AGENCY CASES

1. O!"en$ A"! Se!v"ces vs CA 1. 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 e amine the records of the business transacted by said company since !anuary ", "#"$.%espondent corporation or any of its officials has refused to allo& the petitioner himself to e amine anything relating to the affairs of the company, and the petitioner prays for an order commanding respondents to place records of all business transactions of the company, during a specific period, at the disposal of the plaintiff or his duly authorized agent or attorney. Petitioner desires to e ercise said right through agent or attorney. Petition is filed originally in the 'upreme Court under authority of 'ection ("( of Code of Ci)il Procedure, &hich gi)es 'C concurrent *urisdiction &ith then Court of +irst ,nstance in cases &here any corporation or person unla&fully e cludes the plaintiff from use and en*oyment and some right he is entitled. ISSUE: Whether the right &hich the la& concedes to a stockholder to inspect the records can be e ercised by a proper agent or attorney of the stockholder as &ell as by stockholder in person HELD: -es. %ight of inspection of records can be e ercised by proper agent or attorney of the stockholder as &ell as by stockholder in person. .he right of inspection / e amination into corporate affairs gi)en to a stockholder in section (" of the Corporation 0a& &hich states1 2.he records of all business transactions of the corporation and the minutes of any meeting shall be open to the inspection of any director, member, or stockholder of the corporation at reasonable hour3 can be e e!c"se# e"$%e! b& %"'se() *! b& an& #+(& a+$%*!",e# !e-!esen$a$"ve *! a$$*!ne& "n )ac$. an# e"$%e! /"$% *! /"$%*+$ $%e a$$en#ance *) $%e s$*c0%*(#e!. .his is in conformity &ith the general rule that &hat a man may do in person he may do through another FACTS: ". 4n "( !anuary "#55, 6merican 6irlines, ,nc. an air carrier offering passenger and air cargo transportation in the Philippines, and 4rient 6ir 'er)ices and 7otel %epresentati)es , entered into a General 'ales 6gency 6greement &hereby the former authorized the latter to act as its e clusi)e general sales agent &ithin the Philippines for the sale of air passenger transportation. 8. 4n "" May "#$", alleging that 4rient 6ir had reneged on its obligations under the 6greement by failing to promptly remit the net proceeds of sales for the months of !anuary to March "#$" in the amount of 9':8(;,;<<.;<, 6merican 6ir by itself undertook the collection of the proceeds of tickets sold originally by 4rient 6ir and terminated forth&ith the 6greement. =. +our (;) days later, or on "( May "#$", 6merican 6ir instituted suit against 4rient 6ir &ith the C+, of Manila, >ranch 8;, for 6ccounting &ith Preliminary 6ttachment or Garnishment, Mandatory ,n*unction and %estraining 4rder a)erring the aforesaid basis for the termination of the 6greement as &ell as therein defendant?s pre)ious record of failures @to promptly settle past outstanding refunds of &hich there &ere a)ailable funds in the possession of the defendant, . . . to the damage and pre*udice of plaintiff.@ ;. De)en#an$ O!"en$ A"!: Adenied the material allegations of the complaint &ith respect to plaintiffBs entitlement to alleged unremitted amounts, contending that after application thereof to the commissions due it under the 6greement, plaintiff in fact still o&ed 4rient 6ir a balance in unpaid o)erriding commissions A +urther, the defendant contended that the actions taken by 6merican 6ir in the course of terminating the 6greement as &ell as the termination itself &ere untenable, 4rient 6ir claiming that 6merican 6ir?s precipitous conduct had occasioned pre*udice to its business interests. (. .C ruled in fa)or of 4%,CD. 6,% Adismissing the complaint and holding the termination made by the plaintiff 6merican 6irlines as affecting the G'6 agreement illegal and improper and Aorder the plaintiff 6merican 6irlines to reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance &ith said G'6 agreementE Aplaintiff is ordered to pay defendant the balance of the o)erriding commission on total flo&n re)enue co)ering the period from March"F, "#55 to Gecember =", "#$< in the amount of 9':$;,$8".=" plus the additional amount of 9':$,<<<.<< by &ay of proper =H

o)erriding commission per month commencing from !anuary ", "#$" until such reinstatement or said amounts in its Philippine peso eIui)alent legally pre)ailing at the time of payment plus legal interest to commence from the filing of the counterclaim up to the time of payment. F. ,ntermediate 6ppellate Court (no& Court of 6ppeals) in a decision promulgated on 85 !anuary "#$F, affirmed the findings of the court a Iuo on their material points but &ith some modifications &ith respect to the monetary a&ards granted. 5. >oth appealed the decision of the C6 ISSUE: W4D 6merican 6ir can be ordered by the court to @reinstate defendant as its general sales agent for passenger transportation in the Philippines in accordance &ith said G'6 6greement. HELD. D4 A>y affirming this ruling of the trial court, respondent appellate court, in effect, compels 6merican 6ir to e tend its personality to 4rient 6ir. A'uch &ould be )iolati)e of the principles and essence of agency, defined by la& as a contract &hereby @a person binds himself to render some ser)ice or to do something in representation or on behalf of another, 2ITH THE CONSENT O3 AUTHO3ITY OF THE LATTE3 . A,n an agentAprincipal relationship, the personality of the principal is e tended through the facility of the agent. ,n so doing, the agent, by legal fiction, becomes the principal, authorized to perform all acts &hich the latter &ould ha)e him do. 'uch a relationship can only be effected &ith the consent of the principal, &hich must not, in any &ay, be compelled by la& or by any court. A.he 6greement itself bet&een the parties states that @either party may terminate the 6greement &ithout cause by gi)ing the other =<days? notice by letter, telegram or cable.@

4. 3ALLOS v FELI5 GO CHAN 6 3EALTY COP3. Fac$s: JConcepcion and Gerundia both surnamed %allos &ere sisters and registered coAo&ners of a parcel of land. J.hey e ecuted a special po&er of attorney in fa)or of their brother, 'imeon %allos,authorizing him to sell such land for and in their behalf. J6fter Concepcion died, 'imeon %allos sold the undi)ided shares of his sisters Concepcion and Gerundia to +eli Go Chan K 'ons %ealty Corporation and ne& .C.s &ere issued to the latter. JPetitioner %amon %allos, administrator of the ,ntestate Cstate of Concepcion filed a complaint praying (") that the sale of the undi)ided share of the deceased Concepcion %allos be unenforceable, and said share be recon)eyed to her estateE (8) that the Certificate of ?title issued in the name of +eli Go Chan K 'ons %ealty Corporation be cancelled and another title be issued in the names of the corporation and the @,ntestate estate of Concepcion %allos@ in eIual undi)ided and (=) that plaintiff be indemnified by &ay of attorney?s fees and payment of costs of suit. CFI: ,n fa)or of plaintiff, ordering the sale &as null and )oid insofar as the oneAhalf proA indi)iso share of Concepcion %allos and ordered the issuance of ne& .C. in proportion of L share each proAindi)iso. J!uan .. >orromeo, administrator of the Cstate of 'imeon %allos &as ordered to pay defendant the price of the L share of the land (P(,=;=.;() plus attorneyBs feesM>orromeo filed a third party complaint against !osefina %allos, special administratri of the Cstate of GerundiaN JGismissed &ithout pre*udice to filing either a complaint against the regular administrator of the Cstate of Gerundia %allos or a claim in the ,ntestateACstate of Cerundia %allos, co)ering the same sub*ectAmatter On a--ea( $* $%e CA:C+, Gecision re)ersed, upheld the sale of ConcepcionBs share. M3: denied. Iss+es: ". W4D the sale &as )alid although it &as e ecuted after the death of the principal, Concepcion. 8. W4D the sale fell &ithin the e ception to the general rule that death e tinguishes the authority of the agent. =. W4D petitioner must suffer the conseIuence for failing to annotate a notice of death in the title e)en there &as a good faith on the part of respondent corporation. He(#: .he essential elements of agency are1 (") there is consent, e press or implied of the parties to establish the relationshipE (8) the ob*ect is the e ecution of a *uridical act in relation to a

third personE (=) the agents acts as a representati)e and not for himself, and (;) the agent acts &ithin the scope of his authority. Paragraph " of 6rticle ";<= pro)ides that1 6rticle ";<=. .he follo&ing contracts are unenforceable, unless they are *ustified1 (") .hose entered into in the name of another person by one &ho hi A been gi)en no authority or legal representation or &ho has acted beyond his po&ersE .he general rule for e tinguishment of agency is pro)ided in Par. = of 6rticle "#"# &hich states that1 6rticle "#"#. Agency is extinguished. =. By the death, ci)il interdiction, insanity or insol)ency of the principal or of the agent.

=. Do, the Ci)il Code does not impost a duty on the heirs of the principal to notify the agent of the eath of the principal. ,f re)ocation &as by the act of the principal1 a general po&er &hich does not specify the persons to &hom represents? on should be made, it is the general opinion that all acts, e ecuted &ith third persons &ho contracted in good faith, &ithout kno&ledge of the re)ocation, are )alid. >ut, if re)ocation &as due to death of the principal1 e tinguishment, by operation of la&, is instantaneous &ithout the need for notification to the parties concerned.

>ut the e ception to the general rule are pro)ided in "#=< and "#=". 6%.. "#=<. .he agency shall remain in full force and effect e)en 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 &ho has accepted the stipulation in his fa)or. 6%.. "#=". 6nything done by the agent, &ithout kno&ledge of the death of the principal or of any other cause &hich e tinguishes the agency, is )alid and shall be fully effecti)e &ith respect to third persons &ho may ha)e contracted &ith him in good faith. ". Do, the sale &as )oid. Do one may contract in the name of another &ithout being authorized by the latter, or unless he has by la& a right to represent him. 6 contract entered into in the name of another by one &ho has no authority or the legal representation or &ho has acted beyond his po&ers, shall be unenforceable, unless it is ratified, e pressly or impliedly, by the person on &hose behalf it has been e ecuted, before it is re)oked by the other contracting party. 8. Do, the sale did not fall under the e ception to the general rule that death e tinguishes the authority of the agent. 6rticle "#=< is not applicable because the special po&er of attorney e ecuted in fa)or of 'imeon %allos &as not coupled &ith an interest. We refer to 6rticle "#=", an act done by the agent after the death of his principal is )alid and effecti)e only under t&o conditions1 (") 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. 'imeon %allos, kne& 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 .he la& e pressly reIuires for its application lack of kno&ledge on the part of the agent of the death of his principalE it is not enough that the third person acted in good faith.

created. 4n appeal, it re)ersed %.CsB decision and ordered 9rban >ank to pay PeOa reasonable compensation for his ser)ice. PeOa appealed on certiorari. ;. G.3. N*. 147819 Oc$*be! 19. 1011 U3:AN :AN;. INC. Petitioner, )s. MAGDALENO M. PE<A. %espondent. FACTS: Magdaleno PeOa, a la&yer, &as formerly a stockholder, director and corporate secretary of ,sabel 'ugar Company, ,nc. (,'C,). ,'C, o&ned a parcel of land and leased it. >efore the e piration of the lease contract, ,'C, informed the lessee and his tenants that the lease &ould no longer be rene&ed because the land &ill be sold. ,'C, and 9rban >ank e ecuted a Contract to 'ell. ,'C, then instructed PeOa, to act as its agent and handle the e)iction of the tenants. .he lessee left, but the unauthorized subAtenants refused to lea)e. PeOa had the gates of the property closed and he also posted security guardsPser)ices for &hich he ad)anced payments. Gespite this, the subAtenants &ould force open the gates, and proceed to carry on &ith their businesses. PeOa then filed a complaint &ith the %.C, &hich issued a .%4. 6t the time the complaint &as filed, a ne& title to the land had already been issued in the name of 9rban >ank. When information reached the *udge that the land had already been transferred by ,'C, to 9rban >ank, the trial court recalled the .%4 and issued a breakAopen order for the property. PeOa immediately contacted ,'C,Bs president and told him that he &ould be recalling the security guards he had posted to secure the property. .he ,'C, President asked him to suspend the &ithdra&al of the posted guards, so that ,'C, could get in touch first &ith 9rban >ank. PeOa also called 9rban >ankBs President. .he President allegedly assured him that the bank &as going to retain his ser)ices, and that the he should not gi)e up possession of the sub*ect land. .hereafter, PeOa, in representation of 9rban >ank, filed a separate complaint &ith the %.CAMakati City, to en*oin the tenants from entering property. .he %.CAMakati City issued a .%4. While the 8 nd complaint &as pending, PeOa made efforts to settle the issue of possession &ith the subAtenants. .he subA tenants e)entually agreed to stay off the property for a total consideration of PhP".(M. PeOa ad)anced the payment for the full and final settlement of their claims against 9rban >ank. PeOa formally informed 9rban >ank that it could already take possession of the property. .here &as ho&e)er no mention of the compensation due and o&ed to him for the ser)ices he had rendered. .he bank subseIuently took actual possession of the property and installed its o&n guards at the premises. PeOa filed a complaint &ith %.C demanding from 9rban >ank the payment of the "<H compensation and attorneyBs fees allegedly promised to him by 9rban >ankBs President. 9rban >ank argued that it &as ,'C,, the original o&ners of the property, that had engaged the ser)ices of PeOa in securing the premisesE and, conseIuently, they could not be held liable for the e penses PeOa had incurred. .he %.C ruled in fa)or of PeOa because if found there has a contract of agency ISSUE: W/D Pena is entitled to payment for the ser)ices he rendered as agent of 9rban >ank and W/D there e ist a contract of agency. HELD: -es. 3ATIO: PeOa should be paid for ser)ices rendered under the agency relationship that e isted bet&een him and 9rban >ank based on the ci)il la& principle against un*ust enrichment, and not on the basis of the purported oral contract. ,n a contract of agency, agents bind themsel)es to render some ser)ice or to do something in representation or on behalf of the principal, &ith the consent or authority of the latter. .he essential elements of agency are the follo&ing1 (a) the relationship is established by the partiesB consent, e press or impliedE (b) the ob*ect is the e ecution of a *uridical act in relation to a third personE (c) agents act as representati)es and not for themsel)esE and (d) agents act &ithin 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. .he la& makes no presumption of agencyE pro)ing its e istence, nature and e tent is incumbent upon the person alleging it. .he Court concludes that 9rban >ank constituted 6tty. PeOa as its agent to secure possession of the property. .his conclusion, ho&e)er, is not determinati)e of the basis of the amount of payment that must be made to him by the bank. .he conte t in &hich the agency &as created lays the basis for the amount of compensation 6tty. PeOa is entitled to. 6gency is presumed to be for compensation. .here is no e)idence that 9rban >ank agreed to pay PeOa a specific amount or percentage of amount for his ser)ices, so the court applies the principle against un*ust enrichment and on the basis of !uantum meruit. 0a&yering is not a businessE it is a profession in &hich duty to public ser)ice, not money, is the primary consideration. .he principle of !uantum meruit applies if la&yers are employed &ithout a price agreed upon for their ser)ices, in &hich case they &ould be entitled to recei)e &hat they merit for their ser)ices, or as much as they ha)e earned.

(. DOMINION INSU3ANCE =. CA DOCT3INE: >N* nee# $* /!"$e? When a special po&er of attorney is reIuired for the agent to do a certain act, the agent, in the performance of such act, must comply &ith the specifications embodied in the special po&er of attorney gi)ing him authority to do such. +or e ample, here, a special po&er of attorney &as needed for Gue)arra to settle the claims of GominionBs clients. 6nd for this purpose, there &as a memorandum. 7o&e)er, the memorandum stated that Gue)arra &as to settle the claims using the money in a re)ol)ing fund. Gue)arra did not comply &ith this, so the e penses Gue)arra incurred in the settlement of the claims of the insured may not be reimbursed from Gominion, at least under the la& of agency. FACTS: %odolfo Gue)arra instituted a ci)il case for the reco)ery of a sum of money against Gominion ,nsurance. 7e sought to reco)er P"(F,;5=.#<, &hich he claimed to ha)e ad)anced in his capacity as manager of Gominion to satisfy claims filed by GominionBs clients. Gominion denied any liability to Gue)arra and asserted a counterclaim for premiums allegedly unremitted by the latter. .he preAtrial conference ne)er pushed through despite being scheduled and postponed nine times o)er the course of si months. +inally, the case &as called again for preAtrial and Gominion and counsel failed to sho& up. .he trial court declared Gominion in default and denied any reconsideration. 4n the merits of the case, the %.C ruled that Gominion &as to pay Gue)arra the P"(F,;5=.#< claimed as the total amount ad)anced by the latter in the payment of the claims of GominionBs clients. .he C6 affirmed. ISSUES: 1. 2ON G+eva!!a ac$e# /"$%"n %"s a+$%*!"$& as a@en$ )*! D*'"n"*n 1. 2ON G+eva!!a "s en$"$(e# $* !e"'b+!se'en$ *) a'*+n$s HELD1 1. NO. 6 perusal of the 2'pecial Po&er of 6ttorney3 &ould sho& that Gominion and Gue)arra intended to enter into a principalAagent relationship. Gespite the &ord 2special,3 the contents of the document re)eal that &hat &as constituted &as a general agency. .he agency comprises all the business of the principal, but, couched in general terms, is limited only to acts of administration. 6 general po&er permits the agent to do all acts for &hich the la& does not reIuire a special po&er. 6rt. "$5$ enumerates the instances &hen a special po&er of attorney is reIuired, including (") to make such payments as are not usually considered as acts of administrationE ("() any other act of strict dominion. .he payment of claims is not an act of administration. .he settlement of claims is not included

among the acts enumerated in the 'pecial Po&er of 6ttorney, neither is it of a character similar to the acts enumerated therein. 6 special po&er of attorney &ould ha)e been reIuired before Gue)arra could settle the insurance claims of the insured. Gue)arraBs authority to settle claims is embodied in the Memorandum of Management 6greement &hich enumerated the scope of Gue)arra Bs duties and responsibilities. 7o&e)er, the Memorandum sho&ed the instruction of Gominion that payment of claims shall come from a re)ol)ing fund. 7a)ing de)iated from the instructions of the principal, the e penses that Gue)arra incurred in the settlement of the claims of the insured may not be reimbursed from Gominion. 8. YES. 7o&e)er, &hile the la& on agency prohibits Gue)arra from obtaining reimbursement, his right to reco)ery may still be *ustified under the general la& on 4bligations and Contracts, particularly, 6rt. "8=F , n this case, &hen the risk insured against occurred, GominionBs liability as insurer arose. .his obligation &as e tinguished &hen Gue)arra paid such claims. .hus, to the e tent that the obligation of Gominion had been e tinguished. respondent Gue)arra may demand for reimbursement from his principal.

A. G.3. N*. 19944A Ban+a!& 10. 1011 LOADMASTE3S CUSTOMS SE3=ICES. INC.. Petitioner, )s. GLODEL :3O;E3AGE CO3PO3ATION an# 36: INSU3ANCE CO3PO3ATION. %espondents. THE FACTS1 %K> ,nsurance issued insurance policy in fa)or of Columbia for the shipment of "=8 bundles of electric copper cathodes against all risks. .he cargoes &ere shipped and arri)ed in Manila. Columbia engaged the ser)ices of Glodel for the release and &ithdra&al of the cargoes from the pier and the subseIuent deli)ery to its &arehouses/plants. Glodel, in turn, engaged the ser)ices of 0oadmasters for the use of its deli)ery trucks to transport the cargoes to ColumbiaBs &arehouses/plants. .he goods &ere loaded on board t&el)e ("8) trucks o&ned by 0oadmasters. 'i (F) truckloads &ere to be deli)ered to >alagtas, >ulacan, &hile the other si (F) truckloads &ere destined for 0a&ang >ato, Qalenzuela City. .he cargoes in si truckloads for 0a&ang >ato &ere duly deli)ered in ColumbiaBs &arehouses there. 4f the si (F) trucks en route to >alagtas, >ulacan, ho&e)er, only fi)e (() reached the destination. 4ne (") truck, failed to deli)er its cargo. >ecause of this incident, Columbia filed &ith %K> ,nsurance a claim for insurance indemnity. 6fter the reIuisite in)estigation and ad*ustment, %K> ,nsurance paid Columbia the amount of insurance indemnity. %K> ,nsurance, thereafter, filed a complaint for damages against both 0oadmasters and Glodel before the Manila "#$. ,t sought reimbursement of the amount it had paid to Columbia for the loss of the sub*ect cargo. .he %.C rendered a decision in fa)or of %K> ,nsurance and dismissed 0oadmasters counterclaim. >oth %K> ,nsurance and Glodel appealed the %.C decision to the C6. .he C6 rendered that 0oadmasters is like&ise held liable to appellant Glodel for the insurance indemnity appellant Glodel has been held liable to appellant %K> ,nsurance Corporation considering that appellee is an agent of appellant Glodel. 7ence, 0oadmasters filed petition for re)ie& on certiorari to the 'C. ISSUES: 2ON L*a#'as$e!s be (e@a((& c*ns"#e!e# as an A@en$ *) !es-*n#en$ G(*#e(C He(#1 Do. 6rticle "$F$ of the Ci)il Code pro)ides1 @>y the contract of agency a person binds himself to render some ser)ice or to do something in representation or on behalf of another, &ith the consent or authority of the latter.@ .he elements of a contract of agency are1 (") consent, e press or implied, of the parties to establish the relationshipE (8) the ob*ect is the

e ecution of a *uridical act in relation to a third personE (=) the agent acts as a representati)e and not for himselfE (;) the agent acts &ithin the scope of his authority. 0oadmasters ne)er represented Glodel. Deither &as it e)er authorized to make such representation. ,t 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 &ithin the scope of his authority and said acts ha)e the same legal effect as if they &ere personally e ecuted by the principal. 4n the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his &ords or actions, &hile on the part of the agent, there must be an intention to accept the appointment and act on it. 'uch mutual intent is not obtaining in this case.

9. G.3. N*. 144807 B+ne 8. 100A E#+a!#* =. L"n$*nD+a. B!. an# An$*n"* ;. L"$*nD+a vs. E$e!n"$ C*!-*!a$"*n >EC?. E$e!*+$!e'e!. S.A. C*!-*!a$"*n >ESAC? an# Fa! Eas$ :an0 6 T!+s$ C*'-an& >FE:TC? FACTS1 .he Cternit Corporation (CC) is a corporation duly organized and registered under Philippine la&s engaged in the manufacture of roofing materials and pipe products. ,ts manufacturing operations &ere conducted on eight parcels of land co)ered by .C.s under the name of +C>.C, as trustee. #<H of the shares of stocks of CC &ere o&ned by C'6C, a corporation organized and registered under the la&s of >elgium. !ack Glan)ille, an 6ustralian citizen, &as the Gen. Manager and Pres. of CC, &hile Claude Gelsau &as the %eg. Girector for 6sia of C'6C. >oth had their offices in >elgium. ,n "#$F, the management of C'6C gre& concerned about the political situation in the Philippines and &anted to stop its operations in the country. .he Committee for 6sia of C'6C instructed CC >oard of Girectors Member Michael 6dams, to dispose of the eight parcels of land. 6dams engaged the ser)ices of realtor/broker 0auro G. MarIuez so that the properties could be offered for sale to prospecti)e buyers. MarIuez thereafter offered the parcels of land and the impro)ements thereon to Cduardo >. 0iton*ua, !r. of the 0iton*ua K Company, ,nc. ,n a 0etter, MarIuez declared that he &as authorized to sell the properties for P85,<<<,<<<.<<. .he 0iton*ua siblings offered to buy the property for P8<,<<<,<<<.<< cash. Gelsau sent a tele to Glan)ille stating that, based on the @>elgian/'&iss decision,@ that the final offer &as @9':",<<<,<<<.<< and P8,(<<,<<<.<<. 0iton*ua, !r. accepted the counterproposal of Gelsau . .he 0iton*ua brothers deposited the amount of 9':",<<<,<<<.<< &ith the 'ecurity >ank K .rust Company, Crmita >ranch, and drafted an Cscro& 6greement to e pedite the sale. Mean&hile, &ith the assumption of Corazon C. 6Iuino as President of the %epublic of the Philippines, the political situation in the Philippines had impro)ed. Glan)ille informed MarIuez that @the decision has been taken at a >oard Meeting not to sell the properties on &hich Cternit Corporation is situated.@ When apprised of this de)elopment, the 0iton*uas, &rote CC, demanding payment for damages they had suffered on account of the aborted sale. CC, ho&e)er, re*ected their demand. .he 0iton*uas then filed a complaint for specific performance and damages against CC and the +C>.C, and C'6C in the %.C of Pasig City. CC and C'6C alleged that the >oard and stockholders of CC ne)er appro)ed any resolution to sell sub*ect properties nor authorized MarIuez to sell the same.

Petitioners further emphasize that they acted in good faith &hen Glan)ille and Gelsau &ere kno&ingly permitted by respondent CC to sell the properties &ithin the scope of an apparent authority. Petitioners insist that respondents held themsel)es to the public as possessing po&er to sell the sub*ect properties. .he trial court rendered *udgment in fa)or of defendants and dismissed on the ground that there is no )alid and binding sale bet&een the plaintiffs and said defendants. .he C6 rendered *udgment affirming the decision of the %.C. .he 0iton*uas filed a motion for reconsideration, &hich &as also denied by the appellate court. 7ence, this appeal. ISSUE1 Whether or not MarIuez needed a &ritten authority from respondent Cternit before the sale can be perfected. HELD1 -C'. .he general principles of agency go)ern the relation bet&een the corporation and its officers or agents, sub*ect to the articles of incorporation, byAla&s, or rele)ant pro)isions of la&. 6ny sale of real property of a corporation by a person purporting to be an agent thereof but &ithout &ritten authority from the corporation is D900 6DG Q4,G. .he declarations of the agent alone are generally insufficient to establish the fact or e tent of his/her authority. 6gency may be oral unless the la& reIuires a specific form. 7o&e)er, to create or con)ey real rights o)er immo)able property, a special po&er of attorney is necessary. .hus, &hen a sale of a piece of land or any portion thereof is through an agent, the authority of the latter shall be in &riting, other&ise, the sale shall be )oid. ,n this case, the petitioners as plaintiffs belo&, failed to adduce in e)idence any resolution of the >oard of Girectors of respondent CC empo&ering MarIuez, Glan)ille or Gelsau as its agents, to sell, let alone offer for sale, for and in its behalf, the eight parcels of land o&ned by respondent CC including the impro)ements thereon.

estopped to deny her agency both as against the asserted principal and the third persons interested in the transaction in &hich he or she is engaged. ,n this case, petitioner kne& that the financier of respondent is PuaE and respondent kne& that the borro&ers are friends of petitioner. %espondent is estopped to deny that she herself acted as agent of a certain 6rsenio Pua, her disclosed principal. 'he is also estopped to deny that petitioner acted as agent for the alleged debtors, the friends &hom she (petitioner) referred..he C6 is incorrect &hen it considered the fact that the @supposed friends of MpetitionerN, the actual borro&ers, did not present themsel)es to MrespondentN@ as e)idence that negates the agency relationshipPit is sufficient that petitioner disclosed to respondent that the former &as acting in behalf of her principals, her friends &hom she referred to respondent. +or an agency to arise, it is not necessary that the principal personally encounter the third person &ith &hom the agent interacts. .he la& in fact contemplates, and to a great degree, impersonal dealings &here the principal need not personally kno& or meet the third person &ith &hom her agent transacts1 precisely, the purpose of agency is to e tend the personality of the principal through the facility of the agent. ,n the case at bar, both petitioner and respondent ha)e undeniably disclosed to each other that they are representing someone else, and so both of them are estopped to deny the same. ,t is e)ident from the record that petitioner merely refers actual borro&ers and then collects and disburses the amounts of the loan upon &hich she recei)ed a commissionE and that respondent transacts on behalf of her @principal financier@, a certain 6rsenio Pua. ,f their respecti)e principals do not actually and personally kno& each other, such ignorance does not affect their *uridical standing as agents, especially since the )ery purpose of agency is to e tend the personality of the principal through the facility of the agent.

8. G.3. N*. 149474 B+ne 1A. 100A BOCELYN :. DOLES vs. MA. AU3A TINA ANGELES FACTS1 %espondent 6ngeles filed &ith the %.C a complaint for 'pecific Performance &ith Gamages against Petitioner Goles. %espondent alleged that petitioner &as indebted to the former in the concept of a personal loan. >y )irtue of a @Geed of 6bsolute 'ale@,= petitioner, as seller, ceded to respondent, as buyer, a parcel of land, as &ell as the impro)ements thereon, at a subdi)ision pro*ect kno&n as Camella .o&nhomes 'orrente in >acoor, Ca)ite, in order to satisfy her personal loan &ith respondentE that despite repeated demand, petitioner refused to cooperate &ith respondent to e ecute the necessary documents and other formalities reIuired by the D7M+C to effect the transfer of the title o)er the property. 7o&e)er, petitioner denied that she borro&ed money from respondent, and a)erred that she referred her friends to respondent &hom she kne& to be engaged in the business of lending money in e change for personal checks through her capitalist 6rsenio Pua. 'he alleged that her friends, namely, Renaida %omulo, .heresa Moratin, !ulia ,nocencio, Qirginia !acob, and Clizabeth .omelden, borro&ed money from respondent and issued personal checks in payment of the loanE that the checks bounced for insufficiency of fundsE that despite her efforts to assist respondent to collect from the borro&ers, she could no longer locate themE that, because of this, respondent became furious and threatened petitioner that if the accounts &ere not settled, a criminal case &ill be filed against her. .he trial court dismissed the case at bar on the ground that the deed of sale bet&een the parties has no consideration or insufficiency of e)idence. .he C6 re)ersed the .CBs decision and concluded that petitioner is the real borro&er, &hile the respondent, the real lender, therefore there e isted no contract of agency. ISSUE1 Whether or not there e ist a contract of agency bet&een Petitioner Goles and the alleged debtors, therefore, Petitioner is not a party to the loan. HELD1 -C'. 9nder 6rticle "$F$ of the Ci)il Code, the basis of agency is representation. .he Iuestion of &hether an agency has been created is ordinarily a Iuestion &hich may be established in the same &ay as any other fact, either by direct or circumstantial e)idence. .he Iuestion is ultimately one of intention. 6gency may e)en be implied from the &ords and conduct of the parties and the circumstances of the particular case. .hough the fact or e tent 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

9. G.3. N*. 171419. N*ve'be! 11. 1004 MANILA MEMO3IAL PA3; CEMETE3Y. INC. vs. PED3O L. LINSANGAN FACTS1 +lorencia >aluyot is authorized by the Manila Memorial Park ,nc. (MMP,) to sell burial lots to those interested in purchasing. 7erein respondent 6tty. 0insangan &as approached by +lorencia &ith an offer to sell to the former a lot that she alleges to ha)e already been pre)iously sold but the o&ner thereof has cancelled and thus, 6tty. 0insangan shall only continue the payment thereof amounting to P#(,<<<, 6tty. 0insangan agreed and payed an initial P=(, <<<. .hereafter, +lorencia ad)ised 6tty. 0insangan that there &ere changes in the contract and that she needed him to sign a ne& contract stipulating the total price of P"=8, <<< but +lorencia assured 6tty. 0insangan that he &ould only pay the agreed P#(, <<<. ,n the ne& contract, 6tty. 0insangan acceded that he has read and understood all the stipulations therein. .he payment &as made in installments for t&o years &hich 6tty. 0insangan completed, ho&e)er, after t&o years, +lorencia informed 0insangan that their contract &as cancelled and offered a different lot, 6tty. 0insangan refused the offer and filed a suit for breach of contract against MMP, and +lorencia. MMP, a)ers that +lorencia acted beyond the scope of her authority as MMP,Bs agent since the latter did not allo& her to renegotiate e isting contracts but only to sell ne& contracts. 6tty. 0nsangan on the other hand argues that MMP, should be liable for the acts of its agents. Iss+e1 Whether or not MMP, is liable for the acts of +lorencia He(#1 D4. .he 'C ruled that +lorencia acted outside the scope of her authority as agent of MMP, and 6tty. 0insangan failed to ascertain the authority gi)en to +lorencia especially that their agreement on the second contract had a different stipulation than &hat he and +lorencia agreed upon. Moreo)er, 6tty. 0insanganBs signature o)er the ne& contract signifies his agreement thereto and ser)es as a form of ratification for the acts of +lorencia &hich &ere outside the authority gi)en her. 6s such, the 'C ruled that the principal cannot be held liable for actions of agents outside the scope of their authority &hen such acts are ratified by the principal himself. 4n the part of MMP,, they did not ratify +lorenciaBs acts, nor did they kno& of such actions.

10. :O3DADO3 vs. LUE 184 SC3A 494 FACTS1 Petitioners >ordador spouses &ere engaged in the business of purchase and sale of *e&elry, &hile respondent >rigida 0uz &as their regular customer. %espondent Darciso Geganos, 0uz?s brother, recei)ed se)eral pieces of *e&elry from the >ordadors amounting to P=$8,$"F.<<, &hich items &ereindicated in "5 receipts co)ering the sameAA"" of the receipts stated that they &ere recei)ed by Geganos for a certain C)elyn 6Iuino, &hile the remaining Findicated that they &ere recei)ed by Geganos for 0uz. Geganos &as supposed to sell the items at a profit and remit the proceeds and return the unsold items to the >ordadors. Geganos remitted only P(=,8<5.<<. 7e neither paid the balance of the sales proceeds, nor did he return any unsold item to the >ordadors, &hich led them to file an action for reco)ery of a sum of money and damages against Geganos and 0uz &ith the %.C. .he >ordadors claimed that Geganos acted as the agent of 0uz &hen he recei)ed the items of *e&elry, and because he failed to pay for the same, 0uz, as principal, became solidarily liable &ith him. Geganos asserted that it &as he alone &ho &as in)ol)ed in the transaction &ith the >ordadorsE that he neither acted as agent for nor &as he authorized to act as an agent by 0uz, not&ithstanding the fact that F of thereceipts indicated that the items &ere recei)ed by him for 0uz. 7e added that he ne)er deli)ered any of the items to 0uz. 0uz corroborated the claims of Geganos. .he %.C found that only Geganos &as liable to the >ordados. ,t further found that it &as petitioner 0ydia >ordador &ho indicated in the receipts that the items &ere recei)ed by Geganos for C)elyn 6Iuino and for 0uz. ,t said that it &as @persuaded that >rigida G. 0uz &as behind Geganos,@but because there &as no memorandum to this effect, the agreement bet&een the parties &as unenforceable under the 'tatute of +rauds. 6bsent the reIuired memorandum or any &ritten document connecting 0uz &ith the sub*ect receipts or authorizing Geganos to act on her behalf, the alleged agreement bet&een the >ordadors and 0uz &as unenforceable. .he >ordadors ele)ated the case to the C6 &hich affirmed said *udgment, hence the instant petition. ISSUE1 Whether 0uz is liable to the >ordadors for the latter?s claim for money and damages despite the fact that 0uz did not sign any of the sub*ect receipts or authorized Geganos to recei)e the items of *e&elry on her behalf

HELD1 Do, 0uz is not liable to the >ordadors. 3ATIO1 .7C >6',' +4% 6GCDC- ,' %CP%C'CD.6.,4D. .he basis for agency is representation. 7ere, there is no sho&ing that 0uz consented to the acts of Geganos or authorized him to act on her behalf, much less &ith respect to the particular transactions in)ol)ed. .he >ordadors? attempt to foist liability on 0uz through the supposed agency relation &ith Geganos is groundless and illAad)ised. 6 PC%'4D GC60,DG W,.7 6D 6GCD. ,' P9. 9P4D ,DS9,%- 6DG M9'. G,'C4QC% 9P4D 7,' PC%,0 .7C 69.74%,.- 4+ .7C 6GCD.. >esides, it &as grossly and ine cusably negligent of the >ordadors to entrust to Geganos, not once or t&ice but on at least F occasions as e)idenced by F receipts, se)eral pieces of *e&elry of substantial )alue &ithout reIuiring a &ritten authorization from his alleged principal. 6 person dealing &ith an agent is put upon inIuiry and must disco)er upon his peril the authority of the agent.

11. 3e@"na D",*n e$ a( v. CA an# Ove!(an# E -!ess L"nes. Inc. 401 SC3A 188 FACTS1 4)erland C press 0ines, ,nc. entered into a Contract of 0ease &ith 4ption to >uy &ith petitioners in)ol)ing a ",5((.$< sIuare meter parcel of land situated at corner Mac6rthur 7igh&ay and 'outh273 'treet, Giliman, Suezon City. .he term of the lease &as for " year commencing from May "F, "#5; up to May "(, "#5(. Guring this period, 4)erland C press 0ines &as granted an option to purchase for the amount of P=,<<<.<< per sIuare meter. .hereafter, the lease shall be on a per month basis &ith a monthly rental of P=,<<<.<<. +or failure of 4)erland C press 0ines to pay the increased rental of P$,<<<.<< per month effecti)e !une "#5F, petitioners filed an action for e*ectment against it. .he lo&er court rendered *udgment ordering 4)erland C press 0ines to )acate the leased premises and to pay the sum of PF8;,<<<.<<representing 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 !une "#5F to Do)ember"#$8 at the monthly rental of P$,<<<.<<, less payments made, plus "8H interest per annum from Do)ember "$, "#5F, the date of filing of the complaint, until fully paid, the sum of P$,<<<.<< a month starting Gecember "#$8, until 4)erland C press 0ines fully )acates the premises, and to payP8<,<<<.<< as and by &ay of attorneyBs fees. ISSUE1 W4D 4)erland C press 0ines actually paid the alleged P=<<,<<<.<< to +idela Gizon, as representati)e (agent) of petitioners in consideration of the option

HELD1 Do. C6 opined that the payment by 4)erland C press 0ines of P=<<,<<<.<< as partial payment for the leased property, &hich petitioners accepted (through 6lice 6. Gizon) and for &hich an official receipt &as issued, &as the operati)e act that ga)e rise to a perfected contract of sale, and that for failure of petitioners to deny receipt thereof, 4)erland C press 0ines can therefore assume that 6lice 6. Gizon, acting as agent of petitioners, &as authorized by them to recei)e the money in their behalf.C6 &ent further by stating that in fact, &hat &as entered into &as a 2conditional contract of sale 3&herein o&nership o)er the leased property shall not pass to the 4)erland C press 0ines until it has fully paid the purchase price. 'ince 4)erland C press 0ines did not consign to the court the balance of the purchase price and continued to occupy the sub*ect premises, it had the obligation to pay the amount of P",5<<.<< in monthly rentals until full payment of the purchase price. ,n an attempt to resurrect the lapsed option, 4)erland C press 0ines ga)e P=<<,<<<.<< to petitioners(thru 6lice 6. Gizon) on the erroneous presumption that the said amount tendered &ould constitute a perfected contract of sale pursuant to the contract of lease &ith option to buy. .here &as no )alid consent by the petitioners (as coAo&ners of the leased premises) on the supposed sale entered into by 6lice 6. Gizon, as petitionersB alleged agent, and 4)erland C press 0ines. .he basis for agency is representation and a person dealing &ith an agent is put upon inIuiry and must disco)er upon his peril the authority of the agent. 6s pro)ided in 6rticle "$F$ of the De& Ci)il Code, there &as no sho&ing that petitioners neither consented to the act of 6lice 6. Gizon nor authorized her to act on their behalf &ith regard to her transaction &ith pri)ate respondent. .he most prudent thing pri)ate respondent should ha)e done &as to ascertain the e tent of the authority of 6lice 6. Gizon. >eing negligent in this regard, pri)ate respondent cannot seek relief on the basis of a supposed agency. C)ery person dealing &ith an agent is put upon inIuiry and must disco)er upon his peril the authority of the agent. ,f he does not make such inIuiry, he is chargeable &ith kno&ledge of the agentBs authority, and his ignorance of that authority &ill not be any e cuse. Persons dealing &ith an assumed agency, &hether the assumed agency be a general or special one, are bound at their peril, if they &ould hold the principal, to ascertain not only the fact of the agency but also the nature and e tent of the authority, and in case either is contro)erted, the burden of proof is upon them to establish it.

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T3UST CASES
1. M*!a(es vs. CA >1999? D*c$!"ne1 ". 6 trust is the legal relationship bet&een one person ha)ing an eIuitable o&nership in property and another person o&ning the legal title to such property, the eIuitable o&nership of the former entitling him to the performance of certain duties and the e ercise of certain po&ers by the latter. .he characteristics of a trust are1 a. ,t is a relationshipE b. ,t is a relationship of fiduciary characterE c. ,t is a relationship &ith respect to property, not one in)ol)ing merely personal dutiesE d. ,t in)ol)es the e istence of eIuitable duties imposed upon the holder of the title to the property to deal &ith it for the benefit of anotherE and e. ,t arises as a result of a manifestation of intention to create the relationship. 8. 6rt. ";;$. .here is an implied trust &hen property is sold, and the legal estate is granted to one party but the price is paid by another for the purpose of ha)ing the beneficial interest of the property. .he former is the trustee, &hile the latter is the beneficiary. 7o&e)er, if the person to &hom the title is con)eyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by la&, it being disputably presumed that there is a gift in fa)or of the child. Fac$s1 Cast of Characters1 Celso 6)elino T 4&ner of the premises in Iuestion Priscilla Morales T 'ister of Celso 6)elino, claims o&nership of the land %odolfo Morales T 'on of Priscilla, built beauty shop on premises in Iuestion %anulfo and Crlinda 4rtiz T Purchased premises in Iuestion from Celso 6)elino 6urea 6)elino T 'ister of Celso, caretaker of the premises in Iuestion %osendo 6)elino and !uana %icaforte T Parents of Celso, 6urea and Priscilla %anulfo and Crlinda 4rtiz claim that they are the absolute and e clusi)e o&ners of the premises in Iuestion (="$ sI.m. land located at corner 9mbria 't. and %osales >l)d. >rgy. Central, Calbayog City) through their purchase of the said property from Celso 6)elino and stated the follo&ing1

.he property &as purchased by Celso 6)elino (the 4rtiz?s predecessor in interest) &hen he &as still a bachelor and a city fiscal of Calbayog city from 6le*andra Mendiola and Celita >artolome through an @Cscritura de Qenta.@ 6fter the purchase, he caused the transfer of the title as &ell as the ta declarations in his name. 7e faithfully paid the ta es and kept the receipts thereof. 7e also caused a sur)ey of the premises in Iuestion &ith the >ureau of 0ands and built a residential house thereon. 7e took his parents %osendo 6)elino and !uana %icaforte and his sister 6urea to li)e in his property until their death. Celso 6)elino then became an ,mmigration 4fficer and later a !udge of the Court of +irst ,nstance in Cebu so he left his property under the care of his sister, 6urea. Without his kno&ledge, his nephe& %odolfo Morales (a son of his other sister, Priscilla) constructed a beauty shop on the premises in Iuestion. Celso thereafter sold the property to %anulfo and Crlinda 4rtiz (Celso?s neighbors), they paid the purchase price and a deed of absolute sale &as e ecuted. %odolfo Morales, ho&e)er, refused to )acate the premises unless he is reimbursed P=(,<<<. 7e also occupied the residential building on the property, took in paying boarders and e)en claimed o&nership of the premises in Iuestion. %odolfo Morales contends that his grandparents %osendo 6)elino and !uana %icaforte originally o&ned the premises in Iuestion. .he property &as allegedly bought by Celso 6)elino &ho &as entrusted by %osendo &ith the money to buy it. .hey caused the name of the property to be under Celso 6)elino being the only son. When %osendo 6)elino and !uana %icaforte died, their children1 Celso 6)elino, .rinidad Cruz, Concepcion Peralta, Priscilla Morales and 6urea 6)elino succeeded as o&ners thereof. Iss+es1 ". W/D Celso 6)elino acIuired the property as a mere trustee. 8. W/D %odolfo Morales a builder in good faith that &ould entitle him to reimbursement. He(#1 ". D4. .rusts are either e press or implied. C press trusts are created by the intention of the trustor or of the parties. ,mplied trusts come into being by operation of la&, either through implication of an intention to create a trust as a matter of la& or through the imposition of the trust irrespecti)e of and e)en contrary to, any such intention. ,mplied trusts are either resulting or constructi)e trusts. Constructi)e trusts are created by the construction of eIuity in order to satisfy the demands of *ustice and pre)ent un*ust enrichment. %esulting trusts are based on the eIuitable doctrine that )aluable consideration and not legal title determines the eIuitable title or interest and are presumed al&ays to ha)e been contemplated by the parties. .hey arise from the nature of circumstances of the consideration in)ol)ed in a transaction &hereby one person becomes in)ested &ith legal title but is obligated in eIuity to hold his legal title for the benefit of another. 6 resulting trust in e emplified by 6rticle ";;$ of the Ci)il Code1 @.here is an implied trust &hen property is sold, and the legal estate is granted to one party but the price is paid by another ha)ing the beneficial interest of the property. .he former is the trustee, &hile the

11

latter is the beneficiary. 7o&e)er, if the person to &hom title is con)eyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by la&, it being disputable presumed that there is gift in fa)or of a child. .he last sentence of 6rticle ";;$ gi)es one of the recognized e ceptions to the establishment of an implied resulting trust. (.he other t&o &ould be1 &hen actual contrary intention is pro)ed and &hen purchase is made in )iolation of an e isting statute and in e)asion of its e press pro)ision.) 6s a rule the burden of pro)ing the e istence of trust is on the party asserting its e istence, and such proof must be clear and satisfactorily sho& the e istence of trust. While implied trusts may be pro)ed by oral e)idence, e)idence must be trust&orthy and recei)ed by the courts &th e treme caution. 4n this basis alone, %odolfo and Priscilla Morales? claim must fail. %odolfo and Priscilla relied merely on testimonial e)idences &hich are selfAser)ing. Proof of %anulfo and Crlinda 4rtiz?s la&ful acIuisition of the property through Celso 6)elinoBs o&nership on the other hand &as supported by documentary e)idences such as the deed of absolute sale and ta declarations. C)en testimonies of Celso?s other sisters pro)e that they belie)e that he is the true o&ner of the property. .he fact that the other siblings did not inter)ene in this case to protect their right and that upon the death of their parents no e traA*udicial partition occurred further strengthens Celso?s o&nership. Moreo)er, assuming that their claim that Celso &as a mere trustee is true, it still falls under the e emption under the last sentence of 6rticle ";;$ &hich states that if the person to &hom the title con)eyed is a child, there is a presumption that it is a gift in fa)or of the child. 8. D4. 6rticle ;;$ (.his is on builders in good faith, look it up nalang if you &ant) only applies &hen a builder thinks he o&ns the land or belie)es himself to ha)e a claim of title. +rom the e)idences adduced, %odolfo Morales kne& from the beginning that he &as not the o&ner of the land. %odolfo is not entitled to reimbursement.

1. PENAL:E3 =S. 3AMOS G.%. Do. "5$F;(. !anuary =<, 8<<# Fac$s1 Petitioner operated a hard&are store in a building along >onifacio 't., .uguegarao, Cagayan, &hich stood in a commercial lot o&ned by Maria Mendoza, from &hom the petitioner rented the same. ,n "#$8, petitioner allo&ed respondents to manage the store. ,n "#$;, Mendoza put the >onifacio property for sale. 7a)ing no funds, Petitioner allegedly entered into a )erbal agreement &ith 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. 4n 'eptember 8<, "#$;, respondents returned the management of the store to the petitioner &ith an in)entory sho&ing a difference of P""F,#;F."(. .he petitioner then demanded from the respondents the recon)eyance 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 recon)ey the property to her. Petitioner further argues that the difference in the in)entory pro)es that such amount &as used to pay for the purchase price of the property. %espondents, on the other hand, contend that they ha)e the full o&nership of the property because they paid for it out of their o&n funds. .he petitioner filed a case before the %.C &hich rendered a *udgment in fa)or of the petitioner, &hich &as later on re)ersed by the Court of 6ppeals. Iss+e1 Whether there is a )alid and enforceable trust. He(#1 Do, the Court ruled that petitionerBs allegations as to the e istence of an e press trust agreement &ith respondent spouses %amos, supported only by her o&n and her son !ohnsonBs testimonies, do not hold &ater. 6 resulting difference of P""F,#;F."( in the beginning in)entory of the stocks of the hard&are store and the second in)entory thereof, by itself, is not conclusi)e proof that the said amount &as used to pay the purchase price of the >onifacio property, such as &ould make it the property of petitioner held merely in trust by respondent spouses %amos.

12

=. =DA. DE ESCONDE vs. CA. G.3. N*. 104A47 Feb!+a!& 1. 199A FACTS1 Petitioners Constancia, >en*amin and Clenita, and pri)ate respondent Pedro, are the children of the late Culogio Csconde and petitioner Catalina >uan. Culogio Csconde &as one of the children and heirs of 6ndres Csconde. 6ndres is the brother of Cstanislao Csconde, the original o&ner of the disputed lot &ho died &ithout issue. 'ur)i)ed by his only brother, 6ndres, Cstanislao left an estate consisting of four parcels of land in 'amal, >ataan. Culogio died in 6pril, "#;; sur)i)ed by petitioners and pri)ate respondent. 6t that time, 0azara and Ciriaca, Culogio?s sisters, had already died &ithout ha)ing partitioned the estate of the late Cstanislao Csconde. 'ometime later, the heirs of 0azara, Ciriaca and Culogio e ecuted a deed of e tra*udicial partition. 'ince the children of Culogio, &ith the e ception of Constancia, &ere then all minors, they &ere represented by their mother and *udicial guardian, petitioner Catalina >uan )da. de Csconde &ho renounced and &ai)ed her usufructuary rights o)er the parcels of land in fa)or of her children in the same deed. 'ubseIuently, >en*amin disco)ered that 0ot Do. "5<< &as registered in the name of his brother, pri)ate respondent. >elie)ing that the lot &as coAo&ned by all the children of Culogio Csconde, >en*amin demanded his share of the lot from pri)ate respondent. 7o&e)er, pri)ate respondent asserted e clusi)e o&nership thereof pursuant to the deed of e tra*udicial partition. .he lo&er court ruled that the action had been barred by both prescription and laches. ISSUE1 .he applicability of the laches doctrine to implied trust is the issue in this petition. DECISION1 Petitioner Catalina >uan )da. de Csconde, as mother and legal guardian of her children, appears to ha)e fa)ored her elder son, pri)ate respondent, in allo&ing that he be gi)en 0ot Do. "5<< in its entirety in the e tra*udicial partition of the Csconde estate to the pre*udice of her other children. Pri)ate respondent e ercised e clusi)e rights of o&nership therein to the e tent of e)en mortgaging the lot &hen he needed money. ,f, as petitioners insist, a mistake &as committed in allotting 0ot Do. "5<< to pri)ate respondent, then a trust relationship &as created bet&een them and pri)ate respondent. 7o&e)er, pri)ate respondent ne)er considered himself a trustee. ,f he allo&ed his brother >en*amin to construct or make

impro)ements thereon, it appears to ha)e been out of tolerance to a brother. ConseIuently, if indeed, by mistake, pri)ate respondent &as gi)en the entirety of 0ot Do. "5<<, the trust relationship bet&een him and petitioners &as a constructi)e, not resulting, implied trust. 9nfortunately, petitioners assailed pri)ate respondentBs e ercise of absolute o&nership o)er the property long after their right to do so ha)e prescribed. .he rule that a trustee cannot acIuire by prescription o&nership o)er property entrusted to him until and unless he repudiates the trust, applies to e press trusts and resulting implied trusts. 7o&e)er, in constructi)e implied trusts, prescription may super)ene e)en if the trustee does not repudiate the relationship. Decessarily, repudiation of the said trust is not a condition precedent to the running of the prescripti)e period.

4. T*!be(a vs. S-*+ses 3*sa!"* G3 140718 Dec. 09. 1011 FACTS1 .he issue is o)er a parcel of land inherited by the .orbela siblings from their parents. .hey e ecuted a deed of absolute Iuitclaim o)er the property in fa)or of Gr. %osario. +our days later, on Gecember "F, "#F;, 0ot Do. =(FA6 &as issued in Gr. %osarioBs name co)ering the said property. 6nother Geed of 6bsolute Suitclaim &as subseIuently e ecuted on Gecember 8$, "#F;, this time by Gr. %osario, ackno&ledging that he 2only borro&ed3 0ot Do. =(FA6 from the .orbela siblings and &as already returning the same to the latter for P".<<. .his deed &as notarized but not immediately annotated. Gr. %osario used the land as mortgage for a loan he obtain and used the proceeds of the loan for the construction of impro)ements. Gr. %osario fully paid the loan from G>P and the mortgage &as cancelled and ratified by a notary public. 7o&e)er, Gr. %osario took another loan from PD>. 7e later acIuired a third loan from >anco +ilipino and bought out the loan from PD> cancelling the mortgage &ith PD>. %osario failed to pay their loan in >anco +ilipino and the property &as e tra*udicially foreclosed. ,n "#$F, the siblings filed a ci)il case for reco)ery of o&nership and possession and damages. ISSUES1 Whether or not an implied or e press trust &as established bet&een the partiesE Whether or not the right of the .orbelaBs to reco)er the land has prescribed. 3ULING1 Gr. %osario only holds 0ot Do. =(FA6 in trust for the .orbela siblings. When Gr. %osario &as able to register 0ot Do. =(FA6 in his name under Gecember "F, "#F;, an implied trust &as initially established bet&een him and the .orbela siblings under 6rticle ";(" of the Ci)il Code, &hich pro)ides1

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6%.. ";(". 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 la& for the benefit of the true o&ner. Gr. %osarioBs e ecution of the Geed of 6bsolute Suitclaim on Gecember 8$, "#F;, containing his e press admission that he only borro&ed 0ot Do. =(FA6 from the .orbela siblings, e)entually transformed the nature of the trust to an e press one. .he e press trust continued despite Gr. %osario stating in his Geed of 6bsolute Suitclaim that he &as already returning 0ot Do. =(FA6 to the .orbela siblings as 0ot Do. =(FA6 remained registered in Gr. %osarioBs name. 7e kept possession of said property, together &ith the impro)ements thereon. .o apply the "<Ayear prescripti)e period, &hich &ould bar a beneficiaryBs action to reco)er in an e press trust, the repudiation of the trust must be pro)en by clear and con)incing e)idence and made kno&n to the beneficiary. .he e press trust disables the trustee from acIuiring for his o&n benefit the property committed to his management or custody, at least &hile he does not openly repudiate the trust, and makes such repudiation kno&n to the beneficiary or cestui Iue trust. +or this reason, the old Code of Ci)il Procedure (6ct "#<) declared that the rules on ad)erse possession do not apply to 2continuing and subsisting3 (i.e., unrepudiated) trusts. ,n an e press trust, the delay of the beneficiary is directly attributable to the trustee &ho undertakes to hold the property for the former, or &ho is linked to the beneficiary by confidential or fiduciary relations. .he trustee?s possession is, therefore, not ad)erse to the beneficiary, until and unless the latter is made a&are that the trust has been repudiated. Gr. %osario argues that he is deemed to ha)e repudiated the trust on Gecember "F, "#F;, &hen he registered 0ot Do. =(FA6 in his name under, so &hen on +ebruary "=, "#$F, the .orbela siblings instituted before the %.C for the reco)ery of o&nership and possession of 0ot Do. =(FA6 from the spouses %osario, o)er 8" years had passed, concluding that it &as already barred by prescription, as &ell as laches. 7ence, Gr. %osario is deemed to ha)e effecti)ely repudiated the e press trust bet&een him and the .orbela siblings on March F, "#$", on &hich day, the prescripti)e period for the enforcement of the e press trust by the .orbela siblings began to run. +rom March F, "#$", &hen the amended loan and mortgage agreement &as registered, to +ebruary "=, "#$F, &hen the .orbela siblings instituted before the %.C the case against the spouses %osario, only about fi)e years had passed. .he .orbela siblings &ere able to institute the case &ell before the lapse of the "<Ayear prescripti)e period for the enforcement of their e press trust &ith Gr. %osario.

.he case at bench is like&ise not barred by laches. 0aches means the failure or neglect, for an unreasonable and une plained length of time, to do that &hich by e ercising due diligence could or should ha)e been done earlier. .he .orbela siblings instituted their case fi)e years after Gr. %osarioBs repudiation of the e press trust, still &ithin the "<Ayear prescripti)e period for enforcement of such trusts. .his does not constitute an unreasonable delay in asserting one?s right. 6 delay &ithin the prescripti)e period is sanctioned by la& and is not considered to be a delay that &ould bar relief. 0aches apply only in the absence of a statutory prescripti)e period.

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succession and the po&ers, attributes and properties e pressly authorized by la& or incident to its e istence. .he creation of an e press trust must be manifested &ith reasonable certainty and cannot be inferred from loose and )ague declarations or from ambiguous circumstances susceptible of other interpretations. T!+s$ "s $%e !"@%$ $* $%e bene)"c"a( enD*&'en$ *) -!*-e!$&. $%e (e@a( $"$(e $* /%"c% "s ves$e# "n an*$%e!. I$ "s a )"#+c"a!& !e(a$"*ns%"- $%a$ *b("@es $%e $!+s$ee $* #ea( /"$% $%e -!*-e!$& )*! $%e bene)"$ *) $%e bene)"c"a!&. T!+s$ !e(a$"*ns be$/een -a!$"es 'a& e"$%e! be e -!ess *! "'-("e#. An e -!ess $!+s$ "s c!ea$e# b& $%e "n$en$"*n *) $%e $!+s$*! *! *) $%e -a!$"es. An "'-("e# $!+s$ c*'es "n$* be"n@ b& *-e!a$"*n *) (a/. E -!ess $!+s$s. s*'e$"'es !e)e!!e# $* as #"!ec$ $!+s$s. a!e "n$en$"*na((& c!ea$e# b& $%e #"!ec$ an# -*s"$"ve ac$s *) $%e se$$(*! *! $%e $!+s$*! F b& s*'e /!"$"n@. #ee#. *! /"(( *! *!a( #ec(a!a$"*n. I$ "s c!ea$e# n*$ necessa!"(& b& s*'e /!"$$en /*!#s. b+$ b& $%e #"!ec$ an# -*s"$"ve ac$s *) $%e -a!$"es. T%"s "s "n c*ns*nance /"$% A!$"c(e 1444 *) $%e C"v"( C*#e. /%"c% s$a$es $%a$ GHnI* -a!$"c+(a! /*!#s a!e !eJ+"!e# )*! $%e c!ea$"*n *) an e -!ess $!+s$. "$ be"n@ s+))"c"en$ $%a$ a $!+s$ "s c(ea!(& "n$en#e#.G

7. PN: vs A,na! A49 SC3A 114 >1011? FACTS1 ,n "#($, %,'C4 ceased operation due to business re)erses. ,n plaintiffsB desire to rehabilitate %,'C4, they contributed a total amount of P8"8,58<.<< &hich &as used in the purchase of the three (=) parcels of land. 6fter the purchase of the abo)e lots, titles &ere issued in the name of %,'C4. .he amount contributed by plaintiffs constituted as liens and encumbrances on the aforementioned properties as annotated in the titles of said lots. .he stockholders contributed specific amount to constitute as their lien or interest on the property described abo)e, if and &hen said property are titled in the name of %9%60 ,D'9%6DCC K '9%C.- C4., ,DC., sub*ect to registration as their ad)erse claim until such time their respecti)e contributions are refunded to them completely. .hereafter, )arious subseIuent annotations &ere made on the same titles in fa)or of herein defendant PD> 6znar, et al., filed a Manifestation and Motion for !udgment on the Pleadings. .hus, the trial court rendered a decision &hich ruled against PD> on the basis that there &as an e press trust created o)er the sub*ect properties &hereby %,'C4 &as the trustee and the stockholders, 6znar, et al., &ere the beneficiaries or the cestui Iue trust. ISSUE1 Whether or not the language of the sub*ect Minutes created an e press trust. HELD1 Do. Do such reasonable certitude in the creation of an e press trust obtains in the case at bar. ,n 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 6znar, et al., become beneficiaries under an e press trust and that %,'C4 ser)e as trustor. ,ndeed, &e find that 6znar, et al., ha)e no right to ask for the Iuieting of title of the properties at issue because they ha)e no legal and/or eIuitable rights o)er the properties that are deri)ed from the pre)ious registered o&ner &hich is %,'C4, the pertinent pro)ision of the la& is 'ection 8 of the Corporation Code (>atas Pambansa >lg. F$), &hich states that @MaN corporation is an artificial being created by operation of la&, ha)ing the right of

A. Pac%ec* vs A!!* 87 P%"(. 707 >1970? FACTS1 6 petition for a &rit of certiorari &as filed by Golores Pacheco, as guardian of the minors Concepcion, 6licia and 7erminia surnamed -ulo, daughters of the late !ose -ulo y %egalado, for the re)ie& of a *udgment rendered by the Court of 6ppeals &hich affirmed the one rendered on 8" March "#=# by the Court of +irst ,nstance of 4ccidental Degros, ordering !ose -ulo y %egalado to e ecute deeds of assignment in fa)or of the plaintiffs for each and e)ery lot claimed by them. .he respondents, claiming lots as their property and began to present e)idence before a referee appointed by the court in support of their respecti)e claims. 9pon the assurance and promise made in open court by Gr. Mariano -ulo, &ho represented the late predecessorAinAinterest of the petitioners in the cadastral case, the latter &ould con)ey and assign the lots to the claimants, the herein respondents &ithdre& their claims, and the cadastral court confirmed the title to the lots and decreed their registration in the name of the defendant !ose -ulo y %egalado. .he plaintiffs and appellees in the courts belo& and no& respondents asserted title to each lot claimed by them and began to present e)idence to pro)e title thereto in the cadastral case, but because of the promise referred to made in open court by the representati)e of the defendantAappellant, the predecessorAinAinterest of the petitioners, the respondents &ithdre& their claims relying upon such promise.

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ISSUE1 Whether or not there e ists a trust or fiduciary relationshipU HELD1 When the claim to the lots in the cadastral case &as &ithdra&n by the respondents relying upon the assurance and promise made in open court by... the predecessorAinAinterest of the petitioners, a trust or fiduciary relation bet&een them arose, or resulted therefrom, or &as created thereby. .he trustee cannot in)oke the statute of limitations to bar the action and defeat the right of the cestui Iue trustent.3 .he reason &hy Pacheco is co)ered under the 6rt. ";(F, rather than under 6rt. ";(= (2When property is con)eyed to a person in reliance to his declared intention to hold it for, or transfer is to another or the grantor3) is because the action for recon)eyance &as being filed against the successorsAinAinterest of the person &ho ga)e such a declaration, and conseIuently, the property held in trust passed to the heirs by &ay of mistake, and rightfully co)ered under 6rt. ";(F.

*udgeBs order and &ith the partition pro*ect itself. $ lots of the 7imamaylan Cadastre &ere registered in eIual shares in the names of Gregoria (&ido& of !ose %amos) and her daughter, &hen in fact the administrator &as supposed to pay the cash ad*udications to each of them as enshrined in the partition pro*ect. Plaintiffs &ere then constrained to bring the suit before the court seeking for the recon)eyance in their fa)or their corresponding participations in said parcels of land in accordance &ith 6rticle $;< of the old Ci)il Code. Dote that "/F of the sub*ect lots represents the "/= free portion of martinBs shares &hich &ill e)entually redound to the shares of his 5 legally ackno&ledged natural children. .he petitionersB action &as predicated on the theory that their shares &ere merely held in trust by defendants. Donetheless, no Geed of .rust &as alleged and pro)en. 9ltimately, the lo&er court dismissed the complaint on the grounds of res *udicata, prescription and laches. ISSUE1 Whether or not the plaintiffsB action &as barred by prescription, laches and res *udicata to the effect that they &ere denied of their right to share in their fatherBs estate. 3ULING1 -C', there &as ine cusable delay thereby making the plaintiffsB action unIuestionably barred by prescription and laches and also by res *udicata. ,ne tricably inter&o)en &ith the Iuestions of prescription and res *udicata is the Iuestion on the e istence of a trust. ,t is note&orthy that the main thrust of plaintiffsB action is the alleged holding of their shares in trust by defendants. Cmanating from such, the 'upreme Court elucidated on the nature of trusts and the a)ailability of prescription and laches to bar the action for recon)eyance of property allegedly held in trust. ,t is said that trust is the right, enforceable solely in eIuity to the beneficial en*oyment of property, the legal title to &hich is )ested in another. ,t may either be e press or implied. .he latter ids further subdi)ided into resulting and constructi)e trusts. 6pplying it no& to the case at bar, the plaintiffs did not pro)e any e press trust. Deither did they specify the kind of implied trust contemplated in their action. .herefore, its enforcement maybe barred by laches and prescription &hether they contemplate a resulting or a constructi)e trust.

9. 3AMOS =S. 3AMOS A1 SC3A 184 FACTS1 'pouses Martin %amos and Candida .anate died on 4ctober ;, "#<F and 4ctober 8F, "$$<, respecti)ely. .hey &ere sur)i)ed by their = children. Moreo)er, Martin &as sur)i)ed by his 5 natural children. ,n Gecember "#<F, a special proceeding for the settlement of the intestate estate of said spouses &as conducted. %afael %amos, a brother of Martin, administered the estate for more than F years. C)entually, a partition pro*ect &as submitted &hich &as signed by the =legitimate children and 8 of the 5 natural children. 6 certain .imoteo Rayco signed in representation of the other ( natural children &ho &ere minors. .he partition &as s&orn to before a *ustice of peace. .he con*ugal hereditary estate &as appraised at P5;,#$;.#=, consisting of "$ parcels of land, some head of cattle and the ad)ances to the legitimate children. L thereof represented the estate of Martin. "/= thereof &as the free portion or P"8,;#5.#$. .he shares of the 5 natural children &ere to be taken from that "/= free portion. ,ndeed, the partition &as made in accordance &ith the 4ld Ci)il code. .hereafter, !udge %ichard Campbell appro)ed the partition pro*ect. .he court declared that the proceeding &ill be considered closed and the record should be archi)ed as soon as proof &as submitted that each he=ir had recei)ed the portion ad*udicated to him. 4n +ebruary =, "#";, !udge Depumoceno asked the administrator to submit a report sho&ing that the shares of the heirs had been deli)ered to them as reIuired by the pre)ious decision. De)ertheless, the manifestation &as not in strict conformity &ith the terms of the

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legitimate or illegitimate, of the one paying the price of the sale, D4 .%9'. is ,MP0,CG by 06W, it being disputable presumed that there is a gift in fa)or of the child.3 .he Court also noted that plaintiff failed to pro)e that he did not intend a donation. %egarding the Meridien Condo and Wack Wack property, the court said that plaintiff failed to pro)e that purchase money came from him. .hey also said that 6le ander &as capable of purchasing the property as he had been &orking for nine years, had a car care business, and &as acti)ely engaged in the business dealings of se)eral family corporations from &hich he recei)ed emoluments and other benefits. 7ence, no implied trust created because there &as no proof that plaintiff had paid for said properties.

8. A(eDan#!* T& vs. S&(v"a T& 774 SC3A 40A Fac$s1 6le ander .y, son of 6le*andro .y and husband of 'yl)ia .y, dies of cancer at the age of =;. 'yl)ia files petition for the settlement of 6le anderBs intestate estate. 'he also asks court to sell or mortgage properties in order to pay the estate ta amounting to P;,5";,(F<.<8 assessed by the >,%. .he properties include a parcel of land in CG'6 Greenhills, a residential land in Wack Wack, and the Meridien condo unit in 6nnapolis, Greenhills. 6le*andro .y opposed the mo)e and filed for reco)ery of the property &ith prayer for preliminary in*unction and/or temporary restraining order. Plaintiff 6le*andro claims that he o&ns the CG'6, Wack Wack and Meridien condo unit because he paid for them. .he property &as supposedly registered in trust for 6le anderBs brothers and sisters in case plaintiff dies. Plaintiff also claimed that 6le had no financial capacity to purchase the disputed property, as the latter &as only dependent on the former. 'yl)ia countered that 6le ander had purchased the property &ith his money. 6le ander &as financially capable of purchasing it because he had been managing the family corporations since he &as "$ years old and &as also engage in other profitable businesses. .he %.C granted the application for preliminary in*unction and decides in fa)or of plaintiff regarding the reco)ery of the property. C6 re)ersed the %.C stating that the implication created by la& under 6rt. ";;$ does not apply if the property &as in the name of the purchaserBs child. .hey agreed that plaintiff partly paid for the CG'6 property. Plaintiff appealed. Iss+e1 Whether there &as an implied trust under 6rt. ";;$ of the Ci)il CodeU He(#1 Do, there &as no implied trust created in relation to the CG'6 property. ,f the person to &hom the title is con)eyed is the child of the one paying the price of the sale, no trust is implied by la& under 6rt. ";;$, the soAcalled purchase money resulting trust. .he said article pro)ides an e ception1 2if the person to &hom the title is con)eyed is a child,

9. DE=ELOPMENT :AN; OF THE PHILIPPINES. -e$"$"*ne!. vs. COMMISSION ON AUDIT. !es-*n#en$. HG.3. N*. 14471A. Feb!+a!& 11. 1004I FACTS1 .he G>P is a go)ernment financial institution &ith an original charter, C ecuti)e 4rder Do. $"as amended by %epublic 6ct Do. $(8= (2G>P Charter3). .he C46 is a constitutional body &ith the mandate to e amine and audit all go)ernment instrumentalities and in)estment of public funds. the Ge)elopment >ank of the Philippines (G>P) >oard of Go)ernors adopted %esolution Do. 5#; creating the G>P Gratuity Plan and authorizing the setting up of a retirement fund to co)er the benefits due to G>P retiring officials and employees under Common&ealth 6ct Do. "$F, as amended. 4n +ebruary 8F, "#$<, a .rust ,ndenture &as entered into by and bet&een the G>P and the >oard of .rustees of the Gratuity Plan +und, )esting in the latter the control and administration of the +und. .he trustee, subseIuently, appointed the G>P .rust 'er)ices Gepartment (G>PA.'G) as the in)estment manager thru an ,n)estment Management 6greement, &ith the end in )ie& of making the income and principal of the +und sufficient to meet the liabilities of G>P under the Gratuity Plan. Pursuant to the in)estment scheme, G>PA.'G paid to the in)estorA members a total of P"",F8F,;";.8( representing the net earnings of the in)estments for the years "##" and "##8. .he payments &ere disallo&ed by the 6uditor under 6udit 4bser)ation Memorandum Do. #=A8 dated March ", "##=, on the ground that the distribution of income of the Gratuity Plan +und (GP+) to future retirees of G>P is irregular and constituted the use of public funds for pri)ate purposes &hich is specifically proscribed under 'ection ; of P.G. ";;(. .he 6uditor reasoned that 2the +und is still o&ned by the >ank, the >oard of .rustees is a mere administrator of the +und in the same &ay that the .rust 'er)ices Gepartment &here the fund &as in)ested &as a mere in)estor and neither can the employees, &ho ha)e still an inchoate interest MiNn the +und be considered as rightful o&ner of the +und. . Chairman 6ntonio alleged that the e press trust created for the benefit of Iualified G>P employees under the .rust 6greement (26greement3) dated 8F +ebruary "#$< ga)e the +und a separate legal personality.

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ISSUE1 Whether the income of the +und is income of G>PU HELD1 .he C46 alleges that G>P is the actual o&ner of the +und and its income, on the follo&ing grounds1 (") G>P made the contributions to the +undE (8) the trustees of the +und are merely administratorsE and (=) G>P employees only ha)e an inchoate right to the +und. .he G>P counters that the +und is the sub*ect of a trust, and that the 6greement transferred legal title o)er the +und to the trustees. .he income of the +und does not accrue to G>P. .hus, such income should not be recorded in G>PBs books of account. 6 trust is a 2fiduciary relationship &ith respect to property &hich in)ol)es the e istence of eIuitable duties imposed upon the holder of the title to the property to deal &ith it for the benefit of another.3 6 trust is either e press or implied. C press trusts are those &hich the direct and positi)e acts of the parties create, by some &riting or deed, or &ill, or by &ords e)incing an intention to create a trust. ,n the present case, the G>P >oard of Go)ernorsB (no& >oard of Girectors) %esolution Do. 5#; and the 6greement e ecuted by former G>P Chairman %afael 'ison and the trustees of the Plan created an e press trust, specifically, an employeesB trust. 6n employeesB trust is a trust maintained by an employer to pro)ide retirement, pension or other benefits to its employees. ,t is a separate ta able entity established for the e clusi)e benefit of the employees. ,n a trust, one person has an eIuitable o&nership in the property &hile another person o&ns the legal title to such property, the eIuitable o&nership of the former entitling him to the performance of certain duties and the e ercise of certain po&ers by the latter. 10. LOPEE =S. COU3T OF APPEALS >G.3. N*. 179984? FACTS1 .he instant petition stemmed from an action for recon)eyance instituted by petitioner %ichard >. 0opez in his capacity as trustee of the estate of the late !uliana 0opez Manzano (!uliana) to reco)er from respondents se)eral large tracts of lands allegedly belonging to the trust estate of !uliana. .he decedent, !uliana, &as married to !ose 0opez Manzano (!ose). .heir union did not bear any children. !uliana &as the o&ner of se)eral properties, among them, the properties sub*ect of this dispute. .he disputed properties totaling more than ",(<< hectares consist of si parcels of land, &hich are all located in >atangas. .hey &ere the e clusi)e paraphernal properties of !uliana together &ith a parcel of land situated in Mindoro kno&n as 6bra de ,log and a fractional interest in a residential land on 6ntorcha 't., >alayan, >atangas. , !uliana e ecuted a notarial &ill,M;N &hereby she e pressed that she &ished to constitute a trust fund for her paraphernal properties, denominated as +ideicomiso de !uliana 0opez Manzano (+ideicomiso), to be administered by her husband. ,f her husband &ere to die or renounce the obligation, her nephe&, CnriIue 0opez, &as to become administrator and e ecutor of the +ideicomiso. !uliana initiated the probate of her &ill fi)e (() days after its e ecution, but she died on "8 6ugust "#F$, before the petition for probate could be heard. .he petition &as pursued instead in 'pecial Proceedings ('.P.) Do. 5<F by her husband, !ose, &ho &as the designated e ecutor in the &ill. !ose died on 88 !uly "#$<, lea)ing a holographic &ill disposing of the disputed properties to respondents. .he &ill &as allo&ed probate on 8< Gecember "#$= in '.P. Do.

8F5( before the %.C of Pasay City. Pursuant to !oseBs &ill, the %.C ordered on 8< Gecember "#$= the transfer of the disputed properties to the respondents as the heirs of !ose. ConseIuently, the certificates of title of the disputed properties &ere cancelled and ne& ones issued in the names of respondents. 4n "" Gecember "#$;, petitioner instituted an action for recon)eyance of parcels of land &ith sum of money before the %.C of >alayan, >atangas against respondents. .he complaintM(N essentially alleged that !ose &as able to register in his name the disputed properties, &hich &ere the paraphernal properties of !uliana, either during their con*ugal union or in the course of the performance of his duties as e ecutor of the testate estate of !uliana and that upon the death of !ose, the disputed properties &ere included in the in)entory as if they formed part of !oseBs estate &hen in fact !ose &as holding them only in trust for the trust estate of !uliana. ISSUE1 of &hether an implied trust &as constituted o)er the disputed properties &hen !ose, the trustee, registered them in his name. HELD1 Petitioner insists that an e press trust &as constituted o)er the disputed propertiesE thus the registration of the disputed properties in the name of !ose as trustee cannot gi)e rise to prescription of action to pre)ent the reco)ery of the disputed properties by the beneficiary against the trustee. C)idently, !ulianaBs testamentary intent &as to constitute an e press trust o)er her paraphernal properties &hich &as carried out &hen the +ideicomiso &as established in '.P. Do. 5<F. . .he probate court ad*udicated the disputed properties to !ose as the sole heir of !uliana. ,f a mistake &as made in e cluding the disputed properties from the +ideicomiso and ad*udicating the same to !ose as sole heir, the mistake &as not rectified as no party appeared to oppose or appeal the e clusion of the disputed properties from the +ideicomiso. Moreo)er, the e clusion of the disputed properties from the +ideicomiso bore the appro)al of the probate court. .he issuance of the probate courtBs order ad*udicating the disputed properties to !ose as the sole heir of !uliana en*oys the presumption of regularity. 4n the premise that the disputed properties &ere the paraphernal properties of !uliana &hich should ha)e been included in the +ideicomiso, their registration in the name of !ose &ould be erroneous and !oseBs possession &ould be that of a trustee in an implied trust. ,mplied trusts are those &hich, &ithout being e pressed, are deducible from the nature of the transaction as matters of intent or &hich are superinduced on the transaction by operation of la& as matters of eIuity, independently of the particular intention of the parties. .he pro)ision on implied trust go)erning the factual milieu of this case is pro)ided in 6rticle ";(F of the Ci)il Code, &hich states1

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6%.. ";(F. ,f property is acIuired through mistake or fraud, the person obtaining it is, by force of la&, considered a trustee of an implied trust for the benefit of the person from &hom the property comes. .he registration of the disputed properties in the name of !ose &as actually pursuant to a court order. .he apparent mistake in the ad*udication of the disputed properties to !ose created a mere implied trust of the constructi)e )ariety in fa)or of the beneficiaries of the +ideicomiso.

11. PA3INGIT =S :ABIT Fac$s: Guring their lifetime, spouses !ulian and 6urelia Paringit leased a lot on from .erocel %ealty, ,nc. .hey built their home raised their ( children. .hen 6urelia died on Do)ember F, "#58. +or ha)ing occupied the lot for years, .erocel %ealty offered to sell it to !ulian but he did not ha)e enough money at that time to meet the payment deadline. !ulian sought the help of his children so he can buy the property but only his son +elipe and &ife !osefa had the financial resources he needed at that time. .o bring about the purchase, !ulian e ecuted a deed of assignment of leasehold right in fa)or of +elipe and his &ife that &ould enable them to acIuire the lot. .he latter bought the same from .erocel %ealty for P((,(<<.<< to be paid in installments. +elipe and his &ife paid the last installment and the realty company e ecuted a Geed of 6bsolute 'ale in their fa)or and turned o)er the title to them. Gue to issues among !ulianBs children regarding the o&nership of the lot, !ulian e ecuted an affida)it clarifying the nature of +elipe and his &ifeBs purchase of the lot. 7e claimed that it &as bought for the benefit of all his children and the same must be di)ided eIually among my fi)e children at "( sI. m. eachE but each of them should reimburse their brother +elipe and his &ife, !osefa the proportional amount ad)anced by them as , also &ill reimburse him the sum of P=<,<<<.<< or one half of the amount that the couple ad)anced. +elipe and his &ife registered their purchase of the lot, resulting in the issuance of .ransfer Certificate of .itle "58="= in their names. Gespite the title, ho&e)er, the spouses mo)ed to another house on the same street in "#$$. Marciana, et al, on the other hand, continued to occupy the lot &ith their families &ithout paying rent. .his &as the situation &hen their father !ulian died. +elipe and his &ife 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, belie)ing that they had the right to occupy the house and lot, it being their inheritance from their parents. .hen +elipe and his &ife filed an e*ectment suit against them. .he suit prospered, resulting in the e*ectment of Marciana, et al and their families from the property. 'hortly after, +elipe and his &ife mo)ed into the same. ISSUE1 ". Whether or not +elipe and his &ife purchased the sub*ect lot under an implied trust for the benefit of all the children of !ulianE 8. W/n that Marciana, et alBs right of action &as barred by prescription or laches.

He(#1 ". .he C6 found that +elipe and his &ifeBs purchase of the lot falls under the rubric of the implied trust pro)ided in 6rticle ";(< of the Ci)il Code. ,mplied trust under 6rticle ";(< presupposes a situation &here a person, using his o&n funds, buys property on behalf of another, &ho in the meantime may not ha)e the funds to purchase it. .itle to the property is for the time being placed in the name of the trustee, the person &ho pays for it, until he is reimbursed by the beneficiary, the person for &hom the trustee bought the land. ,t is only after the beneficiary reimburses the trustee of the purchase price that the former can compel con)eyance of the property from the latter. >ut the circumstances of this case are actually &hat implied trust is about. 6lthough no e press agreement co)ered +elipe and his &ifeBs purchase of the lot for the siblings and their father, it came about by operation of la& and is protected by it. .he nature of the transaction established the implied trust and this in turn ga)e rise to the rights and obligations pro)ided by la&. ,mplied trust is a rule of eIuity, independent of the particular intention of the parties. ,n an implied trust, the beneficiaryBs cause of action arises &hen the trustee repudiates the trust, not &hen the trust &as created as +elipe and his &ife &ould ha)e it. 8. +elipe and his &ife also claim that Marciana, et alBs action &as barred by laches. >ut there is no basis for such claim. 0aches has been defined as the failure or neglect, for an unreasonable and une plained length of time, to do that &hich, by e ercising due diligence could or should ha)e been done earlier. Marciana, et al had no reason to file an earlier suit against +elipe and his &ife since the latter had not bothered them despite their purchase of the lot in their names. 4nly about "8 years later &hen they &rote their demand letter did the spouses take an ad)erse attitude against Marciana, et al. .he latter filed their action to annul +elipe and his &ifeBs title and ha)e the same transferred to their name.

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presented sufficiently sustains Mthe respondentBsN claim that the titles issued to Mthe petitionerN &ere based on forged and spurious documents, it behoo)es this Court to annul these certificates of title. 7ence, this petition for re)ie. Iss+es1 Whether the C6 erred in ordering the recon)eyance of the parcel of land co)ered by the petitionerBs titles.

11. MODESTO LEO=E3AS vs.CASIME3O =ALDEE. G.3. N*. 1A9987 Fac$s1 !une "(, 8<"" Maria 'ta. Maria and Gominga Manangan &ere the registered o&ners A threeAfourths (V) and oneAfourth (W) proAindi)iso, respecti)ely A of a parcel of land. 'ta. Maria sold her threeAfourths (V) share to >enigna 0lamas. .he sale &as duly annotated at the back of 4C. Do. 8;F#(. When >enigna died in "#;;, she &illed her threeAfourths (V) share eIually to her sisters 6le*andra 0lamas and !osefa 0lamas. .hus, 6le*andra and !osefa each o&ned oneAhalf (L) of >enignaBs threeAfourths (V) share. 6le*andraBs heirs sold their predecessorBs oneAhalf (L) share (roughly eIui)alent to "<,(F; sIuare meters) to the respondent, as e)idenced by a Geed of 6bsolute 'ale. 6lso, !osefa sold her o&n oneAhalf (L) share (sub*ect property) to the respondent and the petitioner, as e)idenced by another Geed of 6bsolute 'ale. .he respondent and the petitioner e ecuted an 6greement, allotting their portions of the sub*ect property. .he petitioner and the respondent e ecuted an 6ffida)it of 6d)erse Claim o)er the sub*ect property. .he parties took possession of their respecti)e portions of the sub*ect property and declared it in their name for ta ation purposes. .he respondent asked the %egister of Geeds of 0ingayen, Pangasinan on the reIuirements for the transfer of title o)er the portion allotted to him on the sub*ect property. .o his surprise, the respondent learned that the petitioner had already obtained in his name t&o transfer certificates of title. .he respondent filed a complaint for 6nnulment of .itle, %econ)eyance and Gamages against the petitioner, seeking the recon)eyance of the ",<<;AsIuare meter portion (disputed property) co)ered by .C. Do. "#($"=, on the ground that the petitioner is entitled only to the =,<8< sIuare meters identified in the partiesB 6greement. .he respondent sought the nullification of the petitionerBs titles by contesting the authenticity of the petitionerBs documents. Particularly, the respondent assailed the >enigna Geed by presenting >enignaBs death certificate. .he respondent argued that >enigna could not ha)e e ecuted a deed, &hich purports to con)ey ;,<8; sIuare meters to the petitioner, in "#F# because >enigna already died in "#;;. .he respondent added that neither could 'ta. Maria ha)e sold to the parties her threeAfourths (V) share in "#F# because she had already sold her share to >enigna in "#=8.88 .he petitioner asked for the dismissal of the complaint and for a declaration that he is the la&ful o&ner of the parcels of land co)ered by his titles. .he %.C dismissed the complaint. 4n appeal, the C6 re)ersed the %.C by ruling against the authenticity of the >enigna Geed and the 6ffida)it. 6s the totality of the e)idence

He(#: We partially grant the petition. 6n action for recon)eyance is a legal and eIuitable remedy granted to the rightful lando&ner, &hose land &as &rongfully or erroneously registered in the name of another, to compel the registered o&ner to transfer or recon)ey the land to him. .he plaintiff in this action must allege and pro)e his o&nership of the land in dispute and the defendantBs erroneous, fraudulent or &rongful registration of the property. .he petitionerBs argument confuses registration of title &ith o&nership. While the petitionerBs o&nership o)er the land co)ered by .C. Do. "#($"8 is undisputed, his o&nership only ga)e him the right to apply for the proper transfer of title to the property in his name. 4b)iously, the petitioner, e)en as a rightful o&ner, must comply &ith the statutory pro)isions on the transfer of registered title to lands. 'ection (= of Presidential Gecree Do. "(8# pro)ides that the subseIuent registration of title procured by the presentation of a forged deed or other instrument is null and )oid. .hus, the subseIuent issuance of .C. Do. "#($"8 ga)e the petitioner no better right than the tainted registration &hich &as the basis for the issuance of the same title. .he Court simply cannot allo& the petitionerBs attempt to get around the proper procedure for registering the transfer of title in his name by using spurious documents. %econ)eyance is the remedy of the rightful o&ner only While the C6 correctly nullified the petitionerBs certificates of title, the C6 erred in ordering the recon)eyance of the entire sub*ect property in the respondentBs fa)or. .he respondent himself admitted that the =,<8<A sIuare meter portion co)ered by .C. Do. "#($"8 is the petitionerBs *ust share in the sub*ect property.(; .hus, although the petitioner obtained .C. Do. "#($"8 using the same spurious documents, the land co)ered by this title should not be recon)eyed in fa)or of the respondent since he is not the rightful o&ner of the property co)ered by this title.

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14. G.3. N*. 179494 B+(& 41. 1008 3OGELIO. GEO3GE. LOLITA. 3OSALINDA. an# BOSEPHINE. a(( s+!na'e# PASI<O. !e-!esen$e# b& $%e"! )a$%e! an# a$$*!ne&F"nF)ac$ BOSE PASI<O Pe$"$"*ne!s. vs. D3. TEOFILO EDUA3DO F. MONTE33OYO. 3OMUALDO MONTE33OYO. MA3IA TE3ESA MONTE33OYO. an# STEPHEN MONTE33OYO. 3es-*n#en$s. FACTS: A .he Girector of 0and granted 0aureano PasinoBs application for homestead patent. A .he said land &as di)ided by a creek, hence, t&o portionsP0ot 6 and 0ot >. A 4C.s &ere issued by 0M> co)ering the lands, respecti)ely. A 7ere comes the respondent alleging e clusi)e and notorious possession of 0ot >. 7e contended that the 4C. issued in fa)or of petitioners o)er the sub*ect lot &as null and )oid. ISSUES: ". Who is the rightful o&ner of the sub*ect landU 8. What is the effect if the homestead patent granted in accordance &ith la& (not so in this case) is registeredU HELD: ". Monterroyo. +irst, 0M> has no *urisdiction to issue free patent titles. 'econdly, the sub*ect land has been con)erted into pri)ate land thru operation of the la& by )irtue of prescription, thus ,n Girector of 0ands ). ,6C, the Court ruled1 26lienable public land held by a possessor, continuously or through his predecessorsAinA interest, openly, continuously and e clusi)ely for the prescribed statutory period (=< years under .he Public 0and 6ct, as amended) is con)erted to pri)ate property by the mere lapse or completion of the period, ipso *ure.3 .he respondent to that effect has presented proof. 8. 4nce a homestead patent granted in accordance &ith la& is registered, the certificate of title issued by )irtue of the patent has the force and effect of a .orrens title issued under the land registration la&. ,n this case, the issuance of a homestead patent in "#(8 in fa)or of

0aureano &as not registered. 'ection "<= of Presidential Gecree Do. "(8#8( mandates the registration of patents, and registration is the operati)e act to con)ey the land to the patentee, thus1 'ec. "<=. . .he deed, grant, patent or instrument of con)eyance from the Go)ernment to the grantee shall not take effect as a con)eyance or bind the land but shall operate only as a contract bet&een the Go)ernment and the grantee and as e)idence of authority to the %egister of Geeds to make registration. I$ "s $%e ac$ *) !e@"s$!a$"*n $%a$ s%a(( be $%e *-e!a$"ve ac$ $* a))ec$ an# c*nve& $%e (an# , and in all cases under this Gecree, registration shall be made in the office of the %egister of Geeds of the pro)ince or city &here the land lies. .he fees for registration shall be paid by the grantee. 6fter due registration and issuance of the certificate of title, such land shall be deemed to be registered land to all intents and purposes under this Gecree. P!"nc"-(e *) C*ns$!+c$"ve T!+s$ A--("es 9nder the principle of constructi)e trust, registration of property by one person in his name, &hether by mistake or fraud, the real o&ner being another person, impresses upon the title so acIuired the character of a constructi)e trust for the real o&ner, &hich &ould *ustify an action for recon)eyance. ,n the action for recon)eyance, the decree of registration is respected as incontro)ertible but &hat is sought instead is the transfer of the property &rongfully or erroneously registered in anotherBs name to its rightful o&ner or to one &ith a better right. ,f the registration of the land is fraudulent, the person in &hose name the land is registered holds it as a mere trustee, and the real o&ner is entitled to file an action for recon)eyance of the property. ,n the case before us, respondents &ere able to establish that they ha)e a better right to 0ot Do. 8"=# since they had long been in possession of the property in the concept of o&ners, by themsel)es and through their predecessorsAinAinterest. 7ence, despite the irre)ocability of the .orrens titles issued in their names and e)en if they are already the registered o&ners under the .orrens system, petitioners may still be compelled under the la& to recon)ey the property to respondents.

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14. Es$a$e *) Ma!@a!"$a Cabanc+n@an v. Ma!"(*+ La"@* G3. N*. 197094 A+@+s$ 17. 1011 Fac$s1 ". Margarita Cabacungan (Margarita) o&ned three parcels of unregistered land in Paringao and in >accuit, >auang, 0a 9nion. 8. 'ometime in "#F$, MargaritaBs son, %oberto 0aigo, !r. (%oberto), applied for a nonimmigrant )isa to the 9nited 'tates, and to support his application, he allegedly asked Margarita to transfer the ta declarations of the properties in his name. =. +or said purpose, Margarita, unkno&n to her other children, e ecuted an 6ffida)it of .ransfer of %eal Property &hereby the sub*ect properties &ere transferred by donation to%oberto. ;. Dot long after, %obertoBs )isa &as issued and he &as able to tra)el to the 9.'. as a tourist and returned in due time. ,n "#5#, he adopted respondents Pedro 0aigo (Pedro) and Marilou 0aigo (Marilou), and then he married respondent Cstella >alagot. (. ,n !uly "##<, %oberto sold the ;,("8 sI m property in >accuit to the spouses Mario and !ulia Campos for P8=,<<<.<<. F. .hen in 6ugust "##8, he sold the ",#$F sI m and =,;(; sI m lots in Paringao, respecti)ely, to Marilou for P"<<,<<<.<< and to Pedro for P;<,<<<.<<. 5. 6llegedly, these sales &ere not kno&n to Margarita and her other children. $. ,t &as only in 6ugust "##(, at %obertoBs &ake, that Margarita came to kno& of the sales as told by Pedro himself. #. ,n +ebruary "##F, Margarita, represented by her daughter, 0uz, instituted the instant complaint for the annulment of said sales and for the reco)ery of o&nership and possession of the sub*ect properties as &ell as for the cancellation of %icardoBs ta declarations. "<. Margarita admitted ha)ing accommodated %obertoBs reIuest for the transfer of the properties to his name, but pointed out that the arrangement &as only for the specific purpose of supporting his 9.'. )isa application. 'he emphasized that she ne)er intended to di)est herself of o&nership o)er the sub*ect lands and, hence, %oberto had no right to sell them to respondents and the 'pouses Campos. 'he like&ise alleged that the sales, &hich &ere fictitious and simulated considering the gross inadeIuacy of the stipulated price, &ere fraudulently entered into by %oberto. 'he imputed bad faith to

Pedro, Marilou and the 'pouses Campos as buyers of the lots, as they supposedly kne& all along that %oberto &as not the rightful o&ner of the properties. "". .he 'pouses Campos ad)anced that they &ere innocent purchasers for )alue and in good faith, and had merely relied on %obertoBs representation that he had the right to sell the propertyE and that, hence, they &ere not bound by &hate)er agreement entered by Margarita &ith her son. "8. ,n much the same &ay, Marilou and Pedro, &ho like&ise professed themsel)es to be buyers in good faith and for )alue, belie)ed that MargaritaBs cause of action had already been barred by laches, and that e)en assuming the contrary, the cause of action &as ne)ertheless barred by prescription as the same had accrued &ay back in "#F$ upon the e ecution of the affida)it of transfer by )irtue of &hich an implied trust had been created. ,n this regard, they emphasized that the la& allo&ed only a period of ten ("<) years &ithin &hich an action to reco)er o&nership of real property or to enforce an implied trust thereon may be brought, but Margarita merely let it pass. Iss+e1 ". Whether or not that the complaint is barred by laches and prescription 8. Whether or not the rule on innocent purchaser for )alue applies in this case of sale of unregistered land =. Whether or not there is e)idence to support the finding that there is an implied trust created bet&een Margarita and her son %oberto He(#1 ". Do 8. Do =. -es %atio1 +or issues " and 8. ,n the case at bar, lands in)ol)ed are concededly unregistered landsE hence, there is no &ay by &hich Margarita, during her lifetime, could be notified of the furti)e and fraudulent sales made in "##8 by %oberto in fa)or of respondents, e cept by actual notice from Pedro himself in 6ugust "##(. 7ence, it is from that date that prescription began to toll. .he filing of the complaint in +ebruary "##F is &ell &ithin the prescripti)e period. =. ,ntention T although only presumed, implied or supposed by la& from the nature of the transaction or from the facts and circumstances accompanying the transaction, particularly the source of the consideration T is al&ays an element of a resulting trust and may be inferred from the acts or conduct of the parties rather than from direct e pression of conduct. Certainly, intent as an indispensable element, is a matter that necessarily lies in the e)idence, that is, by e)idence, e)en circumstantial, of statements made by the parties at or before the time title passes. >ecause an implied trust is neither dependent upon an e press agreement nor reIuired to be e)idenced by &riting, 6rticle ";(5 of our Ci)il Code authorizes the admission of parole e)idence to pro)e their

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e istence. Parole e)idence that is reIuired to establish the e istence of an implied trust necessarily has to be trust&orthy and it cannot rest on loose, eIui)ocal or indefinite declarations. .hus, contrary to the Court of 6ppealsB finding that there &as no e)idence on record sho&ing that an implied trust relation arose bet&een Margarita and %oberto, &e find that petitioner before the trial court, had actually adduced e)idence to pro)e the intention of Margarita to transfer to %oberto only the legal title to the properties in Iuestion, &ith attendant e pectation that %oberto &ould return the same to her on accomplishment of that specific purpose for &hich the transaction &as entered into. .he e)idence of course is not documentary, but rather testimonial.

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