trust cases bus org

8/13/2019 Trust Cases Bus Org

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G.R. No. L-16962 February 27, 1962

TRUSTEESHIP OF THE MINORS BENIGNO, NGEL a!"NTONIO, a## $ur!a%e" PERE& ' TU SON,NTONIO M. PERE&, judicial-guardian-appellant,

vs.(. NTONIO R NET , trustee-appellee.

Alfonso L. Felix, Jr. for judicial-guardian-appellant.

Araneta and Araneta for trustee-appellee.

)ON)EP)ION,J.:

Appeal from an order denying a motion.

Sometime in 1948, Angela S. Tuason died leaving a will, paragrap 4of w ic reads!

"Spanis #

$n conformity wit t is provision of said will, t e present trustees ip

proceedings was instituted and certain properties of t e estate of t edeceased, valued %9&&,&& were turned over in 19'& to (. AntonioAraneta, as trustee for t e )enefit of *enigno, Angela and Antonio, allsurnamed %ere+ y Tuason, t e grandc ildren of t e decedentreferred to in er aforementioned will. %ortions of said propertiesconstituting t e trust were sold in 19' , 19' and 19'8 at pricese ceedingly )y %1/,418.40, %4,&0/.'0 and %81,/8 .94, respectively

aggregating %98,808.88 t e original appraised value t ereof.2n Septem)er 08, 19'9, t e judicial guardian and fat er of saidminors filed a motion in t e trustees ip proceedings alleging t at saidsum of %98,808.88 represents profits or income of t e trustees ip to w ic said minors are entitled, pursuant to t e a)ove 3uotedprovision of t e will, and praying t at t e trustee )e accordinglyinstructed to deliver said sum to t e movant. T e trustee o)jected tot e motion, w ic , after due earing, was denied )y an order dated

arc 1&, 19 &, from w ic said guardian as appealed.

T e appeal inges on w et er or not t e aforesaid sum of%98,808.88 is a profit or income w ic s ould )e turned over to t eguardian of said minors according to t e provisions of t e will 3uoteda)ove. Appellant maintains t at it is, )ecause said sum was includedas profit in t e statements of profits and losses attac ed to t ecorresponding income ta returns. T is pretense is untena)le.

To )egin wit , t e issue as to w et er or not t e minors are entitledto t e delivery of said sum of %98,808.88 is a matter dependente clusively upon t e conditions upon w ic t e trust ad )eenesta)lis ed, as provided in t e a)ove 3uoted paragrap of t e will oft e decedent, w ic in turn depends upon t e latter5s intent, as setfort in said paragrap . 6pon t e ot er and, t e 3uestion w et ert e sum in 3uestion is a profit or not wit in t e purview of our internalrevenue law depends upon t e provisions of t e latter, regardless oft e will of t e decedent.1äwphï1.ñ t

Secondly, t e proceeds of t e sale of portions of t e real estate eldin trust, merely ta7e t e place of t e property sold. at is more, t eprovision of t e will of t e decedent e plicitly aut ori+ing t e trusteeto sell t e property eld in trust and to ac3uire, wit t e proceeds oft e sale, ot er property " con amplios poderos de vender los mismos,

y con su producto ad3uirir otros )ienes, # leaves no room for dou)a)out t e intent of t e testatri to 7eep, as part of t e trust, saidproceeds of t e sale, and not to turn t e same over to t e )eneficiaas net rentals " rentas netas #.

T irdly, under t e principles of general law on trust, insofar as noconflict wit t e :ivil :ode, t e :ode of :ommerce, t e ;ules of:ourt and Special laws, are now part of our laws "Article 1440, :ivi:ode of t e % ilippines#. %ursuant to t e general law on trust, a

provision in t e instrument to t e effect t at t e )eneficiary s all entitled to t e 5income and profits of5 of t e trust estate is notordinarily sufficient to indicate an intention t at e s ould )e entitto receive gains arising from t e sale of trust property ... " $n reAccount of .;. '/1= @ut rie5s Trustee v. A7ers, 1' y. 49= Bstate of@artenlaule, 198 :al. 0&4, 044 %ac. /48, 48 A.>.;. C .S. 9/D#.$ndeed!.

T e corpus of t e estate, no matter w at c anges of formundergoes, s ould )e regarded as t e same property. T at e trust property is originally money, later )ecomes )ondand still later real estate, oug t not to affect t e status oft e property as t e capital fund. "$n re @ra am5s Bstate198 %a. 01 , 019, 4 A. 11&8= See *ogert on Trusts, 0dBd., p. 4/ .#

aw, Trusts, G$, pp. 80 and 91.#


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G.R. No. 96727 u*u$+ 2 , 1996

RI& L SURET' INSUR N)E )OMP N',petitioner,vs.)OURT OF PPE LS a!" TR NSO)E N TR NSPORT)ORPOR TION,respondents.

P NG NIB N,J.: p

as a trust relationship esta)lis ed )etween an insurer and t e twoinsureds over t e )alance of t e insurance proceeds )eing eld )yt e insurer for t e account of t e two insureds, pending a finalsettlement )y and )etween t e two insureds of t eir respectiveclaims to said proceedsH :an t e insurer w et er or notconsidered a trustee )e eld lia)le for interest on t e saidinsurance proceeds, w ic proceeds t e said insurer failed orneglected to deposit in an interest-)earing account, contrary to t especific written instructions of t e two insuredsH And s ouldattorney5s fees )e awarded in t is caseH

T ese 3uestions confronted t e :ourt in resolving t e instant petitionfor review oncertiorari , w ic assailed t e Iecision1 of t e :ourt ofAppeals 2 promulgated 2cto)er 0', 199& affirming and modifying t edecision dated Septem)er 19, 198 of t e ;egional Trial :ourt of

anila, *ranc //, / in :ivil :ase Eo. 10'88 .

!he Facts

As culled from t e stipulations )etween t e parties and t e assailedIecision, t e factual )ac7ground of t is case is as follows!

2n Iecem)er ', 19 1, t e ;eparations :ommission " ereinafterreferred to as ;B%A:2 # sold to private respondent TransoceanTransport :orporation t e vessel 5 JG T;AES2:BAE S


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to t e >oss and Su)rogation ;eceipt, a revised version t ereof wasfinally presented to t e 2ffice of t e Solicitor @eneral, and on ay0', 19 , t en Acting Solicitor @eneral Gicente G. endo+a wrotepetitioner demanding t at it pay interest on t e dollar )alance per t e:* letter-aut ority. oss and Su)rogation ;eceipt wase ecuted.

2n 2cto)er 1&, 19 , private respondent and ;B%A:2 sentpetitioner t e duly e ecuted >oss and Su)rogation ;eceipt, dated(anuary /1, 19 , wit out prejudice to t eir claim for interest on t edollar )alance from t e time :* aut ori+ed its placement in aninterest )earing account.

2n ?e)ruary 0 , 19 8, a final compromise agreement 1 was entered

into )etween private respondent and ;B%A:2 , w ere)y t e latter,in consideration of an additional sum of one million pesos paid to it )yt e former, transferred, conveyed and assigned to t e former all itsrig ts, interests and claims in and to t e insurance proceeds. T edollar )alance of t e insurance proceeds was t en remitted to t e% ilippine Eational *an7, Bscolta )ranc for t e sole account ofprivate respondent.

2n April 14, 19 8, a demand letter for interest on t e said dollar)alance was sent )y private respondent5s counsel to petitioner and%rudential *an7, w ic neit er replied t ereto nor compliedt erewit .

2n August 1', 19 9, private respondent filed wit t e ;egional Tria:ourt of anila, *ranc //, a complaint for collection of unearnedinterest on t e dollar )alance of t e insurance proceeds.

2n Septem)er 19, 198 , t e trial court issued its decision oldingt at "i# a trust relations ip e isted )etween petitioner as trustee anprivate respondent and ;B%A:2 as )eneficiaries, "ii# from April 019 , petitioner s ould ave deposited t e remaining dollar depoin an interest-)earing account eit er )y remitting t e same to t e

%E* in compliance wit t e re3uest of ;B%A:2 and privaterespondent, or )y transferring t e same into an interest-)earingaccount wit %rudential *an7, and "iii# t is duty to deposit t e fuin an interest-)earing account ended w en private respondent signt e >oss and Su)rogation ;eceipt on (anuary /1, 19 . T us,petitioner was ordered to pay "1# interest on t e )alance of6SK 18,& 8.0& at L per annu" , computed from April 01, 19 u(anuary /1, 19 )ased on t e t en prevailing peso-dollar rate ofe c ange= "0# interest of L per annu" on t e accrued interestearned until fully paid= "/# 1&L of t e total amount claimed asattorney5s fees and "4# costs of suit. 19 T e complaint againstdefendant %rudential *an7 and Trust was dismissed for lac7 of me

*ot petitioner and private respondent appealed t e trial court5sdecision. %rivate respondent alleged t at t e trial court erred w ea)solved defendant %rudential *an7 from lia)ility and w en it rulet at t e interest on t e )alance of t e dollar deposit, for w icpetitioner was eld lia)le, s ould )e computed only until (anuary /19 "w en t e >oss and Su)rogation ;eceipt was signed# insteadof (anuary 1&, 19 8 "w en t e actual transfer of t e dollar depos was made to t e )an7 c osen )y private respondent#. 2 2n t e ot er

and, petitioner c arged t at t e trial court ad seriously erred infinding t at a trust relations ip, e isted and t at petitioner was liafor t e interest on t e dollar )alance despite t e e ecution of t e>oss and Su)rogation ;eceipt w erein petitioner was unconditionaland a)solutely released from all its lia)ilities under t e marine ulpolicies. 21

2n 2cto)er 0', 199&, t e :ourt of Appeals up eld t e judgment oft e trial court, and confirmed t at a trust ad in fact )een esta)lisand t at petitioner )ecame lia)le for interest on t e dollar account its capacity as trustee, not as insurer. As for t e >oss andSu)rogation document, t e appellate :ourt ruled t at petitioner gavundue importance t ereto, and t at t e e ecution t ereof did not )t e claims for accrued interest. *y virtue of t at document, petitio was released only from its lia)ilities arising from t e insurancepolicies,i .e., in respect of t e principal amount representing t einsurance proceeds, )ut not insofar as its lia)ility for accrued intere was concerned, w ic arose from t e violation of its duty as trust

i .e., its refusal to deposit t e dollar )alance in an interest-)earingaccount, under terms most advantageous to t e )eneficiaries. T erespondent :ourt modified t e trial court5s judgment )y orderingpetitioner to pay said interest computed from April 01, 19 up to(anuary 1&, 19 8.

2n Iecem)er 1 , 199&, t e :ourt of Appeals denied t e petitioner5motion for reconsideration.


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%etitioner alleges t at t e :ourt of Appeals erred!

$. . . . w en it eld t at ;i+al is lia)le toTransocean for supposed interest on t e )alanceof 6SK 18,& 8.0& after admitting t atTransocean and ;B%A:2 ad unconditionallyand a)solutely released and disc arged ;i+alfrom itstotal lia)ilities w en t ey signed t e lossand su)rogation receipt . . . on (anuary /1, 19 =

$$. . . . in assuming t at ;B%A:2 andTransocean on one and and ;i+al, on t e ot er,intended to create a trust=

$$$. . . . in not olding t at Transocean ad actedin palpa)le )ad fait and wit malice in filing t isclearly unfounded civil action, and in not orderingTransocean to pay to ;i+al moral and punitivedamages . . . , plus attorney5s fees and e pensesof litigation . . . = and

$G. . . . in affirming t e ;T: decision w ic

incorrectly awarded attorney5s fees and costs ofsuit to Transocean. 22

T e foregoing grounds are almost e actly t e same grounds pleaded)y petitioner )efore t e respondent :ourt. At t e eart of t e matteris t e 3uestion of w et er t e petitioner is lia)le for accrued intereston t e dollar )alance of t e insurance proceeds. ;eiterating t earguments it ventilated )efore t e respondent appellate :ourt,petitioner continues to deny t e e istence of t e trust, alleging t at itnever intended to enter into a fiduciary relations ip wit privaterespondent and ;B%A:2 and t at it eld on to t e dollar )alanceonly as a means to protect its interest. ?urt ermore, petitioner insistst at t e >oss and Su)rogation ;eceipt signed )y t e insureds

released and a)solved petitioner from all lia)ilities, including t eclaimed interest.

*riefly, t e 7ey issues in t is case may )e re-stated t us!

$. T e e istence of a trust relations ip=

$$. T e significance of t e >oss and Su)rogation;eceipt=

$$$. %etitioner5s lia)ility for accrued interest on t edollar )alance= and

$G. :orrectness of t e award of attorney5s fees.

!he %ourt&s 'uling

T e s op-worn arguments recycled )y petitioner are mainly devoid ofmerit. e searc ed for arguments t at could constitute reversi)leerrors committed )y t e respondent :ourt, )ut found only one in t elast issue.

First (ssue! !he !rust 'elationship

:rucial in t e resolution of t is case is t e determination of t e rolplayed )y petitioner. Iid it act merely as an insurer, or was it also atrusteeH $n ruling t at petitioner was a trustee of t e privaterespondent and ;B%A:2 , t e :ourt of Appeals ratiocinated t us!

T e respondent "trial# court sustained t e t eory ofT;AES2:BAE and was of t e view t at ;$MA> eld t e dollar)alance of 6SK 18,& 8.0& as trustee for t e )enefit of ;B%A:2and plaintiff corporation "private respondent erein# upon

consideration of t e following facts and t e said court5s o)serva

1. T at pursuant to ;$MA>5s letter to t e :entral *an7 datedEovem)er 0', 19 ', it re3uested t at is aut ority to deposit t edollar proceeds wit any local )an7 )e amended )y allowing it todeposit t e same in t e name of ;i+al Surety F $nsurance:ompany for t e joint account of t e ;eparations :ommission andTransocean Transport :orporation. $t furt er states, to wit!

T is is in conformity wit our agreement on t is matter witrespective officers of our insureds, ;eparations :ommissionand Transocean Transport :orporation, during our conference

eld in t e office of Solicitor @eneral Bstelito endo+a, last Eovem)er 19 '. "B i)it $#

?rom t ese facts, it is very clear t at t e parties t ereto intendet at t e entire dollar insurance proceeds )e eld in trust )ydefendant ;$MA> for t e )enefit of ;B%A:2 and plaintiffcorporation.

0. T is agreement was furt er fortified )y t e :entral *an75s repto t e a)ove-mentioned letter aut ori+ing ;$MA> to deposit t edollar insurance proceeds in t e name of ;i+al Surety F$nsurance :ompany for t e joint account of Transocean Transpo:orporation and ;eparations :ommission "B i)it (#.

/. >i7ewise, defendant ;$MA>5s letter to ;B%A:2 and plaintiffcorporation confirming t e fact t at t e insurance proceeds wert en deposited wit %rudential *an7 and it was recorded under name of ;i+al Surety F $nsurance :ompany for t e joint accountTransocean Transport :orporation and ;B%A:2 "B i)it >#.

4. T e partial compromise agreement entered into )etween t einsureds on (anuary 09, 19 over t e division of t e insuranceproceeds w ic provides as follows!

4. T e disputed portion or t e )alance of t e insuranceproceeds remaining after deducting t e undisputed portioas agreed a)ove s all )e 7ept in t e same )an7 deposit intrust for and in t e joint name of ;B%A:2 andT;AES2:BAE until suc time as t ere is a court decisionor a compromise agreement on t e full amount or portiot ereof, or until suc time as ;B%A:2 andT;AES2:BAE s all agree jointly to transfer suc )alanceto anot er )an7 account.

$t appears clearly t at even from t e start of t ecommunications among t emselves, especially )etweendefendant ;$MA> on one and and ;B%A:2 and t eplaintiff corporation, on t e ot er and, it s ows t at t e

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parties intended t at t e dollar insurance proceeds )e eld int e name of defendant ;$MA> for t e joint )enefit of;B%A:2 and plaintiff corporation. Eo repudiation was evermade or any one of t e parties for t at matter 3uestioned saidagreement. T ere was, t erefore, created a trust relations ip)etween ;$MA> on one and and t e ;B%A:2 and plaintiffcorporation on t e ot er, over t e dollar insurance proceedsof t e lost vessel. . . .

$ndeed, t e aforesaid enumerated facts sufficiently manifest t eintention )etween ;B%A:2 and T;AES2:BAE on one andand ;$MA>, on t e ot er, to create a trust.

$t was ;$MA> itself w ic re3uested t e :entral *an7 t at it )eallowed to deposit t e dollars in its name and for t e joint accountof ;B%A:2 and T;AES2:BAE instead of in t e joint accountof ;B%A:2 and T;AES2:BAE as originally aut ori+ed.

oreover, t e %artial :ompromise Agreement e plicitly states t att e dollars s all )e 7ept in t e same )an7 deposits in trust for andin t e joint name of ;B%A:2 and T;AES2:BAE . ile it istrue, t at ;$MA> was not a party to t e :ompromise Agreement,nevert eless, ;$MA> was furnis ed a copy of t e same and did notin any way manifest o)jection t ereto. 2n t e contrary, ;$MA>even implemented certain provisions t ereof.

T e intention to create a trust relation can )e inferred from t esurrounding factual circumstances. T us!

Suc a manifestation can in fact )e determined merely )yconstruction of, and inference from, t e surrounding factualcircumstances, so long as t e proof t ereof is clear,satisfactory, and convincing, and does not rest on loose,e3uivocal or indefinite declarations " edina vs. :A, 1&9

S:;A 4/ #.

%etitioner claims t at respondent :ourt was misled )y t e trial court5scrucial mis-assumption t at petitioner was t e one w ic too7 t einitiative of re3uesting 2 aut ori+ation from :* to deposit t e dollarproceeds in its name, into concluding t at a trust relations ip ad)een created. %etitioner insists t at it did so only in reaction to t eearlier :* letter dated Eovem)er 0&, 19 ' w ic first orderedpetitioner to receive t e dollar insurance proceeds and deposit t esame wit any local )an7 in a non-interest )earing account in t enames of Transocean and ;B%A:2 jointly, and t at it "petitioner#made suc re3uest to avoid aving t e dollar proceeds paid directlyto t e account of t e two insured, as t at would )e tantamount to full

payment of t e loss wit out first securing petitioner5s release from itslia)ilities under t e insurance policies. $n s ort, petitioner claims it was just trying to protect its interest w en it made suc re3uest.%etitioner furt er scores t e respondent :ourt for relying on t e twoinsured5s arrangement contained in t e %artial :ompromiseAgreement t at t e dollar )alance )e 7ept in t e same )an7 deposit" eld )y petitioner# in trust for and in t e joint name of ;B%A:2and T;AES2:BAE . %etitioner insists it was never a party to saidcompromise agreement, and t at t erefore, it s ould not )e eld)ound )y anyt ing contained t erein, and simply )ecause it did notin any way manifest o)jection t ereto 2/

%etitioner5s arguments notwit standing, we old t at t e courts )elow

were correct in concluding t at a trust relations ip e isted. $t is )in law t at a trust is t e rig t, enforcea)le solely in e3uity, to t e)eneficial enjoyment of property, t e legal title to w ic is vestedanot er. 20 $t is a fiduciary relations ip 26 concerning property w ico)liges a person olding it "i .e., t e trustee# to deal wit t e properfor t e )enefit of anot er "i .e. t e )eneficiary#. T e :ivil :odeprovides t at!

Art. 1441. Trusts are eit er e press or implied. B press trust

are created )y t e intention of t e trustor or of t e parties. . . .

Art. 1444. Eo particular words are re3uired for t e creation oe press trust, it )eing sufficient t at a trust is clearly intended

B press trusts are created )y direct and positive acts of t e parties)y some writing or deed, or will, or )y words eit er e pressly orimpliedly evincing an intention to create a trust. 27

T e evidence on record is clear t at petitioner eld on to t e dolla)alance of t e insurance proceeds )ecause "1# private respondentand ;B%A:2 re3uested it to do so as t ey ad not yet agreed ont e amount of t eir respective claims, and t e ?inal :ompromise

Agreement was yet to )e e ecuted, and "0# t ey ad not, prior to(anuary /1, 19 , signed t e >oss and Su)rogation ;eceipt in favorof petitioner.

?urt ermore, petitioner5s letter dated Eovem)er 0&, 19 ' addresseto t e :* e pressly stated t at t e deposit in %rudential *an7 was)eing made in its name for t e joint account of t e private respondand ;B%A:2 . %etitioner never claimed owners ip over t e fundin said deposit. $n fact, it made several tenders of payment to t eprivate respondent and ;B%A:2 , al)eit t e latter declined toaccept since t e dispute as to t eir respective claims could not yetresolved at t at time. *y its own allegation, petitioner eld on to tdollar )alance of t e insurance proceeds to protect its interest, as it

was not yet granted t e rig t of su)rogation over t e total loss of tvessel. As petitioner continued olding on to t e deposit for t e)enefit of private respondent and ;B%A:2 , petitioner o)viouslyrecogni+ed its fiduciary relations ip wit said parties. T is is t eessence of t e trust flowing from t e actions and communicationspetitioner.

$n)indanao *e+elop"ent Authorit +s . %ourt of Appeals, 2 t is:ourt eld!

. . . $t is fundamental in t e law of trusts t atcertain re3uirements must e ist )efore ane press trust will )e recogni+ed. *asically, t eselements include a competent trustor and trustean ascertaina)le trust res, and sufficiently certai)eneficiaries. Stilted formalities are unnecessar)ut nevert eless eac of t e a)ove elements isre3uired to )e esta)lis ed, and, if any one oft em is missing, it is fatal to t e trusts "sic#.?urt ermore, t ere must )e a present andcomplete disposition of t e trust property,notwit standing t at t e enjoyment in t e)eneficiary will ta7e place in t e future. $t isessential, too, t at t e purpose )e an active oneto prevent trust from )eing e ecuted into a legaestate or interest, and one t at is not in



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contravention of some pro i)ition of statute orrule of pu)lic policy. T ere must also )e somepower of administration ot er t an a mere duty toperform a contract alt oug t e contract is for at ird-party )eneficiary. A declaration of terms isessential, and t ese must )e stated witreasona)le certainty in order t at t e trustee mayadminister, and t at t e court, if called upon so todo, may enforce, t e trust. "citing Sec. /1, Trusts,Am (ur 0d, pp. 0 8-0 9.#

6ndenia)ly, all t e a)ovementioned elements are present in t einstant case. %etitioner5s argument t at it was never a party to t e%artial :ompromise Agreement is unavailing, since, upon )eingfurnis ed a copy of t e same, it undou)tedly )ecame aware if it was not already aware even prior t ereto t at t e parties to saidagreement considered petitioner as t eir trustee in respect of saiddollar )alance= in s ort, it is all too evident t at petitioner fullygrasped t e situation and reali+ed t at private respondent and;B%A:2 were constituting petitioner t eir trustee. Net, petitionernot only did not manifest any o)jection t ereto, )ut it insteadproceeded to accept its role and responsi)ility as suc trustee )yimplementing t e compromise agreement. B3ually as significant,petitioner never committed any act amounting to an une3uivocalrepudiation of its role as trustee.

%etitioner5s desperate attempt to esta)lis a via)le defense )y way ofits allegation t at no fiduciary relations ip could ave e isted)ecause of t e joint insured5s adversary positions wit respect to t einsurance proceeds deserves scant consideration. T e so-calledadversary positions of t e parties ad no effect on t e trust as itnever c anged t e position of t e parties in relation to eac ot er andto t e dollar proceeds,i .e., petitioner eld it for private respondentand ;B%A:2 , w ic were t e real owners of t e money.

econd (ssue! !he ignificance f !heLoss and u#rogation 'eceipt

T e respondent :ourt committed no reversi)le error in itsappreciation of t e >oss and Su)rogation ;eceipt, w ic reads inrelevant part.

. . . we ave unconditionally and a)solutelyaccepted full payment from ;i+al Surety F$nsurance :ompany, as insurer, of its totallia)ilities.

$n consideration of t is full payment, we ere)y

assign, cede and transfer to said $nsurance:ompany any and all claims, interests anddemands of w atever nature against any person,entity, corporation or property arising from orot erwise connected wit suc total loss of t einsured property and we ere)y ac7nowledget at t e said :ompany is su)rogated in our placeand stead to any and all claims, interests anddemands t at we ave, or in t e future mig t

ave, against all persons, entities, corporationsor properties to t e full e tent of t ea)ovementioned payment received )y us.

Said receipt a)solved t e petitioner only from all claims arising frot e insurance policies it issued. $t did not e culpate petitioner fromlia)ility for t e accrued interest as t is o)ligation arose in connecti wit its role as trustee and its unjustified refusal to deposit t e moin an interest-)earing account as re3uired.

T e respondent :ourt correctly eld t at!

;$MA> gives undue importance to t e >oss and

Su)rogation ;eceipt "B . 6-1# signed )yT;AES2:BAE and ;B%A:2 in an effort toa)solve itself from lia)ility.

T e e ecution of t e said >oss and Su)rogation;eceipt did not preclude t e joint insured fromclaiming t e accrued interest. T;AES2:BAEand ;B%A:2 released ;$MA> only from its";$MA># lia)ilities arising from t e insurancepolicies issued, t at is, in regard to t e principaamount representing t e insurance proceeds )utnot to t e accrued interest w ic stemmed fromits refusal to deposit t e disputed dollar portion

violation of its duty as a trustee to deposit t esame under t e terms most advantageous toT;AES2:BAE and ;B%A:2 . :orollaryt ereto, ;$MA> was su)rogated to t e rig ts w ic stemmed from t e insurance contract )unot to t ose w ic arise from t e trustrelations ip= ot erwise, t at would lead to ana)surd situation.

At most, t e signing of t e >oss and Su)rogation ;eceipt was a valpre-condition )efore petitioner could )e compelled to turn over t e w ole amount of t e insurance proceeds to t e two insured. T usresponse to t e letter of private respondent and ;B%A:2 to

petitioner dated April 01, 19 ', petitioner reiterated its offer to pay)alance of t e insurance claim provided t e former sign t e >oss aSu)rogation ;eceipt. *ut t is was done only on 2cto)er 1&, 19 .

!hird (ssue! Lia#ilit f /etitioner For Accrued (nterest

%etitioner argues, rat er unconvincingly, t at it was of t e )elief tas it was never t e trustee for t e insured and t us was under noo)ligation to e ecute t e instruction to transfer t e dollar )alance ian interest-)earing account, t erefore, it was also not o)ligated and ence it did not )ot er to advise private respondent and;B%A:2 t at it would neit er remit t e dollar )alance to t e

insured5s )an7 of c oice as specifically instructed, nor just deposit e same in an interest-)earing account at %rudential *an7.%etitioner5s ot er contention t at it was not )ound )y t e :* orderdespite its aving )een informed t ereof and copy furnis ed )yprivate respondent and ;B%A:2 , simply )ecause said order wasnot directed to it, is even more ridiculous and undeserving of furtcomment.

2riginally, petitioner, as s own )y its Eovem)er 0', 19 ' letter, onlyagreed to receive and deposit t e money under its name for t e joiaccount of t e private respondent and ;B%A:2 in a non-interest)earing account. At t at point, as trustee, it could ave easilydisc arged its o)ligation )y simply transferring and paying t e dol



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)alance to private respondent and ;B%A:2 and )y so doing, would ave dissolved t e trust. oss and Su)rogation ;eceipt. T is falls far s ort of t ere3uirement to clearly inform t e trustor-)eneficiaries of petitioner5srefusal or ina)ility to comply wit said re3uestJinstruction. Sucsilence and inaction in t e face of specific written instructions fromt e trustors-)eneficiaries could not )ut ave misled t e latter intot in7ing t at t e trustee was amena)le to and was carrying out t eirinstructions, t ere )eing no reason for t em to t in7 ot erwise. T isin turn prevented t e trustors-)eneficiaries from early on ta7ing actionto disc arge t e unwilling trustee and appointing a new trustee in itsplace or from ot erwise effecting t e transfer of t e deposit into aninterest-)earing account. T e result was t at t e trustors-)eneficiaries, private respondent and ;B%A:2 , suffered prejudicein t e form of loss of interest income on t e dollar )alance. Asalready mentioned, suc prejudice could ave )een prevented adpetitioner acted promptly and in good fait )y communicating its realintentions to t e trustors.

*eyond t e foregoing considerations, we must also ma7e mention oft e matter of undue enric ment. e agree wit private respondentt at t e dollar )alance of 6SK 18,& 8.0& was certainly a large sumof money. >eaving suc an enormous amount in a non-interest)earing )an7 account for an e tended period of time a)out oneyear and nine mont s would undou)tedly ave not only prejudiced

t e owner"s# of t e funds, )ut, e3ually as true, would ave resulted tot e immense )enefit of %rudential *an7 "w ic appens to )e a sistercompany of t e petitioner#, w ic )eyond t e s adow of a dou)tmust ave earned income t ereon )y utili+ing and relending t esame wit out aving to pay any interest cost t ereon.


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G.R. No. L-261 7 No e%ber 27, 19 1

THE HEIRS OF PE3RO ME3IN , re4re$e!+e" by M RG RITME3IN ,petitionersvs.THE HON. )OURT OF PPE LS, 5 RESTITUT &URBITO 3 .3E ME3IN a!" N3RES N RRO, (R.,respondents.

TEEH N EE, Acting C.J.:

T e :ourt up olds t e decision of t e :ourt of Appeals w icdismissed petitioners5 complaint to recover from private respondentsa parcel of land situated in 2ac, ilagros, as)ate, toget er wit t eSpanis title "Titulo ;eal Eo. /49'81# covering it. T e :ourt ofAppeals correctly found t at petitioners failed to prove t eir claim t atrespondents were olding t e property on t e )asis of an e presstrust, t e e istence of w ic , according to law and to esta)lis ed jurisprudence, cannot )e proven )y mere parol evidence and cannotrest on vague and uncertain evidence or on loose, e3uivocal orindefinite declarations. T us, assuming t at t ere e isted aconstructive trust in petitioners5 favor, petitioners5 action to recovert e property ad )een lost )y )ot e tinctive and ac3uisitiveprescription )y virtue of respondents5 continuous, uninterrupted andunc allenged possession and occupancy of t e premises adverselyand in t e concept of owner-)uyer for t irty-t ree years, counted fromt e e ecution in 1904 of t e deed of sale in respondents5 favor to t efiling of t e action in 19' .

T e late ?rancisco edina ad eig t c ildren, namely,@regorio, otero, arciso, Gictorina, Simona, :armen,/edro and


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c ildren, c anging and amending t e statement in t eir original replyt at t ey were ac7nowledged natural daug ters of t eir fat er%edro edina and recogni+ed )y t eir deceased naturalgrandparents 2 #, was determined positively in favor of petitioners )yt e :ourt of Appeals w ic ruled t at t ere was sufficient 5evidenceup olding t e trial court5s finding on t eir legitimate filiation )ased ont e testimonies of witnesses w o testified on t e fact of t e marriageof t eir parents %edro edina and ;osario ;amire+. Said findings offact may no longer )e distur)ed in t ese proceedings, and at any ratedo not affect t e disposition of t e case.

T e decisive issue at )ar, )earing in mind t e legitimate filiation ofpetitioners, and t us t e would )e validity of t eir claim to t e land, issimply w et er or not petitioners5 action for recovery t ereof as)een )arred )y prescription.

T e validity of respondents5 defense of prescription in turn rests upon w et er or not anexpress trust over t e property in litigation as)een constituted )y petitioners5 fat er %edro edina "w opredeceased is fat er ?rancisco edina# upon is )rot er Soteroand Sotero5s wife ;estituta Mur)ito for t e )enefit of is c ildren,petitioner argarita edina and er deceased sister Ana edina andt e latter5s eirs.

As provided )y our :ivil :ode, Trusts are eit er e press or implied.B press trusts are created )y t e intention of t e trusts are of t eparties. $mplied trusts come into )eing )y operation of law. "Art.1441# Eo e press trusts concerning an immova)le or any interestt erein may )e proven )y parol evidence. "Art. 144/# An impliedtrust may )e proven )y oral evidence. "Art. 14' #

Applied to t e case at )ar, if anexpress trust ad )een constitutedupon t e occupancy of t e property )y respondents in favor of t epetitioners, prescription of action would not lie, t e )asis of t e rule)eing t at t e possession of t e trustee is not adverse to t e

)eneficiary. *ut if t ere were merely a constructive or implied trust,t e action to recover may )e )arred )y prescription of action or )yac3uisitive prescription )y virtue of respondents5 continuous andadverse possession of t e property in t e concept of owner-)uyer fort irty-t ree years.

T e appellate court correctly eld t at t e facts and evidence ofrecord do not support petitioners5 claim of t e creation of an e presstrust and imprescripti)ility of t eir claim, ruling s3uarely t at t e factsdo not warrant t e conclusion t at an e press trust was created overt e land in dispute. Alt oug no particular words are re3uired for t ecreation of an e press trust, a clear intention to create a trust must )es own "Article 1444, :ivil :ode of t e % ilippines#= and t e proof of

fiduciary relations ip must )e clear and convincing g "Ouiogue vs.Aram)ulo, 4' 2. @. /&'= Bspinosa vs. Tumula7, :A-@. ;. Eo. /&& '-;, (une 0 , 19 4#. B press trusts are t ose intentionally created )yt e direct and positive act of t e trustor, )y some writing, deed or win,or oral declaration "'4 Am. (ur. //-/4#. T e creation of an e presstrust must )e manifested wit reasona)le certainty and cannot )einferred from loose and vague declarations or from am)iguouscircumstances suscepti)le of ot er interpretations "'4 Am. (ur. 48-49#. Eow ere in t e record is t ere any evidence, and t e plaintiffsdo not even raise t e pretention, t at t e original owner of t eproperty %edro edina, fat er of plaintiff argarita edina,appointed, designated or constituted Sotero edina "t e us)and ofdefendant ;estituta Mur)ito edina# as t e trustee of t e land in

dispute. %laintiffs5 contention t at t ere was an e press trust mut erefore, fail. /

:oncretely, petitioners anc or t eir claim of an e press trust on tfollowing circumstances! "1# respondents5 possession of t etituloreal covering t e land= "0# t e deed of partition of t e estate of tcommon predecessor ?rancisco edina dated ?e)ruary /, 1904,adjudicating t e land solely to is son Earciso edina= "/# t e deeof sale of t e land dated (une 09, 1904, e ecuted )y Earciso edin

in favor of is )rot er Sotero edina= and "4# t e testimony ofrespondent ;estituta Mur)ito Gda. de edina "Sotero5s wife# to t eeffect t at er us)and used to administer and t en later on, s

erself administered t e land.

T ese circumstances do not ma7e out t e creation of an e presstrust. ;espondents5 possession of t e Spanis title issued in t e lat%edro edina5s name may just )e t e conse3uence of t e sale of tland )y Earciso "to w om it ad )een adjudicated in t e partition#t e spouses Sotero edina and ;estituta Mur)ito on (une 09, 1904and is )y no means an evidence of an e press trust created for t e)enefit of petitioners. Spanis titles are defeasi)le, and alt ougevidences of owners ip . ... may )e lost t rougprescription. 0 Eeit er is t e deed of partition "w ic apparentlye cluded %edro edina# entered into earlier any indication of ane press creation of a trust. $n fact, t ese documents are adverse topetitioners5 cause, and are evidences of transfer of owners ip of tland from one ownerJowners to anot er or ot ers and t ey in factnegate t e creation or e istence of an e press trust.

Eeit er does t e testimony of Sotero5s widow, ;estituta Mur)ito, tot e effect t at er us)and and t en later s e erself administert e land support petitioners5 claim of an e press trust. T ere is nos owing t at t e term administration as used )y said responden

er testimony is )y reason of an appointment as suc on )e alf ofanot er owner or )eneficiary, suc as to support t e e istence of ae press trust. 2n t e contrary, it appears clear from t e conte t of

er testimony t at er use of t e term administer was in t econcept of an owner-)uyer administering and managing isJ erproperty,

T us, petitioner cite er following testimony!

O. $n w at manner did you possess t is property from t e tyou )oug t it from Earciso edinaH A. ?irst my us)and was t e one w o administered t e property and t en later oadministered t ere. "T.s.n., Iec. 4, 19 /, p. 119.#

*ut continuing er testimony, s e clearly declared, as follows!

O.


10/75

of an e press trust, t at T e legal construction most favora)le to"petitioners# t at can )e impressed upon t e facts of t e case is t ata constructive or implied trust was created )y operation of law upont e property in 3uestion,7 )ut petitioners5 cause of action adprescri)ed upon t e lapse of t e ten-year period of ac3uisitiveprescription provided )y t e t en applica)le statute "section 41 of Act19 for unregistered lands suc as t e land erein involved.

As found )y t e :ourt of Appeals, t e land was sold to Sotero

edina on (une 09, 1904 from w ic date Sotero and is wife too7open, pu)lic, continuous and adverse possession of t e land in t econcept of owner. $n 19' w en t e present action was filed, t irty-t ree "//# years, muc more t an t e 1&-year statutory period forac3uisitive prescription, ad already elapsed.

$n addition, t e appellate court furt er eld t at petitioners5 action torecover was li7ewise time-)arred, pointing out t at t e ten-yearperiod under t e statute of limitation wit in w ic plaintiffs could filean action for recovery of real property commenced to run, in 19// w en plaintiff argarita edina was informed t at t e land in dispute)elonged to er fat er %edro edina, for in t at year s e could ave)roug t an action for reconveyance. T e period of prescriptioncommences to run from t e day t e action may )e )roug t "Article11'&, :ivil :ode of t e % ilippines#, and in an action )ased on fraud,as is t e )asis of t e present action, t e period of prescription )eginsfrom t e discovery of t e fraud "$G Tolentino5s :ivil :ode of t e% ilippines 4&, citing Anuran vs. A3uino, /8 % il. 09 and Solatorio vs.Solatorio, '0 % il. 444#= t e reasons a party mig t ave ad for notimmediately ta7ing judicial action is immaterial and does not stop t erunning of t e period ">am7o vs. Iioso Eo. >- 90/, 2cto)er /1,19''#. 9 ;espondent court ad referred to suc non-action as

per aps in deference to t e defendants w o ad raised and clot eder. 1

T e similar case of%ua cong +s. %ua cong, 11 w ere t e :ourt, afterfinding t e non-e istence of an e press trust applying Article 144/ oft e :ivil :ode w ic )ars parol evidence in proving t e allegedcreation of an e press trust over immova)les, eld t at evenassuming t e alleged trust to )e an implied one, t e rig t alleged )yplaintiffs would ave already prescri)ed since starting in 19/ w ent e trustor died, plaintiffs ad already )een allegedly refused )y t eaforesaid defendants in t eir demands over t e land, and t ecompliance filed only in 19 1 P more t an t e 1 year period ofprescription for t e enforcement of suc rig ts under t e trust. $t issettled t at t e rig t to enforce an implied trust in one5s favorprescri)es in. ten "1 years. And even under t e :ode of :ivil%rocedure, action to recover real property suc as lands prescri)esin ten years "Sec. 4&, Act 19, fully supports t e correctness of t edecision under review.

A::2;I$E@>N, t e appealed decision is ere)y affirmed.



11/75

G.R. No. L- 1 O8+ober 1, 197 M R)ELO SOTTO, "% ! $+ra+or o:+;e E$+a+e o: F #e%o! So++o, 4e+ + o!er, $. PIL R TE ES,FLORENTINO TE ES, 3UL)E TE ES I M O a$$ $+e" by ;u$ba!"FELIPE I M O 3OLORES TE ES R)EN S, a$$ $+e" by ;u$ba!"M RI NO R)EN S, M RI ) M R GUMB N, a$$ $+e" by ;u$ba!"NI) NOR GUMB N, BELEN ) M R BROots Eos. '4 , 840, 01 9-A, 10/, and 1/ &.T ere is no dispute as to t e fact t at t e aforesaid propertiesoriginally )elonged to t e conjugal partners ip of t e spouses?lorentino ;allos and aria ?adullon. en ?lorentino ;allos diedon arc 14, 1910 in t e :ity of :e)u, t e parcels of land in3uestion, toget er wit t e ot er properties comprising t e estateof t e deceased, descended in testate succession to is sole eirs,

is widow, aria ?adullon, and two c ildren, named :oncepcion;allos and :armen ;allos. T e lawyer to w om t e ;allos eirsentrusted t e settlement of t e estate was Atty. ?ilemon Sotto.

S ortly after t e closure of t e pro)ate proceeding in 191/, Atty.Sotto married :armen ;allos. :armen died in 194' wit out leavingany issue. :oncepcion died later leaving many c ildren. aria?adullon predeceased er two daug ters. Atty. Sotto died intestateon 2cto)er 1&, 19 .

:ompeting for t e owners ip of t e five lots are t e directdescendants and )lood relatives of ?lorentino ;allos and aria?adullon, opposed )y t e administrator of t e intestate estate of Atty.Sotto. T e c ildren of :oncepcion ;allos, or t e grandc ildren of?lorentino ;allos and aria ?adullon, some of w om are assisted )yt eir spouses, are t e plaintiffs in t is case. Iefendant administratorrepresents Atty. Sotto5s c ildren out of wedloc7. $t is claimed )y t e

defendant t at Atty. Sotto was at t e time of is deat t e owner ot e five lots in 3uestion.

$n life, Atty. ?ilemon Sotto was a very prestigious man.


12/75

is sagacity e aving )ecome a municipal councilor, municipal vice-mayor, fiscal and assem)lyman= t at e married :armen (. ;allos onSept. 0 , 191/ and e later )ecame senator, delegate to t e:onstitutional :onvention and editor, )esides )eing a practicinglawyer.

$t is furt ermore alleged t at Atty. ?ilemon Sotto, aving married:armen ;allos, t ere)y virtually ma7ing im a mem)er of t e ;allosfamily, was loo7ed upon as t e ead of t e ;allos family to loo7 after

t e properties in erited from t e deceased ?lorentino ;allosincluding t e ' parcels of land erein)efore mentioned, t ere)yesta)lis ing a trust relation wit Ion ?ilemon Sotto as trustee of t esaid properties for t e )enefit of is mot er-in-law aria ?adullonGda. de ;allos, is wife :armen ;allos de Sotto and sister-in-law:oncepcion ;allos and t e eirs of t e latter, as cestuis 2ue trust =t at t e aforesaid trust reposed upon im continued even after t edeat s of aria ?adullon Gda. de ;allos, :armen ;allos de Sottoand :oncepcion ;allos, t e latter w o married twice, first to arianoTeves and second to ariano :amara, and lasted up to Ion ?ilemonSotto5s deat on 2cto)er 1&, 19 = t at on Eovem)er 09, 191 , Ion?ilemon Sotto in violation of t e trust reposed upon im )y, and isduty as attorney for, t e eirs of t e deceased ?lorentino ;allos,illegally caused Iecree Eo. 41&1 dated (an. 0 , 1918 to )e issuedin :ase Eo. 9, @.;.>.2 Eo. 94 ' of t e :ourt of ?irst $nstance of:e)u on t e entire >ot Eo. '4 in 3uestion, in t e name alone of:armen ;allos de Sotto, t e wife of ?ilemon Sotto, to t e greatprejudice and damage of t e ot er co-owners t ereof namely aria?adullon Gda. de ;allos and :oncepcion ;allos de :amara= t at saidIecree is ine istent, null and voida# initio and wit out force andeffect for it s ould ave )een issued not in t e name of :armen;allos de Sotto )ut in t e names of aria ?adullon Gda. de ;allos Q s are and t e remaining Q s are t ereof in t e names of :armen;allos de Sotto and :oncepcion ;allos de :amara in e3ualproportion of R s are eac = t at on ?e)ruary 9, 1918, as a result oft e said ine istent, null and void Iecree Eo. 41&1, 2riginal:ertificate of Title Eo. 1&/4 was issued in t e name of :armen

;allos de Sotto, wife of ?ilemon Sotto= t at sometime in 1900, Atty.?ilemon Sotto ad caused >ot Eo. '4 to )e transferred )y is wifeto t e name of anot er person as a result of w ic 2.:.T. Eo. 1&/4 was cancelled and Transfer :ertificate of Title Eo. 0 8 was issued,for fear t at said lot mig t )e attac ed in connection wit t e li)el suitfiled against t e newspaper,La 'e+olucion edited )y Ion ?ilemonSotto at t e instance of t e t en @ov. @en. >eonard ood= t at on(une ', 19//, Ion ?ilemon Sotto caused Transfer :ertificate of TitleEo. 0 8 of >ot '4 to )e reconveyed not in t e name of is wife)ut in is own name under Transfer :ertificate of Title Eo. 10 4& and was t ereafter reconstituted administratively )y t e guardian of isproperties as Transfer :ertificate of Title Eo. ;T- 89& in t e name of?ilemon Sotto, widower,and finally t e present :ertificate of Title Eo.

0 1& was issued )y t e ;egister of Ieeds in t e name of ?ilemonSotto, widower.

6nder t e second, t ird, fourt and fift causes of action,respondents alleged specific similar violations of t e trust relationreposed upon im wit respect to t e ot er 4 parcels of land in t atAtty. ?ilemon Sotto illegally caused said lots to )e registered eit er int e name of is wife :armen ;allos de Sotto alone or jointly wit

aria ?adullon Gda. de ;allos, to t e prejudice of t e ot er co-owner, :oncepcion ;allos, and t ereafter t ru manipulations andfraudulent means, unregistered deeds of sale, fictitious and simulatedtransfers, incum)rances and reconstitution, t ese properties were ingross violation of t e trust reposed upon im )y t e eirs, finally titled

in t e name alone of :armen ;allos de Sotto and ultimately to t at is name as Ion ?ilemon Sotto, widower.

6nder t e si t cause of action, demand was made for t e paymenof rental income of t e lots in 3uestion at %4,'&&.&& a mont fro2ct. 1&, 19 until delivery of possession and owners ip of said las actual or compensatory damages, %0&,&&&.&& as moral dam%1&,&&&.&& as e emplary damages and %0&,&&&.&& for pservices.

Answering t e complaint, petitioner arcelo Sotto as administratot e estate of Atty. ?ilemon Sotto, denied t at t ere was any trustrelation )etween Ion ?ilemon Sotto on one and and aria ?adullonGda. de ;allos, :armen ;allos and :oncepcion ;allos on t e ot er=t at granting t at suc relations ip e isted )etween Ion ?ilemonSotto and :oncepcion ;allos, suc a relations ip could not aveendured until t e deat of Ion ?ilemon Sotto= t at t e decree of >Eo. '4 was issued in t e name of :armen ;allos pursuant to anagreement among t e eirs of ?lorentino ;allos t at t is parcel ofland, toget er wit t e ot er parcels of land involved in t is case,adjudicated to :armen ;allos as er s are in t e estate of ?lorentino;allos, in t e same manner t at several parcels of land were li7ewiadjudicated to, and decrees issued in t e name of :oncepcion;allos, as er s are in t e estate of ?lorentino ;allos= t at t epartition agreement adjudicating >ots Eo. '4 and Q eac of >otsEos. 840, 01 9-A and >ots Eos. 10/ and 1/ & were adjudicated to:armen ;allos and t e ot er alves of >ot Eos. 840 and 01 9 wereadjudicated to aria ?adullon Gda. de ;allos and decrees wereaccordingly issued later on )y t e :adastral :ourt relative to t e saiproperties of land in pursuance to said partition agreement= t at mt an 1 year aving elapsed from t eir issuance, t e decrees ad)ecome indefeasi)le= t at t e parcels of land, aving )eentransferred to t e purc asers for value and in good fait , t e preseaction for reconveyance will not prosper= t at t e plaintiffs ave cause of action as t e same is )arred )y prescription, lac es andestoppel= and assuming t at t ere was any trust relation )etweenAtty. Sotto and :oncepcion ;allos, t e trust was repudiated )y Atty.?ilemon Sotto a long time ago as s own )y t e series of transfers ot ese lots made )y im personally. A counterclaim for e emplarydamages, moral damages and attorney5s fees were also set up.

T e issues aving )een joined and trial concluded, t e :ourt of ?irs$nstance of :e)u rendered its decision 0dismissing t e complaint,

olding t at no e press trust relation e isted )etween Atty. ?ilemoSotto on one and and aria ?adullon Gda. de ;allos, :armen;allos and :oncepcion ;allos on t e ot er wit respect to t e lots in3uestion= t at t ere was no implied trust su)sisting )etween Atty.Sotto and t e said eirs and t at t ere was actual partition )etweent em w ere)y t e ' lots were given to :armen ;allos as er s are=t at :armen ;allos e ercised acts of owners ip over t e ' city lots i3uestion to t e e clusion of :oncepcion ;allos and aria ?adullonGda. de ;allos, registering t em in er name under t e Torrenssystem= t at :oncepcion ;allos and er c ildren after er deat wt us notified constructively and actually )y :armen ;allos de Sotto5raising t e flag of e clusive owners ip and repudiation of t e trusrelation, if t ere was any, and since t en t e period of prescription1& years for )ringing t e action tolled against an implied trust. >aor inaction on t e part of :oncepcion ;allos and er eirs ave t urendered t eir demand sale or no longer enforcea)le.

T e eirs of :oncepcion ;allos appealed to t e :ourt of Appeals. $n



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t e Iecision 6 promulgated Eov. 0', 19 0, t e :ourt of Appeals,Big t Iivision, affirmed t e judgment of t e lower court. T eappellate court agreed wit t e conclusion of t e lower court t at noe press trust was created )etween Atty. ?ilemon Sotto and t e eirsof ?lorentino ;allos )y t e mere signing of t e)ocion in )e alf of t e

eirs of ?lorentino ;allos= t at w en t e surviving eirs of t edeceased manifested in t e petition filed )y Atty. ?ilemon Sottoduring t e pro)ate of t e will t at it is t eir desire not to partition t eestate so as to preserve and maintain co-owners ip over t eproperties, t ere can )e no dou)t t at )y direct and positive acts in

olding t e estate pro-indi+iso, t ey intended to create an e presstrust among t emselves= t at ?ilemon Sotto w o merely representedt e eirs in t at pro)ate proceedings and filed t e petition in court was not made a co-trustee )y reason of is marriage to :armen;allos even if e was t e lawyer of t e ;allos family enjoying t eprestige of )eing a prominent lawyer wit political influence= t at t eestate of ?lorentino ;allos was already partitioned w et er in 190',prior or su)se3uent t ereto, does not matter )ut t e fact is t at t e2riginal Transfer :ertificates of Title covering t e ' parcels of land were originally issued in t e name of :armen ;allos alone witrespect to lot Eo. '4 and jointly in t e name of :armen ;allos and

aria ?adullon Gda. de ;allos as regards >ots Eos. 840, 01 9-A,10/ and 1/ &, to t e e clusion of :oncepcion ;allos! t at t ere wasrepudiation of t e trust relation among t e co-owners, t e date of w ic t e :ourt can only )e guided )y t e registration and issuanceof t e certificates of title w en :armen ;allos put t e sta7es ofe clusive owners ip over t e lands and repudiated w atever trust was reposed in er )y er co- eirs= t at from t e moment :armen;allos asserted er title over t e 3uestioned properties, t e statute oflimitation operated against er co- eirs, irrespective of plainotto +s.!e+es , plaintiffs5 pretension t at t ey discovered muc too late t att e ' lots were already titled in t e name of :armen ;allos, for sucdiscovery is deemed to ave ta7en place w en t e certificates of titleto t e properties were issued in favor of :armen ;allos.

T e a)ove decision of t e Appellate :ourt aving )een assailed on a

otion for ;econsideration 7 filed )y plaintiffs-appellants, now t eerein private respondents, t e :ourt of Appeals, Special Iivision of

?ive, reversed t e said decision in its ;esolution of Sept. 14, 19 /.T e :ourt, owever, agreed wit t e ruling of t e original decisiondeclaring t at t e eirs of ?lorentino ;allos ad )y manifesting tot e pro)ate court t at it was t eir desire to preserve and maintain t eowners ip of t e in erited properties t ere)y intended and created)y direct and positive acts an e press trust among t emselves, as it was in conformity wit t e evidence and t e law.T e court alsonoted t at "t# e parties ceased to de)ate t e 3uestion as to w et eror not an e press trust was created )y and among t e ;allos eirsafter our decision was promulgated. T ey came to agree t at suc arelations ip was indeed created and t at it e isted. $n t e present

motion for reconsideration, t e dispute centers on t e issue as to w et er t e e press trust su)sisted or it was repudiated. T e partiesare also in disaccord on t e 3uestion as to w et er Atty. Sotto s ould)e considered a party in t e e press trust or s ould )e regardedmerely as a constructive trust. 9

T e respondent :ourt of Appeals said t at upon t e facts and undert e law, Atty. Sotto can )e regarded as t e constructive trustee of is wife and of t e widow and descendants of ?lorentino ;allos= t atAtty. Sotto5s special relations wit t e ;allos eirs in i)ited im fromany act or conduct t at could put is interests a)ove or in directcollision wit t e interests of t ose w o ad reposed t eir trust andconfidence in im.

T e :ourt also found t at t e trust continued to su)sist and did notterminate in 190' )y an adjudication of t e lots to :armen ;allos, forno suc adjudication too7 place= t at t e registration of t e lots wnot t e result of suc adjudication or partition and said registrationdid not amount to a repudiation of t e e press trust. T e titling oflots in t e names of :armen ;allos and aria ?adullon Gda. de;allos was done in t eir capacities as trustees and not as a)soluteand e clusive owners t ereof. $n 190' an oral agreement foundedupon and in reaffirmation of t e 191/ written agreement was reacamong t e ;allos eirs under w ic t e ' lots would remain underco-owners ip of t e / eirs, wit :armen ;allos as administratri w o would )e entitled to a lifetime of usufruct of t e properties )uupon er deat , owners ip of t e lots would devolve to :oncepcio;allos and er eirs. T e :ourt ruled t at :armen ;allos could notlegally deprive :oncepcion ;allos and er eirs of t eir rig ts to tproperties t roug t e e ecution of a will in favor of er us)and?ilemon Sotto, considering t at t e same were trust properties el)y er in trust for t e )enefit of :oncepcion ;allos and er eirs,

ence, Atty. ?ilemon Sotto must )e deemed to ave received t eproperties impressed wit t e su)sisting trust, not for imself )ut ft e )enefit of t ecestuis 2ue trust .

:oncluding, t e :ourt said! 6pon t e facts, under t e applica)lelaws, and even on t e )asis of e3uity, plaintiffs are entitled to )edeclared t e owners of t e properties w ic admittedly originatedfrom t eir ancestor and )lood relative, t eir grandfat er ?lorentino;allos. As owners of t e lots in 3uestion plaintiffs are also entitled t e fruitst ereof. ...1

%etitioner5s motion for reconsideration aving )een denied, e now com6s to review t e reversal of t e original decision of t e appellate court ama7es t e following assignment of errors!$. T e :ourt of Appeals erred in finding t at an e press trust was createdamong t e eirs of ?lorentino ;allos )y virtue of t e ocion So)re laIisposicion de los *ienes filed )y ?ilemon Sotto.$$. T e :ourt of Appeals erred in not finding t at t e legal relations ipscreated )y t e said ocion So)re >a Iisposicion Ie los *ienes was asimple co-owners ip.$$$. T e :ourt of Appeals erred in finding t at Ion ?ilemon Sotto )ecameco-trustee )y virtue of is su)se3uent marriage to :armen ;allos.$G. T e :ourt of Appeals erred in not finding t at t e eirs of ?lorentino;allos entered into an actual, effective and mutually accepted partition of estate.G. T e :ourt of Appeals erred in finding t at an e press trust e isted )y tuse of parol evidence, disregarding t e weig t of a torrens title and a pudocument mutually admitted )y t e parties.G$. T e :ourt of Appeals erred in not finding t at even if an e press trucreated, t e same was e pressly repudiated )y )ot parties.G$$. T e :ourt of Appeals erred not finding t e respondents guilty of lacand estoppel.

T e first and second assignments of error relate to t e)ocion o#rela *isposicion de los 3ienes ence e are constrained to considerand resolve t em toget er. %etitioner faults t e :ourt of Appeals ifinding t at an e press trust was created among t e eirs of?lorentino ;allos )y virtue of t e)ocion filed )y Atty. Sotto, and innot finding t at t e legal relations ip created )y t e)ocion was asimple co-owners ip. %etitioner contends t at t e motion is verclear and categorical and t e only purpose of t at otion is to 7eept e properties in a co-owners ip )y t e eirs of ?lorentino ;allos, nto create a relations ip of e press trust among t e eirs.11


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t at t e document e pressly state and provide for t e e presstrust, 12 and t at it is a contradiction in terms for t e :ourt of Appealsto imply from t e document an e press trust.

%etitioner5s contention is wit out merit. $t may )e true t at t e eirs of?lorentino ;allos intended and desired to 7eep t e properties in co-owners ip pro-indi+iso w en t ey signed t e)ocion filed in t eir)e alf )y Atty. ?ilemon Sotto in t e pro)ate proceedings to terminatet e same )ut t e legal effect of said agreement to preserve t e

properties in co-owners ip as e pressed in writing and em)odied int e )ocion was to create a form of an e press trust amongt emselves as co-owners of t e properties. $n t e case of%astrillo, etal. +s. %ourt of Appeals, et al.,1& S:;A '49, t e Supreme :ourt,spea7ing t ru : ief (ustice a7alintal, said t at co-owners ip is aform of trust and every co-owner is a trustee for t e ot er. $n co-owners ip, t e relations ip of eac co-owner to t e ot er co-ownersis fiduciary in c aracter and attri)ute. et er esta)lis ed )y law or)y agreement of t e co owners, t e property or t ing eld pro-indiviso is impressed wit a fiducial nature t at eac co-owner)ecomes a trustee for t e )enefit of is co-owners and e may not doany act prejudicial to t e interest of is co-owners.

6nder t e law on Trusts, it is not necessary, as petitioner insists, t att e document e pressly state and provide for t e e press trust, for noparticular words are re3uired for t e creation of an e press trust, it)eing sufficient t at a trust is clearly intended. "Art. 1444, E.:.:.# Ane press trust is created )y t e direct and positive acts of t e parties,)y some writing or deed or will or )y words evidencing an intention tocreate a trust. :uaycong et al. vs. :uaycong, et al., @.;. Eo. >-01 1 , Iec. 11, 19 #.

e agree wit t e findings of t e respondent :ourt of Appeals t atan e press trust was created )y t e eirs of ?lorentino ;allos inrespect to t e properties in litigation w en t ey agreed to preservesaid properties in co-owners ip among t emselves as manifestedand e pressed into writing and filed as a pleading captioned)ocion

o#re la *isposicion de los 3ienes. $ncidentally, t is is t e samefinding of t e original decision of t e Big t Iivision, same :ourt w ic was, owever, reconsidered on ot er grounds. e find noreason to distur) t is finding of t e respondent :ourt, t e same )eingin accordance wit law and t e facts as clearly esta)lis ed.

e now consider t e t ird assignment of error. %etitioner contendst at t e :ourt of Appeals erred in finding t at Ion ?ilemon Sotto)ecame a co-trustee )y virtue of is su)se3uent marriage to :armen;allos. %etitioner, w ile admitting t at as a lawyer some form of trustdevolved upon t e s oulders of ?ilemon Sotto= t at as t e us)andof :armen Sotto, some form of trust devolved on is s oulders= t at)ecause of overw elming social and political standing during is timesome form of trust was carried )y ?ilemon Sotto,1 argues t at t is isnot t e Trust t at is defined in our :ivil :ode most especially if it ist e e press trust under Articles 1441 and 1444 w ic is relied upon)y t e respondent :ourt of Appeals, Special Iivision of ?ive. T etrust on t e s oulder of ?ilemon Sotto as t e family lawyer in t eintestate proceedings of ?lorentino ;allos was only coterminous witt e duration of t e proceedings itself. T e trust on t e s oulder of?ilemon Sotto )y virtue of is marriage to :armen ;allos was only asmuc as t e trust on t e s oulders of t e two us)ands of:oncepcion ;allos, ariano Teves and ariano :amara, and t istrust is not t e trust defined in our :ivil :ode on e press trust.1/

e find no merit in petitioner5s contention. $n t e first place,petitioner5s argument is )ased on an incorrect assumption. %etitioassumes t at t e respondent :ourt of Appeals found t e e istence an e press trust )etween Atty. ?ilemon Sotto and t e eirs of?lorentino ;allos, w ic is not correct. at t e appellate court eis t at Atty. Sotto can )e regarded as t e constructive trustee of is wife and of t e widow and descendants of ?lorentino ;allos. $n fact e :ourt declared, t us

6pon t e record, we ave no dou)t )ut t at t ere e isted moret an mere professional relations ip of attorney and client )etweAtty. Sotto and t e mem)ers of t e family of ?lorentino ;allos.S ortly after t e closure of t e testate proceeding, Atty. Sottocontracted marriage wit one of t e daug ters of ?lorentino ;allT e attorney t ere)y )ecame not only a family lawyer )ut also aactual mem)er on t e ;allos family )y affinity. *y reason of ismarriage to :armen ;allos, and on account of is prestige andtremendous social and political influence, Atty. Sotto enjoyed ane ercised a personal, domestic, social, political and moralascendancy and superiority not only over is wife )ut also over

aria ?adullon, :oncepcion ;allos, and t e latter5s c ildren. T eevidence reveals t at t e ;alloses loo7ed up to Atty. Sotto asprotector and )enefactor, as one on w om t ey could repose t etrust and confidence and w o would ta7e care of t e propertiesin erited from ?lorentino ;allos, and on is part, Atty. Sottoac7nowledged is position as protector of t e rig ts and interesof t e ;allos family. >i7e a pater fa"ilias , e attended to t efinancial and medical needs of t e direct descendants of ?lorent;allos and aria ?adullon "B s. 6 and T#. en one of t e fiveparcels in 3uestion, >ot '4 , was )eing claimed )y a certain

anuel 2cejo, Atty. Sotto represented t e ;allos family asdefendants in :ivil :ase Eo. 1 41 of t e :ourt of ?irst $nstance of:e)u, and t e lot was adjudicated in favor of t e ;allos family. Tacts and conduct of t e ;alloses and Atty. Sotto fostered a closeand fiduciary relations ip )etween t em. 6pon t e facts and undt e law, Atty. Sotto can )e regarded as t e constructive trustee o

is wife and of t e widow and descendants of ?lorentino ;allos.?or t e settled rule is t at!

T e relation )etween parties, in order to )e a fiduciary relationneed not )e legal, )ut may )e moral, social, domestic or merelypersonal= and w ere )y reason of 7ins ip, )usiness association,disparity in age or p ysical or mental condition or ot er reason,grantee is in an especially intimate position wit regard to anotand t e latter reposes a degree of trust and confidence in t eformer, confidential relations ip e ists w ic pro i)its t e oneentrusted from see7ing a selfis )enefit for imself during t ecourse of relations ip, and affords a )asis for imposing aconstructive trust. "89 :(S Art. 1'1, pp. 1&'4-1&' #

Atty. Sotto5s special relations ip wit t e ;allos eirs in i)ited ifrom any act or conduct t at would put is interests a)ove, or indirect collision wit , t e interests of t ose w o ad reposed t eirand confidence in im.10

Secondly, it is also not 3uite correct for petitioner to claim t at t erespondent :ourt ruled t at Ion ?ilemon Sotto )ecame a co-trustee)y virtue of is su)se3uent marriage to :armen ;allos. T e trut oft e matter is t at, according to t e :ourt, Atty. Sotto )ecame aconstructive trustee not only )y reason of is marriage to :armen;allos )ut also on account of is prestige and tremendous social an



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political influence, also )ecause Atty. Sotto enjoyed and e ercised apersonal, domestic, social, political and moral ascendancy andsuperiority over is wife, over aria ?adullon, :oncepcion ;allos andt e latter5s c ildren, )esides )eing t e protector of t e rig ts andinterests of t e ;allos family acting li7e a pater fa"ilias attending tot eir financial and medical needs, as well as t e family lawyer.

e are in full accord wit t ese findings and conclusion of t erespondent :ourt as t e same are final, conclusive and )inding upon

6s, t ere )eing no e ceptional circumstances or reasons to review orrevise t e same.

it respect to t e fourt assignment of error, petitioner impugns t e:ourt of Appeals in not finding t at t e eirs of ?lorentino ;allosentered into an actual, effective and mutually accepted partition oft e estate. %etitioner claims t at partition of t e in erited propertiestoo7 place )etween t e eirs in 190' in accordance wit w ic t e 'parcels of land under litigation were adjudicated to :armen ;allosand t at )y reason of t e partition and adjudication, t e lots weregranted to :armen ;allos and titles were secured and issued in erfavor and name.

2n t e ot er and, t e private respondents claim t at t ere was suca partition agreed upon in 190' w en, on t e occasion of t e visit ofaria ?adullon Gda. de ;allos and :armen ;allos to :oncepcion

;allos after t e latter5s delivery of a c ild, it was agreed t at t eproperties in :armen, :e)u and one lot in *asa7, :e)u :ity, allassessed at %9,&&&.&& were to remain wit :oncepcion ;allos, w ilet e ' lots now in litigation, t en owned in common among t e t ree

eirs, and assessed at %'',&&&.&& would )e administered )y:armen ;allos, t e fruits t ereof to )e received )y :armen ;allosduring er lifetime and t at upon t e deat of :armen t e properties will devolve to :oncepcion and to er c ildren.

T e respondent :ourt rejected petitioner5s claim of partition and

adjudication, declaring t at

e cannot em)race t e t eory advanced )y defendant, w ic is)ereft of evidentiary support, t at in 190', on t e occasion of t evisit paid )y aria ?adullon and :armen ;allos to :oncepcion;allos, t e five lots in 3uestion were adjudicated to :armen ;allos.To )egin wit , t ere is no concrete evidence of record on w ic tolay suc claim. $t is our )elief t at t e realities of t e situation oft e parties and t e practica)le and e3uita)le utility of t ein eritance of ?lorentino ;allos are )etter determinants of t e3uestion as to w et er defendant5s t eory would )e accepted orrejected. :armen ;allos was admittedly wit out any c ild tosupport. 2n t e ot er and, :oncepcion ;allos was )urdened wit

many c ildren. T e lots in :armen and *asa7, w ic were allowedto )e retained )y :oncepcion, were assessed at a mere%9,&&&.&&, w ereas t e five lots in 3uestion ad an assessedvalue of %'',&&&.&& in 190'. $t is very difficult to )elieve t at:armen ;allos and aria ?adullon ad gone to :oncepcion, ont e occasion w en anot er c ild ad just )een added to t e latter5s)urden, to tell er t at t ey were depriving er of a valua)le s arein t e in eritance, suc s are to )e given to :armen w o wasc ildless. Suc t eory of defendant is utterly un ?ilipino and ist oroug ly irreconcila)le wit our customs and ways of treatingclose relatives. T e more pro)a)le and )elieva)le is t e testimonyof %ilar Teves t at aria ?adullon and :armen ;allos came to:oncepcion, as agis )earing gifts, to tell er t at t e five lots

would go to er and to er c ildren upon :armen5s deat . T etestimony of %ilar ji)es wit t e evidence t at ?lorentino ;allos

ad e pressed t e wis t at a portion of t e in erited properties ould )e devoted to defray t e e penses for t e education of grandc ildren. 16

e up old t e stand of t e respondent :ourt of Appeals, SpecialIivision of ?ive in giving credence and )elief to respondents5 claimpartition as testified to )y %ilar Teves, one of t e private responde

)ecause t e :ourt5s findings and its ruling is )ased on t e grounds uman e perience, t e ordinary course of t ings and our own natcustoms, culture and tradition to revere t e memory of our ancesto)y 7eeping intact t e estate in in eritance as long as possi)le, and

elp one5s )rot ers and sisters to )enefit from t e sweat and toil oour parents, rat er t an dispossess t em or given t e in eritanceaway to perfect strangers, strangers to family ties and filial affectio$t is unconsciona)le and contrary to morals t at a parent s oulddeprive is c ildren of w at lawfully )elongs to t em. "Ie @u+mvs. A3uino, /4 S:;A 0/ #.

%etitioner5s version of t e partition and adjudication is, from a faviewpoint, clearly untena)le= it is even inconsistent wit is evideT e facts s ow t at all t e lots were registered originally )efore talleged partition and adjudication in 190'. >ots 10/ and 1/ & wereregistered on Sept. 0/, 191/= >ot 840 on ?e). ', 1918= >ot 01 9-A o(une 1 , 1901 and >ot '4 on ?e)ruary 9, 1918. *ase on t eirrespective dates, t e acts of registration preceded t e supposedpartition and adjudication w ic ine plica)ly reversed t e usual oof occurrence w ic is, t at partition and adjudication normallyprecede registration. ore t an t at, t e first 4 lots mentioned a)ov were registered jointly in t e names of aria ?adullon Gda. de ;alland :armen ;allos, w ic strongly )elied petitioner5s contention tall t e ' lots were adjudicated to :armen ;allos alone. T econclusion is inescapa)le t at petitioner5s version did not ta7e plaand t at t e registration of t e lots could not ave resulted from tsupposed partition and adjudication.

As e ave eretofore stressed, t e findings of fact of t e :ourt ofAppeals are conclusive. >i7ewise, 3uestion of credi)ility is left to t:ourt of Appeals. "Ie @arcia vs. :ourt of Appeals, / S:;A 109#.Appreciation of evidence is wit in t e domain of t e :ourt of App)ecause its findings of facts are not reviewa)le )y t e Supreme:ourt. "Talosig vs. Gda. de Eie)a, 4/ S:;A 4 0= Tingco vs. de la

erced, '8 S:;A 89#. T e Supreme :ourt will not review findings ofacts of t e :ourt of Appeals, "Bvangelista F :o. vs. Santos, '1S:;A 41 #.

2n appeal from a decision of t e :ourt of Appeals, t e findings offact made in said decision are final, e cept! "1# en t e conclusis a finding grounded entirely on speculations, surmises orconjectures= "0# en t e inference is manifestly mista7en, a)surimpossi)le= "/# en t ere is a grave a)use of discretion= "4# et e judgment is )ased on a misappre ension of facts= "'# en t efindings of fact are conflicting, " # en t e :ourt of Appeals, inma7ing its findings, went )eyond t e issues of t e case and t e sais contrary to t e admissions of )ot appellant and appellee. "Eapovs. :ourt of Appeals, 4/ S:;A /&1#. $n t e case at )ar, e areconvinced and satisfied t at t e a)ove e ceptions do not o)tain.

%etitioner e acer)ates t at t e :ourt of Appeals erred in finding tan e press trust e isted )y t e use of parol evidence, disregarding



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t e weig t of a torrens title and a pu)lic document mutually admitted)y t e parties, in is fift assignment of error.

e reject petitioner5s contention as )aseless. $n t e first place, t erespondent :ourt did not find t at an e press trust e isted )y t e useof parol evidence. Actually, t e :ourt, on t is point said! 2n t e)asis of undisputed facts, we eld in our decision t at t e eirs of?lorentino ;allos, )y manifesting to t e pro)ate court t at it was t eirdesire to preserve and maintain t e co-owners ip over t e in erited

properties, t ere)y intended and created, )y direct positive acts, ane press trust among t emselves. "pp. 19, 04, Iecision#. $t is our viewt at t is olding s ould )e maintained )ecause it is in conformity witt e evidence and t e law. 17 $n a later portion of t e ;esolutionappealed from, t e :ourt said! As early as in 191/, t e ;allos eirs

ad already agreed e pressly and in writing t at t e five parcels s allremain in co-owners ip, and t at in regard to t em eac one of t e

eirs s all )e a trustee for t e ot ers.1

$n t e second place, t e oral testimony of %ilar Teves simply affirmedt e e istence of suc trust relation= it gave proof t at t e eirsdesired to continue t e e press trust and co-owners ip over t e fivelots. $t was not necessary t at t e eirs create a new agreement ofco-owners ip over t e said properties. T ey merely reiterated t eir written agreement made in 191/ t at t e five parcels would )epreserved in co-owners ip )ut made provisions for t eiradministration, collection of rentals and final disposition upon t edeat of :armen ;allos.

T ere is, t erefore, no violation of Art. 144/, E.:.: w ic providest at no e press trust concerning an immova)le or any interestt erein may )e proved )y parol evidence, as t e same is notapplica)le erein.

As to t e pretension t at t e respondent appellate court disregardedt e weig t of a torrens title and a pu)lic document mutually admitted

)y t e parties, t e latter refering to t e will e ecuted )y :armen;allos in 1940 )e3ueat ing all er properties to er us)and, Atty.?ilemon Sotto, petitioner5s reasoning olds no water )ecause fromt e very nature of a trust relation w ic e isted )etween :armen;allos and er co-owners, s e cannot o)tain and secure a torrenstitle to t e properties in er name muc less dispose of t em )ytestament to er us)and, a constructive trustee, to t e prejudice anddeprivation of t e rig ts and interests of said co- eirs.

A fiduciary relations ip may e ist even if t e title to t e propertysu)ject to t e trust appears in t e name of t e trustee alone, )ecausein cases of trustees ip, t e legal title usually appears in t e name oft e trustee, w ile t e e3uita)le title remains wit t ecestui 2ue trust .

"%alma vs. :risto)al, % il. 10#. True it is t at Torrens titles wereissued in t e name of :armen ;allos, )ut t e principle olds t at atrustee w o ta7es a Torrens title in is name cannot repudiate t etrust )y relying on t e registration, w ic is one of t e well- 7nownstations upon t e finality of a decree of title. "Alvare+, et al. vs. Bspiritu,>-188//, August 14, 19 ', 14 S:;A 890= %aterno Gda. de %adillavs. *i))y de %adilla, 4 % il. / = Eery vs. >oren+o, >-0/&9 , April0 , 19 0, 44 S:;A 4/1, 4/9 and t e cases cited t erein#.

Eeit er an t e will e ecuted )y :armen ;allos deprive t e privaterespondents of t eir owners ip over t e five parcels of land. T eselots were trust properties= :armen ;allos was olding t em in trust

for er sister :oncepcion ;allos and t e latter5s c ildren. Eot )eingt e a)solute owner t ereof, :armen ;allos could not legally conveyt eir owners ip )y including t em in t eir will. To all intents andpurposes, t e will and last testament of :armen ;allos was merely ave icle of an e isting trust and t erefore, Atty. ?ilemon Sotto musdeemed to ave received t e properties not for imself )ut for t e)enefit of t ecestui 2ue trust . And as a trustee of t ese trustproperties, Atty. Sotto never alienated or disposed any of t eseproperties during is lifetime, t ere)y recogni+ing is position astrustee and t at e eld t em for t e )enefit and interest oft ecestuis 2ue trust.

2n t e penultimate and ultimate assignments of error, petitionerfulminates against t e appellate court in not finding t at, assumingt at an e press trust was created, t e same was e presslyrepudiated )y t e parties and in not finding respondents guilty oflac es and estoppel.

T e resolution of t ese supposed errors, t e t and t e t , musfollow as a conse3uence to 2ur rulinga propos petitioner5s 4t and't assignments of error. e sustained t e respondent :ourt inrejecting petitioner5s version of t e partition and adjudication andt e registration of t e lots could not ave resulted from t e suppopartition and adjudication. e affirmed t at t e e press trust and cowners ip over t e ' parcels of land created and agreed in 191/ )yand among t e ;allos eirs did not terminate in 190' )ut su)sistedand was maintained )y t em t ereafter. e also declared t at t eregistration of t e 4 lots in t e names of :armen ;allos and aria?adullon Gda. de ;allos and 1 lot in favor of :armen ;allos alone was done in t eir capacities as trustees and not as a)solute ore clusive owners, and not only in t eir own )e alf and )enefit )utalso for t e ot er co-owner, :oncepcion ;allos.

it t ese previous pronouncements in mind, e must overrulepetitioner5s stand t at t e trust was e pressly repudiated )y t eparties alt oug e ma7es capital of t e fact of registration of t eproperties in t e names of :armen ;allos and aria ?adullon Gda.de ;allos, contending strongly t at suc registration is evidence ofrepudiation of t e e press trust. T e rationale of 2ur conclusion inmeeting petitioner5s 4t assignment of error, including t e aut orcited t ereunder, olds wit e3ual force and persuasion overpetitioner5s contention of alleged repudiation )y t e parties. T eregistration of t e property in t e name of t e trustee in possessiot ereof must )e deemed to ave )een effected for t e )enefit oft ecestui 2ue trust . "Severino vs. Severino, 44 % il /4/= *aretto vTuason, '& % il. 888#.

%etitioner points to t e fact t at :oncepcion ;allos ad e presslyrepudiated t e trust )y selling t e *asa7 properties w ic wereconverted into a su)division, as well as to acts of e clusiveowners ip over t e properties of t e estate )y eac of t e co-ownto s ow t at t e trust relations ip and co-owners ip was repudiatrenounced and terminated w en t e parties agreed to an actualpartition of t e estate. %etitioner5s advocation is futile. *esides tfalsity of its )asis for t e reason t at e found no partition ast eori+ed )y petitioner and t at t e trust relation su)sisted and wamaintained in 190' and t ereafter, t e acts of e clusive owners ippointed )y petitioner do not appear to )e clear, open and une3uivocrepudiation of t e trust. T us

1. T e sale )y :oncepcion ;allos of some of t e properties originall



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forming part of t e estate of ?lorentino ;allos cannot )e consideredas a repudiation of t e e press trust )y :oncepcion erself. Saidproperties were given to er in t e aforementioned agreementtestified to )y %ilar Teves and did not form part of t e five parcels ofland over w ic an e press trust was esta)lis ed in 191/ andreiterated in 190'.

0. it respect to >ots 10/ and 1/ &, Atty. ?ilemon Sotto, soon aftert e creation of t e e press trust in 191/, caused t e registration of

t ese two lots and t e issuance of 2riginal :ertificate of Title Eo.0'1-0'/ dated Sept. 0/, 191/ in t e names of aria ?adullon and:armen ;allos, to t e e clusion of :oncepcion ;allos. T ereafter,Atty. Sotto caused t e deed of sale to )e e ecuted )y aria ?adullon w ere)y s e purportedly sold er s are in t e two lots to :armen;allos, and )y virtue of suc deed, Atty. Sotto was a)le to o)tainTransfer :ertificate of Title in t e name of is wife :armen ;allos.T at t e registration of t ese two lots too7 place in 191/, )arely 8mont s after t e creation of t e e press trust, and )eing inconsistent wit t e terms of said otion t at t ey preserve t e in eritance in co-owners ip and in e3ual s ares, do not clearly s ow t at :armen;allos intended to repudiate t eir original agreement as contained int e )ocion. Since t e titles were issued in t e name of :armen;allos t ru t e professional services of er lawyer- us)and Atty.?ilemon Sotto, it is more )elieva)le and consistent wit t e e presstrust relation created under t e)ocion dated and filed on (an 0',191/ t at t e title was ta7en in t e name of :armen ;allos )ut for t e)enefit of t e ot er eirs, namely aria ?adullon ;allos and:oncepcion ;allos.

/. it respect to >ot 01 9-A, t e 2riginal :ertificate of Title waso)tained )y Atty. ?ilemon Sotto on (une 1 , 1901 in t e name of

aria ?adullon de ;allos and :armen ;allos, again e cluding:oncepcion ;allos. en @ov. @en. ood sued Atty. Sotto fordamages in t e famous ood-Sotto li)el case, Atty. Sotto, fearful oft e issuance of attac ments proceedings, caused aria ?adullonand :armen ;allos to sell >ot 01 9-A in favor of t e spouses Agustin(ere+a and *eatri+ de (ere+a, in w ose names t e 2riginal:ertificate of Title were t en transferred. ot 840, t e same was registered on ?e). ', 1918in t e name of :armen ;allos and er mot er aria ?adullon ;allos,also to t e e clusion of :oncepcion ;allos. A deed of sale e ecuted)y aria ?adullon purported to sell er Q s are of t e lot in favor of:oncepcion ;allos. T is deed was among t e documents 7ept in t eprivate files of Atty. Sotto w ic were delivered )y :esar Sotto to t erespondents. T is deed was not registered in t e 2ffice of t e;egister of Ieeds )ut was 7ept secret in t e files of Atty. Sotto.T ereafter, anot er deed was registered w ere)y aria ?adullonsold er s are to :armen ;allos and upon t e registration of t elatter deed, title was consolidated in t e name of :armen ;allos, w o was issued a new Transfer :ertificate of Title. T at t e deed of salesupposedly asserting a claim of owners ip and transfer t ereof was7ept under seal of secrecy cannot )e considered as une3uivocal acts

of repudiation of t e trust and of t e co-owners ip. Alt oug t eto t e lot was finally consolidated in t e name of :armen ;allos t rt is secret manner, e must regard t e registration to )e for t e)enefit of t e ot er co- eirs w o cannot )e prejudiced )y suc furtand stealt y act.

T e finding of t e respondent :ourt of Appeals t at "t# e issuantitles and t e e ecution of t e purported sales and transfers, w icculminated in Atty. Sotto5s ac3uisition of titles in is name, occur

during t e e istence of t e e press trust, and were s rouded )y acloud of secrecy, at least as far as :oncepcion ;allos wasconcerned. A6 t e papers and documents pertaining to t e issuancof titles and to t e transfers and sales were 7ept in Atty. Sotto5spossession, and concealed from t e 7nowledge of :oncepcion;allos. At t e time :oncepcion ;allos was )eing deprived of avalua)le s are in t e in eritance, s e was 7ept completely in t edar7. 6nder t e facts, appellee cannot rely on t e certificates of titin t e names of Atty. Sotto to defeat t e plaintiffs5 rig t and causeaction, 19 clearly appears to )e correct and well-founded t at t esame will not )e distur)ed )y 6s in t e present petition for review ocertiorari.

$n*ia4, et al. +s. 5orricho and Aguado /hil. 671, t e Supreme :ourt,spea7ing t ru (ustice (.*.>. ;eyes, said. T e e press trusts disa)let e trustee from ac3uiring for is own )enefit t e property commito is management or custody, at least w ile e does not openlyrepudiate t e trust, and ma7es suc repudiation 7nown to t e)eneficiary orcestui 2ue trust . ?or t is reason, t e old :ode of :ivil%rocedure "Act 19 declared t at t e rules on adverse possessiodo not apply to continuing and su)sisting "i.e., unrepudiated#trusts.

$n8alde4, et al +s. larga et al., 91 %'A :1 , t e Supreme :ourt, wit Acting : ief (ustice a7alintal as ponente, eld! And from tstandpoint of ac3uisitive prescription, or prescription of owners it is :ourt as eld in numerous decisions involving fiduciaryrelations suc as t ose occupied )y a trustee wit respect tot ecestui 2ue trust t at as a general rule t e former5s possession isnot adverse and t erefore cannot ripen into a title )y prescription.Adverse possession in suc a case re3uires t e concurrence of t efollowing circumstances! "a# t at t e trustee as performedune3uivocal acts of repudiation amounting to an ouster of t ecestui2ue trust = ")# t at suc positive acts of repudiation ave )een mad7nown to t ecestui 2ue trust and "c# t at t e evidence t ereons ould )e clear and conclusive.

$n t e lig t of t e a)ove doctrinal , e rule t at t e registration oflots in t e names of :armen ;allos and er mot er aria ?adullonGda de ;allos and t eir su)se3uent transfers and consolidation to:armen ;allos5 name alone in a manner s own to )e fictitious,fraudulent and secretive, t ere)y 7eeping t e cestuis 3ue trust in tdar7 did not constitute acts of repudiation of t e e press trust. Sucregistrations were ineffective and not )inding upon t e cestui 3uetrust. e are persuaded and convinced t at t e circumstancesre3uired )y said decisions are not present in t e case at )ar.

%etitioner finally raises a num)er of points w ic according to iconstitute acts of repudiation )y :oncepcion ;allos suc as erfailure and t at of er eirs to oppose t e pro)ate of t e will of:armen and t at t is failure also constitute lac es= t at t e failuret e t ree inventories of properties su)mitted in t e intestate



18/75

proceedings of :oncepcion ;allos to include t e five parcels of landin 3uestion is a repudiation= t at t is omission as also placed t erespondents in estoppel to claim now t e properties= and t at t efailure of respondents to ta7e any action to recover t e propertiesduring t e lifetime of ?ilemon Sotto constitute lac es.

>ac es as )een defined as t e failure or neglect, for anunreasona)le and une plained lengt of time, to do t at w ic )ye ercising due diligence, could or s ould ave )een done earlier= it is

negligence or omission to assert a rig t wit in a reasona)le time, warranting a presumption t at t e party entitled to assert it eit er asa)andoned it or declined to assert it. "Tijam, et al. v. Si)ong anoy, etal., Eo. >-014'&, April 1', 19 8, 0/ S:;A 09, /'#. T e defense oflac es is an e3uita)le one and does not concern itself wit t ec aracter of t e defendant5s title, )ut only wit w et er or not )yreason of t e plaintiff5s long inaction or ine cusa)le neglect e s ould)e )arred from asserting is claim at all. "%a)alate v. Bc arri, (r., /'S:;A '18#.

Bstoppel, on t e ot er and, rests on t is rule! w enever a party as,)y is declaration, act or omission, intentionally and deli)erately ledt e ot er to )elieve a particular t ing true, and to act, upon suc)elief, e cannot, in any litigation arising out of suc declaration, act,or omission, )e permitted to falsify it. "Ie :astro vs. @inete,>-/&&'8, arc 08, 19 9, 0 S:;A 0/#. Bstoppel as its origin ine3uity and )eing )ased on moral and natural justice, findsapplica)ility w atever and w enever t e special circumstances of acase so demand ":astrillo vs. :ourt of Appeals, >-18&4 , arc /1,19 4, 1& S:;A '49= *eronilla vs. @overnment Service $nsuranceSystem, >-01 0/, Eovem)er 0 , 19 &, / S:;A 44#.

$n determining w et er a delay in see7ing to enforce a rig tconstitutes lac es, t e e istence of a confidential relations ip)etween t e parties is an important circumstance for consideration, adelay under suc circumstances not )eing so strictly regarded as w ere t e parties are strangers to eac ot er. T e doctrine of lac esis not strictly applied )etween near relatives, and t e fact t at t eparties are connected )y ties of )lood or marriage tends to e cuse anot erwise unreasona)le delay.

T e claim t at t e eirs of :oncepcion ;allos are guilty of lac es andare estopped from claiming t e properties deserves scantconsideration, for in fiduciary relations ip, t e )eneficiaries ave t erig t to rely on t e trust and confidence reposed in t e trustee. $n t ecase at )ar, t ere )eing no effective repudiation of t e e press trustcreated )y and among t e ;allos eirs, t e defense of lac esinvo7ed )y petitioner is unvailing. "*uencamino, et al., @.;. Eo. >-19&10, 2cto)er /&, 19 #. oreover, under t e facts esta)lis ed ands owing t e complete dominance of Atty. Sotto over t e eirs anddescendants of t e ;allos family, t e confidentia

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