G.R. No.

L-27014

October 5, 1927

securing the indebtedness. Marcelino

later on paid the sum in full satisfaction
of the entire claim and received from
Baas a reconveyance of the three
parcels. The widow, Paulina Cristobal,
and the children of Epifanio Gomez
instituted an action for the recovery of
the three parcels of land from
Marcelino Gomez.

PAULINA CRISTOBAL, ET AL., plaintiffsappellees,

vs.
MARCELINO GOMEZ, defendant-appellant.
Facts:

Epifanio Gomez owned a property

which was sold in a pacto de retro sale
to Luis Yangco redeemable in 5 years,
although the period passed without
redemption, the vendee conceded the
vendor the privilege of repurchase.
Gomez apply to a kinsman, Bibiano
Baas, for assistance on a condition
that he will let him have the money if
his brother Marcelino Gomez and his
sister Telesfora Gomez would make
themselves responsible for the loan.
The siblings agreed and Baas advance
the sum of P7000 which was used to
repurchase the property in the names
of Marcelino and Telesfora..
A private partnership in participation
was created between Marcelino and
Telesfora and therein agreed that the
capital of the partnership should
consist of P7000 of which Marcelino
was to supply the amount of P1500 and
Telesora the sume of P5500.
It was further agreed that the all the
property to be redeemed shall be
named to the two, that Marcelino
should be its manager, that all the
income, rent, produce of the property
shall be applied exclusively to the
amortization of the capital employed
by
the
two
parties
with
its
corresponding interest and other
incidental expenses and as soon as the
capital employed, with its interest and
other incidental expenses, shall have
been covered, said properties shall be
returned to Epifanio Gomez or his
legitimate children.
A year after Epifanios death, Telesfora
wanted to free herself from the
responsibility which she had assumed
to Baas and conveyed to Marcelino
her interest and share in the three
properties previously redeemed from
Yangco and both declared dissolved the
partnership they created.
With Marcelino as the sole debtor,
Baas required him to execute a
contract of sale of the three parcels
with pacto de retro for the purpose of

Defendants argument: Defendant answered

with a general denial and claimed to be the
owner in his own right of all the property which
is the subject of the action. He further claimed
that the trust agreement was kept secret from
Epifanio Gomez, and that, having no
knowledge of it, he could not have accepted it
before the stipulation was revoked. And that he
has the benefit of prescription in his favor,
having been in possession of more than 10
years under the deed which he acquired the
sole right from his sister.
RTCs ruling: ruled in favor of plaintiffs and
found that the property in question belongs to
the plaintiffs, as co-owners, and ordered the
defendant to surrender the property to them
and execute an appropriate deed of transfer as
well as to pay the cost of the proceeding.
Issues:
1.

W/N the dissolution of partnership

between Marcelino and Telesfora
destroyed the beneficial right of
Epifanio Gomez in the property.

2.

W/N the partnership agreement of

Marcelino
and Telesfora was a donation in favor of
Epifanio or an express trust.

3.

W/N Marcelino Gomez acquired the

property through prescription.

Ruling: SC declared ownership in favor of

plaintiffs.
(1) The fact that one of the two individuals
who have constituted themselves
trustees for the purpose above
indicated conveys his interest in the
property to his cotrustee does not
relieve the latter from the obligation to
comply with the trust.
(2) A trust constituted between two
contracting parties for the benefit of a
third person is not subject to the rules
governing donations of real property.
The beneficiary of the trust may

demand performance of the obligation

without having formally accepted the
benefit of the trust in a public
document, upon mere acquiescence in
the formation of the trusts and
acceptance under the second par. of
article 1257 of the CC. Much energy
has been expanded by the attorneys
for the appellant in attempting to
demonstrate that, if Epifanio at any
time had any right in the property by
virtue of the partnership agreement
between Marcelino and Telesfora such
right could be derived as a donation
and that, inasmuch as the donation

was never accepted by Epifanio in a

public document, his supposed interest
therein is unenforceable. The
partnership should not be viewed in
light of an intended donation, but as an
express trust.
(3) As against the beneficiary, prescription
is not effective in favor of a person who
is acting as a trustee of a continuing
and subsisting trust. Therefore,
Marcelino cannot acquire ownership
over the property through prescription.