2. Goyanko vs. UCPB (g.

r no 179096)

FACTS:
In 1995, the late Joseph Goyanko Sr. invested 2 million pesoseosess with
Philippine Asia Lending investors Inc. (PALII). After his death, represented by his son,
Goyanko Jr., filed a claim over his estate and at the same time Sr.’s illegitimate family
filed a claim as well, over the investment to PALII. Due to the proceedings, PALII,
deposited the proceeds with UCPB under the name Phil Asia: ATF (in trust for) the
heirs of the late investor. Thereafter, UCPB allowed PALII to withdraw P1.5M under
that account. When the heirs were about to claim the proceeds of the investment,
UCPB refused to restore the amount to the petitioner. On litigation, the trial court
disregarded the statement (ITF) to charge UCPB with any trust relationship with PALII
and the decedent’s heirs.
On appeal, despite the arguments of the petitioners that a trust was created,
the appellate court found against the heirs. In their argument, the CA’s iteration was
that the transaction was a mere deposit between UCPB and PALII. The ITF addition
has no effect.

ISSUE:
WON a trust agreement occurred?
HELD:
No. in order for a trust to come into being, Article 1444 of the CC must be
satisfied. From the facts at hand, the high court found insufficiency. In fine, the
following elements must exist:

1. a competent trustor and trustee;

2. an ascertainable trust res; and
3. sufficiently certain beneficiaries.
The lack of one is fatal to the existence of a trust. Furthermore, there must be a
present and complete disposition of the trust property, notwithstanding that the
enjoyment in the beneficiary will take place in the future. It is essential, too, that the
purpose be an active one to prevent trust from being executed into a legal estate or
interest, and one that is not in contravention of some prohibition of statute or rule of
public policy. There must also be some power of administration other than a mere
duty to perform a contract although the contract is for a third party beneficiary. A
declaration of terms is essential, and these must be stated with reasonable certainty
in order that the trustee may administer, and that the court, if called upon so to do,
may enforce, the trust.
4. Metropolitan Bank & Trust Company, Inc. vs. Board of Trustees of Riverside Mills
Corporation Provident and Retirement Fund 630 SCRA 350
FACTS:
The Riverside Mills Corporation (RMC) established a Plan for its regular employees.
The contributions to the plan shall form part of the Fund which shall be held, invested
and distributed by the Commercial Bank and Trust Company. The BOT of the fund
entered into an agreement with Philbank to act as an agent of the BOT and to hold,
manage, invest and reinvest the Fund in Trust Account No. 1797 in its behalf. When
RMC ceased its business operations, the BOD of Philbank decided to apply the
remaining trust assets held by it in the name of the Fund against part of the RMC’s
outstanding obligations.

When the unpaid employees of RMC learned of the trust account, they demanded
the payment of their share, which went unheeded. They, together with the members
of the Fund, filed a complaint for accounting against the BOD of Philbank and its
officers. The trial court ruled in favor of the BOT of RMC and was affirmed on appeal.
The BOD on petition for review on certiorari under Rule 45 of the Rules of Court
contends that without known claimants of the Fund for eleven (11) years since RMC
closed shop, it was justifiable for petitioner to consider the Fund to have “technically
reverted” to, and formed part of RMC’s assets. Hence, it could be applied to satisfy
RMC’s debts to Philbank.

ISSUE:
Whether the BOD’s contention is correct.

RULING:
No. The Court held that “a trust is a “fiduciary relationship with respect to property
which involves the existence of equitable duties imposed upon the holder of the title
to the property to deal with it for the benefit of another.” A trust is either express or
implied. Express trusts are those which the direct and positive acts of the parties
create, by some writing or deed, or will, or by words evincing an intention to create a
trust.”
6. Torbela vs. Rasario 661 SCRA 633

FACTS:
The spouses Eugenio and Marta Torbela received a parcel of land from Marta’s
sister. Upon the death of the spouses, the Land was adjudicated in equal shares
among their children. These children executed a Deed of Absolute Quitclaim over
the land in favor of their nephew, Dr. Rosario. Another Deed of Absolute Quitclaim
was executed, this time by Dr. Rosario, acknowledging that he only borrowed the
land and was already returning it to his aunts and uncles. The latter Deed was
notarized but was not immediately annotated on the title of the land, hence, the title
was still in the name of Dr. Rosario. Dr. Rosario mortgaged the land to Banco
Filipino for a loan. Dr. Rosario failed to pay the loan and the mortgage was extra-
judicially foreclosed.
The children then filed a complaint for recovery of ownership and possession of the
subject land against Dr. Rosario and Banco Filipino. The trial court ruled in their
favor which was affirmed by the Court of Appeals.

ISSUE:
Whether an express trust was created in this case.

RULING:
Yes. The Court held that “Express trusts are created by direct and positive acts of
the parties, by some writing or deed, or will, or by words either expressly or
impliedly evincing an intention to create a trust. Under Article 1444 of the Civil
Code, “[n]o particular words are required for the creation of an express trust, it
being sufficient that a trust is clearly intended.”62 It is possible to create a trust
without using the word “trust” or “trustee.” Conversely, the mere fact that these
words are used does not necessarily indicate an intention to create a trust. The
question in each case is whether the trustor manifested an intention to create the
kind of relationship which to lawyers is known as trust. It is immaterial whether or
not he knows that the relationship which he intends to create is called a trust, and
whether or not he knows the precise characteristics of the relationship which is
called a trust.”
7. TRUST PENALBER VS. RAMOS G.R. No. 178645. January 30, 2009

Facts: Petitioner operated a hardware store in a building along Bonifacio St.,

Tuguegarao, Cagayan, which stood in a commercial lot owned by Maria Mendoza,
from whom the petitioner rented the same. In 1982, petitioner allowed respondents to
manage the store. In 1984, Mendoza put the Bonifacio property for sale. Having no
funds, Petitioner allegedly entered into a verbal agreement with respondents
stipulating that the latter shall buy the property in behalf of the petitioner and the
consideration for the lot shall be paid from the accumulated earnings of the store. On
September 20, 1984, respondents returned the management of the store to the
petitioner with an inventory showing a difference of P116,946.15. The petitioner then
demanded from the respondents the reconveyance title of the property but the latter
refused. Petitioner argues that the respondents are mere trustees of the property and
thus, are under moral and legal obligation to reconvey the property to her. Petitioner
further argues that the difference in the inventory proves that such amount was used
to pay for the purchase price of the property. Respondents, on the other hand,
contend that they have the full ownership of the property because they paid for it out
of their own funds. The petitioner filed a case before the RTC which rendered a
judgment in favor of the petitioner, which was later on reversed by the Court of
Appeals. Issue: Whether there is a valid and enforceable trust. Held:

No, the Court ruled that petitioner’s allegations as to the existence of an express trust
agreement with respondent spouses Ramos, supported only by her own and her son
Johnson’s testimonies, do not hold water. A resulting difference of P116,946.15 in the
beginning inventory of the stocks of the hardware store and the second inventory
thereof, by itself, is not conclusive proof that the said amount was used to pay the
purchase price of the Bonifacio property, such as would make it the property of
petitioner held merely in trust by respondent spouses Ramos.

10. Miguel J. Osorio Pension Foundation, Inc. vs. CA and CIR
GR # 162175 June 28, 2010
Facts:
Petitioner is a non-stock and nonprofit corporation – it was organized for the purpose
of holding title to and administering the employees trust or retirement funds
(Employees Trust Fund) established for the benefit of the employees of Victoria’s
Milling Company Inc. (VMC).
Petitioner as trustee claims that the income earned by the employees Trust Fund is
tax exempt under Sec. 53(b) (now Sec. 60 (b) of the NIRC. Petitioner as trustee of
the employees fund invested part of said fund to purchase a lot in Madrigal Business
Park (MBP) located in Muntinlupa. Since petitioner needed funds to pay the
retirement and pension benefits of VMC employees and to reimburse advances
made by VMC, petitioner’s board of trustees authorized the sale of its share in the
MBP lot.
VMC eventually sold the MBP lot to Metrobank and as withholding agent; Metrobank
paid the amount of PHP 6, 125, 625.00 as withholding tax on the sale of the real
property.
Petitioner claims that it is a co-owner of the MBP lot as trustee of the Employees
Trust Fund. Further, it contends that the Employees Trust Fund is exempt from
income tax. Since petitioner as trustee purchased 49.59% of the MBP lot using funds
of the Trust Fund, it asserts that their 49.59% share in the income tax paid amounting
to PHP 3, 037, 697.40 rounded off to PHP 3, 037, 500 should be refunded. It
maintained that the tax exemption of the Trust Fund rendered the payment of income
tax as illegal or erroneous – which resulted in filing a claim for tax refund.
As action, the BIR stated that under Sec 26 of the Tax Code, petitioner is not exempt
from tax on its income from the sale of real property. The BIR asked petitioner to
submit documents to prove its co-ownership of the MBP lot and its exemption from
tax.
Petitioner in reply said that the applicable provision granting its claim for tax
exemption is not Sec. 26 but Sec. 53 (b) of the Tax Code and that its co-ownership of
the MBP lot is evidenced by Board Resolution #s 92-34 and 96-46 and the MOA
among petitioner, VMC and its subsidiaries.
Since the BIR failed to act on petitioner’s claim, it was elevated to CIR - again no
action was taken hence, a petition for tax refund before the CTA was filed.
The CTA ruled that Sec. 53 (b) of the Tax Code talks about exemption from income
tax on the income or earnings of the Employees trust Fund. Also, that the petitioner is
not the pension trust itself but is a separate and distinct entity whose function is to
administer the pension plan for some VMC employees.
As to the co-ownership of the lot, the CTA ruled that the evidences are selfserving
and cannot themselves prove the co-ownership of the petitioner of the MBP lot.
Further, petitioner failed to present any evidence to prove that the money used to
purchase the MBP lot came from the Employees Trust Fund. Thus, petitioner is
estopped from claiming a tax exemption.
When the claim was filed before the CA, the CA agreed that the pieces of
documentary evidence submitted are largely self-serving and can be contrived easily
and that the documents failed to show that the funds used to purchase the MBP lot
came from the Employees Trust Fund. Hence this petition.
Issue: Whether or not petitioner is entitled to claim a refund for the income tax paid
on the sale of its co-owned MBP lot in its capacity as trustee of the Employees Trust
Fund.
Ruling: The court ruled that, the tax-exempt character of petitioner’s Employees Trust
Fund is not an issue in this case because the tax-exempt character of the Employees
Trust Fund has long been settled. It is also settled that petitioner exist for the purpose
of holding title to and administering the tax exempt Employees Trust Fund which was
established for the benefit of VMC’s employees. As such, petitioner has the
personality to claim tax refunds due to the Employees Trust Fund.
As to the proof of co-ownership of the MBP lot, the law expressly allows a co-owner
(1st co-owner) of a parcel of land to register his proportionate share in the name of
his coowner (2nd co-owner) in whose name the entire land is registered. The 2nd co-
owner serves as a legal trustee of the 1st co-owner insofar as the proportionate
share of the 1st coowner is concerned. The 1st co-owner remains the owner of his
proportionate share and not the 2nd co-owner in whose name the entire land is
registered, as provided in Art. 1452 of the NCC.
The income from the trust fund investments is therefore exempt from the payment of
income tax and consequently from the payment of the creditable withholding tax on
the sale of their real property. Thus, the Employees Trust Fund owns 49.59% of the
MBP lot.
Since petitioner has proven that the income from the sale of the MBP lot came from
an investment by the Employees Trust Fund, petitioner as trustee is entitled to claim
the tax refund of PHP 3, 037, 500.00 – which was erroneously paid in the sale of the
MBP lot.