DEFINITION OF TRUST

Trust is the legal relationship between one person having an equitable ownership in
property and another person owning the legal title to such property, the equitable
ownership of the former entitling him to the performance of certain duties and the exercise
of certain powers by the latter.

It is a right, enforceable in equity, to the beneficial enjoyment of property the legal title to
which is in another. As it is founded in equity, it can never result from act violative of law.

CHARACTERISTICS OF TRUST

1. It is a relationship;
2. It is a relationship of fiduciary character;
3. It is a relationship with respect to property, not one involving merely personal duties;
4. It involves the existence of equitable duties, imposed upon the holder of the title of the
property to deal with it for the benefit of another;
5. It arises as a result of a manifestation of intention to create the relationship.

DISTINGUISHED FROM BAILMENT

A delivery of property in trust necessarily involves a transfer of legal title, or at least a

separation of equitable interest and legal title, with the legal title in the trustee, whereas it
is a characteristic of a bailment that the bailee has possession of, without legal title to the
property subject to the bailment.

DISTINGUISHED FROM DONATION

A trust is an existing legal relationship and involves the separation of legal and equitable
title, whereas a gift is a transfer of property and, except in the case of a gift in trust,
involves a disposition of both legal and equitable ownership.

A trust constituted between two contracting parties for the benefit of a third person is not
subject to the rules governing donations of real property. The beneficiary of a trust may
demand performance of the obligation without having formally accepted the benefit of the
trust in a public document, upon mere acquiescence in the formation of the trust and
acceptance under the second paragraph of Article 1311 of the Civil Code.

DISTINGUISHED FROM CONTRACT

A trust always involves an ownership, embracing a set of rights and duties fiduciary in
character which
may be created by a declaration without consideration, whereas a contract is a legal
obligation based on an
undertaking supported by a consideration, which obligation may or may not be fiduciary
in character.
DISTINGUISHED FROM GUARDIANSHIP OR EXECUTORSHIP
In trust, the trustee or holder has the legal title to the property; a guardian, administrator,
or executor
does not have legal title to the property.
DISTINGUISHED FROM STIPULATION POUR AUTRUI
A trust may exist because of a legal provision or because of an agreement; a stipulation
pour autrui
can arise only in the case of contracts.
A trust refers to specific property; a stipulation pour autrui refers to specific property or to
other things.
DISTINGUISHED FROM AGENCY
A trust and an agency are distinguishable on the basis of the non-representative role of
the trustee
and the representative role of the agent.
CO-OWNERSHIP AS A TRUST
A co-ownership is a form of a trust, with each co-owner being a trustee for each of the
others.
PARTIES TO A TRUST
1. Trustor or the person who creates or established the trust;
2. Trustee or the person who takes and holds the legal tile to the trust property, for the
benefit of another,
with certain powers and subject to certain duties;
3. Beneficiary or cestui que trust or the person has an equitable interest in the property
and enjoys the
benefit of the administration of the trust by the trustee
CHARACTER OF OFFICE OF TRUSTEE
1. As principal – The trustee is not an agent of the trust estate or of the cestui que trust,
but he acts for
himself in the administration of the trust estate, although subject to the terms of the trust
and law of
trusts.
2. As agent – In some cases, however, a trustee has been regarded as an agent of
beneficiaries of the
trust at least for certain purposes, such as for the purpose of imputing to the beneficiaries
of the trust
notice given to the trustee.
3. As fiduciary – A trustee, like an executor or administrator, holds an office of trust. The
duties of the
latter are, however, fixed and/or limited by law, whereas those of trustee of an express
trust are
usually governed by the intention of the trustor or of the parties, if established by contract.
CLASSIFICATION OF TRUST
From the viewpoint of whether it becomes effective after the death of the trustor or during
his life:
1. Testamentary trust
2. Trust inter vivos (sometimes called “living trusts”)
From the viewpoint of the creative force bringing it into existence:
1. Express trust – which can come into existence only by the manifestation of an intention
to create it by
the one having legal and equitable dominion over the property made subject to it;
2. Implied trust – which comes into existence either through implication of an intention to
create a trust
as a matter of law or through the imposition of the trust irrespective of and even contrary
to any such
intention; it may either be:
a. A resulting trust – which arises where a person makes or causes to be made a
disposition of
property under circumstances which raise an inference that he does not intend that the
person
taking or holding the property should have the beneficial interest in the property; is
founded on
the presumed intention of the parties; OR
b. A constructive trust – which is imposed where a person holding title to property is
subject to an
equitable duty to convey it to another on the ground that he would be unjustly enriched if
he
were permitted to retain it; the duty to convey the property arises because it was acquired
through fraud, duress, undue influence, mistake, or through breach of a fiduciary duty, or
through the wrongful disposition of another’s property.
VALDEZ VS. OLARGA (51 SCRA 71)
It has been held in numerous decisions involving fiduciary relations such as those
occupied by a
trustee with respect to the cestui que trust that as a general rule the former’s possession
is not adverse and
therefore cannot ripen into a title by prescription. Thus, adverse possession in such a
case requires the
concurrence of the following circumstances:
1. That the trustee has performed unequivocal acts of repudiation amounting to ouster of
the cestui que
trust;
2. That such positive acts of repudiation have been made known to the cestui que trust;
and
3. That the evidence thereon should be clear and conclusive.
EXPRESS TRUSTS
REQUISITES
There must be:
1. A competent trustor and trustee,
2. An ascertainable trust res, and
3. Sufficiently certain beneficiaries
Therefore:
1. The requirement that the express trust be written is only for enforceability, not for
validity between the
parties; hence, Article 1443 may, by analogy, be included under the Statute of Frauds;
2. By implication, for a trust over personal property, and oral agreement is valid and
enforceable
between the parties;
3. Regarding third persons, the trust must be in public instrument registered in the
Registry of Property if
it concerns real property.
CREATION
1. By conveyance to the trustee by an act inter vivos or mortis causa
2. By admission of the trustee that he holds the property only as a trustee
There must be a clear intent to create a trust. Thus, no particular or technical words
are required.
CAPACITY
1. The trustor must be capacitated to convey property
2. The trustee must be capacitated to hold property and to enter into contract
3. The beneficiary must be capacitated to receive gratuitously from the trustor
ADMINISTRATION OF THE TRUST
1. The trustee must file a bond
2. The trustee must make an inventory of the real and personal property in trust
3. The trustee must manage and dispose of the estate and faithfully discharge his trust in
relation
thereto according to law or according to the terms of the trust instrument as long as they
are legal and
possible
4. The trustee must render a true and clear account
5. The trustee cannot acquire the property held in trust by prescription as long as the trust
is admitted (if
he repudiates and this is made known to the party involved, prescription is permitted)
Q: MAY A TRUSTEE OF A TRUST ESTATE BE PERSONALLY LIABLE?
A: In the absence of an express stipulation in a contract entered into by a trustee for a
corporation that the
trust estate and not the trustee should be liable on the contract; the trustee is liable in its
individual
capacity.
Q: WHEN MAY A TRUSTEE SUE AS SUCH?
A: Before a trustee may sue or be sued alone as such, it is essential that his trust be
express.
ACCEPTANCE, DECLINATION, OR RENUNCIATION BY THE TRUSTEE
In the case of an express trust, acceptance of trust by a trustee is necessary to charge
him with the
office of the trustee and the administration of the trust and to vest the legal title in him.
However, his
acceptance of the trust is not necessary to its existence and validity, since if he declines
the trust, the courts
will appoint a trustee to fill the office that he declines.
One designated or appointed as trustee may decline the responsibility and thereby be
free from any
legal or equitable duty or liability in the matter. Unless a contrary intention appears in the
instrument
constituting the trust, declination or refusal or disqualification of a trustee does not operate
to defeat or void
the trust, nor does it operate to vest legal as well as equitable title in the beneficiary.
Renunciation of a trust after its acceptance can only be by resignation or retirement with
court
approval, with agreement of beneficiaries, and on satisfaction of all legal liabilities growing
out of the
acceptance of the trust. When a person administering property in the character of a
trustee inconsistently
assumes to be holding in his own right, this operates as renunciation of the trust and the
beneficiaries of the
property are entitled to maintain an action to declare their right and remove the unfaithful
trustee.
ACCEPTANCE OF TRUST BY THE BENEFICIARY
This is essential to the creation and validity of a trust.
Acceptance is presumed if the granting of benefit is purely gratuitous (no onerous
condition) EXCEPT
if there is proof that he really did not accept.
Acceptance by the beneficiary of a gratuitous trust is not subject to the rules for the
formalities of
donations.
TERMINATION
1. Mutual agreement of all the parties
2. Expiration of the term
3. Fulfillment of the resolutory condition
4. Rescission or annulment
5. Physical loss or legal impossibility of the subject matter of the trust
6. Order of the court
7. Merger
8. Accomplishment of the purpose of the trust
EFFECT OF LACHES
Cestui que trust is entitled to rely upon the fidelity of the trustee. Laches applies from the
trustee
openly denies or repudiates the trust and the beneficiary is notified thereof, or is otherwise
plainly put on
guard against the trustee. On the other hand, when it does not appear when the trustee
repudiated
existence of the fiduciary relation, the same shall be taken to have been made only upon
the filing of his
answer to the complaint.
IMPLIED TRUST
CONCEPT
Implied trusts are those which, without being expressed, are deducible from the nature of
the transactions as
matter of intent, or which are super induced on the transaction by operation of law, is
matters of equity,
independently of the particular intention of the parties. The doctrine of implied trusts is
founded upon equity.
As such, trust can never result from acts violative of the law.
KINDS
1. Resulting trust – a trust whish is raised or created by the act or construction of law, or
in its more restricted
sense, it is raised by implication of law and presumed always to have been contemplated
by the parties,
the intention as to which is to be found in the nature of their transaction, but not expressed
in the deed or
instrument of conveyance.
Examples are those found in Articles 1448 to 1455 of the NCC
2. Constructive trust – a trust raised by construction of law; in a more restricted sense
and as contradistinguished
from a resulting trust, it is a trust not created by words, expressly or impliedly evincing a
direct intention to create a trust by the construction of equity in order to satisfy the
demands of justice; it
does not arise by agreement or intention but by operation of law
DISTINCTION BETWEEN EXPRESS AND IMPLIED TRUSTS
Express Trust Implied Trust
Created by the intention (through direct
and positive acts) of the parties
Comes into being by operation of law
independent of the particular intention
of the parties
Cannot be proved by parol evidence when it
concerns an immovable or any interest
therein
Can be proved by oral evidence when
it concerns an immovable or any
interest therein
In order that laches or acquisitive
prescription may bar an action to enforce it,
an express repudiation made known to the
beneficiary is required
Laches constitutes a bar to actions to
enforce it, unless there is concealment
of the fact giving rise to the trust
Q: WHEN IS AN IMPLIED TRUST CONVERTED TO EXPRESS TRUST?
A: An implied trust may be converted to an express trust by the recognition by the implied
trustee of the right
to the property of the owner.
ACQUISITION OF PROPERTY THROUGH PRESCRIPTION
By trustee:
1. The possession of a trustee is in law possession of the cestui que trust and, therefore,
it cannot be a
good ground for title by prescription
2. No prescription shall run in favor of a co-owner against his co-owners or co-heirs as
long as he
expressly or impliedly recognizes the co-ownership
3. Express trusts disable the trustee from acquiring for his own benefit the property
committed to his
management or custody at least while he does not openly repudiate the trust and makes
such
repudiation known to the beneficiary
4. Trustee may claim title by prescription founded on adverse possession where it
appears that:
a. He has performed open and unequivocal acts of repudiation amounting to an ouster of
the
cestui que trust
b. Such positive acts of repudiation have been made known to the cestui que trust
c. The evidence thereon should be clear and conclusive; and
d. The period fixed by law has prescribed (the period commences to run from and after
said
repudiation and the knowledge thereof by the cestui que trust.
By third persons:
Though the statute of limitations does not run between trustee cestui que trust as long as
the trust
relation subsists, it does not run between the trust and third persons. Thus, a third person
who holds actual,
open, public, and continuous possession of a land adversely to the trust, acquires title to
the land by
prescription as against such trust.
PRESCRIPTIBILITY OF ACTION FOR RECONVEYANCE BASED ON IMPLIED
TRUST
1. An action for reconveyance of property (real or personal) to enforce an implied trust in
one’s favor
prescribed in ten (10) years from the time the right of action
2. Accrues (the action being based upon an obligation created by law), that is, from the
moment the law
creates the trust because the so-called trustee does not recognize any trust and has no
intention to
hold for the beneficiary.
Some doctrines:
Where the action for conveyance of real property is based on constructive trust resulting
from its fraudulent registration in the name of another (see Article 1456), the action may
be filed
from the discovery of the fraud or notice thereof, which is deemed to have taken place
from the
inscription of the instrument and/or issuance of the new certificate of title by virtue thereof.
The
issuance of said certificate of title constitutes constructive notice to the public.
In another case, however, where the ownership of the land was sold fictitiously to avoid
a
foreclosure of mortgage, it was ruled that the ten-year prescriptive period should be
counted not
from the registration of the simulated sale, but from the date of recording of the release
of the
mortgage, on which date the cestui que trust was charged with the knowledge of the
settlement of
the mortgage obligation, the attainment of the purpose for which the trust was created.
But if the
legitimate owner of the subject property, which was fraudulently registered in the name
of another,
had always been in possession thereof, the constructive notice rule cannot be applied.
The action
for reconveyance is in reality an action to quiet title; therefore, the action is imprescriptible.
3. But where the rights of the beneficiary are recognized by the trustee, the ten-year
prescriptive period
commences to run from the time the trustee begins to assert his title or to hold adversely,
as when the
trustee files an ejectment suit against the beneficiary, or when he registers the deed of
assignment of
property to him and secures the cancellation of the certificate of title in the name of the
former owner
and the issuance of new certificate of title in his own name, or when he sells portions of
the property.
Continuous recognition of a resulting trust precludes any defense of prescription or laches
in a
suit to declare and enforce the trust.
4. When a person through fraud succeeds in registering a land in his name, the law
creates a
constructive trust in favor of the defrauded party. (See Article 1456).
5. The latter is granted the right to recover the property fraudulently registered within a
period of ten
years. In the computation of time necessary for prescription, the present possessor may
complete the
period necessary for prescription by tacking his possession to that of his grantor. This
rule, however,
applies only where there is privity between successive possessors.
But according to Paras, citing two 1950’s cases, the action should be filed within four (4)
years
from the discovery of the fraud.
6. The only limitation upon the right of the beneficiary to recover title over the property
held in trust is that
the same must not have been transferred to an innocent purchaser for value in which
event, his
remedy is to ask for damages.
EFFECT OF LACHES
Implied trust may be barred not only by prescription but also by laches. Laches constitutes
a defense
to a suit to declare and enforce an implied trust, and for the purpose of the rule, express
repudiation is not
required, unless the trustee fraudulently and successfully conceals the facts giving rise to
the trust.
Inasmuch as the trustee in an implied trust does not recognize any trust and has no intent
to hold for
the beneficiary, the latter is not justified in delaying the action to recover his property. It is
his fault if he
delays. The doctrine of laches, however, is less strictly applied between near relatives
than when the parties
are strangers to each other.
GENERAL RULE UNDER ARTICLE 1448
A resulting trust arises in favor of a person from whom a consideration comes for a
reconveyance of
property (real or personal) to another, but the trust is rebuttable by proof of a contrary
intention of the persons
from whom the consideration comes, and such proof may be by parol evidence. The trust
results only in
favor of one advancing the consideration, and not in favor of one for whose benefit the
purchase may have
been made.
EXCEPTIONS
1. No trust is implied if the person to whom the legal estate is conveyed is a legitimate or
illegitimate
child of the payor. The reason is there is a presumption that a gift or donation was
intended in favor of
the child.
2. When an actual contrary intention is proved.
Articles 1448, 1449, 1451 and 1453 are resulting trusts.
Articles 1450, 1454, 1455 and 1456 are constructive trusts.
Article 1455
The general rule is that where trust money cannot be applied either immediately or within
a short
time to the purpose of the trust, it is the duty of the trustee to make the fund productive to
the beneficiary
by investment of it in some proper security. But trustees must not make investment of
funds in their own
names but always indicate that they are made in trust capacities.
This article applies to any trustee, guardian, or other person holding a fiduciary
relationship.
 Article 1456
The mistake referred to in this article is a mistake made by a third person, not that made
by a party
to the contract. For if made by a party, no trust is created. Similarly, the fraud referred to
is extracontractual.
Title V. - TRUSTS (n)
CHAPTER 1
GENERAL PROVISIONS
Art. 1440. A person who establishes a trust is called the
trustor; one in whom confidence is reposed as regards
property for the benefit of another person is known as
the trustee; and the person for whose benefit the trust
has been created is referred to as the beneficiary.
Art. 1441. Trusts are either express or implied. Express
trusts are created by the intention of the trustor or of the
parties. Implied trusts come into being by operation of
law.
Art. 1442. The principles of the general law of trusts,
insofar as they are not in conflict with this Code, the
Code of Commerce, the Rules of Court and special laws
are hereby adopted.
CHAPTER 2
EXPRESS TRUSTS
Art. 1443. No express trusts concerning an immovable
or any interest therein may be proved by parol evidence.
Art. 1444. No particular words are required for the
creation of an express trust, it being sufficient that a
trust is clearly intended.
Art. 1445. No trust shall fail because the trustee
appointed declines the designation, unless the contrary
should appear in the instrument constituting the trust.
Art. 1446. Acceptance by the beneficiary is necessary.
Nevertheless, if the trust imposes no onerous condition
upon the beneficiary, his acceptance shall be presumed,
if there is no proof to the contrary.
CHAPTER 3
IMPLIED TRUSTS
Art. 1447. The enumeration of the following cases of
implied trust does not exclude others established by the
general law of trust, but the limitation laid down in Article
1442 shall be applicable.
Art. 1448. There is an implied trust when property is
sold, and the legal estate is granted to one party but the
price is paid by another for the purpose of having the
beneficial interest of the property. The former is the
trustee, while the latter is the beneficiary.
However, if the person to whom the title is conveyed is a
child, legitimate or illegitimate, of the one paying the
price of the sale, no trust is implied by law, it being
disputably presumed that there is a gift in favor of the
child.
Art. 1449. There is also an implied trust when a donation
is made to a person but it appears that although the
legal estate is transmitted to the donee, he nevertheless
is either to have no beneficial interest or only a part
thereof.
Art. 1450. If the price of a sale of property is loaned or
paid by one person for the benefit of another and the
conveyance is made to the lender or payor to secure the
payment of the debt, a trust arises by operation of law in
favor of the person to whom the money is loaned or for
whom it is paid. The latter may redeem the property and
compel a conveyance thereof to him.
Art. 1451. When land passes by succession to any
person and he causes the legal title to be put in the
name of another, a trust is established by implication of
law for the benefit of the true owner.
Art. 1452. If two or more persons agree to purchase
property and by common consent the legal title is taken
in the name of one of them for the benefit of all, a trust
is created by force of law in favor of the others in
proportion to the interest of each.
Art. 1453. When property is conveyed to a person in
reliance upon his declared intention to hold it for, or
transfer it to another or the grantor, there is an implied
trust in favor of the person whose benefit is
contemplated.
Art. 1454. If an absolute conveyance of property is
made in order to secure the performance of an
obligation of the grantor toward the grantee, a trust by
virtue of law is established. If the fulfillment of the
obligation is offered by the grantor when it becomes
due, he may demand the reconveyance of the property
to him.
Art. 1455. When any trustee, guardian or other person
holding a fiduciary relationship uses trust funds for the
purchase of property and causes the conveyance to be
made to him or to a third person, a trust is established
by operation of law in favor of the person to whom the
funds belong.
Art. 1456. 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.
Art. 1457. An implied trust may be proved by oral
evidence.
1. Salao vs salao
G.R. No. L-26699 March 16, 1976
SC decision: The trial court's judgment is affirmed. No pronouncement as to costs.
Facts:

This litigation regarding a forty-seven-hectare fishpond located at Sitio Calunuran,

Hermosa, Bataan involves the law of trusts and prescription. The facts are as follows:

The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal
begot four children named Patricio, Alejandra, Juan (Banli) and Ambrosia. Manuel Salao
died in 1885. His eldest son, Patricio, died in 1886 survived by his only child. Valentin
Salao.
There is no documentary evidence as to what, properties formed part of Manuel Salao's
estate, if any. His widow died on May 28, 1914. After her death, her estate was
administered by her daughter Ambrosia.
It was partitioned extrajudicially in a deed dated December 29, 1918 but notarized on May
22, 1919 (Exh. 21). The deed was signed by her four legal heirs, namely, her three
children, Alejandra, Juan and Ambrosia, and her grandson, Valentin Salao, in
representation of his deceased father, Patricio.

To each of the legal heirs of Valentina Ignacio was adjudicated a distributive share valued
at P8,135.25. In satisfaction of his distributive share, Valentin Salao (who was then
already forty-eight years old) was given the biggest fishpond with an area of 50,469
square meters, a smaller fishpond with an area of 6,989 square meters and the riceland
with a net area of 9,905 square meters. Those parcels of land had an aggregate appraised
value of P13,501 which exceeded Valentin's distributive share. So in the deed of partition
he was directed to pay to his co-heirs the sum of P5,365.75. That arrangement, which
was obviously intended to avoid the fragmentation of the lands, was beneficial to Valentin.

In that deed of partition (Exh. 21) it was noted that: It was expressly stipulated that
Ambrosia Salao was not obligated to render any accounting of her (pages 2 and 11, Exh.
21).

By virtue of the partition the heirs became: “absolute owners of their respective properties,
and may immediately take possession of their property, in the manner in which the awards
have been distributed and carried out/”

The documentary evidence proves that in 1911 or prior to the death of Valentina Ignacio
her two children, Juan Y. Salao, Sr. and Ambrosia Salao, secured a Torrens title, OCT
No. 185 of the Registry of Deeds of Pampanga, in their names for a forty-seven-hectare
fishpond located at Sitio Calunuran, Lubao, Pampanga (Exh. 14). It is also known as Lot
No. 540 of the Hermosa cadastre because that part of Lubao later became a part of
Bataan.
The Calunuran fishpond is the bone of contention in this case.

The 1930 survey shown in the computation sheets of the Bureau of Lands reveals that
the Calunuran fishpond has an area of 479,205 square meters and that it was claimed by
Juan Salao and Ambrosia Salao, while the Pinanganacan fishpond (subsequently
acquired by Juan and Ambrosia) has an area of 975,952 square meters (Exh. 22).

ISSUE: WON:
1. Was there a trust between Valentin (nephew) and his aunt and uncle
2. Petitioner cause action has prescribed due to laches

HELD:

RTC dismissed petition.

The trial court found that there was no community of property among Juan Y. Salao, Sr.,
Ambrosia Salao and Valentin Salao when the Calunuran and Pinanganacan (Lewa) lands
were acquired; that a co-ownership over the real properties of Valentina Ignacio (maternal
side) existed among her heirs after her death in 1914; that the co-ownership was
administered by Ambrosia Salao and that it subsisted up to 1918 when her estate was
partitioned among her three children and her grandson, Valentin Salao.

The trial court speculated that if valentin had a hand in the conversion into fishponds of
the Calunuran and Lewa lands, he must have done so on a salary or profit- sharing basis.
It conjectured that Valentin's children and grandchildren were given by Ambrosia Salao a
portion of the earnings of the fishponds as a reward for his services or because of
Ambrosia's affection for her grandnieces. The trial court rationalized that Valentin's
omission during his lifetime to assail the Torrens titles of Juan and Ambrosia signified that
"he was not a co-owner" of the fishponds. It did not give credence to the testimonies of
plaintiffs' witnesses because their memories could not be trusted and because no strong
documentary evidence supported the declarations. Moreover, the parties involved in the
alleged trust were already dead.

Both parties appealed.

decisive issue of whether the Calunuran fishpond was held in trust for Valentin Salao by
Juan Y. Salao, Sr. and Ambrosia Salao. That issue is tied up with the question of whether
plaintiffs' action for reconveyance had already prescribed.

A person who establishes a trust is called the trustor; one in whom confidence is reposed
as regards property for the benefit of another person is known as the trustee; and the
person for whose benefit the trust has been created is referred to as the beneficiary" (Art.
1440, Civil Code). There is a fiduciary relation between the trustee and the cestui que
trust (beneficiary) as regards certain property, real, personal, money or choses in action
(Pacheco vs. Arro, 85 Phil. 505).
"Trusts are either express or implied. Express trusts are created by the intention of the
trustor or of the parties. Implied trusts come into being by operation of law" (Art. 1441,
Civil Code). "No express trusts concerning an immovable or any interest therein may be
proven by parol evidence. An implied trust may be proven by oral evidence" (Ibid, Arts.
1443 and 1457).
"No particular words are required for the creation of an express trust, it being sufficient
that a trust is clearly intended" (Ibid, Art. 1444; Tuason de Perez vs. Caluag, 96 Phil. 981;
Julio vs. Dalandan, L-19012, October 30, 1967, 21 SCRA 543, 546). "Express trusts are
those which are created by the direct and positive acts of the parties, by some writing or
deed, or will, or by words either expressly or impliedly evincing an intention to create a
trust" (89 C.J.S. 72).
"Implied trusts are those which, without being expressed, are deducible from the nature
of the transaction as matters of intent, or which are superinduced on the transaction by
operation of law as matter of equity, independently of the particular intention of the
parties" (89 C.J.S. 724). They are ordinarily subdivided into resulting and constructive
trusts (89 C.J.S. 722).
"A resulting trust. is broadly defined as a trust which is raised or created by the act or
construction of law, but in its more restricted sense it is a trust raised by implication of law
and presumed to have been contemplated by the parties, the intention as to which is to
be found in the nature of their transaction, but not expressed in the deed or instrument of
conveyance (89 C.J.S. 725). Examples of resulting trusts are found in articles 1448 to
1455 of the Civil Code. (See Padilla vs. Court of Appeals, L-31569, September 28, 1973,
53 SCRA 168, 179; Martinez vs. Graño 42 Phil. 35).
On the other hand, a constructive trust is -a trust "raised by construction of law, or arising
by operation of law". In a more restricted sense and as contra-distinguished from a
resulting trust, a constructive trust is "a trust not created by any words, either expressly
or impliedly evincing a direct intension to create a trust, but by the construction of equity
in order to satisfy the demands of justice." It does not arise "by agreement or intention,
but by operation of law." (89 C.J.S. 726-727).
Thus, "if property is acquired through mistake or fraud, the person obtaining it is, by force
of law, considered a trustee of an implied trust for the benefit of the person from whom
the property comes" (Art. 1456, Civil Code).

Not a scintilla of documentary evidence was presented by the plaintiffs to prove that there
was an express trust over the Calunuran fishpond in favor of Valentin Salao. Purely parol
evidence was offered by them to prove the alleged trust. Their claim that in the oral
partition in 1919 of the two fishponds the Calunuran fishpond was assigned to Valentin
Salao is legally untenable.

It is legally indefensible because the terms of article 1443 of the Civil Code (already in
force when the action herein was instituted) are peremptory and unmistakable: parol
evidence cannot be used to prove an express trust concerning realty.
Is plaintiffs' massive oral evidence sufficient to prove an implied trust, resulting or
constructive, regarding the two fishponds?
Plaintiffs' pleadings and evidence cannot be relied upon to prove an implied trust.

It is incredible that the forty-seven-hectare Calunuran fishpond would be adjudicated to

Valentin Salao mere by by word of mouth. Incredible because for the partition of the
seventeen hectares of land left by Valentina Ignacio an elaborate "Escritura de Particion"
consisting of twenty-two pages had to be executed by the four Salao heirs. Surely, for the
partition of one hundred forty-five hectares of fishponds among three of the same Salao
heirs an oral adjudication would not have sufficed.

a trust must be proven by clear, satisfactory and convincing evidence. It cannot rest on
vague and uncertain evidence or on loose, equivocal or indefinite declarations

Trust and trustee; establishment of trust by parol evidence; certainty of proof. — Where
a trust is to be established by oral proof, the testimony supporting it must be sufficiently
strong to prove the right of the alleged beneficiary with as much certainty as if a document
proving the trust were shown. A trust cannot be established, contrary to the recitals of a
Torrens title, upon vague and inconclusive proof.(Syllabus, Suarez vs. Tirambulo, 59 Phil.
303).
Trusts; evidence needed to establish trust on parol testimony. — In order to establish a
trust in real property by parol evidence, the proof should be as fully convincing as if the
act giving rise to the trust obligation were proven by an authentic document. Such a trust
cannot be established upon testimony consisting in large part of insecure surmises based
on ancient hearsay. (Syllabus, Santa Juana vs. Del Rosario 50 Phil. 110).
The foregoing rulings are good under article 1457 of the Civil Code which, as already
noted, allows an implied trust to be proven by oral evidence. Trustworthy oral evidence is
required to prove an implied trust because, oral evidence can be easily fabricated.

The real purpose of the Torrens system is, to quiet title to land. "Once a title is registered,
the owner may rest secure, without the necessity of waiting in the portals of the court, or
sitting in the mirador de su casa, to avoid the possibility of losing his land" (Legarda and
Prieto vs. Saleeby, 31 Phil. 590, 593).
There was no resulting trust in this case because there never was any intention on the
part of Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao to create any trust. There
was no constructive trust because the registration of the two fishponds in the names of
Juan and Ambrosia was not vitiated by fraud or mistake.

And even assuming that there was an implied trust, plaintiffs' action is clearly barred by
prescription or laches

Under Act No. 190, whose statute of limitation would apply if there were an implied trust
in this case, the longest period of extinctive prescription was only ten year
The Calunuran fishpond was registered in 1911. The written extrajudicial demand for its
reconveyance was made by the plaintiffs in 1951. Their action was filed in 1952 or after
the lapse of more than forty years from the date of registration.

The plaintiffs have no right and personality to assil that donation.

The sole legal heir of Ambrosia was her nephew, Juan, Jr., her nearest relative within the
third degree. collateral line.

The trial court did not err in dismissing plaintiffs' complaint.

2 . G.R. No. L-17809 December 29, 1962

De leon vs MOLO-PECKSON

SC DECISION: we hereby affirm the decision appealed from, without pronouncement as

to costs
FACTS:
On January 24, 1941, Mariano Molo y Legaspi died leaving a will wherein he bequeathed
his entire estate to his wife, Juana Juan. This will was probated in the Court of First
Instance of Pasay City, Rizal, which was affirmed by the Supreme Court on November
26, 1956 (G.R. No. L-8774). On May 11, 1948, Juana Juan in turn executed a will naming
therein many devisees and legatees, one of whom is Guillermo San Rafael, mother of the
plaintiffs and defendant Pilar Perez Nable. On June 7, 1948, however, Juana Juan
executed a donation inter vivos in favor of Emiliana Molo-Peckson and Pilar Perez Nable
of almost all of her entire property leaving only about P16,000.00 worth of property for the
devisees mentioned in the will. Among the properties conveyed to the donees are the ten
parcels of land subject of the present action. Juana Juan died on May 28, 1950.
On December 5, 1950, Emiliana Molo-Peckson and Pilar Perez Nable executed a
document which they called "MUTUAL AGREEMENT" the pertinent provisions of which
are:
That the above named parties hereby mutually agree by these presents . . . that the
following lots should be sold at ONE (1) PESO each to the following persons and
organization:
xxxxxxxxx
TO — JUSTA DE LEON and RESURRECCION DE LEON, several parcels of land located
at Calle Tolentino (South of Tenorio and Kapitan Magtibay), Pasay City, share and share
alike or half and half of TEN (10) LOTS described in:
Transfer Certificate of Title No. 28157 — and allocated as follows:
(a) To JUSTA DE LEON Five (5) Lots.
(b) To RESURRECCION DE LEON, the remaining Five (5) Lots.
That this agreement is made in conformity with the verbal wish of the late Don Mariano
Molo y Legaspi and the late Dona Juana Francisco Juan y Molo. These obligations were
repeatedly told to Emiliana Molo Peckson, before their death and that same should be
fulfilled after their death.
On August 9, 1956, however, the same defendants, assisted by their husbands, executed
another document in which they revoked the so-called mutual agreement mentioned
above, and another relating to the same subject matter, stating therein that the parties,
"after matured and thorough study, realized that the above-mentioned public instruments
. . . do not represent their true and correct interpretation of the verbal wishes of the late
spouses Don Mariano Molo y Legaspi and Dona Juana Francisco Juan y Molo." But after
the execution of this document, that is, on August 11, 1956, the beneficiary Resurreccion
de Leon and Justa de Leon, thru their
counsel demanded the conveyance to them of the ten parcels of land for the consideration
of P1.00 per parcel as stated in the document of December 5, 1950. And having the
defendants refused to do so, said beneficiaries consigned on July 8, 1957 the amount of
P10.00 as the consideration of the ten parcels of land.lawphil.net

ISSUE: WON; 1.) THE LOWER COURT ERRED IN APPLYING ARTICLE 1440, 1441,
1449, 1453 AND 1457 OF THE NEW CIVIL CODE TO THE CASE AT BAR. 2.) THE
LOWER COURT ERRED IN HOLDING THAT DEFENDANTS-APPELLANTS HAD NO
RIGHT TO REVOKE EXHIBIT "A". 3.)

HELD:
There is no merit in the claim that the document executed on December 5, 1950 does not
represent the true and correct interpretation by appellants of the verbal wish of their foster
parents relative to the conveyance for a nominal consideration to appellees of the ten
parcels of land in question considering the circumstances obtaining in the present case.
To begin with, this document was executed by appellants on December 5, 1950, or about
two years and six months
from the time they acquired title to the lands by virtue of the donation inter vivos executed
in their favor by their foster mother Juana Juan and six months after the death of the
donor. There is nobody who could cajole them to execute it, nor is there any force that
could coerce them to make the declaration therein expressed, except the constraining
mandate of their conscience to comply with "the obligations repeatedly told to Emiliana
Molo Peckson," one of appellants, before their death, epitomized in the "verbal wish of
the late Don Mariano Molo y Legaspi and the late Doña Juana Francisco Juan y Molo" to
convey after their death said ten parcels of land at P1.00 a parcel to appellees. In fact,
the acknowledgement appended to the document they subscribed states that it was "their
own free act and voluntary deed."1awphi1.net
Indeed, it is to be supposed that appellants understood and comprehended the legal
import of said documents when they executed it more so when both of them had studied
in reputable centers of learning, one being a pharmacist and the other a member of the
bar. Moreover, they have more than ample time — the six months intervening betwen the
death of the donor and the execution of the document — to ponder not only wish of their
predecessors-in-interest but also on the propriety of putting in writing the mandate they
have received. It is, therefore, reasonable to presume that that document represents the
real wish of appellants' predecessors-in-interest and that the only thing to be determined
is its real import and legal implications.
That the document represents a recognition of pre-existing trust or a declaration of an
express trust impressed on the ten parcels of land in question is evident. A declaration of
trust has been defined as an act by which a person acknowledges that the property, title
to which he holds, is held by him for the use of another (Griffith v. Maxfield, 51 S.W. 832,
66Ark. 513, 521). This is precisely the nature of the will of the donor: to convey the titles
of the lands to appellants with the duty to hold them in trust for the appellees. Appellants
obliged complied with this duty by executing the document under consideration.
True it is that to establish a trust the proof must be clear, satisfactory and convincing. It
cannot rest on vague, uncertain evidence, or on a loose, equivocal or indefinite
declaration (In re Tuttle's Estate, 200 A. 921, 132 Pa. Super 356); but here the document
in question clearly and unequivocally declares the existence of the trust even if the same
was executed subsequent to the death of the trustor, Juana Juan, for it has been held
that the right creating or declaring a trust need not be contemporaneous or inter-parties
(Stephenson v. Stephenson, 171 S.W. 2d 265, 351 Mo. 8; In re Corbin's Trust Orhp., 57
York Leg. Rec. 201). It was even held that an express trust maybe declared by a writing
made after the legal estate has been vested in the trustee (Kurtz v. Robinson, Tex. Civ.
App. 256 S.W. 2d 1003). The contention, therefore, of appellants that the will and the
donation executed by their predecessors-in-interest were absolute for it did not contain a
hint that the lots in question will be held in trust by them does not merit weight because
the fact that an express trust was created by a deed which was absolute on its face may
be shown by a writing separate from the deed itself (Mugan v. Wheeler, 145 S.W. 462,
241 Mo. 376).
The fact that the beneficiaries were not notified of the existence of the trust or that the
latter have not been given an opportunity to accept it is of no importance, for it is not
essential to the existence of a valid trust and to the right of the beneficiaries to enforce
the same that they had knowledge thereof the time of its creation (Stoehr v. Miller, 296 F.
414).Neither is it necessary that the beneficiary should consent to the creation of the trust
(Wockwire-Spencer Steel Corporation v. United Spring Mfg. Co.,142 N.E. 758, 247 Mass.
565). In fact it has been held that in case of a voluntary trust the assent of the beneficiary
is not necessary to render it valid because as a general rule acceptance by the beneficiary
is presumed (Article 1446, new Civil Code; Cristobal v. Gomez, 50 Phil. 810).
It is true, as appellants contend, that the alleged declaration of trust was revoked, and
having been revoked it cannot be accepted, but the attempted revocation did not have
any legal effect. The rule is that in the absence of any reservation of the power to revoke
a voluntary trust is irrevocable without the consent of the beneficiary (Allen v. Safe Deposit
and Trust Co.of Baltimore, 7 A. 2d 180, 177 Md. 26). It cannot be revoked by the creator
alone, nor by the trustee
(Fricke v. Weber, C.C.A. Ohio, 145 F. 2d 737;Hughes v. C.I.R., C.C.A. 9, 104 F. 2d 144;
Ewing v. Shannahan, 20 S.W. 1065,113 Mo. 188). Here, there is no such reservation.
To recapitulate (summarize), we hold: (1) that the document executed on December 5,
1950 creates an express trust in favor of appellees; (2) that appellants had no right to
revoke it without the consent of the cestui que trust (beneficiary) ; (3) that appellants
must render an accounting of the fruits of the lands from the date the judgement rendered
in G.R. No. L-8774 became final and executory; and (4)that appellants should free said
lands from all liens and encumbrances.

Araneta vs Perez
G.R. Nos. L-20787-8 June 29, 1965

On June 16, 1961, Antonio M. Perez executed a promissory note wherein he agreed to
pay J. Antonio Araneta, or order, the sum of P3,700.00 119 days from said date, or on
October 13, 1961, and if it is not paid on the date of maturity, to pay interest at 9% per
annum on the amount of the loan, and P370.00 as attorney's fees in addition to costs and
other disbursements taxable under the Rules of Court.
The note having become due and Antonio M. Perez having failed to pay it despite demand
made upon him to do so, Araneta filed on October 31, 1961 a complaint in the Municipal
Court of Manila to collect its import under the terms therein stipulated (Civil Case No.
92265).
In his answer, defendant Perez admitted the execution of the promissory note as well as
his failure to pay it despite its maturity and demand, but he averred certain allegations
that were irrelevant to the complaint. Thus, Perez alleged that the proceeds of the note
were applied by him to the payment of the medical treatment of his minor daughter Angela
Perez y Tuason, who is the beneficiary of the trust then administered by Araneta as
trustee in Special Proceeding No. Q-73 of the Court of First Instance of Quezon City, and
that the trust estate is bound to pay the expenses of said treatment because they were
for the benefit of said minor and so the personal fund he borrowed from Araneta and for
which he executed the aforesaid promissory note should be paid by Araneta in the
manner above-stated

ISSUE: WON, defendant Perez is correct in making Araneta liable for the said amount in
dispute because it was borne out of a medical expense of the trust’s beneficiary?
HELD:
“So where a trust fund is to be applied to the support of the beneficiary, a claim for medical
services rendered on the request of the beneficiary with the knowledge of the trustee,
may be enforced in equity as against the trustee where the beneficiary is insolvent and it
does not appear that the trustee had furnished him with all that is necessary with respect
to medical attendance”

Promissory note between Perez and Araneta are enforceable between them. Under these
terms it is clear that appellant bound himself to pay personally said promissory note which
he cannot shift to another without the consent of the payee. the allegation regarding the
existence of the trust and its mismanagement on the part of appellee Araneta as trustee,
certainly, has nothing to do with the money lent by him to appellant. Neither has the
allegation that the proceeds of the note were spent by appellant for the medical treatment
of minor Angela anything to do with his personal obligation because the destination of the
proceeds of said note is certainly not the concern of Araneta. We are, therefore, of the
opinion that the court a quo did not err in rendering judgment on the pleadings in the light
of what is averred in appellee's complaint.

Araneta vs Perez
G.R. No. L-18414 July 15, 1968
SC decision: WHEREFORE, the appealed order of October 31, 1960, absolving the
trustee, J. Antonio Araneta, from the charges filed by appellant-guardian, Antonio M.
Perez, is affirmed. With costs against the aforesaid appellant-guardian.
FACTS:
A continuation from the previous case. Basically, Perez wants araneta removed as
trustee. Makes (7) allegation why trustee should be replaced. RTC ruled in favor of
trustee. Finding no reason to remove him.

ISSUE: WON, RTC erred in their decision. And, what is the proof need for a trustee to be
removed.

HELD:
What must be emphasized, however, is that the uppermost consideration should be the
welfare of the minor beneficiaries, the children of appellant- guardian, for whom the trust
was created. Certainly, as of this time and after all these litigations, there is no requisite
of the failure of the trustee to live up to the exacting responsibility entrusted to him or his
subordination of the well-being of such minors to his own personal interest. What was
said by the present Chief Justice in Trusteeship of the Minors v. Araneta,19 bears
repeating: "In short, the trustor had such faith and confidence in appellee that she relied
fully upon his judgment and discretion. The exercise thereof by appellee should not be
disturbed, therefore, except upon clear proof of fraud or bad faith, or unless the
transaction in question is manifestly prejudicial to the interest of the minors
aforementioned. Such is not the situation obtaining in the present case." .

G.R. No. L-49087 April 5, 1982

Mindano Development vs CA

SC decision: WHEREFORE, the petition should be, as it is hereby, DENIED. No costs.

FACTS:
In 1939,Francisco Ang Bansing, owner of an unregistered tract of land with an area of
29 hectares, sold to Juan Cruz Yap Chuy a portion of said land (DAVAO CITY), Lot
1846-C with an area of around 5 hectares. In the deed of sale, BANSING made the
following commitment: “I hereby agree to work for the titling of the entire area of land
under my own expenses and the expenses for the titling of the portion sold (by) me shall
be under the expenses of CHUY.” Ten months later, CHUY sold to the Government Lot
1846-C.
In 1941, BANSING executed an affidavit wherein he confirmed the previous
sale to CHUY clarifying that the exact area of the lot sold is 61,107 square meters and
certifying that he intended to cede and transfer the lot to CHUY after the survey of
BANSING’s land. The affidavit was registered. Subsequently, BANSING obtained
original certificate of title for the 29-hectare land. By Presidential Proclamation, certain
parcels of land forming part of the Government’s private domain were transferred to
MDA (Mindanao Development Authority, now Southern Philippines Development
Administration), a government agency, subject to private rights, if any. Lot 1846-C was
among the parcels of land transferred to MDA in said proclamation. In 1969, MDA filed
suit against BASNSING for the reconveyance of the title over Lot 1846-C after the latter
ignored repeated demands to the transfer of title to MDA.

Issue:
Whether BANSING a trustee in an express trust covering Lot 1846-C, and, therefore,
he lot should be adjudicated to MDA?

HELD:

No. The stipulation in the deed of sale does not categorically create an obligation on the
part of BANSING to hold the property in trust for CHUY. Hence, there is no express
trust. It is essential to the creation of an express trust that the settlor presently and
unequivocably make a disposition of property and make himself the trustee of the
property for the benefit of another. While BANSING had agreed that he will work for the
titling of “the entire area of my land under my own expenses,” it is not clear therefrom
whether said statement refers to the 29-hectare parcel of land or to that portion left to
im after the sale. A failure on the part of the settlor definitely to describe the subject
matter of the supposed trust or the beneficiaries or object thereof is strong evidence that
he intended no trust. And even assuming that an express trust was created, BANSING
had long repudiated it when he refused to deliver and convey the title to the property to
MDA, the alleged beneficiary to the trust. MDA did not take any action until after the
lapse of 23 years. (Mindanao Development Authority vs. Court ofAppeals, supra.)

G.R. No. L-27294 June 28, 1983

Roa, Jr. Vs CA

SC decision: WHEREFORE, IN VIEW OF THE FOREGOING, the judgment appealed

from is hereby AFFIRMED.

Facts : That the plaintiff and his brothers and sisters Trinidad Reyes Roa, Esperanza
Roa de Ongpin, Concepcion Roa and Zosimo Roa, husband of the latter, were the owners
pro-indiviso of a parcel of land located in Tagoloan, Misamis Oriental, containing an area
of several hundred hectares, and sometime in 1925, and for the purpose of registering
their title to said parcel of land, the said co- owners filed an application with the Court of
First Instance of Misamis Oriental, and said application was docketed in said Court
That one Pablo Valdehuesa filed an opposition in said application in court claiming
absolute and exclusive ownership over a portion which is now the property under
litigation.
That sometime during the year 1925, the co-owners, said Concepcion Roa, Esperanza
Roa de Ongpin and Trinidad Reyes Roa and Zosimo Roa entered into an agreement with
the said Pablo Valdehuesa, and the terms of their agreement are contained in the
document hereto attached, made a part hereof, and marked as Exhibit "1".
Pursuant to said Exhibit "1", Concepcion, Esperanza, Trinidad and Zosimo, all surnamed
Roa, agreed to replace the land of Pablo Valdehuesa with another parcel of land with an
area of 1.4959 hectares to be given to Pablo Valdehuesa in exchange for the land
occupied by him, or if said land was not acceptable to him, to pay him the amount of
P400.00. Neither of these undertakings was complied with by the Roas and Pablo
Valdehuesa continued in possession of the land occupied by him until the same was sold
by the heirs of Pablo Valdehuesa to the respondent spouses on April 30, 1930.
That in compliance with his obligation under and by virtue of said Exhibit " 1" the said
Pablo Valdehuesa withdrew the opposition filed by him in said case Expediente No. 12,
G.L.R.O. Record No. 10003, and as the result of said withdrawal, the plaintiff and his co-
owners succeeded in registering their title to their property, including the portion owned
by Pablo Valdehuesa as claimed in his opposition.
That the said Pablo Valdehuesa died in May of 1928, and upon his death his estate
passed to the ownership of his widow and legitimate children including all his rights under
said Exhibit " 1 " to the property in question.
That since then the property in question has been in the possession of the defendants,
and their possession together with the possession of their predecessors in said property
has been open, continuous and uninterrupted to this date.

On March 6, 1964, the lower court rendered the decision ordering the plaintiff Alfredo
Roa to reconvey the land in dispute to the defendants, now the respondent spouses, on
the ground that same could not have been registered in the name of the plaintiff and his
brother and sisters if not
for the compromise agreement aforestated and further to pay said defendants the amount
of P1,000.00 as attorney's fees plus costs.
On appeal taken by Alfredo Roa, the appellate court affirmed the decision of the lower
court and declared that (a) the compromise agreement created an express trust between
the Roa brothers and sisters, including Alfredo, Sr., (b) that the respondent spouses'
action for reconveyance was imprescriptible on the authority of Mirabiles, et al. v. Quito,
et al., L- 14008, October 18, 1956; and (c) that Alfredo Roa cannot invoke the
indefeasibility and imprescriptibility of the Torrens title issued in his name for the land in
dispute since the said title was secured by him in breach of an express trust, and thus,
the Court ordered the reconveyance of the property within fifteen (15) days from the
finality of the decision.

ISSUE:

WON, the agreement entered into created a trust.

HELD:

Yes, Private respondents claim that under the terms of the compromise agreement, the
land claimed by Pablo Valdehuesa should be deemed held in trust by the Roas when the
latter failed to relocate him or pay the price therefor.
It could thus be gleaned that had it not been for the promise of the Roas contained in
Exhibit 1, Valdehuesa would not have been induced to withdraw his opposition in the land
registration case. When, therefore, the Roas turned their back to a solemn agreement
entered in a court proceedings, they were guilty of fraud.
Fraud is every kind of deception, whether in the form of insidious machinations,
manipulations, concealments or misrepresentations, for the purpose of leading another
party into error and then execute a particular act. It must have a determining influence on
the consent of the victim." (4 Tolentino, Civil Code, p. 462)
Art. 1456. 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. (N.C.C)".

"A constructive trust is substantially an appropriate remedy against unjust enrichment. It

is raised by equity in respect of property, which has been acquired by fraud, or where,
although acquired originally without fraud, it is against equity that it should be retained by
the person holding it."
Cuaycong vs Cuaycong
G.R. No. L-21616 December 11, 1967

SC ruling: WHEREFORE, the order of dismissal of the lower court appealed from is
hereby affirmed, without costs. So ordered.

Facts:
Eduardo Cuaycong, married to Clotilde de Leon, died on June 21, 1936 without 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 Victorias, Negros Occidental,1.) Haciendas Sta. Cruz and 2.)
Pusod both known as Hacienda Bacayan.
Hacienda Bacayan is comprised of eight (8) lots all of which are titled in the name of Luis
D. Cuaycong, son of Justo Cuaycong
Lino Cuaycong died on May 4, 1937 and was survived by his children Paz, Carolina,
Gertrudes, Carmen, Virgilio, Benjamin, Praxedes and Anastacio. Praxedes Cuaycong,
married to Jose Betia, is already deceased and is survived by her children Jose Jr., Jesus,
Mildred, Nenita and Nilo, all surnamed Betia. Anastacio Cuaycong, also deceased, is
survived by his children Ester, Armando, Lourdes, Luis T., Eva and Aida, all surnamed
Cuaycong.

Meliton and Basilisa died without any issue.

On October 3, 1961, the surviving children of Lino Cuaycong: Gertrudes, Carmen, Paz,
Carolina, Virgilio; the surviving children of Anastacio: Ester, Armando, Lourdes, Luis T.,
Eva and Aida; as well as Jose, Jr., Jesus, Mildred, Nenita, Nilo, all surnamed Betia,
children of deceased Praxedes Cuaycong Betia, filed as pauper litigants, a suit against
Justo, Luis and Benjamin Cuaycong1 for conveyance of inheritance and accounting,
before the Court of First Instance of Negros Occidental (Civil Case No. 6314), alleging
among others that:

1. Eduardo Cuaycong had on several occasions, made known to his brothers and sisters
that he and his wife Clotilde de Leon (died in 1940) had an understanding and made
arrangements with Luis Cuaycong and his father Justo Cuaycong, that it was their desire
to divide Haciendas Sta. Cruz and Pusod among his brothers and sister and his wife
Clotilde.
2. With the consent of his wife, Eduardo had asked his brothers and sister to pay his wife
P75,000 (the haciendas were worth P150,000) and then divide equally the remaining one-
half share of Eduardo.
3. The brothers and sister failed to pay the 1/2 share of Clotilde over the two haciendas
which were later acquired by Luis Cuaycong thru clever strategy, fraud, misrepresentation
and in disregard of Eduardo's wishes by causing the issuance in his name of certificates
of title covering said properties.
4. As the two haciendas were the subject of transactions between the spouses and Justo
and Luis Cuaycong, Eduardo told Justo and Luis, and the two agreed, to hold in trust
what might belong to his brothers and sister as a result of the arrangements and deliver
to them their share when the proper time comes.
5. That as far back as 1936 Lino demanded from Justo and Luis his share and especially
after Eduardo's and Clotilde's death, the plaintiffs demanded their shares.
6. That their demands had been refused and in 1960 during the estate proceedings of
Praxedes Escalon, deceased wife of Luis D. Cuaycong, the latter fraudulently made it
appear that the plaintiffs had nothing to do with the land; that Luis Cuaycong had
possessed the lands since June 21, 1936 from which time he should be made to account
for the plaintiffs' share; and that P1,500 attorney's fees should be paid in their favor.

Luis D. Cuaycong on October 20, 1961 moved to dismiss the complaint on the grounds
of unenforceability of the claim under the statute of frauds, no cause of action (Rule 8,
Sec. 1 [f] of the Rules of Court), and bar of causes of action by the statute of limitations
(Rule 8, Sec. 1[e]). Subsequently, opposition thereto, answer and reply were filed; the
plaintiffs also sought to have Benjamin Cuaycong declared in default for his failure to
answer. On December 16, 1961, the Court of First Instance ruled that the trust alleged,
particularly in paragraph 8 of the complaint, refers to an immovable which under Article
1443 of the Civil Code may not be proved by parole evidence. Plaintiffs were given 10
days to file an amended complaint mentioning or alleging therein the written evidence of
the alleged trust, otherwise the case would be dismissed. Later, on December 23, 1961,
the court decreed that since there was no amended complaint filed, thus, no enforceable
claim, it was useless to declare Benjamin Cuaycong in default. Plaintiff thereafter
manifested that the claim is based on an implied trust as shown by paragraph 8 of the
complaint. They added that there being no written instrument of trust, they could not
amend the complaint to include such instrument. On January 13, 1962, the court
dismissed the case for failure to amend the complaint; it further refused to reconsider its
order denying the motion to declare Benjamin
ISSUE: The trust was express or Implied

HELD:
SC ruled that there was an express trust. “Eduardo told Justo and Luis, and the two
agreed, to hold in trust what might belong to his brothers and sister as a result of the
arrangements and deliver to them their share when the proper time comes.”
Appealant contented that, "When property is conveyed to a person in reliance upon his
declared intentions to hold it for or transfer it to another or the grantor, there is an implied
trust in favor of the person whose benefit is contemplated." Said arguments are
untenable, even considering the whole complaint. Article 1453 would apply if the person
conveying the property did not expressly state that he was establishing the trust, unlike
the case at bar where he was alleged to have expressed such intent. Consequently, the
lower court did not err in dismissing the complaint.

Express trusts are those created by the direct and positive acts of the parties, by some
writing or deed or will or by
words evidencing an intention to create a trust. On the other hand, implied trusts are those
which, without being expressed, are deducible from the nature of the transaction by
operation of law as matters of equity, in dependently of the particular intention of the
parties.3 Thus, if the intention to establish a trust is clear, the trust is express; if the intent
to establish a trust is to be taken from circumstances or other matters indicative of such
intent, then the trust is implied.

Sinaon vs Sorongon
G.R. No. L-59879 May 13, 1985

SC ruling: WHEREFORE, the judgment of the Court of Appeals is reversed and the
complaint is dismissed. The receivership is terminated. The receiver is directed to wind
up his accounts. No costs.

Facts:
 According to the documentary evidence consisting of public documents and tax records,
Judge (later Justice) Carlos A. Imperial in a decree dated March 4, 1916 adjudicated to
Canuta Soblingo (Somblingo), a widow, Lot No. 4781 of the Sta. Barbara, Iloilo cadastre
with an area of 5.5 hectares. OCT No. 6178-A was issued in 1917 to Canuta (Exh. 6 and
7 or B).
In 1923 Canuta sold the lot to the spouses Patricio Sinaon and Julia Sualibio for P2,000
(Exh. 8). TCT No. 2542 was issued to the Sinaon spouses (Exh. 9 or C). It is still existing
and uncancelled up to this time, Julia was the granddaughter of Canuta.
The lot was declared for tax purposes in Sinaon's name (Exh. 3). The Sinaon spouses
and their children paid the realty taxes due thereon (Exh. 1 to 5-C). They have possessed
the land as owners from 1923 up to this time or for more than half a century.
Canuta was one of the five children of Domingo Somblingo, the alleged original owner of
the lot when it was not yet registered. His other four children were Felipe, Juan, Esteban
and Santiago. The theory of respondents Soroñgon, et al.,
which they adopted in their 1968 second amended complaint (they filed the action in
1964) is that Canuta and the Sinaons were trustees of the lot and that the heirs of
Domingo's four children are entitled to a 4/5 share thereof.
That theory was sustained by the trial court and the Appellate Court. The trial court
ordered the Sinaons to convey 4/5 of Lot No. 4781 to respondents Soroñgon, et al. It
decreed partition of the lot in five equal parts. The Sinaons appealed to this Court. The
respondents did not file any brief.

Issue: The issue in this case is whether an action for reconveyance of a registered five-
hectare land, based on implied trust, would lie after the supposed trustees had held the
land for more than forty years.

Held:
We hold that after the Sinaons had appeared to be the registered owners of the lot for
more than forty years and had possessed it during that period, their title had become
indefeasible and their possession could not be disturbed. Any pretension as to the
existence of an implied trust should not be countenanced.
The trustors. who created the alleged trust, died a long time ago. An attempt to prove the
trust was made by unreliable oral evidence. The title and possession of the Sinaons
cannot be defeated by oral evidence which can be easily fabricated and contradicted. The
contradictory oral evidence leaves the court sometimes bothered and bewildered.
There was no express trust in this case. Express trusts concerning real property cannot
be proven by parol evidence (Art. 1443, Civil Code). An implied trust "cannot be
established, contrary to the recitals of a Torrens title, upon vague and inconclusive proof"
Even assuming that there was an implied trust, plaintiffs' action was clearly barred by
prescription

o'laco vs co cho chit

G.R. No. 58010. March 31, 1993.

SC ruling: WHEREFORE, the Petition for Review on Certiorari is DENIED. The Decision
of the Court of Appeals of 9 April 1981, which reversed the trial court, is AFFIRMED.
Costs against petitioners.

Facts:
half-sisters each claiming ownership over a parcel of land. While petitioner Emilia O'Laco
asserts that she merely left the certificate of title covering the property with private
respondent O Lay Kia for safekeeping, the latter who is the former's older sister insists
that the title was in her possession because she and her husband bought the property
from their conjugal funds.
The trial court declared that there was no trust relation of any sort between the sisters.
1 The Court of Appeals ruled otherwise.
2 Hence, the instant petition for review on certiorari of the decision of the appellate court
together with its resolution denying reconsideration.

Issue:
whether a resulting trust was intended by them in the acquisition of the property
Held:

A resulting trust is repudiated if the following requisites concur: (a) the trustee has
performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust;
(b) such positive acts of repudiation have been made known to the cestui qui trust; and,
(c) the evidence thereon is clear and convincing. 42 In Tale v. Court of Appeals 43 the
Court categorically ruled that an action for reconveyance based on an implied or
constructive trust must perforce prescribe in ten (10) years, and not otherwise, thereby
modifying previous decisions holding that the prescriptive period was four (4) years.
Neither the registration of the Oroquieta property in the name of petitioner Emilia O'Laco
nor the issuance of a new Torrens title in 1944 in her name in lieu of the alleged loss of
the original may be made the basis for the commencement of the prescriptive period. For,
the issuance of the Torrens title in the name of Emilia O'Laco could not be considered
adverse, much less fraudulent. Precisely, although the property was bought by
respondent-spouses, the legal title was placed in the name of Emilia O'Laco. The transfer
of the Torrens title in her name was only in consonance with the deed of sale in her favor.
Consequently, there was no cause for any alarm on the part of respondent-spouses. As
late as 1959, or just before she got married, Emilia continued to recognize the ownership
of respondent-spouses(O’laco) over the Oroquieta property. Thus, until that point,
respondent-spouses were not aware of any act of Emilia which would convey to them the
idea that she was repudiating the resulting trust. The second requisite is therefore absent.
Hence, prescription did not begin to run until the sale of the Oroquieta property, which
was clearly an act of repudiation. But immediately after Emilia sold the Oroquieta property
which is obviously a disavowal of the resulting trust, respondent-spouses instituted the
present suit for breach of trust. Correspondingly, laches cannot lie against them. After all,
so long as the trustee recognizes the trust, the beneficiary may rely upon the recognition,
and ordinarily will not be in fault for omitting to bring an action to enforce his rights. 44
There is no running of the prescriptive period if the trustee expressly recognizes the
resulting trust. 45 Since the complaint for breach of trust was filed by respondent-spouses
two (2) months after acquiring knowledge of the sale, the action therefore has not yet
prescribed.

Emilia did not have a source of income, she could not afford to purchase the land from
Philippine Sugar Estate Development Company, Ltd

Cases 2-13

SEE PDF trust digest scribd

PNB vs CA
G.R. No. 97995 January 21, 1993

SC ruling: WHEREFORE, the decision of the Court of Appeals dismissing petitioner's

claim against private respondent is AFFIRMED

Facts: PNB erroneously paid Mata US$ 14000. Sued after 7 years after learning of
mistake

Issue: issue of whether or not petitioner may still claim the US$14,000 it erroneously paid
private respondent under a constructive trust?

Held:
Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it
erroneously paid private respondent under a constructive trust, we rule in the negative.
Although we are aware that only seven (7) years lapsed after petitioner erroneously
credited private respondent with the said amount and that under Article 1144, petitioner
is well within the prescriptive period for the enforcement of a constructive or implied
trust, we rule that petitioner's claim cannot prosper since it is already barred by laches.
It is a well-settled rule now that an action to enforce an implied trust, whether resulting
or constructive, may be barred not only by prescription but also by laches.28
While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay.29 It is amazing that it took petitioner almost seven years before it
discovered that it had erroneously paid private respondent. Petitioner would attribute its
mistake to the heavy volume of international transactions handled by the Cable and
Remittance Division of the International Department of PNB. Such specious reasoning is
not persuasive. It is unbelievable for a bank, and a government bank at that, which
regularly publishes its balanced financial statements annually or more frequently, by the
quarter, to notice its error only seven years later. As a universal bank with worldwide
operations, PNB cannot afford to commit such costly mistakes. Moreover, as between
parties where negligence is imputable to one and not to the other, the former must
perforce bear the consequences of its neglect. Hence, petitioner should bear the cost of
its own negligence.