IMPLIED TRUSTS (ART 1447-1457)

CUENCO vs. CUENCO

Civil Law; Contracts; Trust; Kinds; Trust relations between parties may either be express or implied; resulting or
constructive.—A trust is a legal relationship between one having an equitable ownership in a property and another having legal title to
it. Trust relations between parties may either be express or implied. Express trusts are created by the direct and positive acts of the
parties, indicated implied; resulting or constructive.—A trust is a legal relationship between one having an equitable ownership in a
property and another having legal title to it. Trust relations between parties may either be express or implied. Express trusts are created
by the direct and positive acts of the parties, indicated of equity in order to satisfy the demands of justice and prevent unjust enrichment.
They arise contrary to intention 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.”

Resulting trusts are presumed to have been contemplated by the parties and are based on the equitable doctrine that valuable
consideration, not legal title, determines the equitable title or interest. 19 These trusts arise from the nature of or the circumstances
involved in a transaction,20 whereby legal title becomes vested in one person, who is obligated in equity to hold that title for the benefit
of another.

Constructive trusts are "created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment.
They arise contrary to intention 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." 21

FACTS:

 Concepcion (respondent) filed the initiatory complaint herein for specific performance against her uncle Miguel Cuenco
(petitioner, later substituted by Cuyegkeng).

o Concepcion's father, the late Don Mariano Jesus Cuenco and Miguel Cuenco formed the ‘Cuenco and Cuenco Law
Offices’

o Cuenco and Cuenco Law Offices served as lawyers in two (2) cases entitled ‘Valeriano Solon versus Zoilo Solon’ and
‘Valeriano Solon versus Apolonia Solon” involving a dispute among relatives over ownership of lot 903 of the Banilad
Estate.

 Records of said cases indicate the name of the Miguel alone as counsel of record, but in truth and in fact, the real lawyer behind
the success of said cases was the influential Don Mariano Jesus Cuenco

 After winning the said cases:

o Lot 903-A: 5000 square meters (Don Mariano Jesus Cuenco’s attorney’s fees)

o Lot 903-B: 5000 square meters (Miguel Cuenco’s attorney’s fees)

o Lot 903-C: 54,000 square meters (Solon’s retention)

 Mariano Cuenco entrusted Lot 903 A to Miguel.

o Miguel was able to obtain in his own name a title for Lot 903-A

o Miguel was under the obligation to hold the title in trust for his brother Mariano’s children by first marriage

 Lot 903-A was partitioned into six (6) sub-lots (Lots 903-A-1 to 903-A-6) to correspond to the six (6) children of Mariano’s
first marriage (Teresita, Manuel, Lourdes, Carmen, Consuelo, and Concepcion)

 The case of Concepcion

o Five deeds of donation were executed in favour of five children. This left out Concepcion (who became respondent in
this case).

o Concepcion occupied Lot 903-A-6 and paid taxes for it.

o When Concepcion went to the Register of Deeds to register the Lot 903-A-6, there was an adverse claim by Miguel
saying that he was the absolute owner of said lot.
 IMPLIED TRUSTS (ART 1447-1457)
 Miguel’s allegations

o He executed five deeds of donation to five children of his brother because of the love, care and gratitude they exhibited
during his long sickness.

o Concepcion never visited him.

 Miguel was able to take the witness stand but he became sick and was not able to be present on cross-examination so his
testimony was stricken off the record.

 Marietta Cuyegkeng (her only daughter) substituted him in the case.

o She is the owner of the lot as he purchased it from his father.

o That she was aware of the case because her father used to commute to Cebu to attend hearings.

o That she constructed a house on the said lot.

 Lower court and appellate court:

o Concepcion has the legal right of ownership over lot 903-A-6.

o The CA ruled that the subject land "is part of the attorney’s fees of Don Mariano Cuenco, predecessor-in-interest of
Concepcion Cuenco vda. de Manguerra and Miguel merely holds such property in trust for her.

ISSUE: WHETHER there’s no constructive or implied trust exists between the parties.

HELD:

YEAH A review of the records shows that indeed there is an implied trust between the parties.

Although Lot 903-A was titled in Miguel’s name, the circumstances surrounding the acquisition and the subsequent partial dispositions
of this property eloquently speak of the intent that the equitable or beneficial ownership of the property should belong to Mariano and
his heirs.

 First, Lot 903-A was one half of the one-hectare portion of Lot 903 given as attorney’s fees by a client of the law firm of
Partners Miguel and Mariano Cuenco. It constituted the latter’s share in the attorney’s fees and thus equitably belonged to him,
as correctly found by the CA. That Lot 903-A had been titled in the name of Miguel gave rise to an implied trust between him
and Mariano, specifically, the former holds the property in trust for the latter.
 Second, from the time it was titled in his name in 1938, Lot 903-A remained undivided and untouched by Miguel. Only on
February 3, 1947, did Lourdes Cuenco, upon the instruction of Mariano, have it surveyed and subdivided into six almost equal
portions -- 903-A-1 to 903-A-6. Each portion was specifically allocated to each of the six children of Mariano with his first
wife.
 Third, Miguel readily surrendered his Certificate of Title and interposed no objection28 to the subdivision and the allocation of
the property to Mariano’s six children, including Concepcion.
 Fourth, Mariano’s children, including Concepcion, were the ones who shouldered the expenses incurred for the subdivision of
the property.
 Fifth, after the subdivision of the property, Mariano’s children -- including Concepcion30 -- took possession of their respective
portions thereof.
 Sixth, the legal titles to five portions of the property were transferred via a gratuitous deed of conveyance to Mariano’s five
children, following the allocations specified in the subdivision plan prepared for Lourdes Cuenco. 31

With respect to Lot 903-A-6 in particular, the existence of Concepcion’s equitable ownership thereof is bolstered, not
just by the above circumstances, but also by the fact that respondent fenced the portion allocated to her and planted trees
thereon. More significantly, she also paid real property taxes on Lot 903-A-6 yearly, from 1956 until 196933 -- the year when
she was dispossessed of the property.
 IMPLIED TRUSTS (ART 1447-1457)
Delfin vs. Billones

Civil Law; Trusts; Implied Trusts; Constructive Trusts; When one’s property is registered in another’s name without the former’s
consent, an implied trust is created by law in favor of the true owner.—When one’s property is registered in another’s name without the
former’s consent, an implied trust is created by law in favor of the true owner. Implied trusts are those which, without being expressed,
are deducible from the nature of the transaction by operation of law as matters of equity, independently of the particular intention of the
parties. Meanwhile, constructive trusts are created in order to satisfy the demands of justice and prevent unjust enrichment. They arise
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.

FACTS:

(Background- How they acquire the said lots.) Spouses Delfin’s acquisition of lot no. 213 and 3414

 On 29 July 1960, a Deed of Absolute Sale over Lot No. 213, covered by RO-5563 (14516) of the Cadastral Survey of Panitan,
Capiz, was executed by Teresa Daños, Esperanza Daradar, Estrella Daradar and Maria Daradar. The document, so it appears, bore
the signatures of Esperanza and Estrella, as well as the thumb marks of Teresa, Maria, and Cipriano, and was acknowledged before
a notary public. On 18 November 1980, the spouses Delfin registered the Deed of Absolute Sale with the Register of Deeds of the
Province of Capiz. Thereupon, a new title, Transfer Certificate of Title (TCT) No. T-17071, was issued in the name of the spouses
Delfin.
 Meanwhile, on 26 March 1965, an Extra-Judicial Partition and Absolute Deed of Sale involving Lot No. 3414 then covered by TCT
No. T-16804 was made between Teresa Daños, Trinidad Degala, Leopoldo Degala, Presentacion Degala, Rosario Degala and Pedro
Degala, on one part, and the spouses Delfin, on the other. The deed, bearing either the thumb marks or the signatures of the sellers,
was likewise notarized. Said document was registered by the spouses Delfin on 24 June 1980. Thus, TCT No. T-16804 covering Lot
No. 3414 was cancelled and a new one, TCT No. T-16805, was issued in the names of the spouses Delfin on 24 June 1980.

Respondent’s claims
 On 12 April 1994, herein respondents, claiming to be the heirs of the former owners of Lots No. 213 and No. 3414, filed an action
for annulment, reconveyance, recovery of ownership and possession and damages.
o As regards Lot No. 3414, respondents specifically alleged that the spouses Delfin "tricked the plaintiffs and their late mother
into signing a fictitious and simulated document," and that "TCT No. T-16805 was the product of a fictitious and simulated
transaction [that] was obtained through fraud, the same should be declared null and void". They claimed that the original
owners of Lot No. 3414 did not intend to execute a deed of extra-judicial partition and absolute sale but only a mortgage
instrument.
o As to Lot No. 213, respondents averred that the Deed of Sale covering the property was fictitious and the signatures and thumb
marks contained therein were all forged because three (3) of the signatories therein died before the alleged sale in 1960,
namely: Estrella Daradar, who died in 1934, and Esperanza Daradar and Cipriano Degala, who both died in 1946. As proof
thereof, respondents presented certifications on the deaths of Esperanza Daradar and Cipriano Degala by the Local Civil
Registrar of Panitan, Capiz.

Trial’s court decisions

 The trial court ruled that respondents’ claim of ownership over the subject properties was not established by a preponderance of
evidence.
 Moreover, the trial court held that the deeds of sale being duly executed notarial and public documents, they enjoy the presumption
of regularity which can only be contradicted by clear and convincing evidence. In addition, respondents’ claims based on fraud were
barred by prescription, having been filed more than four (4) years from the time the instruments were registered with the Register of
Deeds, and they are estopped from annulling the documents by reason of laches, the action having been filed 15 years after the
deeds were registered. The trial court also denied respondents’ claims for damages.

The Court of Appeals reversed the ruling of the trial court.

 the Court of Appeals ruled that while an action for reconveyance based on implied or constructive trust prescribes in ten (10) years
from the date of the issuance of the certificate of title over the property, such prescriptive period does not apply if the person
claiming to be the owner of the property is in possession thereof, such as respondents in this case.
o The appellate court annulled the Extra-Judicial Partition and Deed of Sale covering Lot No. 3414.
 IMPLIED TRUSTS (ART 1447-1457)
o As for Lot No. 213, the Court of Appeals held that the Deed of Absolute Sale could not have been executed on 9 July
1960. Relying on the certifications of death presented by respondents, the Court of Appeals ruled that the defense of due
execution cannot prevail over the fact that two (2) of the signatories therein have already died prior to said date

In essence, petitioners insist that respondents failed to prove that fraud attended the sale of Lots No. 213 and No. 3414.

ISSUE: WON implied or constructive trust was created between respondents and the spouses Delfins’ because of the existence of fraud
in the acquisition of Lot.

HELD: NO A duly executed contract carries with it the presumption of validity. Respondents have the burden to establish their case by
a preponderance of evidence, or evidence which is of greater weight or more convincing than that which is offered in opposition to it.
Hence, parties who have the burden of proof must produce such quantum of evidence, with plaintiffs having to rely on the strength of
their own evidence, not on the weakness of the defendant’s.

Respondents came out with were bare allegations that the said owners were either old and sickly or illiterate; that the
purported selling price of P300.00 was unconscionable; and that petitioners failed to eject respondents from the subject land, as
respondents were unable to present any evidence to substantiate their claims, much less the charge of fraud.

Respondents did not present any witness to testify on the execution of the deed, nor on the condition of the signatories
thereto.

Respondents have not established possession of the subject properties. Save for the lone testimony of Orlando Buday, a
neighbor, that Rosario Degala Daradar was the only one still residing in the properties in dispute, no other evidence was presented to
show that respondents are in actual occupation and possession thereof. Not even Rosario herself testified. Doubts also arise as to the
veracity of respondents’ claim of possession since respondents themselves averred in their complaint that the spouses Delfin had
immediately taken possession of the subject properties in the same year that the sale was made, and appropriated the produce found in
the subject lots from then on.

Respondents indeed failed to prove that fraud attended the execution of the Extra-Judicial Partition and Deed of Absolute Sale. Their
bare and unsupported allegations are not enough to overthrow the presumption of the validity of said agreement or to raise the
presumption of fraud.

Considering that respondents failed to establish the existence of fraud in the spouses Delfin’s acquisition of Lot No. 3414, it

Fraud may be, and often is, proved by or inferred from circumstances, and the circumstances proved may in some cases raise a
presumption of its existence. However, while fraud may be proved by circumstances or presumed from them, it cannot be
demonstrated by mere construction, but must be proven in all cases.

cannot be said that implied or constructive trust was created between respondents and the spouses Delfin.
 IMPLIED TRUSTS (ART 1447-1457)

CABACUNGAN V. LAIGO

Trusts; A trust is the legal relationship between one person having an equitable ownership of property and another person owning
the legal title to such property.—A trust is the legal relationship between one person having an equitable ownership of property and
another person owning the legal title to such property, the equitable ownership of the former entitling him to the performance of
certain duties and the exercise of certain powers by the latter. Trusts are either express or implied.

Express or direct trusts are created by the direct and positive acts of the parties, by some writing or deed, or will, or by oral
declaration in words evincing an intention to create a trust.— Express or direct trusts are created by the direct and positive acts of
the parties, by some writing or deed, or will, or by oral declaration in words evincing an intention to create a trust.

Implied trusts arise by legal implication based on the presumed intention of the parties or on equitable principles independent of the
particular intention of the parties.—Implied trusts—also called “trusts by operation of law,” “indirect trusts” and “involuntary
trusts”—arise by legal implication based on the presumed intention of the parties or on equitable principles independent of the
particular intention of theparties. They are those which, without being expressed, are deducible from the nature of the transaction
as matters of intent or, independently of the particular intention of the parties, as being inferred from the transaction by operation
of law basically by reason of equity.

Constructive trusts come about in the main by operation of law and not by agreement or intention.—Implied trusts are further
classified into constructive trusts and resulting trusts. Constructive trusts, on the one hand, come about in the main by operation of
law and not by agreement or intention. They arise not by any word or phrase, either expressly or impliedly, evincing a direct
intention to create a trust, but one which arises in order to satisfy the demands of justice.

A trust will follow the property throughall changes in its state and form as long as such property, its products or its proceeds, are
capable of identification, even into the hands of a transferee other than a bona fide purchaser for value.—A trust will follow the
property—through all changes in its state and form as long as such property, its products or its proceeds, are capable of
identification, even into the hands of a transferee other than a bona fide purchaser for value, or restitution will be enforced at the
election of the beneficiary through recourse against the trustee or the transferee personally. This is grounded on the principle in
property law that ownership continues and can be asserted by the true owner against any withholding of the object to which the
ownership pertains, whether such object of the ownership is found in the hands of an original owner or a transferee, or in a
different form, as long as it can be identified.

An action form reconveyance based on a constructive implied trust prescribes in 10 years in accordance with Article
1144 of the Civil Code.—It is settled that an action for reconveyance based on a constructive implied trust prescribes in 10 years
likewise in accordance with Article 1144 of the Civil Code. Yet not like in the case of a resulting implied trust and an express trust,
prescription supervenes in a constructive implied trust even if the trustee does not repudiate the relationship. In other words,
repudiation of said trust is not a condition precedent to the running of the prescriptive period.

An action for reconveyance under a constructive implied trust does not prescribe unless and until the land is registered or the
instrument affecting the same is inscribed in accordance with law.—An action for reconveyance under a constructive implied trust
in accordance with Article 1456 does not prescribe unless and until the land is registered or the instrument affecting the same is
inscribed in accordance with law, inasmuch as it is what binds the land and operates constructive notice to the world.

FACTS:

 Margarita Cabacungan (Margarita) owned three parcels of unregistered land. The properties were individually covered by tax
declaration all in her name.
 Sometime in 1968, Margaritas son, Roberto Laigo, Jr. (Roberto), applied for a non-immigrant visa to the United States, and to
support his application, he allegedly asked Margarita to transfer the tax declarations of the properties in his name.
 Unknown to the other children of Margarita, the mother transferred the tax declarations of her three (3) lands to her son, Roberto, to
support his application for travel to the US.
 IMPLIED TRUSTS (ART 1447-1457)
 Upon returning, Roberto married Estella and adopted her two children, Pedro and Marilou. Sometime later, Roberto sold one of the
lands to the spouses Campos, and separately sold the two remaining lands to his two adopted children
 Margarita came to know of the sale during the wake of Roberto. Hence, Roberto’s siblings filed a complaint for annulment of the
said sales and for the recovery of ownership and possession of the land.
 The trial court ruled that the 1968 Affidavit of Transfer operated as a simple transfer of the subject properties from Margarita to
Roberto. It found no express trust created between Roberto and Margarita by virtue merely of the said document as there was no
evidence of another document showing Robertos undertaking to return the subject properties. Interestingly, it concluded that,
instead, an implied or constructive trust was created between the parties, as if affirming that there was indeed an agreement albeit
unwritten to have the properties returned to Margarita in due time.
TRIAL COURT
 Moreover, the trial court surmised how Margarita could have failed to recover the subject properties from Roberto at any time
between 1968, following the execution of the Affidavit of Transfer, and Robertos return from the United States shortly thereafter.
Finding Margarita guilty of laches by such inaction, the trial court barred recovery from respondents who were found to have
acquired the properties supposedly in good faith and for value. [It also pointed out that recovery could no longer be pursued in this
case because Margarita had likewise exhausted the ten-year prescriptive period for reconveyance based on an implied trust which
had commenced to run in 1968 upon the execution of the Affidavit of Transfer.
CA AFFIRMED THE TRIAL COURTS DECISION
 Petitioner appealed to the Court of Appeals which, on October 13, 2006, affirmed the trial courts disposition. The appellate court
dismissed petitioners claim that Roberto was merely a trustee of the subject properties as there was no evidence on record
supportive of the allegation that Roberto merely borrowed the properties from Margarita upon his promise to return the same on his
arrival from the United States.

ISSUES:

Whether or not an action for reconveyance under a constructive implied trust in accordance with Article 1456 does not prescribe.

HELD:
NO The Court disagree with the Court of Appeals’ finding that there was no evidence on record showing that an implied trust
relation arose between Margarita and Roberto. It finds that petitioner had offered evidence to prove the intention of Margarita to transfer
to Roberto only the legal title to the properties in question, with expectation that Roberto would return the same to her on
accomplishment of that specific purpose for which the transaction was entered into.

It explained that trust is the legal relationship between one person having an equitable ownership of property and another person owning
the legal title to such property, the equitable ownership of the former entitling him to the performance of certain duties and the exercise
of certain powers by the latter. Express or direct trusts are created by the direct and positive acts of the parties, by some writing or deed,
or will, or by oral declaration in words evincing an intention to create a trust. Implied trusts arise by legal implication based on the
presumed intention of the parties or on equitable principles independent of the particular intention of the parties.

Constructive trusts, on the one hand, come about in the main by operation of law and not by agreement or intention. They arise not by
any word or phrase, either expressly or impliedly, evincing a direct intention to create a trust, but one which arises in order to satisfy the
demands of justice. Constructive trusts are illustrated in Articles 1450, 1454, 1455 and 1456

Roberto is merely a depositary of legal title having no duties as to the management, control or disposition of the property except to make
a conveyance when called upon by the cestui que trust. Hence, the sales he entered into with respondents are a wrongful conversion of
the trust property and a breach of the trust.

The Court finds that an action for reconveyance under a constructive implied trust in accordance with Article 1456 does not
prescribe unless and until the land is registered or the instrument affecting the same is inscribed in accordance with law,
inasmuch as it is what binds the land and operates constructive notice to the world.

In the present case, however, the lands involved are unregistered lands. There is no way by which Margarita, during her lifetime, could
be notified of the furtive and fraudulent sales made in 1992 by Roberto in favor of respondents, except by actual notice from Pedro
himself in August 1995. Hence, it is from that date that prescription began to toll. The filing of the complaint in February 1996 is well
within the prescriptive period. Finally, such delay of only six (6) months in instituting the present action hardly be sufficient to justify a
finding of inexcusable delay or to create an inference that Margarita has allowed her claim to stale by laches.

The Court granted the petition, affirming the judgment of the Regional Trial Court and reversed the decision of the Court of Appeals. It
also directed the cancellation of the tax declarations covering the subject properties in the name of Roberto D. Laigo and his transferees,
 IMPLIED TRUSTS (ART 1447-1457)
nullified the deeds of sale executed by Roberto D. Laigo in favor of respondents Pedro Roy Laigo and Marilou Laigo and directed said
respondents to execute reconveyance in favor of petitioner.

GUY VS. CA
Trust, in its technical sense, is a right of property, real or personal, held by one party for the benefit of another
—it is a fiduciary relationship with respect to property, subjecting the person holding the same to the obligation of dealing with the
property for the benefit of another person.—Article 1440 of the Civil Code provides that: ART. 1440. A person who establishes a
trust is called the trustor; one in whom confidence is reposed as regards property for the benefit of another person is known as the
trustee; and the person for whose benefit the trust has been created is referred to as the beneficiary. In the early case of Gayondato v.
Treasurer of the Philippine Islands, 49 Phil. 244 (1926), this Court defines trust, in its technical sense, as “a right of property, real
or personal, held by one party for the benefit of another.” Differently stated, a trust is “a fiduciary relationship with respect to
property, subjecting the person holding the same to the obligation of dealing with the property for the benefit of another person.”

FACTS:

 Gilbert, petitioner, is the son of Francisco and Simny Guy. Respondents, Geraldine, Gladys and Grace are his sisters. The family feud
involves the ownership and control of 20,160 shares of stock of Northern Islands Co., Inc. (Northern Islands).
 Northern Islands is a family-owned corporation. In November 1986, they incorporated Lincoln Continental as a holding company of the
50% shares of stock of Northern Islands in trust for their daughters, respondents. In December 1986, upon instruction of spouses Guy,
Atty. Andres Gatmaitan, president of Lincoln Continental, indorsed in blank Stock Certificate No. 132 (covering 8,400 shares) and
Stock Certificate No. 133 (covering 11,760 shares) and delivered them to Simny.
 In 1984, spouses Guy found that their son Gilbert has been disposing of the assets of their corporations without authority. In order to
protect the assets of Northern Islands, the 20,160 shares covered by the two Stock Certificates were then registered in the names of
respondent sisters, thus enabling them to assume an active role in the management of Northern Islands.
 Thereafter, Simny was elected President; Grace as Vice-President for Finance; Geraldine as Corporate Treasurer; and Gladys as
Corporate Secretary. Gilbert retained his position as Executive Vice President. This development started the warfare between Gilbert
and his sisters.
 Lincoln Continental filed a Complaint for Annulment of the Transfer of Shares of Stock against respondents. The complaint basically
alleges that Lincoln Continental owns 20,160 shares of stock of Northern Islands; and that respondents, in order to oust Gilbert from the
management of Northern Islands, falsely transferred the said shares of stock in respondent sisters’ names.
TRIAL COURT
 The trial court held that the complaint was baseless and an unwarranted suit among family members. That based on the evidence, Gilbert
was only entrusted to hold the disputed shares of stock in his name for the benefit of the other family members; and that it was only
when Gilbert started to dispose of the assets of the family’s corporations without their knowledge that respondent sisters caused the
registration of the shares in their respective names.
CA
 On appeal, the Court of Appeals affirmed the Trial Court. Hence this petition.

ISSUES:

Whether or not Gilbert was merely trust for the Guy sisters.

HELD:
YES. There was no doubt that Lincoln Continental held the disputed shares of stock of Northern Islands merely in trust for the
Guy sisters as found by the trial court and affirmed by the CA. In fact, the evidence proffered by Lincoln Continental itself supports this
conclusion.

Article 1440 of the Civil Code provides that:

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.
 IMPLIED TRUSTS (ART 1447-1457)
In the early case of Gayondato v. Treasurer of the Philippine Island, this Court defines trust, in its technical sense, as “a right of
property, real or personal, held by one party for the benefit of another.” Differently stated, a trust is “a fiduciary relationship with respect
to property, subjecting the person holding the same to the obligation of dealing with the property for the benefit of another person.”

Both Lincoln Continental and Gilbert claim that the latter holds legal title to the shares in question. However, there was no evidence to
support their claim. Rather, the evidence on record clearly indicates that the stock certificates representing the contested shares are in
respondents’ possession. Significantly, there is no proof to support his allegation that the transfer of the shares of stock to respondent
sisters is fraudulent. As aptly held by the Court of Appeals, fraud is never presumed but must be established by clear and convincing
evidence. Gilbert failed to discharge this burden. We, agree with the Court of Appeals that respondent sisters own the shares of stocks,
Gilbert being their mere trustee.
 IMPLIED TRUSTS (ART 1447-1457)

MAXIMO HEIRS LABANON V. CONSTANCIO HEIRS LABANON

Trusts; Nature and Import of a Trust Explained; Trust can be distinguished from other relationships of a fiduciary character
such as deposit, guardianship and agency in that the trustee has legal title to the property.—Former Vice-Presidentand Senator
Arturo Tolentino, a noted civilist, explained the nature and import of a trust: Trust is the legal relationship between one person
having an equitable ownership in property and another person owning the legal title to such property, the equitable ownership
of the former entitling him to the performance of certain duties and the exercise of certain powers by the latter. This legal
relationship can be distinguished from other relationships of a fiduciary character, such as deposit, guardianship, and agency, in
that the trustee has legal title to the property. In the case at bench, this is exactly the relationship established between the
parties.

Trust classified as either express or implied.—Trusts are classified under the Civil Code as either express or implied. Such
classification determines the prescriptive period for enforcing such trust. Article 1444 of the New Civil Code on express trust
provides that “[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly
intended.”

An express trust is created by the direct and positive acts of the parties, by some writing or deed or by words evidencing an
intention to create a trust.—We ruled in Estate of Edward Miller Grimm v. Estate of Charles Parsons and
Patrick C. Parsons, 504 SCRA 67 (2006) that: An express trust is created by the direct and positive acts of the parties, by some
writing or deed or by words evidencing an intention to create a trust; the use of the word trust is not required or essential to its
constitution, it being sufficient that a trust is clearly intended.

Unrepudiated written express trusts are imprescriptible; The prescriptive period for the enforcement of an express trust of ten
(10) years starts upon the repudiation of the trust by the trustee.—On the issue of prescription, we had the opportunity to rule
in Bueno v. Reyes, 27 SCRA 1179 (1969), that unrepudiated written express trusts are imprescriptible. This principle was
amplified in Escay v. Court of Appeals, 61 SCRA 369 (1974) this way: “Express trusts prescribe 10 years from the repudiation
of the trust (Manuel Diaz, et al. vs. Carmen Gorricho, et al., 54 O.G. p. 8429, Sec. 40, Code of Civil Procedure).” In the more
recent case of Secuya v. De Selma, 326 SCRA 244 (2000), we again ruled that the prescriptive period for the enforcement of an
express trust of ten (10) years starts upon the repudiation of the trust by the trustee.

FATCS:

 During the lifetime of Constancio Labanon, prior to the outbreak of WWII, he settled upon a piece of alienable and disposable
public agricultural land situated at Brgy. Lanao, Kidapawan, Cotabato.
 Constancio cultivated the said lot and introduced permanent improvements that still exist up to the present. Being of very limited
educational attainment, he found it difficult to file his public land application over said lot. Constancio then asked his brother,
Maximo Labanon who was better educated to file the corresponding public land application under the express agreement that they
will divide the said lot as soon as it would be feasible for them to do so. The offer was accepted by Maximo.
 During the time of the application it was Constancio who continued to cultivate the said lot in order to comply with the cultivation
requirement set forth under Commonwealth Act 141, as amended, on Homestead applications.
 After which, on June 6, 1941, Homestead Application No. 244742 (E-128802) of his brother Maximo was approved with
Homestead Patent No. 67512. Eventually, Original Certificate of Title No. P-14320 was issued by the Register of Deeds of Cotabato
over said lot in favor of Maximo Labanon.
 Maximo Labanon executed a document denominated as assignment of Rights and Ownership' to safeguard the ownership and
interest of his brother Constancio Labanon.
 Later on, Maximo executed a sworn statement reiterating his desire that his elder brother Constancio, his heirs and assigns shall
own the eastern portion of the Lot.
 IMPLIED TRUSTS (ART 1447-1457)
 After the death of Constancio Labanon, his heirs executed an extra-judicial settlement of estate with simultaneous sale over the
aforesaid eastern portion of the lot in favor of Alberto Makilang, the husband of Visitacion Labanon, one of the children of
Constancio. Subsequently, the parcel of land was declared for taxation purposes in the name of Alberto.
 On the other hand, Maximo Labanon heirs were taking steps to deprive the heirs of Constancio Labanon of their ownership over the
eastern portion of said lot. They refused and still continue to refuse to honor the trust agreement entered into by the deceased
brothers.

ISSUE:
WON the trust agreement alleged made by Constancio Labanon and Maximo Labanon prescribed.

HELD:

NO.
In the more recent case of Secuya v. De Selma, we again ruled that the prescriptive period for the enforcement of an express
trust of ten (10) years starts upon the repudiation of the trust by the trustee.

In the case at bar, Maximo Labanon never repudiated the express trust instituted between him and Constancio Labanon. And after
Maximo Labanons death, the trust could no longer be renounced; thus, respondents right to enforce the trust agreement can no longer be
restricted nor prejudiced by prescription.

It must be noted that the Assignment of Rights and Ownership and Maximo Labanons Sworn Statement were executed after the
Homestead Patent was applied for and eventually granted with the issuance of Homestead Patent No. 67512 on June 6, 1942. Evidently,
it was the intent of Maximo Labanon to hold the title over the land in his name while recognizing Constancio Labanons equitable
ownership and actual possession of the eastern portion of the land covered by OCT No. P-14320.

In addition, petitioners can no longer question the validity of the positive declaration of Maximo Labanon in the Assignment of Rights
and Ownership in favor of the late Constancio Labanon, as the agreement was not impugned during the formers lifetime and the
recognition of his brothers rights over the eastern portion of the lot was further affirmed and confirmed in the subsequent April 25, 1962
Sworn Statement.