Trust Case Digest

ENITA SALAO, assisted by her husband, GREGORIO MARCELO; ALMARIO ALCURIZA, ARTURO ALCURIZA, OSCAR ALCURIZA and ANITA ALCURIZA, the latter two being minors are represented by guardian ad litem, ARTURO ALCURIZA, plaintiffs-appellants, vs. JUAN S. SALAO, later substituted by PABLO P. SALAO, Administrator of the Intestate of JUAN S. SALAO; now MERCEDES P. VDA. DE SALAO, ROBERTO P. SALAO, MARIA SALAO VDA. DE SANTOS, LUCIANA P. SALAO, ISABEL SALAO DE SANTOS, and PABLO P. SALAO, as successors-ininterest of the late JUAN S. SALAO, together with PABLO P. SALAO, Administrator, defendants-appellants. F: Juan and his sister Ambrosia were engaged in the fishpond business. Alejandra and nephew Valentin were included in the joint venture. The funds used were the earnings of the properties inherited from their father and that those earnings were used in the acquisition of the fishpond in dispute. I: R: MINDANAO DEVELOPMENT AUTHORITY VS CA AND FRANCISCO ANG FRANCISCO F: Francisco is an owner of a big tract of land. He sold a portion Juan Cruz. In the deed of sale, it was stipulated that Francisco is responsible for titling his land at his own expense and that Juan Cruz should shoulder the expenses for the titling of the land he bought. Subsequently, Juan Cruz sold his lot to the Commonealth of the Philippines. The President of the Philippines issued a proclamation where it transferred certain parcels of land to Mindanao Development Authority. The land belonging to Juan Cruz was among the parcels of land. The lawyer for Mindanao Devt Authority requested Francisco to surrender a copy of the Transfer Certificate of Title but Francisco refused. Mindanao Devt. Authority then filed a complaint against Francisco for the reconveyance of the TCT on the ground That the defendant as vendor and the one who worked to secure the title of his entire tract of land which included the portion sold by him. to Juan Cruz acted in the capacity of and/or served as trustee for any and all parties who become successor-in-interest to Juan Cruz and the defendant was bound and obligated to give, deliver and reconvey to Juan Cruz and/or his successor-in-interest the title pertaining to the portion of land sold and conveyed by him to Juan Cruz. I: Whether there was an express trust established between Francisco and Juan Cruz based on the stipulation in the deed of sale? NO. R: It is nothing but a condition. The stipulation does not categorically create an obligation on the part of Francisco to hold the property in trust for Juan Cruz. It is essential to the creation of an express trust that the settler presently and unequivocally make a disposition of property and make himself the trustee of the property for the benefit of another. *In case of a declaration of trust, the declaration must be clear and unequivocal that the owner holds poperty in trust for the purposes named. Also, it was not clear from the stipulation what parcel of land is being referred to – whether the entire portion before the sale or the portion of land left to him after sale. A failure on the part of the settler to definitely describe the subject-matter of the supposed trust or the beneficiaries or object thereof is strong evidence that he intended no trust.

ALFREDO ROA, JR., LETICIA ROA DE BORJA, RUBEN ROA, CORNELIO ROA and ELSIE ROA-CACNIO (as heirs of the late Alfredo Roa, Sr.). petitioners, vs. HON. COURT OF APPEALS and the spouses JOAQUIN CASIÑO and CUSTODIA VALDEHUESA, respondents. F: The Roas were owners of a parcel of land. For the purpose of registering their title to the property, they filed an application to the Court. Valdehuesa then filed an opposition to the application claiming absolute and exclusive ownership over a portion of the land. The Roas then entered into an agreement with Valdehuesa. Valdehuesa withdrew the opposition he filed and as a result, the Roas succeeded in registering their title to the property including the portion being claimed by Valdehuesa. The Roas partitioned the property. One of the Roas owned the portion being claimed by Valdehuesa. Pursuant to the agreement between the Roas and Valdehuesa, the Roas agreed to replace the land of Valdehusa with another land or to pay an amount of money if Valdehuesa does not agree. However, neither of the undertakings was complied by the Roas. I: Whether a trust relationship was established between the parties? R: The compromise agreement between the parties did not create an express trust nor an implied trust. However, to make recourse to the general principles of the law of trusts, in so far as they are not in conflict with the New Civil Code, Code of Commerce, the Rules of Court and special laws. "A constructive trust is substantially an appropriate remedy against unjust enrichment. It is raised by equity in respect of property, which has been acquired by fraud, or where, although acquired originally without fraud, it is against equity that it should be retained by the person holding it." (76 Am. Jur. 2d, Sec. 222, p. 447). The above principle is not in conflict with the New Civil Code, Code of Commerce, Rules of Court and special laws. And since We are a court of law and of equity, the case at bar must be resolved on the general principles of law on constructive trust which basically rest on equitable considerations in order to satisfy the demands of justice, morality, conscience and fair dealing and thus protect the innocent against fraud. As the respondent court said, "It behooves upon the courts to shield fiduciary relations against every manner of chickanery or detestable design cloaked by legal technicalities." No express trust was created between the parties by reason of the compromise agreement entered into between them. Express trusts are created by the intention of the trustor or one of the parties. While no particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended no direct and positive intent to create a trust relationship between the parties to the compromise agreement under which Pablo Valdehuesa agreed to withdraw his opposition to the application for registration upon the commitment of the Roas to give Valdehuesa another piece of land of equal area or pay its price of P 400.00. It seems clear to Us that the Roas under the compromise agreement did not commit themselves to hold the lot claimed by Pablo Valdehuesa for Pablo Valdehuesa and in Pablo Valdehuesa's name.

No implied trust was also created since Valdehuesa acquired the property not through mistake or fraud but by reason of the voluntary agreement of Valdehuesa to withdraw his opposition to the registration of the land. TRUSTEESHIP OF THE MINORS BENIGNO, ANGELA and ANTONIO, all surnamed PEREZ Y TUASON, ANTONIO M. PEREZ, judicial-guardian-appellant, vs. J. ANTONIO ARANETA F: Angela Tuason died and left a will. A trusteeship proceeding was instituted and certain properties of the estate of the deceased were turned over to Araneta as trustee for the benefit of the grandchildren of the deceased. A provision in the will authorized Araneta to sell the property held in trust and to acquire other property using the proceeds of the sale. Portions of the properties were sold. The father of the minors filed a motion stating that the children are entitled to the profits of the trusteeship pursuant to a provision of the will of the deceased. The father prayed that the trustee is instructed to deliver the profits to the father. The trustee objected to the motion. I: Whether the minors are entitled to the profits of the trusteeship? NO. R: The intent of the deceased was to keep as part of the trust the proceeds of the sale and to not turn the same over to the beneficiary. A provision in the instrument to the effect that the beneficiary shall be entitled to the 'income and profits of' of the trust estate is not ordinarily sufficient to indicate an intention that he should be entitled to receive gains arising from the sale of trust property. is well settled that profits realized in the sale of trust properties are part of the capital held in trust to which the beneficiaries are not entitled as income. ========================================== GERTRUDES F. CUAYCONG, ET AL., plaintiffs-appellants, vs. LUIS D. CUAYCONG, ET AL F: Eduardo has two hacienas and it was alleged that Eduardo made known to his siblings that he is going to divide the hacienda among themselves. Eduardo asked his siblings to pay his wife a sum of money. The siblings failed to pay the wife and so the two haciendas were acquired by the son of Eduardo's sibling, Justo, through fraud and misrepresentation. It was then alleged that Eduardo told Justo to hold in trust what might belong to the other siblings and deliver to them their share when the proper time comes. The children of Lino Cuaycong as well as some of his grand children filed as pauper litigants a suit against the brother of Lino including his son as well as one of the son of Lino a suit for conveyance of inheritance and accounting because when they demanded their shares, the demands had been refused. I: Whether there was an implied or express trust? EXPRESS R: Our Civil Code defines an express trust as one created by the intention of the trustor or of the parties. Express trusts are those created by the direct and positive acts of the parties, by some writing or deed or will or by words evidencing an intention to create a trust. Thus, if the intention to establish a trust is clear, the trust is express. Plaintiffs

alleged an express trust over an immovable, especially since it is alleged that the trustor expressly told the defendants of his intention to establish the trust. PATRICIO SINAON and MARIA, FRANCISCA and JOSE, all surnamed SINAON, vs. ANDRES SOROÑGON, ANASTACIA PARREÑO, SOLEDAD PARREÑO, ANA PARREÑO, MARCELINA, CLARITA, RUFINO and MANUEL, all surnamed ARELLANO, SIMPLICIO SOMBLINGO and BRIGIDA SOMBLINGO and COURT OF APPEALS, respondents. F: A lot was sold to the Sinaon spouses by Canuta. The lot was declared for tax purposes and the Spouses and their children paid for the taxes. The respondent on the other hand alleged that Canuta and Sinaon were trustees of the land and that the siblings of Canuta are entitled to 4/5 of the land. The court ordered the Spouses to convey the 4/5s to the respondents. I: Whether there was express trust? R: The trustors. who created the alleged trust, died a long time ago. An attempt to prove the trust was made by unreliable oral evidence. The title and possession of the Sinaons cannot be defeated by oral evidence which can be easily fabricated and contradicted. There was no express trust in this case. Express trusts concerning real property cannot be proven by parol evidence. An implied trust "cannot be established, contrary to the recitals of a Torrens title, upon vague and inconclusive proof" =============================================== O’Laco vs. Co Cho Chit F: A parcel of land was sold to Olaco. Cho chit learned that Olaco sold the land to the Archbishop of Manila. Cho Chit and Lay Kia sued Olaco to recover the purchase price of the land asserting that Olaco knew she was not the real vendee of the property. Both also contended that Olaco breached the trust when she sold thenlanf to Archbishop of Manila. I: Whether a resulting trust was intended by them in the acquisition of the property. YES R: Implied trusts are those which, without being express, 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. Implied trusts may either be resulting or constructive trusts, both coming into being by operation of law. Resulting trust- based on the equitable doctrine that valuable consideration and not legal title determines equitable title or interest and are presumed always to have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. Constructive trust – created by the construction of equity in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention

against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience to hold. Implied trusts may be established by oral evidence. However, in order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation were proven by an authentic document. It cannot be established upon vague and conclusive proof. ************** O'LACO VS. CO CHO CHIT 220 SCRA 656 (Dungog) FACTS: O Lay Kia bought a piece of land and had it named under her half sister Emilia since she and her husband, as a Chinese national and cannot own property in the Philippines. Later on, Emilia sold the property to the Church without the knowledge of her sister. When O Lay Kia found out, they immediately filed a case for recovery of the purchase price of the land. Emilia asserts that she merely left the certificate of title covering the property with O Lay Kia for safekeeping. The latter insists that the title was in her possession because she and her husband bought the property from their conjugal funds. The trial court declared that there was no trust relation of any sort between the sisters. The Court of Appeals ruled otherwise. ISSUES: 1.Whether or not a resulting trust existed between the sisters? 2. Whether prescription has set in? HELD: 1) Yes. Under Art. 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 for the purpose of having the beneficial interest of the property. The former is the trustee, while the latter is the beneficiary.” 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 or circumstances of the consideration involved in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his legal title for the benefit of another. In this case, the court cited five instances that prove a trust relationship. First, the spouses were in possession of all the pertinent documents of the sale from the beginning until the end of the transaction. Second, there is a previous case of similar facts involving O Lay Kia and her brother on a different parcel of land decided in her favor. Third, the circumstances leading to Emilia acquiring a title to the land was dubius. Fourth, until the sale to the church, Emilia recognized the trust by promising to take care of the transfer to the actual owners as soon as she is able. Lastly, Emilia had no source of income to show how it was possible for her to purchase the land. 2) No. So long as the trustee recognizes the trust, the beneficiary may rely upon the recognition, and ordinarily will not be in fault for omitting to bring an action to enforce his rights. There is no running of the prescriptive period if the trustee expressly recognizes the resulting trust. A resulting trust is repudiated if the following requisites concur: (a) the trustee has performed unequivocal acts of repudiation amounting to an ouster of the cestui qui trust; (b) such positive acts of repudiation have been made

known to the cestui qui trust; and, (c) the evidence thereon is clear and convincing. In this case, prescription did not begin to run until the sale of the Oroquieta property. The spouses instituted the suit 2 moths after acquiring knowledge of the sale for breach of trust. Laches cannot lie against them. In Tale v. Court of Appeals, the Court categorically ruled that an action for reconveyance based on an implied or constructive trust must prescribes in ten (10) years.

SPECIAL SERVICES VS. CENTRO LA PAZ (SEE NOTEBOOK PLEASE) CHIAO LIONG TAN VS. CA F: SEE NOTEBOOK PLEASE FOR THE FACTS OF THE CASE A certificate of registration of a motor vehicle in one’s name indeed creates a strong presumption of ownership. For all practical purposes, the person in whose favor it has been issued is virtually the owner thereof unless proved otherwise. In other words, such presumption is rebuttable by competent proof.

an implied trust was created when the certificate of registration of the motor vehicle was placed in the name of petitioner although the price thereof was not paid by him but by private respondent. The principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust by relying on the registration is one of the wellknown limitations upon a title. A trust, which derives its strength from the confidence one reposes on another especially between brothers, does not lose that character simply because of what appears in a legal document. SABAS H. HOMENA and ILUMINADA JUANEZA, plaintiffs-appellants, vs. DIMAS CASA AND MARIA CASTOR and the REGISTER OF DEEDS FOR THE PROVINCE OF COTABATO, defendants-appellees. F: A complaint was filed against the Casa spouses for alleged unlawful acts of dispossession disturbing plaintiffs’ peaceful, continuous, open, uninterrupted adverse and public possession of the property in question. Plaintiffs also sought to annul the original certificate of title issued in favor of the spouses pursuant to a Homestead Patent on the ground that said patent was obtained by defendant spouses through fraud and misrepresentation. Plaintiffs alleged that on they purchased from the defendants two (2) hectares of the aforementioned parcel of land, it being agreed in the deed of sale that the said portion would be reconveyed to plaintiffs after the five-year prohibitory period, as provided for in the Homestead Patent Law, shall have elapsed, and that defendants failed to abide by said agreement. The defendants moved to dismiss the complaint, based on the following grounds: (1) the complaint is barred by prescription (thirteen years had elapsed from the issuance of the homestead patent before the action was filed) I: Whether the defense of prescription can be set up in an action to recover property held in trust by a person for another?

R: Basically, the plaintiffs’ supposed cause of action rests upon the deed of sale executed by defendants in their favor on June 15, 1962 wherein the latter sold a two-hectare portion of the homestead which they were applying for to the plaintiffs on the understanding that the actual conveyance of the said portion to plaintiffs would be made only after the lapse of the five-year period during which, under the Public Land Act, the homestead owner was prohibited from transferring his rights. The agreement is clearly illegal and void ab initio; it is intended to circumvent and violate the law. As parties to a void contract, the plaintiffs have no rights which they can enforce and the court can not lend itself to its enforcement. Plaintiffs can neither invoke the doctrine of implied trust based on an illegal contract. The issue of prescription or laches becomes irrelevant in a case such as this, where plaintiffs clearly have no cause of action.

[No. L-12149. September 30, 1960] HEIRS OF EMILIO CANDELARIA, ETC., plaintiff and appellant, vs. LUISA ROMERO, ET AL., defendants and appellees. F: Emilio and his brother Lucas each bought a lot on installment basis. Lucas paid the first two installments on his lot but was faced with the inability to pay the remaining balance because of sickness. Lucas then sold his interest to Emilio. Emilio continued to pay the remaining installments of Lucas’ lot until purchase price had been fully satisfied. The subsequent payments made by Emilio were made in the name of Lucas. A transfer certificate was then issued in the name of Lucas and that he merely held the title to said lot in trust for Emilio. This fact was acknowledged not only by Lucas but also his heirs. A complaint was filed by the heirs of Emilio and that the heirs of Lucas who are still in possession of the lot refused to reconvey it despite repeated demands. ****** Lucas' possession of the lot was merely tolerated by Emilio and his heirs; that from the time Emilio bought the lot from his brother, Lucas had been collecting all its rents for his own use as financial aid to him as a brother in view of the fact that he was bedridden without any means of livelihood and with several children to support, although from 1926, when Emilio was confined at the Culion Leper Colony up to his death on February 5, 1936, Lucas had been giving part of the rents to Fortunata Bautista, the second wife of Emilio, in accordance with the latter's wishes I: Whether the plaintiff's cause of action has already prescribed? R: The trust alleged to have been created, in our opinion, is an implied trust. As held, in effect, by this Court in the case of Martinez vs. Graño (42 Phil., 35), where property is taken by a person under an agreement to hold it for, or convey it to another or the grantor, a resulting or implied trust arises in favor of the person for whose benefit the property was intended. This rule, which has been incorporated in the new Civil Code in Art. 1453 thereof, is founded upon equity. The rule is the same in the United States, particularly where, on the faith of the agreement or the understanding, the grantee is enabled to gain an advantage in the purchase of the property or where the consideration or part thereof has been furnished by or for such other. Thus, it has been held that where the grantee takes the property under an agreement to convey another on certain conditions, a trust results for the benefit of such other or his heirs, which equity will enforce according to the agreement. It is also the rule there that an implied trust arises

where a person purchases land with his own money and takes a conveyance thereof in the name of another. In such a case, the property is held on a resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears. The trust which results under such circumstances does not arise from contract or agreement of the parties, but from the facts and circumstances, that is to say, it results because of equity and arises by implication or operation of law.

In the present case, the complaint expressly alleges that "although Lucas Candelaria had no more interest over the lot, the subsequent payments made by Emilio Candelaria until fully paid were made in the name of Lucas Candelaria, with the understanding that the necessary documents of transfer will be made later, the reason that the transaction being brother to brother." From this allegation, it is apparent that Emilio Candelaria who furnished the consideration intended to obtain a beneficial interest in the property in question. Having supplied the purchase money, it may naturally be presumed that he intended the purchase for his own benefit. Indeed, it is evident from the above-quoted allegation in the complaint that the property in question was acquired by Lucas Candelaria under circumstances which show it was conveyed to him on the faith of his intention to hold it for, or convey it to the grantor, the plaintiff's predecessor in interest.

Constructive or implied trusts may, of course, be barred by lapse of time. The rule in such trusts is that laches constitutes a bar to actions to enforce the trust, and repudiation is not required, unless there is a concealment of the facts giving rise to the trust. Continuous recognition of a resulting trust, however, precludes any defense of laches in a suit to declare and enforce the trust. The beneficiary of a resulting trust may, therefore, without prejudice to his right to enforce the trust, prefer the trust to persist and demand no conveyance from the trustee. It being alleged in the complaint that Lucas held the title to the lot in question merely in trust for Emilio and that this fact was acknowledged not only by him but also by his heirs, herein defendants — which allegation is hypothetically admitted — we are not prepared to rule that plaintiff's action is already barred by lapse of time. On the contrary, we think the interest of justice would be better served if she and her alleged co-heirs were to be given an opportunity to be heard and allowed to present proof in support of their claim.