secured title in his name for the land of his brother which was
under his administration. He could not have acquired it by prescription because
his possession was not adverse. On certain occasions, he had admitted that he
was merely the administrator of the land and not its true owner.
More in point is the Cuaycong case, supra, where the action for the
reconveyance of property held in trust accrued in 1936 and it was filed only in
1961 or after the lapse of twenty-five years. That action was barred.
On its face, the partition agreement was theoretically correct since the seven
natural children were given their full legitime, which under article 942 of the old
Civil Code was their share as legal heirs. But it was possible that the lands were
undervalued or were not properly appraised at their fair market value and,
therefore, the natural children were short-changed in the computation of the
value of their shares which the legitimate children could pay in cash as allowed in
article 840 of the old Civil Code. It is of common knowledge that anyone who
received lands in the partition of a decedent's estate would ultimately have an
advantage over the one who received cash because lands increase in value as
time goes by while money is easily spent.
As pointed out in the statement of facts, it was anomalous that the manifestation,
evidencing the alleged receipt by the natural children of their shares, should
recite that they received their shares from the administrator, when in the project
of partition itself, as approved by the probate court (Exh. 3 to 6), it was stipulated
that Jose Ramos and Agustin Ramos would be the ones to pay the cash
settlement for their shares. No receipts were submitted to the court to prove that
Jose Ramos and Agustin Ramos paid to the plaintiffs the cash adjudicated to
them in the project of partition.
The plaintiffs pinpoint certain alleged irregularities in the intestate proceeding.
The aver that Modesto Ramos and Manuel Ramos were already of age in 1913
and could not therefore have been represented by Timoteo Zayco as guardian ad
litem and that, consequently, the two were denied due process. The plaintiffs
accuse Zayco of not having competently protected the interests of the minors,
Maria Ramos and Emiliano Ramos. They allege that Atanacia Ramos signed the
project of partition and the "receipt" of shares (Exh. 3 and 6) without
understanding those documents which were in Spanish. They assert that the
lopsided and defective partition was not implemented.
In short, the plaintiffs contend that the partition was not binding on them (Note
that their brother, Timoteo, considered himself bound by that partition). They ask
that the case be remanded to the lower court for the determination and
adjudication of their rightful shares.
All those contentions would have a semblance of cogency and would deserve
serious consideration if the plaintiffs had not slept on their rights. They allowed
more than forty years to elapse before they woke up and complained that they
were much aggrieved by the partition. Under the circumstances, their claims can
hardly evoke judicial compassion. Vigilantibus et non dormientibus jura
subveniunt. "If eternal vigilance is the price of safety, one cannot sleep on one's
right for more than a tenth of a century and expect it to be preserved in its
pristine purity" (Ozaeta, J. in Associacion Cooperativa de Credito Agricola de
Miagao vs. Monteclaro, 74 Phil. 281, 283).
The plaintiffs have only themselves to blame if the courts at this late hour can no
longer afford them relief against the inequities allegedly vitiating the partition of
their father's estate.
In connection with the res judicata aspect of the case, it may be clarified that in
the settlement of a decedent's estate it is not de rigeuer for the heirs to sign a
partition agreement. "It is the judicial decree of distribution, once final, that vests
title in the distributees" (Reyes vs. Barretto-Datu, L-17818, January 25, 1967, 19
SCRA 85, 91) which in this case was Judge Campbell's decision (Exh. 4).
A judgment in an intestate proceeding may be considered as a judgment in
rem (Varela vs. Villanueva, 95 Phil. 248, 267. See Sec. 49[a], Rule 39, Rules of
Court). There is a ruling that "if the decree of distribution was erroneous or not in
conformity with law or the testament, the same should have been corrected by
opportune appeal; but once it had become final, its binding effect is like that of
any other judgment in rem, unless properly set aside for lack of jurisdiction or
fraud". A partition approved by the court in 1939 could no longer be contested in
1956 on the ground of fraud. The action had already prescribed. "The fact that
one of the distributees was a minor at the time the court issued the decree of
distribution does not imply that the court had no jurisdiction to enter the decree of
distribution." (Reyes vs. Barretto-Datu, supra, citing Ramos vs. Ortuzar, 89 Phil.
742). "A final order of distribution of the estate of a deceased person vests the
title to the land of the estate in the distributees" (Syllabus, Santos vs. Roman
Catholic Bishop of Nueva Caceres, 45 Phil. 895, 900).
Parenthetically, it may be noted that the filing of the instant case long after the
death of Jose Ramos and other persons involved in the intestate proceeding
renders it difficult to determine with certitude whether the plaintiffs had really
been defrauded. What Justice Street said in Sinco vs. Longa, 51 Phil. 507, 518-9
is relevant to this case:
"In passing upon controversies of this character
experience teaches the danger of accepting lightly
charges of fraud made many years after the transaction
in question was accomplished, when death may have
sealed the lips of the principal actors and changes
effected by time may have given a totally different color
to the cause of controversy. In the case before us the
guardian, Emilio Tevez, is dead. The same is true of
Trinidad Diago, mother of the defendant Agueda Longa;
while Agapito Longa is now living in Spain. It will be
borne in mind also that, insofar as oral proof is
concerned, the charge of fraud rests principally on the
testimony of a single witness who, if fraud was
committed, was a participant therein and who naturally
would now be anxious, so far as practicable, to put the
blame on others. In this connection it is well to bear in
mind the following impressive language of Mr. Justice
Story:
". . . But length of time necessarily obscures all human
evidence; and as it thus removes from the parties all the
immediate means to verify the nature of the original
transactions, it operates by way of presumption, in favor
of innocence, and against imputation of fraud. It would be
unreasonable, after a great length of time, to require
exact proof of all the minute circumstances of any
transaction, or to expect a satisfactory explanation of
every difficulty, real or apparent, with which it may be
incumbered. The most that can fairly be expected, in
such cases, if the parties are living, from the frailty of
memory, and human infirmity is, that the material facts
can be given with certainty to a common intent; and, if
the parties are dead, and the cases rest in confidence,
and in parol agreements, the most that we can hope is to
arrive at probable conjectures, and to substitute general
presumptions of law, for exact knowledge. Fraud, or
breach of trust, ought not lightly to be imputed to the
living; for, the legal presumption is the other way; as to
the dead, who are not here to answer for themselves, it
would be the height of injustice and cruelty, to disturb
their ashes, and violate the sanctity of the grave, unless
the evidence of fraud be clear, beyond a reasonable
doubt (Prevost vs. Gratz, 6 Wheat. [U.S.], 481, 498)."
Defendants' appeal. Defendants Granada Ramos, Gregoria T. Ramos,
Candida Ramos, Jose Bayot and Agustin Ramos appealed from the lower court's
decision insofar as it ignored their counterclaim for P50,000 as moral damages
and P10,000 as attorney's fees. In their brief the claim for attorney's fees was
increased to P20,000. They prayed for exemplary damages.
The defendants argue that plaintiffs' action was baseless and was filed in gross
and evident bad faith. It is alleged that the action caused defendants mental
anguish, wounded feelings, moral shock and serious anxiety and compelled them
to hire the services of counsel and incur litigation expenses.
Articles 2219 and 2220 (also 1764 and 2206) of the Civil Code indicate the cases
where moral damages may be recovered. The instant litigation does not fall
within any of the enumerated cases. Nor can it be regarded as analogous to any
of the cases mentioned in those articles. Hence, defendants' claim for moral
damages cannot be sustained (Ventanilla vs. Centeno, 110 Phil. 811, 814). The
worries and anxiety of a defendant in a litigation that was not maliciously
instituted are not the moral damages contemplated in the law (Solis & Yarisantos
vs. Salvador, L-17022, August 14, 1965, 14 SCRA 887).
"The adverse result of an action does not per se make the act wrongful and
subject the actor to the payment of moral damages. The law could not have
meant to impose a penalty on the right to litigate, such right is so precious that
moral damages may not be charged on those who may exercise it erroneously."
(Barreto vs. Arevalo, 99 Phil. 771, 779).
On the other hand, the award of reasonable attorney's fees is governed by article
2208 of the Civil Code which lays down the general rule that, in the absence of
stipulation, attorney's fees and litigation expenses cannot be recovered. Article
2208 specifies eleven instances where attorney's fees may be recovered. The
defendants did not point out the specific provision of article 2208 on which their
counterclaim may be predicated.
What may possibly apply to defendants' counterclaim are paragraphs four and
eleven which respectively provide that attorney's fees may be recovered "in case
of a clearly unfounded civil action or proceeding against the plaintiff" (defendant
is a plaintiff in his counterclaim) or "in any other cases where the court deems it
just and equitable" that attorney's fees should be awarded.
We hold that, notwithstanding the dismissal of the action, no attorney's fees
should be granted to the defendants. Under the facts of the case, it cannot be
asseverated with dogmatic finality that plaintiffs' action was manifestly unfounded
or was maliciously filed to harass and embarrass the defendants. All indications
point to the fact that the plaintiffs honestly thought that they had a good cause of
action. They acted in evident good faith. (See Herrera vs. Luy Kim Guan, 110
Phil. 1020, 1028; Rizal Surety & Insurance Co., Inc. vs. Court of Appeals, L-
23729, May 16, 1967, 20 SCRA 61).
Inasmuch as some of the plaintiffs were minors when the partition of their father's
landed estate was made, and considering that they were not allotted even a few
square meters out of the hundreds of hectares of land, which belonged to him,
they had reason to feel aggrieved and to seek redress for their grievances.
Those circumstances as well as the marked contrast between their indigence
and the affluence of the heirs of their half-brother, Jose Ramos, might have
impelled them to ask the courts to reexamine the partition of their father's estate.
It is not sound public policy to set a premium on the right to litigate. An adverse
decision does not ipso factojustify the award of attorney's fees to the winning
party (Herrera vs. Luy Kim, supra; Heirs of Justiva vs. Gustilo, 61 O. G. 6959. Cf.
Lazatin vs. Twao and Castro, 112 Phil. 733, 741).
Since no compensatory and moral damages have been awarded in this case,
defendants' claim for exemplary damages, which was ventilated for the first time
in their appellants' brief, may be as an afterthought, cannot be granted (Art. 2229,
Civil Code).
WHEREFORE, the trial court's judgment is affirmed with the clarification that
defendants' counterclaim is dismissed. No costs.
SO ORDERED.
Makalintal, C.J., Barredo, Antonio and Fernandez, JJ., concur.
Fernando, J., did not take part.
||| (Ramos v. Ramos, G.R. No. L-19872, [December 3, 1974], 158 PHIL 935-960)
AUSTRIA-MARTINEZ, J : p
This resolves the petition for review on certiorari seeking the modification of
the Decision 1 of the Court of Appeals (CA) dated March 7, 2000 which
affirmed with modification the Decision of the Regional Trial Court (RTC) of
Lapu-Lapu City, Branch 27 in Civil Case No. 2930-L; and the Resolution dated
August 2, 2000 denying petitioner's motion for reconsideration of the
aforementioned decision.
The disputed property is Lot No. 4399 with an area of 34,325 square meters
located at Dapdap, Lapu-Lapu City. Crisanta Maloloy-on petitioned for the
issuance of a cadastral decree in her favor over said parcel of land. After her
death in 1930, the Cadastral Court issued a Decision directing the issuance of
a decree in the name of Crisanta Maloloy-on's eight children, namely: Juan,
Celedonio, Emiliano, Francisco, Simeon, Bernabe, Roberta and Fausta, all
surnamed Aying. The certificate of title was, however, lost during the war.
On February 1, 1994, the MTC ordered the occupants to vacate the property.
The case eventually reached this Court, docketed as G.R. No. 128102,
entitled Aznar Brothers Realty Company vs. Court of Appeals, Luis Aying,
Demetrio Sida, Felomino Augusto, Federico Abing, and Romeo Augusto. 2On
March 7, 2000, a Decision was promulgated in favor of herein petitioner,
declaring it as the rightful possessor of the parcel of land in question.
Petitioner (defendant before the RTC) filed its Answer, denying that
respondents are the lawful owners of subject parcel of land by virtue of their
being descendants or heirs of the registered owners of subject property.
Instead, petitioner alleged that it had been in actual possession of subject
land as owner thereof by virtue of the extra-judicial partition of real property
and deed of absolute sale executed in its favor; that in fact, it had been
paying taxes thereon religiously; that it tolerated about 6 persons to live on
said land but said persons were eventually ejected by court order. Petitioner
then raised the affirmative defenses of failure to state cause of action and
prescription, as it took respondents 27 years, 10 months and 27 days to file
the action to recover subject property, when an action to recover property
based on an implied trust should be instituted within 4 years from discovery
of the fraud. 4
In the Pre-Trial Order dated January 30, 1995 of the RTC, the issues were
narrowed down to the following:
After trial, the RTC rendered a Decision dated July 4, 1997, ruling that
respondents' evidence failed to prove that the extra-judicial partition with
deed of absolute sale was a totally simulated or fictitious contract and
concluded that said document is valid, thus, effectively conveying to petitioner
the property in question. It further held that respondents' action had
prescribed in that the action is considered as one for reconveyance based on
implied or constructive trust, it prescribed in 10 years from the registration of
the deed on March 6, 1964; and if the action is considered as one for
annulment of contract on the ground of fraud, it should have been filed
within 4 years from discovery of the fraud. The trial court also ruled that
respondents failed to present any admissible proof of filiation, hence, they
were not able to prove that they are indeed heirs of the eight Aying siblings
who appear as the registered owners under OCT No. RO-2856. TaDSHC
The dispositive portion of the RTC Decision reads as follows:
SO ORDERED. 6
SO ORDERED.
In modifying the RTC judgment, the CA ratiocinated that "an action for
recovery of possession of registered land never prescribes in view of the
provision of Section 44, Act No. 496 (now Sec. 47, PD 1520), to the effect that
no title to registered land in derogation to that of a registered owner shall be
acquired by prescription." The CA further ruled that even if the action is
deemed to be based on implied trust, prescription did not begin to run since
there is no evidence that positive acts of repudiation were made known to
the heirs who did not participate in the execution of the Extra-Judicial
Partition of Real Estate with Deed of Absolute Sale. Thus, striking down the
RTC's ruling that the respondents' complaint is dismissible on the ground of
prescription, the CA held instead that herein respondents' action had not
prescribed but upheld the validity of the Extra-Judicial Partition of Real Estate
with Deed of Absolute Sale, except as to the shares of the heirs of Emiliano,
Simeon and Roberta, who did not participate in the execution of said
document.
Hence, the present petition for review on certiorari assailing the CA decision
on the following grounds:
II
III
At the outset, it should be stressed that not all the plaintiffs who filed the
amended complaint before the trial court had been impleaded as respondents
in the present petition. The only parties impleaded are the heirs of Emiliano,
Simeon and Roberta Aying, whom the CA adjudged as owners of a 3/8
portion of the land in dispute for not having participated in the execution of
the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale.
The issues raised by petitioner for the Court's resolution are (1) whether or
not respondents' cause of action is imprescriptible; and (2) if their right to
bring action is indeed imprescriptible, may the principle of laches apply.
Respondents alleged in their amended complaint that not all the co-owners
of the land in question signed or executed the document conveying
ownership thereof to petitioner and made the conclusion that said document
is null and void. We agree with the ruling of the RTC and the CA that the
Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is valid and
binding only as to the heirs who participated in the execution thereof, hence,
the heirs of Emiliano, Simeon and Roberta Aying, who undisputedly did not
participate therein, cannot be bound by said document.
However, the facts on record show that petitioner acquired the entire parcel
of land with the mistaken belief that all the heirs have executed the subject
document. Thus, the trial court is correct that the provision of law applicable
to this case is Article 1456 of the Civil Code which states:
The concept of constructive trusts was further elucidated in the same case, as
follows:
Based on such concept of constructive trusts, the Court ruled in said case
that:
It has also been ruled that the ten-year prescriptive period begins to run
from the date of registration of the deed or the date of the issuance of the
certificate of title over the property, but if the person claiming to be the
owner thereof is in actual possession of the property, the right to seek
reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. 14
The question then arises as to the date from which the ten-year period
should be reckoned, considering that the Extra-Judicial Partition of Real Estate
with Deed of Absolute Sale was registered under Act No. 3344 and not
under Act No. 496 (Land Registration Act), despite the fact the land in dispute
was already titled under Act No. 496 in the names of the Aying siblings at the
time the subject document was executed.
In this case, since the Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale was registered under Act No. 3344 and not under Act No. 496,
said document is deemed not registered. Accordingly, the ten-year
prescriptive period cannot be reckoned from March 6, 1964, the date of
registration of the subject document under Act No. 3344. The prescriptive
period only began to run from the time respondents had actual notice of the
Extra-Judicial Partition of Real Estate with Deed of Absolute Sale. IaAHCE
In the case at bar, it was petitioner, as the defendant before the RTC, which
set up in its Answer the affirmative defense of prescription. It was, therefore,
incumbent upon petitioner to prove the date from which the prescriptive
period began to run. Evidence as to the date when the ten-year prescriptive
period began exists only as to the heirs of Roberta Aying, as Wenceslao
Sumalinog admitted that they learned of the existence of the document of
sale in the year 1967. As to the heirs of Emiliano Aying and Simeon Aying,
there is no clear evidence of the date when they discovered the document
conveying the subject land to petitioner. Petitioner miserably failed to adduce
proof of when the heirs of Emiliano Aying and Simeon Aying were notified of
the subject document. Hence, with regard to said heirs, the Court may
consider the admission in the amended complaint that they learned of the
conveyance of the disputed land only in 1991 when petitioner sent notices to
vacate to the occupants of the subject land, as the date from which the ten-
year prescriptive period should be reckoned.
With regard to petitioner's argument that the provision of Article 1104 of the
Civil Code, stating that a partition made with preterition of any of the
compulsory heirs shall not be rescinded, should be applied, suffice it to say
that the Extra-Judicial Partition of Real Estate with Deed of Absolute Sale is
not being rescinded. In fact, its validity had been upheld but only as to the
parties who participated in the execution of the same. As discussed above,
what was conveyed to petitioner was ownership over the shares of the heirs
who executed the subject document. Thus, the law, particularly, Article 1456
of the Civil Code, imposed the obligation upon petitioner to act as a trustee
for the benefit of respondent heirs of Emiliano and Simeon Aying who, having
brought their action within the prescriptive period, are now entitled to the
reconveyance of their share in the land in dispute.
SO ORDERED.
||| (Aznar Brothers Realty Co. v. Aying, G.R. No. 144773, [May 16, 2005], 497
PHIL 788-805)
DECISION
AZCUNA, J : p
Apparently, this action did not sit well with her father-in-law,
the plaintiff-appellee, for on December 16, 1992, Alejandro Ty, father
of the deceased Alexander Ty, filed a complaint for recovery of
properties with prayer for preliminary injunction and/or temporary
restraining order. Docketed as Civil Case No. 62714, of the Regional
Trial Court of Pasig, Branch 166, the complaint named Sylvia Ty as
defendant in her capacity as [Administratrix] of the Intestate Estate of
Alexander Ty.
SO ORDERED. 4
I.
II.
III.
Anent the issue of laches, this Court finds that the plaintiff-
appellee is not guilty of laches. There is laches when: (1) the conduct
of the defendant or one under whom he claims, gave rise to the
situation complained of; (2) there was delay in asserting a right after
knowledge defendant's conduct and after an opportunity to sue; (3)
defendant had no knowledge or notice that the complainant would
assert his right; and (4) there is injury or prejudice to the defendant
in the event relief is accorded to the complainant. These conditions
do not obtain here.
The CA then turned to "the critical, crucial and pivotal issue of whether
a trust, express or implied, was established by the plaintiff-appellee in favor
of his late son and name-sake Alexander Ty".
The CA proceeded to distinguish express from implied trust, then
found that no express trust can be involved here since nothing in writing
was presented to prove it and the case involves real property. It then stated
that it disagrees with the court a quo's application of Art. 1448 of the Civil
Code on implied trust, the so-called purchase money resulting trust, stating
that the very Article provides the exception that obtains when the person to
whom the title is conveyed is the child, legitimate or illegitimate, of the one
paying the price of the sale, in which case no trust is implied by law, it being
disputably presumed that there is a gift in favor of the child.
Q During the time that Alex was staying with you, did you ever come
to know that Alexander and his wife did go to the States?
A Yes, sir. But I do not know the exact date. But they told me they want
to go to America for check up.
Q Was that the only time that Alexander went to the States?
A Only that time, sir. Previously, he did not tell me. That last he
come (sic) to me and tell [sic] me that he will go to America for
check up. That is the only thing I know.
Q Would you say for the past five years before his death Alex and his
wife were going to the States at least once a year?
A I cannot say exactly. They just come to me and say that I [sic] will go
to "bakasyon". They are already grown people. They don't have
to tell me where they want to go.
Q You are saying that Alexander did not ask you for assistance
whenever he goes to the States?
A Sometimes Yes.
Q In what form?
The fact that Alexander stayed with his father, the plaintiff-
appellee in this case, even after he married Sylvia and begot Krizia,
does not at all prove that Alexander was dependent on plaintiff-
appellee. Neither does it necessarily mean that it was plaintiff-
appellee who was supporting Alexander's family. If anything, plaintiff-
appellee in his testimony admitted that Alexander and his family went
to live with him in observance of Chinese traditions.
Q And after the death and burial of your husband, will you tell this
Honorable Court what happened to the construction of this
residence in Wack-Wack?
Q And did you had [sic] any conversation with Mr. Alejandro Ty
regarding as to why he did that?
Q Was there any point in time that you yourself took over the
construction?
A Yes, sir, right after a year of that property after I was more settled.
A Yes, sir.
Q And was there any company or office which helped Architect Adarme
in the continuation of the construction?
A Yes, sir I have the whole construction documents and also the
documents through Arch. Gerry Contreras, that contract that we
signed.
The CA therefore reversed and set aside the judgment appealed from
and entered another one dismissing the complaint.
The CA conceded that at least part of the purchase price of the EDSA
property came from petitioner. However, it ruled out the existence of an
implied trust because of the last sentence of Article 1448: . . . However, if
the person to whom the title is conveyed is a child, legitimate or illegitimate,
of the one paying the price of the sale, no trust is implied by law, it being
disputably presumed that there is a gift in favor of the child.
The CA, therefore, did not err in simply applying the law.
Article 1448 of the Civil Code is clear. If the person to whom the title
is conveyed is the child of the one paying the price of the sale, and in this
case this is undisputed, NO TRUST IS IMPLIED BY LAW. The law, instead,
disputably presumes a donation in favor of the child.
On the question of whether or not petitioner intended a donation, the
CA found that petitioner failed to prove the contrary. This is a factual finding
which this Court sees no reason the record to reverse.
Petitioner would have this Court overturn the finding of the CA that
as regards the Meridien Condominium and the Wack-Wack property,
petitioner failed to show that the money used to purchase the same came
from him.
No costs.
SO ORDERED.
||| (Ty v. Ty, G.R. No. 165696, [April 30, 2008], 576 PHIL 296-323)
SYLLABUS
DECISION
WILLARD, J :
p
||| (Trinidad v. Ricafort, G.R. No. L-3240, [February 8, 1907], 7 PHIL 449-455)
DECISION
CHICO-NAZARIO, J : p
This is a Petition for Review on Certiorari under Rule 45 of the Revised Rules
of Court, filed by petitioners Spouses Carlos and Eulalia Raymundo and
Spouses Angelito and Jocelyn Buenaobra seeking the reversal and setting
aside of the Decision 1 of the Court of Appeals dated 26 September 2005 and
its Resolution 2 dated 24 January 2006 in CA-G.R. CV No. 59557. The Court of
Appeals, in its assailed Decision and Resolution, reversed the Decision 3 of the
Regional Trial Court (RTC) dated 28 January 1998, in Civil Case No. C-14980,
declaring the Deed of Sale executed by respondent Dominador Bandong
(Dominador) in favor of petitioner Eulalia Raymundo (Eulalia) as valid and
binding. The dispositive portion of the assailed Court of Appeals Decision
reads:
Eulalia was engaged in the business of buying and selling large cattle from
different provinces within the Philippines. For this purpose, she employed
"biyaheros" whose primary task involved the procuring of large cattle with the
financial capital provided by Eulalia and delivering the procured cattle to her
for further disposal. In order to secure the financial capital she advanced for
the "biyaheros," Eulalia required them to surrender the Transfer Certificates of
Title (TCTs) of their properties and to execute the corresponding Deeds of
Sale in her favor. cEDaTS
Dominador had been working for Eulalia as one of her biyaheros for three
decades. Considering his long years of service without any previous
derogatory record, Eulalia no longer required Dominador to post any security
in the performance of his duties. 5
However, in 1989, Eulalia found that Dominador incurred shortage in his cattle
procurement operation in the amount of P70,000.00. Dominador and his wife
Rosalia Bandong (Rosalia) then executed a Deed of Sale 6 in favor of Eulalia
on 3 February 1989, covering a parcel of land with an area of 96 square
meters, more or less, located at Caloocan City and registered under TCT No.
1421 (subject property), in the name of the Spouses Bandong. On the
strength of the aforesaid deed, the subject property was registered in the
names of Eulalia and her husband Carlos Raymundo (Carlos). The subject
property was thereafter sold by the Spouses Raymundo to Eulalia's
grandniece and herein co-petitioner, Jocelyn Buenaobra (Jocelyn). Thus, the
subject property came to be registered in the name of Jocelyn and her
husband Angelito Buenaobra (Angelito).
After the TCT of the subject property was transferred to their names, the
Spouses Buenaobra instituted before the Metropolitan Trial Court (MeTC) of
Caloocan City, an action for ejectment against the Spouses Bandong,
docketed as Civil Case No. 20053, seeking the eviction of the latter from the
subject property, which the Spouses Bandong opposed on the ground that
they are the rightful owners and possessors thereof. The MeTC ruled in favor
of the Spouses Buenaobra which, on appeal, was affirmed in toto by the
RTC 7 and subsequently, by the Court of Appeals. 8Finally, when the case was
raised on appeal before us in G.R. No. 109422, we issued a
Resolution 9 dated 12 July 1993, finding that no substantial arguments were
raised therein to warrant the reversal of the appealed decision.
To assert their right to the subject property, the Spouses Bandong instituted
an action for annulment of sale before the RTC against Eulalia and Jocelyn on
the ground that their consent to the sale of the subject property was vitiated
by Eulalia after they were served by Jocelyn's counsel with the demand to
vacate. This was docketed as Civil Case No. C-14980. The Spouses Bandong
alleged that there was no sale intended but only equitable mortgage for the
purpose of securing the shortage incurred by Dominador in the amount of
P70,000 while employed as "biyahero" by Eulalia.
For her part, Jocelyn maintained that she was a buyer in good faith and for
value for she personally inquired from the Register of Deeds of the presence
of any liens and encumbrances on the TCT of the subject property and found
that the same was completely free therefrom. While she admitted that she
had previous notice that Dominador and a certain Lourdes Santos (Lourdes)
were in possession of the subject property, Jocelyn claimed that the said
possessors already acknowledged her ownership thereof and even asked for
time to vacate. In the end, though, they refused to leave the premises.
On 28 June 1998, the RTC rendered a Decision 10 in Civil Case No. C-14980 in
favor of Eulalia and Jocelyn by declaring that the Deed of Sale between
Dominador and Eulalia was valid and binding and, consequently, the
subsequent sale between Eulalia and Jocelyn was also lawful absent any
showing that Jocelyn was a buyer in bad faith. The dispositive portion of the
said decision reads:
On appeal in CA-G.R. SP No. 59557, the Court of Appeals reversed the RTC
Decision and found that the transaction entered into by Dominador and
Eulalia was not one of sale but an equitable mortgage considering that the
purchase price was grossly inadequate and the Spouses Bandong remained as
possessors of the subject property after Eulalia's alleged purchase thereof. The
appellate court likewise charged Jocelyn with knowledge that the Spouses
Raymundo were not the absolute owners of the subject property negating the
presumption that she was an innocent purchaser for value.
Hence, this instant Petition for Review on Certiorari filed by the petitioners
assailing the Decision dated 26 September 2005 and the Resolution dated 24
January 2006 rendered by the Court of Appeals. For the resolution of this
Court are the following issues:
I.
II.
In arguing that the sale between Dominador and Eulalia is valid, petitioners
posit that gross inadequacy of the price is not sufficient to invalidate the sale,
and granting arguendo that insufficient consideration may void a sale, it has
not been proven that the consideration of sale between Dominador and
Eulalia was grossly inadequate.
We do not agree.
(5) When the vendor binds himself to pay the taxes on the thing sold.
(6) In any other case where it may be fairly inferred that the real
intention of the parties is that the transaction shall secure the
payment of a debt or the performance of any other obligation.
Art. 1604. The provisions of Article 1602 shall also apply to a contract
purporting to be an absolute sale.
For Articles 1602 and 1604 to apply, two requisites must concur: one, the
parties entered into a contract denominated as a contract of sale; and two,
their intention was to secure an existing debt by way of an equitable
mortgage. 13
Moreover, granting that the purchase price is adequate, the fact that
respondents remain in possession of the subject property after its supposed
sale is sufficient to support our finding that the contract is one of equitable
mortgage and not of sale. To reiterate, the existence of any one of the
conditions under Article 1602, not a concurrence, or an overwhelming
number of such circumstances, suffices to give rise to the presumption
that the contract is an equitable mortgage. 19
Having threshed the issue that there was no sale in favor of Eulalia but an
equitable mortgage leads us to an inevitable conclusion that she has no right
to subsequently transfer ownership of the subject property, in consonance
with the principle that nobody can dispose of what he does not have. 20 One
of the exceptions 21 to this rule, however, can be found in Article 1506 of the
Civil Code, wherein the seller has voidable title to a property but his title has
not yet been nullified at the time of the sale, and the subsequent buyer of the
property was in good faith. HEcTAI
An innocent purchaser for value is one who buys the property of another,
without notice that some other person has a right or interest in the property,
for which a full and fair price is paid by the buyer at the time of the purchase
or before receipt of any notice of claims or interest of some other person in
the property. 22
Again, we are not persuaded. The burden of proving the purchaser's good
faith lies in the one who asserts the same. In discharging the burden, it is not
enough to invoke the ordinary presumption of good faith. 23 In Arrofo v.
Quio, 24 we have elucidated that:
[A] person dealing with registered land, [is not required] to inquire
further that what the Torrens title on its face indicates. This rule,
however, is not absolute but admits of exceptions.
The glaring lack of good faith of Jocelyn is more apparent in her own
admission that she was aware that Dominador and a certain Lourdes were in
possession of the subject property. A buyer of real property that is in the
possession of a person other than the seller must be wary. A buyer who does
not investigate the rights of the one in possession can hardly be regarded as
a buyer in good faith. 25 Jocelyn's self-serving statement that she personally
talked to Dominador and Lourdes about her acquisition of the subject
property and intention to take possession of the same, and that Dominador
and Lourdes even pleaded for time to vacate the subject property cannot be
given credence in light of the prompt filing by the Spouses Bandong of an
action for the annulment of the sale contract between Dominador and Eulalia
after they received the demand to vacate from Jocelyn's lawyer.
In the last analysis, good faith, or the lack of it, is a question of intention. But
in ascertaining the intention that impels one on a given occasion, the courts
are necessarily controlled by the evidence as to the conduct and other
outward acts by which the motive may be safely determined. 26
Finally, we agree with the Court of Appeals that the ejectment case which had
been litigated to finality by the Spouses Buenaobra and the respondents need
not alter our conclusion in the present case. Well entrenched is the doctrine
that in ejectment cases, the sole question for resolution is the physical or
material possession of the property in question, so that neither the claim of
juridical possession nor an averment of ownership can outrightly prevent the
court from taking cognizance of the case. 28 In ejectment cases, all the court
may do is to resolve who is entitled to its possession although, in doing so, it
may make a determination of who is the owner of the property in order to
resolve the issue of possession. But such determination of ownership is not
clothed with finality. Neither will it affect ownership of the property or
constitute a binding and conclusive adjudication on the merits with respect to
the issue of ownership. 29
SO ORDERED.
||| (Spouses Raymundo v. Spouses Bandong, G.R. No. 171250, [July 4, 2007],
553 PHIL 480-497)
SYLLABUS
DECISION
CARSON, J :
p
||| (Uy Aloc v. Cho Jan Ling, G.R. No. L-5333, [March 25, 1911], 19 PHIL 202-
206)
SYLLABUS
1. TRUSTS; JURIDICAL CONCEPT OF A TRUST; TRUSTEE CANNOT
INVOKE STATUTE OF LIMITATIONS AGAINST "CESTUIS QUE TRUSTENT."
The juridical concept of a trust, which in a broad sense involves, arises from,
or is the result of, a fiduciary relation between the trustee and the cestui
que trust as regards certain property real, personal, funds or money, or
choses in action must not be confused with an action for specific
performance. When the claim to the lots in the cadastral case was withdrawn
by the respondents relying upon the assurance and promise made in open
court by Dr. M. Y. in behalf of J. Y. y R., the predecessor-in-interest of the
petitioners, a trust or a fiduciary relation between them arose, or resulted
therefrom, or was created thereby. The trustee cannot invoke the statute of
limitations to bar the action and defeat the right of the cestuis que trustent.
DECISION
PADILLA, J :
p
"EXHIBIT B
"ISLAS FILIPINAS.
[Expediente No. 11, G.L.R.O. Record No. 100, Catastro ds Isabela, Lote
No. 109].
"Certifico:
"Que lo que precede es transcripcion fiel y exacta de las notas
taquigraficas tomadas por mi durante la sesion arriba mencionada.
"LORENZO TANJUAQUIAO
"Taquigrafo Oficial"
||| (Dolores v. Arro, G.R. No. 48090, [February 16, 1950], 85 PHIL 505-515)
SYLLABUS
DECISION
FELICIANO, J : p
In the lawful wedlock of Victor Adaza and Rosario Gonzales were born six (6)
children: petitioner Horacio, Homero, Demosthenes, respondent Violeta,
Teresita and Victor, Jr.
The head of the family, Victor Adaza, Sr., died in 1956, while the wife died in
1971. During his lifetime, Victor Adaza, Sr. executed a Deed of Donation dated
10 June 1953, covering the parcel of land subject matter of this case, with an
area of 13.3618 hectares, located at Sinonok, Dapitan City, Zamboanga del
Norte, in favor of respondent Violeta, then still single. The donation was
accepted in the same instrument, which both donor and donee acknowledged
before Notary Public ex officio Milagros C. Galeposo. The land donated was
then part of the public domain, being disposable public land, and had been
held and cultivated by Victor Adaza, Sr. for many years. Violeta, with the aid
of her brother Horacio, filed a homestead application covering the land
involved. This application was in due course approved and a free patent
issued to her on 3 October 1956. As a result thereof, on 26 January 1960, an
Original Certificate of Title No. P-11111 was issued in her name. She declared
the property in her name under Tax Declaration No. 9808.
The record does not show when Violeta Adaza got married. But in 1962,
Violeta and her husband Lino Amor, obtained a loan from the Philippine
National Bank which they secured with a mortgage on the land covered by
OCT No. P-11111. The land was, and continued to be administered by
Violeta's brother, Homero Adaza. prcd
Four (4) years later, petitioner Horacio came back to Dapitan City for the town
fiesta. He invited respondent Violeta and the other brothers and sister for a
family gathering in his house. There, Horacio asked Violeta to sign a Deed of
Waiver which had been prepared in respect of the property in Sinonok
donated by their father Victor Adaza, Sr. This Deed stated that the Sinonok
property was owned in common by Violeta and her brother Horacio G. Adaza,
even though the certificate of title had been issued in her name only. The
Deed also provided for the waiver, transfer and conveyance by Violeta in favor
of Horacio of one-half (1/2) of the Sinonok property, together with all
improvements existing in that one-half (1/2) portion. Violeta signed this Deed
of Waiver: the Deed was also signed by petitioner Horacio and Homero Adaza
as witnesses. The full text of this Deed of Waiver follows:
"DEED OF WAIVER
Signed in my presence:
(SGD.) ILLEGIBLE(SGD.) ILLEGIBLE
Before me, this 28th day of July, 1971, at Dapitan City, personally
appeared VIOLETA G. ADAZA, with Res. Certificate No. A-2825141,
issued at Dapitan City, Jan. 7, 1971, known to me and to me known
to be the same person who executed the foregoing instrument and
she acknowledged to me that the same is her free and voluntary act
and deed.
WITNESS MY HAND AND SEAL, on the date and at the place first
above stated.
On 31 May 1974, the trial court rendered a Decision 4 declaring the Deed of
Waiver as valid and binding upon respondent Violeta. The Dispositive portion
of this Decision read as follows:
IT IS SO ORDERED."
Being unhappy with the trial court's decision, respondent Violeta and her
husband appealed to the Court of Appeals where their appeal was docketed
as C.A. G.R. No. 55929-R. In a Decision 5 dated 15 July 1977, the Court of
Appeals reversed the decision of the trial court. The Court of Appeals agreed
with the finding of the trial court that the Deed of Waiver had been signed
voluntarily, if reluctantly, by Violeta. The appellate court, however, held that
such Deed was without cause or consideration, because the land had been, in
the view of the appellate court, unconditionally donated to Violeta alone. The
Court of Appeals further held that the Deed of Waiver could not be regarded
as a gratuitous contract or a donation, said Deed being "congenitally bad" in
form because it was not drawn according to the requirements of Articles 749
and 1270 of the Civil Code. Petitioner's Motion for Reconsideration was
denied.
In the instant Petition for Review, petitioners insist once more that respondent
Violeta was not the sole owner of the disputed land but on the contrary held
one-half (1/2) thereof in trust for petitioner Horacio and that this fact of co-
ownership was sufficient consideration to sustain the validity of the Deed of
Waiver. LLpr
The principal issue raised here thus relates to the ownership of the 13.3618
hectares of land covered by OCT No. P-11111.
Since Violeta traced her title to and based her claim of ownership upon the
Deed of Donation executed by their father, it is necessary to examine this
Deed of Donation. That Deed of Donation is noteworthy for its inclusion of a
paragraph that was crossed-out. The crossed-out provision reads:
"That the donee shall share one-half (1/2) of the entire property with
one of her brothers or sisters after the death of the donor."
"That the donee do [sic] hereby receive and accept this gift and
donation made in her favor by the donor, not subject to any
condition, and do hereby express her appreciation and gratefulness
for the kindness and generosity of the donor." (Rollo, p. 50)
Petitioner Horacio testified before the trial court that it had been the intention
of their father to donate the parcel of land covered by the Deed of Donation
to him and to Violeta, as shown by the above provision which was ultimately
crossed-out. Petitioner Horacio further testified that he himself had crossed-
out the aforementioned provision, with the consent of his father, to make it
appear that the land was being donated sole]y to Violeta, in order to facilitate
the issuance of the title in her name. It seems worthwhile recalling that at the
time of execution of the donation by the father, the land was still public
disposable land and that the final issuance of title was still about seven (7)
years down the road. Clearly, in itself, the crossing out of the above-quoted
paragraph was at least an ambiguous act. The Court of Appeals took what
appears to us as a too literal view of the matter, that is, that the effect of the
crossing-out of that paragraph was precisely to render the donation a simple
and unconditional one, such that respondent Violeta was not obliged to share
the property with her brother Horacio. If, indeed, in the view of the Court of
Appeals, an informal agreement had been reached during the lifetime of the
parties' father that the subject property would become the property of
Horacio and Violeta in equal shares, such informal agreement, if reached
before the execution of the Deed of Donation, would have to be deemed
superseded by the Deed of Donation itself. Upon the other hand, the Court of
Appeals' decision reasoned, if such informal agreement had been reached
after execution of the Deed of Donation on 10 June 1953, then that
agreement, to be effective, must assume the form of another deed of
donation to be executed by Violeta in favor of Horacio and covering a one-
half (1/2) share in the property.
We take a different view. We believe that the critical question relates to the
reality of the intent ascribed to the donor and father of Horacio and Violeta
to make the two (2) co-owners of the property in question. Assuming such an
intent is sufficiently shown, it must be respected and implemented through
whatever medium is available under our civil law.
We turn to the question of the intent of the donor. Petitioner Horacio claimed
that intent was precisely to make both Violeta and himself co-owners of the
land then being donated to Violeta. Put a little differently, according to
petitioner Horacio, though respondent Violeta alone was to be the registered
owner, she was to share the land donated by the father with Horacio on an
equal sharing basis. We think this intent is evidenced, firstly, by the Deed of
Waiver executed by Violeta and quoted in full earlier. The Deed of Waiver is
important because there Violeta acknowledged that she owned the land in
common with her brother Horacio although the certificate of title bore only
her name. As noted earlier, respondent Violeta strove mightily to convince
both the trial court and the Court of Appeals that she had signed the Deed of
Waiver by reason of fraud, misrepresentation and undue influence exercised
upon her by her brother Horacio. However, both the trial court and the Court
of Appeals reached the conclusion that Violeta had in fact voluntarily signed
the Deed of Waiver, even though she had done so with reluctance. The Deed
of Waiver had been signed by Violeta in the presence of Horacio and of her
other brothers Homero Adaza and Victor Adaza, Jr. and her sister Teresita
Adaza. 6 An aunt, Pilar Adaza Soller, was also at that time present in the same
house if not in the same room at that precise moment. 7The record is bereft
of any indication of any evil intent or malice on the part of Homero, Victor, Jr.
and Teresita that would suggest deliberate collusion against their sister
Violeta. Equally important were the testimonies of Homero Adaza and Teresita
Adaza, both of whom explicitly stated that their father had executed the Deed
of Donation with the understanding that the same would be divided between
Horacio and Violeta, that Violeta had signed the Deed of Waiver freely and
voluntarily, and that their brother Horacio had not threatened and forced her
to do so. 8 The evidence also showed that on the same occasion of the
signing of the Deed of Waiver by respondent Violeta, another brother Victor
Adaza, Jr. had also executed a similar Deed of Waiver covering one-half (1/2)
share of another piece of property at Tiwalos, Dapitan City (also titled in
Victor, Jr.'s name only) in favor of his sister Teresita Adaza. 9 The trial court
pointed out that Victor Adaza, Sr. and Rosario Gonzales left four (4) parcels of
land which were divided among their six (6) children, as follows: cdll
Evidently, the parties' parents made it a practice, for reasons of their own,
to have lands acquired by them titled in the name of one or another of
their children. Three (3) of the four (4) parcels acquired by the parents
were each placed in the name of one of the children. The land in Tiwalos,
Dapitan City, intended for Victor, Jr. and Teresita, was placed in the name
of Victor, Jr. The parcel located in Sokon, Dapitan City, intended for
Homero was placed in the name of petitioner Horacio, 11 while the parcel
in Sinonok, Dapitan City, was titled in Violeta's name.
The trial court also pointed to respondent Violeta's "[t]wo (2) letters to
defendant [petitioner Horacio], written to the latter in Davao City (Exhibits '1'
and '2') acknowledging that the defendant is the co-owner of one-half (1/2)
share of said land, titled in her name. In said letters (Exhibits '1' and '2')
plaintiff (respondent Violeta) is requesting the defendant [petitioner Horacio]
not to be in a hurry to divide the lot in question (Exhibit '2-C') and get his
one-half share in order [that she could] meet her obligations." 12
Finally, it may be noted that this is not a case of an older brother exploiting
or cheating his younger sister. On the contrary, the evidence showed that
petitioner Horacio had taken care of his father and mother and of his sister
Violeta, that petitioner Horacio had been quite relaxed and unworried about
the title remaining in the name of his sister alone until Violeta had gotten
married and her husband began to show what petitioner thought was undue
and indelicate interest in the land in Sinonok. 13 Thus, the trial court found,
among other things: cdll
13.That defendant waived his share from the [income from the] land
in litigation in favor of plaintiffs [Violeta and her husband] who were
hard-up at that time for they had a child who was suffering from a
brain ailment; that it was also agreed upon that the share of the
defendant in said parcel will be used for the expenses of their mother
(at that time bedridden).
All the above circumstances lead this Court to the conclusion which Violeta
had admitted in the Deed of Waiver, that is, that the "property [here involved]
is owned in common by [her] and [her] brother, Horacio G. Adaza, although
the certificate of title was issued only in [her] name." We believe and so hold
that this statement is an admission that she held half of the land in trust for
petitioner Horacio. The execution of the Deed of Donation of 10 June 1953 by
respondent Violeta's father created an implied trust in favor of Violeta's
brother, petitioner Horacio Adaza, in respect of half of the property
donated." 15 Article 1449 of the Civil Code is directly in point:
"Art. 1449.There is also an implied trust when a donation is made to a
person but it appears that although the legal estate is transmitted to
the donee, he nevertheless is either to have no beneficial interest or
only a part thereof."
Respondent Violeta and her husband also contended that the long delay and
inaction on the part of Horacio in taking any steps for reconveyance of the
one-half (1/2) share claimed by him, indicates lack of any color of right over
the said one-half (1/2) share. It was also argued by the two (2) that
considering that twelve (12) years had passed since OCT No. P-11111 was
issued and more than nineteen (19) years since the Deed of Donation was
executed, the counterclaim for partition and reconveyance of Horacio's
alleged one-half share was barred by laches, if not by prescription. Again, we
rule for the petitioners. In determining whether delay in seeking to enforce a
right constitutes laches, the existence of a confidential relationship based
upon, for instance, consanguinity, is an important circumstance for
consideration. Delay in a situation where such circumstance exists, should not
be as strictly construed as where the parties are complete strangers vis-a-vis
each other. The doctrine of laches is not to be applied mechanically as
between near relatives; 16 the fact that the parties in the instant case are
brother and sister tends to explain and excuse what would otherwise appears
as long delay. Moreover, continued recognition of the existence of the trust
precludes the defense of laches. 17 The two (2) letters noted above sent by
respondent Violeta to petitioner Horacio, one in 1969 and the other in 1971,
show that Violeta as late as 1971 had recognized the trust imposed on her by
law. Conversely, Horacio's reliance upon his blood relationship with his sister
and the trust and confidence normally connoted in our culture by that
relationship, should not be taken against him. Petitioners' counterclaim in the
trial court for partition and reconveyance cannot he regarded as barred
whether by laches or by prescription. cdrep
WHEREFORE, the Petition for Review is hereby GRANTED. The Decision dated
15 July 1977 of the Court of Appeals in C.A.-G.R. No. 55929-R is SET ASIDE
and the Decision dated 31 May 1974 of the then Court of First Instance,
Branch 2, Dipolog City in Civil Case No. 2213 is REINSTATED. No
pronouncement as to costs.
SO ORDERED.
||| (Adaza v. Court of Appeals, G.R. No. L-47354, [March 21, 1989], 253 PHIL
364-376)
DECISION
TINGA, J :p
Juliana initiated the probate of her will five (5) days after its execution,
but she died on 12 August 1968, before the petition for probate could be
heard. The petition was pursued instead in Special Proceedings (S.P.) No.
706 by her husband, Jose, who was the designated executor in the will. On
7 October 1968, the Court of First Instance, Branch 3, Balayan, Batangas,
acting as probate court, admitted the will to probate and issued the letters
testamentary to Jose. Jose then submitted an inventory of Juliana's real
properties with their appraised values, which was approved by the probate
court.
PROJECT OF PARTITION
Hence, the instant petition attributing the following errors to the Court
of Appeals:
I. THE COURT OF APPEAL'S CONCLUSION THAT PETITIONER'S
ACTION FOR [RECONVEYANCE] HAS PRESCRIBED TAKING AS BASIS
SEPTEMBER 15, 1969 WHEN THE PROPERTIES IN DISPUTE WERE
TRANSFERRED TO THE NAME OF THE LATE JOSE LOPEZ MANZANO
IN RELATION TO DECEMBER 12, 1984 WHEN THE ACTION FOR
RECONVEYANCE WAS FILED IS ERRONEOUS.
The provision on implied trust governing the factual milieu of this case
is provided in Article 1456 of the Civil Code, which states:
It should be pointed out also that Jose had already indicated at the
outset that the disputed properties did not form part of
theFideicomiso contrary to petitioner's claim that no overt acts of
repudiation may be attributed to Jose. It may not be amiss to state that in
the project of partition submitted to the probate court, Jose had indicated
that the disputed properties were conjugal in nature and, thus, excluded
from Juliana's Fideicomiso. This act is clearly tantamount to repudiating the
trust, at which point the period for prescription is reckoned. HAEIac
SO ORDERED.
||| (Lopez v. Court of Appeals, G.R. No. 157784, [December 16, 2008], 594 PHIL
436-450)
SYLLABUS
3. ID.; ID.; ID.; ID.; CONSTRUCTIVE TRUST UNDER ARTICLE 1456 OF THE NEW
CIVIL CODE NOT A TRUST IN THE TECHNICAL SENSE; REASON THEREFOR; CASE
AT BAR. A deeper analysis of Article 1456 reveals that it is not a trust in the
technical sense for in a typical trust, confidence is reposed in one person who
is named a trustee for the benefit of another who is called the cestui que trust,
respecting property which is held by the trustee for the benefit of the cestui
que trust. A constructive trust, unlike an express trust, does not emanate from,
or generate a fiduciary relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a constructive trust,
there is neither a promise nor any fiduciary relation to speak of and the so-
called trustee neither accepts any trust nor intends holding the property for the
beneficiary. In the case at bar, Mata, in receiving the US$14,000 in its account
through IBAA, had no intent of holding the same for a supposed beneficiary
or cestui que trust, namely PNB. But under Article 1456, the law construes a
trust, namely a constructive trust, for the benefit of the person from whom the
property comes, in this case PNB, for reasons of justice and equity.
4. ID.; ID.; ID.; ID.; MISTAKE GIVING RISE TO CONSTRUCTIVE TRUST MAY BE
COMMITTED EITHER BY GRANTOR OR GRANTEE. We agree with petitioner's
stand that under Article 1456, the law does not make any distinction since
mutual mistake is a possibility on either side on the side of either the grantor
or the grantee. Thus, it was error to conclude that in a constructive trust, only
the person obtaining the property commits a mistake. This is because it is also
possible that a grantor, like PNB in the case at hand, may commit the mistake.
DECISION
ROMERO, J : p
Rarely is this Court confronted with a case calling for the delineation in broad
strokes of the distinctions between such closely allied concepts as the quasi-
contract called "solutio indebiti" under the venerable Spanish Civil Code and
the species of implied trust denominated "constructive trusts," commonly
regarded as of Anglo-American origin. Such a case is the one presented to us
now which has highlighted more of the affinity and less of the dissimilarity
between the two concepts as to lead the legal scholar into the error of
interchanging the two. Presented below are the factual circumstances that
brought into juxtaposition the twin institutions of the Civil Law quasi-contract
and the Anglo-American trust.
Against this background, on February 21, 1975, Security Pacific National Bank
(SEPAC) of Los Angeles which had an agency arrangement with Philippine
National Bank (PNB), transmitted a cable message to the International
Department of PNB to pay the amount of US$14,000 to Mata by crediting the
latter's account with the Insular Bank of Asia and America (IBAA), per order of
Star Kist. Upon receipt of this cabled message on February 24, 1975, PNB's
International Department noticed an error and sent a service message to SEPAC
Bank. The latter replied with instructions that the amount of US$14,000 should
only be for US$1,400. cdll
On the basis of the cable message dated February 24, 1975, Cashier's Check
No. 269522 in the amount of US$1,400 (P9,772.96) representing reimbursement
from Star Kist, was issued by the Star Kist for the account of Mata on February
25, 1975 through the Insular Bank of Asia and America (IBAA).
However, fourteen days after or on March 11, 1975, PNB effected another
payment through Cashier's Check No. 270271 in the amount of US$14,000
(P97,878.60) purporting to be another transmittal of reimbursement from Star
Kist, private respondent's foreign principal.
Six years later, or more specifically, on May 13, 1981, PNB requested Mata for
refund of US$14,000 (P97,878.60) after it discovered its error in effecting the
second payment. Cdpr
On February 4, 1982, PNB filed a civil case for collection and refund of
US$14,000 against Mata arguing that based on a constructive trust under Article
1456 of the Civil Code,it has a right to recover the said amount it erroneously
credited to respondent Mata. 1
After trial, the Regional Trial Court of Manila rendered judgment dismissing the
complaint ruling that the instant case falls squarely under Article 2154
on solutio indebiti and not under Article 1456 on constructive trust. The lower
court rules out constructive trust, applying strictly the technical definition of a
trust as "a right of property, real or personal, held by one party for the benefit
of another; that there is a fiduciary relation between a trustee and a cestui que
trust as regards certain property, real, personal, money or choses in action." 2
In affirming the lower court, the appellate court added in its opinion that under
Article 2154 on solutio indebiti, the person who makes the payment is the one
who commits the mistake vis-a-vis the recipient who is unaware of such a
mistake. 3 Consequently, recipient is duty bound to return the amount paid by
mistake. But the appellate court concluded that petitioner's demand for the
return of US$14,000 cannot prosper because its cause of action had already
prescribed under Article 1145, paragraph 2 of the Civil Code which states:
"The following actions must be commenced within six years:
Hence, the instant petition for certiorari proceeding seeking to annul the
decision of the appellate court on the basis that Mata's obligation to return
US$14,000 is governed, in the alternative, by either Article 1456 on constructive
trust or Article 2154 of the Civil Code on quasi-contract. 4
To recall, trusts are either express or implied. While express trusts are created
by the intention of the trustor or of the parties, implied trusts come into being
by operation of law. 6 Implied trusts are those which, without being expressed,
are deducible from the nature of the transaction as matters of the intent or
which are superinduced on the transaction by operation of law as matters of
equity, independently of the particular intention of the parties. 7
In turn, implied trusts are subdivided into resulting and constructive trusts. 8 A
resulting trust is a trust raised by implication of law and presumed always to
have been contemplated by the parties, the intention of which is found in the
nature of the transaction, but not expressed in the deed or instrument of
conveyance. 9 Examples of resulting trusts are found in Articles 1448 to 1455 of
the Civil Code.10 On the other hand, a constructive trust is one not created by
words either expressly or impliedly, but by construction of equity in order to
satisfy the demands of justice. An example of a constructive trust is Article 1456
quoted above. 11
A deeper analysis of Article 1456 reveals that it is not a trust in the technical
sense 12 for in a typical trust, confidence is reposed in one person who is named
a trustee for the benefit of another who is called the cestui que trust, respecting
property which is held by the trustee for the benefit of the cestui que trust. 13 A
constructive trust, unlike an express trust, does not emanate from, or generate
a fiduciary relation. While in an express trust, a beneficiary and a trustee are
linked by confidential or fiduciary relations, in a constructive trust, there is
neither a promise nor any fiduciary relation to speak of and the so-called trustee
neither accepts any trust nor intends holding the property for the beneficiary. 14
In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA,
had no intent of holding the same for a supposed beneficiary orcestui que trust,
namely PNB. But under Article 1456, the law construes a trust, namely a
constructive trust, for the benefit of the person from whom the property comes,
in this case PNB, for reasons of justice and equity.
At this juncture, a historical note on the codal provisions on trust and quasi-
contracts is in order.
Originally, under the Spanish Civil Code, there were only two kinds of quasi
contracts: negotiorum gestio and solutio indebiti. But the Code Commission,
mindful of the position of the eminent Spanish jurist, Manresa, that "the number
of quasi contracts may be indefinite," added Section 3 entitled "Other Quasi-
Contracts." 15
Moreover, even as Article 2142 of the Civil Code defines a quasi-contract, the
succeeding article provides that: "The provisions for quasi-contracts in this
Chapter do not exclude other quasi-contracts which may come within the
purview of the preceding article." 16
Indubitably, the Civil Code does not confine itself exclusively to the quasi-
contracts enumerated from Articles 2144 to 2175 but is open to the possibility
that, absent a pre-existing relationship, there being neither crime nor quasi-
delict, a quasi-contractual relation may be forced upon the parties to avoid a
case of unjust enrichment. 17 There being no express consent, in the sense of a
meeting of minds between the parties, there is no contract to speak of.
However, in view of the peculiar circumstances or factual environment, consent
is presume to the end that a recipient of benefits or favors resulting from lawful,
voluntary and unilateral acts of another may not be unjustly enriched at the
expense of another. LexLib
Undoubtedly, the instant case fulfills the indispensable requisites of solutio
indebiti as defined in Article 2154: that something (in this case money) has been
received when there was no right to demand it and (2) the same was unduly
delivered through mistake. There is a presumption that there was a mistake in
the payment "if something which had never been due or had already been
paid was delivered; but he from whom the return is claimed may prove that the
delivery was made out of liberality or for any other just cause." 18
While the principle of undue enrichment or solutio indebiti, is not new, having
been incorporated in the subject on quasi-contracts in Title XVI of Book IV of
the Spanish Civil Code entitled "Obligations incurred without contract," 19 the
chapter on Trusts is fairly recent, having been introduced by the Code
Commission in 1949. Although the concept of trusts is nowhere to be found in
the Spanish Civil Code, the framers of our present Civil Code incorporated
implied trusts, which includes constructive trusts, on top of quasi-contracts,
both of which embody the principle of equity above strict legalism. 20
Although we are not quite in accord with the opinion that "the trusts known to
American and English equity jurisprudence are derived from the fidei
commissa of the Roman Law," 24 it is safe to state that their roots are firmly
grounded on such Civil Law principles as expressed in the Latin maxim, "Nemo
cum alterius detrimento locupletari potest," 25 particularly the concept of
constructive trust.
Returning to the instant case, while petitioner may indeed opt to avail of an
action to enforce a constructive trust or the quasi-contract of solutio indebiti,
it has been deprived of a choice, for prescription has effectively blocked quasi-
contract as an alternative, leaving only constructive trust as the feasible option.
Petitioner argues that the lower and appellate courts cannot indulge in
semantics by holding that in Article 1456 the recipient commits the mistake
while in Article 2154, the recipient commits on mistake. 26 On the other hand,
private respondent, invoking the appellate court's reasoning, would impress
upon us that under Article 1456, there can be no mutual mistake. Consequently,
private respondent contends that the case at bar is one of solutio indebiti and
not a constructive trust. cdrep
We agree with petitioner's stand that under Article 1456, the law does not make
any distinction since mutual mistake is a possibility on either side on the
side of either the grantor or the grantee. 27 Thus, it was error to conclude that
in a constructive trust, only the person obtaining the property commits a
mistake. This is because it is also possible that a grantor, like PNB in the case
at hand, may commit the mistake.
Proceeding now to the issue of whether or not petitioner may still claim the
US$14,000 it erroneously paid private respondent under a constructive trust, we
rule in the negative. Although we are aware that only seven (7) years lapsed
after petitioner erroneously credited private respondent with the said amount
and that under Article 1144, petitioner is well within the prescriptive period for
the enforcement of a constructive or implied trust, we rule that petitioner's
claim cannot prosper since it is already barred by laches. It is a well-settled rule
now that an action to enforce an implied trust, whether resulting or constructive,
may be barred not only by prescription but also by laches. 28
While prescription is concerned with the fact of delay, laches deals with the
effect of unreasonable delay. 29 It is amazing that it took petitioner almost
seven years before it discovered that it had erroneously paid private
respondent. Petitioner would attribute its mistake to the heavy volume of
international transactions handled by the Cable and Remittance Division of the
International Department of PNB. Such specious reasoning is not persuasive. It
is unbelievable for a bank, and a government bank at that, which regularly
publishes its balanced financial statements annually or more frequently, by the
quarter, to notice its error only seven years later. As a universal bank with
worldwide operations, PNB cannot afford to commit such costly mistakes.
Moreover, as between parties where negligence is imputable to one and not to
the other, the former must perforce bear the consequences of its neglect.
Hence, petitioner should bear the cost of its own negligence.
SO ORDERED.
||| (Philippine National Bank v. Court of Appeals, G.R. No. 97995, [January 21,
1993], 291 PHIL 356-369)