SALAO VS.

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

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

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

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

repaid the amount loaned to RISCO. Unfortunately, the
right to seek repayment or reimbursement of their
IMPLIED TRUST – CONCEPT case falls squarely under Article 2154 on solutio
indebiti and not under Article 1456 on constructive trust.
PNB VS CA The lower court ruled out constructive trust, applying
FACTS: Private Respondent B.P. Mata & Co. Inc. strictly the technical definition of a trust as "a right of
(Mata), is a private corporation engaged in providing property, real or personal, held by one party for the benefit
goods and services to shipping companies. Since 1966, it of another; that there is a fiduciary relation between a
has acted as a manning or crewing agent for several trustee and a cestui que trust as regards certain property,
foreign firms, one of which is Star Kist Foods, Inc., USA real, personal, money or choses in action."2
(Star Kist). As part of their agreement, Mata makes
In affirming the lower court, the appellate court added in
advances for the crew's medical expenses, National
its opinion that under Article 2154 on solutio indebiti, the
Seaman's Board fees, Seaman's Welfare fund, and
person who makes the payment is the one who commits
standby fees and for the crew's basic personal needs.
the mistake vis-a-vis the recipient who is unaware of such
Subsequently, Mata sends monthly billings to its foreign
a mistake.3 Consequently, recipient is duty bound to
principal Star Kist, which in turn reimburses Mata by
return the amount paid by mistake. But the appellate court
sending a telegraphic transfer through banks for credit to
concluded that petitioner's demand for the return of
the latter's account.
US$14,000 cannot prosper because its cause of action had
Against this background, on February 21, 1975, Security already prescribed; action was filed 7 years after
Pacific National Bank (SEPAC) of Los Angeles which petitioner mistakenly made payment to private
had an agency arrangement with Philippine National respondent. It should only be 6 years.
Bank (PNB), transmitted a cable message to the
Petitioner naturally opts for an interpretation under
International Department of PNB to pay the amount of
constructive trust as its action filed on February 4, 1982
US$14,000 to Mata by crediting the latter's account with
can still prosper, as it is well within the prescriptive period
the Insular Bank of Asia and America (IBAA), per order
of ten (10) years as provided by Article 1144, paragraph
of Star Kist. Upon receipt of this cabled message on
2 of the Civil Code.5
February 24, 1975, PNB's International Department
noticed an error and sent a service message to SEPAC If it is to be construed as a case of payment by mistake
Bank. The latter replied with instructions that the amount or solutio indebiti, then the prescriptive period for quasi-
of US$14,000 should only be for US$1,400. contracts of six years applies, as provided by Article 1145.
As pointed out by the appellate court, petitioner's cause of
On the basis of the cable message dated February 24, 1975
action thereunder shall have prescribed, having been
Cashier's Check No. 269522 in the amount of US$1,400
brought almost seven years after the cause of action
(P9,772.95) representing reimbursement from Star Kist,
accrued.
was issued by the Star Kist for the account of Mata on
February 25, 1975 through the IBAA ISSUE: WON petitioner may still claim the US$14,000 it
erroneously paid private resp under a constructive trust.
However, fourteen days after or on March 11, 1975, PNB
effected another payment through Cashier's Check No. RULING: No. Although the Court is aware that only
270271 in the amount of US$14,000 (P97,878.60) seven (7) years lapsed after petitioner erroneously
purporting to be another transmittal of reimbursement credited private respondent with the said amount and that
from Star Kist, private respondent's foreign principal. under Article 1144, petitioner is well within the
prescriptive period for the enforcement of a constructive
Six years later, or more specifically, on May 13, 1981,
or implied trust, the Court rule that petitioner's claim
PNB requested Mata for refund of US$14,000
cannot prosper since it is already barred by laches. It is a
(P97,878.60) after it discovered its error in effecting the
well-settled rule now that an action to enforce an implied
second payment.
trust, whether resulting or constructive, may be barred not
On February 4, 1982, PNB filed a civil case for collection only by prescription but also by laches.
and refund of US$14,000 against Mata arguing that based
While prescription is concerned with the fact of delay,
on a constructive trust under Article 1456 of the Civil
laches deals with the effect of unreasonable delay. It is
Code, it has a right to recover the said amount it
amazing that it took petitioner almost seven years before
erroneously credited to respondent Mata.1
it discovered that it had erroneously paid private
After trial, the Regional Trial Court of Manila rendered respondent.
judgment dismissing the complaint ruling that the instant
SPECIAL SERVICES CORP VS CENTRO LA PAZ 1. February 15, 1963
FACTS 2. November 29, 1963 and
Trustor: Centro La Paz 3. August 8, 1966
Trustee: Alejandro Estudillo, et. al* July 21, 1973, CENTRO submitted a third party claim to
the Sheriff of Manila likewise averring exclusive
The Union Espiritista Cristiana de Filipinas, Inc., is a
ownership of the properties in question.
semi-religious and charitable organization.
ISSUE
October 10, 1972, judgment was rendered in favor of
petitioner Special Services Corporation by the CFI, I. WON Estudillo is merely the trustee of Centro La
Branch IV, Manila, against one Alejandro Estudillo in the Paz?
amount of P94,727.52, more or less, in an action for
II. WON the “Acknowledgements” of registered
Replevin with Sum of Money. A writ of execution was
owners not being annotated on TCT No. 51837 is
thereafter issued but which has remained unsatisfied.
conclusive of all matters, valid and binding?
December 15, 1972, the Sheriff of Manila caused the
III. Whether or not Centro La Paz which is merely a
annotation of a notice of levy on TCT No. 51837, in
Chapter of Union Espiritista de Filipinas, Inc. has
respect of the rights, interest and participation of
a juridical personality of its own in accordance
Alejandro Estudillo, one of the registered owners
with the provisions of our laws;
indicated in said title.
Title covers 2 parcels of land situated in Sampaloc, RULING
Manila, consisting 348 square meters and registered in the I.
names of:*
1. CENTRO reiterated ownership of the properties
1. Alejandro Estudillo, married to Primitiva in question and emphasized that the registered
Victoria; owners thereof had publicly acknowledged their
possession of said properties in the concept of
2. Joaquina de la Rosa, widow;
trustees.
3. Pedro Paguio, married to Amor Jose and
2. Preponderance of evidence CENTRO had
4. Maximo Victoria, married to Juliana Roberto, all established that it was "really and true and lawful
Chapter members. owner of the property in dispute, and that the
persons registered therein as its owners are
July 23, 1973: schedule of the public auction sale of
merely trustees of the plaintiff, the series of
Estudillo's rights and interests in said properties
documents executed even as early as 1957, long
June 27, 1973, Alejandro Estudillo filed a "Motion to before the issue of whether Alejandro Estudillo
Dissolve and/or Cancel the Notice of Levy" alleging that really has an interest and/or participation in the
he and the other registered owners indicated on the title property in dispute, attest to plaintiff's ownership
merely held in trust the properties and improvements of the property in question.
thereon in favor of Centro La Paz (Samahang Espiritista
 The Deed of Donation dated March 13, 1957
Sa Lunduyang La Paz) a Chapter of Union Espiritista
Cristiana de Filipinas, Inc. as evidenced by  Deed of Absolute Sale executed by Joaquina dela
"Acknowledgments" executed by them on October 20, Rosa in favor of Alejandro Estudillo, Pedro
1961 and October 2, 1971. Paguio and Maximo Victoria of the same
property covered by the Deed of Donation;
Estudillo further alleged that CENTRO's ownership was
also evidenced by letters sent to the City Assessor by him  Deed of Sale of two parcels in dispute described
and Crispulo Romero, President of CENTRO, long before under T.C.T. No. 51837 executed by Sta. Mesa
the filing of the replevin case on December 28, 1971 Realty, Inc. in favor of Alejandro Estudillo,
praying for the revocation of tax assessments on said Joaquina dela Rosa, Pedro Q. Paguio and
properties as the same, were used for religious purposes. Maximo Victoria
Date of letters are as follows
  Deed of Acknowledgment dated October 30, said sale since it had knowledge of CENTRO's claim,
1961 also executed by Estudillo de la Rosa and particularly when the latter had filed a third-party-claim
Victoria acknowledging that the property with the Sheriff of Manila before the scheduled auction
described under the aforementioned T.C.T. No. sale, which knowledge was equivalent to registration of
51837, together with the improvements thereon the several "Acknowledgments" in the Registry of Deeds.
are being possessed by them only as trustees;
III. Evident from the record that although it was
 Deed of Acknowledgment executed on October CENTRO that was actively prosecuting the case,
22, 1971, jointly by Amor Jose, widow of Paguio in substance, it was representing the mother
and the latter's daughters, Sumilang Paguio and organization, the Union Espiritista Cristiana de
Filipina Paguio (co-registered owner of Filipinas, Inc., which is the real party in interest
Estudillo) likewise declaring that their possession and is itself named in the Complaint. It is an
of the said property is merely that of trustees and organization that is duly registered with the
not as owners; Securities and Exchange Commission, and thus
possessed of a juridical personality to sue and be
 Petitions for revocation of tax assessments Nos.
sued.
3187 and 3188
 Petition to exempt said parcels from taxation,
being owned by a religious organization and;
 Follow-up letters addressed to the City Assessor
of Manila, dated February 15, 1963; December
29,1963 and May 29, 1962 respectively
 Deed of Sale executed by Estudillo, heirs of dela
Rosa and Paguio of the two parcels in favor of
Centro La Paz, indubitably point to one and
inescapable conclusion that the plaintiff is really
the true and lawful owner of the property in
dispute and that persons registered therein as its
owners, are merely trustees of the plaintiff.
II. As found by both the Trial Court and Appellate
Court, the evidence sufficiently establishes that
the registered owners of the parcels of land
covered by TCT 51837, all of whom are members
of CENTRO, hold the properties in trust for
CENTRO by virtue of the indubitable documents
executed even before the institution of suit. In the
same manner that the real property, registered
solely in the name of a husband, can be proven to
be conjugal property with his wife, the fact of
registration in the name of Alejandro Estudillo
and others does not bar evidence to show that the
registered owners hold the properties in trust for
CENTRO.
Admittedly, the trust was not registered in accordance
with section 65 of Act 496 (the former Land Registration
Law). The absence of said registration, however, cannot
be taken against CENTRO inasmuch as, if the public
auction sale had actually been held, with Special Service
Corp. (SSC) as the successful buyer, SSC could not have
been considered a purchaser for value and in good faith at
B. SALE/PURCHASE OF PROPERTY June 11, 1946, Gregorio Villarta caused this portion to be
declared in his name under Tax Declaration. Meanwhile,
VILLARTA V. CUYNO or on April 18, 1945, he had purchased from Clemente
FACTS: Olaybar the aforementioned small portion, of about
0.3100 hectares, which the latter had acquired from
Plaintiffs Gregorio, Glicerio and Marina Villarta seek to Isidoro Cuyno before May 29, 1924
establish their title to a parcel of land, of about 15
hectares, located in the barrio of Tipolo, Municipality of Gregorio Villarta commenced the present action alleging
Ubay, Province of Bohol, and to recover the possession that defendants herein forcibly deprived them of the
thereof. possession of the land in question. The evidence for the
plaintiffs tend to establish that, despite the payments to
Defendants denied plaintiffs' alleged ownership and the municipal treasurer of Ubay, Gregorio Villarta had
asserted title in themselves, in addition to pleading been unable to take possession of said land, except a small
prescription of action. part thereof, because the other parts of the land,
CFI: declared plaintiff Gregorio Villarta owner of the constituting the bulk thereof, had been allegedly sold
Northwestern portion of the land. conditionally by Isidoro Cuyno to several parties, from
whom Gregorio Villarta claims to have redeemed said
The Court refrains from deciding the case regarding the parts in three (3) separate transactions from March 3,
rest of the disputed land for the reason that most of the co- 1942 to April 18, 1945; that on January 28, 1948,
owners are not included as parties to this case. defendants herein filed Civil Case against Gregorio
Villarta to recover the land in question from Gregorio
The Court orders the dismissal of this case with respect to
Villarta, upon the ground that the same represents their
the remaining part of the land in question on the ground
share in the estate of Isidoro Cuyno, as heirs of his now
that it belong to the heirs of the late Isidoro Cuyno, most
deceased son Marciano Cuyno; and that sometime in
of which are not made parties to this case.
1953, during the pendency of said case No. 292,
The present judgment is rendered without special defendants herein illegally deprived Gregorio Villarta of
pronouncement as to costs, and without prejudice to the the possession of said land.
right of plaintiff Gregorio Villarta to recover from all the
ISSUE:
co-owners of the disputed property the amounts of taxes
he had paid to the municipal treasurer of Ubay, Bohol. RULING:
Hence, this appeal by the plaintiffs. At the outset, it should be noted that plaintiffs' action is
based primarily upon the payment made by Gregorio
Plaintiff Gregorio Villarta is the father of his co-plaintiffs
Villarta to the municipal treasurer of Ubay of the overdue
Glicerio and Marina Villarta. The disputed land belonged
real estate tax on the portion of the land in question
originally to Isidoro Cuyno, who, prior to May 29, 1924,
covered by Tax Declarations, which had been forfeited to
had assigned a small portion thereof to one Clemente
the Government for delinquency in the payment of said
Olaybar, who declared it, for real estate tax purposes, in
tax. Plaintiffs contend that Gregorio Villarta had thereby
his name. The remaining portion of said land was declared
acquired the rights of the deceased Isidoro Cuyno in and
in the name of Isidoro Cuyno, which was superseded in
to said property. However, the delinquent taxpayer was
1925 in the same name. Isidoro Cuyno died sometime
the estate of Isidoro Cuyno, not Gregorio Villarta, so that
before 1936.
payment by the latter merely subrogated him into the
For failure of his heirs to pay the real estate taxes due, said rights of the Government as creditor for said delinquent
portion, of about 14.8400 hectares, was forfeited to the taxes.
Government in 1936. To avoid its eventual sale at public
As a matter of fact, the municipal treasurer of Ubay
auction, one of the children of Isidoro Cuyno, namely,
did not, by accepting said payment by Gregorio Villarta,
Marciano Cuyno, asked plaintiff Gregorio Villarta, whose
sell the property to him. Indeed, said officer did not
wife (Guardicisima Cuyno) is a granddaughter of said
execute any deed of conveyance in favor of Gregorio
deceased, to pay the amount of said taxes. Accordingly,
Villarta. What is more, the receipts given to the latter by
from August 29, 1936 to September 2, 1937, Gregorio
said officer were issued, not in his (Gregorio Villarta's)
Villarta paid the municipal treasurer of Ubay several sums
name, but in that of Isidoro Cuyno.
of money aggregating P114.52, representing the overdue
real estate tax on said portion of 14.8400 hectares. On
The fact that Gregorio Villarta accepted said receipts, It cannot be denied, however, that, prima facie, as
issued in the name of Isidoro Cuyno, indicates that the children of Guardicisima Cuyno, one of the daughters of
former, also, understood that he was not thereby Isidoro Cuyno, plaintiffs Glicerio and Marina Villarta are
purchasing the property, but, had made the payment for entitled to share in the property in question. This
the account or benefit of Isidoro Cuyno. notwithstanding, the lower court refrained from
determining the extent of their rights, if any, thereon,
In fact, the letter of the municipal treasurer of Ubay to
because most of the surviving descendants of Isidoro
Gregorio Villarta refers to said payments of Gregorio
Cuyno had not been made parties in this case.
Villarta as part of the process of "repurchase" by his "in
behalf of the declared owner, Mr. Isidoro Cuyno". Thus, In other words, of the nine (9) children of Isidoro Cuyno,
Gregorio Villarta thereby became a trustee for the benefit the heirs of only one of them — namely, Marciano Cuyno
of Isidoro Cuyno, or his heirs. — are fully represented in this case. Glicerio and Marina
Villarta merely represent part of the heirs of Isidoro's son
Plaintiffs, likewise, invoke title to part of the land in
Angel Cuyno, namely his daughter Guardicisima. Angel's
question in consequence of a conveyance allegedly made
other children — Caridad, Maria and Servando Cuyno —
to Gregorio Villarta by Clemente Olaybar, who, plaintiffs
are not parties in this case. Neither is Isidoro's only
allege, acquired it from Benito Cuyno, who, in turn,
surviving son, Bernardo Cuyno. Nor are the descendants
derived his title from Isidoro Cuyno, by virtue of the deed
of Isidoro's other deceased children — Toribia, Gregoria,
of sale. The property described in this instrument is
Vicenta, Bernardo, Urbano, Narciso and Benito.
located, however, in Cabadiangan whereas the land in
question is in Tipolo. Accordingly, the lower court was The lower court acted that, therefore, in not determining
justified in concluding that the subject matter of said deed the precise share of the parties herein in the land formerly
of sale is different from that of the present case. covered by Tax Declaration No. 8042 and in limiting
itself to declaring that said land belongs to the heirs of
Again, plaintiffs invoke title by acquisitive prescription.
Isidoro Cuyno, without prejudice to the right of Gregorio
This pretense is, however, untenable:
Villarta to recover from them the sums by him paid as real
(1) because they admit that, in 1936, Gregorio Villarta estate tax thereon.
was unable to take possession of most of the land in
Wherefore, the decision appealed from is hereby
question, for the same was then being held by those who
affirmed, with costs of this instance against plaintiffs-
had allegedly purchased conditionally portion thereof
appellants.
from Isidoro Cuyno;
(2) because the purchase allegedly made by Gregorio
Villarta from Mr. & Mrs. Embradura, and Juan Gaviola
and Toribia Cuyno, took place only in 1942, and
plaintiffs' possession from this year was interrupted
constructively upon the filing of Civil Case No. 292 in
1948, or before the expiration of ten (10) years;
(3) because, since the aforementioned delinquent taxes
had been paid by Gregorio Villarta "in behalf of Isidoro
Cuyno", the possession acquired by the former, and his
subsequent transactions with the Embraduras and the
Gaviolas, must be deemed effected by Gregorio
Villarta in trust and for the benefit of Isidoro Cuyno, until
the contrary is clearly proven; and
(4) that the first such evidence that can be invoked by
Gregorio Villarta is, at best, Tax Declaration No. 13462
(Exhibit A) in his name, but this declaration was made on
June 11, 1946, and his possession since then was, as above
indicated, interrupted, in contemplation of law, in 1948,
and actually, according to plaintiffs' complaint, in 1953,
or before the expiration of ten (10) years since 1946.
D. LOAN – ART. 1450 said loan, although in the name of Valdes, was actually
Nakpil's. In other words, the property was acquired with
NAKPIL VS. IAC, CARLOS J. VALDES and funds partly loaned by Valdes to Nakpil and partly
CAVAL REALTY CORPORATION borrowed by Nakpil from FUB albeit in Valdes' name.To
FACTS: the mind of the Court these are in confirmatory of a pre-
existing express trust relationship between Valdes and the
Petitioner instituted an action for reconveyance with late Nakpil over the property in dispute, and assuming the
damages for breach of trust before RTC of Baguio City letters could not stand as proof of an express trust, still the
against respondents Valdes and Caval Realty Court believes that they could, as they indeed are, proof
Corporation. She alleged that her husband Nakpil prior to of an implied trust under Article 1450 of the Civil Code.
his death had requested Valdes to purchase Pulong
Maulap (a summer residence in Baguio City) and However, RTC dismissed the petition for reconveyance
thereafter register the sale and hold the title thereto in trust on the ground that petitioner, the very documents she
for the former, which respondent Valdes did. But after her presented to prove the existence of a trust relationship, has
husband's death, Valdes concealed and suppressed all waived her right over Pulong Maulap. Not satisfied with
information regarding the trust agreement; instead, he the decision of the trial court, both parties appealed to
transferred Pulong Maulap in the name of respondent respondent Intermediate Appellate Court which reversed
Caval Realty Corporation, which is 99.7% owned by him, the trial court.
in exchange for 1,500 shares of stock.
ISSUE/S:
Respondent Valdes, on the other hand, denied the
1. Whether Art. 1450 of the Civil Code applies; (and, if it
existence of any trust agreement over Pulong Maulap. He
so applies)
averred that he bought the summer residence for himself
with his own funds and without any participation of the 2. Whether the petitioner can still compel reconveyance
late Nakpil; neither was it bought in trust for the latter. of Pulong Maulap from respondent Valdes.
Valdes claims that he only informed Nakpil of the
3. Whether or not there is a pactum commissorium
acquisition of Pulong Maulap, and the latter merely
existing.
showed interest in buying the property if he could have
the money. Meanwhile, considering their avowed RULING:
friendship, Valdes offered the usufruct of the property to
the Nakpils who in turn agreed to shoulder its 1. Yes there was a constructive trust between the
parties under Art. 1450.
maintenance expenses, real estate taxes, fire insurance
Consequently, respondent Valdes is estopped from
premiums and servicing of interest on the mortgage
claiming that he bought Pulong Maulap for himself, and
obligation constituted on the property.
not merely in trust for the late Nakpil, as this contention
The records likewise show that, Valdes assigned Pulong is belied by the following facts:
Maulap to Caval Realty Corporation. Later, after
a. Loans while in his name (Valdes), such was
petitioner allegedly received a P2,000,000.00— offer for obtained by late Nakpil
Pulong Maulap from Pasay City Mayor Pablo Cuneta, b. P75,000 initially advanced for the Moran
petitioner wrote Valdes demanding a reconveyance to property still remains unpaid.
enable her to effect the sale and reimburse the latter from c. Mortgage of the vendors with PNB (P75,000)
the proceeds thereof for the advances he made. liquidated from proceeds of loan obtained from
However,Valdes allegedly told petitioner that he could FUB- actually secured by late Napkil merely
not execute the deed of conveyance because Pulong using respondent’s name.
Maulap was his and he had no intention of selling it. d. P65,000 loan to FUB proceeds of which were
used to finance repair and renovation of Pulong
RTC rendered a decision holding that a trust relationship Maulap.
existed since it appears in the letters downpayment of e. Down payment (P50,000) and partial payment
P50,000.00 and the further sum of P25,000.00 paid to (P25,000) to PNB came from personal fund of
PNB though paid through respondent’s personal funds, Valdes which he considered as advances to late
the same was considered by him as a loan to Nakpil; and Napkil.
while the remaining P75,000.00, representing the balance f. Payment being tendered, while remitting
of the mortgage indebtedness of the Garcias to the PNB, payment of real estate taxes was made “on
was liquidated with the proceeds of a loan from FUB, the
 behalf” of the Napkil’s. - which is an express What the parties merely agreed to under the arrangement
recognition of the implied trust was that respondent Valdes would undertake to "take over
the total loan of P140,000.00 and pay all of the interests
due on the notes" while the heirs of the late Jose Nakpil
Implied trusts, which may either be resulting or
would continue to live in the disputed property for five (5)
constructive, are those which, without being express, are
years without any remuneration save for regular
deducible from the nature of the transaction as matters of
maintenance expenses. This does not mean, however, that
intent, or which are superinduced on the transaction by
if at the end of the five-year period petitioner failed to
operation of law as matter of equity, independently of the
reimburse Valdes for his advances, which respondent
particular intention of the parties.
computed to be P375,056.64 Valdes could already
Article 1450, which petitioner invokes in the case at bar, automatically assume ownership of Pulong Maulap.
is an illustration of an implied trust which is constructive. Instead, the remedy of respondents Carlos J. Valdes and
Article 1450 presupposes a situation where a person, Caval Realty Corporation was to proceed against the
using his own funds, purchases a certain piece of land in estate of the late Jose M. Nakpil and/or the property itself.
behalf of another who, in the meantime, may not have
sufficient funds to purchase the land. The property is then
transferred in the name of the trustee, the person who paid 3. Yes, there exists pactum commissorium.
for the land, until he is reimbursed by the beneficiary, the
person for whom the land is purchased. It is only after the
beneficiary reimburses the trustee of the purchase price The arrangement entered into between the parties,
that the former can compel conveyance of the purchased whereby Pulong Maulap was to be "considered sold to
property from the latter. him (respondent) . . . in case petitioner fails to reimburse
Valdes, must then be construed as tantamount to a pactum
2. Yes, petitioner may redeem and compel commissorium which is expressly prohibited by Art.
conveyance of the disputed property but only after 2088 of the Civil Code. For, there was to be automatic
reimbursing respondent the sum of P375,056.64, appropriation of the property by Valdes in the event of
with legal interest from 31 July 1978, the amount failure of petitioner to pay the value of the advances.
advanced by Valdes for the purchase of the Pulong
Maulap being a conditio sine qua non for Thus, contrary to respondent's manifestations, all the
compelling conveyance. elements of a pactum commissorium were present: there
was a creditor-debtor relationship between the parties; the
property was used as security for the loan; and, there was
The period within which to compel conveyance of Pulong
automatic appropriation by respondent of Pulong Maulap
Maulap is not imprescriptible. The rule is well-settled that
in case of default of petitioner.
an action for reconveyance based on an implied or
constructive trust prescibes in ten (10) years. But, in the
case, petitioner could still compel conveyance of the
disputed property from respondent provided the former
reimburses the latter for all his expenses. Valdes never
repudiated the constructive trust during the lifetime of the
late Jose Nakpil.
On the contrary, he expressly recognized it. The
prescriptive period therefore did not begin to run until
after he repudiated the trust. And such repudiation came
when Valdes excluded Pulong Maulap from the list of
properties of the late Jose Nakpil submitted to the intestate
court in 1973. Even then, the present action for
conveyance was filed in 1979 or well within the ten-years
period.The trust relations between the parties were
therefore never extinguished. Besides, petitioner could
not have waived the interest of her children with the late
Jose M. Nakpil who are her co-heirs to the Nakpil estate.
E. INHERITANCE – ART. 1451 Dissatisfied with this decision, defendants appealed to the
Court of Appeals.
CUSTODIO VS. CASIANO
CA: rendered judgment declaring defendants the sole and
FACTS: exclusive owners of the land described in Transfer
Filomena Custodio, et al., who are the children of Certificate of Title No. 5800. Hence, the present petition
Alejandra, Gregoria and Trinidad, all surnamed Custodio, for review.
filed a complaint before the Court of First Instance of
Court of Appeals based its ruling on the theory that since
Cavite against Filomena Casiano, et al., the widow and
no trust relation was proven between the predecessors-in-
children, respectively, of Ciriaco Custodio, alleging,
interest of both petitioners and respondents, or that they
among other things, that their grandfather, Isaac Custodio,
were co-owners of the land in question, for as a matter of
purchased during his lifetime for a valuable consideration
fact the land appears registered in the name of Ciriaco
but on installment basis from the Caridad Estate of Cavite,
Custodio, coupled with the fact that petitioners filed the
Inc. a parcel of land situated in the City of Cavite;
instant action only after the lapse of 25 years from the date
that although the title to the land was not placed in the of the registration of the land in Ciriaco's name, the right
name of Isaac before he died due to his inability to pay in of action of petitioners has already prescribed. This ruling
full the purchase price, his rights thereto passed to his is now assigned as error.
children, namely, Ciriaco, Alejandro, Gregoria, and
ISSUE: Whether or not CA erred in its decision.
Trinidad, in the proportion of ¼ each;
RULING: YES.
that upon payment by Alejandra of the remaining
installments, the Caridad Estate of Cavite, Inc. suggested 1) We find merit in this petition for review. An
that the deed of sale be executed in the name of their examination of the evidence on record will clearly reveal
brother Ciriaco since he was the only male in the family, that the land in question was formerly a part of a big estate
and having the three sisters agreed to the suggestion, the known as "Hacienda Dona Bartola" which the Caridad
document was executed as suggested and, pursuant Estate of Cavite, Inc. bought in 1921. This hacienda was
thereto, Transfer Certificate of Title No. 5800 covering later subdivided into small lots for resale to the public
the land was issued in the name of Ciriaco Custodio, giving preference to actual occupants.
married to Filomena Casiano; and that having discovered
Isaac Custodio was the occupant of the land in question
later that defendants were intending to sell the land to the
he being the lessee of its former owner. Taking advantage
prejudice of the plaintiffs, the latter instituted the present
of the offer given by the owner to the occupants, Isaac
action.
bought the land he was occupying for P800.00 in 1922,
In the answer they filed after their motion to dismiss was making as down payment the value of the share he was
denied, defendants averred that they are the sole and holding with the corporation worth P600.00. When Isaac
exclusive owners of the land since the same was died, the title has not yet been issued to him in view of his
purchased by their predecessor-in-interest Ciriaco inability to pay the purchase price in full, but the balance
Custodio from the Caridad Estate of Cavite, Inc. as a of P60.00 was advanced by his daughter Alejandra.
result of which Transfer Certificate of Title No. 5800 was
Upon the payment of this balance, the manager of the
issued in his name. And as a special defense, defendants
corporation suggested that since Ciriaco was the only
contend that the land having been registered under the
male in the family it would be convenient that the title be
Land Registration Act (Act 496) the title issued in relation
issued in his name, to which his three sisters agreed. But
thereto is conclusive as to all matters contained therein,
this notwithstanding, after the registration of the title in
aside from the fact that the cause of action of plaintiffs, if
the name of Ciriaco in 1928, his sisters took possession of
any they have against defendants, has already prescribed.
the land, with the exception of Ciriaco who was never in
After trial, the court a quo rendered judgment declaring possession thereof.
plaintiffs and defendants, with the exception of Isagani
It further appears that, although the title of the land was
Geronimo, Filomena Casiano and Sixto Brasero, co-
issued in the name Ciriaco the same however was at all
owners of the land in litigation, and ordering the
times kept in the possession of Alejandra, and later of
cancellation of Transfer Certificate of Title No. 5800 and
Valeriano, an uncle of plaintiffs, and it was only in 1951
the issuance of another in their names in the proportion
when the title was given to Filomena Casiano who had
therein specified, with costs against defendants.
requested for it in connection with a transaction. It finally
appears that during the lifetime of Ciriaco the latter has The elements abovementioned are not here present, with
always acknowledged the ownership of his sisters over the exception probably of the first one where we stated
the land and after his death, his widow had also that because of the conduct of respondents in requesting
acknowledged on several occasions that the predecessors- for the delivery of the title, petitioners were prompted to
in-interest of the parties were co-owners of the land. institute the present action. But not with regard to the rest.

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