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Agency, Trusts, Partnership, and Joint Ventures: Atty. Jose U. Cochingyan III

The heirs of Tanak Pangawaran-Patiwayan filed a complaint against respondents seeking to annul the title obtained by Tagwalan Pangawaran, reconveyance of succession shares, partition, accounting and damages. They alleged that their ancestor married three times and had children from each marriage, but that Tagwalan fraudulently obtained title over the property in his name alone. The trial court dismissed the case, finding it had no jurisdiction and the action had prescribed. The Supreme Court ruled that Tagwalan's title was obtained through fraud, creating an implied trust in favor of the defrauded heirs. As such, the applicable prescriptive period was ten years, making the case still timely.

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138 views41 pages

Agency, Trusts, Partnership, and Joint Ventures: Atty. Jose U. Cochingyan III

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AGENCY, TRUSTS, PARTNERSHIP,

AND JOINT VENTURES

Atty. Jose U. Cochingyan III

CASE DIGESTS FOR

August 23, 2019 - August 24, 2019
B3 (36-49)

36. HEIRS OF TANAK PANGAWARAN PATIWAYAN v.

trust (and if not, an action for reversion) – YES
MARTINEZ RULING: While Taglawan is qualified to apply for a free patent over
June 10, 1986| J. Gutierres, Jr. | Several Persons Jointly Purchase the land in question, he was not the only one who was entitled to this
Property, But Place Title In One of Them privilege because he was not the only heir of Pangawaran. Since
B. SALAZAR & J. ROY Tagwalan, through fraud was able to secure a title in his own name to the
exclusion of his co-heirs who equally have the right to a share of the land
covered by the title, an implied trust was created in favor of said co-heirs.
PETITIONER: Heirs of Tanak Pangawaran Patiwayan, namely Respondent Tagwalan is deemed to merely hold the property for their
Patiwayan Mananque, Arabia, Ramir, Saramia, Inobodan, Samlan, and his benefit. It is clear that the prescriptive period which is applicable
Pinjamat, and Norma, all surnamed PATIWAYAN in this case is ten (10) years.
RESPONDENT: Hon. Antonio M. Martinez, in his capacity as Presiding
Judge of the CFI of Davao, Branch VI; Tagwalan Pangawaran; Balatang DOCTRINE: The rules are well-settled that when a person through
Atis; Bocaocawi (Moro); Jane Doe and Jill Doe, minors represented fraud succeeds in registering the property in his name, the law
herein by their natural mother and guardian NAPSA (Mora) creates what is called a "constructive or implied trust" in favor of
the defrauded party and grants the latter the right to recover the
RECIT-READY: Tanak Pangawaran-Patiwayan filed a complaint property fraudulently registered within a period of ten years.
against private respondents for annulment of title, reconveyance of
successional shares, partition, accounting and damages. She alleges that
her father, a certain Pangawaran, during his lifetime married legitimately FACTS:
three successive times; that she is the daughter by second marriage; that ● On July 1, 1976, Tanak Pangawaran-Patiwayan filed a
no liquidations of the conjugal partnerships after the death of complaint against the private respondents for annulment of title,
Pangawaran’s respective spouses; and that since respondent Tagwalan reconveyance of successional shares, partition, accounting and
was the only son, he was able to convince his co-heirs that he should act damages. Complaint alleged:
as administrator of the properties leftby Pangawaran but instead,
○ That a certain Pangawaran(one name), during his
managed to obtain a patent in his own name and anoriginal certificate of
title (O.C.T.) to the complainant's prejudice. lifetime married legitimately three times;
○ That complainant Tanak is the daughter by the second
Tanak died and her heirs were substituted as complainants in the case. marriage;
Respondents filed a motion to dismiss on the grounds, among others, that ○ that during the first and second marriages, there were no
the trial court has no jurisdiction to annul the Free Patent Application and liquidations of the conjugal partnership after the death of
the Original Certificate of Title issued in favor of respondent Tagwalan Pangawaran's respective spouses;
and that the action has prescribed. ○ That respondent Tagwalan is the child of the third
marriage;
RTC granted the motion saying that the action is now barred by
prescription (1 year from issuance of OCT), and that the plaintiffs do not ○ that since Tagwalan was the only son of Pangawaran,
have legal personality. he was able to convince his co-heirs that he should act as
administrator of the properties left by Pangawaran but
ISSUE: W/N the case is an action for reconveyance based on implied instead, managed to obtain a patent in his own name and

later anoriginal certificate of title (O.C.T.) to the RELEVANT ARGUMENTS (if any):
complainant's prejudice. (madayaaaa) Petitioners:
● Respondents denied the marriage of Pangawaran to Tanak's mother ● Maintain that the trial court has jurisdiction over the case which is
alleging that Pangawaran married only twice, the offsprings of mainly an action for reconveyance based on implied trust and not
which are the respondents themselves. an action for reversion which may only be filed by the Solicitor
● Tanak died and her heirs were substituted as complainants in the General;
case. ● That since the action is one for reconveyance based on implied
● Respondents filed a motion to dismiss on the grounds, among trust, the respondent court still has jurisdiction over the case
others, that the trial court has no jurisdiction to annul the Free because such action prescribes in ten (10) years and since the
Patent Application and the OCT issued in favor of Tagwalan and original certificate of title was issued on July 19, 1966 and the
that the action has prescribed. action was filed on July 1, 1976, the ten-year prescriptive period
● RTC granted the motion to dismiss saying, has not yet elapsed.
○ since the complainant alleges fraud and in order that the
Court can have jurisdiction to entertain the case at bar, it RATIO:
should have been brought within one (1) year from the ● Trial court was of the opinion "once the title is cancelled then the
time that the original certificate of title was issued to the land automatically reverts to the public domain."
defendant Tagwalan. ○ This is erroneous because when the patent was issued, the
○ Also, plaintiffs do not have legal personality to institute property in question ceased to be part of the public
the case at bar. Plaintiff Tanak cannot get her rightful domain and, therefore, even if respondent Tagwalan
share in the property unless and until the title issued has eventually is proven to have procured the patent and the
been cancelled. However, once the title is cancelled then original certificate of title by means of fraud, the land
the land automatically reverts to the public domain. Once would not revert back to the state but will be partitioned
it becomes a part of the public domain then plaintiff among the rightful heirs which also include Tagwalan and
Tanak cannot now claim any portion thereof unless and his co-respondents.
until all the heirs file an application for the property to be ● There is no question that respondent Tagwalan is qualified to apply
awarded in their names. for a free patent over the land in question because his father
○ To our mind, since the cancellation of the title precedes initiated the grounds for entitlement and had become entitled to
the distribution of a share to Tanak, then the suit must be such patent by virtue of cultivating the land during his lifetime and
brought by the Solicitor General in the name of the declaring the same as his property for taxation purposes.
Republic of the Philippines. Tagwalan, therefore, as heir of Pangawaran, became entitled
to the same privilege through his father and applied for a
ISSUES:W/N the case is an action for reconveyance based on implied trust patent in his stead. However, he was not the only one who was
(and if not, an action for reversion) – YES. entitled to this privilege because he was not the only heir of
Pangawaran.

● [ALSO] According to the respondent court, it lost jurisdiction over WHEREFORE, IN VIEW OF THE FOREGOING, the petition is
the case because it was brought after the lapse of one year from the GRANTED and the decision of the respondent court dated March 8,
date of the issuance of the original certificate of title. 1978 and its order dated April 18, 1978 are hereby ANNULLED and
○ ENGK MALI. The respondent court was unmindful of SET ASIDE. The case is ordered remanded to the respondent court for
the fact that since respondent Tagwalan, through further proceedings. Costs against the private respondents.
fraud was able to secure a title in his own name to the
exclusion of his co-heirs who equally have the right to
a share of the land covered by the title, an implied
trust was created in favor of said co-heirs. Respondent
Tagwalan is deemed to merely hold the property for
their and his benefit.
○ Article 1456 of our new Civil Code which provides: 'If
property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a
trustee of an implied trust for the benefit of the person
from whom the property comes.'
○ Since it appears that the land in question was obtained by
defendants thru fraudulent representations by means of
which a patent and a title were issued in their name, they
are deemed to hold it in trust for the benefit of the person
prejudiced by it.
○ There being an implied trust in this transaction, the
action to recover the property prescribes after the
lapse of ten years.
● Consequently, the action of petitioner was not yet barred since it
was filed on July 1, 1976 while the last day for filing such action
was on July 19, 1976, ten years after the issuance of the original
certificate of title.
● The rules are well-settled that when a person through fraud
succeeds in registering the property in his name, the law creates
what is called a "constructive or implied trust" in favor of the
defrauded party and grants the latter the right to recover the
property fraudulently registered within a period of ten years.

37. HEIRS OF CANDELARIA v. ROMERO

apparent that Emilio Candelaria who furnished the consideration intended
September 30, 1960| Gutierrez Davit| Topic to obtain a benecial interest in the property in question. Having supplied
J. SALAMAT & H. SATO the purchase money, it may naturally be presumed that he intended the
purchase for his own benet
PETITIONER: Heirs of Emilio Candelaria
The rule in such trusts is that laches constitutes a bar to actions to enforce
RESPONDENT: Luisa Romero
the trust, and repudiation is not required, unless there is concealment of
the facts giving rise to the trust. Continuous recognition of a resulting
RECIT-READY:
trust, however, precludes any defense of laches in a suit to declare and
Ester Candelaria alleged that Emilio and Luis Candelaria each bought a
enforce the trust. It being alleged that Lucas held the title to the lot in
lot in Solokan Subd. Lucas paid for the first two installments, but then he
question merely in trust for Emilio and that this fact was acknowledged
got sick, so he sold his interest to Emilio. Emilio continued to pay the
not only by him but also by his heirs, herein defendants—which
remaining installments in the name of Luis with the understanding that
allegation is hypothetically admitted—we are not prepared to rule that
the documents of transfer will be made later, the reason that the
plaintiffs action is already barred by lapse of time. On the contrary, we
transaction being from brother to brother. A cert of title was then issue in
think the interest of justice would be better served if she and her alleged
the name of Lucas. According to Ester, the title was merely held in trust
co-heirs were to be given an opportunity to be heard and allowed to
for Emilio. Despite repeated demands, Lucas’ wife, Luisa and children
present proof in support of their claim.
will not reconvey the lot to Ester. Acc to Luisa, the action is
unenforceable and that the action has already prescribed. The RTC ruled
DOCTRINE:
in favor of Luisa holding that the trust created was an express trust that
Where property is taken by a person under an agreement to hold it for, or
must be in writing and that since the TCT has been in the name of Lucas
convey it to another or the grantor, a resulting or implied trust arises in
since 1938, the action has already prescribed.
favor of the person for whose benet the property was intended. This rule
has been incorporated in the New Civil Code in Article 1453 thereof, and
ISSUE:
is founded on equity
● Whether an express or implied trust has been created - an
implied trust
Laches constitutes a bar to actions to enforce a constructive or implied
● Whether the action is barred by laches - no
trust, and repudiation is not required, unless there is concealment of the
facts giving rise to the trust. Continuous recognition of a resulting trust,
RULING:An implied trust arises where a person purchases land with his
however, precludes any defense
own money and takes a conveyance thereof in the name of another.Tthe
property is held on a resulting trust in favor of the one furnishing the
consideration for the transfer, unless a different intention or FACTS:
understanding appears. In the present case, the complaint expressly ● Ester Candelaria in her own behalf and in representation of the
alleges that "althoughLucas Candelaria had no more interest over the lot, other alleged heirs of Emilio Candelaria, alleges the ff:
the subsequent payments made by Emilio Candelaria until fully paid
○ That sometime prior to 1917 Emilio and his brother
were made in the name of Lucas Candelaria, with the understanding that
the necessary documents of transfer will be made later, the reason that Lucas Candelaria bought each a lot in the Solokan
the transaction being brother to brother." From this allegation, it is Subdivision on the installment basis;

○ That Lucas paid the rst two installments corresponding children; and that said defendants are still in possession of
to his lot, but faced with the inability of meeting the the lot, having refused to reconvey it to plaintiff despite
subsequent installments because of sickness which caused repeated demands
him to be bedridden, he sold his interest therein to his ● Instead of answering the complaint, the defendants led a motion
brother Emilio, who then reimbursed him the amount he to dismiss, alleging, that plaintiff's cause of action is unenforceable
had already paid, and thereafter continued payment of the under the new Civil Code and that the action has already
remaining installments until the whole purchase price had prescribed. The lower court held that an express and not an implied
been fully satised; trust was created which is unenforceable without any writing, and
○ "that although Lucas Candelaria had no more interest over that since TCT No. 9584 covering the land in question had been
the lot, the subsequent payments made by Emilio issued to Lucas Candelaria way-back in 1918 or 38 years before
Candelaria until fully paid were made in the name of the ling of the complaint, the action has already prescribed
Lucas Candelaria, with the understanding that the
necessary documents of transfer will be made later, the ISSUES:
reason that the transaction being from brother to brother" ● Whether there was an express trust created – No; it was an implied
○ In 1918 a transfer certicate of title for said lot was issued trust
by the register of deeds of Manila in the name of "Lucas
Candelaria married to Luisa Romero"; RATIO:
○ That Lucas held the title to said lot merely in trust for ● As held, in effect, by this Court in the case of Martinez vs. Graño,
Emilio and that this fact was acknowledged not only by where property is taken by a person under an agreement to hold it
him but also by the defendants (his heirs) on several for, or convey it to another or the grantor, a resulting or implied
occasions; trust arises in favor of the person for whose benet the property
○ That Lucas' possession of the lot was merely tolerated by was intended. This rule is founded upon equity. It is also the rule
Emilio and his heirs; that from the time Emilio bought the there that an implied trust arises where a person purchases land
lot from his brother, Lucas had been collecting all its rents with his own money and takes a conveyance thereof in the name of
for his own use as nancial aid to him as a brother in view another. In such a case, the property is held on a resulting trust in
of the fact that he was bedridden without any means of favor of the one furnishing the consideration for the transfer,
livelihood and with several children to support, although unless a different intention or understanding appears. The trust
from 1926, when Emilio was conned at the Culion Leper which results under such circumstances does not arise from
Colony up to his death on February 5, 1936 Lucas had contract or agreement of the parties, but from the facts and
been giving part of the rents to Fortunata Bautista, the circumstances, that is to say, it results because of equity and arises
second wife of Emilio, in accordance with the latter's by implication or operation of law
wishes; ● In the present case, the complaint expressly alleges that "although
○ That Lucas died in August, 1942, survived by the present Lucas Candelaria had no more interest over the lot, the subsequent
defendants, who are his spouse Luisa Romero and several payments made by Emilio Candelaria until fully paid were made in

the name of Lucas Candelaria, with the understanding that the

necessary documents of transfer will be made later, the reason that
the transaction being brother to brother." From this allegation, it is
apparent that Emilio Candelaria who furnished the consideration
intended to obtain a benecial interest in the property in question.
Having supplied the purchase money, it may naturally be presumed
that he intended the purchase for his own benet
● It is evident from the above-quoted allegation in the complaint that
the property in question was acquired by Lucas Candelaria under
circumstances which show that it was conveyed to him on the faith
of his intention to hold it for, or convey it to the grantor, the
plaintiffs predecessor in interest
● Constructive or implied trusts may, of course, be barred by lapse of
time. The rule in such trusts is that laches constitutes a bar to
actions to enforce the trust, and repudiation is not required, unless
there is concealment of the facts giving rise to the trust Continuous
recognition of a resulting trust, however, precludes any defense of
laches in a suit to declare and enforce the trust. The beneciary of
a resulting trust may, therefore, without prejudice to his right to
enforce the trust, prefer the trust to persist and demand no
conveyance from the trustee. It being alleged in the complaint that
Lucas held the title to the lot in question merely in trust for Emilio
and that this fact was acknowledged not only by him but also by
his heirs, herein defendants—which allegation is hypothetically
admitted—we are not prepared to rule that plaintiffs action is
already barred by lapse of time. On the contrary, we think the
interest of justice would be better served if she and her alleged
co-heirs were to be given an opportunity to be heard and allowed
to present proof in support of their claim.

Wherefore, the order of dismissal appealed from is hereby reversed

and the case remanded to the court a quo for further proceedings. So
ordered without costs

38. CUAYCONG v. CUAYCONG FACTS:

December 11, 1967 | J. Bengzon | Art. 1453 ● Eduardo Cuaycong, married to Clotilde de Leon, died without
LUCES & SEGOVIA issue but with three brothers and a sister surviving him: Lino,
Justo, Meliton and Basilisa. Upon his death, his properties were
distributed to his heirs as he willed except two haciendas in Negros
PETITIONER: Gertrudes F. Cuaycong, et al.
RESPONDENT: Luis D. Cuaycong, et al. Occidental, devoted to sugar and other crops — the Haciendas Sta.
Cruz and Pusod both known as Hacienda Bacayan. Hacienda
RECIT-READY: Upon the death of Eduardo Cuaycong, his properties Bacayan is comprised of eight (8) lots — all of which are titled in
were distributed to his heirs as he willed, except two haciendas: the name of Luis D. Cuaycong, son of Justo Cuaycong. Meliton
Haciendas Sta. Cruz and Pusod, which were titled in the name of Luis and Basilisa also died.
Cuaycong (defendant). Plaintiffs contend that Eduardo and his wife, ● The surviving children of Lino Cuaycong: Gertrudes, Carmen, Paz,
Clotilde, had an understanding that these Haciendas were to be divided Carolina, Virgilio; the surviving children of Anastacio: Ester,
among Eduardo’s brothers and sisters and his wife. They also allege that
Armando, Lourdes, Luis T., Eva and Aida; as well as Jose, Jr.,
Luis acquired these certificates of title thru fraud and in disregard of
Eduardo’s wishes. Plaintiffs demanded their shares, but these were Jesus, Mildred, Nenita, Nilo, all surnamed Betia, children of
refused. The CFI ruled that the trust alleged refers to an immovable, deceased Praxedes Cuaycong Betia, led as pauper litigants, a suit
which under the CC may not be proved by parol evidence. The plaintiffs against Justo, Luis and Benjamin Cuaycong for conveyance of
were given a chance to amend their complaint to include the written inheritance and accounting, alleging among others that:
instrument of trust. But plaintiff avers that the claim is based on an ○ Eduardo Cuaycong had made known to his siblings that
implied trust, hence they cannot amend the complaint to include such he and his wife Clotilde had an understanding with Luis
instrument. As a result, the court dismissed the case. Cuaycong and his father Justo Cuaycong, that it was their
desire to divide Haciendas Sta. Cruz and Pusod among his
ISSUE: W/N the trust subject of this case is express or implied - express
brothers and sisters and his wife Clotilde.
RULING: From the provisions of paragraph 8 of the complaint itself, ○ With the consent of his wife, Eduardo had asked his
We find it clear that the plaintiffs alleged an express trust over an brothers and sister to pay his wife P75,000 (the haciendas
immovable, especially since it is alleged that the trustor expressly told the were worth P150,000) and then divide equally the
defendants of his intention to establish the trust. remaining one-half share of Eduardo.
○ The brothers and sister failed to pay the 1/2 share of
Article 1453: "When property is conveyed to a person in reliance upon Clotilde over the two haciendas which were later acquired
his declared intentions to hold it for or transfer it to another or the
by Luis Cuaycong thru clever strategy, fraud,
grantor, there is an implied trust in favor of the person whose benefit is
contemplated." misrepresentation and in disregard of Eduardo's wishes by
causing the issuance in his name of certificates of title
DOCTRINE: Article 1453 would apply if the person conveying the covering said properties.
property did not expressly state that he was establishing the trust, unlike ● As the two haciendas were the subject of transactions between the
the case at bar where he was alleged to have expressed such intent. spouses and Justo and Luis Cuaycong, Eduardo told Justo and

Luis, and the two agreed, to hold in trust what might belong to RATIO:
his brothers and sister as a result of the arrangements and ● Express trust - one created by the intention of the trustor or of the
deliver to them their share when the proper time comes. parties. Express trusts are those created by the direct and positive
● That as far back as 1936 Lino demanded from Justo and Luis his acts of the parties, by some writing or deed or will or by words
share and especially after Eduardo's and Clotilde's death, the evidencing an intention to create a trust.
plaintiffs demanded their shares. Their demands had been refused. ● Implied trusts - one that comes into being by operation of law.
● Plaintiffs were given a chance to amend their complaint since CFI Those which, without being expressed, are deducible from the
ruled that the trust alleged refers to an immovable which under nature of the transaction by operation of law as matters of equity,
Article 1443 of the CC may not be proved by parol evidence. The independently of the particular intention of the parties.
plaintiff avers that the claim is based on an implied trust since ● Thus, if the intention to establish a trust is clear, the trust is
there being no written instrument of trust, they could not amend express; if the intent to establish a trust is to be taken from
the complaint to include such instrument. circumstances or other matters indicative of such intent, then the
● For failure to amend the complaint, the court dismissed the case. trust is implied.
Hence, this appeal hinging on whether the trust is express or ● From these and from the provisions of paragraph 8 of the
implied. complaint itself, We find it clear that the plaintiffs alleged an
● Paragraph 8 of the complaint states: express trust over an immovable, especially since it is alleged that
○ "That as the said two haciendas were then the subject of the trustor expressly told the defendants of his intention to
certain transactions between the spouses Eduardo establish the trust.
Cuaycong and Clotilde de Leon on one hand, and Justo ● Article 1453: "When property is conveyed to a person in reliance
and Luis D. Cuaycong on the other, Eduardo Cuaycong upon his declared intentions to hold it for or transfer it to another
told his brother Justo and his nephew, defendant Luis D. or the grantor, there is an implied trust in favor of the person
Cuaycong, to hold in trust what might belong to his whose bene fit is contemplated."
brothers and sister as a result of the arrangements and to ● Article 1453 would apply if the person conveying the property did
deliver to them their shares when the proper time comes, not expressly state that he was establishing the trust, unlike the
to which Justo and Luis D. Cuaycong agreed." case at bar where he was alleged to have expressed such intent.
● Even assuming the alleged trust to be an implied one, the right
ISSUES: W/N the trust subject of this case is express or implied - express alleged by plaintiffs would have already prescribed. It is settled
that the right to enforce an implied trust in one's favor prescribes in
RELEVANT ARGUMENTS (if any): ten (10) years.
Petitioner: The plaintiffs claim that an implied trust is referred to in
the complaint which, under Article 1457 of the Civil Code, may be WHEREFORE, the order of dismissal of the lower court appealed from
proved by parol evidence. is hereby affirmed, without costs. So ordered.

39. ADAZA v. COURT OF APPEALS

this Court to the conclusion which Violeta had admitted in the Deed of
March 21, 1989 | J. Feliciano | Resulting Trusts- Donation of Property Waiver, that is, that the "property [here involved] is owned in common
to a Donee Who Shall Have No Beneficial Title by [her] and [her] brother, Horacio G. Adaza, although the certificate of
F. QUIJANO & G. CAPUCHINO title was issued only in [her] name."The execution of the Deed of
Donation of 10 June 1953 by respondent Violeta's father created an
implied trust in favor of Violeta's brother, petitioner Horacio Adaza, in
PETITIONER: Horacio Adaza and Felicidad Marundan respect of half of the property donated."
RESPONDENT: Court of Appeals and Violeta Adaza
DOCTRINE: Where father formally donates a piece of land in the name
RECIT-READY: Victor Adaza, Sr. executed a Deed of Donation dated of the daughter with verbal notice that the other half would be held by her
10 June 1953, covering the parcel of land subject matter of this case, in for the benefit of a younger brother, coupled with a deed of waiver
favor of respondent Violeta. An Original Certificate of Title No. P-11111 subsequently executed by the daughter that she held the land for the
was issued in her name. Horacio Adaza was appointed Provincial Fiscal common benefit of her brother, created an implied trust in favor of the
of Davao Oriental in 1967 andmoved from Dapitan City to Davao brother under Art. 1449.
Oriental. Four (4) years later, Horacio came back to Dapitan City for the
town fiesta. Horacio asked Violeta to sign a Deed of Waiver which had
been prepared in respect of the property in Sinonok donated by their FACTS:
father Victor Adaza, Sr. This Deed stated that the Sinonok property was ● Victor Adaza, Sr. executed a Deed of Donation dated 10 June
owned in common by Violeta and her brother Horacio G. Adaza, even 1953, covering the parcel of land subject matter of this case, in
though the certificate of title had been issued in her name only. The Deed favor of respondent Violeta. Victor Adaza Sr died on 1956. An
also provided for the waiver, transfer and conveyance by Violeta in favor
Original Certificate of Title No. P-11111 was issued in her name.
of Horacio of one-half (1/2) of the Sinonok property, together with all
improvements existing in that one-half (1/2) portion. ● Horacio Adaza was appointed Provincial Fiscal of Davao Oriental
in 1967. He accordingly moved from Dapitan City to Davao
ISSUE: Oriental. Four (4) years later, Horacio came back to Dapitan City
● Whether or not there is an implied trust with the land between for the town fiesta. Horacio asked Violeta to sign a Deed of
Victor Adaza, Sr and Violeta Adaza in favor of Horacio? YES Waiver which had been prepared in respect of the property in
Sinonok donated by their father Victor Adaza, Sr.
RULING: The record is bereft of any indication of any evil intent or ● This Deed stated that the Sinonok property was owned in common
malice on the part of Homero, Victor, Jr. and Teresita that would suggest by Violeta and her brother Horacio G. Adaza, even though the
deliberate collusion against their sister Violeta. The testimonies of certificate of title had been issued in her name only. The Deed also
Homero Adaza and Teresita Adaza, both of whom explicitly stated that
provided for the waiver, transfer and conveyance by Violeta in
their father had executed the Deed of Donation with the understanding
that the same would be divided between Horacio and Violeta, Evidently, favor of Horacio of one-half (1/2) of the Sinonok property,
the parties' parents made it a practice, for reasons of their own, to have together with all improvements existing in that one-half (1/2)
lands acquired by them titled in the name of one or another of their portion.
children. Three (3) of the four (4) parcels acquired by the parents were
each placed in the name of one of the children. All the circumstances lead

● Violeta joined by her husband, Lino Amor, filed a complaint for her husband began to show what petitioner thought was undue and
annulment of the Deed of Waiver and for damages, against indelicate interest in the land in Sinonok.
petitioner spouses Horacio and Felisa M. Adaza. ● The trial court found, among other things:
● That Deed of Donation is noteworthy for its inclusion of a ○ "That from 1946 to 1968, the property in Sinonok covered by
paragraph that was crossed-out. The crossed-out provision reads: Original Certificate of Title No. P-11111 (Exhibits 'D', 'D-1' to
"That the donee shall share one-half (1/2) of the entire property 'D-3') had been administered by Homero Adaza, and the income
with one of her brothers or sisters after the death of the donor." from said land was spent for the expenses of their parents and
● The next succeeding paragraph reads thus: "That the donee do the plaintiff [Violetal who was studying at that time.
hereby receive and accept this gift and donation made in her ○ That defendant waived his share from the [income from the]
land in litigation in favor of plaintiffs [Violeta and her husband]
favor by the donor, not subject to any condition, and do hereby
who were hard-up at that time for they had a child who was
express her appreciation and gratefulness for the kindness and
suffering from a brain ailment; that it was also agreed upon that
generosity of the donor."
the share of the defendant in said parcel will be used for the
expenses of their mother (at that time bedridden).
ISSUES: ○ That defendant voluntarily relinguished his one-half (1/2) share
● Whether or not there is an implied trust with the land between of the income of the land now in litigation in favor of plaintiff
Victor Adaza, Sr and Violeta Adaza in favor of Horacio? YES during the lifetime of their mother, Rosario Gonzales Adaza,
subject to the condition that his (Horacio's) share of the proceeds
RATIO: shall be spent for the expenses of their mother who was at that
● The Deed of Waiver is important because there Violeta timebedridden."
acknowledged that she owned the land in common with her brother ● The execution of the Deed of Donation by respondent Violeta's
Horacio although the certificate of title bore only her name. Both father created an implied trust in favor of Violeta's brother,
the trial court and the Court of Appeals reached the conclusion that petitioner Horacio Adaza, in respect of half of the property
Violeta had in fact voluntarily signed the Deed of Waiver, even donated."
though she had done so with reluctance. The testimonies of ● Article 1449 of the Civil Code is directly in point:
Homero Adaza and Teresita Adaza, both of whom explicitly stated ○ "There is also an implied trust when a donation is made to a
that their father had executed the Deed of Donation with the person but it appears that although the legal estate is transmitted
understanding that the same would be divided between Horacio to the donee, he nevertheless is either to have no beneficial
and Violeta, that Violeta had signed the Deed of Waiver freely and interest or only a part thereof."
voluntarily, and that their brother Horacio had not threatened and
forced her to do so. WHEREFORE, the Petition for Review is hereby GRANTED. The
● The evidence showed that petitioner Horacio had taken care of his Decision dated 15 July 1977 of the Court of Appeals in C.A.-G.R. No.
father and mother and of his sister Violeta, that petitioner Horacio 55929-R is SET ASIDE and the Decision dated 31 May 1974 of the then
had been quite relaxed and unworried about the title remaining in Court of First Instance, Branch 2, Dipolog City in Civil Case No. 2213
the name of his sister alone until Violeta had gotten married and is REINSTATED. No pronouncement as to costs.

40. DIAZ v. GORRICHO

property. It is his fault if he delays; hence, he may be estopped by his
March 29, 1958 | J. Reyes J.B.L. | Constructive Trust own laches.
BARLONGAY & SERRANO
DOCTRINE: Constructive trust is a rule of equity, independent of the
particular intentions of the parties. In constructive trusts there is neither
PETITIONER: Manuel Diaz, Constancia Diaz and Sor Petra Diaz
promise nor fiduciary relations; the trustee does not recognize any trust
RESPONDENT: Carmen Gorricho and husband Francisco Aguado
with no intent to hold property for the beneficiary.
RECIT-READY: Spouse Diaz and Sevilla owned two lots. Diaz died in
1919. Survived by his wife and 3 children, defendant Gorricho filed an FACTS:
action against Sevilla where a writ of attachment was issued against the ● Lots Nos. 1941 and 3073 of the Cadastral Survey of Cabanatuan
said lots of the spouses which were later sold at public auction to originally belonged to the conjugal partnership of the spouses
Gorricho. However, the Sheriff wrongfully conveyed the entire lot to
Francisco Diaz and Maria Sevilla, having been registered in their
Gorricho instead of the half-interest of Sevilla.
name under Original Certificates of Titles.
In 1951, Sevilla died, and the following year, her children filed the ● Francisco Diaz died in 1919, survived by his widow Maria Sevilla
present action against Carmen Gorricho and her husband Francisco and their three children — Manuel Diaz born in 1911, Lolita Diaz
Aguado to compel defendants to execute in their favor a deed of born in 1913, and Constancia Diaz born in 1918.
reconveyance over an undivided one-half interest over the lots in ● Sometime in 1935, appellee Carmen J. Gorricho filed an action
question which defendants were allegedly held in trust for them. against Maria Sevilla in the Court of First Instance of Manila and a
writ of attachment was issued upon the shares of Maria Sevilla in
The lower court agreed that a constructive trust arose, however the action
the said lots. Said lots were sold at public auction and purchased
of the plaintiffs were barred by prescription and laches.,
by the plaintiff herself, Carmen J. Gorricho.
● Maria Sevilla failed to redeem within one year, whereupon the
ISSUE: W/N Appellants are barred by prescription and laches by virtue acting provincial sheriff executed a final deed of sale in favor of
of the constructive trust. Yes. Carmen J. Gorricho.
● In said final deed however, the sheriff conveyed to Gorricho the
RULING: The court here differentiated a constructive trust from an entire lot instead of only the half-interest of Maria Sevilla therein.
express trust. In express trusts, the delay of the beneficiary is directly ● Pursuant to said deed, Carmen J. Gorricho obtained Transfer
attributable to the trustee who undertakes to hold the property for the
Certificate of Title in her name on April 13, 1937, and has been
former, or who is linked to the beneficiary by confidential or fiduciary
relations. The trustee’s possession is, therefore, not adverse to the possessing said lands as owner ever since.
beneficiary, until and unless the latter is made aware that the trust has ● In November, 1951, Maria Sevilla died.
been repudiated. But in constructive trusts (that are imposed by law), ● The following year, on March 31, 1952, her children Manuel Diaz,
there is neither promise nor fiduciary relation; the so-called trustee does Constancia Diaz, and Sor Petra Diaz (Lolita Diaz) filed the present
not recognize any trust and has no intent to hold for the beneficiary; action against Carmen Gorricho and her husband Francisco
therefore, the latter is not justified in delaying action to recover his Aguado to compel defendants to execute in their favor a deed of

reconveyance over an undivided one-half interest over the lots in least while he does not openly repudiate the trust, and makes such
question (the share therein of their deceased father Francisco Diaz repudiation known to the beneficiary or cestui que trust. For this
illegally conveyed by the provincial sheriff to Gorricho), which reason, the old Code of Civil Procedure declared that the rules on
defendants were allegedly held in trust for them. adverse possession do not apply to "continuing and subsisting"
● Defendants alleged that plaintiffs’ action has long prescribed. (i.e., unrepudiated) trusts.
● The court below rendered judgment, holding that while a ● But in constructive trusts, the rule is that laches constitutes a bar to
constructive trust in plaintiffs’ favor arose when defendant actions to enforce the trust, and repudiation is not required, unless
Gorricho took advantage of the error of the provincial sheriff in there is concealment of the facts giving rise to the trust.
conveying to her the whole of the parcels in question and obtained ● In express trusts, the delay of the beneficiary is directly attributable
title in herself, the action of plaintiffs was, however, barred by to the trustee who undertakes to hold the property for the former,
laches and prescription. Plaintiff appealed. or who is linked to the beneficiary by confidential or fiduciary
relations. The trustee’s possession is, therefore, not adverse to the
ISSUES: W/N appellants are barred by prescription and laches by virtue of beneficiary, until and unless the latter is made aware that the trust
the constructive trust. Yes. has been repudiated. But in constructive trusts (that are imposed by
law), there is neither promise nor fiduciary relation; the so-called
RELEVANT ARGUMENTS (if any): trustee does not recognize any trust and has no intent to hold for
Petitioner: Their father’s half of the disputed property was the beneficiary; therefore, the latter is not justified in delaying
acquired by Carmen J. Gorricho through an error of the provincial action to recover his property. It is his fault if he delays; hence, he
sheriff; that having been acquired through error, it was subject to may be estopped by his own laches.
an implied trust, as provided by Article 1456 of the new Civil ● Morever, one who invokes the equitable doctrine of estoppel by
Code; and therefore, since the trust is continuing and subsisting, laches must show not only unjustified inaction but also some unfair
the appellants may compel reconveyance of the property despite injury would result to him unless the action is held barred.
the lapse of time, especially because prescription does not run ● Where the appellants' cause of action to attack the sheriff's deed
against titles registered under Act 496. and cancel the transfer certificates of title issued to the appellees
accrued from the year of their issuance and recording, 1937, and
RATIO: appellants have allowed fifteen 15 years to elapse before taking
● Appellants are in error in believing that like express trusts, such remedial action in 1902, more than sufficient time (13 yrs.) has
constructive trusts may not be barred by lapse of time. The been allowed to elapse to extinguish appellant's action, in view of
American law on trusts has always maintained a distinction the appellees' public assertion of title during this entire period.
between express trusts created by intention of the parties, and the Under the old Code of Civil Procedure in force at the time, the
implied or constructive trusts that are exclusively created by law, longest period of extinctive prescription was only ten years.
the latter not being trusts in their technical sense.
● The express trusts disable the trustee from acquiring for his own WHEREFORE, the judgment appealed from is affirmed, with costs
benefit the property committed to his management or custody, at against appellants.

41. VDA. DE OUANO v. REPUBLIC

title, MCIAA in this case, may not, in good conscience, retain
February 9, 2011 | Velasco Jr., J. | Constructive Trusts
the beneficial interest.
NOEL - REALUBIN

PETITIONER: ANUNCIACION VDA. DE OUANO et al. FACTS:

RESPONDENT: Republic of the Philippines, Mactan Cebu International
● In 1949, the National Airport Corporation (NAC), MCIAA’s
Airport Authority (MCIAA)
predecessor agency, pursued a program to expand the Lahug
RECIT-READY: The Ouanos and the Inocians parted with their Airport in Cebu City.
respective lots in favor of the MCIAA, the latter obliging itself to use the ● NAC met and negotiated with the owners of the properties situated
realties for the expansion of Lahug Airport; failing to keep its end of the around the airport, which included portions of the Banilad Estate.
bargain, MCIAA can be compelled by the former landowners to The government negotiating team assured the landowners that they
reconvey the parcels of land to them, otherwise, they would be denied the could repurchase their respective lands should the Lahug Airport
use of their properties upon a state of affairs that was not conceived nor expansion project do not push through or once the Lahug Airport
contemplated when the expropriation was authorized. However, MCIAA
closes or its operations transferred to Mactan-Cebu Airport. (verbal
refuse to return the land to them.
assurance)
ISSUE: ● Some of the landowners accepted the assurance and executed
Whether or not the abandonment of the public use for which the subject deeds of sale with a right of repurchase. Others refused to sell
properties were expropriated entitles the Ouanos and Inocians to because the purchase price offered was viewed as way below
repurchase them? (YES) market, therefore expropriation proceedings took place. The land
purchased by the Republic was subsequently transferred to the
RULING: MCIAA.
The court held that since it is no longer being used for a public purpose,
● Soon after the transfer of the aforesaid lots to MCIAA, Lahug
the landowners are entitled to repurchase the property as they were
Airport completely ceased operations, Mactan Airport having
promised. In effect, the government merely held the properties in
trust until the proposed public use or purpose for which the lots were opened to accommodate incoming and outgoing commercial
condemned was actually consummated by the government. Since the flights.
government failed to perform the obligation that is the basis of the ● The expropriated lots were never utilized for the purpose they
transfer of the property, then the lot owners Ouanos and Inocians can were taken as no expansion of Lahug Airport was undertaken.
demand the reconveyance of their old properties after the payment of the This prompted the former lot owners to formally demand from the
condemnation price. government that they be allowed to exercise their promised right to
repurchase.
DOCTRINE:
● MCIAA petition -The Inocians’ property was expropriated by the
● Constructive trusts are fictions of equity that courts use as state for the airport that never materialized. The RTC and CA ruled
devices to remedy any situation in which the holder of the legal in favor of the Inocians and ordered MCIAA to allow them to

repurchase their property. The MCIAA is now filing a petition for title, MCIAA in this case, may not, in good conscience, retain
review. the beneficial interest.
● Ouano petition- The property of the Ouano’s was taken taken for
the same reason. While the RTC ruled in their favor, the decision WHEREFORE, the petition in G.R. No. 168770 is GRANTED.
was reversed during the motion for reconsideration. The CA Accordingly, the CA Decision dated September 3, 2004 in CA-G.R. CV No.
denied their appeal, hence this petition before the SC. 78027 is REVERSED and SET ASIDE. (Ouano petition)

ISSUES: The petition of the Mactan-Cebu International Airport Authority in G.R.

● Whether or not the abandonment of the public use for which the No. 168812 is DENIED, and the CA’s Decision and Resolution dated
subject properties were expropriated entitles the Ouanos and January 14, 2005 and June 29, 2005, respectively, in CA-G.R. CV No.
Inocians to repurchase them. (YES) 64356 are AFFIRMED. (MCIAA petition)

RATIO:

● SC: Since the airport project failed to materialize, the land is no

longer for public purpose and must be returned to the Ouanos and
the Inocians.
● 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

42. SING JUCO and SING BENGCO v. ANTONIO SUYANTONG and

DOCTRINE: An employee who commits act of disloyalty to his
VICENTA LLORENTE DE SUYANTONG principal is liable for the damage caused.
30 June 1922 | J. Romualdez| When a Fiduciary Uses Funds or Property
Held in Trust to Purchase Property WhichIs Registered in Fiduciary’s Name or
a Third Party FACTS:
REALUBIN & SERRANO
● On May 20, 1919, the plaintiffs obtained from Maria Gay a written
option to purchase an estate known as "San Antonio Estate,"
PETITIONER: Sing Juco and Sing Bengco containing more than 2,000 hectares situated in the municipality of
RESPONDENT: Antonio and Vicenta Suyantong Passi, Province of Iloilo, together with the large cattle existing on
said estate. The term of the option expired, but the plaintiffs had it
RECIT-READY: The petitioners were supposed to buy the San Antonio
Estate from Maria Gay. Antonio Suyantong, as an employee of the extended verbally until 12 o'clock noon of June 17, 1919.
petitioners, was being updated about the progress of the negotiations. In ● The defendant Antonio Suyantong was at the time an employee of
the morning of the day when the option contract would expire, Suyantong the plaintiffs, and the preponderance of evidence shows that they
called Maria Gay and offered to purchase the property. This prompted reposed confidence in him and did not mind disclosing their plans
her to call the petitioners and seek for their answer whether to buy the to him, concerning the purchase of the aforesaid estate and the
property or not before the option contract would have even expired. Gay progress of their negotiations with Maria Gay.
sold the property to Antonio and Vicenta Suyantong. ● The plaintiffs sent Alipio de los Santos to inspect the land.
Suyantong talked to him and told him not to tell the plaintiffs that
ISSUE: Whether or not the acts of Suyantong are considered as acts of
disloyalty to his employers and that he should be held liable for the the land was valuable.
frustrated contract? - YES ● On the morning of the expiry of the option contract, Suyantong
called Maria Gay and offered to buy the estate on the same terms
RULING: A confidential employee who, knowing that his principal was proposed by her and not yet accepted by the plaintiffs, making the
negotiating with the owner of some land for the purchase thereof, offer to buy not for the benefit of the plaintiffs, but for his own
surreptitiously succeeds in buying it in the name of his wife, commits an wife, his codefendant Vicenta Llorente de Suyantong.
act of disloyalty and infidelity to his principal, whereby he becomes ● Maria Gay called Manuel Sotel, the broker of the plaintiffs, sought
liable, among other things, for the damages caused. In such cases the
for categorical answer. Sing Bengco instructed Stotel to inform her
reparation of the damages must consist in respecting the contract which
was about to be concluded, and which was frustrated by such an act of that if she did not care to wait until 12 o'clock, "ella cuidado" (she
disloyalty and infidelity, and transferring the said land for the same price could do as she pleased). This is a purely Philippines phrase, an
and upon the same terms as those on which the purchase was made for exact translation of the Tagalog "siya ang bahala" and
the land sold to the wife of said employee passed to them as what might approximately of the Visayan "ambut sa iya," which has very
be regarded an equitable trust, by virtue of which the thing thus acquired different, and even contradictory, meanings. It might be interpreted
by an employee is deemed to have been acquired not for his own benefit in several different ways, such as a threat on the part of Sing
or that of any other person but for his principal and held in trust for the Bengo to take legal action against Maria Gay in case she did not
latter.
wait until the expiration of the option, or that they would waive all

claims to the option and be agreeable to whatever action she might could have been caused to the plaintiff Sing Bengco, for the record shows
take. that he had every opportunity to take advantage of the option that was
● Interpreting the phrase to mean that the plaintiffs waived their granted him to buy the land, and until the last moment the owner, in view of
option to buy, Maria Gay closed the sale of the estate in favor of the fact that another offer to purchase, which was that of the defendant
the defendant Antonio Suyantong. Sunyantong, was being made to her, requested said Sing Bengco to give her
a de nite answer and the latter simply answered through Manuel Sotelo that
ISSUES: "if she (the owner) could not wait until 12 o'clock ella cuidado (she could
● Whether or not the acts of Suyantong are considered as acts of do as she pleased)." By this plaintiff Sing Bengco gave it to understand that
disloyalty to his employers and that he should be held liable for the he waived his right to the option and the owner was free to dispose of the
frustrated contract? - YES estate.

RATIO:

● A confidential employee who, knowing that his principal was

negotiating with the owner of some land for the purchase thereof,
surreptitiously succeeds in buying it in the name of his wife,
commits an act of disloyalty and infidelity to his principal,
whereby he becomes liable, among other things, for the damages
caused.
● In such cases the reparation of the damages must consist in
respecting the contract which was about to be concluded, and
which was frustrated by such an act of disloyalty and infidelity,
and transferring the said land for the same price and upon the same
terms as those on which the purchase was made for the land sold to
the wife of said employee passed to them as what might be
regarded an equitable trust, by virtue of which the thing thus
acquired by an employee is deemed to have been acquired not for
his own benefit or that of any other person but for his principal and
held in trust for the latter.

WHEREFORE, start here.

Dissenting opinion of Justice Villamor:

Has any damage been proven to have arisen from the culpable act of the
defendant Suyantong? I do not think that it has, and indeed no damage

43. CORNELIA M. HERNANDEZ v CECILIO F. HERNANDEZ

is elementary that in regard to property subject matter of the agency, an
March 9, 2011 | PEREZ, J. |When a Fiduciary Uses Funds or Property agent is estopped from acquiring or asserting a title adverse to that of the
Held in Trust to Purchase Property Which Is Registered in Fiduciary’s principal. His position is analogous to that of a trustee and he cannot,
Name or a Third Party (Art. 1455) consistently with the principles of good faith, be allowed to create in
T. DELA ROSA himself an interest in opposition to that of his principal or cestui que
trust.

PETITIONER: Cornelia M. Hernandez

RESPONDENT: Cecilio F. Hernandez FACTS:

RECIT-READY: ● The controversy arose when the Republic of the Philippines,

Cornelia M. Hernandez was one of the owners of a parcel of land that the through the Department of Public Works and Highways (DPWH),
PH government, through DPWH, wanted to buy for the expansion of offered to purchase a portion of a parcel of land with an area of
SLEX. Cornelia and the other owners negotiated the purchase price with
80,133 square meters, covered by TCT No. T-36751of the Registry
the government but they did not see eye to eye on the price. As such, the
government filed an expropriation case. The owners of the Hernandez of Deeds for Tanauan, Batangas, located at San Rafael, Sto.
property then appointed Cecilio as their representative and their latter had Tomas, Batangas, for use in the expansion of the South Luzon
a stipulation regarding his compensation (see comprehensive list of Expressway (SLEX).
facts). Subsequently, he was also appointed as one of the commissioners ● The land is pro-indiviso owned by
who would determine the FMV of the land. In October 1996, Cornelia ○ Cornelia M. Hernandez (Cornelia), petitioner herein,
and her co-owners executed an SPA in favor of Cecilio, but no mention ○ Atty. Jose M. Hernandez, deceased father of respondent
of his compensation was included. Later on, the just compensation for the Cecilio F. Hernandez (Cecilio) represented by Paciencia
property was fixed at ₱21,964,500.00. In October 1999, Cecilio’s SPA
Hernandez (Paciencia) and Mena Hernandez (Mena), also
was revoked. After the revocation, on 28 December 1999, without the
termination of counsel on record, Cornelia, with a new lawyer, moved for deceased and represented by her heirs.
the withdrawal of her share worth ₱7,321,500.00. The RTC judge who ● Initial purchase price the government offered: P35/sqm for 14,643
handled the expropriation case granted her motion but had the money sqm. The Hernandez family rejected the offer.
released to the attorney-in-fact Cecilio. Cornelia received from Cecilio a ● After negotiations, the last offer stood at P70/sqm. They still did
BPI Check amounting to One Million One Hundred Twenty-Three not accept the offer and the government was forced to file an
Thousand Pesos ₱1,123,000.00 along with a receipt and quitclaim. She expropriation case.
received this but later on found out that she was entitled to much more. ● On 9 August 1993, an expropriation case was filed by the Republic
A Complaint for the Annulment of Quitclaim and Recovery of Sum of
of the Philippines, through the DPWH, before the RTC in Batangas
Money and Damages was filed before the RTC. RTC ruled that the
receipt and quitclaim was null and void and otdered Cecilio to pay. The ● In Civil Case No. C-023, different parcels of land in Barangay
CA reversed and set aside the decision. The SC reinstated the RTC Tripache, Tanauan Batangas, which belongs to thirty-four (34)
decision. families including the Hernandezes are affected by the expansion
project of the DPWH. A similar case, Civil Case No. C-022, was
DOCTRINE: The relation of an agent to his principal is fiduciary and it consolidated with the former as it affects the same DPWH

endeavor. Land in San Rafael, Sto. Tomas, Batangas, which belong ○It further stated that the authority shall bind all successors
to twenty-three (23) families, was also the subject of expropriation. and assigns in regard to any negotiation with the
● On November 11, 1993 the owners of the Hernandez property government until its consummation and
executed a letter indicating: (1) Cecilio as the representative of the ○ binding transfer of a portion to be sold to that entity with
owners of the land; and (2) the compensation he gets in doing such Cecilio as the sole signatory in regard to the rights and
job. interests of the signatories therein.
○ “twenty (20%) percent of any amount in excess of ○ There was no mention of the compensation scheme
Seventy (P70.00) Pesos per square meter of our respective ● The just compensation for the condemned properties was fixed at
shares as success fee for your effort in representing us in The value of the land located at Barangay Tripache, Tanauan,
Civil Case No. T-859 entitled, "Republic of the Batangas, was pegged at One Thousand Five Hundred Pesos
Philippines, represented by the Public Works and (₱1,500.00) per square meter.
Highways v. Sto. Tomas Agri-Farms, Inc. and the ○ The total area that was condemned for the Hernandez
Appellate Courts." family was Fourteen Thousand Six Hundred Forty-Three
○ Whatever excess beyond Three Hundred (₱300.00) Pesos (14,643) square meters.
per square meter of the area shall likewise be given to you ○ Thus, multiplying the values given, the Hernandez family
as additional incentive. will get a total of Twenty One Million, Nine Hundred
○ We will give you One Thousand Five Hundred Sixty-Four Thousand Five Hundred Pesos
(₱8,500.00) (sic) Pesos each for the preparation of the (₱21,964,500.00) as just compensation.
pleading before the Regional Trial Court and such other ○ Included in the decision is the directive of the court to pay
reasonable expenses of litigation pro-indiviso.” the amount of ₱4,000.00 to Cecilio, as Commissioner’s
● In order to determine the fair market value of the lands subject of fees.
expropriation, the following are appointed as commissioners: Engr. ● On 6 October 1999, petitioner executed a Revocation of the SPA
Melchor Dimaano, as representative of the Department of Public withdrawing the authority earlier granted to Cecilio in the SPA
Works and Highways (DPWH), Messrs. Magno Aguilar and dated 18 October 1996.
Cecilio Hernandez, as representatives of the landowners, and Mr. ● After the revocation, on 28 December 1999, without the
Eric Faustino Esperanza as representative of the Court. termination of counsel on record, Cornelia, with a new lawyer,
● On October 18, 1996, Cornelia, and her other co-owners who were moved for the withdrawal of her one-third (1/3) share of the just
also signatories of the 11 November 1993 letter, executed an compensation, which is equivalent to Seven Million Three
irrevocable Special Power of Attorney (SPA) appointing Cecilio Hundred Twenty-One Thousand Five Hundred Pesos
Hernandez as their "true and lawful attorney" with respect to the (₱7,321,500.00) – the amount a pro-indiviso owner is to receive.
expropriation of the subject property ● In January 24, 2000, Judge Rosales, even with the irregularity that
○ stated that the authority shall be irrevocable and continue the motion to withdraw was not filed by the counsel of record,
to be binding all throughout the negotiation. granted the motion of petitioner, with the condition that the money

shall be released only to the attorney-in-fact, Mr. Cecilio F. of Makati on 18 September 2000. The case was docketed as Civil
Hernandez. Case No. 00-1184.
○ Cecilio, therefore, was able to get not just one-third (1/3) ● RTC ruled that the receipt and quitclaim was null and void and
of, but the entire sum of Twenty One Million, Nine otdered Cecilio to pay
Hundred Sixty-Four Thousand Five Hundred Pesos ● The CA reversed and set aside the decision
(₱21,964,500.00).
● On 7 February 2000, Cornelia received from Cecilio a Bank of the RELEVANT ARGUMENTS:
Philippine Islands Check amounting to One Million One Hundred Petitioner: Court of Appeals erred in holding the validity of the receipt and
Twenty-Three Thousand Pesos (₱1,123,000.00) quitclaim document contrary to law and jurisprudence. She holds that the
○ This was accompanied by a receipt and quitclaim distribution of award that transpired is unjust and prays that the decision of
document in favor of Cecilio the RTC Branch 150 of Makati be reinstated.
○ In essence it states that:
■ (1) the amount received will be the share of Cornelia Respondent: The equal division of proceeds, however, was contested by
in the just compensation paid by the government in the Cecilio. He avers that he is the agent of the owners of the property. He
expropriated property; bound himself to render service on behalf of her cousins, aunt and mother,
■ (2) in consideration of the payment, it will release and by virtue of the request of the latter. As an agent, Cecilio insists that he be
forever discharge Cecilio from any action, damages, given the compensation he deserves based on the agreement made in the
claims or demands; and
letter dated 11 November 1993, also called as the service contract, which
■ (3) Cornelia will not institute any action and will not
was signed by all the parties. This is the contract to which Cecilio anchors
pursue her complaint or opposition to the release to
his claim of validity of the receipt and quitclaim that was signed in his
Cecilio or his heirs or assigns, of the entire amount
favor.
deposited in the Land Bank of the Philippines,
Tanauan, Batangas, or in any other account with any
bank, deposited or will be deposited therein, in ISSUES: W/N the CA erred in holding the validity of the receipt and
connection with Civil Case No C-023, representing the quitclaim? YES
total just compensation of expropriated properties
under the aforementioned case. RATIO:
● Cornelia, a few days from her receipt of the check, sought the help ● What is on record is that Cornelia asked for an accounting of the
of her niece, Daisy Castillo, to get the decision in Civil Case No. just compensation from Cecilio several times, but the request
C-022.23 It was only then, when her niece got hold of the decision remained unheeded. Right at that point, it can be already said that
and explained its contents, that she learned that she was entitled to Cecilio violated the fiduciary relationship of an agent and a
receive Seven Million Three Hundred Twenty-One Thousand Five principal. The relation of an agent to his principal is fiduciary
Hundred Pesos (₱7,321,500.00) and it is elementary that in regard to property subject matter of
● A Complaint for the Annulment of Quitclaim and Recovery of the agency, an agent is estopped from acquiring or asserting a
Sum of Money and Damages was filed before the RTC Branch 150 title adverse to that of the principal. His position is analogous to

that of a trustee and he cannot, consistently with the principles of

good faith, be allowed to create in himself an interest in
opposition to that of his principal or cestui que trust.
● Cecilio’s last source of authority to collect payment from the
proceeds of the expropriation is the SPA executed on 18 October
1996 by the Hernandezes in favor of Cecilio as their "true and
lawful" attorney with respect to the expropriation of the Hernandez
property. At the outset, it must be underscored that the SPA did not
specify the compensation of Cecilio as attorney-in-fact of the
Hernandezes.
● When Cecilio accepted the position as commissioner and
proceeded to perform the duties of such commissioner until the
completion of his mandate as such, he created a barrier that
prevented his performance of his duties under the SPA. Due to the
nature of his duties and functions as commissioner, Cecilio became
an officer of the court.
● Cecilio acted for the expropriation court. He cannot be allowed to
consider such action as an act for or in behalf of the defendant in
the same case. Cecilio could not have been a hearing officer and a
defendant at the same time. Indeed, Cecilio foisted fraud on both
the Court and the Hernandezes when, after his appointment as
commissioner, he accepted the appointment by the Hernandezes to
"represent" and "sue for" them.

WHEREFORE, premises considered, the Decision of the Court of Appeals

is hereby REVERSED and SET ASIDE. The Decision of the RTC of
Makati, Branch 150 is REINSTATED with the following
MODIFICATIONS that the interest on the monetary awards should be at
6% per annum from the time of the filing of the complaint up to the date of
the decision, and at 12% per annum from finality until fully paid.

SO ORDERED.

44. GAYONDATO v TREASURER

DOCTRINE: Where a mother and her minor daughter inherited a large
Aug 25, 1926 | Ostrand | When Property Acquired Through Mistake or tract of land, and had it applied for cadastral survey, but title was issued
Fraud (Art. 1456) only in the name of the mother, courts of equity will impress upon the
R. Dysico & P. Soriano title, a condition which is generally in a broad sense termed ―
“constructive trust” in favor of the defrauded party (daughter), but use of
―trust in this sense is not technically accurate.
PETITIONER: Rosario Gayondato
RESPONDENT: The Treasurer of the Philippine Islands, Adela
Gasayata, Domingo Cuacho, Francisco Rodriguez FACTS:
● This action is brought to recover damages in the sum of P30,000
RECIT-READY: Domingo Gayondato owned lands which he inherited for the erroneous registration in the name of the defendant
from his mother. When he married Adela Gasataya, they had a child, Gasataya of three parcels of land situated in the municipality of
named Rosario Gayondato. When Domingo Gayondato died, Adela
Isabela, Province of Occidental Negros, and of which Gayondato
married Domingo Cuachon. The said lands became the subject of a
cadastral proceeding. In the said case, Cuachon appeared on behalf of was the owner at the time of the registration.
Adela and Rosario and filed claims for the lots in which he stated that the ● The three parcels of land were formerly owned by one Domingo
lots were property of “his with Adela Gasataya and of her daughter, Gayondato, who inherited them from his mother, Ramona
fifteen years of age.” Notwithstanding said statement, CFI erroneously Granada, in 1896. In 1899 Domingo married Adela Gasataya, with
decreed the registration of lots in the name of Adela alone. Rosario whom he had a child, Rosario Gayondato, born in October 1900.
brought this case against Adela, Cuachon, Francisco (buyer of the lots), Upon the death of Domingo in the year 1902, Gabino Gasataya,
and Insular Treasurer. CFI ruled in favor of Rosario ordering Adela and the father of Adela, took charge of the three parcels of land in
Cuachon to pay damages. However, CFI absolved Insular Treasurer and
question. In 1908 Adela married the Domingo Cuachon, and
Rodriguez from the complaint.
Gabino Gasataya thereupon turned over to them the possession of
ISSUE: WON the Court erred in absolving the Insular Treasurer by the land.
virtue of Sec. 106 of the Land Registration Act which provides that the ● The three parcels were included in cadastral case No. 11 of the
assurance fund shall not be liable in case of breach of trust by the trustee. Court of First Instance of Occidental Negros as lots Nos. 70, 364
-YES and 375, and when that case came on for hearing in August, 1916,
Domingo Cuachon appeared on behalf of his wife and
RULING: The SC ruled that Insular Treasurer must be held liable as the stepdaughter and filed claims for the aforesaid lots by way of
trust referred to in Sec. 106 requires a technical signification of trust. The
answers in which he stated that the lots were the property of "his
court below appears to have been under the impression that the liability
of the assurance fund is confined to cases where the erroneous with Adela Gasataya and of her daughter, fifteen years of age."
registration is due to omission, mistake or malfeasance on the part of the Notwithstanding this statement, the Court of First Instance
employees of the registration court. That this view is erroneous, is erroneously decreed the registration of the aforesaid lots in the
evident from the language of section 101 and 102 of the Land name of Adela Gasataya alone. Subsequently Adela, with the
Registration Act consent of her husband, mortgaged the property to the National
Bank and finally in the year 1920 sold it to Rodriguez for the sum

of P13,000, the purchaser, in addition thereto, assuming the persons other than the clerk, the register of deeds, the examiners of
liability for a mortgage of P8,000 to the National Bank and for titles, deputies and clerks, or arising jointly through the fraud or
certain other debts amounting to over P4,000. wrongful act of such other person or persons and the omission,
● The complaint in the present case was filed on August 18, 1922, mistake, or misfeasance of the clerk, the register of deeds, the
Adela Gasataya, Domingo Cuachon, Francisco Rodriguez and the examiners of titles, deputies, or clerks, then such action shall be
Insular Treasurer being made parties defendant. Upon the facts brought against both the Treasurer of the Philippine Archipelago
above stated the trial court rendered judgment in favor of and such person or persons aforesaid. In all such actions where
Gayondato, ordering Adela Gasataya and Domingo Cuachon there are defendants other than the Treasurer of the Philippine
jointly and severally to indemnify Gayondato in the sum of Archipelago and damages shall have been recovered, no final
P35,000. The Insular Treasurer and Francisco Rodriguez were judgment shall be entered against the Treasurer of the Philippine
absolved from the complaint. Archipelago until execution against the other defendants shall be
returned unsatisfied in whole or in part, and the officer returning
ISSUES: Whether or not the trial court erred in absolving the Insular the execution ]shall certify that the amount still due upon the
Treasurer from the complaint? (YES) execution cannot be collected except by application to the
assurance fund. Thereupon the court having jurisdiction of the
RATIO: action, being satisfied as to the truth of such return, may, upon
Lower court erred in absolving Treasurer proper showing, order the amount of the execution and costs or so
● Sections 101 and 102 of the Land Registration Act read as follows: much thereof as remains unpaid, to be paid by the Treasurer of the
Philippine Archipelago out of the assurance fund.
SEC. 101. . . .and any person who is wrongfully deprived of any ● The court below appears to have been under the impression that
land or any interest therein, without negligence on his part, the liability of the assurance fund is confined to cases where the
through the bringing of the same under the provisions of this Act erroneous registration is due to omission, mistake or malfeasance
or by the registration of any other person as owner of such land, or on the part of the employees of the registration court. That this
by . . . may bring in any court of competent jurisdiction an action view is erroneous, is evident from the language of Sections 102
against the Treasurer of the Philippine Archipelago for the and 102 of the Land Registration Act.
recovery of damages to be paid, out of the assurance fund. ● As the Gayondato was a minor at the time of the registration of the
land and consequently no negligence can be imputed to her, it is
● SEC. 102. If such action be for recovery for loss or damage arising clear from the sections quoted that in the absence of special
only through any omission mistake, or misfeasance of the clerk or circumstances to the contrary the assurance fund is secondarily
of the register of deeds, or of any examiner of titles, or of any liable for the damages suffered by her through the wrongful
deputy or clerk of the register of deeds in the performance of their registration.
respective duties under the provisions of this Act, then the
Treasurer of the Philippine Archipelago shall be the sole defendant
to such action. But if such action be brought for loss or damage
arising only through the fraud or willful act of some person or

No trust was created relations. Thus if a person obtains legal title to

● Bouvier defines a trust in its technical sense as "a right of property by fraud or concealment, courts of equity
property, real or personal, held by one party for the benefit of will impress upon the title a so-called constructive
another. trust in favor of the defrauded party. The use of the
● In the present case we have this situation: Gayondato was a word "trust" in this sense is not technically accurate:
minor at the time of the registration of the land and had no as Perry says, such trusts "are not trusts at all in the
legal guardian. It is true that her mother in whose name the strict and proper signification of the word "trust"; but
land was registered was the natural guardian of her person, as courts are agreed in administering the same remedy
but that guardianship did not extend to the property of the in a certain class of frauds as are administered in
minor and conferred no right to the administration of the same fraudulent breaches of trusts, and as courts and the
and the plaintiff, being a minor and under disability, could not profession have concurred in calling such frauds
create a technical trust of any kind. constructive trusts, there can be no misapprehension
● Applying Bouvier's definition to this estate of facts, it is clear in continuing the same phraseology, while a change
that there was no trust in its technical signification. The might lead to confusion and misunderstanding
mother had no right of property or administration in her ● (Imported info) Cestui que trust: He who has a right to a beneficial
daughter's estate and was nothing but a mere trespasser. interest in and out of an estate the legal title to which is vested in
● But the Attorney-General in his brief for the Insular Treasurer another. The person who possesses the equitable right to property
raises the point that the relation of trustee and cestui que trust and receives the rents, issues, and profits thereof, the legal estate of
(see bullet below) was thus created. which is vested in a trustee. (from Black’s Law Dictionary) Cestui
○ Domingo Cuachon and Adela Gasataya prior to the que is a shortened version of cestui a que use le feoffment fuit fait,
registration must be considered to have held the literally, "The person for whose benefit the feoffment was made."
property in trust and for the benefit of the Gayondato; (feoffment: the deed by which a person was given land in
○ that the case therefore falls under section 106 of the exchange for a pledge of service. This mechanism was later used to
Land Registration Act, which provides that "the avoid restrictions on the passage of title in land by a system in
assurance fund shall not be liable to pay for any loss which a landowner would give land to one person for the use of
or damage or deprivation occasioned by a breach of another) (sourced from Wikipedia )
trust, whether express, implied, or constructive, by ● From what has been said it follows that the judgment absolving the
any registered owner who is a trustee, or by the Insular Treasurer from the complaint must be reversed. We also
improper exercise of any sale in mortgage-foreclosure note from the record that Adela Gasataya died March 1, 1923,
proceedings." before the trial of the case and that an administrator of her estate
○ At first blush the Attorney-General's contention seems was appointed. It was therefore error to render judgment against
quite plausible. For want of better terms the words her personally. It may further be noted that the measure of
"trust" and "trustee" are frequently used in a broad damages applied by the court below, i. e. the full value of the land,
and popular sense so as to embrace a large variety of is not strictly accurate. The property was subject to a life estate of

one-third in favor of Adela Gasataya as the widow of Domingo

Gayondato, the value of which must be deducted from the total
value of the fee simple. It may also be observed that the amount
demanded in the complaint is only P30,000 and that the land was
sold to Francisco Rodriguez for but little more than P25,000. We
are therefore of the opinion that the damages awarded should be
reduced to P25,000.

(Wherefore), The judgment appealed from is reversed, and it is hereby

ordered that the defendants Domingo Cuachon and the estate of Adela
Gasataya jointly and severally pay to the plaintiff the sum of P25,000, with
interest at the rate of 6 per cent per annum from August 18, 1922, the date
of the filing of the complaint, with the costs. It is further ordered that if the
execution of this judgment is returned unsatisfied in whole or in part and the
officer returning the execution certifies that the amount upon the execution
cannot be collected except by application to the assurance fund and the
court having jurisdiction over the action shall be satisfied as to the truth of
such return, said court shall order the amount of the execution and costs, or
so much thereof as remains unpaid, to be paid by the Treasurer of the
Philippine Archipelago out of the assurance fund. The complaint will stand
dismissed as to Francisco Rodriguez. No costs will be allowed. So ordered.

45. ESCOBAR v. LOCSIN

DOCTRINE: When an agent, taking advantage of the illiteracy of the
January 30, 1943 | Bacobo, J. | When Property Acquired principal, claims for himself the property which he was designated to
Through Mistake or Fraud claim for the principal and manages to have it registered in his own name
M. SAMSON & M. LUCES and became part of his estate when the agent died, the estate is in equity
bound to execute the deed of conveyance of the lot to the cestui que trust.
The courts have therefore shielded fiduciary relations against every
PETITIONER: Eusebia Escobar manner of chicanery or detestable design cloaked by legal technicalities.
RESPONDENT: Ramon Locsin, in his capacity as special administrator The Torrens system was never calculated to foment betrayal in the
of the intestate estate of Juana Ringor performance of a trust.
RECIT-READY: Eusebia Escobar, as owner of the lot, prays for the
reconveyance of Lot No. 692 of the Cuyapo cadastre in Nueva Ecija. In FACTS:
the course of the cadastral proceedings, the plaintiff being illiterate, asked ● This complaint prays for the reconveyance of Lot No. 692 of the
Domingo Sumangil to claim the same for her. However, Sumangil Cuyapo cadastre in Nueva Ecija, alleging that plaintiff Escobar is
committed a breach of trust by claiming the lot for himself, so it was the owner of the said lot.
adjudicated in favor if Sumangil. The CFI of Nueva Ecija found that
● In the course of the cadastral proceedings, the plaintiff being
Escobar is the real owner of the lot which she acquired in 1914 by
donation propter nuptias from Pablo Ringor. Since 1914, plaintiff had illiterate, asked Domingo Sumangil to claim the same for her.
been in possession of the land; and that the same had been decreed in the However, Sumangil committed a breach of trust by claiming the
cadastral proceedings in favor of Domingo Sumangil. The trial court, lot for himself, so it was adjudicated in favor if Sumangil.
while recognizing that the plaintiff had the equitable title and the ● Ramon Locsin, defendant herein, is the special administrator of the
defendant the legal title, nevertheless dismissed the complaint because estate of Juana Ringor, to whom the land in question was assigned
the period of one (1) year provided for in Section 38 of the Land by partition in the intestate estate of Domingo Sumangil and
Registration Act for the review of a decree had elapsed, and the plaintiff Honorata Duque.
had not availed herself of this remedy.
● The CFI of Nueva Ecija found that Escobar is the real owner of the
ISSUE: lot which she acquired in 1914 by donation propter nuptias from
● W/N the trial court erred in dismissing the case - YES Pablo Ringor. Since 1914, plaintiff had been in possession of the
land; and that the same had been decreed in the cadastral
RULING: The complaint did not seek the review of the decree or the proceedings in favor of Domingo Sumangil.
reopening of the cadastral case, but the enforcement of trust. Hence, ● The trial court, while recognizing that the plaintiff had the
Section 38 of the Land Registration Act does not apply. The estate of equitable title and the defendant the legal title, nevertheless
Juana Ringor, as the successor in interest of the trustee Domingo dismissed the complaint because the period of one (1) year
Sumangil, is in equity bound to execute a deed of conveyance of the lot provided for in Section 38 of the Land Registration Act for the
to cestui que trust1, plaintiff Escobar.
review of a decree had elapsed, and the plaintiff had not availed
herself of this remedy.

1
A beneficiary having an equitable interest in a trust

ISSUES:
● W/N the trial court erred in dismissing the case - YES

RATIO:
● The complaint did not seek the review of the decree or the
reopening of the cadastral case, but the enforcement of trust.
Hence, Section 38 of the Land Registration Act does not apply.
● The estate of Juana Ringor, as the successor in interest of the
trustee Domingo Sumangil, is in equity bound to execute a deed of
conveyance of the lot to cestui que trust2, plaintiff Escobar.
● A trust — such as that which was created between the plaintiff and
Domingo Sumangil — is sacred and inviolable. The Courts have
therefore shielded fiduciary relations against every manner of
chicanery or detestable design cloaked by legal technicalities. The
Torrens system was never calculated to foment betrayal in the
performance of a trust.

WHEREFORE, The judgment appealed from is hereby reversed, and

the defendant is ordered to convey the lot in question to the plaintiff
within fifteen days from the entry of final judgment herein; and, upon
his failure or refusal to do so, this judgment shall constitute sufficient
authorization for the Register of Deeds of Nueva Ecija, in lieu of a deed
of conveyance, to transfer the certificate of title for said lot No. 692 to
the plaintiff Eusebia Escobar. The defendant shall pay the costs of both
instances. So ordered.

2
A beneficiary having an equitable interest in a trust

46. LOPEZ v. CA
CA affirmed. Peti Richard basically argues that CA was wrong in ruling
December 16, 2008 | TINGA, J. | When Property Acquired it’s an implied trust. His argument: An express trust was constituted over
Through Mistake or Fraud the disputed properties; thus the registration of the disputed properties in
B. DABUET & J. SALAMAT the name of Jose as trustee cannot give rise to prescription of action to
prevent the recovery of the disputed properties by the beneficiary against
the trustee.
PETITIONER: Richard B. Lopez, in his capacity as Trustee of the Trust
Estate of the Late Juliana Lopez-Manzano ISSUE: W/N an implied trust was constituted over the disputed
RESPONDENT: Court of Appeals, Corazon Lopez, Fernando Lopez, properties when Jose as trustee registered them in his name - YES
Roberto Lopez, Represented By Luzviminda Lopez, Maria Rolinda
Manzano, Maria Rosario Manzano Santos, Jose Manzano, Jr., Narciso RULING: An implied constructive trust was constituted over the
Manzano (All Represented By Attorney-In-Fact, Modesto Rubio), Maria disputed properties. The disputed properties were excluded from the
Cristina Manzano Rubio, Irene Monzon And Elena Manzano Fideicomiso (Trust Fund).
● Jose registered the disputed properties in his name partly as his
RECIT-READY: conjugal share and partly as his inheritance from his wife
Juliana was the owner of several parcels of lands including the disputed Juliana. This is a complete reverse of the claim of the petitioner
properties all located in Batangas. She executed a testamentary trust Richard as the new trustee, that the properties are intended for
called the Fideicomiso that states that her paraphernal properties where to the beneficiaries of the Trust Fund.
be administered by Jose, her husband. And if Jose dies or renounces ● The exclusion of the disputed properties from the Fideicomiso
obligation, Enrique Lopez (Juliana’s nephew, Peti Richard’s father) was was approved by the probate court and, subsequently, by the
to become the administrator. The trust also provides that 2/3 of the trial court having jurisdiction over it. Hence, the registration of
income from rentals over these properties were to answer for the the disputed properties in the name of Jose was actually
education of deserving but needy honor students (beneficiaries). Juliana pursuant to a court order.
initiated the probate of her will but she died before it could be heard so ● The apparent mistake in the adjudication of the disputed
Jose became the executor in the will. Jose then submitted an inventory of properties to Jose created a mere implied trust of the
Juliana’s real and personal properties which was approved by the probate constructive variety in favor of the beneficiaries of the
court, and also filed for a project of partition. Eventually, the probate Fideicomiso.
court approved the project of partition. The disputed lands were excluded
from this trust. Jose died leaving a holographic will disposing of the Hence, where the husband-trustee in a testamentary trust established by
disputed properties to respondents (Jose Jr. and others). Eventually, RTC the wife over her paraphernal properties for the benefit of deserving
Pasay ordered transfer of properties to Jose Jr. and others, hence new students obtains a court order from the probate court to register some of
certificates of title of the disputed properties were issued in their names. the properties as his own as part of his successional rights to the estate of
But Enrique Lopez, also assumed the trusteeship of Juliana’s estate. the deceased wife and thereby exclude them from the express
testamentary trusts, then a constructive trust has been constituted under
[the petition] RTC of Batangas appointed Richard Lopez as trustee of Art. 1456 in favor of the intended beneficiaries, and the action for
Juliana’s estate in a Special Proceedings. Petitioner Richard then reconveyance would be extinguished at the end of 10 years from the
instituted an action for reconveyance of parcels of land with sum of registration of the titles to the properties in the name of the husband.
money Batangas against respondents (Jose Jr. plus others). RTC denied.

● The probate court approved the partition. All the TCT’s over the
DOCTRINE: Resulting trusts are based on the equitable doctrine that
valuable consideration and not legal title determines the equitable title or parcels of and were issued in Jose’s favor, ½ as trustee of the trust
interest and are presumed always to have been contemplated by the fund and ½ as heir of Juliana.
parties. They arise from the nature of circumstances of the consideration ● Jose died and the contested properties went to the respondent heirs.
involved in a transaction whereby one person thereby becomes invested Enrique became administrator/executor of trust fund.
with legal title but is obligated in equity to hold his legal title for the ● Enrique instituted action for reconveyance of parcels of land with
benefit of another. sum of money against the Lopez/Manzano heirs heirs. (to put it
back in the trustfund)
On the other hand, constructive trusts are created by the construction of
● The complaint essentially Alleged that Jose was able to register in
equity in order to satisfy the demands of justice and prevent unjust
enrichment. They arise contrary to intention against one who, by fraud, his name the disputed properties, which were the paraphernal
duress or abuse of confidence, obtains or holds the legal right to property properties of Juliana, either during their conjugal union or in the
which he ought not, in equity and good conscience, to hold course of the performance of his duties as executor of the testate
estate of Juliana and that
● upon the death of Jose, the disputed properties were included in the
FACTS:
inventory as if they formed part of Joses estate when in fact Jose
● Juliana, was married to Jose Lopez Manzano. Their union did not
was holding them only in trust for the trust estate of Juliana.
bear any children. Juliana was the owner of several properties. The
● They brought the matter to court, RTC dismissed the action on the
disputed properties totaling more than 1,500 hectares consist of six
ground of prescription since the lands were registered in Jose’s
parcels of land, which are all located in Batangas. They were the
name 30 years ago and the action prescribes in 10 years. CA
exclusive paraphernal properties of Juliana together with a parcels
affirmed.
of land of land.
● In 1968, Juliana executed a notarial will, whereby she expressed
ISSUE/S:
that she wished to constitute a trust fund for her paraphernal
● W/N there is an implied trust over the disputed properties when
properties, denominated as Fideicomiso, to be administered by her
Jose as registered it in his name? YES
husband. If her husband were to die or renounce the obligation, her ● Less relevant issue: W/N the action has prescribed? YES
nephew, Enrique Lopez, was to become administrator and executor
of the Fideicomiso. Two-thirds (2/3) of the income from rentals RATIO:
over these properties were to answer for the education of deserving ● 1st Issue: A constructive trust is created, not by any word evincing
but needy honor students, while one-third 1/3 was to shoulder the a direct intention to create a trust, but by operation of law in order
expenses and fees of the administrator. As to her conjugal to satisfy the demands of justice and to prevent unjust enrichment.
properties, Juliana bequeathed the portion that she could legally It is raised by equity in respect of property, which has been
dispose to her husband, and after his death, said properties were to acquired by fraud, or where although acquired originally without
pass to her biznietos or great grandchildren. fraud, it is against equity that it should be retained by the person
holding it. Constructive trusts are illustrated in Arts. 1450, 1454,
1455 and 1456.

● The disputed properties were excluded from the Fideicomiso at the Repudiation of said trust is not a condition precedent to the
outset. Jose registered the disputed properties in his name partly as running of the prescriptive period. Thus, for the purpose of
his conjugal share and partly as his inheritance from his wife counting the 10-year prescriptive period for the action to enforce
Juliana, which is the complete reverse of the claim of the the constructive trust, the reckoning point is deemed to be on 15
petitioner, as the new trustee, that the properties are intended for September 1969 when Jose registered the disputed properties in his
the beneficiaries of the Fideicomiso. name.
● Furthermore, the exclusion of the disputed properties from the
Fideicomiso was approved by the probate court and, subsequently, WHEREFORE, the instant petition for review on certiorari is DENIED
by the trial court having jurisdiction over the Fideicomiso. The and the decision and resolution of the Court of Appeals in CA-G.R. CV No.
registration of the disputed properties in the name of Jose was 34086 are AFFIRMED. Costs against petitioner.
actually pursuant to a court order. The apparent mistake in the
adjudication of the disputed properties to Jose created a mere
implied trust of the constructive variety in favor of the
beneficiaries of the Fideicomiso.
● 2nd Issue: The 10-year prescriptive period to recover the disputed
property must be counted from its registration in the name of Jose
on 15 September 1969, when Richard was charged with
constructive notice that Jose adjudicated the disputed properties to
himself as the sole heir of Juana and not as trustee of the
Fideicomiso.
● It should be pointed out also that Jose had already indicated at the
outset that the disputed properties did not form part of the
Fideicomiso contrary to petitioners claim that no overt acts of
repudiation may be attributed to Jose. In the project of partition
submitted to the probate court, Jose had indicated that the disputed
properties were conjugal in nature and, thus, excluded from
Julianas Fideicomiso. This act is clearly tantamount to repudiating
the trust, at which point the period for prescription is reckoned.
● GENERAL RULE is, a trustee cannot acquire by prescription
ownership over property entrusted to him until and unless he
repudiates the trust applies only to express trusts and resulting
implied trusts.
● EXCEPTION is in constructive implied trusts, prescription may
supervene even if the trustee does not repudiate the relationship.

47. PASINO v. MONTERROYO

to establish that they have a better right to Lot No. 2139 since they had
July 31, 2008| Carpio, J.| When Property Acquired through Mistake or long been in possession of the property in the concept of owners, by
Fraud (Art. 1456) themselves and through their predecessors-in-interest. Hence, despite the
K. LOPEZ DE LEON & CHECKER irrevocability of the Torrens titles issued in their names and even if they
are already the registered owners under the Torrens system, petitioners
may still be compelled under the law to reconvey the property to
PETITIONER: Rogelio, George, Lolita, Rosalinda and Josephine all respondents.
surnamed Pasino
RESPONDENT: Dr. Teofilo Eduardo F. Monterroyo, Romualdo DOCTRINE: Under Art. 1456 on constructive trust, registration of
Monterroyo, Maria Teresa Monterroyo and Stephen Monterroyo property by one person in his name, whether by mistake or fraud, the real
owner being another person, impresses upon the title so acquired the
RECIT-READY: Lot No. 2139 is a part of a 24-hectare land in Iligan character of a constructive trust for the real owner, which would justify
City occupied, cultivated and cleared by Laureano Pasiño in 1933. The an action for reconveyance within a period of 10 years from registration.
land formed part of the public domain which was later declared alienable. In the action for reconveyance, the decree of registration is respected as
Pasino filed a homestead app over the entire 24ha land which was incontrovertible, and what is sought instead is the transfer of the property
approved by the Dir. of Lands. He died in 1950. The Director issued an wrongfully or erroneously registered in another‘s name to its rightful
order for the issuance of homestead patent in favor of Pasiño but his heirs owner or to one with a better right.
did not receive it so the land was not registered under his name or that of ● Under the principle of constructive trust, registration of
his heirs. Pasiños heirs simultaneously filed apps for grant of Free Patent
property by one person in his name, whether by mistake or
Titles over their respective shares in Lot 2139 (half of the 24ha land)
before the Land Management Bureau (DENR). It was granted so they fraud, the real owner being another person, impresses upon the
have OCTs in their favor. Pasiños alleged that the possession of Lot No title so acquired the character of a constructive trust for the real
2139 was interrupted when Monterroyos forcibly took possession of the owner, which would justify an action for reconveyance.
property. Respondent Monterroyos alleged that they had been in open, ● If the registration of the land is fraudulent, the person in
continuous, exclusive and notorious possession of the lot since 1949. whose name the land is registered holds it as a mere trustee,
They alleged that the Land Management Bureau had no jurisdiction to and the real owner is entitled to file an action for
issue patent because the land was already a private land. RTC and CA reconveyance of the property.
ruled in favor of Monterroyos.

ISSUE:
● W/N the CA erred in sustaining the RTC Decision declaring FACTS:
respondent Monterroyo as the rightful owners and possessors of ● Lot No. 2139 with an area of 19,979 sqm in Panul-iran, Abuno,
Lot No. 2139 (NO) Iligan City, was part of a 24-hectare land occupied, cultivated and
cleared by Laureano Pasiño (Laureano) in 1933.
RULING: Considering that Pasiño’s application for free patent titles was
filed only on 8 January 1994, when Lot No. 2139 had already become ● On 18 Feb 1935, Laureano filed a homestead application over the
private land ipso jure, the Land Management Bureau had no jurisdiction entire 24ha land. The Director of Lands approved Laureano's
to entertain petitioners' application for patent title. Monterroyos were able

homestead application and a homestead entry was recorded in his ○ Petra executed a deed of sale in favor of Vicente Teves
name. Laureano died on 1950. ○ Vicente executed a pacto de retro sale to Arturo Teves
● On 15 April 1952, the Director of Lands issued a homestead patent ○ Arturo sold Lot No. 2139 to Respondent’s father, Dr.
in favor of Laureano. Monterroyo, by virtue of an oral contract.
● His heirs did not receive the order and so the land was not ○ On 5 Jan 1995, Arturo executed a Deed of Confirmation
registered under his name or under his heirs. of Absolute Sale of Unregistered Land in favor of Dr.
● In 1953, the property was covered by tax declaration in the name Monterroyo's heirs.
of Laureano with Graciana (wife) as administrator. ● Monterroyos aver that Jose was NOT the owner of Lot No. 2139
● Between 1949 and 1954, a Cadastral Survey was conducted in and he could not sell the land to his children. Petitioners' OCTs
Iligan which found that a small creek divided the 24-ha land into were null and void for having been procured in violation of the
two portions (Lot 2138 & 2139) Public Land Act and that the Land Management Bureau had no
● Petitioner Pasiños claimed that Laureano's heirs, headed by Jose, authority to issue the free patent titles because Lot No. 2139 was a
continuously possessed and cultivated both lots. private land.
● 16 Oct 1962, Jose's co-heirs executed a Deed of Quitclaim ● The RTC ruled in favor of respondent Monterroyos.
renouncing their rights and interest over the land in favor of Jose. ○ Land Management Bureau had no jurisdiction to issue the
Jose secured a title in his name for Lot No. 2138. patent because the lot was a private land.
● Later, Jose alienated Lot No. 2139 in favor of his children ○ While Laureano was the original claimant of the entire
(petitioners in this case) who, on 8 January 1994, simultaneously 24ha, he ceded the right to possession over half of the
filed applications for grant of Free Patent Titles over their property to Larumbe sometime in 1947.
respective shares of Lot No. 2139 before the Land Management ○ Pasiños had failed to present convincing evidence that
Bureau of DENR. they and their predecessors-in-interest were in possession
● On 22 August 1994, the DENR granted petitioners' applications from 1947 to 1994 when they filed their application for
and issued an several OCTs in favor of Rogelio Pasiño, George free patent.
Pasiño, Lolita Pasiño, Josephine Pasiño, and in favor of Rosalinda ● Further, the RTC ruled that Pasiños committed actual fraud
Pasiño. when they misrepresented in their free patent applications that
● Pasiños alleged that their possession of Lot No. 2139 was they were in possession of the property continuously and
interrupted on 3 January 1993 when Monterroyos forcibly publicly.
took possession of it.
● Respondent Monterroyo alleged that they had been in open, ISSUES:
continuous, exclusive and notorious possession of Lot No. 2139, ● W/N the CA erred in sustaining the RTC Decision declaring
by themselves and through their predecessors since 10 July 1949. respondent Monterroyo as the rightful owners and possessors of
They alleged: Lot No. 2139 (NO)
○ On 10 July 1949, a certain Larumbe sold Lot No. 2139 to
Petra Teves

RATIO: real owner is entitled to file an action for reconveyance of the

● Alienable public land held by a possessor, continuously or through property.
his predecessors, openly, continuously and exclusively for 30 years ● Respondents were able to establish that they have a better right to
(Public Land Act) is converted to private property by the mere Lot No. 2139 since they had long been in possession of the
lapse or completion of the period, ipso jure. So long as there is a property in the concept of owners, by themselves and through their
clear showing of open, continuous, exclusive and notorious predecessors-in-interest. Hence, despite the irrevocability of the
possession Torrens titles issued in their names and even if they are already the
● Respondents were able to present the original Deed of Absolute registered owners under the Torrens system, petitioners may still
Sale executed by Larumbe to Petra, the succeeding Deeds of Sale be compelled under the law to reconvey the property to
from Petra to Vicente and from Vicente to Arturo, and the Deed of respondents
Confirmation of Absolute Sale of Unregistered Real Property from
Arturo to respondents. WHEREFORE, petition is hereby DENIED.
● Considering that Pasiño’s application for free patent titles was filed
only on 8 January 1994, when Lot No. 2139 had already become
private land ipso jure, the Land Management Bureau had no
jurisdiction to entertain petitioners' application.
● Once a homestead patent granted in accordance with law is
registered, the certificate of title issued by virtue of the patent has
the force and effect of a Torrens title issued under the land
registration law. In this case, the issuance of a homestead patent in
1952 in favor of Laureano was not registered.
● In this case, Laureano already conveyed Lot No. 2139 to Larumbe
in 1947 before the approval of his homestead application
● Under the principle of constructive trust, registration of property
by one person in his name, whether by mistake or fraud, the real
owner being another person, impresses upon the title so acquired
the character of a constructive trust for the real owner, which
would justify an action for reconveyance.
● In the action for reconveyance, the decree of registration is
respected as incontrovertible but what is sought instead is the
transfer of the property wrongfully or erroneously registered in
another's name to its rightful owner or to one with a better right.
● If the registration of the land is fraudulent, the person in whose
name the land is registered holds it as a mere trustee, and the

48. HOME GUARANTY CORP. v. LA SAVOJE DEV. CORP

created is a constructive trust in which the properties of the Asset pool
January 28, 2015 | J. Leonen | When Property Acquired Through are held in trust by Home Guaranty, as trustee, for the trustor, La Savoie.
Mistake or Fraud (Art. 1456) This case falls under Art. 14563 of the Civil Code. Home Guaranty
H. SEGOVIA & A. ALVERO Corporation acquired the properties compromising the Asset Pool by
mistake or through the ineffectual transfer made by the original trustee,
Planters Development Bank. With all but a constructive trust created
PETITIONER: Home Guaranty Corporation between Home Guaranty Corporation and La Savoie, the properties
RESPONDENT: La Savoie Development Corporation compromising the Asset Pool remain with La Savoie.
RECIT-READY: La Savoie as “landowner/developer” had subdivision DOCTRINE: Conveyance made by seller of a property acquired through
and housing projects in several areas that were collectively referred to as pactum commisorium i s void, and thus not vest title to the buyer. Such a
the “La Savoie Project” or simply, “Project” Such was to be financed situation falls squarely under Art. 1456, where the buyer is deemed to
through the issuance and sale of asset participation certificates known as have acquired the property by mistake or through ineffectual transfer.
La Savoie Development Certificates (LSDC). Planters Development
Bank was specified to be the “nominal issuer” of these certificates. The NOTE: CASE WAS REMANDED BACK TO RTC, Br. 142 to
LSDC were secured by “real estate properties and the products and resolve Petition for Rehabilitation filed by La Savoie.
results of their planned development.” The Trust Agreement conducted
also provides for the establishment of the “Asset Pool” in which La OTHER NOTES:
Savoie “conveyed, assigned, delivered all its rights and interests in the Relationships established in this case by virtue of the Contractual
real estate properties...to the TRUSTEE for the present and future holders Agreement:
of the LSDCs.” Planters Development Bank was named trustee of the 1. TRUST RELATION (with respect to the Asset Pool): La
Asset Pool. Apart from the Asset Pool, the LSDC certificates were also
Savoie is the trustor, Planters Development Bank is the
secured by a guaranty. The Trust Agreement provides that in the event
that a call is made on Home Guaranty Corporation for its guaranty, trustee, and the holders of the LSDCs are the beneficiaries
Planters Development Bank shall convey to the former the Asset Pool. 2. CREDIT RELATION (with respect to the LSDCs): La
Savoie is the debtor (Planters Development Bank being a
La Savoie then defaulted in the redemption and payment of interest on mere nominal issuer), the holders of the LSDC certificates
the LSDCs. A call was then made to Home Guaranty to pay for the are the creditors, and Home Guaranty Corporation is the
LSDCs. However, any payment that could have been made was guarantor.
“overtaken” by the filing of La Savoie’s Petition for Rehabilitation. But 3. AGENCY RELATION (with respect to the transfer of the
in the interim, Home Guaranty paid the holders of the LSDCs.
real properties in the Asset Pool should the guarantor pay
ISSUE: W/N the conveyance to Home Guaranty of the properties for the LSDC): La Savoie is the principal and Planters
comprising the Asset Pool was valid and effectual - NO Development Bank is the agent. In this event, Home

RULING: The execution of the Deed without resorting to foreclosure is

indicative of pactum commisorium. It is therefore void and ineffectual 3
Art. 1456: If the property is acquired through mistake or fraud, the person obtaining it is, by
and does not serve to vest ownership in Home Guaranry. All that is force of law, considered an implied trust for the benefit of the person from whom the property
comes.

● Home Guaranty also filed an Opposition even though it was not a

Guaranty is the transferee
creditor of La Savoie asserting that it had a “material and
● The following are the elements of pactum commisorium:
beneficial interest in the petition, in relation to the interest of the
○ There should be a property mortgage by way of
creditors4 of La Savoie vis-a-vis certain properties or assets that
security for the payment of principal obligation
might have been taken cognizance of, and placed under the
○ There should be a stipulation for automatic
custody of the RTC and/or the appointed Rehabilitation Receiver
appropriation by the creditor of the thing mortgaged in
(Mr. Rito C. Manzana)
case of non-payment of the principal obligation within
● Home Guaranty noted that through the “La Savoie Asset Pool
the stipulation period.
Formation and Trust Agreement”, La Savoie obtained financing
for some of its projects through a securitization process in which
FACTS: Planters Development Bank issued P150M in asset participation
● La Savaoie Development Corporation (La Savoie) is a domestic certificates dubbed as LCDC5 certificates to be sold to investors.
corporation engaged in the business of “real estate development, ● The projects financed by these certificates consisted in the
subdivision and brokering.” development of real properties in General Trias, Cavite; Sto.
● With the onset of the Asian financial crisis in 1997, the devaluation Tomas, Batangas; Los Banos, Laguna; and Quezon City.
of the Philippine peso and due to other factors such as lack of ● The same properties were conveyed in trust by La Savoie, as
working capital; high interest rates, penalties, and charges; low trustor, to Planters Development Bank, as trustee, and constituted
demand for real estate properties; and poor peace and order into the La Savoie Asset Pool.
situations in some of its project sites, La Savoie found itself unable ● The redemption of the LSDC certificates upon maturity and the
to pay its obligations to its creditors. interest payments on them were “backed/collateralized by the
● On April 25, 2003, La Savoie field before the RTC of Makati a assets that were conveyed by [La Savoie] to the Trust.”
“petition for the declaration of state of suspension of payments ● The LSDC certificates were covered by a guaranty extended by
with approval of proposed rehabilitation plan” under the Interim Home Guaranty Corporation through a “Contract of Guaranty”
Rules of Procedure on Corporate Rehabilitation. entered into by Home Guaranty Corporation with La Savoie and
● Initially, RTC proceedings were put on hold since La Savoie failed Planters dEvelopment Bank.
to attach some of the requirements under Rule 4, Section 2 of the ● Home Guaranty was charged with the duty to ensure that all funds
Interim Rules. due to the Asset pool are collected and disbursed for the purpose
● When La Savoie finally complied, RTC Judge Perlas-Bernabe intended for it.
issued a Stay order, staying the enforcement of all claims against ● La Savoie then collected from the buyers an amount of
La Savoie. P60,659,134.30 from the buyers of some of the properties covered
● Following the issuance of the Stay Order, La Savoie’s creditors -- by the Asset Pool. The amount, however. Was not remitted by La
Planters Development Bank, Philippine Veterans Bank, and Savoie to the trust. Due to the failure to complete some of its
Robinsons Savings Bank -- filed their oppositions.
4
Philippine Veterans Bank, Planters Development Bank, and Land Bank of the Philippines
5
“La Savoie Development Certificates”

projects and this failure to remit sales transactions, the Asset Pool unsold subdivision lots and use the unremitted collections
defaulted in redeeming and paying interest on the LSDC due to HGC which will be converted as additional loan to
certificates. fund its ongoing projects.
● La Savoie’s investors placed a call on the guaranty. With its failure ○ Re: Payment of the guaranty call
to remit collections, Home Guaranty held in abeyance the ■ Made after the Petition for Rehabilitation had
settlement of the investors’ call. been brought by La Savoie and after the issuance
● This settlement was then overtaken by the filing of La Savoie’s of the Stay Order. HGC has no right to make
Petition for Rehabilitation. such payment.
● RTC ruling: Denied due course to La Savoie’s Petition for
Rehabilitation and lifted the stay order. The trial court reasoned ISSUES: W/N the conveyance to Home Guaranty of the properties
that the findings of sufficiency in the form and substance for which comprising the Asset Pool was valid and effectual - NO
the stay order was issued has been flawed and it cannot
countenance a situation such as this where the petitioner files a RELEVANT ARGUMENTS (if any):
petition on the basis of inaccurate or unverifiable allegations. Per In the RTC: Home Guaranty and the investors on the LSDC certificates
the Rehabilitation Receiver’s Report, there were “various had “preferential rights” over the properties making up the Asset Pool as
inaccuracies in the material allegations of the petition and its these “were conveyed as security or collaterals for the redemption of the
annexes.” La Savoie failed to present any concrete and feasible LSDC certificates. Thus, they should be excluded from the coverage of the
plan on how it will able to secure additional funds to continue with Petition for Rehabilitation.
development of its raw land and ongoing joint-venture projects. In the CA: Home Guaranty argued that all of the properties comprising the
● [DURING INTERIM] Home Guaranty approved and processed Asset Pool should be excluded from the rehabilitation proceedings in view
the call on the guaranty for the redemption of the LSDC of the Deed of Assignment and Conveyance executed in its favor by
certificates. It paid, through Planters Development Bank, a total of Planters Development Bank.
P128.5 million as redemption value to the certificate holders. In the SC: Properties compromising the Asset Pool should be excluded
● Planters Development Bank executed a “Deed of Assignment and from the rehabilitation proceedings as these have now been “removed from
Conveyance” in favor of Homie Guaranty Corporation. Through the dominion” of La Savoie and have been conveyed and assigned to HGC.
the same deed, Planters Development Bank “absolutely conveyed The transfer was made after the Stay Order was lifted.
and assigned to Home Guaranty the right to collect from LA Respondent: La Savoie argued that the assignment of assets to the Asset
Savoie cash receivables representing the amount collected Pool was not absolute and subject to certain conditions. It asserted that for
● CA Ruling: the assignment to take effect, Home Guaranty Corporation had to first pay
○ Reversed and set aside the RTC Order and reinstated the the holders of the certificates. La Savoie claimed that the properties
Stay Order and remanded the case to the trial court for compromising the Asset Pool remained to be its assets.
further proceedings. It ruled that La Savoie convincingly In the SC: Assignment and Conveyance to Home Guaranty Corporation
showed that it could undertake its projects through the was ineffectual considering that at the time of the guaranty call, the Stay
Pag-Ibig Overseas Program, sell existing inventories of

Order was still in effect. Even assuming that there was full payment, the fraud, duress or abuse of confidence, obtains or holds the legal
Subject Properties remained within the jurisdiction of the RTC. right to property which he ought not, in equity and good
conscience, to hold.7
RATIO: ● This case falls under Article 1456 of the Civil Code. Home
● The transfer made to Home Guaranty Corporation on the strength Guaranty acquired the properties comprising the Asset Pool by
of the Deed of Conveyance appears valid and binding. However, mistake or through the ineffectual transfer made by the original
its execution is in violation of fundamental principles in the law of trustee, Planters Development Bank.
credit transactions. The execution of the Deed without resorting to ● With all but a constructive trust created between Home Guaranty
foreclosure is indicative of pactum commissorim. S uch is against Corporation and La Savoie, the properties comprising the Asset
Art. 20886. Pool remain with La Savoie.
● It is therefore void and ineffectual and does not serve to vest ● La Savoie’s continuing ownership means the court having
ownership in Home Guaranty. jurisdiction over the rehabilitation proceeding should rule on how
● The following are the elements of pactum commisorium: the properties compromising the Asset Pool shall be disposed,
○ There should be a property mortgage by way of security managed, or administered in order to satisfy La Savoie’s
for the payment of principal obligation obligations and/or effect its rehabilitation.
○ There should be a stipulation for automatic appropriation ● The effect is that Home Guaranty must submit itself to how La
by the creditor of the thing mortgaged in case of Savoie’s petition for rehabilitation will be resolved. As a paying
non-payment of the principal obligation within the guarantor, Home Guaranty was subrogated the rights of La
stipulation period. Savoie’s creditors and now stands as latter’s creditor. It remains as
● In this case, the Contract of Guaranty calls for the “promt such pending satisfaction of La Savoie’s obligation and as the void
assignment and conveyance to [Home Guaranty] of all the conveyance made to it by Planters Development Bank failed to
corresponding properties in the Asset Pool” that are held as terminate in the creditor-debtor relationship with La Savoie.
security in favor of the guarantor. Moreover, it dispenses with the
need of conducting foreclosure proceedings, judicial or otherwise. WHEREFORE, the Petition is DENIED. The Regional Trial Court,
● This automatic appropriation by the paying guarantor of the Branch 142, Makati City is directed to proceed with dispatch in
properties held as security is a clear case of pactum commissorium. resolving the Petition for Rehabilitation filed by respondent La Savoie
It is null and void. All that this transfer has created is a Development Corporation.
constructive trust in which the properties of the Asset pool are held
in trust by Home Guaranty, as trustee, for the trustor, La Savoie.
● 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

6
Art. 2088: The Creditor cannot appropriate the things given by way of pledge or mortgage,
or dispose of them. Any stipulation to the contrary is null and void. 7
Examples of a constructive trust: See Articles 1450, 1454, 1455, and 1456 of your BFF

49. JOSE JUAN TONG, ET AL. v. GO TIAT KUN, ET AL.

RULING:
April 21, 2014 | J. Reyes | Resulting Trust On the implied resulting trust
H. SATO & E. CANCEKO What was truly created was an implied resulting trust. The only reason
why Lot 998 was registered in the name of Luis, Sr. was to facilitate the
purchase of the said property to be used in the family's lumber business
PETITIONER: Jose Juan Tong, et al.
since Luis, Sr. was the only Filipino Citizen in the Juan Tong family at
RESPONDENT: Go Tiat Kun, et al.
that time. The real intention was for the property to belong to the entire
Juan Tong family (Juan Tong paid for it, not Luis. The property was
RECIT-READ: Juan Tong, a Chinese, informed his 10 children of his
physically possessed by the Juan Tong family for years. Real property
intention to purchase Lot 998 to be used for the family's lumber business
taxes were paid by Juan Tong since he bought the property. The lot was
called "Juan Tong Lumber". The land title was named after his eldest
never divided until Luis died).
son (Luis Sr.) since Juan was disqualified from acquiring a property
being a Chinese citizen.
On the prescription of the trust
Implied resulting trusts do not prescribe except when the trustee
Luis died in 1981, and Juan Tong died in 1990. Luis Sr.’s heirs claimed
repudiates the trust. Further, the action to reconvey does not prescribe
ownership over the Lot 998 and registered the property in their names.
so long as the property stands in the name of the trustee. To allow
They divided the property into two (Lot 998-A and Lot 998-B), and sold
prescription would be tantamount to allowing a trustee to acquire title
Lot 998-B to Fine Rock Development Corporation (FRDC).
against his principal and true owner.
The other siblings (9 out of 10) filed an action to reconvey the property
It should also be noted that Luis died before Juan Tong. The implied
and annul the titles and the sale.
trust was repudiated through his death. Hence, Lot 998 cannot be
included in his estate (except insofar as his share), so his heirs did not
The trial court ruled in favor of the petitioners, ruling that there was an
inherit it.
implied resulting trust between Juan Tong, Luis, Sr., the petitioners and
the respondents, over Lot 998.
FACTS:
(IMPORTANT) The CA reversed it and stated that even if it was an ● Juan Tong (father of Jose Juan Tong) had a meeting with all his 10
implied trust, it would have been converted into a constructive trust children to inform them of his intention to purchase Lot 998 to be
upon the death of Luis, Sr. And since actions for reconveyance based
used for the family's lumber business called "Juan Tong Lumber".
on constructive trusts prescribes in 10 years from the issuance of the
title, petitioners’ action is now barred by prescription. ● Since he was a Chinese citizen and was disqualified from acquiring
the said lot, the title to the property will be registered in the name
ISSUE: of his eldest son, Luis, Sr., who at that time was already of age and
● W/N an implied resulting trust was constituted over Lot 998 was the only Filipino citizen among his children.
when Juan Tong purchased the property and registered it in the ● Juan Tong bought Lot 998 from the heirs of Jose Ascencio.
name of Luis, Sr. - YES ● Luis died in 1981, and Juan Tong died in 1990.
● W/N petitioners’ action is barred by prescription - NO ● Luis’ surviving heirs, claimed ownership over Lot 998 by
succession, alleging that no trust agreement exists and it was Luis,

Sr. who bought Lot 998. The said deed (Extra-Judicial Settlement ○ Did not exercise any other act of ownership over the said
of Estate) was registered causing the cancellation of TCT No. lot.
10346 (named to Luis, Sr.) and the issuance of TCT No. T-60231 ● The CA rendered the herein assailed decision, which reversed and
in the name of the respondents. set aside the trial court's decision, and dismissed the complaint for
● The respondents agreed to subdivide Lot 998, thus, on October 12, lack of merit. They ruled that an express trust was created because
1992, two new titles were issued: (1) TCT No. 97068 over Lot there was a direct and positive act from Juan Tong to create a trust.
998-A in the name of Go Tiat Kun and her children; and (2) TCT And when an express trust concerns an immovable property or any
No. T-96216 over Lot 998-B in the name of Luis, Jr. interest therein, it may not be proved by parol or oral evidence, but
● Luis, Jr. sold Lot 998-B to Fine Rock Development Corporation must be proven by some writing or deed.
(FRDC), which in turn sold the same to Visayas Goodwill Credit ● The CA also ruled that even granting that an implied resulting trust
Corporation (VGCC). was created, the petitioners are still barred by prescription
● The petitioners filed an action for Annulment of Sales, Titles, because the said resulting trust was terminated upon the death
Reconveyance and Damages of Lot 998-B against Luis, Jr., FRDC of Luis, Sr. and was then converted into a constructive trust.
and VGCC. Consequently, Lot 998-B was reconveyed to the Since in an action for reconveyance based on a constructive
petitioners and TCT No. T-14839 was issued under their names trust prescribes in ten years from the issuance of the Torrens
including the late Luis, Sr. title over the property, counting from the death of Luis, Sr. in
● Go Tiat Kun executed a Deed of Sale of Undivided Interest over 1981, the action has already prescribed.
Lot 998-A in favor of her children, resulting in the issuance of
TCT No. T-134082 over Lot 998-A. ISSUES:
● The trial court rendered its judgment in favor of the petitioners, ● Whether or not an implied resulting trust was constituted over Lot
ruling that there was an implied resulting trust between Juan Tong, 998 when Juan Tong purchased the property and registered it in the
Luis, Sr., the petitioners and the respondents, over Lot 998. They name of Luis, Sr. - YES
also ruled that Luis Sr. was a mere trustee, and not the owner of ● W/N petitioners’ action is barred by prescription - NO
Lot 998, and the beneficial interest over said property remained in
Juan Tong and subsequently in the Juan Tong Lumber, Inc. RATIO:
● How the trust was established according to the trial court (during On the implied resulting trust (not the issue, but also relevant)
Luis Sr’s lifetime): ● The records would show an intention to create a trust between the
○ Did not build a house or any structure thereon or make parties. Although Lot 998 was titled in the name of Luis, Sr., the
use of the property in any manner; circumstances surrounding the acquisition of the subject property
○ Resided with his family together with his parents, eloquently speak of the intent that the equitable or beneficial
brothers and sisters in Juan Tong building in front of the ownership of the property should belong to the Juan Tong family:
said lot; ○ Juan Tong had the financial means to purchase the
○ Have acquired a residential property at Ledesco Village property for P55,000.00 while respondents failed to
and other places, where his heirs now reside; and present a single witness to corroborate their claim that

Luis, Sr. bought the property with his own money since at
that time, Luis Sr., was merely working for his father
where he received a monthly salary of P200.00 with free On the prescription of the trust
board and lodging. ● As a rule, implied resulting trusts do not prescribe except when
○ The property was physically possessed by Juan Tong and the trustee repudiates the trust. Further, the action to reconvey
does not prescribe so long as the property stands in the name of
was used as a stockyard for their lumber business before it
the trustee. To allow prescription would be tantamount to allowing
was acquired, and even after it was acquired. a trustee to acquire title against his principal and true owner.
○ From the time it was registered in the name of Luis, Sr. in ● It should be noted that the title of Lot 998 was still registered in the
1957, Lot 998 remained undivided and untouched by the name of Luis Sr. even when he predeceased Juan Tong.
respondents. It was only after the death of Luis, Sr. that Considering that the implied trust has been repudiated through
the respondents claimed ownership over Lot 998. such death, Lot 998 cannot be included in his estate except only
○ Real property taxes on Lot 998 were paid not by Luis Sr. insofar as his undivided share thereof is concerned.
but by his father Juan Tong and Juan Tong Lumber, Inc., ● It is well-settled that title to property does not vest ownership but it
from 1966 up to early 2008. is a mere proof that such property has been registered.
● What was truly created was an implied resulting trust. As what has ● (ruling on laches) Moreso, when the petitioners received a letter
been fully established, in view of the mutual trust and confidence from VGCC, and discovered about the breach of the trust
existing between said parties who are family members, the only agreement committed by the heirs of Luis, Sr., they immediately
reason why Lot 998 was registered in the name of Luis, Sr. was to instituted an action to protect their rights. Clearly, no delay may
facilitate the purchase of the said property to be used in the be attributed to them. The doctrine of laches is not strictly applied
family's lumber business since Luis, Sr. is the only Filipino Citizen between near relatives.
in the Juan Tong family at that time.
● The principle of a resulting trust is based on the equitable doctrine WHEREFORE, in consideration of the foregoing premises, the instant
that valuable consideration and not legal title determines the petition is hereby GRANTED. The Decision dated October 28, 2010 and
equitable title or interest and are presumed always to have been Resolution dated March 3, 2011 of the Court of Appeals in CA-G.R. CV
contemplated by the parties. No. 03078 are REVERSED and SET ASIDE. The Decision dated May 21,
● The Court is in conformity with the finding of the trial court that 2009 of the Regional Trial Court of Iloilo City, Branch 37 in Civil Case No.
an implied resulting trust was created as provided under the first 05-28626 is REINSTATED.
sentence of Article 1448 which is sometimes referred to as a
purchase money resulting trust, the elements of which are:
○ an actual payment of money, property or services, or an
equivalent, constituting valuable consideration; and
○ such consideration must be furnished by the alleged
beneficiary of a resulting trust.

G.R. No. 200804 January 22, 2014 A.L. ANG NETWORK, INC., Petitioner, EMMA MONDEJAR, Accompanied by
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Agency, Trusts, Partnership, and Joint Ventures: Atty. Jose U. Cochingyan III

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Agency, Trusts, Partnership, and Joint Ventures: Atty. Jose U. Cochingyan III

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AGENCY, TRUSTS, PARTNERSHIP,

AND JOINT VENTURES

CASE DIGESTS FOR

36. HEIRS OF TANAK PANGAWARAN PATIWAYAN v.

37. HEIRS OF CANDELARIA v. ROMERO

the name of Lucas Candelaria, with the understanding that the

Wherefore, the order of dismissal appealed from is hereby reversed

38. CUAYCONG v. CUAYCONG FACTS:

39. ADAZA v. COURT OF APPEALS

40. DIAZ v. GORRICHO

41. VDA. DE OUANO v. REPUBLIC

PETITIONER: ​ANUNCIACION VDA. DE OUANO et al. FACTS:

ISSUES: The petition of the Mactan-Cebu International Airport Authority in G.R.

● SC: Since the airport project failed to materialize, the land is no

42. SING JUCO and SING BENGCO v. ANTONIO SUYANTONG and

● A confidential employee who, knowing that his principal was

WHEREFORE, start here.

Dissenting opinion of Justice Villamor:

43. CORNELIA M. HERNANDEZ v CECILIO F. HERNANDEZ

PETITIONER: ​Cornelia M. Hernandez

RECIT-READY: ● The controversy arose when the Republic of the Philippines,

that of a trustee and he cannot, consistently with the principles of

WHEREFORE, premises considered, the Decision of the Court of Appeals

44. GAYONDATO v TREASURER

No trust was created relations. Thus if a person obtains legal title to

one-third in favor of Adela Gasataya as the widow of Domingo

(Wherefore), The judgment appealed from is reversed, and it is hereby

45. ESCOBAR v. LOCSIN

WHEREFORE, The judgment appealed from is hereby reversed, and

47. PASINO v. MONTERROYO

RATIO: real owner is entitled to file an action for reconveyance of the

48. HOME GUARANTY CORP. v. LA SAVOJE DEV. CORP

RULING: ​The execution of the Deed without resorting to foreclosure is

● Home Guaranty also filed an Opposition even though it was not a

49. JOSE JUAN TONG, ET AL. v. GO TIAT KUN, ET AL.

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PETITIONER: ANUNCIACION VDA. DE OUANO et al. FACTS:

PETITIONER: Cornelia M. Hernandez

RULING: The execution of the Deed without resorting to foreclosure is