PENALBER v RAMOS store.

As the spouses never denied the existence of the said

amount, the mother contends that they have the burden of proving
FACTS:
where this amount had gone, and their failure to discharge such
Lina Penalber is the mother of Leticia and the mother-in-law of burden, the only conclusion would be that they did use the amount
Quirino Ramos, husband of Leticia. The mother claimed that for to purchase the property– making such property held merely in
many years, she operated a hardware store in a building she owned. trust by the spouses for the mother. The mother also alleges that
However, the lot upon which the building stood is owned by Maria based on the verbal agreement between her and the spouses, a
Mendoza. The mother allowed the spouses to manage the valid and enforceable trust agreement was created, and such was
hardware store. When Mendoza put the property up for sale, the clearly intended by the parties.
mother did not have cash to buy the property. She allegedly entered
The Spouses’Arguments
into a verbal agreement with the spouses wherein the lot would be
bought by the spouses for and in behalf of the mother, and since The spouses contended that they were given not only the
the spouses have the better credit standing, they would be made to management, but also the full ownership of the hardware store by
appear as the buyers so that the title to be issued in their names the mother, on the condition that the stocks and merchandise of
could be used by the spouses to secure a loan with which to build a the store will be inventoried, and out of the proceeds of the sales,
bigger building and expand the business of the mother. Pursuant to the spouses shall pay the mother’s outstanding liabilities. According
agreement, the spouses Ramos allegedly entered into a contract of to the spouses, they bought the property from Mendoza out of their
sale with Mendoza. Later, the spouses returned the management of own funds. The spouses also said that given that the alleged trust
the hardware. On the bases of receipts and disbursements, the concerns an immovable property, it is unenforceable since the
mother asserted that the land was fully paid out of the funds of the agreement was made verbally and no parol evidence may be
store and if the spouses had given any amount for the purchase admitted to prove the existence of an express trust concerning an
price of the said land, they had already sufficiently reimbursed immovable property or any interest therein.
themselves from the funds of the store. The mother demanded
ISSUE:
from the spouses the reconveyance of the title to the land but the
spouses refused. (1) whether the existence of a trust agreement between her and
respondent spouses Ramos was clearly established. (2) whether
The Mother’s Arguments:
such trust agreement was valid and enforceable.
The spouses were, in reality, mere trustees of the land, thus, they
HELD: (1) No. (2) No. RATIO:
were under a moral and legal obligation to reconvey title over the
said property to her. She calls attention to the fact that the spouses A trust is defined as the right, enforceable solely in equity, to the
could not account for the P116,946.15 difference in the beginning beneficial enjoyment of property, the legal title to which is vested in
inventory and the second inventory of the stocks of the hardware another, but the word "trust" is frequently employed to indicate

1
duties, relations, and responsibilities which are not strictly technical to pay the other obligations of the mother is not sufficient to
trusts. A person who establishes a trust is called the trustor; one in discharge the mother’s burden to prove the existence of the alleged
whom confidence is reposed is known as the trustee; and the express trust agreement.
person for whose benefit the trust has been created is referred to
DBP vs. COA
as the beneficiary. There is a fiduciary relation between the trustee
and the beneficiary (cestui que trust) as regards certain property, FACTS:
real, personal, money or choses in action. Trusts are either express
or implied. Express trusts are created by the intention of the trustor DBP adopted Resolution No. 794 creating the DBP Gratuity Plan and
or of the parties. Implied trusts come into being by operation of law. authorizing the setting up of a retirement fund to cover the benefits
Express trusts are those which are created by the direct and positive due to DBP retiring officials and employees under Commonwealth
acts of the parties, by some writing or deed, or will, or by words Act No. 186, as amended. A Trust Indenture was entered into by
either expressly or impliedly evincing an intention to create a trust. and between the DBP and the Board of Trustees of the Gratuity Plan
No particular words are required for the creation of an express Fund, vesting in the latter the control and administration of the
trust, it being sufficient that a trust is clearly intended. However, in Fund. The Bank established a Special Loan Program availed thru the
accordance with Article 1443 of the Civil Code, when an express facilities of the DBP Provident Fund and funded by placements from
trust concerns an immovable property or any interest therein, the the Gratuity Plan Fund as “part of the benefit program of the Bank
same may not be proved by parol or oral evidence. From the to provide financial assistance to qualified members to enhance and
allegations of the the mother, the alleged verbal trust agreement is protect the value of their gratuity benefits”.
in the nature of an express trust as the mother explicitly agreed to Under it, a prospective retiree is allowed the option to utilize in the
allow the spouses to acquire title to the property in their names, but form of a loan a portion of his “outstanding equity” in the gratuity
to hold the same property for the mother’s benefit. The mother’s fund and to invest it in a profitable investment or undertaking. The
allegations as to the existence of an express trust agreement with earnings of the investment shall then be applied to pay for the
the spouses, supported only by her testimonies, do not hold water. interest due on the gratuity loan. The excess or balance of the
The resulting difference of P116,946.15 in the beginning inventory interest earnings shall then be distributed to the investor-members.
of the stocks of the hardware store (before management was The payments were disallowed by the Auditor under Audit
transferred to the spouses) and the second inventory (after Observation Memorandum No. 93-2 on the ground that the
management was returned to the mother), by itself, is not distribution of income of the Gratuity Plan Fund (GPF) to future
conclusive proof that the said amount was used to pay the purchase retirees of DBP is irregular and constituted the use of public funds
price of the property, such as would make it the property of the for private purposes which is specifically proscribed under Section 4
mother held merely in trust by respondent spouses Ramos. The fact of P.D. 1445. Apart from requiring the recipients to refund their
that the spouses never denied the P116,946.15 difference, or that dividends, the Auditor recommended that the DBP record in its
they failed to present proof that they indeed used the said amount books as miscellaneous income the income of the Gratuity Plan

2
Fund (“Fund”). The Auditor reasoned that “the Fund is still owned retirement, pension or other benefits to its employees. It is a
by the Bank, the Board of Trustees is a mere administrator of the separate taxable entity.
Fund in the same way that the Trust Services Department where the
Employees’ trusts are also exempted from certain taxes under
fund was invested was a mere investor and neither can the
Section 60 (B) of the National Internal Revenue Code, as amended.
employees, who have still an inchoate interest [i]n the Fund be
established for the exclusive benefit of the employees. Resolution
considered as rightful owner of the Fund. Former DBP Chairman
No. 794 shows that DBP intended to establish a trust fund to cover
Alfredo C. Antonio requested then COA Chairman Celso D. Gangan
the retirement benefits of certain employees under Republic Act
to reconsider AOM No. 93-2. It was denied by the COA. Hence, this
No. 1616. The principal and income of the Fund would be separate
petition.
and distinct from the funds of DBP. In a trust, one person has an
ISSUE: equitable ownership in the property while another person owns the
legal title to such property, the equitable ownership of the former
Whether or not the trustees of the Fund are merely administrators.
entitling him to the performance of certain duties and the exercise
Whether or not the fund is the subject of a trust.
of certain powers by the latter. A person who establishes a trust is
HELD: the trustor. One in whom confidence is reposed as regards property
for the benefit of another is the trustee. The person for whose
The DBP counters that the Fund is the subject of a trust, and that benefit the trust is created is the beneficiary. In the present case,
the Agreement transferred legal title over the Fund to the trustees. DBP, as the trustor, vested in the trustees of the Fund legal title
The income of the Fund does not accrue to DBP. Thus, such income over the Fund as well as control over the investment of the money
should not be recorded in DBP’s books of account. A trust is a and assets of the Fund. The powers and duties granted to the
“fiduciary relationship with respect to property which involves the trustees of the Fund under the Agreement were plainly more than
existence of equitable duties imposed upon the holder of the title to just administrative Clearly, the trustees received and collected any
the property to deal with it for the benefit of another.” A trust is income and profit derived from the Fund, and they maintained
either express or implied. Express trusts are those which the direct separate books of account for this purpose. The principal and
and positive acts of the parties create, by some writing or deed, or income of the Fund will not revert to DBP even if the trust is
will, or by words evincing an intention to create a trust. subsequently modified or terminated. The Agreement states that
In the present case, the DBP Board of Governors’ (now Board of the principal and income must be used to satisfy all of the liabilities
Directors) Resolution No. 794 and the Agreement executed by to the beneficiary officials and employees under the Gratuity Plan
former DBP Chairman Rafael Sison and the trustees of the Plan Also as COA correctly observed, the right of the employees to claim
created an express trust, specifically, an employees’ trust. An their gratuities from the Fund is still inchoate. RA 1616, does not
employees’ trust is a trust maintained by an employer to provide allow employees to receive their gratuities until they retire.

3
However, this does not invalidate the trust created by DBP or the HELD: No Trust.
concomitant transfer of legal title to the trustees.
RATIO

Procedural issue: Canezo contends that the court should not have
granted the motion for extension of time to file. The court said, the
grant or denial of a motion fro extension of time is addressed to the
CANEZO v ROJAS
sound discretion of the court and there was a reasonable basis for
FACTS the said extension. Second issue: W/N there was a trust. Trust is a
legal relationship between one person having an equitable
Soledad Canezo filed a complaint for the recovery of real property ownership of property and another person owning the legal title to
plus damages against Conception Rojas (2nd wife of her father). such property, the equitable ownership of the former entitling him
Canezo alleged that she bought the said land from Crisogono to the performance of certain duties and exercise of certain powers
Limpiado although the transaction was not in writing. Then she by the latter. Trusts are either express or implied. Express trust are
entrusted it to her father when she and her husband had to go those which are created by the direct and positive acts of the
mindanao. The father took possession of the said land and then one parties by some writing or deed, or will, or by words evidencing and
day canezo found out that Rojas was in possession of the said land intention to create a trust. Implied trusts are those which, without
and the tax declarations were under his father’s name. being expressed, are deducible from the nature of the transaction
Rojas contends that her husband (father of canezo) bought the land as matters of intent or, independently, of the particular intention of
from the same seller. The father took possession and cultivated it. the parties, as being superinduced ont eh transaction by operation
Canezo has knowledge of it because it was included in the estate of of law basically by reason of equity. It can be either resulting trust
the father (father died) and canezo did not protest meaning she or constructive trust. Resulting trust is presumed always to have
abandoned her right assuming canezo’s contentions were true. been contemplated. The intention as to which can be found in the
Canezo is barred by laches and estoppel. MTC was in favor of nature of their transaction altough not expressed in a deed or
canezo. Rojas appealed to RTC, decision was reversed because instrument. Based on the equitable doctrine that it is the more
action has not yet prescribed because it is a trust. Canezo filed a valuable consideration than the legal title that determines the
motion for reconsideration, RTC reversed again the decision (in equitable interest in property. Trustworthy evidence is required in
favor of canezo). Rojas filed a motion to reconsider the decision but here. Express trust and resulting trust– trustee cannot acquire by
denied by RTC. Rojas then filed a petition for review with CA– prescription a property entrusted to him unless he repudiates a
reversed the decision of RTC (ground is laches and prescription). trust. This is because, in an express trust, the possession of a trustee
Hence, this petition. is not adverse, therefore, he does not acquire by prescription the
property. The burden of proving the existence of trust is on the
ISSUE: WON there was a trust. party asserting it. In this case, canezo failed to provide clear and

4
satisfactorily proof of its existence. Elements: (1) trustor who In addition, canezo is estopped because of her failure to protest its
executes the instrument creating the trust; (2) a trustee who is the inclusion in the estate of the father. She was also barred by laches
person expressly designated to carry out the trust; (3) the trust res because when she discovered it, it took her 17 years to file an action
consisting of duly identified and definite real property; and (4) about it. Finally, the complaint must be dismissed because the
beneficiaries whose identity must be clear. indispensable parties (other heirs) were not included. It is to recover
ownership thus it was in the nature of an action for reconveyance,
Canezo’s only evidence was her self -serving testimony of the
therefore, owners of property over which reconveyance is asserted
petitioner. Express trust may not be established by parol evidence.
are indispensable parties.
One exception–when there was a clear intention of such. However,
it cannot be inferred from canezo’s testimoney and the attendant HEIRS OF TRANQUILINO LABISTE v HEIRS OF JOSE LABISTE
facts and circumstances.
DOCTRINE
What they agreed is to give canezo a share of the copra in land.
If a trust relationship has been created between the parties whether
What distinguishes a trust from other relations is the separation of expressly or impliedly, prescription does not run until the said trust
legal title and equitable ownership of the property. Legal title is is repudiated.
vested in the fiduciary and equitable ownership to cestui que trust
FACTS
and this is not true in the case. In addition, the father’s
uninterrupted possession for 49 years coupled with the acts of The case involved a parcel of Friar Land with an area of 13,308
ownership, such payment of real estate taxes, ripened ownership. square meters known at Cebu City which was purchased from the
Tax declarations are not conclusive evidence but if coupled with Bureau of Lands way back on 1919 by Emilio in his own behalf and
actual possession, then it will have great weight. On the other hand, on behalf of his brothers and sisters who were the heirs of Jose.
Constructive trust is one created not by any word, either expressly (Collectively known as Heirs of Jose) The money that was used to
or impliedly, evincing a direct intention to create trust, but one purchase the land came from both Emilio and their Uncle Lino so
which arises in order to satisfy the demands of justice. There is after full payment of the purchase price but prior to the issuance of
neither a promise nor any fiduciary relation to speak of, no one the deed of conveyance by the Bureau of Lands, Emilio executed an
accepts any trust nor tends holding the property for a beneficiary. In Affidavit in Spanish dated on 1923 affirming that he, as one of the
here, after the death of the father, rojas has no right to retain heirs of Jose and his Uncle Lino then co-owned the lot. Thereafter or
possession of the property. At such point, a constructive trust would on 1924 the Bureau of Lands executed the Deed of Conveyance in
be created over the property by operation of law. favor of Emilio and his siblings, or the heirs of Jose by virtue of
which a TCT was issued by the Register of Deeds. On 1928, the lot
Constructive trust may be supervened by prescription if the trustee
was subdivided by Deputy Land Surveyor, Engineer Bunag into two
does not repudiate the relationship.
(2) equal parts with an area of 6,664 square meters for Lino and an

5
area of 6,664 square meters for Emilio and the other heirs of Jose. Trust is the right to the beneficial enjoyment of property, the legal
This was approved by the Director of Lands on 1928. On 1939, the title to which is vested in another. It may either be express or
heirs of Lino purchased the share of the lot of the heirs of Jose as implied. An express trust is created by direct and positive acts of the
evidenced by the Calig-onan sa Panagpalit executed by the parties parties, by some writing or deed or will. No particular words are
in Visayan dialect. So the heirs of Lino immediately took possession required for the creation of an express trust it being sufficient that a
of the entire 13,308 sqm lot. trust is clearly intended (Article 144, Civil Code). An implied trust
comes into being by operation of law. The Affidavit of Emilio which
When World War II broke out however, Lino’s heirs fled the city.
is genuine and authentic beyond cavil is in the nature of an express
When they came back after the war, they found their homes and
trust. In said affidavit, Emilio confirmed that Lot 1054 bought in his
possessions and the records in the government offices burned and
name was co-owned by him as one of the heirs of Jose, and his
destroyed with squatters occupying their entire property.
uncle Lino. And by agreement, each of them has been in possession
Lino’s heirs subsequently learned that one of the heirs of Jose filed a of half of the property as corroborated by the subdivision plan
petition for reconstitution of title over the Lot on September 17, prepared by Engineer Bunag and approved by the Bureau of Lands.
1993. So in October 1993 they opposed the said petition but later As such prescription and laches will run only if it is shown that: (a)
on withdrew the same on the basis of a compromise agreement the trustee has performed unequivocal acts of repudiation
they entered with the heirs of Jose to expedite the reconstitution of amounting to an ouster of the beneficiary; (b) such positive acts of
title. So on December 14, 1994, the Register of Deed issued the repudiation have been made known to the beneficiary, and (c) the
reconstituted Title in the names of the heirs of Jose. The heirs of evidence thereon is clear and conclusive.
Jose however did not honor the compromise agreement. So on
Jose’s heirs cannot rely on the fact that the Torrens title was issued
January 13, 1995, the heirs of Lino filed a complaint for annulment
in their names. Trustees who obtain a Torrens title over a property
of title, re-conveyance of property with damages. Jose’s heirs
held in trust by them for another cannot repudiate the trust by
however said that the action of Lino’s heirs had long prescribed or
relying on the registration. The only act that can be construed as
barred by laches.
repudiation was when one of Jose’s heirs filed the petition for
ISSUE reconstitution in October 1993. And since Lino’s heirs filed their
complaint in January 1995 their cause of action has not yet
a) WON Lino’s heirs had long prescribed or barred by laches. prescribed.
b) How Express Trusts are created.

HELD / RATIO

a) No. The rules on prescription and the principle of laches cannot

be applied here because of the existence of a trust relationship. b)