1. METROBANK vs.

BOT-RMC

FACTS:
In 1973, RMC established a Provident and Retirement Plan (Plan) for its regular employees
and under such plan, RMC and its employees shall each contribute and the contributions shall
form part of the provident fund (the Fund) which shall be held, invested and distributed by the
commercial bank. Paragraph 13 of the Plan likewise provided that the Plan “may be amended
or terminated by the Company at any time on account of business conditions, but no such
action shall operate to permit any part of the assets of the Fund to be used for, or diverted to
purposes other than for the exclusive benefit of the members of the Plan and their
beneficiaries. In no event shall any part of the assets of the Fund revert to RMC before all
liabilities of the Plan have been satisfied.

In 1979, the Board of Trustees of RMCPRF (the Board) entered into an Investment
Management Agreement (Agreement) with Philbank (now, petitioner Metrobank). Pursuant to
the Agreement, petitioner shall act as an agent of the Board and shall hold, manage, invest
and reinvest the Fund in Trust Account No. 1797 in its behalf.

In 1984, RMC ceased business operations and Philbank’s Board of Directors had decided to
apply the remaining trust assets held by it in the name of RMCPRF against part of the
outstanding obligations of RMC.

When respondent RMC Unpaid Employees Association, Inc. (Association) learned of the trust
account, they demanded payment of their share through counsel but when such demand went
unheeded, the Association, filed a complaint for accounting against the Board and its officers in
which the trial court declared invalid the reversion and application of the proceeds of the Fund
to the outstanding obligation of RMC to petitioner bank which the CA affirmed.

ISSUE:
Whether the proceeds of the RMCPRF may be applied to satisfy RMC’s outstanding
obligations?

RULING:
No. A trust is a “fiduciary relationship with respect to property which involves the existence of
equitable duties imposed upon the holder of the title to the property to deal with it for the
benefit of another.” A trust is either express or implied. Express trusts are those which the
direct and positive acts of the parties create, by some writing or deed, or will, or by words
evincing an intention to create a trust.

Here, the RMC Provident and Retirement Plan created an express trust to provide retirement
benefits to the regular employees of RMC. RMC retained legal title to the Fund but held the
same in trust for the employees-beneficiaries. Thus, the allocation under the Plan is directly
credited to each member’s account:

The trust was likewise a revocable trust as RMC reserved the power to terminate the Plan
after all the liabilities of the Fund to the employees under the trust had been paid.
Paragraph 13 of the Plan provided that "in no event shall any part of the assets of the Fund
revert to the Company before all liabilities of the Plan have been satisfied.”
Employees’ trusts or benefit plans are intended to provide economic assistance to employees
upon the occurrence of certain contingencies, particularly, old age retirement, death,
sickness, or disability. They give security against certain hazards to which members of the
Plan may be exposed. They are independent and additional sources of protection for the
working group and established for their exclusive benefit and for no other purpose.18 Here,
while the Plan provides for a reversion of the Fund to RMC, this cannot be done until all the
liabilities of the Plan have been paid. And when RMC ceased operations in 1984, the Fund
became liable for the payment not only of the benefits of qualified retirees at the time of
RMC’s closure but also of those who were separated from work as a consequence of the
closure.

A member who is separated for cause shall not be entitled to withdraw the total amount
representing his contribution and that of the Company including the earned interest
thereon, and the employer’s contribution shall be retained in the fund.

To be sure, the cessation of business by RMC is an authorized cause for the termination of its
employees. Hence, not only those qualified for retirement should receive their total benefits
under the Fund, but those laid off should also be entitled to collect the balance of their
account as of the last day of the month prior to RMC’s closure. In addition, the Plan provides
that the separating member shall be paid a maximum of 40% of the amount representing the
Company’s contribution and its income standing to his credit. Until these liabilities shall
have been settled, there can be no reversion of the Fund to RMC.

It must be stressed that the RMC Provident and Retirement Plan was primarily established for
the benefit of regular and permanent employees of RMC. As such, the Board may not
unilaterally terminate the Plan without due regard to any accrued benefits and rightful
claims of members-employees. Besides, the Board is bound by the prohibition on the
reversion of the Fund to RMC before all the liabilities of the Plan have been satisfied.

As to the contention that the functions of the Board of Trustees ceased upon with RMC’s
closure, the same is likewise untenable. Under Section 12227  of the  Corporation Code, a
dissolved corporation shall nevertheless continue as a body corporate for three (3) years for
the purpose of prosecuting and defending suits by or against it and enabling it to settle and
close its affairs, to dispose and convey its property and to distribute its assets, but not for
the purpose of continuing the business for which it was established. Within those three (3)
years, the corporation may appoint a trustee or receiver who shall carry out the said
purposes beyond the three (3)-year winding-up period. Thus, a trustee of a dissolved
corporation may commence a suit which can proceed to final judgment even beyond the
three (3)-year period of liquidation.28

In the same manner, during and beyond the three (3)-year winding-up period of RMC, the
Board of Trustees of RMCPRF may do no more than settle and close the affairs of the Fund.
The Board retains its authority to act on behalf of its members, albeit, in a limited capacity.
It may commence suits on behalf of its members but not continue managing the Fund for
purposes of maximizing profits. Here, the Board’s act of issuing the Resolution authorizing
petitioner to release the Fund to its beneficiaries is still part of the liquidation process, that
is, satisfaction of the liabilities of the Plan, and does not amount to doing business. Hence,
it was properly within the Board’s power to promulgate.
2. LINA PENALBER vs. QUIRINO RAMOS, LETICIA PENALBER, BARTEX INC.

FACTS:
This case involves 2 causes of actions, but the Trust issue is discussed only in the 2nd cause
of action.

The 2nd cause of action, regarding the Bonifacio Property, Penalber claims that for many
years prior to 1984, she operated a hardware store in a building she owned. Maria owned the
lot on which the building stood, which Penalber rented. Later, Penalber allowed Ramos to
manage the hardware store. Afterwards, Maria put the lot for sale but Penalber didn’t have
enough cash to buy the lot. Penalber then entered into a verbal agreement with Ramos with
the following terms:

1. Ramos would buy the lot in Penalber’s behalf;

2. Ramos would pay the purchase price using the hardware store’s earnings;

3. Ramos would appear as the buyer in the deed of sale and use the title issued in his name
to secure a loan to expand the hardware store’s business In accordance with the
agreement

Ramos entered into a contract of sale with Mendoza over the lot. Later, Penalber demanded
Ramos reconvey the title to the lot to her but Ramos refused.

ISSUE:
Was there a trust agreement between Penalber and Ramos?

RULING:
No. A trust is defined as the right, enforceable solely in equity to the beneficial enjoyment of
property, the legal title of which is vested in another. A person who establishes a trust is called
the trustor, the person in whom confidence is reposed as trustee, and the person for whose
benefit the trust has been created the beneficiary.

Generally, no particular words are required to create an express trust, it being sufficient that a
trust is clearly intended. However, Art. 1443 declares that an express trust involving
immovables or any interest therein may not be proved by parol evidence.

Art. 1443 requires the express trust to be in writing for purposes of proof, and not for the trust
agreement’s validity. The article is in the nature of a statute of frauds and goes into the
contract’s enforceability.

Here, the alleged verbal trust agreement between Penalber and Ramos is an express trust.
Generally, Penalber’s testimony should’ve been declared inadmissible being parol evidence.
However, Ramos waived his objection to the parol evidence in failing to timely object during
trial. Nevertheless, while Penalber’s parol testimony is admissible, it’s weight as evidence is
still subject to judicial evaluation. Here, such parol evidence carries little weight in proving the
alleged verbal trust agreement. Penalber failed to prove that Ramos indeed used the earnings
from the hardware store to purchase the lot from Maria.

3. BENITA SALAO vs. JUAN SALAO

FACTS:
The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal begot
four children named Patricio, Alejandra, Juan and Ambrosia.

Manuel Salao died in 1885. His eldest son, Patricio, died in 1886 survived by his only child.
Valentin Salao. His widow died on May 28, 1914. After her death, her estate was
administered by her daughter Ambrosia. It was partitioned extrajudicially in a notarized deed.

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.

Prior to the death of Valentina Ignacio her two children, Juan Y. Salao, Sr. and Ambrosia
Salao, secured a Torrens title in their names for a forty-seven-hectare Calunuran fishpond.

Juan Y. Salao, Sr. died on November 3, 1931 at the age of eighty years. His nephew, Valentin
Salao, died on February 9, 1933 at the age of sixty years according to the death certificate.

The intestate estate of Valentin Salao was partitioned extrajudicially between his

two daughters, Benita Salao-Marcelo and Victorina Salao-Alcuriza. His estate consisted of the
two fishponds which he had inherited in 1918 from his grandmother, Valentina Ignacio.

Ambrosia Salao donated to her grandniece, plaintiff Benita Salao, three lots. It was only after
Ambrosia Salao’s death that she thought of filing an action for the reconveyance of the
Calunuran fishpond which was allegedly held in trust and which had become the sole
property of Juan Salao y Santiago.

During the Japanese occupation and about a year before Ambrosia Salao’s death on

September 14, 1945 due to senility, she donated her one-half pro-indiviso share in the two
fishponds in question to her nephew, Juan S. Salao, Jr. At that time she was living with Juani’s
family. He was already the owner of the the other half of the said fishponds, having inherited it
from his father, Juan Y. Salao, Sr. The deed of denotion included other pieces of real property
owned by Ambrosia.

ISSUE:
Whether or not Juan and Ambrosia held in trust the Calunuran fishpond for Valentin?

RULING:
No. Here, there’s no evidence to provide there was an express trust over the Calunuran
fishpond in Valentin’s favor. Only parol evidence was presented to prove the alleged trust
claiming there was an oral partition assigning the Calunuran fishpond to Valentin.

An express trust concerning an immovable can’t be proved by parol evidence. But is the parol
evidence presented sufficient to prove an implied trust? On this point, the evidence also fails.
It’s incredible to believe the 47 hectare Calunuran fishpond would be assigned to Valentin by
mere word of mouth. In contrast, for a mere 17 hectare of land Valentina left, the Heirs had to
execute an elaborate 22 page document. Further, the Calunuran fishpond is registered land
but Benita Salao failed to present the registrable deed over the same, despite the lapse of 40
years.

Consequently, Benita failed to prove the existence of a trust by clear, satisfactory, and
convincing evidence.

A trust can’t rest on vague and uncertain evidence or loose, equivocal, or indefinite
declarations. If the trust is to be proven by parol evidence, such parol evidence must be
trustworthy. There was no resulting trust in this case because there was never any intention on
the part of the parties to create a trust. Further, there’s no constructive trust because the
registration of the Calunuran fishpond in the names of Juan and Ambrosia wasn’t vitiated by
fraud or mistake. Lastly, even assuming there was a constructive trust, the action would still be
barred by prescription or laches. The reason being the Calunuran fishpond was registered in
1911 but the action for reconveyance was file din 1952, way after the 10-year prescriptive
period.

4. RESURRECCION DE LEON, ET AL.,  vs. EMILIANA MOLO-PECKSON, ET AL., 

FACTS:
1.In 1941, Mariano Molo y Legaspi died leaving a will wherein he bequeathed his entire estate
to his wife, Juana Juan. On May 11, 1948, Juana Juan in turn executed a will naming
therein many devisees and legatees, one of whom is 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.

2.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: 1)that the
following lots should be sold at ONE (1) PESO TO — JUSTA DE LEON and
RESURRECCION DE LEON, several parcels of land located at Calle Tolentino , share and
share alike or half and half of TEN (10) LOTS described in TCT 28157. 2.) 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.

3. On August 9, 1956, however, the same defendants, executed another document in which
they revoked the so-called mutual agreement mentioned above

4. 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.

Hence this case.

CFI: Trust has been constituted by the late spouses Mariano Molo and Juana Juan over the
ten parcels of land in question in favor plaintiffs as beneficiaries and, as a consequence
concluded:

1. The defendants, jointly and severally to free the said ten (10) parcels of land from the
mortgage lien in favor of DBP, and to sign and execute in favor of the plaintiffs a deed of
absolute sale of the said properties for and in consideration of TEN (P10.00) PESOS;

2. The defendants to render an accounting of the fruits of said ten (10) parcels of land from
the time plaintiffs demanded the conveyance of said parcels of land on August 11, 1956

ISSUE:
1. WON there the Dec. 5, 1950 document created an express trust in favor of the appellees

2. WON the mutually agreement creating the trust can be revoked without the consent of the
trustee? NO

RULING:
1. 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. 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 obligingly complied with this duty by executing the
document under consideration.

There is nobody who could cajole them to execute it, nor is there any force that could
corce 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.” 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.

2. 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. It cannot be
revoked by the creator alone, nor by the trustee. Here, there is no such reservation.

To recapitulate, 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;

(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.

WHEREFORE, with the modification as above indicated with regard to accounting, we hereby
affirm the decision appealed from, without pronouncement as to costs.

5. PABLO LORENZO vs. JUAN POSADAS, JR.,

FACTS FOR STUDY PURPOSE:

Pablo Lorenzo, in his capacity as trustee of the estate of Thomas Hanley, deceased, leaving a
will and a considerable amount of personal and real properties brought action against Juan
Posadas, Jr., for the refund of P2,052.74, paid by the Lorenzo as inheritance tax on the estate of
the Hanley, and for the collection of interest at the rate of 6% per annum, from the date when
the aforesaid tax was paid under protest.

The CFI of Zamboanga appointed a trustee to administer the real properties which, under the
will, were to pass to Matthew Hanley ten years after the two executors named in the will, was,
appointed trustee, Moore and gave bond until February 29, 1932, when he resigned, Lorenzo
was appointed in his stead. During the incumbency of the Lorenzo, Posadas alleged that the
estate left at the time of death consisted of realty valued at P27,920 and personalty valued at
P1,465, and a deduction of P480.81, assessed against the estate an inheritance tax of
P1,434.24 with the penalties for deliquency in payment consisting of a 1% monthly interest.
Posadas filed a motion in the testamentary proceedings praying that Lorenzo, be ordered to
pay to the Government the said sum of P2,052.74. The motion was granted. The plaintiff paid
said amount under protest, notifying the defendant at the same time that unless the amount
was promptly refunded suit would be brought for its recovery. The defendant overruled the
plaintiff's protest and refused to refund the said amount hausted.

FACTS FOR DIGESTS:

Herein petitioner Lorenzo, in his capacity as trustee of the estate of a certain Thomas Hanley,
deceased, brought an action against respondent Posadas, Collector of Internal Revenue.
Petitioner alleges the respondent to have exceeded in its tax collection, which, as assessed
by the former, should only be in the amount of PhP1,434.24 instead of PhP2,052.74.
Disregarding the allegation, respondent filed a motion in the CFI of Zamboanga praying that
the trustee be made to pay such tax. The motion was granted. Petitioner paid the amount in
protest, however notified the respondent that until a refund is prompted, suit would be bought
for its recovery. Respondent overruled the protest. Hence, the case at bar.

ISSUE:
WHETHER THERE IS AN INTENTION BY THE TESTATOR TO CREATE TRUST?

RULING:
YES. The appointment of P. J. M. Moore as trustee was made by the trial court in conformity
with the wishes of the testator as expressed in his will. It is true that the word "trust" is not
mentioned or used in the will but the intention to create one is clear. No particular or technical
words are required to create a testamentary trust. The words "trust" and "trustee", though apt
for the purpose, are not necessary. In fact, the use of these two words is not conclusive on
the question that a trust is created.

"To create a trust by will the testator must indicate in the will his intention so to do by using
language sufficient to separate the legal from the equitable estate, and with sufficient certainty
designate the beneficiaries, their interest in the trust, the purpose or object of the trust, and
the property or subject matter thereof.

Stated otherwise, to constitute a valid testamentary trust there must be a concurrence of

three circumstances:

(1) Sufficient words to raise a trust;

(2) a definite subject;

(3) a certain or ascertain object; statutes in some jurisdictions expressly or in effect so

providing.”

There is no doubt that the testator intended to create a trust. He ordered in his will that certain
of his properties be kept together undisposed during a fixed period, for a stated purpose.

6. SOLEDAD CANEZO vs. CONCEPCION ROJAS

FACTS:
Soledad Canezo alleges she bought a parcel of land from Crisogono Limpiado, although the
transaction wasn’t reduced into writing. Afterwards, Canezo took possession of the land.
Canezo entrusted the land to her father, Crispulo, who took possession of the same and
cultivates it. About 40 years later, Canezo found out that Roxas, her stepmother, possessed
the land and tax declarations over it were already in Crispulo’s name. Canezo then filed suit to
recover the land.

ISSUE:
Whether or not there an express trust between Canezo and Crispulo?

RULING:
No. For a trust relationship to be created the following elements must be proved:

1. A trustor who executed 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;

4. The cestui que trust, or beneficiaries whose identity must be clear

An express trust concerning real property can’t be established by parol evidence. It must be
proven by some writing or deed. Here, the only evidence to support the existence of an
express trust between Canezo and Crispulo is Canezo’s self-serving testimony.

Further, an intention to create a trust can’t be inferred from Canezo’s testimony and the
attending facts and circumstances. Canezo testified her agreement with Crispulo was Canezo
will be given a share in the produce of land. This allegation, standing alone, is inadequate to
establish the existence of a trust because profit sharing per se doesn’t necessarily translate to
a trust relation. What distinguishes a trust from other relations is legal title is vested in the
trustee while equitable ownership in the beneficiaries.

Here, Canezo made much of the fact that the tax declaration was in Crispulo’s name. If
Canezo truly did intend to create a trust this shouldn’t have been an issue because it’s
expected for such tax declaration to be in Crispulo’s name in a trust relationship. Further,
even if a trust was indeed created, the same ceased upon Crispulo’s death.

When the land was transferred to Rojas, the latter had no right to retain the same and hence a
constructive trust was created. But in a constructive trust, prescription may supervene even if
the trustee doesn’t repudiate the trust relationship because such trust isn’t based on a
fiduciary relationship and the holding of the thing object of the trust is always adverse.

7. PHILIPPINE NATIONAL BANK vs. COURT OF APPEALS

FACTS:
B. P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing goods and
services to Star Kist Foods, Inc. As part of their agreement, Mata makes advances for
the crew’s expenses, which Star Kist reimburses by telegraphic transfer through
banks.

On Feb 21, 1976, SEPAC of Los Angeles, which had an arrangement with PNB,
transmitted a cable message to PNB to pay $14,000 to Mata’s account with Insular
Bank of Asia and America. PNB noticed an error, informed SEPAC Bank, who replied
with the correction that the $14,000 is actually only for $1,400.

On the basis of this message, a cable check worth $1,400 was issued to Mata, from
Star Kist. However, 14 days after, PNB issued another check to Star Kist in the amount
of $14,000.

Six years later, PNB requested Mata for a refund of the erroneous $14,000 check.
Thereafter, it filed a civil case for collection and refund of $14,000 arguing that based
on constructive trust under Art. 1456 of the Civil Code, it has the right to recover the
amount erroneously credited to Mata.

RTC Manila dismissed the complaint, ruling that the case falls under Art. 2156 on
solutio indebiti, and NOT under Art. 1456 on constructive trust. CA affirmed, but
concluded that the action for recovery has already prescribed under Art. 1145(2).
Hence, this petition for certiorari.

ISSUE:
Whether or not the basis of Mata’s obligation to return $14,000 is governed by Article
1456 on constructive trust, or Art. 2154 of the Civil Code?

Whether or not the action has prescribed?

RULING:
The basis of obligation is governed by Art. 1456 on constructive trust. However, the
action to recover damages has already prescribed due to laches.

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

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

while petitioner may indeed opt to avail of an action to enforce a constructive trust or
the quasi-contract of solutio indebiti, it has been deprived of a choice, for prescription
has effectively blocked quasi-contract as an alternative, leaving only constructive trust
as the feasible option.

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

resulting or constructive, may be barred not only by prescription
implied trust, whether
but also by laches.

While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay.

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. 

8. JUAN MARTINEZ vs. CLEMENCIA GRANO

FACTS:
Juan Martinez and his wife, Macaria Ticson, both now deceased, were owners in their
lifetime of seven parcels of land of considerable value. Upon the death in 1910 of the last of
the two spouses abovementioned, devolved by inheritance upon their numerous living children
and the descendants of such as were dead.
At the time of the division aforesaid and apparently for a number of years prior thereto,
the property comprising the estate of the deceased spouses, Juan Martinez and Macaria
Ticson, was encumbered with indebtedness, and the parties in interest had long since been
compelled to resort to the dangerous expedient of selling their inheritance under a contract of
sale with pacto de retro and found that a certain W. Robinson had acquired title to the property
under such a contract; and on the same year, the property was again sold under pacto de retro
to Alfonso Tiaoqui, of Manila, for the sum of P12,000, apparently in order to get the means to
redeem the property from Robinson.
To be able to redeem the property, they obtained a loan in “El Hoagr Filipino” but
because the parties in interest were numerous and many were minors, the adult parties in
interest were advised, and decided, to allow a single individual to effect the redemption from
Alfonso Tiaoqui, thus placing the documentary title exclusively in this one person, who, as was
intended, could then deal directly with the association. The person chosen as the repository of
this trust was Clemencia Graño, the widow of Apolonio Martinez and mother and guardian of
Jose and therefore, was agreed that she will acquire the properties in her name being a
trustee.
However, Clemencia Graño had intervened in behalf of all persons in interest in
effecting the repurchase from Tiaoqui and the making of the mortgage to "El Hogar Filipino,"
she nevertheless now asserts that she is the sole and absolute owner of all the property
obtained by her from Tiaoqui an denies that the Martinez heirs have any interest whatever
therein in which the heirs contested.

ISSUE:
Whether Clemencia is the sole and absolute owner of the properties

RULING:
No. The ultimate and main object of the action is of course to obtain a judicial
declaration to the effect that the Martinez heirs are the real owners of the parcels of property
respectively apportioned to them under the partition of 1915, and that the title vested in
Clemencia Graño is held by her in trust for all the Martinez heirs as their respective interests
appear, subject to the mortgage in favor of "El Hogar Filipino." In this connection the plaintiffs
pray that the agreement under which Clemencia Graño had been made administrator of the
property and had been allowed to acquire the legal title in her own name should be rescinded
for her manifest failure to comply with the trust reposed in her.
Documents showed that the same was marked by Clemencia and therefore, bound by
it. There can be no doubt that at the time the agreement was made she had a natural desire to
assist all her relatives, as well as her own son, in recovering the property.
As the Martinez heirs demonstrably retained their
redemptionary interest in the property in question at the time it was acquired by Clemencia
Graño, the latter was unquestionably bound by the stipulations contained in the documents in
which she had recognized their rights and had agreed to hold and administer the property for
the common benefit of all. Those stipulations are not mere nuda pacta, but are supported by a
sufficient consideration in law, which is found in the circumstance that by virtue of those
agreements Clemencia Graño was able to acquire,and did acquire, the legal title to property in
which others had a subsisting interest, whereby she became entitled to use and administer the
same for the purpose and to the end contemplated.
The point being determined that Clemencia Graño is bound by the stipulations
contained in the documents so often alluded to, it results that, but for her renunciation of the
trust, she would have been entitled to retain possession and administer the property for the
purpose of liquidating the loan from "El Hogar Filipino." In such case she would have remained
in the position of an active trustee, with a duty to administer the property and liquidate the
mortgage for the benefit of all concerned. But when a person thus circumstanced assumes an
attitude hostile to the real parties in interest, this necessarily operates as a renunciation of the
trust; and this is sufficient to justify the court in displacing such unfaithful trustee. Speaking in
terms of the doctrine of the civil law, we may say that the failure of the trustee in the present
case to administer the property for the benefit of all persons in interest en titles the plaintiffs in
this action to have the contract of agency and administration rescinded; and if necessary to the
accomplishment of justice, we should not hesitate to make such disposition.
We hereby declare that the title acquired by Clemencia Graño by purchase, on
December 19, 1917, from Alfonso Tiaoqui of the property which had been acquired by him
under the contract of sale with pacto de retro dated September 28, 1916, from the heirs of
Juan Martinez and Macaria Ticson, was acquired and is now held in trust by the said
Clemencia Graño for the benefit of the said heirs in the manner indicated in the judicial
partition approved
The plaintiffs are, furthermore, entitled to have an accounting from the said Clemencia
Graño of all the proceeds obtained by her from the property in question during the period of
her administration, or which might have been obtained by her in the exercise of reason able
diligence.

10. GILBERT GUY VS. COURT OF APPEALS

FACTS:
Gilbert, petitioner, is the son of Francisco and Simny Guy. Respondents, Geraldine, Gladys
and Grace are his sisters. The family feud involves the ownership and control of 20,160 shares
of stock of Northern Islands Co., Inc. (Northern Islands).

Northern Islands is a family-owned corporation. In November 1986, they incorporated Lincoln

Continental as a holding company of the 50% shares of stock of Northern Islands in trust for
their daughters, respondents. In December 1986, upon instruction of spouses Guy, Atty.
Andres Gatmaitan, president of Lincoln Continental, indorsed in blank Stock Certificate No.
132 (covering 8,400 shares) and Stock Certificate No. 133 (covering 11,760 shares) and
delivered them to Simny.

In 1984, spouses Guy found that their son Gilbert has been disposing of the assets of their
corporations without authority. In order to protect the assets of Northern Islands, the 20,160
shares covered by the two Stock Certificates were then registered in the names of respondent
sisters, thus enabling them to assume an active role in the management of Northern Islands.

Thereafter, Simny was elected President; Grace as Vice-President for Finance; Geraldine as
Corporate Treasurer; and Gladys as Corporate Secretary. Gilbert retained his position as
Executive Vice President. This development started the warfare between Gilbert and his
sisters.

Lincoln Continental filed a Complaint for Annulment of the Transfer of Shares of Stock against
respondents. The complaint basically alleges that Lincoln Continental owns 20,160 shares of
stock of Northern Islands; and that respondents, in order to oust Gilbert from the management
of Northern Islands, falsely transferred the said shares of stock in respondent sisters’ names.

The trial court held that the complaint was baseless and an unwarranted suit among family
members. That based on the evidence, Gilbert was only entrusted to hold the disputed shares
of stock in his name for the benefit of the other family members; and that it was only when
Gilbert started to dispose of the assets of the family’s corporations without their knowledge that
respondent sisters caused the registration of the shares in their respective names.

On appeal, the Court of Appeals affirmed the Trial Court. Hence this petition.

ISSUES:
Whether or not Gilbert was merely trust for the Guy sisters.

RULING:
There was no doubt that Lincoln Continental held the disputed shares of stock of Northern
Islands merely in trust for the Guy sisters as found by the trial court and affirmed by the CA. In
fact, the evidence proffered by Lincoln Continental itself supports this conclusion.

Article 1440 of the Civil Code provides that:

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.

In the early case of Gayondato v. Treasurer of the Philippine Island, this Court defines trust, in
its technical sense, as “a right of property, real or personal, held by one party for the benefit of
another.” Differently stated, a trust is “a fiduciary relationship with respect to property,
subjecting the person holding the same to the obligation of dealing with the property for the
benefit of another person.”

Both Lincoln Continental and Gilbert claim that the latter holds legal title to the shares in
question. However, there was no evidence to support their claim. Rather, the evidence on
record clearly indicates that the stock certificates representing the contested shares are in
respondents’ possession. Significantly, there is no proof to support his allegation that the
transfer of the shares of stock to respondent sisters is fraudulent. As aptly held by the Court of
Appeals, fraud is never presumed but must be established by clear and convincing evidence.
Gilbert failed to discharge this burden. We, agree with the Court of Appeals that respondent
sisters own the shares of stocks, Gilbert being their mere trustee. 

12. ALEJANDRO B. TY vs. SYLVIA S. TY

FACTS:
Alexander Ty, son of Alejandro Ty and husband of Sylvia Ty, dies of cancer at the age of 34.
Sylvia files petition for the settlement of Alexander’s intestate estate and asks court to sell or
mortgage properties in order to pay the estate tax amounting to P4,714,560.02 assessed by
the BIR. The properties include a parcel of land in EDSA Greenhills, a residential land in Wack
Wack, and the Meridien condo unit in Annapolis, Greenhills.

Alejandro Ty opposed the move and filed for recovery of the property with prayer for
preliminary injunction and/or TRO. Plaintiff Alejandro claims that he owns the EDSA, Wack
Wack and Meridien condo unit because he paid for them. The property was supposedly
registered in trust for Alexander’s brothers and sisters in case plaintiff dies. Plaintiff also
claimed that Alex had no financial capacity to purchase the disputed property, as the latter
was only dependent on the former.

Sylvia countered that Alexander had purchased the property with his money. Alexander was
financially capable of purchasing it because he had been managing the family corporations
since he was 18 years old and was also engage in other profitable businesses.

The RTC granted the application for preliminary injunction and decides in favor of Alejandro
regarding the recovery of the property. CA reversed the RTC stating that the implication
created by law under Art. 1448 does not apply if the property was in the name of the
purchaser’s child. They agreed that plaintiff partly paid for the EDSA property. Plaintiff
appealed.

Issue:
Whether there was an implied trust under Art. 1448 of the Civil Code?

Ruling:
NO. Article 1448 of the Civil Code provides:

Art. 1448. There is an implied trust when property is sold, and the legal estate is granted to
one party but the price is paid by another for the purpose of having the 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 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.

The CA conceded that at least part of the purchase price of the EDSA property came from
petitioner. However, it ruled out the existence of an implied trust because of the last sentence
of Article 1448: x x x 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.

14. MIGUEL J. OSSORIO PENSION FOUNDATION, INCORPORATED vs.
COURT OF APPEALS and COMMISSIONER OF INTERNAL REVENUE
G.R. No. 162175 - June 28, 2010.

FACTS:
MJO Pension Foundation Inc. was organized for the purpose of holding title to and
administering the Employees’ Trust Fund established for the benefit of the employees of
Victorias Milling Company, Inc. (VMC). Petitioner, as trustee, claims that the income earned by
the Employees’ Trust Fund is tax exempt under Section 53(b) of the National Internal Revenue
Code (Tax Code). Petitioner, as trustee, claims that the income earned by the Employees’
Trust Fund is tax exempt under Section 53(b) of the National Internal Revenue Code (Tax
Code).

Sometime in 1992, MJOPFI bought the MBP lot through VMC. MJOPFI claims that its share in
the MBP lot is 49.59%. Petitioner’s investment manager, Citytrust, in submitting its Portfolio
Mix Analysis, regularly reported the Employees’ Trust Fund’s share in the MBP lot.

On 26 March 1997, VMC eventually sold the MBP lot to Metrobank for P81,675,000.

Petitioner claims that it is a co-owner of the MBP lot as trustee of the Employees’ Trust Fund,
based on the notarized Memorandum of Agreement. Petitioner maintains that its ownership of
the MBP lot is supported by the excerpts of the minutes and the resolutions of petitioner’s
Board Meetings. Petitioner further contends that there is no dispute that the Employees’ Trust
Fund is exempt from income tax. Since petitioner, as trustee, purchased 49.59% of the MBP
lot using funds of the Employees’ Trust Fund, petitioner asserts that the Employees’ Trust
Fund's 49.59% share in the income tax paid should be refunded.

The CTA denied petitioner's claim for refund of withheld creditable tax of P3,037,500 arising
from the sale of real property of which petitioner claims to be a co-owner as trustee of the
employees' trust or retirement funds.

CA agreed with the CTA that pieces of documentary evidence submitted by petitioner are
largely self-serving and can be contrived easily. The CA ruled that these documents failed to
show that the funds used to purchase the MBP lot came from the Employees’ Trust Fund.

ISSUE:
1. Whether petitioner or the Employees’ Trust Fund is estopped from claiming that the
Employees’ Trust Fund is the beneficial owner of 49.59% of the MBP lot, and that VMC merely
held 49.59% of the MBP lot in trust for the Employees’ Trust Fund?

RULING:
No, they are not estopped.

The law expressly allows a co-owner (first co-owner) of a parcel of land to register his
proportionate share in the name of his co-owner (second co-owner) in whose name the entire
land is registered. The second co-owner serves as a legal trustee of the first co-owner insofar
as the proportionate share of the first co-owner is concerned. The first co-owner remains the
owner of his proportionate share and not the second co-owner in whose name the entire land
is registered. Article 1452 of the Civil Code provides:

Art. 1452. If two or more persons agree to purchase a 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.

For Article 1452 to apply, all that a co-owner needs to show is that there is “common
consent” among the purchasing co-owners to put the legal title to the purchased property in
the name of one co-owner for the benefit of all. Once this “common consent” is shown, “a
trust is created by force of law.” The BIR has no option but to recognize such legal trust
as well as the beneficial ownership of the real owners because the trust is created by force of
law. The fact that the title is registered solely in the name of one person is not conclusive
that he alone owns the property.

Thus, this case turns on whether petitioner can sufficiently establish that petitioner, as
trustee of the Employees’ Trust Fund, has a common agreement with VMC and VFC that
petitioner, VMC and VFC shall jointly purchase the MBP lot and put the title to the MBP lot in
the name of VMC for the benefit petitioner, VMC and VFC.

We rule that petitioner, as trustee of the Employees’ Trust Fund, has more than
sufficiently established that it has an agreement with VMC and VFC to purchase jointly the
MBP lot and to register the MBP lot solely in the name of VMC for the benefit of petitioner,
VMC and VFC.

The appellate courts failed to consider the genuineness and due execution of the
notarized Memorandum of Agreement acknowledging petitioner’s ownership of the MBP lot.
The BIR failed to present any clear and convincing evidence to prove that the notarized
Memorandum of Agreement is fictitious or has no legal effect. Likewise, VMC, the registered
owner, did not repudiate petitioner’s share in the MBP lot. Further, Citytrust, a reputable
banking institution, has prepared a Portfolio Mix Analysis for the years 1994 to 1997 showing
that petitioner invested P5,504,748.25 in the MBP lot. Absent any proof that the Citytrust bank
records have been tampered or falsified, and the BIR has presented none, the Portfolio Mix
Analysis should be given probative value.

15. LAZARO TOMAS vs. CA

FACTS:
Respondents are the vendees of a parcel of land measuring 105 square meters in the
names of certain Cirila Mistica and her children. The original deed executed on September 5,
1961 covered 57 square meters but the second deed executed on February 5, 1963 covered
105 square meters instead of 57 square meters. Respondents claimed to be in possession
since 1963 of said parcel of land, where they constructed valuable improvements, including a
3-door apartment in 1963. In the year 1978, respondents discovered that defendant petitioners
together with their deceased brother, Lazaro Tomas, applied for the registration of a parcel of
land known as Lot No. 2826 of the Meycauayan Cadastre, and “either by mistake or by design”
included therein a portion of the land belonging to respondents consisting of 65 square meters
adjacent to the parcel owned by petitioners and obtained Original Certificate of Title which
included the said 65 square meters of land.
Petitioners refused to reconvey the said land to respondents, thus an action for
reconveyance was instituted which was filed by respondents against petitioners before the
Court of First Instance of Bulacan on January 2, 1979.
Trial court rendered judgment in favor of the petitioners and against respondents, but
the same was reversed by the Court of Appeals

ISSUE:
Whether or not the Court of Appeals erred in not dismissing the complaint on the
grounds of: (a) absence of allegation of fraud; (b) res judicata; and (c) prescription or laches

RULING:
The court a quo erred in concluding that the land of Cirila Mistica and her children was
included in the titled lands of a certain Pacita Deganos when on the contrary, said lots of
Pacita Daganos are bounded by the land of Cirila Mistica, the predecessors-in-interest of
respondents as confirmed by the Certificate of Title of Pacita Deganos. The trial court failed to
consider that the land of Dolores Juson, mother and predecessor-in-interest of the petitioners,
has an area of 600 square meters only and is bounded on the north by the land of Cirila
Mistica.

The Court of Appeals correctly found:

(a) that the complaint alleges the commission of fraud by stating that petitioners while
professing all the time to recognize the rights of respondents to the said land, registered
the same in their names;
(b) that an action for reconveyance is not barred by the finality of the judgment in the Land
Registration case, the former being an action in personam; and
(c) that the period of prescription or laches which is ten years has not yet expired.

Article 1456 of the Civil Code provides that: “If a 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.”
In the present case, prescription will not lie in favor of the petitioners who are not even
in possession of the disputed land. Undoubtedly, they obtained the property by mistake or
fraud so that by operation of law, they are considered as trustees of an implied trust for the
benefit of the respondents from whom the property came.
 It is well-settled that an action for reconveyance based on an implied trust or
constructive trust prescribes in ten years from the issuance of torrens title over the property
Respondent’s action for reconveyance was filed on January 2, 1979, one year from the time
respondents discovered that petitioners together with their deceased brother applied for the
registration of a parcel of land known as Lot No. 2626, in 1978.