ATP Jurisprudence from 2005-2015

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2005 Jurisprudence on Trusts

Sps. Gomez v. Duyan GR No. 144148 Mar. 18, 2005

Art. 1444

Even if the word “trust” was not expressly used by the signatories to an agreement, theestablishment of an express trust cannot be discounted. Under the Civil Code, “Noparticular words are required for the creation of an express trust, it being sufficient that atrust is clearly intended.”

In a decision penned by Justice Paras, this Court held that “…under the law on Trusts, itis not necessary that the document expressly state and provide for the express trust, forit may even be created orally, no particular words are required for its creation (Art. 1444,

Civil Code).”

“A trust … is sacred and inviolable. The courts have therefore shielded fiduciaryrelations against every manner of chicanery or detestable design cloaked by legaltechnicalities.”

Vda. De Rigonan v. Derecho GR No. 159571 July 15, 2005

Art. 1456

An implied trust arises, not from any presumed intention of the parties, but by operationof law in order to satisfy the demands of justice and equity and to protect against unfairdealing or downright fraud. Under Article 1456 of the new Civil Code, "if property isacquired through mistake or fraud, the person obtaining it is, by force of law, considereda trustee of an implied trust for the benefit of the person from whom the propertycomes." Although this provision is not retroactive in character, it expresses a rulealready recognized by our courts prior to the effectivity of the Code.

Sps. Bejoc v. Cabreros GR No. 145849

Aug. 22, 2005

Art. 1456

An implied trust is one that, without being express, is deducible from the nature of thetransaction as a matter of intent or which is superinduced on the transaction byoperation of law as a matter of equity, independently of the particular intention of theparties. It may either be resulting or constructive trust.

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A resulting trust is presumed to have been contemplated by the parties, the intention asto which is to be found in the nature of their transaction but not expressed in the deeditself. It is based on the equitable doctrine that valuable consideration, not legal title,determines the equitable title or interest.

A constructive trust is created, not by any word evincing a direct intention to create atrust, but by operation of law in order to satisfy the demands of justice and to preventunjust enrichment. It arises contrary to an agreement or intention against one who, byfraud, duress or abuse of confidence, obtains or holds the legal right to property whichhe ought not, in equity and good conscience, to hold. A constructive trust is illustrated in

Article 1456 of the Civil Code:

ARTICLE 1456. If the property is acquired through mistake or fraud, the personobtaining it is by force of law, considered a trustee of an implied trust for thebenefit of the person from whom the property comes.

Anzar Bros. Realty Co. v. Aying GR. No. 144773 May 16, 2005

Article 1456

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 anotherwho is called the cestui que trust, respecting property which is held by the trustee forthe benefit of the cestui que trust. A constructive trust, unlike an express trust, does notemanate 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 trusteeneither accepts any trust nor intends holding the property for the beneficiary.

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 anotherwho is called the cestui que trust, respecting property which is held by the trustee forthe benefit of the cestui que trust. A constructive trust, unlike an express trust, does notemanate from, or generate a fiduciary relation. While in an express trust, a beneficiaryand 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.

Resulting trusts are based on the equitable doctrine that valuable consideration and notlegal title determines the equitable title or interest and are presumed always to havebeen contemplated by the parties. They arise from the nature of circumstances of theconsideration involved in a transaction whereby one person thereby becomes investedwith legal title but is obligated in equity to hold his legal title for the benefit of another.

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On the other hand, constructive trusts are created by the construction of equity in orderto satisfy the demands of justice and prevent unjust enrichment. They arise contrary tointention against one who, by fraud, duress or abuse of confidence, obtains or holds thelegal right to property which he ought not, in equity and good conscience, to hold.

Vda. De Gualberto v. Go GR No. 139843 Aug. 21, 2005

An action for reconveyance of real property based on implied or constructive trust is notbarred by the aforementioned 10-year prescriptive period only if the plaintiff is in actual,continuous and peaceful possession of the property involved. If a person claiming to bethe owner thereof is in actual possession of the property, the right to seekreconveyance, which in effect seeks to quiet title to the property, does not prescribe.The reason for this is that one who is in actual possession of a piece of land claiming tobe the owner thereof may wait until his possession is disturbed or his title is attacked

before taking steps to vindicate his right, the reason for the rule being, that hisundisturbed possession gives him a continuing right to seek the aid of a court of equityto ascertain and determine the nature of the adverse claim of a third party and its effecton his own title, which right can be claimed only by one who is in possession.

SPOUSES JOSE BEJOC and JOVITA CAPUTOL BEJOC, petitioners, vs. PRIMACALDERON CABREROS and COURT OF APPEALS, respondents G.R. No. 145849July 22, 2005

ARTICLE 1456, An implied trust is one that, without being express, is deducible

from the nature of the transaction as a matter of intent or which is superinduced on thetransaction by operation of law as a matter of equity, independently of the particular in-tention of the parties.[13] It may either be resulting or constructive trust.

A resulting trust is presumed to have been contemplated by the parties, the inten-tion as to which is to be found in the nature of their transaction but not expressed in thedeed itself.[14] It is based on the equitable doctrine that valuable consideration, not legaltitle, determines the equitable title or interest.[15]

A constructive trust is created, not by any word evincing a direct intention to createa trust, but by operation of law in order to satisfy the demands of justice and to preventunjust enrichment. It arises contrary to an agreement or intention against one who, byfraud, duress or abuse of confidence, obtains or holds the legal right to property which

he ought not, in equity and good conscience, to hold.

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ONSUELO N. VDA. DE GUALBERTO, FE GUALBERTO-CHAVEZ, AMADOR GUAL-BERTO, CESAR GUALBERTO, RODOLFO GUALBERTO, LUZVIMINDA GUALBER-TO MIRANA, and VIRGINIA GUALBERTO, petitioners, vs. FRANCISCO H. GO,RAYMUNDO J. GO, MIRIAM J. GO, MIRIAM G. SON, VICENTE J. GO, BELEN GO,and ROSA JAVIER GO, respondents.

G.R. No. 139843July 21, 2005

Article 1144. An action for reconveyance based on an implied or constructivetrust must perforce prescribe in ten years and not otherwise.

A long line of decisions of this Court, and of very recent vintage at that, illustratesthis rule. Undoubtedly, it is now well-settled that an action for reconveyance based onan implied or constructive trust prescribes in ten years from the issuance of the Torrenstitle over the property. The only discordant note, it seems, is Balbin v. Medalla, whichstates that the prescriptive period for a reconveyance action is four years. However, thisvariance can be explained by the erroneous reliance on Gerona v. de Guzman. But in

Gerona, the fraud was discovered on June 25, 1948, hence Section 43(3) of Act No.190 was applied, the New Civil Code not coming into effect until August 30, 1950 asmentioned earlier. It must be stressed, at this juncture, that Article 1144 and Article1456, are new provisions. They have no counterparts in the old Civil Code or in the oldCode of Civil Procedure, the latter being then resorted to as legal basis of the four-yearprescriptive period for an action for reconveyance of title of real property acquired underfalse pretenses.

AZNAR BROTHERS REALTY COMPANY, petitioner, vs. LAURENCIO AYING, INHIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS OF EMILIANO AYING,PAULINO AYING, IN HIS OWN BEHALF AND IN BEHALF OF THE OTHER HEIRS

OF SIMEON AYING, AND WENCESLAO SUMALINOG, IN HIS OWN BEHALF ANDIN BEHALF OF THE OTHER HEIRS OF ROBERTA AYING, respondentsG.R. No. 144773May 16, 2005

ART. 1456 A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense

for in a typical trust, confidence is reposed in one person who is named a trustee for thebenefit of another who is called the cestui que trust, respecting property which is held bythe trustee for the benefit of the cestui que trust. A constructive trust, unlike an expresstrust, 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 construc-tive 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 benefi-ciaries.

The concept of constructive trusts was further elucidated in the same case, as fol-lows:. . . implied trusts are those which, without being expressed, are deducible from the na-ture of the transaction as matters of intent or which are superinduced on the transaction

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by operation of law as matters of equity, independently of the particular intention of theparties. In turn, implied trusts are either resulting or constructive trusts. These two aredifferentiated from each other as follows:

Resulting trusts are based on the equitable doctrine that valuable considerationand not legal title determines the equitable title or interest and are presumed always to

have been contemplated by the parties. They arise from the nature of circumstances ofthe consideration involved in a transaction whereby one person thereby becomes in-vested with legal title but is obligated in equity to hold his legal title for the benefit of an-other. On the other hand, constructive trusts are created by the construction of equity inorder to satisfy the demands of justice and prevent unjust enrichment. They arise con-trary to intention against one who, by fraud, duress or abuse of confidence, obtains orholds the legal right to property which he ought not, in equity and good conscience, tohold.

The rule that a trustee cannot acquire by prescription ownership over propertyentrusted to him until and unless he repudiates the trust, applies to express trusts andresulting implied trusts. However, in constructive implied trusts, prescription may super-

vene even if the trustee does not repudiate the relationship. Necessarily, repudiation ofsaid trust is not a condition precedent to the running of the prescriptive period.

SPS. FELIZA DUYAN GOMEZ and EUGENIO GOMEZ, petitioners, vs. PURISIMADUYAN, ROLANDO DUYAN, EMERITA DUYAN, DIGNA DUYAN, EDUARDO DUYAN,LUCRECIA DUYAN, ROBERTO DUYAN, CRESENCIA DUYAN, RODRIGO DUYAN,REULGINA DUYAN, DOMINICIA DUYAN, AVECENCIO DUYAN, MARIA SALOMEDUYAN and DIVINA DUYAN, respondents. G.R. No. 144148. March 18, 2005,

Art. 1440. A person who establishes a trust is called the trustor; one in whomconfidence is reposed as regards property for the benefit of another person is known asthe trustee; and the person for whose benefit the trust has been created is referred to as

the beneficiary. Even if the word trust was not expressly used by the signatories to the10 February 1978 Pagpapahayag and the document did not expressly state that a trustwas being established by reason thereof, the establishment of an express trust cannotbe discounted. Under the Civil Code, No particular words are required for the creation ofan express trust, it being sufficient that a trust is clearly intended. In a decision pennedby Justice Paras, this Court held that under the law on Trusts, it is not necessary thatthe document expressly state and provide for the express trust, for it may even be cre-ated orally, no particular words are required for its creation (Art. 1444, Civil Code).The Pagpapahayag dated 10 February 1978 having been freely entered into by Eulogioand Feliza, it had the force of law between them. It was therefore incumbent upon Fe-liza as trustee to comply with the provisions of the instrument and have the subject

property registered in the names of her nephews and nieces.

PHILIPPINE NATIONAL BANK,Petitioner, - versus -MERELO B. AZNAR; MATIAS B.AZNAR III; JOSE L. AZNAR (deceased), represented by his heirs; RAMON A.

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BARCENILLA; ROSARIO T. BARCENILLA; JOSE B. ENAD (deceased), represent-ed by his heirs; and RICARDO GABUYA (deceased), represented by his heirs, Re-spondents.G.R. No. 171805

Article 1444, Trust is the right to the beneficial enjoyment of property, the legaltitle to which is vested in another. It is a fiduciary relationship that obliges the trustee todeal with the property for the benefit of the beneficiary. Trust relations between partiesmay either be express or implied. An express trust is created by the intention of thetrustor or of the parties. An implied trust comes into being by operation of law.

Express trusts, sometimes referred to as direct trusts, are intentionally created bythe direct and positive acts of the settlor or the trustor - by some writing, deed, or will ororal declaration. It is created not necessarily by some written words, but by the directand positive acts of the parties.[22] This is in consonance with Article 1444 of the CivilCode, which states that [n]o particular words are required for the creation of an expresstrust, it being sufficient that a trust is clearly intended.

In other words, the creation of an express trust must be manifested withreasonable certainty and cannot be inferred from loose and vague declarations or fromambiguous circumstances susceptible of other interpretations

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SPOUSES ANTHONY AND PERCITA OCO v. YARES-SANTIAGO, AUSTRIA-MARTINEZ GR NO. 161298

January 31, 2006

ART. 1448. There is an implied trust when property is sold, and the legal estate isgranted to one party but the price is paid by another for the purpose of having thebeneficial interest of the property. The former is the trustee, while the latter is thebeneficiary. However, if the person to whom the title is conveyed is a child, legitimate orillegitimate, of the one paying the price of the sale, no trust is implied by law, it beingdisputably presumed that there is a gift in favor of the child.Trust is the legal relationship between one person who has equitable ownership of aproperty and another who owns the legal title to the property. The trustor is the one whoestablishes the trust; the beneficiary, the person for whose benefit the trust was created;

and the trustee, the one in whom, by conferment of a legal title, confidence has beenreposed as regards the property of the beneficiary.Trusts may be either express or implied. Express trusts are those created by direct andpositive acts of the parties, such as by some writing, deed or will; or by words eitherexpressly or impliedly evidencing an intention to create a trust. Implied trusts are thosethat, without being expressed, are deducible from the nature of the transaction asmatters of intent; or that are super-induced in the transaction by operation of law as amatter of equity, independently of the particular intention of the parties.Under the last sentence of Article 1448, respondents alleged acts -- paying the price ofthe subject properties and, in the titles, naming his children as owners -- raise thepresumption that a gift was effected in their favor. Respondent failed to rebut this

presumption. Absent any clear proof that a trust was created, he cannot be deemed areal party in interest.That he should be deemed a trustor on the basis merely of havingpaid the purchase price is plainly contradicted by the presumption based on Article 1448of the Civil Code that there is a gift in favor of the child, not a trust in favor of the parent.

MARLENE CRISOSTOMO AND JOSE G. CRISOSTOMO v. FLORITO M. GARCIA JR. GR NO. 164787 January 31, 2006

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, byforce of law, considered a trustee of an implied trust for the benefit of the person from

whom the property comes.Thus, it was held that when a party uses fraud or concealment to obtain a certificate oftitle of property, a constructive trust is created in favor of the defrauded party.Constructive trusts are created by the construction of equity in order to satisfy thedemands of justice and prevent unjust enrichment. They arise contrary to intentionagainst one who, by fraud, duress or abuse of confidence, obtains or holds the legalright to property which he ought not, in equity and good conscience, to hold.When property is registered in anothers name, an implied or constructive trust is

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created by law in favor of the true owner.[38] The action for reconveyance of the title tothe rightful owner prescribes in 10 years from the issuance of the title.Clearly, the applicable prescriptive period is ten years under Art. 1144 and not four yearsunder Arts. 1389 and 1391.

Applying the law and jurisprudential declaration above-cited to the allegations of fact in

the complaint, it can clearly be seen that respondent has a period of 10 years from theregistration of the title within which to file the action. Since the title was registered in thename of the petitioners on 16 November 1993, respondent had a period of 10 yearsfrom the time of the registration within which to file the complaint. Since the complaintwas filed on 20 June 2002, the action clearly has not prescribed and was timely-filed.

PAZ GALVEZ, CARLOS TAM, AND TYCOON PROPERTIES v. HONORABLE COURTOF APPEALS AND PORFIRO GALVEZ GR NO. 157954 March 24, 2006

Art. 1451. When land passes by succession to any person and he causes the legal titleto be put in the name of another, a trust is established by implication of law for thebenefit of the true owner.In assailing the decisions of the trial and appellate courts, petitioners cite Article 1451 ofthe Civil Code and claim that an implied or constructive trust which prescribes in tenyears, was established between Paz Galvez and Porfirio Galvez. It is petitionersunflinching stand that the implied trust was repudiated when Paz Galvez executed an

Affidavit of Self-Adjudication on 4 May 1970, registered the same before the Register ofDeeds of La Union on 4 June 1970 and secured a new tax declaration in her name.From 4 May 1970 to the time the complaint was filed on 12 May 1994, 24 years havepassed, hence, the action is clearly barred both by prescription and laches.

We find the petition bereft of merit.In Salvador v. Court of Appeals, it was held that the possession of a co-owner is like thatof a trustee and shall not be regarded as adverse to the other co-owner but in factbeneficial to all of them.The case of Huang v. Court of Appeals is instructive on the creation of trustrelationships.Trust is a fiduciary relationship with respect to property which involves the existence ofequitable duties imposed upon the holder of the title to the property to deal with it for thebenefit of another. A person who establishes a trust is called the trustor; one in whomconfidence is reposed as regards property for the benefit of another person is known asthe trustee; and the person for whose benefit the trust has been created is referred to as

the beneficiary or cestui que trust. Trust is either express or implied. Express trust iscreated by the intention of the trustor or of the parties. Implied trust comes into being byoperation of law. The latter kind is either constructive or resulting trust. A constructivetrust is imposed where a person holding title to property is subject to an equitable dutyto convey it to another on the ground that he would be unjustly enriched if he werepermitted to retain it. The duty to convey the property arises because it was acquiredthrough fraud, duress, undue influence or mistake, or through breach of a fiduciary duty,or through the wrongful disposition of anothers property. On the other hand, a resulting

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trust arises where a person makes or causes to be made a disposition of property undercircumstances which raise an inference that he does not intend that the person taking orholding the property should have the beneficial interest in the property. It is founded onthe presumed intention of the parties, and as a general rule, it arises where, and onlywhere such may be reasonably presumed to be the intention of the parties, as

determined from the facts and circumstances existing at the time of the transaction outof which it is sought to be established.

MARIA B. CHING v. JOSEPH C. GOYANKO, JR., EVELYN GOYANKO, JERRYGOYANKO, IMELDA GOYANKO, JULIUS GOYANKO, MARY ELLEN GOYANKO,JESS GOYANKO GR NO. 165879 November 10, 2006

As the conveyance in question was made by Goyangko in favor of his common- law-wife-herein petitioner, it was null and void.

Petitioners argument that a trust relationship was created between Goyanko as trusteeand her as beneficiary as provided in Articles 1448 and 1450 of the Civil Code whichread:

ARTICLE 1448. There is an implied trust when property is sold, and the legal estate isgranted to one party but the price is paid by another for the purpose of having thebeneficial interest of the property. The former is the trustee, while the latter is thebeneficiary. However, if the person to whom the title is conveyed is a child, legitimate orillegitimate, of the one paying the price of the sale, no trust is implied by law, it beingdisputably presumed that there is a gift in favor of the child.

ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for thebenefit of another and the conveyance is made to the lender or payor to secure the

payment of the debt, a trust arises by operation of law in favor of the person to whomthe money is loaned or for whom it is paid. The latter may redeem the property andcompel a conveyance thereof to him.does not persuade.For petitioners testimony that it was she who provided the purchase price isuncorroborated. That she may have been considered the breadwinner of the family andthat there was proof that she earned a living do not conclusively clinch her claim.It follows that the second issue of whether an implied trust relationship was createdbetween Eusebio and his heirs as trustees and respondent as beneficiary must also beresolved against respondent. We do not agree with the reasoning of the CA:[A]fter the execution of the deed of assignment, [respondent] proceeded to buy the

front half portion from PHHC by paying the amortizations due thereon in exercise of theright which he purchased by way of deed of assignment. He also established hisresidence on this portion since he was then secure in the knowledge that he eventuallywill own the same portion having also purchased this right to own in the deed ofassignment. Therefore, when the purchase price for the entire lot was finally paid, thedeed of its conveyance was finally executed and the title to the entire lot was issued inEusebio Pigaos name, an implied trust relationship was created over the front halfportion between Pigao and [respondent].

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Per Article 1448 of the Civil Code, there is an implied trust when property is sold, andthe legal estate is granted to one party but the price is paid by another for the purposeof having the beneficial interest of the property. The former party is referred to as thetrustee, while the latter is referred to as the beneficiary.In the case at bench, the trustee is Pigao, who, with the title to the entire lot issued to

him, holds the front half portion thereof in trust for [respondent], who is the beneficiary.The CA declared that Article 1448 of the Civil Code was applicable: Art. 1448. There is an implied trust when property is sold, and the legal estate is grantedto one party but the price is paid by another for the purpose of having the beneficialinterest of the property. The former is the trustee, while the latter is the beneficiary.In Morales v. Court of Appeals, we extensively discussed the concept of trust:

A trust is the legal relationship between one person having an equitable ownership inproperty and another person owning the legal title to such property, the equitableownership of the former entitling him to the performance of certain duties and theexercise of certain powers by the latter.Trusts are either express or implied. Express trusts are created by the intention of the

trustor or of the parties, while implied trusts come into being by operation of law, eitherthrough implication of an intention to create a trust as a matter of law or through theimposition of the trust irrespective of, and even contrary to, any such intention. In turn,implied trusts are either resulting or constructive trusts. Resulting trusts are based onthe equitable doctrine that valuable consideration and not legal title determines theequitable title or interest and are presumed always to have been contemplated by theparties. They arise from the nature or circumstances of the consideration involved in atransaction whereby one person thereby becomes invested with legal title but isobligated in equity to hold his legal title for the benefit of another.

ESTRELLA PIGAO, ROMEO PIGAO, EMMANUEL PIGAO, ISABELITA ABAD,

PURITA SARGITA, CESAR PIGAO, VIRGILIO PIGAO, AND EVANGELINEKIUNISALA v.SAMUEL RABANILLO GR NO. 150712 May 2, 2006

A resulting trust is exemplified by Article 1448 of the Civil Code xxx Art. 1448. There is an implied trust when property is sold, and the legal estate isgranted to one party but the price is paid by another for the purpose of having thebeneficial interest of the property. The former is the trustee, while the latter is thebeneficiary.The trust created under the first sentence of Article 1448 is sometimes referred to as a

purchase money resulting trust. The trust is created in order to effectuate what the lawpresumes to have been the intention of the parties in the circumstances that the personto whom the land was conveyed holds it as trustee for the person who supplied thepurchase money.To give rise to a purchase money resulting trust, it is essential that there be:1. an actual payment of money, property or services, or an equivalent, constitutingvaluable consideration;2. and such consideration must be furnished by the alleged beneficiary of a resulting

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trust.There are recognized exceptions to the establishment of an implied resulting trust. Thefirst is stated in the last part of Article 1448 itself. Thus, where A pays the purchasemoney and title is conveyed by absolute deed to A's child or to a person to whom Astands in loco parentis and who makes no express promise, a trust does not result, the

presumption being that a gift was intended. Another exception is, of course, that inwhich an actual contrary intention is proved. Also where the purchase is made inviolation of an existing statute and in evasion of its express provision, no trust can resultin favor of the party who is guilty of the fraud.

Another exception to the establishment of an implied resulting trust under Article 1448 iswhen its enforcement contravenes public policy. We have already ruled that the transferof rights by Eusebio to respondent was null and void ab initio for being contrary to publicpolicy. As we held in Ramos v. Court of Appeals:Otherwise stated, as an exception to the law on trusts, "[a] trust or a provision in theterms of a trust is invalid if the enforcement of the trust or provision would be againstpublic policy, even though its performance does not involve the commission of a

criminal or tortious act by the trustee." The parties must necessarily be subject to thesame limitations on allowable stipulations in ordinary contracts, i.e., their stipulationsmust not be contrary to law, morals, good customs, public order, or public policy. Whatthe parties then cannot expressly provide in their contracts for being contrary to law andpublic policy, they cannot impliedly or implicitly do so in the guise of a resulting trust.(emphasis supplied)

HEBRON v. PALAD G.R. No. 149542July 2006

Art. 1448.“There is an implied trust when property is sold, and the legal estate is granted to oneparty but the price is paid by another for the purpose of having the beneficial interest ofthe property. The former is the trustee, while the latter is the beneficiary. However, if theperson to whom the title is conveyed is a child, legitimate or illegitimate, of the onepaying the price of the sale, no trust is implied by law, it being disputably presumed thatthere is a gift in favor of the child.”The trust created under the first sentence of Article 1448 is sometimes referred to as a

purchase money resulting trust, the elements of which are:(a) an actual payment of money, property or services, or an equivalent, constitutingvaluable consideration; and

(b) such consideration must be furnished by the alleged beneficiary of a resulting trust. As a rule, the burden of proving the existence of a trust is on the party asserting itsexistence, and such proof. While implied trusts may be proved by oral evidence, theevidence must be trustworthy and received by the courts with extreme caution, andshould not be made to rest on loose, equivocal or indefinite declarations. Trustworthyevidence is required because oral evidence can easily be fabricated.Thus, in order to establish an implied trust in real property by parol evidence, the proofshould be as fully convincing as if the acts giving rise to the trust obligation are proven

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by an authentic document. An implied trust, in fine, cannot be established upon vague and inconclusive proof.

MARCELITO D. QUEVADA v. JUANITO N. VILLAVERDE, G.R. No. 140798

September 19, 2006

Article 1450 of the Civil Code does not apply: ARTICLE 1450. If the price of a sale of property is loaned or paid by one person for thebenefit of another and the conveyance is made to the lender or payer to secure thepayment of the debt, a trust arises by operation of law in favor of the person to whomthe money is loaned or for whom it is paid. The latter may redeem the property andcompel a conveyance thereof to him.The conveyance of the property was not from petitioner, but rather from its previous

owner, to private respondent. No evidence is presented to show that such conveyancewas to secure payment of a debt. Thus, there is no resulting trust. Private respondent is

under no obligation in equity to hold his legal title to the land for the benefit of petitioner.There is no constructive trust either. Private respondent is not alleged to have obtained

or held the legal right thereto by fraud, duress, or abuse of confidence. Again, in theabsence of proof showing that private respondent has fraudulently registered the land inhis name, petitioner has no right to recover it under Article 1456 of the Civil Code, whichstates:

ARTICLE 1456. If property is acquired through mistake or fraud, the person obtaining itis, by force of law, considered a trustee of an implied trust for the benefit of the personfrom whom the property comes.

While an implied trust may be proved orally (Civil Code of the Philippines, Art. 1457),the evidence must be trustworthy and received by the courts with extreme caution,

because such kind of evidence may be easily fabricate. It cannot be made to rest onvague and uncertain evidence or on loose, equivocal or indefinite declarations. Theburden of proving the existence of a trust is on the party asserting its existence, andsuch proof must be clear and satisfactorily show the existence of the trust and itselements.

JESUS DURAN and DEMETRIA A. DURAN, v. COURT OF APPEALS G.R. No. 126973 May 2, 2006

In Morales v. Court of Appeals, we defined a trust and the categories of trust, viz:

Trusts are either express or implied. Express trusts are created by the intention of thetrustor or of the parties, while implied trusts come into being by operation of law, eitherthrough implication of an intention to create a trust as a matter of law or through theimposition of the trust irrespective of, and even contrary to, any such intention. In turn,implied trusts are either resulting or constructive trusts.Resulting trusts are based on the equitable doctrine that valuable consideration and notlegal title determines the equitable title or interest and are presumed always to havebeen contemplated by the parties. They arise from the nature or circumstances of the

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consideration involved in a transaction whereby one person thereby becomes investedwith legal title but is obligated in equity to hold his legal title for the benefit of another.On the other hand, constructive trusts are created by the construction of equity in orderto satisfy the demands of justice and prevent unjust enrichment. They arise contrary tointention against one who, by fraud, duress or abuse of confidence, obtains or holds the

legal right to property which he ought not, in equity and good conscience, to hold.

The burden of proving the existence of a trust is generally on the party asserting itsexistence. Such proof must be clear and must satisfactorily show the existence of thetrust and its elements. While oral evidence may be presented to prove the existence ofan implied trust, such evidence must be trustworthy because oral evidence can easilybe fabricated. Further, the evidence must be received by thecourts with extreme caution. The existence of an implied trust should not be made torest on loose, equivocal and indefinite declarations.[ JUANITA NAVAL, - vs - COURT OF APPEALS, JUANITO CAMALLA, JAIME NACION,CONRADO BALILA, ESTER MOYA and PORFIRIA AGUIRRE,

G.R. No. 167412February 22, 2006

The Court of Appeals correctly held that an action for reconveyance does not prescribewhen the plaintiff is in possession of the land to be reconveyed, as in this case.Thus, in Leyson v. Bontuyan:

This Court declared that an action for reconveyance based on fraud isimprescriptible where the plaintiff is in possession of the property subject of the acts.

In Vda. de Cabrera v. Court of Appeals, the Court held:

An action for reconveyance of a parcel of land based on implied or constructivetrust prescribes in ten years, the point of reference being the date of registration of thedeed or the date of the issuance of the certificate of title over the property, but this ruleapplies only when the plaintiff or the person enforcing the trust is not in possession ofthe property, since if a person claiming to be the owner thereof is in actual possessionof the property, as the defendants are in the instant case, the right to seekreconveyance, which in effect seeks to quiet title to the property, does not prescribe.The reason for this is that one who is in actual possession of a piece of land claiming tobe the owner thereof may wait until his possession is disturbed or his title is attackedbefore taking steps to vindicate his right, the reason for the rule being, that hisundisturbed possession gives him a continuing right to seek the aid of a court of equity

to ascertain and determine the nature of the adverse claim of a third party and its effecton his own title, which right can be claimed only by one who is in possession.

Similarly, in the case of David v. Malay, the same pronouncement was reiterated by theCourt. There is settled jurisprudence that one who is in actual possession of a piece ofland claiming to be owner thereof may wait until his possession is disturbed or his title isattacked before taking steps to vindicate his right, the reason for the rule being, that hisundisturbed possession gives him a continuing right to seek the aid of the court of

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equity to ascertain and determine the nature of the adverse claim of a third party and itseffect on his own title, which right can be claimed only by one who is in possession. Nobetter situation can be conceived at the moment for Us to apply this rule on equity thanthat of herein petitioners whose possession of the litigated property for no less than 30years and was suddenly confronted with a claim that the land she had been occupying

and cultivating all these years, was titled in the name of a third person. We hold that insuch a situation the right to quiet title to the property, to seek its reconveyance andannul any certificate of title covering it, accrued only from the time the one in possessionwas made aware of a claim adverse to his own, and it is only then that the statutoryperiod of prescription commences to run against such possessor.The paramount reason for this exception is based on the theory that registrationproceedings could not be used as a shield for fraud. Moreover, to hold otherwise wouldbe to put premium on land-grabbing and transgressing the broader principle in humanrelations that no person shall unjustly enrich himself at the expense of another.

Article 1448 of the Civil Code on implied trust provides: Art. 1448. There is an implied trust when property is sold, and the legal estate is granted

to one party but the price is paid by another for the purpose of having the beneficialinterest of the property. The former is the trustee, while the latter is the beneficiary.However, if the person to whom the title is conveyed is a child, legitimate or illegitimate,of the one paying the price of the sale, no trust is implied by law, it being disputablypresumed that there is a gift in favor of the child.The trust created under the first sentence of Article 1448 is sometimes referred to as apurchase money resulting trust, the elements of which are: (a) an actual payment ofmoney, property or services, or an equivalent, constituting valuable consideration; and(b) such consideration must be furnished by the alleged beneficiary of a resulting trust.Respondents have shown that the two elements are present in the instant case.Dominga was merely a trustee of the respondents in relation to the subject property.

Therefore, Dominga could not have validly donated the subject property to petitioner, asexpressly provided in Article 736 of the Civil Code, thus:

Art. 736. Guardians and trustees cannot donate the property entrusted to them.Truly, nobody can dispose of that which does not belong to him.

NESTOR MENDIZABEL, v. FERNANDO APAO G.R. No. 143185 February 20, 2006

Action for Reconveyance Based on Implied TrustIn an action for reconveyance, all that must be alleged in the complaint are two facts

which, admitting them to be true, would entitle the plaintiff to recover title to the disputedland, namely,

(1) that the plaintiff was the owner of the land or possessed the land in theconcept of owner and(2) that the defendant had illegally dispossessed him of the land

In their complaint, respondents clearly asserted that:

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(1) they were the true and actual possessors of the property;(2) they purchased the property from spouses Alejandro and Teofila Magbanuaon 21 March 1955 as evidenced by a deed of sale pacto de retro which spousesMagbanua executed in their favor;

(3) their ownership of the property became absolute when the vendors failed torepurchase it within the period stipulated in their contract; and(4) they were fraudulently deprived of ownership of the property when petitionersobtained homestead patents and certificates of title in their names.

These allegations certainly measure up to the requisite statement of facts to constitutean action for reconveyance based on an implied trust.

Indubitably, the act of petitioners in misrepresenting that they were in actual possessionand occupation of the property, obtaining patents and original certificates of title in theirnames, created an implied trust in favor of the actual possessors of the property. The

Civil Code provides:

ART. 1456. If property is acquired through mistake or fraud, the person obtaining it is, byforce of law, considered a trustee of an implied trust for the benefit of the person fromwhom the property comes.

In other words, if the registration of the land is fraudulent, the person in whose namethe land is registered holds it as a mere trustee, and the real owner is entitled to file anaction for reconveyance of the property.

Petitioners would nonetheless insist that respondents failed to present any proof of

fiduciary relation between them and respondents and breach of such trust bypetitioners.

Whether there is fiduciary relation between petitioners and respondents is of nomoment. Construing the provision of Article 1456, the Court in Aznar Brothers RealtyCompany v. Aying stated:

A deeper analysis of Article 1456 reveals that it is not a trust in the technicalsense for in a typical trust, confidence is reposed in one person who is named atrustee for the benefit of another who is called the cestui que trust, respectingproperty 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 afiduciary relation. While in an express trust, a beneficiary and a trustee are linkedby confidential or fiduciary relations, in a constructive trust, there is neither apromise nor any fiduciary relation to speak of and the so-called trustee neitheraccepts any trust nor intends holding the property for the beneficiary.

Implied trusts are those which, without being expressed, are deducible from the natureof the transaction as matters of intent or which are superinduced on the transaction byoperation of law as matters of equity, independently of the particular intention of the

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parties. In turn, implied trusts are either resulting or constructive trusts.Constructive trusts are created by the construction of equity in order to satisfy thedemands of justice and prevent unjust enrichment. They arise contrary to intentionagainst one who, by fraud, duress or abuse of confidence, obtains or holds the legalright to property which he ought not, in equity and good conscience, to hold.

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Spouses Raul and Amalia Panlilio v. Citibank, N.A. GR No. 156335 November 28, 2007

Art. 1440, NCC: A person who establishes a trust is called a trustor, one in whom theconfidence is reposed as regards property for the benefit of another person is known asthe trustee; and the person for whose benefit the trust has been created is referred to asthe beneficiary.

Trust business shall refer to any activity resulting from a trustor-trusteerelationship (trusteeship) involving the appointment of a trustee by a trustor for theadministration, holding, management of funds and/or properties of the trustor by thetrustee for the use, benefit or advantage of the trustor or of others called beneficiaries.Other fiduciary business shall refer to any activity of a trust-licensed bank resulting from

a contract or agreement whereby the bank binds itself to render services or to act in arepresentative capacity such as in an agency, guardianship, administratorship of wills,properties and estates, executorship, receivership, and other similar services which donot create or result in a trusteeship.

Erlinda Asejo v. People of the Philippines G.R. No. 157433 July 24, 2007

Art. 1440, NCC: A person who establishes a trust is called a trustor, one in whom theconfidence is reposed as regards property for the benefit of another person is known as

the trustee; and the person for whose benefit the trust has been created is referred to asthe beneficiary.

In a trust agreement, the transfer of the property to the trustee is mere physicalpossession and not juridical possession. Unlike in a contract of loan where the debtoracquires juridical possession and is technically the owner of the amount, in a trust, theobligation of the trustee is fiduciary in nature, i.e. to take care of the thing strictly for thebenefit of the trustor in accordance with the purpose of the express trust.

Soledad Caezo v. Concepcion Rojas G.R. No. 148788

November 23, 2007

Art. 1443, NCC: No express trusts concerning an immovable or any interest therein maybe proved by parol evidence.

Art. 1444, NCC: No particular words are required for the creation of an express trust, itbeing sufficient that a trust is clearly intended.

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A trust is the legal relationship between one person having an equitableownership of property and another person owning the legal title to such property, theequitable ownership of the former entitling him to the performance of certain duties andthe exercise of certain powers by the latter. What distinguishes a trust from otherrelations is the separation of the legal title and equitable ownership of the property. In a

trust relation, legal title is vested in the fiduciary while equitable ownership is vested ina cestui que trust.

There is a rule that a trustee cannot acquire by prescription the ownership ofproperty entrusted to him, or that an action to compel a trustee to convey propertyregistered in his name in trust for the benefit of the cestui que trust does not prescribe,or that the defense of prescription cannot be set up in an action to recover property heldby a person in trust for the benefit of another, or that property held in trust can berecovered by the beneficiary regardless of the lapse of time. This rule applies squarelyto express trusts. The basis of the rule is that the possession of a trustee is not adverse.Not being adverse, he does not acquire by prescription the property held in trust.

The existence of express trusts concerning real property may not be establishedby parol evidence. It must be proven by some writing or deed. Bare allegations do notconstitute evidence adequate to support a conclusion. They are not equivalent to proofunder the Rules of Court.

Although no particular words are required for the creation of an express trust, aclear intention to create a trust must be shown; and the proof of fiduciary relationshipmust be clear and convincing. The creation of an express trust must be manifested withreasonable certainty and cannot be inferred from loose and vague declarations or fromambiguous circumstances susceptible of other interpretations.

Heirs of Maximo Labanon v. Heirs of Constancio Labanon G.R. No. 160711 August 14, 2007

Art. 1444, NCC: No particular words are required for the creation of an express trust, itbeing sufficient that a trust is clearly intended.

No particular form of words or conduct is necessary for the manifestation ofintention to create a trust. It is possible to create a trust without using the word trust ortrustee. Conversely, the mere fact that these words are used does not necessarily

indicate an intention to create a trust. The question in each case is whether the trustormanifested an intention to create the kind of relationship which to lawyers is known astrust. It is immaterial whether or not he knows that the relationship which he intends tocreate is called a trust, and whether or not he knows the precise characteristics of therelationship which is called a trust.

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Gilbert G. Guy v. Court of Appeals G.R. No. 165849 December 10, 2007

Art. 1440, NCC: A person who establishes a trust is called a trustor, one in whom the

confidence is reposed as regards property for the benefit of another person is known asthe trustee; and the person for whose benefit the trust has been created is referred to asthe beneficiary.

Trust, in its technical sense, is "a right of property, real or personal, held by oneparty for the benefit of another." Differently stated, a trust is "a fiduciary relationship withrespect to property, subjecting the person holding the same to the obligation of dealingwith the property for the benefit of another person.”

ERLINDA PILAPIL and HEIRS OF DONATA ORTIZ BRIONES, namely: ESTELA,ERIBERTO AND VIRGILIO SANTOS, ANA SANTOS CULTURA, ELVIRA SANTOS

INOCENTES, ERNESTO MENDOZA, RIZALINA SANTOS, ADOLFO MENDOZA andPACITA MENDOZA, v. HEIRS OF MAXIMINO R. BRIONES, namely: SILVERIO S.BRIONES, PETRA BRIONES, BONIFACIO CABAHUG, JR., ANITA TRASMONTE,CIRILITA FORTUNA, CRESENCIA BRIONES, FUGURACION MEDALLE andMERCEDES LAGBAS, G.R. No. 150175 February 5, 2007

Art. 1456 Doctrine: As this Court declared in its Decision, the existence of any trust relationsbetween petitioners and respondents shall be examined in the light of Article 1456 of the

New Civil Code, which provides that, [i]f property is acquired through mistake or fraud,the person obtaining it is, by force of law, considered a trustee of an implied trust for thebenefit of the person from whom the property comes. Hence, the foremost question tobe answered is still whether an implied trust under Article 1456 of the New Civil Codehad been sufficiently established in the present case.

In the Decision, this Court ruled in the negative, since there was insufficient evidence toestablish that Donata committed fraud. It should be remembered that Donata was ableto secure certificates of title to the disputed properties by virtue of the CFI Order inSpecial Proceedings No. 928-R (the proceedings she inst i tuted tosettle Maximinos intestate estate), which declared her as Maximinos sole heir. In the

absence of proof to the contrary, the Court accorded to Special Proceedings No. 928-Rthe presumptions of regularity and validity.

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ANITA UNGAB-VALEROSO, joined in by her husband, RUSELO VALEROSO, v.AMANCIA UNGAB-GRADO, FELIX UNGAB, represented by his son ROSENDOUNGAB, ESPENILA UNGAB-JAICTIN and RUSTICINA UNGAB-TAMALA G.R. No. 163081 June 15, 2007

Art. 1444

Doctrine: As properly held by the trial and appellate courts, the execution of the Affidavit of Acknowledgment and the compromise agreement established an expresstrust wherein the respondents, as trustors, reposed their confidence on petitioner Anitaand her mother, as trustees, that they will hold the land subject of the co-ownership. There are no particular words required in the creation of an express trust, itbeing sufficient that a trust is clearly intended.[16] This express trust is shown in the twodocuments. Express trusts do not prescribe except when the trustee repudiates thetrust.

EULOGIO M. PEDRANO, v. HEIRS OF BENEDICTO PEDRANO, namely: ROMANAPEDRANO, ANTONIO PEDRANO, ROSENDA PEDRANO RAAGAS, LEONIDAPEDRANO VILLAMOR, and ZENAIDA P. DAGOHOY; and HEIRS OF NORBERTO M.PEDRANO, namely: NORBERTO C. PEDRANO, JR., MARILYN C. PEDRANO, andBENEDICTO C. PEDRANO, represented by NORMIE P. ALCORIN, G.R. No. 159666 December 4, 2007

Art. 1456

Doctrine: Petitioner had not adduced evidence that he indeed paid the PhP 30,000consideration for Lot. Since petitioner failed to comply with what is incumbent upon him,the injured parties (respondents as heirs of Romana) may choose between fulfillmentand rescission of the sale under Art. 1191 of the Civil Code. Respondents choserescission. Thus, the juridical tie between the parties is invalidated and it leaves theparties with their respective property rights relating to Lot No. 6416 before thecelebration of the December 22, 1981 Deed of Sale.

What remains therefore is the undisputed March 15, 1965 Deed of Sale withRomana as the buyer. Petitioners possession of Lot No. 6416, owned by his parents,was an implied trust constituted upon petitioner. The CA is correct in applying Art. 1456

on implied trust to this case.

Art. 1456 provides, If property is acquired through mistake or fraud, the personobtaining it is, by force of law, considered a trustee of an implied trust for the benefit ofthe person from whom the property comes.

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CYNTHIA CRUZ KHEMANI and SHANKER N. KHEMANI, v. THE HEIRS OFANASTACIO TRINIDAD, represented by NAPOLEON and ROLANDO TRINIDAD G.R. No. 147340 December 13, 2007

Doctrine: Even assuming arguendo that respondents filed their action after one year, they maystill be entitled to relief. An aggrieved party may file an action for reconveyance basedon implied or constructive trust, which prescribes in ten years from the date of theissuance of the certificate of title over the property provided that the property has notbeen acquired by an innocent purchaser for value.

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SPOUSES SOFRONIO SANTOS and NATIVIDAD SANTOS, FROILAN SANTOS,CECILIA M. MACASPAC, and R TRANSPORT CORPORATION vs. HEIRS OFDOMINGA LUSTRE, namely TARCISIO MANIQUIZ, TERESITA BURGOS, FLORITA

M. REYES and LERMIE MANIQUIZ||| G.R. No. 151016 August 6, 2008

A person acquiring property through fraud becomes, by operation of law, a trustee of animplied trust for the benefit of the real owner of the property. An action for reconveyancebased on an implied trust prescribes in ten years. And in such case, the prescriptiveperiod applies only if there is an actual need to reconvey the property as when theplaintiff is not in possession of the property. Otherwise, if plaintiff is in possession of theproperty, prescription does not commence to run against him. Thus, when an action forreconveyance is nonetheless filed, it would be in the nature of a suit for quieting of title,

an action that is imprescriptible.

IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and JOSE G.RESLIN vs. COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCABENEDICTO-PAULINO||| G.R. No. 154096August 22, 2008

Sec. 3, Rule 3 of the Rules of Court – Parties to Civil ActionRepresentatives as parties. –– Where the action is allowed to be prosecuted ordefended by a representative or someone acting in a fiduciary capacity, the beneficiary

shall be included in the title of the case and shall be deemed to be the real party ininterest. A representative may be a trustee of an express trust, a guardian, an executoror administrator, or a party authorized by law or these Rules. An agent acting in his ownname and for the benefit of an undisclosed principal may sue or be sued without joiningthe principal except when the contract involves things belonging to the principal.

The trustee may be accorded the right to prosecute a suit, but only on behalf of thebeneficiary who must be included in the title of the case and shall be deemed to be thereal party-in-interest.

HEIRS OF GORGONIO MEDINA, namely: LEONOR T. MEDINA, RAMON T. MEDINA,

ABIEL T. MEDINA, ILUDIVINA M. ROSARI, CONCEPCION DE LA CRUZ, LEONORM. BAKKER, SAMUEL T. MEDINA, VICTOR T. MEDINA, TERESITA M. SABADO,JOSEFINA M. CANAS and VERONICA M. DE GUZMAN vs. BONIFACIO NATIVIDAD,represented by PHILIP M. NATIVIDAD G.R. No. 177505 November 27, 2008

Section 24, Rule 132 of the Rules of Court.|

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Proof of official record. — The record of public documents referred to in paragraph (a) ofSection 19, when admissible for any purpose, may be evidenced by an officialpublication thereof or by a copy attested by the officer having the legal custody of therecord, or by his deputy, and accompanied, if the record is not kept in the Philippines,with a certificate that such officer has the custody. If the office in which the record is kept

is in a foreign country, the certificate may be made by a secretary of the embassy orlegation, consul general, consul, vice consul, or consular agent or by any officer in theforeign service of the Philippines stationed in the foreign country in which the record iskept, and authenticated by the seal of his office.

The rule on the prescriptive period of trustee repudiating the trust within 10 years||is notapplicable. When the special power of attorney is executed and acknowledged before anotary public or other competent official in a foreign country, it cannot be admitted inevidence unless it is certified as such in accordance with the foregoing provision of therules by a secretary of embassy or legation, consul general, consul, vice consul, orconsular agent or by any officer in the foreign service of the Philippines stationed in the

foreign country in which the record is kept of said public document and authenticated bythe seal of his office. Hence, a person has no legal capacity and not a real party-in-interest if the special power of attorney is not properly authenticated before a consularoffice.

NATIVIDAD BAUTISTA-BORJA vs. ILUMINADA BAUTISTA, AUREA BAUTISTA-RUIZ, CLARITA BAUTISTA, FLORENTINO BAUTISTA, DIOSDADO BAUTISTA,FRANCISCO BAUTISTA II, FRANCISCO BAUTISTA III, DANILO BAUTISTA,LUZVIMINDA BAUTISTA, ARTURO BAUTISTA, LUZ BAUTISTA and PAULINOBAUTISTA G.R. No. 136197

December 10, 2008

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, byforce of law, considered as a trustee of an implied trust for the benefit of the person fromwhom the property comes.

An action to compel the trustee to convey the property registered in his name for thebenefit of the cestui que trust does not prescribe"; and that the prescriptive periodcommences to run only when the trustee repudiates the trust through unequivocal actsmade known to the cestui que trust. Thus, if the trial court finds that the deed of sale isvoid, then the action for the declaration of the contract's nullity is imprescriptible.

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MARY ANN DEHEZA-INAMARGA vs. CELENIA C. ALANO, BERNALDA A.PAROHINOG, GODOFREDO ALANO, AVELINO ALANO, ESTRELLA ALANO,FORTUNATA ALANO, NANY ALANO, SALLY ALANO, ADIONITO ALANO, andSUFRONIA ALANO|| G.R. No. 171321

December 18, 2008

ART. 1410. The action or defense for the declaration of the inexistence of a contractdoes not prescribe.

The argument that the prescriptive period for reconveyance of land based on impliedor constructive trust is 10 years cannot apply where there is no consent given by oneparty in a purported contract, such contract was not perfected; therefore, there is nocontract to speak of. The deed of sale relied upon by petitioner is deemed a voidcontract.

Lopez vs. CA 574 SCRA 26 GR. NO. 157784 December 16,2008

When the properties that are intended to be part of a trust fund were registered in thename of the administrator of such trust fund, the possession of the administrator is thatof a trustee in an implied trust.

Ty vs. Ty 553 SCRA 306 GR. NO. 165696

April 30,2008

Art. 1448When the father paid the price of a land, but it was registered under the son’s name,there is no express trust because there is no writing to prove it, nor can there be animplied trust for the title to the land was conveyed to the son, thus a donation ispresumed.

Ting Ho, jr. vs. Teng Gui 558 SCRA 421 GR. NO. 130115

July 16,2008

The prohibition against an alien owning land of the public domain is absolute and noteven an implied trust can be permitted to arise on equity considerations.

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Pasiño vs. Monterroyo 560 SCRA 739 GR. NO. 159494 July 31, 2008

Under the principle of constructive trust, registration of property by one person in hisname, whether by mistake or fraud, the real owner being another person, impressesupon the title so acquired the character of a constructive trust for the real owner, whichwould justify an action for reconveyance.

Heirs of Nala vs. Cabansag GR. NO. 161188 June 13, 2008

When the property under trust is sold to a buyer, the sending of demand letters forrentals and evacuation is not indicative of bad faith or malice to support payment of

damages under article 19 of the New Civil Code.

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Guaranteed Homes, Inc. vs. Heirs of Maria P. Valdez,

G.R. No. 171531

January 30, 2009

The other heirs of Pablo should have filed an action for reconveyance based on impliedor constructive trust within ten (10) years from the date of registration of the deed or thedate of the issuance of the certificate of title over the property. The legal relationshipbetween Cipriano and the other heirs of Pablo is governed by Article 1456 of the CivilCode which provides that if a property is acquired through mistake or fraud, the personobtaining it is, by force of law, considered a trustee of an implied trust for the benefit ofthe person from whom the property comes.

Heirs of Toribio Waga vs. Sacabin, G.R. No. 159131 July 27, 2009

An action for reconveyance of property based on an implied or constructive trust is theproper remedy of an aggrieved party whose property had been erroneously registeredin another’s name. The prescriptive period for the reconveyance of registered propertyis ten years, reckoned from the date of the issuance of the certificate of title. However,the ten-year prescriptive period for an action for reconveyance is not applicable wherethe complainant is in possession of the land to be reconveyed and the registered ownerwas never in possession of the disputed property. In such a case, the action for

reconveyance filed by the complainant who is in possession of the disputed propertywould be in the nature of an action to quiet title which is imprescriptible.

Cavile vs. Litania-Hong, 581 SCRA 408

March 13, 2009

An aggrieved party may still file an action for reconveyance based on implied orconstructive trust, which prescribes in 10 years from the date of the issuance of theCertificate of Title over the property, provided that the property has not been acquired byan innocent purchaser for value. An action for reconveyance is one that seeks to

transfer property, wrongfully or fraudulently registered by another, to its rightful and legalowner. If the registered owner, be he the patentee or his successor-in-interest to whomthe free patent was transferred, knew that the parcel of land described in the patent andin the Torrens title belonged to another, who together with his predecessors-in-interesthad been in possession thereof, and if the patentee and his successor-in-interest werenever in possession thereof, the true owner may bring an action to have the ownershipof or title to the land judicially settled. The court in the exercise of its equity jurisdiction,without ordering the cancellation of the Torrens titled issued upon the patent, may direct

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the defendant, the registered owner, to reconvey the parcel of land to the plaintiff whohas been found to be the true owner thereof.

LINA PENALBER vs. QUIRINO RAMOS, LETICIA PENALBER and BARTEX, INC. G.R. No. 178645

January 30, 2009

Article 1440- A person who establishes a trust is called the trustor; one in whomconfidence is reposed as regards property for the benefit of another person is known asthe trustee; and the person for whose benefit the trust has been created is referred to asthe beneficiary.There is a fiduciary relationship between the trustee and the beneficiary as regardscertain property, real or personal, money or choices in action. However, in relation toExpress Trust, it being sufficient that a trust has been clearly intended, if it concerns animmovable property or any interest therein, the same may not be proved by parol or oralevidence.

The Supreme Court held that Trust, in its technical legal sense that it is the right,enforceable in its equity, to the beneficial employment of property, the legal title which isvested with another, but the word trust is frequently employed to indicate duties,relations, and responsibilities which are not strictly technical trusts.

HEIRS OF TRANQUILINO LABISTE vs. HEIRS OF JOSE LABISTE G.R. No. 162033 May 8, 2009

Article 1444- No particular words are required for the creation of an express trust, itbeing sufficient that a trust is clearly intended.

Trust relations between parties may either be express or implied. An express trust iscreated by the intention of the trustor or of the parties. Express Trusts are created bydirect and positive acts of the parties, by some writing or deed, or will, by words, eitherexpressly or impliedly evidencing an intention to create a trust.Under Article 1444, no particular words are required for the creation of an express trust,it being sufficient that a trust has been intended. As such, prescription and laches willrun only from the time the express trust has been repudiated.

ANGEL M. PAGADUAN et al. vs. SPOUSES ESTANISLAO and FE POSADASOCUMA G.R. No. 176308

May 8, 2009

Article 1456- If property is acquired through mistake or fraud, the person obtaining it is,by force of law, considered as trustee of an implied trust for the benefit of the personwhom the property comes.The Supreme Court reiterated that Article 1456 refers to actual or constructive fraud.Actual fraud consists in deception, intentionally practice to induce another to part withproperty or to surrender some legal right and which accomplishes the end desired.

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Constructive Fraud, on the other hand, is a breach of legal or equitable duty which thelaw declares as fraudulent irrespective of the moral guilt of the actor due to thetendency to deceive others, to violate private or public confidence, or to injure publicinterests. The latter proceeds from a breach of duty arising out of a fiduciary orconfidential relationship. If there is no fiduciary relationship against the parties, there

can be no existence of constructive fraud.

JOSEPH REMENTIZO vs. HEIRS OF PELAGIA Vda. De MADARIETA G.R. No. 170138 January 15, 2009

Article 1456- If property is acquired through mistake or fraud, the person obtaining it is,by force of law, considered as trustee of an implied trust for the benefit of the personwhom the property comes.The Supreme Court ruled that under Article 1456 of the New Civil Code, just as thatimplied or constructive trust is an offspring of the law, so is the corresponding obligation

to reconvey the property and the title thereto in favor of the true owner. In this context,and vis-à-vis prescription, the Civil Code provisions on prescription shall also be heldapplicable. Thus, the 10-year prescriptive period is reckoned from the date of theissuance of the certificate of title of the property involved. An action for reconveyancebased on implied or constructive trust prescribes in 10 years from the issuance of theTorrens title of the said property, which operates as a constructive notice to the wholeworld.

STRATEGIC ALLIANCE DEVELOPMENT CORPORATION vs. RADSTOCKSECURITIES LIMITED and PHILIPPINE NATIONAL CONSTRUCTIONCORPORATION

G.R. No. 178158 December 4, 2009

Article 1441- Trusts are either express or implied. Express trusts are created by theintention of the trustor or the parties. Implied trusts come into being by operation of law.

A Compromise Agreement will not create a Trust relationship. Trust is the legalrelationship between one person having an equitable ownership in property and anotherperson owing the legal title to such property, the equitable ownership of the formerentitling him to the performance of certain duties and the exercise of powers by thelatter. Trust relations between parties are either express or implied. Express trust arecreated by the direct and positive acts of the parties, by some writing, deed or will but a

compromise agreement would not vest any equitable ownership over the property.

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SPS. FELIPE and JOSEFA PARINGIT, Petitioner, vs. MARCIANA PARINGIT BAJIT,ADOLIO PARINGIT and ROSARIO PARINGIT ORDOÑO, Respondents. G.R. No. 181844

September 29, 2010

Art. 1144. The following actions must be brought within ten years from the time the rightof action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; or(3) Upon a judgment.

An implied trust prescribes within 10 years from the time the right of action accrues. Aright of action implies the existence of a cause of action and a cause of action has threeelements: a) the existence of a right in plaintiff’s favor; b) defendant’s obligation torespect such right; and c) defendant’s act or omission that violates the plaintiff’s right.Only when the last element occurs or takes place can it be said in law that a cause of

action has arisen. In an implied trust, the beneficiary’s cause of action arises when thetrustee repudiates the trust, not when the trust was created.

JUANITO GERONIMO, ANTONIA LIMSON and LINDA GERONIMO, vs. THE HEIRSOF CARLITO GERONIMO represented by ANGELITO GERONIMO, Respondents. G.R. No. 169858 January 26, 2010

Art. 1144. The following actions must be brought within ten years from the time the rightof action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; or(3) Upon a judgment.

Sec. 53 (3), PD 1529, “In all cases of registration procured by fraud, the owner maypursue all his legal and equitable remedies against the parties to such fraud withoutprejudice, however, to the rights of any innocent holder of the decree of registration onthe original petition or application.”

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, byforce of law, considered a trustee of an implied trust for the benefit of the person fromwhom the property comes.

An action for reconveyance based on an implied or constructive trust prescribes in tenyears from the issuance of the Torrens title over the property. The law thereby creates

the obligation of the trustee to reconvey the property and the title thereto in favor of thetrue owner. Correlating Section 53, paragraph 3 of Presidential Decree No. 1529 and

Article 1456 of the Civil Code with Article 1144(2) of the Civil Code, the prescriptiveperiod for the reconveyance of fraudulently registered real property is ten (10) yearsreckoned from the date of the issuance of the certificate of title. In this case, thereckoning period has not yet expired.

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MIGUEL J. OSSORIO PENSION FOUNDATION, INCORPORATED, Petitioner, vs. C O U R T O F A P P E A L S a n d C O M M I S S I O N E R O F I N T E R N A LREVENUE, Respondents. G.R. No. 162175 June 28, 2010

Art. 1450. If the price of a sale of property is loaned or paid by one person for thebenefit of another and the conveyance is made to the lender or payor to secure thepayment of the debt, a trust arises by operation of law in favor of the person to whomthe money is loaned or for whom it is paid. The latter may redeem the property andcompel a conveyance thereof to him.

An implied trust arises where a person purchases land with his own money and takesconveyance thereof in the name of another. In such a case, the property is held onresulting trust in favor of the one furnishing the consideration for the transfer, unless adifferent intention or understanding appears. The trust which results under such

circumstances does not arise from a contract or an agreement of the parties, but fromthe facts and circumstances; that is to say, the trust results because of equity and itarises by implication or operation of law. n this case, the notarized Memorandum of

Agreement and the certified true copies of the Portfolio Mix Analysis prepared byCitytrust clearly prove that petitioner invested a certain amount, using funds of theEmployees' Trust Fund, to purchase the MBP lot. Since the MBP lot was registered inVMC’s name only, a resulting trust is created by operation of law. A resulting trust isbased on the equitable doctrine that valuable consideration and not legal titledetermines the equitable interest and is presumed to have been contemplated by theparties.Based on this resulting trust, the Employees’ Trust Fund is considered thebeneficial co-owner of the MBP lot.

FEDERICO JARANTILLA, JR., Petitioner, vs. ANTONIETA JARANTILLA,BUENAVENTURA REMOTIGUE, substituted by CYNTHIA REMOTIGUE, DOROTEOJARANTILLA and TOMAS JARANTILLA, Respondents. G.R. No. 154486 December 1, 2010

Art. 1457. An implied trust may be proved by oral evidence.

Express trusts are created by the intention of the trustor or of the parties, while impliedtrusts come into being by operation of law, either through implication of an intention to

create a trust as a matter of law or through the imposition of the trust irrespective of,and even contrary to, any such intention. In turn, implied trusts are either resulting orconstructive trusts. Resulting trusts are based on the equitable doctrine that valuableconsideration and not legal title determines the equitable title or interest and arepresumed always to have been contemplated by the parties. They arise from the natureor circumstances of the consideration involved in a transaction whereby one personthereby becomes invested with legal title but is obligated in equity to hold his legal titlefor the benefit of another.

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On proving the existence of a trust, this Court held that: "As a rule, the burden ofproving the existence of a trust is on the party asserting its existence, and such proofmust be clear and satisfactorily show the existence of the trust and its elements. Whileimplied trusts may be proved by oral evidence, the evidence must be trustworthy andreceived by the courts with extreme caution, and should not be made to rest on loose,

equivocal or indefinite declarations. Trustworthy evidence is required because oralevidence can easily be fabricated." In this case, respondent has presented only bareassertions that a trust was created. Noting the need to prove the existence of a trust.

HEIRS OF DOMINGO VALIENTES, Petitioners, vs. Hon. REINERIO (Abraham) B.RAMAS, Acting Presiding Judge, RTC, Branch 29, 9th Judicial Region, SanMiguel, Zamboanga del Sur and Vilma V. Minor, Respondents. G.R. No. 157852 December 15, 2010

Art. 1144. The following actions must be brought within ten years from the time the right

of action accrues: (1) Upon a written contract; (2) Upon an obligation created by law; or(3) Upon a judgment.

Art. 1456. If property is acquired through mistake or fraud, the person obtaining it is, byforce of law, considered a trustee of an implied trust for the benefit of the person fromwhom the property comes.

An action for reconveyance of a parcel of land based on implied or constructive trustprescribes in ten years, the point of reference being the date of registration of the deedor the date of the issuance of the certificate of title over the property. But this ruleapplies only when the plaintiff is not in possession of the property, since if a person

claiming to be the owner thereof is in actual possession of the property, the right to seekreconveyance, which in effect seeks to quiet title to the property, does not prescribe. Inthe case at bar, petitioners are not in possession of the subject property. If it were to beconsidered as that of enforcing an implied trust, should have therefore been filed withinten years from the issuance of TCT in 1969. The case was, however, filed on 1998which was way beyond the prescriptive period.

HEIRS OF JOSE LIM, Represented by ELENITO LIM, Petitioners, vs. JULIET VILLA LIM G.R. No. 172690 March 3, 2010

Article 1769 of the Civil Code, which provides:

Art. 1769. In determining whether a partnership exists, these rules shallapply:

(1) Except as provided by Article 1825, persons who are not partners asto each other are not partners as to third persons;

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(2) Co-ownership or co-possession does not of itself establish apartnership, whether such co-owners or co-possessors do or do notshare any profits made by the use of the property;(3) The sharing of gross returns does not of itself establish a partnership,whether or not the persons sharing them have a joint or common right or

interest in any property from which the returns are derived;(4) The receipt by a person of a share of the profits of a business is aprima facie evidence that he is a partner in the business, but no suchinference shall be drawn if such profits were received in payment:

(a) As a debt by installments or otherwise;(b) As wages of an employee or rent to a landlord;(c) As an annuity to a widow or representative of a deceasedpartner;(d) As interest on a loan, though the amount of payment vary withthe profits of the business;

(e) As the consideration for the sale of a goodwill of a business orother property by installments or otherwise.

A partnership exists when two or more persons agree to place their money, effects,labor, and skill in lawful commerce or business, with the understanding that there shallbe a proportionate sharing of the profits and losses among them. A contract ofpartnership is defined by the Civil Code as one where two or more persons bindthemselves to contribute money, property, or industry to a common fund, with theintention of dividing the profits among themselves.

MARSMAN DRYSDALE LAND, INC., v. PHILIPPINE GEOANALYTICS INC. AND

GOTESCO PROPERTIES INC., GOTESCO PROPERTIES INC., v. MARSMAN DRYSSDALE LAND, INC. ANDPHILIPPINE GEOANALYTICS, INC., G.R. Nos. 183374-183376 June 29, 2010

Article 1797 of the Civil Code provides:

Art. 1797. The losses and profits shall be distributed in conformitywith the agreement. If only the share of each partner in the profits hasbeen agreed upon, the share of each in the losses shall be in the same

proportion.

In the absence of stipulation, the share of each in the profits andlosses shall be in proportion to what he may have contributed, but theindustrial partner shall not be liable for the losses. As for the profits, theindustrial partner shall receive such share as may be just and equitableunder the circumstances. If besides his services he has contributedcapital, he shall also receive a share in the profits in proportion to his

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capital.

In the JVA, Marsman Drysdale and Gotesco agreed on a 50-50 ratio on theproceeds of the project. They did not provide for the splitting of losses,however. Applying the above-quoted provision of Article 1797 then, the same ratio

applies in splitting the P535,353.50 obligation-loss of the joint venture.The appellate courts decision must be modified, however. Marsman Drysdaleand Gotesco being jointly liable, there is no need for Gotesco to reimburse MarsmanDrysdale for 50% of the aggregate sum due to PGI.

Allowing Marsman Drysdale to recover from Gotesco what it paid to PGI wouldnot only be contrary to the law on partnership on division of losses but would partake ofa clear case of unjust enrichment at Gotescos expense. The grant by the lower courtsof Marsman Drysdale cross-claim against Gotesco was thus erroneous.

J. TIOSEJO INVESTMENT CORP v. SPOUSES BENJAMIN and ELEANOR ANG G.R. No. 174149

September 8, 2010

Article 1824. All Partners are solidarily liable with the partnership for everythingchargeable to the partnership under Articles 1822 and 1823.xxx A joint venture is considered in this jurisdiction as a form of partnership and is,accordingly, governed by the law of partnerships. Under Article 1824 of the Civil Code ofthe Philippines, all partners are solidarily liable with the partnership for everythingchargeable to the partnership, including loss or injury caused to a third person orpenalties incurred due to any wrongful act or omission of any partner acting in theordinary course of the business of the partnership or with the authority of his co-partners. Whether innocent or guilty, all the partners are solidarily liable with the

partnership itself.

BALGAMELO CABILING MA, FELIX CABILING MA, JR., and VALERIO CABILINGMA v. COMMISSIONER ALIPIO F. FERNANDEZ, JR., ASSOCIATE COMMISSIONERARTHEL B. CARONOGAN, ASSOCIATE COMMISSIONER JOSE DL. CABOCHAN,ASSOCIATE COMMISSIONER TEODORO B. DELARMENTE AND ASSOCIATECOMMISSIONER FRANKLIN Z. LITTAUA, in their capacities as Chairman andMembers of the Board of Commissioners (Bureau of Immigration), and MAT G.CATRAL G.R. No. 183133 July 26, 2010

ARTICLE 1772. Every contract of partnership having a capital of three thousand pesosor more, in money or property, shall appear in a public instrument, which must berecorded in the Office of the Securities and Exchange Commission.

In a contract of partnership, we said that the purpose of registration is to give notice tothird parties; that failure to register the contract does not affect the liability of thepartnership and of the partners to third persons; and that neither does such failure affect

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the partnerships juridical personality. An unregistered contract of partnership is valid asamong the partners, so long as it has the essential requisites, because the mainpurpose of registration is to give notice to third parties, and it can be assumed that themembers themselves knew of the contents of their contract. (Citing Angeles vs. TheHon. Sec. of Justice and Felino Mercado; G.R. No. 142612, July 29, 2005)

ROGER V. NAVARRO v. HON. JOSE L. ESCOBIDO, Presiding Judge, RTC Branch37, Promulgated: Cagayan, De Oro City, and KAREN T. GO, doing business underthe NOVEMBER 27, 2009 name KARGO ENTERPRISES

ARTICLE 1811. A partner is co-owner with his partners of specific partnership property.

The incidents of this co-ownership are such that:

(1) A partner, subject to the provisions of this Title and to any agreement between thepartners, has an equal right with his partners to possess specific partnership propertyfor partnership purposes; but he has no right to possess such property for any other

purpose without the consent of his partners;(2) A partner's right in specific partnership property is not assignable except inconnection with the assignment of rights of all the partners in the same property;

(3) A partner's right in specific partnership property is not subject to attachment orexecution, except on a claim against the partnership. When partnership property isattached for a partnership debt the partners, or any of them, or the representatives of adeceased partner, cannot claim any right under the homestead or exemption laws;

(4) A partner's right in specific partnership property is not subject to legal support underarticle 291.In this connection, Article 1811 of the Civil Code provides that [a] partner is a co-owner

with the other partners of specific partnership property. Taken with the presumption ofthe conjugal nature of the funds used to finance the four checks used to pay forpetitioners stock subscriptions, and with the presumption that the credits themselves arepart of conjugal funds, Article 1811 makes Quirino and Milagros de Guzman co-ownersof the alleged credit.

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Aznar vs Philippine National BankGR No 172021May 30,2011

Express trusts are intentionally created by the direct and positive acts of the settlor andthe trustor - by some writing, deed or will or oral declaration. It is not created necessarilyby some written words, but by the direct and positive acts of the parties. This is inconsonance with Article 1444 of the civil code. In other words the creation of an expresstrust must be manifested with reasonable certainty and cannot be inferred from looseand vague declarationsIn the case at bar, no express trust existed. Careful scrutiny and plain and ordinarymeaning of the Minutes does not offer any indication that the parties intended Azar tobecome beneficiaries under an express trust.

Estate of Cabacungan vs Laigo et alGR No. 175073August 15, 2011

Express or direct trusts are created by the direct and positive acts of the trustor or of theparties however the creation of an express trust must be firmly shown; it cannot beassumed from loose and vague declarations or circumstances capable of otherinterpretations.

Art. 1444 No particular words are required for the creation of an express trust, it beingsufficient that a trust is clearly intended.

Torbela vs Spouses RosarioGR No. 140528December 7, 2011

Mere issuance of the certificate of title in the name of any person does not foreclose thepossibility that the real property may be under co-ownership with persons not named inthe cer

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