G.R. No.

137533 November 22, 2002

TALA REALTY SERVICES CORPORATION, petitioner,

Issue: WON there is a trustor-trustee relationship. NONE!

There is no trustor-trustee relationship between Tala and the Bank contrary to the claim of the Bank
that it is trustor and beneficiary while Tala as trustee.

As an exception to the law on trusts, ‘[a] trust or a provision in the terms of a trust is invalid if
the enforcement of the trust or provision would be against public policy, even though its
performance does not involve the commission of a criminal or tortuous act by the trustee.’

The parties must necessarily be subject to the same limitations on allowable stipulations in ordinary
contracts, i.e., their stipulations must not be contrary to law, morals, good customs, public order, or
public policy (Article 1306, Civil Code). What the parties then cannot expressly provide in their
contracts for being contrary to law and public policy, they cannot impliedly or implicitly do so in the
guise of a resulting trust."

In this case, Bank cannot use the defense of nor seek enforcement of its alleged implied trust with Tala
since its purpose was contrary to law, this is evident when:

1. Bank admitted that with the limitation set by the General Banking Act on the Bank’s real
estate holdings, the Bank did not have a choice but to transfer ownership of the subject property
to Tala;

2. That the Bank warehoused or sold it to Tala to enable them to pursue its expansion program,
to avoid the limitation;

3. That the Bank does not spell out their true agreement to return or reconvey to the Bank all
the properties anytime at its pleasure and at the same transfer price, because Central Bank
might questioned it and derailed their expansion program.

Clearly, the Bank was well aware of the limitations on its real estate holdings under the General Banking
Act and that its "warehousing agreement" with Tala was a scheme to circumvent the limitation. Thus,
the Bank opted not to put the agreement in writing and call a spade a spade, but instead phrased its
right to reconveyance of the subject property at any time as a "first preference to buy" at the "same
transfer price." This arrangement which the Bank claims to be an implied trust is contrary to law

while we find the sale and lease of the subject property genuine and binding upon the parties, we
cannot enforce the implied trust even assuming the parties intended to create it. In the words of the
Court in the Ramos case, "the courts will not assist the payor in achieving his improper purpose by
enforcing a resultant trust for him in accordance with the ‘clean hands’ doctrine." 73 The Bank cannot
thus demand reconveyance of the property based on its alleged implied trust relationship with Tala.
G.R. No. 147863 August 13, 2004

RINGOR v RINGOR

All lands adjudicated to Jacobo in three land registration cases: Expedientes 241 4449 and 241, were
transferred to Jose (grandson of Jacobo) through Compraventa (sale) and donation, but the possession
of the properties remained to Jacobo and he did not even partitioned it because he still needs it, despite
of such Jacobo unfailingly gave the share to the 7 children of his son Juan.

When Jacobo died, (Juan predeceases his father), Jose, eldest child of Juan, continue the administration
of the properties and that despite his refusal to partition the properties even though his siblings
demanded it, he assured them that he would never cheat them.

When Jose died, respondents (siblings of Jose) demanded from petitioners (children of Jose) the
partition and delivery of their share in the estate left by Jacobo and under Jose's administration, but
petitioners refused, hence respondent filed a complaint for partition and reconveyance with damages.

Respondents claimed that they are grandchildren and or great grandchildren of Jacobo, who left
intestate the disputed lands, registered in the name of Jose, that Jose had always been the
administrator and trustee of Jacobo and that being a trustee he was answerable to the respondents for
their just shares in the intestate properties of Jacobo.

Petitioners averred that they rightfully own and possess the disputed lands. That their father Jose
acquired legitimate title to the lands through sale and donation and that Jose had long acquired
indefeasible and incontrovertible title to the said properties.

Trial Court ruled in favour of respondents and states that Jacobo created an express trust over his
entire property in favor of his grandchildren, that Jose held held the subject lands as co-owner and
trustee of the express trust.The trial court further reasoned that despite the absence of a document
proving the express trust, the same was proven by parol evidence. That the prohibition in Article
144334 of the New Civil Code, is a prohibition for purposes of presenting proof on the matter, but it
could be waived by a party, that failure to object to parol evidence during trial is deemed waiver of
prohibition.

Court of Appeals affirmed the lower court's decision.

Issues:

WON there was a valid express trust established by Jacobo Ringor. YES!

WON parol evidence be used as proof of the establishment of the express trust. YES!

Petitioners aver that these elements [(1) a trustor or settlor who executes the instrument creating the trust;
(2) a trustee, who is the person expressly designated to carry out the trust; (3) the trust res, consisting of
duly identified and definite real properties; and (4) the cestui que trust, or beneficiaries whose identity must
be clear] are indispensable for an express trust to exist. Petitioners then lament that respondents did not
present during trial or even attach to the records of the case, any deed, instrument or document that Jacobo
intended to create a trust. Petitioners, in their petition, insist that the intent to create a trust must be in
writing; and they claimed that they objected, from the beginning, to the introduction of any oral testimony
to prove the establishment of an express trust.

Respondents, for their part, argue that Jacobo created an express trust. Respondents cite the three
applications for registration of the lands referred to the Expedientes 241, 244 and 4449 and the
three Compraventas as documentary proofs that an express trust was created by Jacobo. According to them,
this conclusion can be gleaned clearly when Jacobo exercised acts of ownership over all the disputed lands
even after the alleged donation and deeds of sale in favor of Jose, and when Jacobo religiously gave shares
of the income and produce of the disputed lands to the respondents, a practice Jose continued until three
years before his death.

SC:

Express trusts are intentionally created by the direct and positive acts of the settlor or the trustor – by
some writing, deed, or will, or oral declaration. It is created not necessarily by some written words,
but by the direct and positive acts of the parties. No particular words are required, it being sufficient
that a trust was clearly intended.

However, in the case of immovable properties, the law provides that written instrument is
needed signed by party creating trust, but this is not to be construed as preventing a
creation of trust by oral agreement, but merely rendering such trust as enforceable.

It is not error of the lower court to rely on parol evidence (the oral testimonies of witnesses Emeteria
Ringor, Julio Monsis and Teofilo Abalos) to conclude that express trust exist, because what is crucial is
the intention tocreate a trust. That sometimes, intention is manifested by the trustor in express or
explicit language, or may be may be manifested by inference from what the trustor has said or done,
from the nature of the transaction, or from the circumstances surrounding the creation of the purported
trust.

That implication of the intention to create a trust, made from language, conduct or
circumstances, must be made with reasonable certainty, it cannot rest on vague, uncertain
or indefinite declarations. That if innference of intention to create trust predicated on
conduct or circumstance, it can only be made if it admit of no other interpretation.

In this case, credible witnesses testified that

1. transfer of properties to Jose was made for convenience of Jacobo;

2. despite the transfer, Jacobo perform all the acts of ownership including possession over the
disputed lands;

3. that Jose unfailingly gave his siblings their share in the produce of lands, thereby recognizing
his siblings as co-owners; and

4. Jose never repudiated the claim of his sibling over their share in the disputed properties.

With that, the lands sold and transferred to Jose by Jacobo were simulated or falsified sales, considering
that Jacobo’s intention was to create a trust, Jose as trustee and Jacobo’s heir as beneficiaries.

SC also applied the doctrine of partial performance, that objection to the oral character of a
trust may be overcome or removed where there has been partial performance of the terms
of the trust as to raise an equity in the promise. That when a verbal contract has been completed,
executed or partially consummated, its enforceability will not be barred by the Statute of Frauds, which
applies only to an executory agreement

In this case, there is partial performance of trust, when:

1. Jose unfailingly gave his siblings their share of the produce of the lands;

2. He fail to repudiate the trust;

3. it was inconvenience of partitioning that kept Jose from transferring his siblings shares.

As to the donation, there is also implied trust in the donation executed by Jacobo in favour
of Jose. Despite the registration in Jose's name, Jose did not take possession over them from the date
of registration to the time of Jacobo's death. Instead, while alive, Jacobo retained possession, and
continued the administration of the lands. Considering then these circumstances, Article 1449 of the
New Civil Code on implied trusts is the pertinent law.

Generally, resulting trusts do not prescribe except when the trustee repudiates the trust. Further, the
action to reconvey does not prescribe so long as the property stands in the name of the trustee. To
allow prescription would be tantamount to allowing a trustee to acquire title against his principal and
true owner. Here, Jose did not repudiate the trust, and the titles of the disputed lands are still registered
in Jose's name or in the name of the Heirs of Jose M. Ringor, Inc.

A trustee who obtains a Torrens title over a property held in trust for him by another cannot
repudiate the trust by relying on the registration. Torrens Certificate of Title in Jose's name did
not vest ownership of the land upon him, it only confirms and records title already existing and vested.
It does not protect a usurper from the true owner. Jose could not repudiate a trust by relying on a
Torrens title he held in trust for his co-heirs. The beneficiaries are entitled to enforce the trust,
notwithstanding the irrevocability of the Torrens title. The intended trust must be sustained.