Beneficiary

• The person for whose benefit the trust is created is the beneficiary
• For express trusts, acceptance by the beneficiary is necessary. However, if
the trust imposes no onerous condition upon the beneficiary, his acceptance
shall be presumed unless the contrary is proven.

Gov't of the Phil v. Abadilla

Facts:

Luis Palad, a school teacher, obtained title to a certain land (partitioned into 3) by
composition gratuita. He executed a holographic will saying that, after his death, the
said land shall be used after by his wife until she dies or until she marries, and in
such event, it shall be delivered to the Ayutamiento of the town or Governor of the
province, in order for a secondary college to be erected on it.

Luis died and his wife, Dorotea, soon married another.

A few years later, the collateral heirs of Luis filed an action against Dorotea for the
partition of the said property. The municipality of Tayabas intervened claiming the
said land under the will.

Issue:
Who is the rightful owner of the lands?

Held:
2 of the lands rightfully belong to the Municipality of Tayabas.

First, statutory construction provides that testamentary dispositions must be

liberally construed to give effect to the intention of the testator as revealed by the
will. Applying this, the will evidently shows that Luis intended to create a trust in
favor of a secondary school as beneficiary, the trustee being the Ayutamiento or the
Governor.

Second, in order that a trust may be effective, there must be a trustee and a
beneficiary. Although there is currently no ayuntamiento or gobernador civil, there
exists its counterpart, the Governor of Tayabas. Also, in regard to private trusts, it is
not always necessary that the beneficiary is named, or even be in esse at the time
the trust is created in his favor.

Thirdly, the collateral heirs are not entitled to the income of the land, pending the
existence of the beneficiary. This is because since the legal title is now with the
trustee, the heirs no longer have any interest in said land.
Lastly, the remaining lot should remain with Dorotea because she has acquired it
through prescription. This is because, although prescription does not run between
the trustee and the beneficiary, it runs between the former and third persons.

Cristobal v. Gomez

Facts:

Epifanio Gomez sold his property with pact de retro to Yangco, redeemable in 5
years, remaining as lessee. The land was not redeemed. Nevertheless, Yangco
conceded the privilege of repurchasing. However, Epifanio did not have the money,
so he asked the assistance of Banas, who said that he will only grant the loan if his
siblings Marcelino and Telesfora will also be liable to him for the loan.

The latter two agreed so all of them met up in the home of Telefora wherein they all
agreed that Banas will advance the P7k needed for the repurchase, and that the
property will be titled to the siblings who shall hold it until they are paid by
Epifanio. The agreement was made in writing. The siblings also created a
partnership for the purpose of redeeming the property, which had a capital of P7k,
P1.5k by Marcelino and P5.5k by Telefora, Marcelino being the manager. The
agreement, in writing, contained a provision that, in order for the property to be
returned to Epifanio, it is essential that he shall manifest good behavior in the
opinion of the siblings.

The repurchase took place. A year after, Epifanio died leaving a widow Paulina and
four children.

Telesfora, desiring to free herself from the loan to Banas, with the consent of
Marcelino and Banas, had the partnership dissolved, with Marcelino assuming the
entire obligation

Eventually, Marcelino paid out the debt. The heirs of Epifano now come to court
seeking to recover the land and the income received by the property.

Issue:
W/N Marcelino should reconvey the lands to the heirs - Yes

Held:
Yes. First, there was an express trust created in favor of Epifanio, the partnership of
the siblings being the trustee, not a donation.

Second, the contention that the trust agreement was kept secret from Epifanio
therefore he could not have accepted it is belied by the testimony of Banas himself
that Epifanio was present when the agreements were made, and that his signature
appeared in such agreement.
Third, on the argument that Epifanio "misbehaved" by selling salt lots to various
persons and by attending cockfights, activities distasteful to the siblings, those
cannot be taken against him because Marcelino never took any steps to defeat
Epifanio’s rights to the trust on account of his bad behavior.

Lastly, prescription also won’t run in Marcelino’s favor because he didn’t hold it in
the concept on an adverse owner. He held it merely in the concept of a trustee and
prescription can’t run in such capacity.

DBP v. COA

Facts:

The BOD of DBP created a DBP Gratuity Plan which was designed to set up a
retirement fund to cover the benefits due to DBP retiring officials. The BOT of the
Gratuity Plan Fund (GPF) was given control and administration over the fund. The
trustee appointed DBP Trust Services Department (DBP-TSD) as the investment
manager to make the income of the fund sufficient to meant the liabilities of the GPF.

DBP established a Special Loan Program which gave the prospective retirees the
option to advance a portion of his retirement benefit, but it on the condition that it
shall be invested in an profitable investment.

Pursuant to this scheme, DBP-TSD paid to its investor-members a total of P11.6M,

which were disallowed by COA on the ground that the distribution of the income
from such investment was an irregular use of public funds which is prohibited by
law.

Issue:
W/N the disallowance was proper - Yes.

Held:
Yes. First, the income from the GPF is not part of public funds. It is actually the
object of an express trust: the truster DBP, the beneficiaries being the prospective
retirees and the trustees, DBP-TSD. The Agreement clearly transferred legal title
over the Fund to the Fund’s trustees. Consequently, the COA’s directive to record the
Fund’s income in DBP’s books is wrong because such income from the Fund doesn’t
form part of DBP’s revenues. Such income of the Funds constituting the subject
matter of the trust.

Lastly, although the funds are not public funds, the disallowance is still proper
because the rights of the prospective retirees (beneficiaries) to the income is still
inchoate because they haven't retired yet. This is pursuant to a law which prohibits
the employees to receive their benefits before they retire.
5. How express trust are terminated
1. Where the trust fails
2. Upon death of the trustee
3. When trustee acquires the res through prescription by repudiating the trust,
such repudiation is made known to the beneficiary, and the evidence thereon
is clear and conclusive.
• Old Rule: Express trusts are absolutely imprescriptible

III. Implied Trusts

1. Listing of implied trusts not exclusive: Founded on equity.

A. Resulting Trust
• is a trust which is raised or created by the construction of law, it is raised by
implication of law and presumed always to have been contemplated by the
parties, the intention as to which is to be found in the nature of their
transaction but not expressed in the deed of conveyance.
• is based on the equitable doctrine that it is the more valuable consideration
than the legal title that determines the equitable interests in property

Ramos v. Ramos

Facts:

Martin Ramos and Candida were survived by their three legitimate children, Jose,
Agustin and Granada. Martin was also survived by seven natural children which
includes Emiliano.

In the settlement of their estate, Rafael, Martin's brother, was appointed

administrator. A partition, signed by the legit children and two of the natural
children in representation of the other 5 which where still minors, was created and
approved by the court. Said partition gave all the land to the legit children
proportionate to their shares, and gave the natural children cash to be paid by the
legit children.

Eventually, a report was sent to the judge who handled the estate case confirming
the delivery of the shares pursuant to the partition. Said report was signed by the
legit children, the two natural children, and Timoteo Zayco, the guardian of the
minor natural children.

Later, a cadastral court ordered the lands covering Hacienda Calaza, which was
inherited by Jose, be surveyed. Emiliano didn’t file any claim anymore in the
cadastral case, relying instead on Jose who promised to have Titles issued in his and
the other co-heirs name.
Afterwards, Emiliano discovered that Jose in fact had the Title issued in his wife’s
name instead, Gregoria. Further, Emiliano discovered there was in fact an earlier
partition of her father’s estate and the fact she didn’t receive her rightful share.
Emiliano then filed suit to recover Hacienda Calaza and their share in the partition,
claiming that Jose was holding the properties in trust for the natural children.

Issue:
W/N Emiliano can still claim his share - No.

Held:
No. First, the existence of an express trust is negated by the intestate proceeding
and project of partition. Also, a trust must be proven by clear and convincing
evidence based on writing, and cannot be proven by parol evidence.

Second, implied trusts are those which, without being expressed, are deducible from
the nature of the transaction as matters of intent, or which are superinduced on the
transaction by operation of law as matters of equity, independently of the particular
intention of the parties. However, there is no implied trust here because Emiliano
has failed to prove the existence of such by clear and convincing evidence.

Third, Assuming there was a trust, evidence shows that after the cadastral
proceedings, the hacienda was leased to a certain Yulo in 1932. This transaction is a
repudiation by the Ramoses. Being such, the action which was instituted in 1957 (43
years later) is already barred by prescription.

Lastly, although there were alleged irregularities in the intestate proceedings such
as, that some of the "minors" then were not really anymore minors, that Zayco, the
guardian, did not really protect the interests of the natural children, that Atanacia
(the representative natural child) signed the receipt of delivery without
understanding the same because it was in spanish, and others; They are still barred
by laches because they slept on their rights for more than 40 years.

B. Constructive Trusts
• is a trust arising by operation of law, not created by any words, but by the
construction of equity in order to satisfy the demands of justice. It does not
arise by intention but by operation of law.

Diaz v. Gorricho

Facts:

Francisco Diaz and Maria owned 2 parcels of land. Francisco died leaving Maria and
3 children, Manuel, Lolita and Constancia.
Later, Gorricho obtained a judgment against Maria, the lands eventually being sold
in auction to Gorricho. Maria failed to redeem the lands, hence the sheriff executed a
final deed of sale in Gorricho's favor. However, the deed conveyed all the lots
instead of only Maria's half interest therein.

15 years later, Maria having already died, the children filed this action to recover the
1/2 interest of Maria over the lots, contending that the Gorrichos were holding it in
trust for them. Gorrichos allege that the action has already prescribed.

Issue:
W/N the children can recover the 1/2 interest - No.

Held:
No. First, this a case of constructive trust because the Gorrichos obtained the legal
title to the land through the mistake of the sheriff therefore they are holding it in
trust for the Diaz siblings who are the beneficiaries.

However, the siblings are barred by prescription of 10 years and not by laches. This
is because, unlike express and resulting trusts which are imprescriptible unless
repudiated by the trustee, in constructive trusts, prescription applies without need
of repudiation.

The reason for this distinction is that in express and resulting trusts, the delay of the
beneficiary is attributable to the trustee who undertakes to hold the res in favor of
the former. The possession is therefore not adverse. There is a confidential or
fiduciary relationship.

But in constructive trusts, there is no fiduciary relation. The trustee does not
recognize the trust and has no intent to hold it for the beneficiary. the possession is
adverse. Therefore, the beneficiary is not justified in delaying action to recover his
property.

Vda. de Ouano v. Republic of the Philippines

Facts:

In 1949, The National Airport Corporation (NAC), Mactan-Cebu International

Airport Authority’s (MCIAA) predecessor agency, pursued a program to expand the
Lahug Airport in Cebu City. The government negotiated with the landowners who
will be affected by such expansion that they could repurchase their respective lands
should the Lahug Airport expansion project not push through or once the Lahug
Airport closes or its operations transferred to Mactan-Cebu Airport. Some of the
landowners (including the Ouanos and Inocians) accepted the assurance and
executed deeds of sale with a right of repurchase. Others, however, refused to sell
because the purchase price offered was way below market. This forced the Republic
to file a complaint for expropriation, which was granted by the court. In view of the
adverted buy-back assurance made by the government, the owners of the lots no
longer appealed the decision of the trial court.

However, at the end of 1991, Lahug Airport completely ceased operations as

Mactan Airport opened to accommodate incoming and outgoing commercial flights.
The expropriated lots were never utilized for the purpose they were taken as no
expansion of Lahug Airport was undertaken. This prompted the former lot owners
to formally demand from the government that they be allowed to exercise their
promised right to repurchase. The demands went unheeded. Civil suits followed.

Ruling of RTC in Inocian Case: Reconvey the lots back to the landowners
Ruling of CA in Ouano Case: Republic won and case was dismissed – CA reasoned
that the Ouanos, parted with their property not through expropriation but via a sale
and purchase transaction

Issue:
W/N the Ouanos are entitled to the land - Yes.

Held:
Yes. The Ouanos and the Inocians’ right to repurchase is what in the case of Heirs of
Moreno was referred to as constructive trust, one that is akin to the implied trust
expressed in Art. 1454 of the Civil Code, the purpose of which is to prevent unjust
enrichment.

In the case at bench, the Ouanos and the Inocians parted with their respective lots in
favor of the MCIAA, the latter obliging itself to use the realties for the expansion of
Lahug Airport; failing to keep its end of the bargain, MCIAA can be compelled by the
former landowners to reconvey the parcels of land to them, otherwise, they would
be denied the use of their properties upon a state of affairs that was not conceived
nor contemplated when the expropriation was authorized.

In effect, the government merely held the properties condemned in trust until the
proposed public use or purpose for which the lots were condemned was actually
consummated by the government. Since the government failed to perform the
obligation that is the basis of the transfer of the property, then the lot owners
Ouanos and Inocians can demand the reconveyance of their old properties after the
payment of the condemnation price.

Constructive trusts are fictions of equity that courts use as devices to remedy any
situation in which the holder of the legal title, MCIAA in this case, may not, in good
conscience, retain the beneficial interest. We add, however, as in Heirs of Moreno,
that the party seeking the aid of equity––the landowners in this instance, in
establishing the trust––must himself do equity in a manner as the court may deem
just and reasonable.
Equity and justice demand the reconveyance by MCIAA of the litigated lands in
question to the Ouanos and Inocians. In the same token, justice and fair play also
dictate that the Ouanos and Inocian return to MCIAA what they received as just
compensation for the expropriation of their respective properties plus legal
interest.

C. Distinction between resulting trust and constructive trust

Lopez v. CA

Facts:

Juliana Lopez owned several properties. She died leaving his husband Jose, and no
children. In her will, she appointed Jose as trustee of the properties and that if he
were to die or renounce the obligation, her nephew Enrique was to become the new
trustee. The trust was created in favor of education of deserving but needy honor
students.

When she died, 1/2 of the properties were titled to Jose pursuant to law as his share
and the other half (disputed) titled also to him but as trustee in accordance with the
will.

When Jose died, the res was transferred to the heirs of Jose (respondents). Also,
Enrique Lopez (petitioner's father) assumed the trusteeship Juliana's estate.

In 1984, Richard Lopez (petitioner) filed a complaint for reconveyance of said lands
from the heirs of Jose.

RTC and CA ruled that the action has already prescribed

Issue:
W/N the action for reconveyance has prescribed - Yes.

Held:
Yes. First, the disputed properties were excluded from the trust as approved by the
probate court. Assuming a mistake was made where the DP should have been
included in the trust, the registration in the name of Jose would have been
erroneous and therefore a constructive trust has been made.

Second, assuming so, the action is barred by prescription of 10 years because the
period began in 1969 when Jose registered the DP in his name. There is no need of
repudiation because that only applies in express and resulting trusts.

Resulting trusts are based on the equitable doctrine that valuable consideration and
not legal title determines the equitable title and are presumed always to have been
contemplated by the parties. They arise from the nature of circumstances of the
consideration involved whereby one is given legal title but is obligated in equity to
hold it 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 should not, in equity and good conscience, hold.

D. An implied trust may be proved by parole evidence

Salao v. Salao

Facts:

This litigation is about a 47 hectare fishpond (Calunuran fishpond). Manuel Salao

and Valentina Ignacio had 4 children (Patricio, Alejandra, Juan(Banli), and
Ambrosia).

Manuel Salao died first, followed by the eldest son, Patricio. After some time,
Valentina also died and her estate was administered by Ambrosia.

There were 4 legal heirs (Alejandra, Juan(Banli), Ambrosia and, the son of Patricio,
Valentin). Basically, the lands that were adjudicated were mostly fishponds and
ricelands. After the partition of the estate, it was shown that Banli and Ambrosia
were able to obtain new fishponds which were both registered under the Torrens
System. One of those fishponds is the Calunuran fishpond.

Take note that the person bringing this suit is the daughter of Valentin, named
Benita. This was after Valentin had died. His estate was partitioned between his two
daughters, Benita and Victorina.

Benita is claiming that in obtaining the Calunuran fishpond, funds from the estate of
Manuel Salao were used and as such, Valentin Salao and Alejandra Salao were also
included in that venture/acquisition of the Calunuran fishpond.

There was no documentary evidence to support this claim by Benita. Also, there
were no mention of such interest made in the extrajudicial partition of Valentin’s
estate. Another thing to take into account is that, Ambrosia donated the fishpond in
contention to Banli’s son Juan Salao Jr.

So to recap, the parties in this case is Benita (daughter of Valentin) against Juan Jr.
(Son of Banli and Nephew of Ambrosia). Benita is claiming a share in the Calunuran
fishpond because it claims that her father had a share in acquiring the said
Calunuran fishpond. Juan Jr, disagrees and contends that the sole owner is his father
and aunt, Ambrosia as clearly indicated in the certificate of title.
There was an action for the annulment of the donation to Juan Jr and for the
reconveyance of their share in the Calunuran fishpond. Juan Jr subsequently died
and was substituted by his widow and six children.

Trial Court dismissed the complaint. It found that there were no community of
property among Juan Salao Sr., Ambrosia, and Valentin when the Calunuran
fishpond was acquired. It said that Valentin’s omission during his lifetime to assail
the Torrent titles of Juan and Ambrosia signified that he was not a co-owner of the
fishponds. No strong evidence supported the contentions of Benita.

Both appealed. Benita, because the reconveyance was denied. Juan Jr., because the
claim for damages was denied.

Issue:
W/N the Calunuran fishpond was held in trust for Valentin Salao by Juan Salao Sr.
and Ambrosia.

Held:

NO. Trusts are either express or implied. Express trusts are created by the intention
of the trustor or of the parties. Implied trusts come into being by operation of law.
Express trusts cannot be proven using parol evidence. Implied trusts may be proven
by oral evidence.

In this case, plaintiff’s pleadings and evidence cannot be relied upon to prove an
implied trust. The trial court’s firm conclusion that there was no community of
property between the parties is substantiated by documentary evidence. The fact
that Valentin Salao and his successors-in-interest never bothered for a period of
nearly forty years to procure any documentary evidence to establish his supposed
interest of participation in the two fishponds is very suggestive of the absence of
such interest. There was also no evidence that shows Valentin’s participation in the
Calunuran fishpond.

All in all, the plaintiffs utterly failed to measure up to the yardstick that a trust must
be proven by clear, satisfactory and convincing evidence. It cannot rest on vague and
uncertain evidence or on loose, equivocal or indefinite declarations. A trust cannot
be established, contrary to the recitals of a Torrens title, upon vague and
inconclusive proof.

There was no resulting trust because there was never any intention on the part of
Juan Sr., Ambrosia and Valentin to create any trust. There was no constructive trust
because the registration of the fishpond in the names of Juan and Ambrosia was not
vitiated by fraud or mistake.
This is not a case where to satisfy the demands of justice it is necessary to consider
the Calunuran fishpond as being held in trust by the heirs of Juan Y Salao, Sr. for the
heirs of Valentin Salao. And EVEN IF there was an implied trust, it was clearly
barred by prescription or laches -- the fishpond was registered in 1911, the
extrajudicial demand was made in 1951 (40years).

Municipality of Victorias v. CA

Facts:

Norma Leuenberger inherited a certain lot from her grandmother. She donated a
portion of it to the municipality for a certain high school, another portion she
converted into a subdivision, the rest she cultivated.

Later, she discovered upon survey that part of the land that she was cultivating
included a cemetery owned by the Municipality since more than 30 years ago. She
notified the Mayor and demanded past rentals and reconveyance of the said land.
The Mayor refused and contended that the said property was bought from Simeona
Ditching (grandmother of Norma), but he could not produce a deed of sale and was
only able to produce secondary evidence.

Issue:
W/N the municipality can prove the sale by means of secondary evidence - yes.

Held:
Yes. The record shows that the land was sold to the municipality by Simeona,
however, the municipality failed to register the sale. Because of this, when Simeona
died, Norma was able to claim the property as part of her inheritance.

Because of this, a constructive trust is made wherein Norma holds the disputed
property in trust for the Municipality of Victorias

Although the Municipality could not present the original Deed of Sale covering the
said lot, they produced however a notarial report which showed the following:
• Nature of the instrument – a deed of sale
• Subject of the sale – two parcels of land (Lot 140-A and 140-B)
• Parties of the contract – Simeona and the Mayor of the Municpality
• Consideration - P750

The municipality presented a certificate of the archives division of the bureau of

records management in manila which shows that Simeona indeed sold the land to
the municipality

This is allowed because

"Sec. 4. Secondary evidence when original is lost or destroyed— When the original
writing has been lost or destroyed, or cannot be produced in court, upon proof of its
execution and loss or destruction or unavailability, its contents may be proved by a
copy, or by a recital of its contents in some authentic document, or by the
recollection of witnesses." (Rule 130, Rules of Court).

E. Distinguished from quasi-contracts

PNB v. CA

Facts:

Mata is a manning/crewing agent of several firms, one of which is Star Kist. As part
of their agreement, Mata makes advances for the crew's necessary expenses such as
medical expenses, Seaman’s Welfare Fund, etc. Mata bills Star Kist, who reimburses
it for the same.

One day, Security Pacific National Bank (SEPAC) of Los Angeles, under the orders of
Star Kist, transmitted a cable message to the International Department of PNB to
pay the amount of US$14,000 to Mata by crediting the latter's account with the
Insular Bank of Asia and America (IBAA). Upon receipt, PNB noticed an error and
messaged SEPAC. The latter replied acknowledging that the amount should be
$1,400 for the crew’s expenses instead of $14,000.

PNB followed the instructions and credited the same. However, 14 days later or on
March 11, 1975, PNB credited another payment of $14,000. Six years later or on
May 13, 1981, PNB requested Mata for the refund of the said amount. On February
4, 1982, PNB filed a case to collect the amount.

PNB alleges that the case is a trust therefore the action has not yet prescribed
(10year prescription)

RTC dismissed the case holding that it was a case of solution indebiti. Being a quasi-
contract, the action on it has already prescribed (6 years).

CA affirmed in toto.

Issue:
w/n the case is one of solution indebiti or constructive trust – can be both
w/n PNB can still collect the refund – No.

Held:
(1) SC held that solution indebiti is also applicable in the case at bar, however, since
PNB cannot choose that “path” anymore as the action will have prescribed (6years),
it is forced to choose the option of “constructive trust”.

Constructive Trust
Article 1456 reveals that it is not a trust in the technical sense for in a typical trust,
confidence is reposed in one person who is named a trustee for the benefit of
another who is called the cestui que trust, respecting property which is held by the
trustee for the benefit of the cestui que trust. A constructive trust, unlike an express
trust, does not emanate from, or generate a fiduciary relation. While in an express
trust, a beneficiary and a trustee are linked by confidential or fiduciary relations, in
a constructive trust, there is neither a promise nor any fiduciary relation to speak of
and the so-called trustee neither accepts any trust nor intends holding the property
for the beneficiary.

In this case, Mata, in receiving the US$14,000 in its account, had no intent of holding
the same for a supposed beneficiary or cestui que trust, namely PNB. But under
Article 1456, the law construes a trust, namely a constructive trust, for the benefit of
the person from whom the property comes, in this case PNB, for reasons of justice
and equity.

(2) No. Although only 7 years has passed, being well within the 10 year prescriptive
period, PNB still cannot claim because it is barred by laches.

While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay. It is amazing that it took PNB almost seven years before it
discovered that it had erroneously paid private respondent. PNB would attribute its
mistake to the heavy volume of international transactions handled by the Cable and
Remittance Division of the International Department of PNB. Such specious
reasoning is not persuasive. It is unbelievable for a bank, and a government bank at
that, which regularly publishes its balanced financial statements annually or more
frequently, by the quarter, to notice its error only seven years later. As a universal
bank with worldwide operations, PNB cannot afford to commit such costly mistakes.
Moreover, as between parties where negligence is imputable to one and not to the
other, the former must perforce bear the consequences of its neglect. Hence, PNB
should bear the cost of its own negligence.

2. When there is a purchase of property where beneficial title is in one person,

but price paid by another person, there is a trust. however if the trustee is a
child of the trustor, no trust is implied by law, it being disputably presumed
that there is a gift in favor of the child.

3. Purchase of property where title is placed in the name of person who loaned
the purchase price - equitable mortgage.
Paringit v. Bajit

Facts:

Spouses Paringit leased a lot from Terocel Realty. After occupying the same for
years, Terocel offered to sell it to the spouses. However, since they had no money
Julian (husband) sought the financial assistance of his children. Of the 5 children,
only Felipe lent the money. Eventually Julian assigned his right to buy the lot to
Felipe and his wife, the lot was sold in favor of the spouses.

Due to issues among the children regarding the ownership of the lot, Julian executed
an affidavit clarifying the nature of Felipe's ownership over it. Said document said
that, upon his death the lot shall be divided equally among the siblings provided that
they reimburse Felipe the proportional amount paid by the latter and that Julian
was waiving his conjugal share. All signed except Florencio. Josefa, Felipe's wife,
signed on his behalf since he was in Saudi at that time.

Later, the lot was registered in Felipe's name. Nevertheless, the spouses moved to
another house on the same street while the siblings remained in the lot without
paying rent.

Later on, Felipe demanded that the siblings pay rental arrearages. Believing that
they had the right to occupy the lot based on inheritance, the siblings refused.

Felipe successfully ejected the siblings hence this petition by the siblings for the
annulment of Felipe's title over the lot.

Issue:
W/N the lot was held by Felipe in favor of the siblings - Yes.

Held:
Yes. First, an implied trust exists where Felipe and his wife bought the lot for the
benefit of the siblings as shown by the following evidence:
1. Felipe and the siblings co-own the lot because of the their mother's share. As
such, if Julian really intended to assign the rights to the lot to Felipe and his
wife, he would have arranged for the siblings to consent being co-owners.
Also, if Felipe intended to buy the lot for themselves, they would have taken
steps to secure the siblings' conformity to the purchase. None of these
happened.
2. The affidavit shows that Julian and his wife bought the land on behalf of the
children, that because they did not have money then Felipe and his wife
advanced the money. Felipe, through his wife, signed this affidavit.
 3. If Felipe and his wife really believed that they were the absolute owners of
the lot, then their moving out of the house and letting the siblings remain
there did not make sense.
4. Felipe and his wife did not demand rent for 10 years which shows that they
respected the right of the siblings to reside in the property.
Lastly, the action is not barred by prescription because the 10year period started
only in 1995 when the demand letter was sent. The action was filed 1996. Even
assuming that the period started upon the registration of the property in 1987, they
were still well within the 10 year period.

4. When absolute conveyance of property effected only as a means to secure

performance of obligation of the grantor - equitable mortgage

5. Several persons jointly purchase property, but title is placed in only one of
them

6. Property conveyed to person merely as holder thereof

Heirs of Emilio Candelaria v. Romero

Facts:

Plaintiffs allege that Emilio and Lucas each bought a lot in the Solokan Subdivision
on installment. Lucas eventually sold his interest to Emilio because he could not pay
the installments due to his sickness. The lots were eventually sold and titled to
Emilio, " that the subsequent installments were paid by Emilio in the name of Lucas,
with the understanding that the necessary documents of transfer will be made later,
the transaction being brother to brother"

Later, a TCT was issued in the name of Lucas who held the lot in trust for Emilio,
that this was acknowledged by the heirs of Lucas.

The heirs of emilio filed a complaint for reconveyance of the lot. Defendants allege
that the action is unenforceable and has already prescribed.

Issue:
W/N the action is unenforceable - No.
W/N the heirs are barred by laches or prescription - No.

Held:
(1) No. Based on the allegations, what is created is an implied trust which can be
proven by parole evidence.

(2) No. The lapse of time will only bar the action in a resulting trust if the trustee has
repudiated the trust. It being alleged that the heirs have continuously acknowledged
not only by Lucas but also by the heirs, laches nor prescription cannot be said to
have run barred the action.

remanded.

7. Donation of property to a donee who shall have no beneficial title

Adaza v. CA

Facts:

Victor Adaza and Rosario had 6 children including Horacio and Violeta. Victor
donated a parcel of land to Violeta. Being then part of public land, Horacio and
Violeta applied for a homestead patent which was granted and issued in her name.

A few years later, Horacio became a provincial fiscal and returned to their
hometown for the town fiesta. He invited his siblings for a gathering in his house.
During the meeting, Horacio asked violet to sign a deed of waiver over the land
stating that Violeta and Horacio co-owned the property although the title was issued
only in her name, and that she transfers 1/2 ownership to him. This was signed by
both parties and was duly notarized.

Later, Violeta and her husband Lino filed to annul the waiver claiming that they
were the absolute owners of the land and that her consent was obtained through
fraud and undue influence.

Horacio contends that her ownership was subject to Horacio's rights as co-owner
and to the obligation to keep or use the property for the benefit of the parents while
they were still alive.

RTC held for Horacio finding no vitiated consent. CA, although having the same
finding, reversed based on the fact that the deed of waiver was a donation not in
accordance with the formal requirements of a donation

Issue:
W/N Horacio is a co-owner of said land - yes

Held:
Yes. First, the deed of donation by their father shows a crossed-out provision that
says "that the donee shall share 1/2 of the property with one of her brothers or
sisters after the death of the donor". Horacio testified that the father intended the
land to be donated to him and Violeta, that he himself crossed-out the provision
with the consent of the father to make it appear that the only donee was Violeta in
order to facilitate the issuance of the title in her name.
There being an ambiguity due to the crossed-out provision, the intent of the donor
must be ascertained. The evidence shows that the real intent of the donor was to
donate the land to both Horacio and Violeta. This is shown by the following
evidence:
1. Violeta acknowledged this intention through the Deed of waiver which she
signed voluntarily
2. Testimonial evidence of 2 of their siblings confirming this intention
3. Their parents owned a lot of properties, and made it a practice to have them
transferred to one or another of the siblings.
4. Violeta wrote 2 letters to Horacio acknowledging the latter's co-ownership
It may be noted that this is not a case of an older brother exploiting or cheating his
younger sister. On the contrary, the evidence showed that petitioner Horacio had
taken care of his father and mother and of his sister Violeta, that petitioner Horacio
had been quite relaxed and unworried about the title remaining in the name of his
sister alone until Violeta had gotten married and her husband began to show what
petitioner thought was undue and indelicate interest in the land in Sinonok.

Finally, the Deed of Donation created an implied trust in favor of Horacio

“Art. 1449. There is also an implied trust when a donation is made to a person but it
appears that although the legal estate is transmitted to the donee, he nevertheless is
either to have no beneficial interest or only a part thereof.”

and he is not barred by laches because the latest letter of Violeta acknowledging the
share of Horacio was sent in 1971, the same year the action was filed.

8. Land passes by succession but heir places the title in a trustee

9. When trust fund used to purchase property which is registered in trustee's

name

Sing Juco v. Sunyatong

Facts:

Juco and Bengco (petitioners) obtained an option contract to from Maria Gay
offering a certain Estate. The option will expire at 12nn on a certain date.

Sunyatong was an employee of the petitioners. On an early morning on the day of

expiry, Sunyatong went to Maria and offered to buy the land according to the terms
offered to the petitioners. Respecting its option contract with petitioners, Maria
contacted petitioners asking for a categorical answer to the offer, but the petitioners
remarked that if she did care to wait until 12nn then "bahala siya" or ambut sa iya.
Interpreting the remark that they have waived their option to buy, the land was sold
to Sunyatong hence the suit by petitioners.

Issue:
W/N there was an implied trust between Sunyatong and petitioners over the
property - Yes

Held:
Yes. Sunyatong obtained the property through disloyalty as evidenced by the
following:
1. In one of petitioners' meetings regarding the purchase of the land, Sunyatong
advised to let some days lapse before accepting the offer so that Maria won't
think that they were coveting the property.
2. Sunyatong told Alipio, the person sent by petitioners to inspect the land and
who found it favorable, not report that it was valuable and a good buy
because if it proved a failure, he might be blamed
3. He offered to buy the land knowing that the option has not yet expired

His disloyalty to his principals ultimately resulted to an end in the negotiations over
the land. Without such intervention, it may be reasonably presumed that the sale
would have been consummated.

Applying the provisions on code of commerce and principles of equitable trusts, by

virtue of which the property acquired by an employee is deemed to have been
acquired not for his own benefit but for his principal and held in trust for the latter.

10. when property is acquired through mistake or fraud

Figuracion v. Figuracion-Gerilla

Facts:

Eulalio owned a certain parcel of land. He had 2 daughters, 1 with Marcela named
Agripina, and the other with Faustina named Carolina.

Later, Agripina executed a Deed of Quitclaim over the eastern portion of said land in
favor of Carolina's daughter, Emilia.

Later, Carolina executed an Affidavit of Self-Adjudication adjudicating unto herself

the entire land as the sole heir of Eulalio and Faustina. She later sold the said land to
her daughters Hilaria and Felipa.

Eventually, relying on the DQ, Emila built a house on the eastern half of the said
land. However, when Hilaria and Felipa found out, they threatened to demolish her
house claiming they were the owners. Hence this case filed by Emilia for the
annulment of the Affidavit of Self Adjudication and Deed of Sale executed by
Carolina, and/or the partition of the lot

Issue:
W/N Emilia has a right to the land and can compel partition - Yes

Held:
Yes.

OWNERSHIP. First, Emilia is the owner of the eastern portion of Lot 707 by virtue of
the quitclaim. It can’t be rendered ineffective by the TCT in the name of Felipa and
Hilaria. Mere issuance of certificate of title in the name of any person does not
foreclose the possibility that the real property may be under co-ownership with
person not named in the certificate or that the registrant may only be a trustee or
that other parties may have acquired interest over the property subsequent to the
issuance of the certificate of title. Co-ownership was successfully established by
Emilia.

The Affidavit of Self Adjudication did not prejudice the share of Agripina because it
not legally possible for one to adjudicate unto himself an entire property he was not
the sole owner of. Each of them only had the right to alienate the lot but only in so
far as the extent of her portion was affected. Being the successor in interest of
Agripina’s share in Lot 707, Emilia took the former’s place in the co-ownership and
as such, has the right to compel partition anytime.

PRESCRIPTION. Second, Co-heirs and co-owners can’t acquire by acquisitive

prescription the share of the other co-heirs or co-owners absent a clear repudiation
of the co-ownership. The act of repudiation, as a mode of terminating co-ownership
is subject to certain conditions: 1.) co-owner repudiates the co-ownership; 2.) such
an act of repudiation is clearly made known to the other co-owners; 3.) the evidence
thereon is clear and conclusive; and 4.) he has been in possession through open,
continuous, exclusive and notorious possession of the property required by law. In
this case this was not proven.

IMPLIED TRUST. Third, Implied trust by force of law was created when Hilaria and
Felipa registered the lot in their names to the exclusion of Emilia and the two of
them were considered a trustee of Emilia’s undivided share. As trustees they can’t
be permitted to repudiate the trust by merely relying on the registration.
Prescription can only produce all of its effects when acts of ownership, or in this
case, possession, do not evince any doubts as to ouster of the rights of the other co-
owners. The express disavowal of co-ownership did not happen during the issuance
of the TCT but happened in 1994 when the sisters attempted to demolish Emilia’s
house. On the same year, Emilia instituted the action for partition thus the period
required by law for acquisitive period to set in was not met.
OWNERSHIP OF LOT 707. Under the Old Civil Code (when Eulalio and Marcela
married), the lot was their conjugal property. When Marcela died, ½ of the lot was
reserved to Eulalio and the other half to Agripina and Eulalio. Eulalio was entitled
only to the usufruct while the naked ownership belonged to Agripina. When he
remarried, his half portion of the lot and his usufructuary right over the other half
were brought into his second marriage with Faustina.
When Eulalio died ¼ of the lot was reserved for Faustina. The remaining ¼ were
transmitted equally to Faustina, Carolina and Agripina. The usufructuary of Eulaiio
was then merged with Agripina’s naked ownership. Upon death of Faustina, her
conjugal share and usufructuary rights were merged with Carolina’s naked
ownership. Hence Agripina is entitled to 5/8 portion of the lot while the remaining
3/8 pertains to Carolina. Thus when Carolina sold Lot 707 to Hilaria and Felipa, the
sale only affected only that portion. Since the quitclaim only bequeathed only half of
the eastern portion of the lot in favour of Emilia, the remaining 1/8 of the lot shall
be inherited by Carolina, her closest collateral relative.

Pasino v. Monterroyo

Facts:

In 1952, Laureano Pasino applied for a Homestead patent over a 2 pieces of land, lot
2138 and 2139. Later, after his death, the patent was granted but his heirs did not
receive the order so they were not able to register the land under their name.

Eventually, Jose, the son of Laureano, was able to secure a title in his name for lot
2138. He also sold lot 2139 to his children, the petitioners here, and eventually were
able to secure a title in their names. They allege that the Monterroyos forcibly took
possession of their property lot 2139.

The Monterroyos on the other hand contend that, lot 2139 was sold to them by a
certain Arturo, tracing his title to a certain Larumbe who sold the said land to a
certain Teves in 1949. All these transactions were evidenced by Deeds of Sale which
were shown in court. Hence this case to compel reconveyance of the land to
Monterroyos.

Issue:
W/N the Pasinos have a right to lot 2139 - No.

Held:
No. First, the records show that in 1947, before the application for the patent,
Laureano sold lot 2139 to Larumbe from whom the Monterroyos trace their title to.
Second, although the Pasinos were granted a patent, the non-registration thereof
had rendered it functus officio (having no more legal efficacy).

Finally, although a decree of registration is incontrovertible, an action for

reconveyance would prosper if it is shown that title to such registration was
obtained through fraud or mistake. In this case, there was a constructive trust over
the land held by the Pasinos as trustee in favor of the Monterroyos because the
Pasinos were able to obtain title thereto through mistake/fraud, therefore, former
can have the reconveyance in their favor.

In Contrast:

Gayondato v. Treasurer

Facts:

Domingo Gayondato owned 3 parcels of land. Domingo later married Adela and bore
a daughter, plaintiff Rosario Gayondato.

Later, after Domingo's death, Gabino Gasataya, Adela's father, took charge of the
land and later turned them over to Adela and his second spouse, Domingo Cuachon.

Later, a cadastral survey erroneously decreed the title of the lands in favor of Adela
alone, despite the Answer made by Cuachon that the land was owned by both Adela
and Rosario. Subsequently, they were mortgaged to PNB and sold to the defendant,
Rodriguez.

Later, when Rosario came of age, she filed this case against Adela, Cuachon,
Rodriguez and the Insular Treasurer for damages due to the erroneous registration
of the land.

The RTC absolved the Insular Treasurer and Rodriguez, but held the others liable

Issue:
W/N the treasurer and rodriguez should also be liable - Yes.

Held:
Yes. First, the Land Registration Act provides that "any person who is wrongfully
deprived of any land or any interest therein, without negligence on his part, through
the bringing of the same under the provisions of this Act or by the registration of
any other person as owner of such land..and who by the provisions of this Act is
barred or in any way precluded from bringing an action for the recovery of such
land or interest therein, or claim upon the same, may bring in any court of
competent jurisdiction an action against the Treasurer of the Philippine Archipelago
for the recovery of damages to be paid out of the assurance fund."
It also provides that when the damage was due to the acts or omissions of the clerk,
or of the register of deeds, or of any examiner of titles, or of any deputy or clerk of
the register, then the sole defendant will be the Treasurer. However, if any other
person caused or contributed to the damage, then such person shall be impleaded
along with the Treasurer.

Second, although the Land Registration Act that the assurance fund shall not be
liable to pay for any loss or damage or deprivation occasioned by a breach of trust,
express, implied, or constructive, the term constructive trust must be understood in
its technical sense, not in its broadest sense.

In its technical sense, trust is a right of property, real or personal, held by one party
for the benefit of another. (Bouvier) In this case, there is no such trust because
although Adela was the guardian of Rosario at the time, such guardianship did not
extend to the minor's property. And being a minor then, she could not create a trust
in a technical sense.

Escobar v. Locsin

Facts:

Eusebia Escobar alleges that she is the owner of the disputed land and that during
the cadastral proceedings, as she was illiterate, she asked Domingo Sumangil to
claim the said land for her, but Sumangil instead claimed it for himself and was
eventually adjudicated in his favor.

When Sumangil died, the said land was transferred to Juana Ringor, the defendant in
this case, represented by Ramon Locsin as administrator. Hence this action for
reconveyance.

The CFI, while recognizing the equitable title of Eusebia, nevertheless dismissed the
complaint on the ground that the 1 year period to review a decree has already
lapsed.

Issue:
W/N Eusebia can have the reconveyance of the property - Yes.

Held:
Yes. First, what is being prayed for here is the enforcement of the trust, not the
review of a decree.

Second, there is a constructive trust here over the land held by the estate of
Sumangil in favor of Eusebia, because the former obtained title thereto through
fraud.
Finally, the Land Registration Act was not intended to cut off the equitable rights or
remedies of the aggrieved plaintiff. This is recognized by the same law itself which
provides that, "nothing in this act shall in anyway be construed to… change or affect
in any way any other rights or liabilities created by law and applicable to
unregistered land, except as otherwise expressly provided in this Act or in the
amendments hereof." The Torrens system was not intended to foment betrayal in
the performance of a trust. A trust is sacred and inviolable.

Cavile v. Litania-Hong

Facts:

The heirs of spouses Cavile and Galon, through a Deed of Partition, partitioned
several parcels of land. 2 of the lands here are the subject of this case, lot 7421 and
7956. These lots were later sold to another co-heir, Castor, thus making him the sole
owner of said lands.

Later, Castor and Susana (his sister) executed a Confirmation of Extrajudicial

Partition which recognized and confirmed that lots 2039 and 2040 were the lawful
shares of Susana in the properties left by their parents.

The descriptions of lots 7421 and 7956 were exactly the same as those of lots 2039
and 2040.

14 years later, the heirs of Susana, Justina and Genova, filed a case for reconveyance
of lots 2039 and 2040 against the daughter of Castor, Perfecta.

Issue:
who is the rightful owner of the said lots - Perfecta

Held:
Perfecta. Lots 2039 and 2040 are the same lots as 7421 and 7956.

First, the preponderance of evidence is in favor of Perfecta. It has been shown that
Castor was able to become the owner thereof through a sale by his co-heirs to him.
On the other hand, Justina and Genova only present the Confirmation of
Extrajudicial Partition which does not explain how the properties were transferred
to Susana but only expresses Castor's acknowledgment that Susana owns them.

Second, although the incontrovertibility of a Torrens title can be defeated by an

action to enforce a constructive trust through reconveyance, the action of
reconveyance however should be filed within 10 years from the time the cause of
action accrued - In this case, from the time the title to the property was issued in
favor of Perfecta. Because 12 years have already lapsed from the time the properties
were titled to Perfecta, the action is barred by prescription.

Estrella Yared v. Tiongco

Facts:

Lots 3244 and 1404 were titled in the name of co-owners Matilde, Jose, Vicente and
Felipe, all children of Maria Luis de Tiongco.

Lot 3246 was titled under the name Heirs of Maria Luis de Tiongco.

Petitioner Estrella, daughter of Jose, built a house on lot 1404. She was collecting on
rentals from lots 3244 and 3246. She filed an adverse claim on all the lots but it was
annotated only on lots 3244 and 1404.

Later, respondent Jose (son of Carmelo who is the brother of petitioner Estrella)
filed a case to recover possession of lots 3244 and 3246, he also filed a case of
unlawful detainer against Estrella on lots 1404.

Estrella later discovered that even before the action, Jose already had the titles over
all the lands registered in his name by executing an Affidavit of Self Adjudication,
alleging that he was the only surviving heir of the registered owners.
She also discovered that Jose had already sold the lands to 3rd persons, which Jose
was eventually able to buy back.

Hence this case to annul the Affidavit of Adjudication, and to revert the titles under
the original owners.

RTC held that the action had already prescribed because 16 years has already lapsed
since the titles were registered under Jose's name

CA affirmed.

Issue:
W/N the action has already prescribed - No.

Held:
No. First, although an action for reconveyance based on a constructive trust
prescribes in 10 years, the exception is when the plaintiff is in possession of the land
to be reconveyed. This is because the action of reconveyance becomes an action to
quiet title which is not subject to prescription.

In this case, Estrella's possession was disturbed in 1983 when Jose filed an action
for recovery of possession against her. In that case, RTC ruled in favor of
respondent, but CA ruled in favor Estrella therefore she never lost possession of the
property.

Also, the sale to 3rd persons of the land did not cleanse Jose's title over the same as
they were not innocent purchasers for value. This is because although every person
dealing with a Torrens title has a right to rely on the face of the title thus making
them in good faith, the exception is when the party has "actual knowledge of facts
and circumstances that would impel a reasonably cautious man to make such
inquiry or when the purchaser has some knowledge of a defect or the lack of title in
his vendor or of sufficient facts to induce a reasonably prudent man to inquire into
the status of the title of the property in litigation".

In this case, the 3rd party buyers should been put on guard by the fact the vendor,
Jose, was not in possession of said properties.

Side note: Respondent Jose Tiongco is a lawyer, and SC in this case ordered him to
show cause why he should not be sanctioned for executing the Affidavit of
Adjudication.

PNB v. Circiaco Jumamoy

Facts:

An RTC decision held that the 2 hectares out of the 13 hectare land of Antonio Pace,
actually belongs to Sesinando Jumamoy, Circiaco's father. Said decision ruled the
conveyance of such portion to Circiaco.

The decision became final and executory but the Deed of Conveyance in favor of
Circiaco Jumamoy could not be annotated on the title because it had already been
cancelled pursuant to a foreclosure in favor of PNB, the current owners of the said
land. The land was apparently mortgaged in 1971 to PNB. The annotation could not
be made because PNB was not impleaded in the case against Antonio.

Hence this case against PNB for the reconveyance of the 2 hectares.

RTC ruled in favor Circiaco by finding that PNB was not a mortgagee/purchaser in
good faith because, although the mortgage was made in 1971 and the lis pendens
was annotated only in 1988, it failed to take the necessary steps to protect its
interest such as sending a field inspector to the area to determine the real owner, its
occupants, its improvements and its boundaries.

CA affirmed

Issue:
W/N the 2 hectares should be reconveyed to Circiaco - Yes.
Held:
Yes.

First, PNB is not an innocent purchaser/mortgagee for value because a bank has the
duty to ascertain the status or condition of a property offered to it as security for a
loan. Because of this, it should have taken the necessary steps to protect its interest
such as sending a field inspector to the area to determine the real owner, its
occupants, its improvements and its boundaries.

Also, PNB is not in good faith because at the time the mortgage was made, the land
was still not registered. It was annotated only 5 months later when the OCT came
out. This shows with more reason that PNB should have verified the status of the
property before granting the loan.

Lastly, although an action for reconveyance based on a constructive trust prescribes

in 10 years, the exception is when the plaintiff is in possession of the land to be
reconveyed. This is because the action of reconveyance becomes an action to quiet
title which is not subject to prescription.

In this case, it has been judicially established that Circiaco is in actual possession of
the property he claims as his and that he has a better right to the disputed portion,
his suit for reconveyance is in effect an action for quieting of title which is
imprescriptible.

Partnership

1. Definition

Art. 1767. By the contract of partnership, 2 or more persons bind themselves

to contribute money, property, or industry to a common fund, with the
intention of dividing the profits among themselves.

2 or more persons may also form a partnership for the exercise of a

profession.

2. Tri-level existence / Legal relationship in a partnership setting

1. Primarily a contractual relationship
1. Art. 1771. A partnership may be constituted in any form, except
where immovable property or real rights are contributed
thereto, in which case a public instrument shall be necessary.
2. Art. 1784. A partnership begins from the moment of the
execution of the said contract, unless it is otherwise stipulated.
2. Separate juridical personality as the medium to pursue business
 1. Art. 1768. The partnership has a juridical
personality separate and distinct from that of each of the
partners, even in case of failure to comply with the requirements
of Art. 1772 1st par.
3. Underlying business enterprise as the primary objective

Yu v. NLRC

Facts:

Benjamin Yu was the Assistant GM of Jade Mountain Ltd., a partnership engaged in

the exploitation of marble deposit on land owned by the spouses Cruz.

Yu however received only half of his stipulated salary, but the partners promised
that the balance would be paid when the firm shall have secured additional
operating funds from abroad.

Later, the partners Bendal sold their interest Co and Zapanta, who eventually
terminated Yu's services without paying his unpaid salaries. hence this case of
illegal dismissal and recovery of unpaid salaries.

The Labor Arbiter ruled for Yu. NLRC reversed holding that there was no law
requiring the new partnership to absorb the employees of the old partnership.
Benjamin Yu, therefore, had not been illegally dismissed by the new partnership
which had simply declined to retain him in his former managerial position or any
other position. It also held that Yu should claim his unpaid wages from the original
partners, not the new partners.

Issue:
w/n Co and Zapanta should be liable to Yu for illegal dismissal and unpaid salaries -
only for unpaid salaries, not for illegal dismissal.

Held:
Yes. First, in this case, the old partnership was dissolved and a new one was created
but still working under the same name, Jade Mountain. However, although the
partnership was dissolved, it has yet terminated because the partnership "has not
yet completed the winding up of its affairs".

Art. 1829. On dissolution, the partnership is not terminated, but continues until the
winding up the partnership affairs have been completed.

Because of this situation, Art. 1840 applies. It provides that the creditors of the old
partnership shall be the creditors of the new partnership if the business is
continued without liquidation of the partnership affairs. Therefore, in this case, both
the old partners and the new are liable to Uy.
Second, there is no illegal dismissal. This is because the termination was due to
redundancy. The new partnership had Co as its GM. Also, the position of GM or
Assistant GM belongs to the most senior ranks of management and a new
partnership is entitled to appoint a top manager of its own choice and confidence.

However, Yu is also entitled to moral damages due to the fact that the treatment
given to him was so summary and cavalier as to amount to arbitrary, bad faith
treatment.

Essential elements and purpose of the partnership

1. Consent
1. Persons who are not partners to one another are not parters as
to third persons
▪ Except: Partnership by estoppel
2. Subject Matter
1. Seeking the joint pursuit of a business venture or enterprise
▪ Except: joint pursuit of a profession
▪ Partnership must be established for the common benefit
or interest of the parties
▪ A stipulation excluding a partner from participation in the
profits and losses is void
3. Consideration
1. Undertaking to constitute money, property or industry to a
common fund