Banzon v.

Cruz
G.R. No. L-31789 June 29, 1972 Justice Teehankee
Facts:
Sometime in 1952, Maximo Sta. Maria (Sta. Maria) obtained a crop loan from the PhilippineNational Bank (PNB), with
Associated Insurance & Surety Co., Inc., (Associated) acting as surety forSta. Maria and Antonio Banzon
(Banzon) and Emilio Naval (Naval) as inseminators for Associated.When Sta. Maria failed to pay PNB the
amount of the loan , PNB demanded payment from Associatedwho, instead of paying PNB, filed a complaint
against Sta.Maria, Banzon and Naval. In 1957, the Courtof First Instance of Manila (CFI of Manila) granted the petition of
Associated, and ordered thereindefendants to pay Associated jointy and severally. Associated then levied Banzons two lots
inCaloocan to satisfy the judgment of CFI Manila. As it was the highest bidder (P41,000.00) at theexecution
sale conducted by the Sheriff of Rizal, the latter issued a certificate of sale in favor of theformer. Associated then demanded
from Banzon the delivery of the latters owners duplicate of certificate of title, to which Banzon refused, prompting
Associated to file a complaint with the Court of First Instance of Rizal (CFI of Rizal) for an order directing
Banzon to present said certificated forcancellation and for another order directing the Register of Deeds of Rizal to
cancel the certificatedand to issue new transfer certificates in the name of Associated. The trial court ruled in
favor of Associated. However, it was then discovered that Associated never discharged its liability
with PNB.PNB then filed a complaint against Sta. Maria, his six brothers and sisters, and Associated. After thetrial court ruled
in favor of PNB, Sta. Maria began paying his outstanding loan with the former, whichthen amounted to only of the
amount earlier awarded to Associated to be paid to PNB. In otherwords, PNB collected directly from its
debtor Sta. Maria the amounts owing to it, with Associated neverhaving to put in one centavo. After collecting from
Sta. Maria, PNB released Associated from itsobligation as surety. This should have put an end to the matter and Banzons two
lots thereforerestored fully to his ownership, but it was then discovered that Associated has allowed and
permittedone Pedro Cardenas (Cardenas) to execute and levy one of Banzons two parcel of land being held
byAssociated as trustee, which then resulted to the issuance of a new title in the name of Cardenas.
OnMarch 13, 1970, having learned of PNBs release of Associated as of February 20, 1970, filed acomplaint for reconveyance
of their two parcels of land, one of which is under Cadenass name and theother, while still under Banzons name, was
held by Associated.
Issue:
Whether or not Banzon has the right to ask for reconveyance of his two lots in question.
Held:
Yes, he has. When Associated nevertheless prematurely and contary to the intent andcondition of the basic 1957 judgment
levied in execution on the two Caloocan City lots of Banzon theinterest it acquired was clearly impressed with a trust character.
Such acquisition of Banzon'sproperties by Associated was effected, if not through fraud on Associated's part, certainly
throughmistake and there Associated was "by force of law, considered a trustee of implied trust for
the benefitof the person from whom the property comes" by virtue of Article 1456 of the Code since Associatednot having
paid nor having been compelled to pay the bank had no right in law or equity to so executethe judgment against Banzon as
indemnitor. Had there been no fraudulent concealment or suppressionof the fact of such non-payment by Associated or a
mistaken notion just assumed without factual basisthat Associted had paid the bank and was thus entitled to enforce its
judgement against Banzon asindemnitor, the writ for execution of the judgment against Banzon's properties would not been
issued.Associated therefore stands legally bound by force of law to now discharge its implied trust and returnBanzon's
properties to him as their true and rightful owner