Ma vs Fernandez

PHILPOTTS vs. PHIL. MNFG. CO 40 PHIL 491 FACTS: W.G. Philpotts (Petitioner) , a stockholder in Philippine Manufacturing Company sought to compel respondents to permit plaintiff, a person or by some authorized agent or attorney to inspect and examine the records of the business transacted by said company since January 1, 1918.Respondent corporation or any of its officials has refused to allow the petitioner himself to examine anything relating to the affairs of the company, and the petitioner prays for an order commanding respondents to place records of all business transactions of the company, during a specific period, at the disposal of the plaintiff or his duly authorized agent or attorney. Petitioner desires to exercise said right through agent or attorney. Petition is filed originally in the Supreme Court under authority of Section 515 of Code of Civil Procedure, which gives SC concurrent jurisdiction with then Court of First Instance in cases where any corporation or person unlawfully excludes the plaintiff from use and enjoyment and some right he is entitled. ISSUE: Whether the right which the law concedes to a stockholder to inspect the records can be exercised by a proper agent or attorney of the stockholder as well as by stockholder in person HELD: Yes. Right of inspection of records can be exercised by proper agent or attorney of the stockholder as well as by stockholder in person. The right of inspection / examination into corporate affairs given to a stockholder in section 51 of the Corporation Law which states: “The records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member, or stockholder of the corporation at reasonable hour” can be exercised either by himself or by any duly authorized representative or attorney in fact, and either with or without the attendance of the stockholder. This is in conformity with the general rule that what a man may do in person he may do through another

Orient Air Services vs CA FACTS: 1. On 15 January 1977, American Airlines, Inc. an air carrier offering passenger and air cargo transportation in the Philippines, and Orient Air Services and Hotel Representatives , entered into a General Sales Agency Agreement whereby the former authorized the latter to act as its exclusive general sales agent within the Philippines for the sale of air passenger transportation. 2. On 11 May 1981, alleging that Orient Air had reneged on its obligations under the Agreement by failing to promptly remit the net proceeds of sales for the months of January to March 1981 in the amount of US$254,400.40, American Air by itself undertook the collection of the proceeds of tickets sold originally by Orient Air and terminated forthwith the Agreement. 3. Four (4) days later, or on 15 May 1981, American Air instituted suit against Orient Air with the CFI of Manila, Branch 24, for Accounting with Preliminary Attachment or Garnishment, Mandatory Injunction and Restraining Order averring the aforesaid basis for the termination of the Agreement as well as therein defendant's previous record of failures "to promptly settle past outstanding refunds of which there were available funds in the possession of the defendant, . . . to the damage and prejudice of plaintiff." 4. Defendant Orient Air: -denied the material allegations of the complaint with respect to plaintiff’s entitlement to alleged unremitted amounts, contending that after application thereof to the commissions due it under the Agreement, plaintiff in fact still owed Orient Air a balance in unpaid overriding commissions - Further, the defendant contended that the actions taken by American Air in the course of terminating the Agreement as well as the termination itself were untenable, Orient Air claiming that American Air's precipitous conduct had occasioned prejudice to its business interests. 5. TC ruled in favor of ORIENT AIR -dismissing the complaint and holding the termination made by the plaintiff American Airlines as affecting the GSA agreement illegal and improper and -order the plaintiff American Airlines to reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA agreement; -plaintiff is ordered to pay defendant the balance of the overriding commission on total flown revenue covering the period from March16, 1977 to December 31, 1980 in the amount of US$84,821.31 plus the additional amount of US$8,000.00 by way of proper 3% overriding commission per month commencing from January 1, 1981 until such reinstatement or said amounts in its Philippine peso equivalent legally prevailing at the time of payment plus legal interest to commence from the filing of the counterclaim up to the time of payment. 6. Intermediate Appellate Court (now Court of Appeals) in a decision promulgated on 27 January 1986, affirmed the findings of the court a quo on their material points but with some modifications with respect to the monetary awards granted. 7. Both appealed the decision of the CA ISSUE: WON American Air can be ordered by the court to "reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance with said GSA Agreement. HELD. NO -By affirming this ruling of the trial court, respondent appellate court, in effect, compels American Air to extend its personality to Orient Air.

-Such would be violative of the principles and essence of agency, defined by law as a contract whereby "a person binds himself to render some service or to do something in representation or on behalf of another, WITH THE CONSENT OR AUTHORITY OF THE LATTER . -In an agent-principal relationship, the personality of the principal is extended through the facility of the agent. In so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts which the latter would have him do. Such a relationship can only be effected with the consent of the principal, which must not, in any way, be compelled by law or by any court. -The Agreement itself between the parties states that "either party may terminate the Agreement without cause by giving the other 30days' notice by letter, telegram or cable."

RALLOS v FELIX GO CHAN & REALTY COPR. Facts: •Concepcion and Gerundia both surnamed Rallos were sisters and registered co-owners of a parcel of land. •They executed a special power of attorney in favor of their brother, Simeon Rallos,authorizing him to sell such land for and in their behalf. •After Concepcion died, Simeon Rallos sold the undivided shares of his sisters Concepcion and Gerundia to Felix Go Chan & Sons Realty Corporation and new TCTs were issued to the latter. •Petitioner Ramon Rallos, administrator of the Intestate Estate of Concepcion filed a complaint praying (1) that the sale of the undivided share of the deceased Concepcion Rallos be unenforceable, and said share be reconveyed to her estate; (2) that the Certificate of 'title issued in the name of Felix Go Chan & Sons Realty Corporation be cancelled and another title be issued in the names of the corporation and the "Intestate estate of Concepcion Rallos" in equal undivided and (3) that plaintiff be indemnified by way of attorney's fees and payment of costs of suit. CFI: In favor of plaintiff, ordering the sale was null and void insofar as the one-half pro-indiviso share of Concepcion Rallos and ordered the issuance of new TCT in proportion of ½ share each pro-indiviso. •Juan T. Borromeo, administrator of the Estate of Simeon Rallos was ordered to pay defendant the price of the ½ share of the land (P5,343.45) plus attorney’s fees[Borromeo filed a third party complaint against Josefina Rallos, special administratrix of the Estate of Gerundia] •Dismissed without prejudice to filing either a complaint against the regular administrator of the Estate of Gerundia Rallos or a claim in the Intestate-Estate of Cerundia Rallos, covering the same subjectmatter On appeal to the CA:CFI Decision reversed, upheld the sale of Concepcion’s share. MR: denied. Issues: 1. WON the sale was valid although it was executed after the death of the principal, Concepcion. 2. WON the sale fell within the exception to the general rule that death extinguishes the authority of the agent. 3. WON petitioner must suffer the consequence for failing to annotate a notice of death in the title even there was a good faith on the part of respondent corporation. Held: The essential elements of agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agents acts as a representative and not for himself, and (4) the agent acts within the scope of his authority. Paragraph 1 of Article 1403 provides that: Article 1403. The following contracts are unenforceable, unless they are justified: (1) Those entered into in the name of another person by one who hi - been given no authority or legal representation or who has acted beyond his powers; The general rule for extinguishment of agency is provided in Par. 3 of Article 1919 which states that: Article 1919. Agency is extinguished. xxx xxx xxx 3. By the death, civil interdiction, insanity or insolvency of the principal or of the agent. xxx xxx xxx But the exception to the general rule are provided in 1930 and 1931. ART. 1930. The agency shall remain in full force and effect even after the death of the principal, if it has been constituted in the common interest of the latter and of the agent, or in the interest of a third person who has accepted the stipulation in his favor.

ART. 1931. Anything done by the agent, without knowledge of the death of the principal or of any other cause which extinguishes the agency, is valid and shall be fully effective with respect to third persons who may have contracted with him in good faith. 1. No, the sale was void. No one may contract in the name of another without being authorized by the latter, or unless he has by law a right to represent him. A contract entered into in the name of another by one who has no authority or the legal representation or who has acted beyond his powers, shall be unenforceable, unless it is ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it is revoked by the other contracting party. 2. No, the sale did not fall under the exception to the general rule that death extinguishes the authority of the agent. Article 1930 is not applicable because the special power of attorney executed in favor of Simeon Rallos was not coupled with an interest. We refer to Article 1931, an act done by the agent after the death of his principal is valid and effective only under two conditions: (1) that the agent acted without knowledge of the death of the principal and (2) that the third person who contracted with the agent himself acted in good faith. Simeon Rallos, knew of the death of his principal at the time he sold the latter's share of the disputed land to respondent corporation, hence Article 1931 is inapplicable. The law expressly requires for its application lack of knowledge on the part of the agent of the death of his principal; it is not enough that the third person acted in good faith. 3. No, the Civil Code does not impost a duty on the heirs of the principal to notify the agent of the eath of the principal. If revocation was by the act of the principal: a general power which does not specify the persons to whom represents' on should be made, it is the general opinion that all acts, executed with third persons who contracted in good faith, without knowledge of the revocation, are valid. But, if revocation was due to death of the principal: extinguishment, by operation of law, is instantaneous without the need for notification to the parties concerned.

G.R. No. 145817 October 19, 2011 URBAN BANK, INC, Petitioner,

vs. MAGDALENO M. PEÑA, Respondent. FACTS: Magdaleno Peña, a lawyer, was formerly a stockholder, director and corporate secretary of Isabel Sugar Company, Inc. (ISCI). ISCI owned a parcel of land and leased it. Before the expiration of the lease contract, ISCI informed the lessee and his tenants that the lease would no longer be renewed because the land will be sold. ISCI and Urban Bank executed a Contract to Sell. ISCI then instructed Peña, to act as its agent and handle the eviction of the tenants. The lessee left, but the unauthorized sub-tenants refused to leave. Peña had the gates of the property closed and he also posted security guards—services for which he advanced payments. Despite this, the sub-tenants would force open the gates, and proceed to carry on with their businesses. Peña then filed a complaint with the RTC, which issued a TRO. At the time the complaint was filed, a new title to the land had already been issued in the name of Urban Bank. When information reached the judge that the land had already been transferred by ISCI to Urban Bank, the trial court recalled the TRO and issued a break-open order for the property. Peña immediately contacted ISCI’s president and told him that he would be recalling the security guards he had posted to secure the property. The ISCI President asked him to suspend the withdrawal of the posted guards, so that ISCI could get in touch first with Urban Bank. Peña also called Urban Bank’s President. The President allegedly assured him that the bank was going to retain his services, and that the he should not give up possession of the subject land. Thereafter, Peña, in representation of Urban Bank, filed a separate complaint with the RTC-Makati City, to enjoin the tenants from entering property. The RTC-Makati City issued a TRO. While the 2nd complaint was pending, Peña made efforts to settle the issue of possession with the sub-tenants. The sub-tenants eventually agreed to stay off the property for a total consideration of PhP1.5M. Peña advanced the payment for the full and final settlement of their claims against Urban Bank. Peña formally informed Urban Bank that it could already take possession of the property. There was however no mention of the compensation due and owed to him for the services he had rendered. The bank subsequently took actual possession of the property and installed its own guards at the premises. Peña filed a complaint with RTC demanding from Urban Bank the payment of the 10% compensation and attorney’s fees allegedly promised to him by Urban Bank’s President. Urban Bank argued that it was ISCI, the original owners of the property, that had engaged the services of Peña in securing the premises; and, consequently, they could not be held liable for the expenses Peña had incurred. The RTC ruled in favor of Peña because if found there has a contract of agency created. On appeal, it reversed RTCs’ decision and ordered Urban Bank to pay Peña reasonable compensation for his service. Peña appealed on certiorari. ISSUE: W/N Pena is entitled to payment for the services he rendered as agent of Urban Bank and W/N there exist a contract of agency. HELD: Yes. RATIO: Peña should be paid for services rendered under the agency relationship that existed between him and Urban Bank based on the civil law principle against unjust enrichment, and not on the basis of the purported oral contract. In a contract of agency, agents bind themselves to render some service or to do something in representation or on behalf of the principal, with the consent or authority of the latter. The essential elements of agency are the following: (a) the relationship is established by the parties’ consent, express or implied; (b) the object is the execution of a juridical act in relation to a third person; (c) agents act as representatives and not for themselves; and (d) agents act within the scope of their authority. Whether or not an agency has been created is determined by the fact that one is representing and acting for another. The law makes no presumption of agency; proving its existence, nature and extent is incumbent upon the person alleging it. The Court concludes that Urban Bank constituted Atty. Peña as its agent to secure possession of the property. This conclusion, however, is not determinative of the basis of the amount of payment that must be made to him by the bank. The context in which the agency was created lays the basis for the amount of compensation Atty. Peña is entitled to.

Agency is presumed to be for compensation. There is no evidence that Urban Bank agreed to pay Peña a specific amount or percentage of amount for his services, so the court applies the principle against unjust enrichment and on the basis of quantum meruit. Lawyering is not a business; it is a profession in which duty to public service, not money, is the primary consideration. The principle of quantum meruit applies if lawyers are employed without a price agreed upon for their services, in which case they would be entitled to receive what they merit for their services, or as much as they have earned.

DOMINION INSURANCE V. CA DOCTRINE: (No need to write)

When a special power of attorney is required for the agent to do a certain act, the agent, in the performance of such act, must comply with the specifications embodied in the special power of attorney giving him authority to do such. For example, here, a special power of attorney was needed for Guevarra to settle the claims of Dominion’s clients. And for this purpose, there was a memorandum. However, the memorandum stated that Guevarra was to settle the claims using the money in a revolving fund. Guevarra did not comply with this, so the expenses Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from Dominion, at least under the law of agency. FACTS: Rodolfo Guevarra instituted a civil case for the recovery of a sum of money against Dominion Insurance. He sought to recover P156,473.90, which he claimed to have advanced in his capacity as manager of Dominion to satisfy claims filed by Dominion’s clients. Dominion denied any liability to Guevarra and asserted a counterclaim for premiums allegedly unremitted by the latter. The pre-trial conference never pushed through despite being scheduled and postponed nine times over the course of six months. Finally, the case was called again for pre-trial and Dominion and counsel failed to show up. The trial court declared Dominion in default and denied any reconsideration. On the merits of the case, the RTC ruled that Dominion was to pay Guevarra the P156,473.90 claimed as the total amount advanced by the latter in the payment of the claims of Dominion’s clients. The CA affirmed. ISSUES: 1. WON Guevarra acted within his authority as agent for Dominion 2. WON Guevarra is entitled to reimbursement of amounts HELD: 1. NO. A perusal of the “Special Power of Attorney” would show that Dominion and Guevarra intended to enter into a principal-agent relationship. Despite the word “special,” the contents of the document reveal that what was constituted was a general agency. The agency comprises all the business of the principal, but, couched in general terms, is limited only to acts of administration. A general power permits the agent to do all acts for which the law does not require a special power. Art. 1878 enumerates the instances when a special power of attorney is required, including (1) to make such payments as are not usually considered as acts of administration; (15) any other act of strict dominion. The payment of claims is not an act of administration. The settlement of claims is not included among the acts enumerated in the Special Power of Attorney, neither is it of a character similar to the acts enumerated therein. A special power of attorney would have been required before Guevarra could settle the insurance claims of the insured. Guevarra’s authority to settle claims is embodied in the Memorandum of Management Agreement which enumerated the scope of Guevarra ’s duties and responsibilities. However, the Memorandum showed the instruction of Dominion that payment of claims shall come from a revolving fund. Having deviated from the instructions of the principal, the expenses that Guevarra incurred in the settlement of the claims of the insured may not be reimbursed from Dominion. 2. YES. However, while the law on agency prohibits Guevarra from obtaining reimbursement, his right to recovery may still be justified under the general law on Obligations and Contracts, particularly, Art. 1236 I n this case, when the risk insured against occurred, Dominion’s liability as insurer arose. This obligation was extinguished when Guevarra paid such claims. Thus, to the extent that the obligation of Dominion had been extinguished. respondent Guevarra may demand for reimbursement from his principal.

G.R. No. 179446 January 10, 2011 LOADMASTERS CUSTOMS SERVICES, INC., Petitioner, vs.

GLODEL BROKERAGE CORPORATION and R&B INSURANCE CORPORATION, Respondents. THE FACTS: R&B Insurance issued insurance policy in favor of Columbia for the shipment of 132 bundles of electric copper cathodes against all risks. The cargoes were shipped and arrived in Manila. Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the subsequent delivery to its warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for the use of its delivery trucks to transport the cargoes to Columbia’s warehouses/plants. The goods were loaded on board twelve (12) trucks owned by Loadmasters. Six (6) truckloads were to be delivered to Balagtas, Bulacan, while the other six (6) truckloads were destined for Lawang Bato, Valenzuela City. The cargoes in six truckloads for Lawang Bato were duly delivered in Columbia’s warehouses there. Of the six (6) trucks en route to Balagtas, Bulacan, however, only five (5) reached the destination. One (1) truck, failed to deliver its cargo. Because of this incident, Columbia filed with R&B Insurance a claim for insurance indemnity. After the requisite investigation and adjustment, R&B Insurance paid Columbia the amount of insurance indemnity. R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before the Manila RTC. It sought reimbursement of the amount it had paid to Columbia for the loss of the subject cargo. The RTC rendered a decision in favor of R&B Insurance and dismissed Loadmasters counterclaim. Both R&B Insurance and Glodel appealed the RTC decision to the CA. The CA rendered that Loadmasters is likewise held liable to appellant Glodel for the insurance indemnity appellant Glodel has been held liable to appellant R&B Insurance Corporation considering that appellee is an agent of appellant Glodel. Hence, Loadmasters filed petition for review on certiorari to the SC. ISSUES: WON Loadmasters be legally considered as an Agent of respondent Glodel? Held: No. Article 1868 of the Civil Code provides: "By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter." The elements of a contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority. Loadmasters never represented Glodel. Neither was it ever authorized to make such representation. It is a settled rule that the basis for agency is representation, that is, the agent acts for and on behalf of the principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal. On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on it. Such mutual intent is not obtaining in this case.

G.R. No. 144805 June 8, 2006

Eduardo V. Lintonjua, Jr. and Antonio K. Litonjua vs. Eternit Corporation (EC), Eteroutremer, S.A. Corporation (ESAC) and Far East Bank & Trust Company (FEBTC) FACTS: The Eternit Corporation (EC) is a corporation duly organized and registered under Philippine laws engaged in the manufacture of roofing materials and pipe products. Its manufacturing operations were conducted on eight parcels of land covered by TCTs under the name of FEBTC, as trustee. 90% of the shares of stocks of EC were owned by ESAC, a corporation organized and registered under the laws of Belgium. Jack Glanville, an Australian citizen, was the Gen. Manager and Pres. of EC, while Claude Delsaux was the Reg. Director for Asia of ESAC. Both had their offices in Belgium. In 1986, the management of ESAC grew concerned about the political situation in the Philippines and wanted to stop its operations in the country. The Committee for Asia of ESAC instructed EC Board of Directors Member Michael Adams, to dispose of the eight parcels of land. Adams engaged the services of realtor/broker Lauro G. Marquez so that the properties could be offered for sale to prospective buyers. Marquez thereafter offered the parcels of land and the improvements thereon to Eduardo B. Litonjua, Jr. of the Litonjua & Company, Inc. In a Letter, Marquez declared that he was authorized to sell the properties for P27,000,000.00. The Litonjua siblings offered to buy the property for P20,000,000.00 cash. Delsaux sent a telex to Glanville stating that, based on the "Belgian/Swiss decision," that the final offer was "US$1,000,000.00 and P2,500,000.00. Litonjua, Jr. accepted the counterproposal of Delsaux. The Litonjua brothers deposited the amount of US$1,000,000.00 with the Security Bank & Trust Company, Ermita Branch, and drafted an Escrow Agreement to expedite the sale. Meanwhile, with the assumption of Corazon C. Aquino as President of the Republic of the Philippines, the political situation in the Philippines had improved. Glanville informed Marquez that "the decision has been taken at a Board Meeting not to sell the properties on which Eternit Corporation is situated." When apprised of this development, the Litonjuas, wrote EC, demanding payment for damages they had suffered on account of the aborted sale. EC, however, rejected their demand. The Litonjuas then filed a complaint for specific performance and damages against EC and the FEBTC, and ESAC in the RTC of Pasig City. EC and ESAC alleged that the Board and stockholders of EC never approved any resolution to sell subject properties nor authorized Marquez to sell the same. Petitioners further emphasize that they acted in good faith when Glanville and Delsaux were knowingly permitted by respondent EC to sell the properties within the scope of an apparent authority. Petitioners insist that respondents held themselves to the public as possessing power to sell the subject properties. The trial court rendered judgment in favor of defendants and dismissed on the ground that there is no valid and binding sale between the plaintiffs and said defendants. The CA rendered judgment affirming the decision of the RTC. The Litonjuas filed a motion for reconsideration, which was also denied by the appellate court. Hence, this appeal. ISSUE: Whether or not Marquez needed a written authority from respondent Eternit before the sale can be perfected. HELD: YES. The general principles of agency govern the relation between the corporation and its officers or agents, subject to the articles of incorporation, by-laws, or relevant provisions of law. Any sale of real property of a corporation by a person purporting to be an agent thereof but without written authority from the corporation is NULL AND VOID. The declarations of the agent alone are generally insufficient to establish the fact or extent of his/her authority. Agency may be oral unless the law requires a specific form. However, to create or convey real rights over immovable property, a special power of attorney is necessary. Thus, when a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shall be in writing, otherwise, the sale shall be void. In this case, the petitioners as plaintiffs below, failed to adduce in evidence any resolution of the Board of Directors of respondent EC empowering Marquez, Glanville or Delsaux as its agents, to sell, let alone offer for sale, for and in its behalf, the eight parcels of land owned by respondent EC including the improvements thereon.

G.R. No. 149353 June 26, 2006 JOCELYN B. DOLES vs. MA. AURA TINA ANGELES FACTS: Respondent Angeles filed with the RTC a complaint for Specific Performance with Damages against Petitioner Doles. Respondent alleged that petitioner was indebted to the former in the concept of a personal loan. By virtue of a "Deed of Absolute Sale",3 petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as well as the improvements thereon, at a subdivision project known as Camella Townhomes Sorrente in Bacoor, Cavite, in order to satisfy her personal loan with respondent; that despite repeated demand, petitioner refused to cooperate with respondent to execute the necessary documents and other formalities required by the NHMFC to effect the transfer of the title over the property. However, petitioner denied that she borrowed money from respondent, and averred that she referred her friends to respondent whom she knew to be engaged in the business of lending money in exchange for personal checks through her capitalist Arsenio Pua. She alleged that her friends, namely, Zenaida Romulo, Theresa Moratin, Julia Inocencio, Virginia Jacob, and Elizabeth Tomelden, borrowed money from respondent and issued personal checks in payment of the loan; that the checks bounced for insufficiency of funds; that despite her efforts to assist respondent to collect from the borrowers, she could no longer locate them; that, because of this, respondent became furious and threatened petitioner that if the accounts were not settled, a criminal case will be filed against her. The trial court dismissed the case at bar on the ground that the deed of sale between the parties has no consideration or insufficiency of evidence. The CA reversed the TC’s decision and concluded that petitioner is the real borrower, while the respondent, the real lender, therefore there existed no contract of agency. ISSUE: Whether or not there exist a contract of agency between Petitioner Doles and the alleged debtors, therefore, Petitioner is not a party to the loan. HELD: YES. Under Article 1868 of the Civil Code, the basis of agency is representation. The question of whether an agency has been created is ordinarily a question which may be established in the same way as any other fact, either by direct or circumstantial evidence. The question is ultimately one of intention. Agency may even be implied from the words and conduct of the parties and the circumstances of the particular case. Though the fact or extent of authority of the agents may not, as a general rule, be established from the declarations of the agents alone, if one professes to act as agent for another, she may be estopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in which he or she is engaged. In this case, petitioner knew that the financier of respondent is Pua; and respondent knew that the borrowers are friends of petitioner. Respondent is estopped to deny that she herself acted as agent of a certain Arsenio Pua, her disclosed principal. She is also estopped to deny that petitioner acted as agent for the alleged debtors, the friends whom she (petitioner) referred.The CA is incorrect when it considered the fact that the "supposed friends of [petitioner], the actual borrowers, did not present themselves to [respondent]" as evidence that negates the agency relationship—it is sufficient that petitioner disclosed to respondent that the former was acting in behalf of her principals, her friends whom she referred to respondent. For an agency to arise, it is not necessary that the principal personally encounter the third person with whom the agent interacts. The law in fact contemplates, and to a great degree, impersonal dealings where the principal need not personally know or meet the third person with whom her agent transacts: precisely, the purpose of agency is to extend the personality of the principal through the facility of the agent. In the case at bar, both petitioner and respondent have undeniably disclosed to each other that they are representing someone else, and so both of them are estopped to deny the same. It is evident from the record that petitioner merely refers actual borrowers and then collects and disburses the amounts of the loan upon which she received a commission; and that respondent transacts on behalf of her "principal financier", a certain Arsenio Pua. If their respective principals do not actually and personally know each other, such ignorance does not affect their juridical standing as agents, especially

since the very purpose of agency is to extend the personality of the principal through the facility of the agent.

G.R. No. 151319. November 22, 2004 MANILA MEMORIAL PARK CEMETERY, INC. vs. PEDRO L. LINSANGAN FACTS: Florencia Baluyot is authorized by the Manila Memorial Park Inc. (MMPI) to sell burial lots to those interested in purchasing. Herein respondent Atty. Linsangan was approached by Florencia with an offer to sell to the former a lot that she alleges to have already been previously sold but the owner thereof has cancelled and thus, Atty. Linsangan shall only continue the payment thereof amounting to P95,000, Atty. Linsangan agreed and payed an initial P35, 000. Thereafter, Florencia advised Atty. Linsangan that there were changes in the contract and that she needed him to sign a new contract stipulating the total price of P132, 000 but Florencia assured Atty. Linsangan that he would only pay the agreed P95, 000. In the new contract, Atty. Linsangan acceded that he has read and understood all the stipulations therein. The payment was made in installments for two years which Atty. Linsangan completed, however, after two years, Florencia informed Linsangan that their contract was cancelled and offered a different lot, Atty. Linsangan refused the offer and filed a suit for breach of contract against MMPI and Florencia. MMPI avers that Florencia acted beyond the scope of her authority as MMPI’s agent since the latter did not allow her to renegotiate existing contracts but only to sell new contracts. Atty. Lnsangan on the other hand argues that MMPI should be liable for the acts of its agents. Issue: Whether or not MMPI is liable for the acts of Florencia Held: NO. The SC ruled that Florencia acted outside the scope of her authority as agent of MMPI and Atty. Linsangan failed to ascertain the authority given to Florencia especially that their agreement on the second contract had a different stipulation than what he and Florencia agreed upon. Moreover, Atty. Linsangan’s signature over the new contract signifies his agreement thereto and serves as a form of ratification for the acts of Florencia which were outside the authority given her. As such, the SC ruled that the principal cannot be held liable for actions of agents outside the scope of their authority when such acts are ratified by the principal himself. On the part of MMPI, they did not ratify Florencia’s acts, nor did they know of such actions.

BORDADOR vs. LUZ 283 SCRA 374

FACTS: Petitioners Bordador spouses were engaged in the business of purchase and sale of jewelry, while respondent Brigida Luz was their regular customer. Respondent Narciso Deganos, Luz's brother, received several pieces of jewelry from the Bordadors amounting to P382,816.00, which items wereindicated in 17 receipts covering the same--11 of the receipts stated that they were received by Deganos for a certain Evelyn Aquino, while the remaining 6indicated that they were received by Deganos for Luz. Deganos was supposed to sell the items at a profit and remit the proceeds and return the unsold items to the Bordadors. Deganos remitted only P53,207.00. He neither paid the balance of the sales proceeds, nor did he return any unsold item to the Bordadors, which led them to file an action for recovery of a sum of money and damages against Deganos and Luz with the RTC. The Bordadors claimed that Deganos acted as the agent of Luz when he received the items of jewelry, and because he failed to pay for the same, Luz, as principal, became solidarily liable with him. Deganos asserted that it was he alone who was involved in the transaction with the Bordadors; that he neither acted as agent for nor was he authorized to act as an agent by Luz, notwithstanding the fact that 6 of thereceipts indicated that the items were received by him for Luz. He added that he never delivered any of the items to Luz. Luz corroborated the claims of Deganos. The RTC found that only Deganos was liable to the Bordados. It further found that it was petitioner Lydia Bordador who indicated in the receipts that the items were received by Deganos for Evelyn Aquino and for Luz. It said that it was "persuaded that Brigida D. Luz was behind Deganos,"but because there was no memorandum to this effect, the agreement between the parties was unenforceable under the Statute of Frauds. Absent the required memorandum or any written document connecting Luz with the subject receipts or authorizing Deganos to act on her behalf, the alleged agreement between the Bordadors and Luz was unenforceable. The Bordadors elevated the case to the CA which affirmed said judgment, hence the instant petition. ISSUE: Whether Luz is liable to the Bordadors for the latter's claim for money and damages despite the fact that Luz did not sign any of the subject receipts or authorized Deganos to receive the items of jewelry on her behalf HELD: No, Luz is not liable to the Bordadors. RATIO: THE BASIS FOR AGENCY IS REPRESENTATION. The basis for agency is representation. Here, there is no showing that Luz consented to the acts of Deganos or authorized him to act on her behalf, much less with respect to the particular transactions involved. The Bordadors' attempt to foist liability on Luz through the supposed agency relation with Deganos is groundless and ill-advised. A PERSON DEALING WITH AN AGENT IS PUT UPON INQUIRY AND MUST DISCOVER UPON HIS PERIL THE AUTHORITY OF THE AGENT. Besides, it was grossly and inexcusably negligent of the Bordadors to entrust to Deganos, not once or twice but on at least 6 occasions as evidenced by 6 receipts, several pieces of jewelry of substantial value without requiring a written authorization from his alleged principal. A person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent.

Regina Dizon et al v. CA and Overland Express Lines, Inc. 302 SCRA 288

FACTS: Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with petitioners involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South“H” Street, Diliman, Quezon City. The term of the lease was for 1 year commencing from May 16, 1974 up to May 15, 1975. During this period, Overland Express Lines was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a monthly rental of P3,000.00. For failure of Overland Express Lines to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment against it. The lower court rendered judgment ordering Overland Express Lines to vacate the leased premises and to pay the sum of P624,000.00representing rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from June 1976 to November1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December 1982, until Overland Express Lines fully vacates the premises, and to payP20,000.00 as and by way of attorney’s fees. ISSUE: WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, as representative (agent) of petitioners in consideration of the option HELD: No. CA opined that the payment by Overland Express Lines of P300,000.00 as partial payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny receipt thereof, Overland Express Lines can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf.CA went further by stating that in fact, what was entered into was a “conditional contract of sale ”wherein ownership over the leased property shall not pass to the Overland Express Lines until it has fully paid the purchase price. Since Overland Express Lines did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price. In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00 to petitioners(thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners’ alleged agent, and Overland Express Lines. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. As provided in Article 1868 of the New Civil Code, there was no showing that petitioners neither consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency. Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agent’s authority, and his ignorance of that authority will not be any excuse. Persons dealing with an assumed agency, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.

Morales vs. CA (1997) Doctrine: 1. A 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. The characteristics of a trust are: a. It is a relationship; b. It is a relationship of fiduciary character; c. It is a relationship with respect to property, not one involving merely personal duties; d. It 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; and e. It arises as a result of a manifestation of intention to create the relationship. 2. 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. Facts: Cast of Characters: Celso Avelino – Owner of the premises in question Priscilla Morales – Sister of Celso Avelino, claims ownership of the land Rodolfo Morales – Son of Priscilla, built beauty shop on premises in question Ranulfo and Erlinda Ortiz – Purchased premises in question from Celso Avelino Aurea Avelino – Sister of Celso, caretaker of the premises in question Rosendo Avelino and Juana Ricaforte – Parents of Celso, Aurea and Priscilla Ranulfo and Erlinda Ortiz claim that they are the absolute and exclusive owners of the premises in question (318 sq.m. land located at corner Umbria St. and Rosales Blvd. Brgy. Central, Calbayog City) through their purchase of the said property from Celso Avelino and stated the following: The property was purchased by Celso Avelino (the Ortiz's predecessor in interest) when he was still a bachelor and a city fiscal of Calbayog city from Alejandra Mendiola and Celita Bartolome through an "Escritura de Venta." After the purchase, he caused the transfer of the title as well as the tax declarations in his name. He faithfully paid the taxes and kept the receipts thereof. He also caused a survey of the premises in question with the Bureau of Lands and built a residential house thereon. He took his parents Rosendo Avelino and Juana Ricaforte and his sister Aurea to live in his property until their death. Celso Avelino then became an Immigration Officer and later a Judge of the Court of First Instance in Cebu so he left his property under the care of his sister, Aurea. Without his knowledge, his nephew Rodolfo Morales (a son of his other sister, Priscilla) constructed a beauty shop on the premises in question. Celso thereafter sold the property to Ranulfo and Erlinda Ortiz (Celso's neighbors), they paid the purchase price and a deed of absolute sale was executed. Rodolfo Morales, however, refused to vacate the premises unless he is reimbursed P35,000. He also occupied the residential building on the property, took in paying boarders and even claimed ownership of the premises in question. Rodolfo Morales contends that his grandparents Rosendo Avelino and Juana Ricaforte originally owned the premises in question. The property was allegedly bought by Celso Avelino who was entrusted by Rosendo with the money to buy it. They caused the name of the property to be under Celso Avelino being the only son. When Rosendo Avelino and Juana Ricaforte died, their children: Celso Avelino, Trinidad Cruz, Concepcion Peralta, Priscilla Morales and Aurea Avelino succeeded as owners thereof. Issues: 1. W/N Celso Avelino acquired the property as a mere trustee. 2. W/N Rodolfo Morales a builder in good faith that would entitle him to reimbursement. Held: 1. NO.

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, 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. Implied trusts are either resulting or constructive trusts. Constructive trusts are created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. Resulting trusts are based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature of circumstances of the consideration involved in a transaction whereby one person becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. A resulting trust in exemplified by Article 1448 of the Civil Code: "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 having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person to whom 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 disputable presumed that there is gift in favor of a child. The last sentence of Article 1448 gives one of the recognized exceptions to the establishment of an implied resulting trust. (The other two would be: when actual contrary intention is proved and when purchase is made in violation of an existing statute and in evasion of its express provision.) As a rule the burden of proving the existence of trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of trust. While implied trusts may be proved by oral evidence, evidence must be trustworthy and received by the courts wth extreme caution. On this basis alone, Rodolfo and Priscilla Morales' claim must fail. Rodolfo and Priscilla relied merely on testimonial evidences which are self-serving. Proof of Ranulfo and Erlinda Ortiz's lawful acquisition of the property through Celso Avelino’s ownership on the other hand was supported by documentary evidences such as the deed of absolute sale and tax declarations. Even testimonies of Celso's other sisters prove that they believe that he is the true owner of the property. The fact that the other siblings did not intervene in this case to protect their right and that upon the death of their parents no extrajudicial partition occurred further strengthens Celso's ownership. Moreover, assuming that their claim that Celso was a mere trustee is true, it still falls under the exemption under the last sentence of Article 1448 which states that if the person to whom the title conveyed is a child, there is a presumption that it is a gift in favor of the child. 2. NO. Article 448 (This is on builders in good faith, look it up nalang if you want) only applies when a builder thinks he owns the land or believes himself to have a claim of title. From the evidences adduced, Rodolfo Morales knew from the beginning that he was not the owner of the land. Rodolfo is not entitled to reimbursement.

PENALBER VS. RAMOS G.R. No. 178645. January 30, 2009 Facts: Petitioner operated a hardware store in a building along Bonifacio St., Tuguegarao, Cagayan, which stood in a commercial lot owned by Maria Mendoza, from whom the petitioner rented the same. In 1982, petitioner allowed respondents to manage the store. In 1984, Mendoza put the Bonifacio property for sale. Having no funds, Petitioner allegedly entered into a verbal agreement with respondents stipulating that the latter shall buy the property in behalf of the petitioner and the consideration for the lot shall be paid from the accumulated earnings of the store. On September 20, 1984, respondents returned the management of the store to the petitioner with an inventory showing a difference of P116,946.15. The petitioner then demanded from the respondents the reconveyance title of the property but the latter refused. Petitioner argues that the respondents are mere trustees of the property and thus, are under moral and legal obligation to reconvey the property to her. Petitioner further argues that the difference in the inventory proves that such amount was used to pay for the purchase price of the property. Respondents, on the other hand, contend that they have the full ownership of the property because they paid for it out of their own funds. The petitioner filed a case before the RTC which rendered a judgment in favor of the petitioner, which was later on reversed by the Court of Appeals. Issue: Whether there is a valid and enforceable trust. Held: No, the Court ruled that petitioner’s allegations as to the existence of an express trust agreement with respondent spouses Ramos, supported only by her own and her son Johnson’s testimonies, do not hold water. A resulting difference of P116,946.15 in the beginning inventory of the stocks of the hardware store and the second inventory thereof, by itself, is not conclusive proof that the said amount was used to pay the purchase price of the Bonifacio property, such as would make it the property of petitioner held merely in trust by respondent spouses Ramos.

VDA. DE ESCONDE vs. CA, G.R. No. 103635 February 1, 1996 FACTS: Petitioners Constancia, Benjamin and Elenita, and private respondent Pedro, are the children of the late Eulogio Esconde and petitioner Catalina Buan. Eulogio Esconde was one of the children and heirs of Andres Esconde. Andres is the brother of Estanislao Esconde, the original owner of the disputed lot who died without issue. Survived by his only brother, Andres, Estanislao left an estate consisting of four parcels of land in Samal, Bataan. Eulogio died in April, 1944 survived by petitioners and private respondent. At that time, Lazara and Ciriaca, Eulogio's sisters, had already died without having partitioned the estate of the late Estanislao Esconde. Sometime later, the heirs of Lazara, Ciriaca and Eulogio executed a deed of extrajudicial partition. Since the children of Eulogio, with the exception of Constancia, were then all minors, they were represented by their mother and judicial guardian, petitioner Catalina Buan vda. de Esconde who renounced and waived her usufructuary rights over the parcels of land in favor of her children in the same deed. Subsequently, Benjamin discovered that Lot No. 1700 was registered in the name of his brother, private respondent. Believing that the lot was coowned by all the children of Eulogio Esconde, Benjamin demanded his share of the lot from private respondent. However, private respondent asserted exclusive ownership thereof pursuant to the deed of extrajudicial partition. The lower court ruled that the action had been barred by both prescription and laches. ISSUE: The applicability of the laches doctrine to implied trust is the issue in this petition. DECISION: Petitioner Catalina Buan vda. de Esconde, as mother and legal guardian of her children, appears to have favored her elder son, private respondent, in allowing that he be given Lot No. 1700 in its entirety in the extrajudicial partition of the Esconde estate to the prejudice of her other children. Private respondent exercised exclusive rights of ownership therein to the extent of even mortgaging the lot when he needed money. If, as petitioners insist, a mistake was committed in allotting Lot No. 1700 to private respondent, then a trust relationship was created between them and private respondent. However, private respondent never considered himself a trustee. If he allowed his brother Benjamin to construct or make improvements thereon, it appears to have been out of tolerance to a brother. Consequently, if indeed, by mistake, private respondent was given the entirety of Lot No. 1700, the trust relationship between him and petitioners was a constructive, not resulting, implied trust. Unfortunately, petitioners assailed private respondent’s exercise of absolute ownership over the property long after their right to do so have prescribed. The rule that a trustee cannot acquire by prescription ownership over property entrusted to him until and unless he repudiates the trust, applies to express trusts and resulting implied trusts. However, in constructive implied trusts, prescription may supervene even if the trustee does not repudiate the relationship. Necessarily, repudiation of the said trust is not a condition precedent to the running of the prescriptive period.

Torbela vs. Spouses Rosario GR 140528 Dec. 07, 2011 FACTS: The issue is over a parcel of land inherited by the Torbela siblings from their parents. They executed a deed of absolute quitclaim over the property in favor of Dr. Rosario. Four days later, on December 16, 1964, Lot No. 356-A was issued in Dr. Rosario’s name covering the said property. Another Deed of Absolute Quitclaim was subsequently executed on December 28, 1964, this time by Dr. Rosario, acknowledging that he “only borrowed” Lot No. 356-A from the Torbela siblings and was already returning the same to the latter for P1.00. This deed was notarized but not immediately annotated. Dr. Rosario used the land as mortgage for a loan he obtain and used the proceeds of the loan for the construction of improvements. Dr. Rosario fully paid the loan from DBP and the mortgage was cancelled and ratified by a notary public. However, Dr. Rosario took another loan from PNB. He later acquired a third loan from Banco Filipino and bought out the loan from PNB cancelling the mortgage with PNB. Rosario failed to pay their loan in Banco Filipino and the property was extrajudicially foreclosed. In 1986, the siblings filed a civil case for recovery of ownership and possession and damages. ISSUES: Whether or not an implied or express trust was established between the parties; Whether or not the right of the Torbela’s to recover the land has prescribed. RULING: Dr. Rosario only holds Lot No. 356-A in trust for the Torbela siblings. When Dr. Rosario was able to register Lot No. 356-A in his name under December 16, 1964, an implied trust was initially established between him and the Torbela siblings under Article 1451 of the Civil Code, which provides: 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. Dr. Rosario’s execution of the Deed of Absolute Quitclaim on December 28, 1964, containing his express admission that he only borrowed Lot No. 356-A from the Torbela siblings, eventually transformed the nature of the trust to an express one. The express trust continued despite Dr. Rosario stating in his Deed of Absolute Quitclaim that he was already returning Lot No. 356-A to the Torbela siblings as Lot No. 356-A remained registered in Dr. Rosario’s name. He kept possession of said property, together with the improvements thereon. To apply the 10-year prescriptive period, which would bar a beneficiary’s action to recover in an express trust, the repudiation of the trust must be proven by clear and convincing evidence and made known to the beneficiary. The express trust disables 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 or cestui que trust. For this reason, the old Code of Civil Procedure (Act 190) declared that the rules on adverse possession do not apply to “continuing and subsisting” (i.e., unrepudiated) trusts. In an express trust, the delay of the beneficiary is directly attributable to the trustee who undertakes to hold the property for the former, or who is linked to the beneficiary by confidential or fiduciary relations. The trustee's possession is, therefore, not adverse to the beneficiary, until and unless the latter is made aware that the trust has been repudiated. Dr. Rosario argues that he is deemed to have repudiated the trust on December 16, 1964, when he registered Lot No. 356-A in his name under, so when on February 13, 1986, the Torbela siblings instituted before the RTC for the recovery of ownership and possession of Lot No. 356-A from the spouses Rosario, over 21 years had passed, concluding that it was already barred by prescription, as well as laches. Hence, Dr. Rosario is deemed to have effectively repudiated the express trust between him and the Torbela siblings on March 6, 1981, on which day, the prescriptive period for the enforcement of the express trust by the Torbela siblings began to run.

From March 6, 1981, when the amended loan and mortgage agreement was registered, to February 13, 1986, when the Torbela siblings instituted before the RTC the case against the spouses Rosario, only about five years had passed. The Torbela siblings were able to institute the case well before the lapse of the 10-year prescriptive period for the enforcement of their express trust with Dr. Rosario. The case at bench is likewise not barred by laches. Laches means the failure or neglect, for an unreasonable and unexplained length of time, to do that which by exercising due diligence could or should have been done earlier. The Torbela siblings instituted their case five years after Dr. Rosario’s repudiation of the express trust, still within the 10-year prescriptive period for enforcement of such trusts. This does not constitute an unreasonable delay in asserting one's right. A delay within the prescriptive period is sanctioned by law and is not considered to be a delay that would bar relief. Laches apply only in the absence of a statutory prescriptive period.

PNB vs Aznar 649 SCRA 214 (2011) FACTS: In 1958, RISCO ceased operation due to business reverses. In plaintiffs’ desire to rehabilitate RISCO, they contributed a total amount of P212,720.00 which was used in the purchase of the three (3) parcels of land. After the purchase of the above lots, titles were issued in the name of RISCO. The amount contributed by plaintiffs constituted as liens and encumbrances on the aforementioned properties as annotated in the titles of said lots. The stockholders contributed specific amount to constitute as their lien or interest on the property described above, if and when said property are titled in the name of RURAL INSURANCE & SURETY CO., INC., subject to registration as their adverse claim until such time their respective contributions are refunded to them completely. Thereafter, various subsequent annotations were made on the same titles in favor of herein defendant PNB Aznar, et al., filed a Manifestation and Motion for Judgment on the Pleadings. Thus, the trial court rendered a decision which ruled against PNB on the basis that there was an express trust created over the subject properties whereby RISCO was the trustee and the stockholders, Aznar, et al., were the beneficiaries or the cestui que trust. ISSUE: Whether or not the language of the subject Minutes created an express trust. HELD: No. No such reasonable certitude in the creation of an express trust obtains in the case at bar. In fact, a careful scrutiny of the plain and ordinary meaning of the terms used in the Minutes does not offer any indication that the parties thereto intended that Aznar, et al., become beneficiaries under an express trust and that RISCO serve as trustor. Indeed, we find that Aznar, et al., have no right to ask for the quieting of title of the properties at issue because they have no legal and/or equitable rights over the properties that are derived from the previous registered owner which is RISCO, the pertinent provision of the law is Section 2 of the Corporation Code (Batas Pambansa Blg. 68), which states that "[a] corporation is an artificial being created by operation of law, having the right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence. The creation of an express trust must be manifested with reasonable certainty and cannot be inferred from loose and vague declarations or from ambiguous circumstances susceptible of other interpretations. Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties. An implied trust comes into being by operation of law. Express trusts, sometimes referred to as direct trusts, are intentionally created by the direct and positive acts of the settlor or the trustor - by some writing, deed, or will or oral declaration. It is created not necessarily by some written words, but by the direct and positive acts of the parties. This is in consonance with Article 1444 of the Civil Code, which states that "[n]o particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." Note: You may choose to copy the words in red for an in-depth background of express trust.

Pacheco vs Arro 85 Phil. 505 (1950) FACTS: A petition for a writ of certiorari was filed by Dolores Pacheco, as guardian of the minors Concepcion, Alicia and Herminia surnamed Yulo, daughters of the late Jose Yulo y Regalado, for the review of a judgment rendered by the Court of Appeals which affirmed the one rendered on 21 March 1939 by the Court of First Instance of Occidental Negros, ordering Jose Yulo y Regalado to execute deeds of assignment in favor of the plaintiffs for each and every lot claimed by them. The respondents, claiming lots as their property and began to present evidence before a referee appointed by the court in support of their respective claims. Upon the assurance and promise made in open court by Dr. Mariano Yulo, who represented the late predecessor-in-interest of the petitioners in the cadastral case, the latter would convey and assign the lots to the claimants, the herein respondents withdrew their claims, and the cadastral court confirmed the title to the lots and decreed their registration in the name of the defendant Jose Yulo y Regalado. The plaintiffs and appellees in the courts below and now respondents asserted title to each lot claimed by them and began to present evidence to prove title thereto in the cadastral case, but because of the promise referred to made in open court by the representative of the defendant-appellant, the predecessor-ininterest of the petitioners, the respondents withdrew their claims relying upon such promise. ISSUE: Whether or not there exists a trust or fiduciary relationship? HELD: When the claim to the lots in the cadastral case was withdrawn by the respondents relying upon the assurance and promise made in open court by... the predecessor-in-interest of the petitioners, a trust or fiduciary relation between them arose, or resulted therefrom, or was created thereby. The trustee cannot invoke the statute of limitations to bar the action and defeat the right of the cestui que trustent.” The reason why Pacheco is covered under the Art. 1456, rather than under Art. 1453 (“When property is conveyed to a person in reliance to his declared intention to hold it for, or transfer is to another or the grantor”) is because the action for reconveyance was being filed against the successors-in-interest of the person who gave such a declaration, and consequently, the property held in trust passed to the heirs by way of mistake, and rightfully covered under Art. 1456.

RAMOS VS. RAMO 61 SCRA 284 FACTS: Spouses Martin Ramos and Candida Tanate died on October 4, 1906 and October 26, 1880, respectively. They were survived by their 3 children. Moreover, Martin was survived by his 7 natural children. In December 1906, a special proceeding for the settlement of the intestate estate of said spouses was conducted. Rafael Ramos, a brother of Martin, administered the estate for more than 6 years. Eventually, a partition project was submitted which was signed by the 3legitimate children and 2 of the 7 natural children. A certain Timoteo Zayco signed in representation of the other 5 natural children who were minors. The partition was sworn to before a justice of peace. The conjugal hereditary estate was appraised at P74,984.93, consisting of 18 parcels of land, some head of cattle and the advances to the legitimate children. ½ thereof represented the estate of Martin. 1/3 thereof was the free portion or P12,497.98. The shares of the 7 natural children were to be taken from that 1/3 free portion. Indeed, the partition was made in accordance with the Old Civil code. Thereafter, Judge Richard Campbell approved the partition project. The court declared that the proceeding will be considered closed and the record should be archived as soon as proof was submitted that each he3ir had received the portion adjudicated to him. On February 3, 1914, Judge Nepumoceno asked the administrator to submit a report showing that the shares of the heirs had been delivered to them as required by the previous decision. Nevertheless, the manifestation was not in strict conformity with the terms of the judge’s order and with the partition project itself. 8 lots of the Himamaylan Cadastre were registered in equal shares in the names of Gregoria (widow of Jose Ramos) and her daughter, when in fact the administrator was supposed to pay the cash adjudications to each of them as enshrined in the partition project. Plaintiffs were then constrained to bring the suit before the court seeking for the reconveyance in their favor their corresponding participations in said parcels of land in accordance with Article 840 of the old Civil Code. Note that 1/6 of the subject lots represents the 1/3 free portion of martin’s shares which will eventually redound to the shares of his 7 legally acknowledged natural children. The petitioners’ action was predicated on the theory that their shares were merely held in trust by defendants. Nonetheless, no Deed of Trust was alleged and proven. Ultimately, the lower court dismissed the complaint on the grounds of res judicata, prescription and laches. ISSUE: Whether or not the plaintiffs’ action was barred by prescription, laches and res judicata to the effect that they were denied of their right to share in their father’s estate. RULING: YES, there was inexcusable delay thereby making the plaintiffs’ action unquestionably barred by prescription and laches and also by res judicata. Inextricably interwoven with the questions of prescription and res judicata is the question on the existence of a trust. It is noteworthy that the main thrust of plaintiffs’ action is the alleged holding of their shares in trust by defendants. Emanating from such, the Supreme Court elucidated on the nature of trusts and the availability of prescription and laches to bar the action for reconveyance of property allegedly held in trust. It is said that trust is the right, enforceable solely in equity to the beneficial enjoyment of property, the legal title to which is vested in another. It may either be express or implied. The latter ids further subdivided into resulting and constructive trusts. Applying it now to the case at bar, the plaintiffs did not prove any express trust. Neither did they specify the kind of implied trust contemplated in their action. Therefore, its enforcement maybe barred by laches and prescription whether they contemplate a resulting or a constructive trust.

Alejandro Ty vs. Sylvia Ty 553 SCRA 306 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. She also 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 temporary restraining order. 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 plaintiff 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? Held: No, there was no implied trust created in relation to the EDSA property. If the person to whom the title is conveyed is the child of the one paying the price of the sale, no trust is implied by law under Art. 1448, the so-called purchase money resulting trust. The said article provides an exception: “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 disputable presumed that there is a gift in favor of the child.” The Court also noted that plaintiff failed to prove that he did not intend a donation. Regarding the Meridien Condo and Wack Wack property, the court said that plaintiff failed to prove that purchase money came from him. They also said that Alexander was capable of purchasing the property as he had been working for nine years, had a car care business, and was actively engaged in the business dealings of several family corporations from which he received emoluments and other benefits. Hence, no implied trust created because there was no proof that plaintiff had paid for said properties.

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COMMISSION ON AUDIT, respondent. [G.R. No. 144516. February 11, 2004] FACTS: The DBP is a government financial institution with an original charter, Executive Order No. 81as amended by Republic Act No. 8523 (“DBP Charter”). The COA is a constitutional body with the mandate to examine and audit all government instrumentalities and investment of public funds. the Development Bank of the Philippines (DBP) Board of Governors adopted Resolution No. 794 creating the DBP Gratuity Plan and authorizing the setting up of a retirement fund to cover the benefits due to DBP retiring officials and employees under Commonwealth Act No. 186, as amended. On February 26, 1980, a Trust Indenture was entered into by and between the DBP and the Board of Trustees of the Gratuity Plan Fund, vesting in the latter the control and administration of the Fund. The trustee, subsequently, appointed the DBP Trust Services Department (DBP-TSD) as the investment manager thru an Investment Management Agreement, with the end in view of making the income and principal of the Fund sufficient to meet the liabilities of DBP under the Gratuity Plan. Pursuant to the investment scheme, DBP-TSD paid to the investor-members a total of P11,626,414.25 representing the net earnings of the investments for the years 1991 and 1992. The payments were disallowed by the Auditor under Audit Observation Memorandum No. 93-2 dated March 1, 1993, on the ground that the distribution of income of the Gratuity Plan Fund (GPF) to future retirees of DBP is irregular and constituted the use of public funds for private purposes which is specifically proscribed under Section 4 of P.D. 1445. The Auditor reasoned that “the Fund is still owned by the Bank, the Board of Trustees is a mere administrator of the Fund in the same way that the Trust Services Department where the fund was invested was a mere investor and neither can the employees, who have still an inchoate interest [i]n the Fund be considered as rightful owner of the Fund. . Chairman Antonio alleged that the express trust created for the benefit of qualified DBP employees under the Trust Agreement (“Agreement”) dated 26 February 1980 gave the Fund a separate legal personality. ISSUE: Whether the income of the Fund is income of DBP? HELD: The COA alleges that DBP is the actual owner of the Fund and its income, on the following grounds: (1) DBP made the contributions to the Fund; (2) the trustees of the Fund are merely administrators; and (3) DBP employees only have an inchoate right to the Fund. The DBP counters that the Fund is the subject of a trust, and that the Agreement transferred legal title over the Fund to the trustees. The income of the Fund does not accrue to DBP. Thus, such income should not be recorded in DBP’s books of account. 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. In the present case, the DBP Board of Governors’ (now Board of Directors) Resolution No. 794 and the Agreement executed by former DBP Chairman Rafael Sison and the trustees of the Plan created an express trust, specifically, an employees’ trust. An employees’ trust is a trust maintained by an employer to provide retirement, pension or other benefits to its employees. It is a separate taxable entity established for the exclusive benefit of the employees. In a trust, one person has an equitable ownership in the property while another person owns 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.

LOPEZ VS. COURT OF APPEALS (G.R. No. 157784) FACTS: The instant petition stemmed from an action for reconveyance instituted by petitioner Richard B. Lopez in his capacity as trustee of the estate of the late Juliana Lopez Manzano (Juliana) to recover from respondents several large tracts of lands allegedly belonging to the trust estate of Juliana. The decedent, Juliana, was married to Jose Lopez Manzano (Jose). Their union did not bear any children. Juliana was the owner of several properties, among them, the properties subject of this dispute. The disputed properties totaling more than 1,500 hectares consist of six parcels of land, which are all located in Batangas. They were the exclusive paraphernal properties of Juliana together with a parcel of land situated in Mindoro known as Abra de Ilog and a fractional interest in a residential land on Antorcha St., Balayan, Batangas. , Juliana executed a notarial will,[4] whereby she expressed that she wished to constitute a trust fund for her paraphernal properties, denominated as Fideicomiso de Juliana Lopez Manzano (Fideicomiso), to be administered by her husband. If her husband were to die or renounce the obligation, her nephew, Enrique Lopez, was to become administrator and executor of the Fideicomiso. Juliana initiated the probate of her will five (5) days after its execution, but she died on 12 August 1968, before the petition for probate could be heard. The petition was pursued instead in Special Proceedings (S.P.) No. 706 by her husband, Jose, who was the designated executor in the will. Jose died on 22 July 1980, leaving a holographic will disposing of the disputed properties to respondents. The will was allowed probate on 20 December 1983 in S.P. No. 2675 before the RTC of Pasay City. Pursuant to Jose’s will, the RTC ordered on 20 December 1983 the transfer of the disputed properties to the respondents as the heirs of Jose. Consequently, the certificates of title of the disputed properties were cancelled and new ones issued in the names of respondents. On 11 December 1984, petitioner instituted an action for reconveyance of parcels of land with sum of money before the RTC of Balayan, Batangas against respondents. The complaint[5] essentially alleged that Jose was able to register in his name the disputed properties, which were the paraphernal properties of Juliana, either during their conjugal union or in the course of the performance of his duties as executor of the testate estate of Juliana and that upon the death of Jose, the disputed properties were included in the inventory as if they formed part of Jose’s estate when in fact Jose was holding them only in trust for the trust estate of Juliana. ISSUE: of whether an implied trust was constituted over the disputed properties when Jose, the trustee, registered them in his name. HELD: Petitioner insists that an express trust was constituted over the disputed properties; thus the registration of the disputed properties in the name of Jose as trustee cannot give rise to prescription of action to prevent the recovery of the disputed properties by the beneficiary against the trustee. Evidently, Juliana’s testamentary intent was to constitute an express trust over her paraphernal properties which was carried out when the Fideicomiso was established in S.P. No. 706. . The probate court adjudicated the disputed properties to Jose as the sole heir of Juliana. If a mistake was made in excluding the disputed properties from the Fideicomiso and adjudicating the same to Jose as sole heir, the mistake was not rectified as no party appeared to oppose or appeal the exclusion of the disputed properties from the Fideicomiso. Moreover, the exclusion of the disputed properties from the Fideicomiso bore the approval of the probate court. The issuance of the probate court’s order adjudicating the disputed properties to Jose as the sole heir of Juliana enjoys the presumption of regularity. On the premise that the disputed properties were the paraphernal properties of Juliana which should have been included in the Fideicomiso, their registration in the name of Jose would be erroneous and Jose’s possession would be that of a trustee in an implied trust. 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 matters of equity, independently of the particular intention of the parties. The provision on implied trust governing the factual milieu of this case is provided in Article 1456 of the Civil Code, which states: 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.

The registration of the disputed properties in the name of Jose was actually pursuant to a court order. The apparent mistake in the adjudication of the disputed properties to Jose created a mere implied trust of the constructive variety in favor of the beneficiaries of the Fideicomiso.

PARINGIT VS BAJIT Facts: During their lifetime, spouses Julian and Aurelia Paringit leased a lot on from Terocel Realty, Inc. They built their home raised their 5 children. Then Aurelia died on November 6, 1972. For having occupied the lot for years, Terocel Realty offered to sell it to Julian but he did not have enough money at that time to meet the payment deadline. Julian sought the help of his children so he can buy the property but only his son Felipe and wife Josefa had the financial resources he needed at that time. To bring about the purchase, Julian executed a deed of assignment of leasehold right in favor of Felipe and his wife that would enable them to acquire the lot. The latter bought the same from Terocel Realty for P55,500.00 to be paid in installments. Felipe and his wife paid the last installment and the realty company executed a Deed of Absolute Sale in their favor and turned over the title to them. Due to issues among Julian’s children regarding the ownership of the lot, Julian executed an affidavit clarifying the nature of Felipe and his wife’s purchase of the lot. He claimed that it was bought for the benefit of all his children and the same must be divided equally among my five children at 15 sq. m. each; but each of them should reimburse their brother Felipe and his wife, Josefa the proportional amount advanced by them as I also will reimburse him the sum of P30,000.00 or one half of the amount that the couple advanced. Felipe and his wife registered their purchase of the lot, resulting in the issuance of Transfer Certificate of Title 172313 in their names. Despite the title, however, the spouses moved to another house on the same street in 1988. Marciana, et al, on the other hand, continued to occupy the lot with their families without paying rent. This was the situation when their father Julian died. Felipe and his wife sent a demand letter to Marciana, et al asking them to pay rental arrearages for occupying the property from and Marciana, et al refused to pay or reply to the letter, believing that they had the right to occupy the house and lot, it being their inheritance from their parents. Then Felipe and his wife filed an ejectment suit against them. The suit prospered, resulting in the ejectment of Marciana, et al and their families from the property. Shortly after, Felipe and his wife moved into the same. ISSUE: 1. Whether or not Felipe and his wife purchased the subject lot under an implied trust for the benefit of all the children of Julian; 2. W/n that Marciana, et al’s right of action was barred by prescription or laches. Held: 1. The CA found that Felipe and his wife’s purchase of the lot falls under the rubric of the implied trust provided in Article 1450 of the Civil Code. Implied trust under Article 1450 presupposes a situation where a person, using his own funds, buys property on behalf of another, who in the meantime may not have the funds to purchase it. Title to the property is for the time being placed in the name of the trustee, the person who pays for it, until he is reimbursed by the beneficiary, the person for whom the trustee bought the land. It is only after the beneficiary reimburses the trustee of the purchase price that the former can compel conveyance of the property from the latter. But the circumstances of this case are actually what implied trust is about. Although no express agreement covered Felipe and his wife’s purchase of the lot for the siblings and their father, it came about by operation of law and is protected by it. The nature of the transaction established the implied trust and this in turn gave rise to the rights and obligations provided by law. Implied trust is a rule of equity, independent of the particular intention of the parties. In an implied trust, the beneficiary’s cause of action arises when the trustee repudiates the trust, not when the trust was created as Felipe and his wife would have it. 2. Felipe and his wife also claim that Marciana, et al’s action was barred by laches. But there is no basis for such claim. Laches has been defined as the failure or neglect, for an unreasonable and unexplained length of time, to do that which, by exercising due diligence could or should have been done earlier. Marciana, et al had no reason to file an earlier suit against Felipe and his wife since the latter had not bothered them despite their purchase of the lot in their names. Only about 12 years later when they wrote their demand letter did the spouses take an adverse attitude against Marciana, et al. The latter filed their action to annul Felipe and his wife’s title and have the same transferred to their name.

MODESTO LEOVERAS vs.CASIMERO VALDEZ, G.R. No. 169985

Facts: June 15, 2011 Maria Sta. Maria and Dominga Manangan were the registered owners - three-fourths (¾) and one-fourth (¼) pro-indiviso, respectively - of a parcel of land. Sta. Maria sold her three-fourths (¾) share to Benigna Llamas. The sale was duly annotated at the back of OCT No. 24695. When Benigna died in 1944, she willed her three-fourths (¾) share equally to her sisters Alejandra Llamas and Josefa Llamas. Thus, Alejandra and Josefa each owned one-half (½) of Benigna’s three-fourths (¾) share. Alejandra’s heirs sold their predecessor’s one-half (½) share (roughly equivalent to 10,564 square meters) to the respondent, as evidenced by a Deed of Absolute Sale. Also, Josefa sold her own one-half (½) share (subject property) to the respondent and the petitioner, as evidenced by another Deed of Absolute Sale. The respondent and the petitioner executed an Agreement, allotting their portions of the subject property. The petitioner and the respondent executed an Affidavit of Adverse Claim over the subject property. The parties took possession of their respective portions of the subject property and declared it in their name for taxation purposes. The respondent asked the Register of Deeds of Lingayen, Pangasinan on the requirements for the transfer of title over the portion allotted to him on the subject property. To his surprise, the respondent learned that the petitioner had already obtained in his name two transfer certificates of title. The respondent filed a complaint for Annulment of Title, Reconveyance and Damages against the petitioner, seeking the reconveyance of the 1,004-square meter portion (disputed property) covered by TCT No. 195813, on the ground that the petitioner is entitled only to the 3,020 square meters identified in the parties’ Agreement. The respondent sought the nullification of the petitioner’s titles by contesting the authenticity of the petitioner’s documents. Particularly, the respondent assailed the Benigna Deed by presenting Benigna’s death certificate. The respondent argued that Benigna could not have executed a deed, which purports to convey 4,024 square meters to the petitioner, in 1969 because Benigna already died in 1944. The respondent added that neither could Sta. Maria have sold to the parties her three-fourths (¾) share in 1969 because she had already sold her share to Benigna in 1932.22 The petitioner asked for the dismissal of the complaint and for a declaration that he is the lawful owner of the parcels of land covered by his titles. The RTC dismissed the complaint. On appeal, the CA reversed the RTC by ruling against the authenticity of the Benigna Deed and the Affidavit. As the totality of the evidence presented sufficiently sustains [the respondent’s] claim that the titles issued to [the petitioner] were based on forged and spurious documents, it behooves this Court to annul these certificates of title. Hence, this petition for revie. Issues: Whether the CA erred in ordering the reconveyance of the parcel of land covered by the petitioner’s titles. Held: We partially grant the petition. An action for reconveyance is a legal and equitable remedy granted to the rightful landowner, whose land was wrongfully or erroneously registered in the name of another, to compel the registered owner to transfer or reconvey the land to him. The plaintiff in this action must allege and prove his ownership of the land in dispute and the defendant’s erroneous, fraudulent or wrongful registration of the property. The petitioner’s argument confuses registration of title with ownership. While the petitioner’s ownership over the land covered by TCT No. 195812 is undisputed, his ownership only gave him the right to apply for the proper transfer of title to the property in his name. Obviously, the petitioner, even as a rightful owner, must comply with the statutory provisions on the transfer of registered title to lands. Section 53 of Presidential Decree No. 1529 provides that the subsequent registration of title procured by the presentation of a forged deed or other instrument is null and void. Thus, the subsequent issuance of TCT No. 195812 gave the petitioner no better right than the tainted registration which was the basis for the issuance of the same title. The Court simply cannot allow the petitioner’s attempt to get around the proper procedure for registering the transfer of title in his name by using spurious documents. Reconveyance is the remedy of the rightful owner only While the CA correctly nullified the petitioner’s certificates of title, the CA erred in ordering the reconveyance of the entire subject property in the respondent’s favor. The respondent himself admitted that the 3,020- square meter portion covered by TCT No. 195812 is the petitioner’s just share in the subject property.54 Thus, although the petitioner obtained TCT No. 195812 using the same spurious documents, the land covered by this title should not be reconveyed in favor of the respondent since he is not the rightful owner of the property covered by this title.

Pasiño vs Monterroyo

FACTS: This case originated from an action for recovery of possession and damages, with prayer for the issuance of a temporary restraining order or writ of preliminary mandatory injunction, filed by Rogelio, George, Lolita, Rosalinda and Josephine, all surnamed Pasiño, represented by their father and attorneyin-fact Jose Pasiño (petitioners) against Dr. Teofilo Eduardo F. Monterroyo (Dr. Monterroyo), later substituted by his heirs Romualdo, Maria Teresa and Stephen, all surnamed Monterroyo (respondents). Cad. Lot No. 2139 of Cad. 292, Iligan Cadastre (Lot No. 2139), with an area of 19,979 square meters, located at Panul-iran, Abuno, Iligan City, was part of a 24-hectare land occupied, cultivated and cleared by Laureano Pasiño (Laureano) in 1933. The 24-hectare land formed part of the public domain which was later declared alienable and disposable. On 18 February 1935, Laureano filed a homestead application over the entire 24-hectare land under Homestead Application No. 205845.[5] On 22 April 1940, the Bureau of Forestry wrote Laureano and informed him that the tract of land covered by his application was not needed for forest purposes.[6] On 11 September 1941, the Director of Lands issued an Order[7] approving Laureano’s homestead application and stating that Homestead Entry No. 154651 was recorded in his name for the land applied for by him. Laureano died on 24 March 1950. On 15 April 1952, the Director of Lands issued an Order[8] for the issuance of a homestead patent in favor of Laureano, married to Graciana Herbito[9] (Graciana). Laureano’s heirs did not receive the order and consequently, the land was not registered under Laureano’s name or under that of his heirs. In 1953, the property was covered by Tax Declaration No. 11102[10] in the name of Laureano with Graciana[11] as administrator. Between 1949 and 1954, a Cadastral Survey was conducted in Iligan City. The surveyor found that a small creek divided the 24-hectare parcel of land into two portions, identified as Lot No. 2138 and Lot No. 2139. Petitioners claimed that Laureano’s heirs, headed by his son Jose, continuously possessed and cultivated both lots. On 16 October 1962, Jose’s co-heirs executed a Deed of Quitclaim renouncing their rights and interest over the land in favor of Jose. Jose secured a title in his name for Lot No. 2138. Later, Jose alienated Lot No. 2139 in favor of his children (petitioners in this case) who, on 8 January 1994, simultaneously filed applications for grant of Free Patent Titles over their respective shares of Lot No. 2139 before the Land Management Bureau of the Department of Environment and Natural Resources (DENR). On 22 August 1994, the DENR granted petitioners’ applications and issued Original Certificate of Title (OCT) No. P-1322 (a.f.) in favor of Rogelio Pasiño, OCT No. P-1318 (a.f.) in favor of George Pasiño, OCT No. P-1317 (a.f.) in favor of Lolita Pasiño, OCT No. P-1321 (a.f.) in favor of Josephine Pasiño, and OCT No. P-1319 (a.f.) in favor of Rosalinda Pasiño. Petitioners alleged that their possession of Lot No. 2139 was interrupted on 3 January 1993 when respondents forcibly took possession of the property. Respondents alleged that they had been in open, continuous, exclusive and notorious possession of Lot No. 2139, by themselves and through their predecessors-in-interest, since 10 July 1949. They alleged that on 10 July 1949, Rufo Larumbe (Larumbe) sold Lot No. 2139 to Petra Teves (Petra). On 27 February 1984, Petra executed a deed of sale over Lot No. 2139 in favor of Vicente Teves (Vicente). On 20 February 1985, Vicente executed a pacto de retro sale over the land in favor of Arturo Teves (Arturo). In 1992, Arturo sold Lot No. 2139 in favor of respondents’ father, Dr. Monterroyo, by virtue of an oral contract. On 5 January 1995, Arturo executed a Deed of Confirmation of Absolute Sale of Unregistered Land in favor of Dr. Monterroyo’s heirs. Respondents alleged that Jose was not the owner of Lot No. 2139 and as such, he could not sell the land to his children. They alleged that petitioners’ OCTs were null and void for having been procured in violation of the Public Land Act. They further alleged that the Land Management Bureau had no authority to issue the free patent titles because Lot No. 2139 was a private land. Issue: whether the Court of Appeals erred in sustaining the trial court’s Decision declaring respondents as the rightful owners and possessors of Lot No. 2139

Ruling: The trial court found that the preponderance of evidence favors respondents as the possessors of Lot No. 2139 for over 30 years, by themselves and through their predecessors-in-interest. The question of who between petitioners and respondents had prior possession of the property is a factual question whose resolution is the function of the lower courts.[17] When the factual findings of both the trial court and the Court of Appeals are supported by substantial evidence, they are conclusive and binding on the parties and are not reviewable by this Court.[18] While the rule is subject to exceptions, no exception exists in this case. Respondents were able to present the original Deed of Absolute Sale, dated 10 July 1949, executed by Larumbe in favor of Petra.[19]Respondents also presented the succeeding Deeds of Sale showing the transfer of Lot No. 2139 from Petra to Vicente[20] and from Vicente to Arturo[21] and the Deed of Confirmation of Absolute Sale of Unregistered Real Property executed by Arturo in favor of respondents.[22] Respondents also presented a certification[23] executed by P/Sr. Superintendent Julmunier Akbar Jubail, City Director of Iligan City Police Command and verified from the Log Book records by Senior Police Officer Betty Dalongenes Mab-Abo confirming that Andres Quinaquin made a report that Jose, Rogelio and Luciana Pasiño, Lucino Pelarion and Nando Avilo forcibly took his copra. This belied petitioners’ allegation that they were in possession of Lot No. 2139 and respondents forcibly took possession of the property only in January 1993. Considering that petitioners’ application for free patent titles was filed only on 8 January 1994, when Lot No. 2139 had already become private land ipso jure, the Land Management Bureau had no jurisdiction to entertain petitioners’ application.

Estate of Margarita Cabancungan v. Marilou Laigo

GR. No. 175073 August 15, 2011 Facts: 1. Margarita Cabacungan (Margarita) owned three parcels of unregistered land in Paringao and in Baccuit, Bauang, La Union. 2. Sometime in 1968, Margarita’s son, Roberto Laigo, Jr. (Roberto), applied for a nonimmigrant visa to the United States, and to support his application, he allegedly asked Margarita to transfer the tax declarations of the properties in his name. 3. For said purpose, Margarita, unknown to her other children, executed an Affidavit of Transfer of Real Property whereby the subject properties were transferred by donation toRoberto. 4. Not long after, Roberto’s visa was issued and he was able to travel to the U.S. as a tourist and returned in due time. In 1979, he adopted respondents Pedro Laigo (Pedro) and Marilou Laigo (Marilou), and then he married respondent Estella Balagot. 5. In July 1990, Roberto sold the 4,512 sq m property in Baccuit to the spouses Mario and Julia Campos for P23,000.00. 6. Then in August 1992, he sold the 1,986 sq m and 3,454 sq m lots in Paringao, respectively, to Marilou for P100,000.00 and to Pedro for P40,000.00. 7. Allegedly, these sales were not known to Margarita and her other children. 8. It was only in August 1995, at Roberto’s wake, that Margarita came to know of the sales as told by Pedro himself. 9. In February 1996, Margarita, represented by her daughter, Luz, instituted the instant complaint for the annulment of said sales and for the recovery of ownership and possession of the subject properties as well as for the cancellation of Ricardo’s tax declarations. 10. Margarita admitted having accommodated Roberto’s request for the transfer of the properties to his name, but pointed out that the arrangement was only for the specific purpose of supporting his U.S. visa application. She emphasized that she never intended to divest herself of ownership over the subject lands and, hence, Roberto had no right to sell them to respondents and the Spouses Campos. She likewise alleged that the sales, which were fictitious and simulated considering the gross inadequacy of the stipulated price, were fraudulently entered into by Roberto. She imputed bad faith to Pedro, Marilou and the Spouses Campos as buyers of the lots, as they supposedly knew all along that Roberto was not the rightful owner of the properties. 11. The Spouses Campos advanced that they were innocent purchasers for value and in good faith, and had merely relied on Roberto’s representation that he had the right to sell the property; and that, hence, they were not bound by whatever agreement entered by Margarita with her son. 12. In much the same way, Marilou and Pedro, who likewise professed themselves to be buyers in good faith and for value, believed that Margarita’s cause of action had already been barred by laches, and that even assuming the contrary, the cause of action was nevertheless barred by prescription as the same had accrued way back in 1968 upon the execution of the affidavit of transfer by virtue of which an implied trust had been created. In this regard, they emphasized that the law allowed only a period of ten (10) years within which an action to recover ownership of real property or to enforce an implied trust thereon may be brought, but Margarita merely let it pass. Issue: 1. Whether or not that the complaint is barred by laches and prescription 2. Whether or not the rule on innocent purchaser for value applies in this case of sale of unregistered land 3. Whether or not there is evidence to support the finding that there is an implied trust created between Margarita and her son Roberto Held: 1. No 2. No 3. Yes Ratio: For issues 1 and 2. In the case at bar, lands involved are concededly unregistered lands; hence, there is no way by which Margarita, during her lifetime, could be notified of the furtive and fraudulent sales made in 1992 by Roberto in favor of respondents, except by actual notice from Pedro himself in August

1995. Hence, it is from that date that prescription began to toll. The filing of the complaint in February 1996 is well within the prescriptive period. 3. Intention – although only presumed, implied or supposed by law from the nature of the transaction or from the facts and circumstances accompanying the transaction, particularly the source of the consideration – is always an element of a resulting trust and may be inferred from the acts or conduct of the parties rather than from direct expression of conduct. Certainly, intent as an indispensable element, is a matter that necessarily lies in the evidence, that is, by evidence, even circumstantial, of statements made by the parties at or before the time title passes. Because an implied trust is neither dependent upon an express agreement nor required to be evidenced by writing, Article 1457 of our Civil Code authorizes the admission of parole evidence to prove their existence. Parole evidence that is required to establish the existence of an implied trust necessarily has to be trustworthy and it cannot rest on loose, equivocal or indefinite declarations. Thus, contrary to the Court of Appeals’ finding that there was no evidence on record showing that an implied trust relation arose between Margarita and Roberto, we find that petitioner before the trial court, had actually adduced evidence to prove the intention of Margarita to transfer to Roberto only the legal title to the properties in question, with attendant expectation that Roberto would return the same to her on accomplishment of that specific purpose for which the transaction was entered into. The evidence of course is not documentary, but rather testimonial.