41. Ramos, Jeni Eunice A.

Huang vs. CA
G.R. No. 108525 September 13, 1994

Facts:
Dolores Sandoval bought two (2) lots in Dasmarias Village, Lot 20 and 21.
Lot 21 was registered in her name; however, Lot 20 was registered in her
brothers name, Petitioner Ricardo Huang. This was because the spouses
Milagros and Ricardo Huang advised Dolores that the subdivision owner
forbade the acquisition of two (2) lots by a single individual. Dolores
constructed a residential house in Lot 21 and Ricardo asked Dolores
permission to construct a small residential house in Lot 20. She agreed and
she also allowed Ricardo to mortgage Lot 20 to the Social Security System
(SSS) to secure payment for his loan for putting up the said house. Despite
the loan, Dolores actually financed the construction of the house, the
swimming pool and the fence in Lot 20 knowing that the Huang Spouses
merely holds title in trust for her beneficial interest.
Dolores requested the Huangs to execute a Deed of Absolute Sale with
Assumption of Mortgage of Lot 20 with all its improvements in favor of her to
protect her rights, and they obliged. The Huangs then leased the house,
years after the execution of Deed of Sale, to Deltron-Sprague Electronics
Corporation without Dolores permission. She tolerated it but challenges to
her ownership arise when Deltron started prohibiting Dolores family from
using the swimming pool. The Huangs contended that the implied trust
among them was not supported by evidence and that they were the rightful
owner of Lot 20 and all of its improvements.
Issue:
Whether or not an implied trust existed between Dolores and the Huangs,
and was supported by any evidence.
Held:
Yes. Dolores was able to prove with overwhelming evidence that she
purchased Lot 20 with her own money and the spouse Huangs evidence
failed to help them establish ownership. In the case at bar, Dolores provided
the money for the purchase of Lot 20 but the corresponding Deed of Sale and
TCT were placed in the name of Ricardo Huang because she was advised that

it was prohibited by the subdivision owner the acquisition of two (2) lots by a
single individual. In effect, Ricardo became a trustee of Lot 20 and all of its
improvements for the benefit of Dolores. Article 1448 of the New Civil Code
provides that there is an implied trust when property is sold and the legal
estate is granted to one party but the price is paid by another for the
purpose of having beneficial interest for the property. A resulting trust arises
because of the presumption that he who pays for a thing intends a beneficial
interest therein for himself.

43. Anonuevo, Ma. Criselda A.

JOSUE ARLEGUI vs. HON. COURT OF APPEALS and SPOUSES GIL AND BEATRIZ
GENGUYON
G.R. No. 126437. March 6, 2002
FACTS:
The object of the controversy is a residential apartment unit (no. 15) located at the
corner of Romualdez and Kalentong Streets in Mandaluyong City. The said property was
formerly owned by Serafia Real Estate, Incorporated (hereinafter referred to as Serafia), a
company owned by Alberto, Alfonso and Simeon, all surnamed Barretto, and their siblings Rosa
B. Ochoa and Teresita B. Alcantara. For more than twenty (20) years, unit no. 15 was leased by
Serafia to the spouses Gil and Beatriz Genguyon. In a letter dated March 26, 1984, the
Genguyon spouses, along with the other tenants in the apartment building were informed by
Alberto Barretto that Serafia and its assets had already been assigned and transferred to A.B.
Barretto Enterprises. Apprehensive that they were about to be ejected from their respective
units, the tenants formed an organization called the Barretto Apartment Tenants Association.
They elected officers from among themselves to represent them in the negotiations with A.B.
Barretto Enterprises for the purchase of their respective apartment units. Among those elected
were Josue Arlegui as vice-president and Mateo Tan Lu as auditor of the association. Sometime
thereafter, believing that negotiations were still ongoing, the Genguyons were surprised to learn
on January 23, 1987 that the unit they were leasing had already been sold to Mateo Tan Lu.
This notwithstanding, the Genguyons continued to occupy the subject premises and paid the
rentals therefore. The following year, or on July 7, 1988, the Genguyons were informed that
Mateo Tan Lu had sold the subject apartment unit to Josue Arlegui. Not long thereafter, they
received a letter from Arleguis lawyer demanding that they vacate the premises. When they
failed to accede to Arleguis demand, the latter filed an action for ejectment against the
Genguyons before the Metropolitan Trial Court of Mandaluyong City..
On January 11, 1990, the RTC ordered the issuance of a writ of preliminary injunction
directing the MTC to desist from taking further action in the ejectment case pending before it.
On March 22, 1991, the RTC rendered judgment in favor of Arlegui. The respondents
herein filed thir appeal in the Court of Appeals. The Court of Appeals made the following
conclusions:
1)
There existed between the Genguyons and the officers of the tenants association,
particularly Mateo Tan Lu and Josue Arlegui, a fiduciary relationship;
2)
Mateo Tan Lu and Josue Arlegui committed a breach of trust when they purchased the
apartment unit leased by the Genguyons;
3)
Josue Arlegui is not an innocent-purchaser for value nor a buyer in good faith;
4)
The RTC erred in finding that the Genguyons action was premised on their right of first
preference under the Urban Land Reform Law; and
5)
The Genguyons are not estopped from denying Arleguis ownership of the subject
property for no lessor-lessee relationship was established between them.

On February 14, 1996, the Court of Appeals rendered judgment in CA-G.R. CV No.
32833, annulling and setting aside the RTC decision.
ISSUE:
Whether or not there's a breach of trust committed by the petitioner?
HELD:
Yes. The petitioner breach the trust reposed on them as officers of, and negotiators for,
the tenants association, we are constrained to affirm the findings and conclusions of the Court
of Appeals.
The Supreme Court has long stated that:
If a person obtains legal title to property by fraud and concealment, Courts of equity will
impress upon the title a so called constructive trust in favor of the defrauded party.
The petitioner cannot claim to be innocent or unaware of Mateo Tan Lus underhanded method
of acquiring the subject property. He himself bought the said apartment unit in a manner that
cannot be countenanced by the courts. We agree with the following pronouncements of the
Court of Appeals:
x x x Like Mateo Tan Lu, Arlegui was one of the trusted officers of the
Association charged with negotiating for the purchase of the apartment units. In fact, he
was the First Vice-President thereof. Thus, he was privy to all the discussions that took
place within and between both sides. Arlegui knew that like all the other bona fide
tenants of the apartment, the Genguyons had the right to purchase their apartment unit
in accordance with the Associations original agreement with the Barrettos. And so
knowing the negotiation terms firsthand and employing the same to his own benefit and
profit, Arlegui could not be considered as an innocent purchaser for value, or a buyer in
good faith.
The petitioner denies that a constructive trust was created and maintains that there was
no fraud committed. He neither received money from the Genguyons, nor was he unjustly
enriched. However, the records show that the Genguyons, along with the other tenants and
members of the association, contributed money to enable the officers to negotiate with the
Barrettos. Besides, constructive trusts do not only arise out of fraud or duress, but also by
abuse of confidence, in order to satisfy the demands of justice.
It is further argued that no implied trust, as defined under Article 1456 of the New Civil
Code, was created because the petitioner did not acquire the subject property through mistake
or fraud. Nevertheless, the absence of fraud or mistake on the part of the petitioner does not
prevent the court from ruling that an implied or constructive trust was created nonetheless
In American law and jurisprudence, We find the following general principles:
A constructive trust, otherwise known as a trust ex maleficio, a trust ex delicto, a
trust de son tort, an involuntary trust, or an implied trust, is a trust by operation of law
which arises contrary to intention and in invitum, against one who, by fraud, actual or
constructive, by duress or abuse of confidence, by commission of wrong, or by any form
of unconscionable conduct, artifice, concealment, or questionable means, or who in any

way against equity and good conscience, either has obtained or holds the legal right to
property which he ought not, in equity and good conscience, hold and enjoy. It is raised
by equity to satisfy the demands of justice. However, a constructive trust does not arise
on every moral wrong in acquiring or holding property or on every abuse of confidence in
business or other affairs; ordinarily such a trust arises and will be declared only on
wrongful acquisitions or retentions of property of which equity, in accordance with its
fundamental principles and the traditional exercise of its jurisdiction or in accordance
with statutory provision, takes cognizance. It has been broadly ruled that a breach of
confidence, although in business or social relations, rendering an acquisition or retention
of property by one person unconscionable against another, raises a constructive trust.
And specifically applicable to the case at bar is the doctrine that A constructive trust is
substantially an appropriate remedy against unjust enrichment. It is raised by equity in respect
of property, which has been acquired by fraud, or where, although acquired originally without
fraud, it is against equity that it should be retained by the person holding it.
The above principle is not in conflict with the New Civil Code, Code of Commerce, Rules
of Court and special laws. And since We are a court of law and of equity, the case at bar must
be resolved on the general principles of law on constructive trust which basically rest on
equitable considerations in order to satisfy the demands of justice, morality, conscience and fair
dealing and thus protect the innocent against fraud. As the respondent court said, It behooves
upon the courts to shield fiduciary relations against every manner of chickanery or detestable
design cloaked by legal technicalities. (76 Am. Jr. 2d, Sec. 221, pp. 446-447)
There is no doubt that because of Tan Lu and Arleguis violation of the trust and
confidence reposed in them as officers and negotiators in behalf of the tenants-members of the
Association, damages have accrued upon spouses Genguyons for which they must be
indemnified.
WHEREFORE, in view of all the foregoing, the petition is DENIED and the Decision of
the Court of Appeals in CA-G.R. No. 32833 is hereby AFFIRMED and MODIFIED

44. Siaton, Alfred Cyrus P.

Ruperto Viloria v. Court of Appeals
Topic Related: Express Trust

G.R. No. 119974 June 30, 1999

Facts:
The petitioner and private respondents as co-owners of the 2/3 portion of the commercial lot located in
Cabua-an Oeste, Balaoan, La Union, under the name of Ruperto L. Viloria as trustee, and 1/3 portion of the orchard
located in Nalasin, Balaoan, La Union, under the name of Ruperto, Nicolasa and Rosaida, all surnamed Viloria.
December 1980 Nicolasa Viloria passed away, followed by her sister Rosaida in June 1989. Both died single
and without issue, survived by their brothers Ruperto L. Viloria, Anastacio L. Viloria, the heirs of their sister
Felicitacion V. Cacanando, who predeceased them, namely, Lida C. Aquino and Manuel V. Cacanando, and the heirs
of their other sister Josefina V. Ancheta, who likewise predeceased them, namely, Rodolfo V. Ancheta, Estrella V.
Ancheta and Carmen A. Nicolasura.
On 18 February 1991 the heirs of Rosaida and Nicolasa Viloria filed an action for partition with the Regional
Trial Court of Balaoan, La Union, against their co-heir Ruperto L. Viloria. The heirs alleged that during the lifetime of
Nicolasa and Rosaida they were co-owners in equal shares and pro-indiviso with Ruperto L. Viloria of a commercial
lot and an orchard. After Nicolasa and Rosaida died, their heirs demanded from Ruperto L. Viloria, who was in
possession of the properties, to partition the same among them but he refused claiming that during their lifetime
Nicolasa and Rosaida sold and conveyed to him all their shares, interests and participation over the properties in
question.
Ruperto alleged that Nicolasa and Rosaida sold the commercial lot to him by virtue of a deed of sale
executed on 10 August 1965 and duly registered in the Office of the Register of Deeds of La Union, while the heirs of
Josefina V. Ancheta sold and relinquished to him all their claims and ownership over the commercial lot. As regards
the orchard, Ruperto further alleged that it came to his possession when Nicolasa sold to him her share of the land
and the ancestral house standing thereon by virtue of a private agreement written in Ilocano, referred to as
Catulagan, dated 10 June 1978, while Rosaida sold to him her share of the property by virtue of a deed of sale
dated 10 September 1987.
Refuting Rupertos allegations, the heirs of Nicolasa and Rosaida maintained that the transfer of title of the
commercial lot in the name of Ruperto Viloria was only for loan purposes and not to convey and relinquish ownership
over the property, and that Ruperto assured Nicolasa and Rosaida that they would remain as co-owners and the
deed of sale returned to them. As proof of this arrangement, the heirs asserted that Nicolasa and Rosaida exercised
acts of administration and dominion over the property and collected rentals from the buildings standing thereon for 25
years or until they died.
Through their co-heirs Lida C. Aquino and Atty. Gerardo Viloria, private respondents also asserted that while
Rosaida Viloria executed a deed of sale conveying her share of the orchard to Ruperto Viloria, it was without any
consideration.
However, upon realization of the iniquitous nature of the document, Rosaida Viloria immediately executed a deed of
revocation of the sale.
On 6 April 1992 the trial court ruled that title over the commercial lot was not in reality transferred in the
name of Ruperto L. Viloria for the reason that the parties to the deed of sale merely intended to create an express
trust. By admitting the trust and assuring his sisters Nicolasa and Rosaida as well as private respondents that they
would remain as co-owners, an express trust had been created. Petitioner Ruperto Viloria thus became only a trustee
to an express trust which incapacitated him from acquiring for his own benefit the property committed to his custody

although titled in his name. Nicolasa and Rosaida remained as co-owners of the commercial lot, which upon their
demise passed on to their heirs.
The trial court declared that there was no effective conveyance of the 1/3 share of Rosaida over the orchard
in Nalasin since the document of conveyance was in effect nullified when Rosaida executed the deed of revocation.
Consequently, the trial court declared Ruperto L. Viloria and the other heirs as co-owners of the entire portion of the
commercial lot and the entire orchard, and ordered a partition of the properties such that the commercial lot and the
orchard would be divided into four (4) equal parts each, 1/4 for Ruperto Viloria and 3/4 for the other heirs.

The heirs of Nicolasa and Rosaida maintained that the transfer of title of the commercial lot in the name of
Ruperto Viloria was only for loan purposes and not to convey and relinquish ownership over the property,
and that Ruperto assured Nicolasa and Rosaida that they would remain as co-owners and the deed of
sale returned to them. As proof of this arrangement, the heirs asserted that Nicolasa and Rosaida
exercised acts of administration and dominion over the property and collected rentals from the buildings
standing thereon for 25 years or until they died.
Petitioner argues that the existence of an express trust cannot be deduced from the collection of rentals by
Nicolasa and Rosaida since what they collected were merely rentals for the use of the buildings and improvements
on the property as differentiated from rentals for the use of the land itself. Neither can the existence of an express
trust be inferred from the consent and conformity to the waiver of rights issued by Nicolasa and Rosaida since they
were not signatories to the actual document, petitioner being the sole signatory thereto
Issue:
1.) Whether or not there is an express trust between Ruperto Nicolasa and Rosaida
2.) Whether or not the 1965 deed of sale which created an express trust relinquished the right to claim of ownership
by Nicolasa and Rosaida over the property
Held:
1. Yes, On 6 April 1992 the trial court ruled that title over the commercial lot was not in reality transferred in the name
of Ruperto L. Viloria for the reason that the parties to the deed of sale merely intended to create an express trust. By
admitting the trust and assuring his sisters Nicolasa and Rosaida as well as private respondents that they would
remain as co-owners, an express trust had been created. Petitioner Ruperto Viloria thus became only a trustee to an
express trust which incapacitated him from acquiring for his own benefit the property committed to his custody
although titled in his name.[5] Nicolasa and Rosaida remained as co-owners of the commercial lot, which upon their
demise passed on to their heirs.
2. The Court finds that the 1965 deed of sale was in fact an express trust and hence no actual conveyance took
place. The owners Nicolasa and Rosaida did not relinquish their claim of ownership over the commercial lot but
continued to exercise acts of administration and dominion over it, hence, it continued to form part of their estate and
devolved upon their demise on their heirs.
The decision of the Court of Appeals declaring petitioner (Ruperto Viloria) and private respondents (Heirs of Nicolasa
and Rosaida) as co-owners of the 2/3 portion of the commercial lot located in Cabua-an Oeste (Poblacion), Balaoan,
La Union, in the name of Ruperto Viloria as trustee. The properties in Cabua-an Oeste and Nalasin, Balaoan, La
Union, shall be divided into 4 equal parts: 1/4 for petitioner, and 3/4 for private respondents

45. DEL ROSARIO, Ruben Jose Jr. G.

Secuya vs. Vda. de Selma (2000)
G.R. No. 136021

Facts: Case started with an action for quieting of title filed by several petitioners all surnamed Secuya
against Selma.
Petitioners Secuya alleged: Maxima Caballero owned certain Friar Lands by virtue of a patent.
Maxima entered into AGREEMENT OF PARTITION in 1938 with Pacenca Sabellona for 1/3 of the
property. Pacencia Sabellona took possession and occupation of the property. Pacencia sold 3000 sq. m.
portion thereof to Dalmacio Secuya. Dalmacio and his brothers and sisters eventually took possession of
the lot, and even built a house in 1974. Dalmacio Secuyas heirs are the plaintiffs in the case.
Respondent Selma alleged: She bought the lot sometime in February 1975 from Cesaria
Caballero as evidenced by a notarized Deed of Sale and have been in possession of the same since
then.
The RTC and CA both held in favor of Selma. Hence, this petition.
Issue: Whether or not there was a valid transfer of 1/3 of Lot 5679 by Maxima Caballero in favor of
Pacencia Sabellona, by virtue of the Agreement of Partition. (RELATED TO TRUSTS)
Held: No, the petition fails to show any reversible error.
In the Agreement of Partition, it states I, MAXIMA CABALLERO as soon as the application is
approved by the Director of Lands, I hereby bind myself to transfer 1/3 portion of the lot in favor of my
aunt Pacencia Sabellona y Caballero. Notwithstanding its purported nomenclature, this agreement is not
one of partition because there was no property to partition and the parties were not co-owners. Rather, it
is in the nature of a trust agreement. The Agreement of Partition involves an express trust. That Maxima
Caballero bound herself to give 1/3 of the lot to Pacencia Sabellona upon the approval of the formers
application is clear from the terms of the agreement. As a result of the Agreement, Maxima Caballero held
the portion specified therein as belonging to Pacencia Sabellona when the application was eventually
approved and a sale certificate was issued in her name. Thus, she should have transferred the same to
the latter, but she never did so during her lifetime. Instead, her heroes sold the lot to Silvestre Aro,
husband of Cesaria Caballero, in 1955.
Petitioners and their successors-in-interest did not do anything to enforce their proprietary rights
over the disputed property. In fact, they did not even register the said agreement with the registry of
property nor pay the requisite land taxes. While no time limit is imposed for the enforcement of rights
under express trusts, prescription may, however, bar a beneficiarys action for recovery, if a repudiation of
a trust is proven by clear and convincing evidence and made known to the beneficiary. There was a
repudiation of the express trust when the heirs of Maxima Caballero failed to deliver or transfer the
property to Pacencia Sabellona, and instead sold the same toa third person not privy to the Agreement.
Equally important, the Agreement was not registered; thus, it could not bind third persons. Neither was
there any allegation that Silvestre Aro, who purchased the property from Maximas heirs, knew of it.
Consequently, the subsequent sales transactions involving the land in dispute and the titles covering it
must be upheld, in the absence of proof that the said transaction were fraudulent and irregular.
PETITION DENIED. ASSAILED DECISIONS AFFIRMED.
46. MELGAR, Marjorie N.
HEIRS OF SALVADOR HERMOSILLA vs. Spouses JAIME & LUZ REMOQUILLO

G.R. No. 167320 January 30, 2007

Topic: Implied Trust
Facts:
In 1931, the Republic of the Philippines acquired through purchase the San Pedro Tunasan
Homesite. Apolinario Hermosilla, who was occupying a lot in San Pedro Tunasan Homesite, caused the
subdivision of the lot into two, Lot 12 and Lot 19. In 1962, Apolinario executed a Deed of Assignment
transferring possession of Lot 19 in favor of his grandson, respondent Jaime Remoquillo. The Land
Tenure Administration (LTA) later found that Lot 19 was still available for disposition to qualified
applicants, thus, Jaime, being its actual occupant, filed an application to acquire it a year after.
Apolinario conveyed Lot 12 to his son Salvador Hermosilla, Jaimes uncle. Salvador later filed an
application to purchase Lot 12, which the LTA granted in 1971. In 1972, Jaime and his uncle Salvador
forged a "Kasunduan ng Paglipat Ng Karapatan sa Isang Lagay na Lupang Solar" whereby Jaime
transferred ownership of the 65 square meters (the questioned property) in favor of Salvador. In 1986, the
NHA (then LTA) later awarded Lot 19 to Jaime for which he and his wife were issued a TCT.
Petitioners filed an action for Annulment of Title on the ground of fraud with damages against
Jaime and his wife, before the RTC alleging that Jaime had conveyed to his uncle Salvador the
questioned propertypart of Lot 19, by virtue of the Kasunduan.
RTC ruled in favour of Jaime. CA reversed RTCs decision holding that the Kasunduan was void
because at the time of its execution, the Republic of the Philippines was still the owner of Lot 19, hence,
no rights were transmitted to both Jaime and Salvador. Also, the CA held that the action had prescribed, it
having been filed in 1992, more than 4 years from the issuance to Jaime and his wife of the TCT. Hence,
this petition.
Issue: Whether or not the petitioners can seek reconveyance of the property based on implied trust.
Held: NO. The SC held that an action for reconveyance based on an implied trust prescribes in 10
years. The ten-year prescriptive period applies only if there is an actual need to reconvey the property as
when the plaintiff is not in possession of the property. However, if the plaintiff, as the real owner of the
property also remains in possession of the property, the prescriptive period to recover the title and
possession of the property does not run against him. In such a case, an action for reconveyance, if
nonetheless filed, would be in the nature of a suit for quieting of title, an action that is imprescriptible.
Since there was no actual need to reconvey the property as petitioners remained in possession
thereof, the action took the nature of a suit for quieting of title, it having been filed to enforce an alleged
implied trust after Jaime refused to segregate title over Lot 19. One who is in actual possession of a
piece of land claiming to be the owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right.
The lots cannot be transferred to both Jaime and Salvador since Lot 19, of which the questioned
property forms part, was still owned by the Republic. Nemo dat quod non habet. Jaime could not thus
have transferred anything to Salvador via the Kasunduan. For an action for reconveyance based on fraud
to prosper, the plaintiff must prove by clear and convincing evidence not only his title to the
property but also the fact of fraud. Petitioners failed to discharge this burden, however.

47. CABRERA, Errol D.

TOMAS v. CA
Topic: (Implied Trust; Prescription)
FACTS: Respondents are the vendees of a parcel of land measuring 105 square meters covered by Tax
Declaration in the names of certain Cirila Mistica and her children. The original deed executed on
September 5, 1961 covered 57 square meters but the second deed executed on February 5, 1963
covered 105 square meters instead of 57 square meters. Respondents claimed to be in possession since
1963 of said parcel of land, where they constructed valuable improvements, including a 3-door apartment
in 1963. In the year 1978, respondents discovered that defendant-petitioners together with their deceased
brother, Lazaro Tomas, applied for the registration of a parcel of land of the Meycauayan Cadastre, and
"either by mistake or by design" included therein a portion of the land belonging to respondents consisting
of 65 square meters adjacent to the parcel owned by petitioners on the Northern part thereof, and
obtained Original Certificate of Title of the Registry of Deeds of Bulacan, which included the said 65
square meters of land. Petitioners refused to reconvey the said land to respondents, thus an action for
reconveyance was instituted. The action for reconveyance was filed by respondents against petitioners
before the Court of First Instance of Bulacan on January 2, 1979.
CFI Bulacan: rendered judgment in favor of the petitioners and against respondents
CA: reversed the decision of the court a quo. Hence, this petition.
ISSUE: WoN prescription will lie against the petitioners
HELD: NO! Under Article 1456 of the Civil Code: "If a property is acquired through mistake or fraud, the
person obtaining it, is, by force of law considered a trustee of an implied trust for the benefit of the person
from whom the property comes." In the present case, prescription will not lie in favor of the petitioners
who are not even in possession of the disputed land. Undoubtedly, they obtained the property by mistake
or fraud so that by operation of law, they are considered as trustees of an implied trust for the benefit of
the respondents from whom the property came.
It is well-settled that an action for reconveyance based on an implied trust or constructive trust prescribes
in ten years from the issuance of torrens title over the property which must be brought within ten years
from the time of accrual of the cause of action. Respondent's action for reconveyance was filed on

January 2, 1979, one year from the time respondents discovered that petitioners together with their
deceased brother applied for the registration of a parcel of land known as Lot No. 2626, in 1978.
An action for reconveyance is a legal remedy granted to a rightful owner of land wrongfully or erroneously
registered in the name of another to compel the latter to reconvey the land to him.
The prevailing rule in this jurisdiction does not bar a landowner whose property was wrongfully or
erroneously registered under the Torrens System from bringing an action after one year from issuance of
the decree, for the reconveyance of the property in question. Such action for reconveyance does not seek
to set aside the decree but, respecting the decree as incontrovertible and no longer open to review,
instead seeks to transfer or reconvey the land from the registered owner to the rightful owner. Petition is
DISMISSED and the decision appealed from is AFFIRMED.
47. CANCIO, Ryan John
ELENA J. TOMAS, CAMILO ADINA, RICARDO J. TOMAS and JOSE J. TOMAS , petitioners, vs. THE
COURT OF APPEALS, MAXIMA CARREON and AMADO D. NOLASCO, and SECOND BULACAN
DEVELOPMENT BANK, respondents.
[G.R. No. 79328. May 21, 1990.]
FACTS:
Respondents are the vendees of a parcel of land measuring 105 square meters covered by Tax
Declaration No. 2502 in the names of certain Cirila Mistica and her children. The original deed executed
on September 5, 1961 covered 57 square meters (Exhibit "R") but the second deed executed on February
5, 1963 covered 105 square meters instead of 57 square meters.Respondents claimed to be in
possession since 1963 of said parcel of land, where they constructed valuable improvements, including a
3-door apartment in 1963.
In 1978, respondents discovered that defendant-petitioners together with their deceased brother,
Lazaro Tomas, applied for the registration of a parcel of land known as Lot No. 2826 of the Meycauayan
Cadastre, and "either by mistake or by design" included therein a portion of the land belonging to
respondents consisting of 65 square meters adjacent to the parcel owned by petitioners on the Northern
part thereof, and obtained Original Certificate of Title No. 0-6337 of the Registry of Deeds of Bulacan,
which included the said 65 square meters of land. Petitioners refused to reconvey the said land to
respondents, thus an action for reconveyance was instituted.

The action for reconveyance was filed by respondents against petitioners before the Court of First
Instance of Bulacan. After trial, the trial court rendered judgment in favor of the petitioners and against
respondents. On appeal, the Court of Appeals held that the judgment of the lower court be reversed and
another one entered ordering respondents to cause the segregation of the disputed portion of 65 sq.
meters presently occupied by plaintiffs. After the segregation order has been accomplished the Register
of Deeds of Bulacan was ordered to issue a new certificate of title conveying said 65 sq. meters in favor
of plaintiffs, and another certificate of title in favor of the defendants covering the remaining portion.
Hence the petition for review on certiorari seeking to reverse and set aside the decision of the
Court of Appeals in "Maxima Carreon, et al. vs. Elena J. Tomas, et al." Petitioners raised the following
assignments of errors to the effect that respondent Court of Appeals: (1) misapprehended the facts; and
(2) erred in not dismissing the complaint on the grounds of: (a) absence of allegation of fraud; (b) res
judicata; and (c) prescription or laches.
ISSUE:
The main issues in this case are: (1) whether or not the Court of Appeals has the right to change or
disturb the factual findings of the trial court; and (2) whether or not the respondents' complaint should be
dismissed on the above-stated grounds.
HELD:
1) While it is an established rule that appellate courts will not generally disturb the factual findings of the
trial court, considering that the latter is in a better position to decide the question (having heard the
witnesses themselves and observed their deportment and manner of testifying during the trial), this does
not apply in the case at bar where the lower court overlooked certain facts of substance and value which
if considered would affect the result of the case. The court a quo without basis, failed to consider that the
findings and conclusions of Alfredo Salenga, a Geodetic Engineer, that approximately 65 square meters
of the property of Cirila Mistica was included in Cadastral Lot No. 2826 in the name of Tomas Juson, were
based on actual ground verification survey, the technical descriptions on file with the Bureau of Lands and
the tax declarations and approved plan of adjoining property owners and other documents.

2) The Supreme Court held that the Court of Appeals correctly found:
a.

that the complaint alleges the commission of fraud by stating that petitioners while professing all

the time to recognize the rights of respondents to the said land, registered the same in their names;

b.

that an action for reconveyance is not barred by the finality of the judgment in the Land

Registration case, the former being an action in personam; and

c.

that the period of prescription or laches which is ten years has not yet expired.
Article 1456 of the Civil Code provides that: "If a property is acquired through mistake or fraud,

the person obtaining it, is, by force of law considered a trustee of an implied trust for the benefit of the
person from whom the property comes." In the present case, prescription will not lie in favor of the
petitioners who are not even in possession of the disputed land. Undoubtedly, they obtained the property
by mistake or fraud so that by operation of law, they are considered as trustees of an implied trust for the
benefit of the respondents from whom the property came.
It is well-settled that an action for reconveyance based on an implied trust or constructive trust
prescribes in ten years from the issuance of torrens title over the property which must be brought within
ten years from the time of accrual of the cause of action. Respondent's action for reconveyance was filed
on January 2, 1979, one year from the time respondents discovered that petitioners together with their
deceased brother applied for the registration of a parcel of land known as Lot No. 2626, in 1978. An
action for reconveyance is a legal remedy granted to a rightful owner of land wrongfully or erroneously
registered in the name of another to compel the latter to reconvey the land to him
The prevailing rule in this jurisdiction does not bar a land owner whose property was wrongfully or
erroneously registered under the Torrens System from bringing an action after one year from issuance of
the decree, for the reconveyance of the property in question. Such action for reconveyance does not seek
to set aside the decree but, respecting the decree as incontrovertible and no longer open to review,
instead seeks to transfer or reconvey the land from the registered owner to the rightful owner.

PREMISES CONSIDERED, the instant petition is hereby DISMISSED and the decision appealed
from is hereby AFFIRMED.

48. De La Pena, Arah Bea V.

Filipinas Port Services, Inc. VS Victoria Go, et al.
GR NO. 161886, March 16, 2007
FACTS:

Eliodoro Cruz was the president of Filipinas Port Services (Filports) until he lost for
reelection during the general stockholders meeting. Cruz, as petitioner, wrote a letter to the
Corporations Board of Directors (BOD) questioning the boards creation of the following
positions with a monthly remuneration of P 13,050.00 each, and the election of certain members
of the board, as herein respondents. Cruz requested the Board to take necessary actions to
recover from those elected, the salaries they have received. The Board did not show any specific
actions to address the letter. Hence, Cruz, in representation of Filports and its stockholders, filed
with the SEC a petition which he describes as a derivative suit against herein respondents who
were then the incumbent members of Filports BOD for alleged acts of mismanagement
detrimental to the interest of the Corporation and its shareholders. The RTC ruled that BOD have
the power to create positions not in the by-laws and can increase salaries. But Trinidad as
assistant vice president for corporate planning; and likewise de Castro and Chua as special
assistants respectively, to restore to the corporation the salaries they each received. An appeal
was made to the CA with the contention that the creation of the positions merely for
accommodation purpose.
ISSUES:
1.
2.

Whether or not there was mismanagement

Whether or not there is a proper derivative suit

HELD:
1.
NO. Under Section 35 of the Corporation Code, the creation of an executive
committee (as powerful as the BOD) must be provided for in the bylaws of the corporation.
Notwithstanding the silence of Filports bylaws on the matter, we cannot rule that the creation of
the executive committee by the board of directors is illegal or unlawful. One reason is the
absence of a showing as to the true nature and functions of executive committee . But even
assuming there was mismanagement resulting to corporate damages and/or business losses,
respondents may not be held liable in the absence of a showing of bad faith in doing the acts
complained of. ("dishonest purpose","some moral obliquity","conscious doing of a wrong",
"partakes of the nature of fraud") . The determination of the necessity for additional offices
and/or positions in a corporation is a management prerogative which courts are not wont to
review in the absence of any proof that such prerogative was exercised in bad faith or with
malice.
2.
YES. the requisites before a derivative suit which can be filed by a stockholder
are present in this instance, such that:
a)
the party bringing suit should be a shareholder as of the time of the act or
transaction complained of, the number of his shares not being material; this is shown by the fact
that the petitioner is a stockholder of Filport

b)
he has tried to exhaust intra-corporate remedies; i.e., Cruz has made a demand
on the board of directors for the appropriate relief but the latter has failed or refused to heed his
plea; and he wrote a letter
c)
the cause of action actually devolves on the corporation, the wrongdoing or harm
having been, or being caused to the corporation and not to the particular stockholder bringing the
suit; such that the wrong was in truth a wrong against the stockholders of the corporation
generally and not against Cruz, in particular.
49. DEL ROSARIO, Karen R.
Sps. Pascual vs CA, et. al

Facts
Petitioner Consolacion Sioson and respondent Remedios S. Eugenio-Gino are the niece and
granddaughter, respectively, of the late Canuto Sioson. CANUTO and 11 other individuals,
including his sister Catalina Sioson and his brother Victoriano Sioson, were co-owners of a
parcel of land in Tanza, Navotas, Metro Manila. The property, known as Lot 2 of Plan Psu
13245, had an area of 9,347 square meters and was covered by Original Certificate of Title No.
4207 issued by the Register of Deeds of Rizal. CATALINA, CANUTO, and VICTORIANO each
owned an aliquot 10/70 share or 1,335 square meters of Lot 2.
On 20 November 1951, CANUTO had Lot 2 surveyed and subdivided into eight lots (Lot Nos.
2-A to 2-H) through Subdivision Plan Psd 34713 which the Director of Lands approved on 30
May 1952. Lot No. 2-A, with an area of 670 square meters, and Lot No. 2-E, with an area of
2,000 square meters, were placed under CANUTOs name. Three other individuals took the
remaining lots.
On 26 September 1956, CANUTO and CONSOLACION executed a Kasulatan ng Bilihang
Tuluyan. Under the KASULATAN, CANUTO sold his 10/70 share in Lot 2 in favor of
CONSOLACION for P2,250.00. The KASULATAN was notarized by Notary Public Jose T. de
los Santos of Navotas.
CONSOLACION immediately took possession of Lot Nos. 2-A and 2-E. She later declared the
land for taxation purposes and paid the corresponding real estate taxes.
On 23 October 1968, the surviving children of CANUTO, namely, Felicidad and Beatriz,
executed a joint affidavit affirming the KASULATAN in favor of CONSOLACION. They also
attested that the lots their father had sold to CONSOLACION were Lot Nos. 2-A and 2-E of
Subdivision Plan Psd 34713.

On 28 October 1968, CONSOLACION registered the KASULATAN and the JOINT

AFFIDAVIT with the Office of the Register of Deeds of Rizal. Based on these documents, the
Register of Deeds issued to CONSOLACION Transfer Certificate of Title No. (232252) 1321
covering Lot Nos. 2-A and 2-E of Subdivision Plan Psd 34713 with a total area of 2,670 square
meters.
On 4 February 1988, REMEDIOS filed a complaint against CONSOLACION and her spouse
Ricardo Pascual in the Regional Trial Court of Malabon, Branch 165, for "Annulment or
Cancellation of Transfer Certificate [of Title] and Damages." REMEDIOS claimed that she is the
owner of Lot Nos. 2-A and 2-E because CATALINA devised these lots to her in CATALINAs
last will and testament dated 29 May 1964. REMEDIOS added that CONSOLACION obtained
title to these lots through fraudulent means since the area covered by TCT (232252) 1321 is
twice the size of CANUTOs share in Lot 2. REMEDIOS prayed for the cancellation of
CONSOLACIONs title, the issuance of another title in her name, and the payment to her of
damages.
Petitioners sought to dismiss the complaint on the ground of prescription. Petitioners claimed
that the basis of the action is fraud, and REMEDIOS should have filed the action within four
years from the registration of CONSOLACIONs title on 28 October 1968 and not some 19 years
later on 4 February 1988. REMEDIOS opposed the motion, claiming that she became aware of
CONSOLACIONs adverse title only in February 1987. CONSOLACION maintained that she
had timely filed her complaint within the four-year prescriptive on 4 February 1988.
The trial court rendered judgment dismissing the case and ordering REMEDIOS to pay
petitioners P10,000 as attorneys fees and the cost of suit. The trial court further ruled that
REMEDIOS has no right of action against petitioners because CATALINAs LAST WILL from
which REMEDIOS claims to derive her title has not been admitted to probate.
The Court of Appeals rendered judgment reversing the decision of the trial court. The appellate
court held that what REMEDIOS filed was a suit to enforce an implied trust allegedly created in
her favor when CONSOLACION fraudulently registered her title over Lot Nos. 2-A and 2-E.
The appellate court held that CATALINAs unprobated LAST WILL does not preclude
REMEDIOS from seeking reconveyance of Lot Nos. 2-A and 2-E as the LAST WILL may
subsequently be admitted to probate.
Hence this petition.
Issue
Whether or not Remedios is a real party-in-interest

Held
Respondent is Not a Real Party-in-Interest. Not only does prescription bar REMEDIOS
complaint. REMEDIOS is also not a real party-in-interest who can file the complaint, as the trial
court correctly ruled.
The 1997 Rules of Civil Procedure require that every action must be prosecuted or defended in
the name of the real party-in-interest who is the party who stands to benefit or suffer from the
judgment in the suit.If one who is not a real party-in-interest brings the action, the suit is
dismissible for lack of cause of action.
REMEDIOS anchored her claim over Lot Nos. 2-A and 2-E (or over its one-half portion) on the
devise of these lots to her under CATALINAs LAST WILL. However, the trial court found that
the probate court did not issue any order admitting the LAST WILL to probate.
However, since the probate court has not admitted CATALINAs LAST WILL, REMEDIOS has
not acquired any right under the LAST WILL. REMEDIOS is thus without any cause of action
either to seek reconveyance of Lot Nos. 2-A and 2-E or to enforce an implied trust over these
lots.
Art. 1456 provides, If property is acquired through mistake or fraud, the person obtaining it is, by
force of law, considered a trustee of an implied trust for the benefit of the person from whom the
property comes.
The complaint filed by Remedios is dismissed.
50. PARALEJAS, Claire Anne F.
VDA DE CABRERA v. CA
FACTS:
In 1950, a parcel of unregistered land which was owned in common by Daniel,
Albertana and Felicidad Teokemian, having inherited the same from their late father,
Domingo Teokemian, was sold to Andres Orais wherein Felicidad was not able to sign in
the Deed of Sale.
In 1957, Virgilia Orais, daughter of the vendee issued Free Patent and Original
Certificate of Title over the said property.
In 1972, the one-third share of Felicidad Teokemian in her possession was sold to
espouses Elano and Felicidad Cabrera who immediately took possession of it.

In 1988, Virgilia Orais filed a civil case for quieting of title against Felicidad Teokemian
and Felicidad Cabrera.
On April 27, 1989, the lower court rendered judgment in favor of defendants against the
plaintiff, ruling that the latter can no longer recover the portion of land occupied by the
former due to laches.
The Court of Appeals reversed such findings upon appeal on the justification that the
defendants action for reconveyance based on an implied trust had already been barred
by prescription and that the action of the plaintiffs is not barred by laches because what
was sold to the Cabreras was a definite portion of the community property.
ISSUE: WON the right of the defendants to conveyance of the subject property has
lapsed
HELD: NO.
The right of the defendants for reconveyance of the subject property arising from an
implied trust under Article 1456 of the Civil Code is material to the instant case, such
remedy has not yet lapsed, as erroneously submitted by the plaintiffs, and, is thus, a bar
to the plaintiffs action. In the case of Heirs of Jose Olviga vs. Court of Appeals,we
observed that an action for reconveyance of a parcel of land based on implied or
constructive trust prescribes in ten years, the point of reference being the date of
registration of the deed or the date of the issuance of the certificate of title over the
property, but this rule applies only when the plaintiff or the person enforcing the trust is
not in possession of the property, since if a person claiming to be the owner thereof is in
actual possession of the property, as the defendant is in the instant case, the right to
seek reconveyance, which in effect seeks to quiet title to the property, does not
prescribe. The reason for this is that one who is in actual possession of a piece of land
claiming to be the owner thereof may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right, the reason for the rule being, that his
undisturbed possession gives him a continuing right to seek the aid of a court of equity
to ascertain and determine the nature of the adverse claim of a third party and its effect
on his own title, which right can be claimed only by one who is in possession.
As it is, before the period of prescription may start, it must be shown that (a) the trustee
has performed unequivocal acts of repudiation amounting to an ouster of the cestui que
trust; (b) such positive acts of repudiation have been made known to the cestui que trust; and,
(c) the evidence thereon is clear and positive.
In the case at bar, the defendant Felicidad Teokemian, and thereafter, the Cabreras, were in
actual possession of the property since it was left to Felicidad Teokemian by her father in 1941,
which possession had not been interrupted, despite the sale of the two-third portion thereof to

the plaintiff in 1950, and the latters procurement of a Certificate of Title over the subject
property in 1957. Until the institution of the present action in 1988, plaintiffs, likewise, have not
displayed any unequivocal act of repudiation, which could be considered as an assertion of
adverse interest from the defendants, which satisfies the above-quoted requisites. Thus, it
cannot be argued that the right of reconveyance on the part of the defendants, and its use as
defense in the present suit, has been lost by prescription.