1. GARCIA V. DE MANZANO
Manzano falsely and
2. MANILA TRADING & SUPPLY CO., vs. MANILA TRADING LABOR ASSOCIATION
3. RALLOS V. YANGCO
4. LUSTAN V. CA
5. SEVILLA V. CA
6. VALENZUELA V. CA
7. MENDOZA V. PAULE
8. RALLOS V. FELIX GO CHAN & REALTY CORP.
9. SALAO V. SALAO
10.DEVELOPMENT BANK OF THE PHILIPPINES V. COMMISSION ON AUDIT
11.CAEZO V. ROJAS
12.DIAZ VS. GORRICHO AND AGUADO
13.MORALES V. CA
14.MINDANAO DEVELOPMENT AUTHORITY V. CA
15.METROPOLITAN V. THE BOARD OF TRUSTEES OF RIVERSIDE MILLS CORPORATION
PROVIDENT AND RETIREMENT FUND
_________________________________________________
G.R. No. L-13414 February 4, 1919
JUAN GARCIA Y PALICIO, plaintiff-appelle, vs.
JOSEFA DE MANZANO, as administratrix of the estate of her husband Narciso Lopez Manzano,
defendant-appellant.
Quick Facts: Father gave first POA to son and then second POA to wife; son sold half interest in the boat
A second POA (of wife) revokes the first one only after notice is given to the first agent (son).
Facts:
Narciso Lopez Manzano gave a general power-of-attorney to his son, Angel L. Manzano on
the 9th of February, 1910, and on the 25th of March a second general power-of-attorney to his
wife, Josefa Samson.
Manzano was the owner of a half interest in a small steamer, the San Nicolas, the other half
being owned by Ocejo, Perez & Co., with whom there was a partnership agreement to run the
steamer for a few years.
When this period expired Ocejo, Perez & Co demanded that Manzano buy or sell.
As he did not want to sell at the price offered and could not buy, Juan Garcia bought the half
interest held by Ocejo, Perez & Co.
Angel L. Manzano, acting under his power-of-attorney, sold in July, 1911, the other half of the
boat to the plaintiff, but as Garcia is a Spaniard and could not register the boat in his name at
the Custom House, the boat was registered in the name of Agustin Garcia, a son of the plaintiff,
who at that time, July 2d, 1913, was a minor about twenty years old.
Agustin Garcia shortly thereafter died, leaving his parents as his heirs at law, and as such heirs
plaintiff's wife was made a party.
Angel L. Manzano, by virtue of the power-of-attorney from his father, Narciso L. Manzano,
executed a contract by which Juan Garcia agreed to extend a credit to Narciso L. Manzano in
the sum of P12,000, and this credit was used by the house of Manzano.
To secure it a mortgage was given in the same document on three parcels of land in Atimonan,
with their improvements. The registration of this mortgage was refused by the registrar.
Josefa Samson y San Pedro was named administratrix of the property of Narciso L. Manzano,
and commissioners were duly appointed, and notice was published, and no claims having been
presented against the estate to the commissioners, they so reported to the court on the 7th of
December, 1914.
Court of First Instance ordered the partition of the property amongst the heirs of Narciso L.
Manzano.
Plaintiff filed his action to foreclose the so-called mortgage.
Argument of Defendants:
that Garcia taking advantage of the youth and inexperience of Angel L.
maliciously made him believe that he had authority under the power-of-attorney from his father
to sell the half interest in the San Nicolas, and that he did so
That Angel L. Manzano had no authority to sell the interest in the steamer, but that since the
date of said sale, July, 1912, (1911?) the plaintiff had illegally appropriated all rents and profits
of the boat to his own use, which amount to P30,000 per year, after paying for all repairs, etc.
Issue 1: WON the power-of-attorney to the wife revoked the one to the son, in accordance with article
1735 of the Civil code (Article 1735 of the Civil code is as follows: The appointment of a new agent for
the same business produces a revocation of the previous agency from the day on which notice was given
to the former agent, excepting the provisions of the next preceding article.
Held: There is no proof in the record that the first agent, the son, knew of the power-of-attorney to his
mother. It was necessary under the law for the defendants, in order to establish their counterclaim, to
prove that the son had notice of the second power-of-attorney. They have not done so, and it must be
considered that Angel L. Manzano was acting under a valid power-of-attorney from his father which had
not been legally revoked on the date of the sale of the half interest in the steamer to the plaintiff's son,
which half interest was legally inherited by the plaintiffs.
Issue 2: WON the sale of the boat by Angel L. Manzano was authorized Argument of defendants: the
power-of-attorney under which Angel L. Manzano acted, even if a valid power, did not authorize the sale
of the boat, and they want it back it with one-half of the profits derived from its use by the plaintiff.
Held: The authorization is so complete that it carries with it full authority to sell the one-half interest in the
boat which was then owned by Narciso L. Manzano. Ratio: The power does not expressly state that the
agent may sell the boat, but a power so full and complete authoring the sale of real property, must
necessarily carry with it the right to sell a half interest in a small boat. The record further shows the sale
was necessary in order to get money or a credit without which it would be impossible to continue the
business which was being conducted in the name of Narciso L. Manzano and for his benefit.
G.R. No. L--5062 April 29, 1953
MANILA TRADING & SUPPLY CO., vs. MANILA TRADING LABOR ASSOCIATION
On October 10, 1950, the Manila Trading Labor Association, composed of workers of Manila Trading and
Supply Co., made a demand upon said company for increase of personnel, Christmas bonus, and other
gratuities and privileges. As the demand was refused and the Department of Labor whose intervention
had been sought by the association failed to effect an amicable settlement, the Head of the Department
certified the dispute to the Court of Industrial Relations on October 25 and there it was docketed as case
No. 521-V. The company, on its part, on that same day applied to the Court of Industrial Relations for
authority to lay off 50 laborers due to "poor business," the application being docketed as Case No. 415-
V (4).
To resolve the disputes involved in the two cases the Court of Industrial Relations conducted various
hearings between October 26, 1950, and January 18, 1951. Of their own volition the president and vice-
president of the association attended themselves from work for that reason they afterwards claimed that
they were entitled to their wages. The Court of Industrial Relations found merit in the claim, and at their
instance, ordered the company to pay them their wages corresponding to the days they were absent from
work while in attendance at the hearings.
Contending that the industrial court had no authority to issue an order, the company asks this Court to
have it annuled. Opposing the petition, the association, on its part, contends that the order comes within
the broad powers of the industrial court in the settlement of disputes between capital and labor.
The question presented is whether the Court of Industrial Relations may require an employer to pay the
wages of officers of its employees' labor union while attending the hearing of cases between the employer
and the union. The question, it appears, is no different from that decided early in the case of J.P. Heilbronn
Co. vs. National Labor Union,* G.R. No. L-5121. In that case the plaintiff company questioned the validity
of an order the Court of Industrial Relations requiring it to pay the president and the secretary of the labor
union their salaries corresponding to the days they attending the conferences and hearings before that
court. Setting aside the said order, we there said:
When in case of strikes, and according to the CIR even if the strike is legal, strikers may not collect their
wages during the days they did not go to work, for the same reasons if not more, laborers who voluntarily
absent themselves from work to attend the hearing of a case in which they seek to prove and establish
their demands against the company, the legality and propriety of which demands is not yet known, should
lose their pay during the period of such absence from work. The age-old rule governing the relation
between labor and capital or management and employee is that of a "fair day's wage for a fair day's
labor." If there is no work performed by the employee there can be no wage or pay, unless of course, the
laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended. it is
hardly fair or just for an employee or laborer to fight or litigate against his employer on the employer's
time.
In a case where a laborer absents himself from work because of a strike or to attend a conference or
hearing in a case or incident between him and his employer, he might seek reimbursement of his wages
from his union which had declared the strike or filed the case in the industrial court. Or, in the present
case, he might have his absence from his work charged against his vacation leave. Three of the Justices
who sign the present decision believe that the deductions made from the wage of Armando Ocampo and
Protacio Ty might possibly be charge as damages in the case in the event that the said case in CIR
prosecuted in behalf of their union is finally decided in their favor and against the company.
The respondent association, however, claims that it was not the one that brought the cases to the Court
of Industrial Relations, and the point is made that " if the laborer who is dragged to court is deprived of
his wages while attending court hearings, he would in effect be denied the opportunity to defend himself
and protect his interests and those of his fellow workers." But while it is true that it was the Secretary of
Labor who certified the dispute involved in case No. 521-V to the Court of Industrial Relations, the fact
remains that the dispute was initiated by a demand from the labor association. The truth, therefore, is
that while one of the cases was filed by the employer, the other was initiated by the employees. It may
be conceded that the employer is in most cases in a better position to bear the burdens of litigation than
the employees. But as was said in the case of J. P. Heilbronn Co. vs. National Labor Union, supra, "It is
hardly fair for an employee or laborer to fight or litigate against his employer on the employer's time." The
most that can be conceded in favor of the claimants herein is to have the absences occasioned by their
attendance at the hearings charged against their vacation leave if they have any, or as suggested by
three of the Justices who signed the decision in the case just cited, to have the wages they failed to earn
charged as damages in the event the cases whose hearings they attended are decided in favor of the
association. But the majority of the Justices make no commitment on this latter point.
In view of the foregoing, the petition for certiorari is granted and the order complained of set aside. Without
pronouncement as to costs.
G.R. No. 6906 September 27, 1911
FLORENTINO RALLOS, ET AL., plaintiff-appellee, vs.
TEODORO R. YANGCO, defendant-appellant.
MORELAND, J.:
FACTS:
1) Yangco opened a steamship office, a shipping and commission department for buying and selling leaf
tobacco and other native products.
2) He sent a letter2 to plaintiff Rallos on 1907, asking if Rallos was personally and not as agent of the
defendant. This action was brought to recover said sum
__________________________________________________________________________________
2 CIRCULAR NO. 1.
MANILA, November 27, 1907
MR. FLORENTINO RALLOS, Cebu.
DEAR SIR: I have the honor to inform you that I have on this date opened in my steamship office at No.
163 Muelle de la Reina, Binondo, Manila, P. I., a shipping and commission department for buying and
selling leaf tobacco and other native products, under the following conditions:
1. When the consignment has been received, the consignor thereof will be credited with a sum not to
exceed two-thirds of the value of the goods shipped, which may be made available by acceptance of a
draft or written order of the consignor on five to ten day's sight, or by his ordering at his option a bill of
goods. In the latter case he must pay a commission of 2 per cent.
2. No draft or written order will be accepted without previous notice forwarding the consignment of goods
to guarantee the same.
3. Expenses of freight, hauling and everything necessary for duly executing the commission will be
charged in the commission.
4. All advances made under sections (1) and (3) shall bear interest at 10 per cent a year, counting by the
sale of the goods shipped or remittance of the amount thereof.
5. A commission of 2 per cent will be collected on the amount realized from the sale of the goods
shipped
6. A Payment will be made immediately after collection of the price of the goods shipped.
7. Orders will be taken for the purchase of general merchandise, ship-stores, cloths, etc., upon remittance
of the amount with the commission of 2 per cent on the total value of the goods bought. Expenses of
freight, hauling, and everything necessary for properly executing the commission will be charged to the
consignor.
8. The consignor of the good may not fix upon the consignee a longer period than four months, counting
from the date of receipt, for selling the same; with the understanding that after such period the consignee
is authorized to make the sale, so as to prevent the advance and cost of storage from amounting to more
than the actual value of said goods, as has often happened.
9. The shipment to the consignors of the goods ordered on account of the amount realized from the sale
of the goods consigned and of the goods bought on remittance of the value thereof, under sections (1)
and (3), will not be insured against risk by sea and land except on written order of the interested parties.
10. On all consignments of goods not insured according to the next preceding section, the consignors
will bear the risk.
11. All the foregoing conditions will take effect only after this office has acknowledged the consignor's
previous notice.
12. All other conditions and details will be furnished at the office of the undersigned. If you care to favor
me with your patronage, my office is at No. 163 Muelle de la Reinna, Binondo, Manila, P. I., under the
name of "Teodoro R. Yangco." In this connection it gives me great pleasure to introduce to you Mr.
Florentino Collantes, upon whom I have conferred public power of attorney before the notary, Mr. Perfecto
Salas Rodriguez, dated November 16, 1907, to perform in my name and on my behalf all acts necessary
for carrying out my plans, in the belief that through his knowledge and long experience in the business,
along with my commercial connections with the merchants of this city and of the provinces, I may hope
to secure the most advantageous prices for my patrons. Mr. Collantes will sign by power of attorney, so
I beg that you make due note of his signature hereto affixed.
Very respectfully, (Sgd.) T. R. YANGCO. (Sgd.) F. COLLANTES.

ISSUE: WON Rallos can recover the amount from Yangco.
HELD: YES RATIO: Yangco is liable. Having advertised the fact that Collantes was his agent and having
given them a special invitation to deal with such agent, it was the duty of the defendant on the termination
of the relationship of principal and agent to give due and timely notice thereof to the plaintiffs. Failing to
do so, he is responsible to them for whatever goods may have been in good faith and without negligence
sent to the agent without knowledge, actual or constructive, of the termination of such relationship.
ADORACION LUSTAN, petitioner, vs. COURT OF APPEALS, NICOLAS PARANGAN and SOLEDAD
PARANGAN, PHILIPPINE NATIONAL BANK, respondents.
[G.R. No. 111924. January 27, 1997]
FACTS:
Lustan was the registered owner of land located in Iloilo. Lustan then leased the property to
spouses Parangan for a term of ten (10) years and an annual rent of One Thousand (P1,000.00) Pesos.
During the period of lease, Parangan was regularly extending loans in small amounts to petitioner to
defray her daily expenses and to finance her daughter's education. On July 29, 1970, petitioner executed
a Special Power of Attorney in favor of Parangan to secure an agricultural loan from private respondent
Philippine National Bank (PNB) with the aforesaid lot as collateral. On February 18, 1972, a second
Special Power of Attorney was executed by petitioner, by virtue of which, Parangan was able to secure
four (4) additional loans.The last three loans were without the knowledge of herein petitioner and all the
proceeds therefrom were used by Parangan for his own benefit. Upon discovery of the said loan, Lustan
argues that the last three mortgages were void for lack of authority.
ISSUE: (1) WON the loans made by Parangan without knowledge of Lustan is
binding with PNB.
(2) WON Lustan is liable for the actions of Parangan under the SPO.
RULING:
She totally failed to consider that said Special Powers of Attorney are a continuing one and
absent a valid revocation duly furnished to the mortgagee, the same continues to have force and effect
as against third persons who had no knowledge of such lack of authority. Article 1921 of the Civil Code
provides:
Art. 1921. If the agency has been entrusted for the purpose of contracting with specified persons, its
revocation shall not prejudice the latter if they were not given notice thereof.
The Special Power of Attorney executed by petitioner in favor of Parangan duly authorized the
latter to represent and act on behalf of the former. Having done so, petitioner clothed Parangan with
authority to deal with PNB on her behalf and in the absence of any proof that the bank had knowledge
that the last three loans were without the express authority of petitioner, it cannot be prejudiced thereby.
As far as third persons are concerned, an act is deemed to have been performed within the scope of the
agent's authority if such is within the terms of the power of attorney as written even if the agent has in
fact exceeded the limits of his authority according to the understanding between the principal and the
agent. 22 The Special Power of Attorney particularly provides that the same is good not only for the
principal loan but also for subsequent commercial, industrial, agricultural loan or credit accommodation
that the attorney-in-fact may obtain and until the power of attorney is revoked in a public instrument and
a copy of which is furnished to PNB. 23 Even when the agent has exceeded his authority, the principal is
solidarily liable with the agent if the former allowed the latter to act as though he had full powers (Article
1911, Civil Code).
G.R. No. L-41182-3 April 16, 1988
DR. CARLOS L. SEVILLA and LINA O. SEVILLA, petitioners-appellants, vs.
THE COURT OF APPEALS, TOURIST WORLD SERVICE, INC., ELISEO S.CANILAO, and
SEGUNDINA NOGUERA, respondents-appellees.
FACTS
On the strength of a contract, Tourist World Service Inc. (TWS) leased the premises belonging
to Mrs. Segundina Noguera for the formers use as a branch office. Lina Sevilla bound herself solidarily
liable with TWS for the prompt payment of the monthly rentals thereon. When the branch office was
opened, it was run by appellant Sevilla payable to TWS by any airline for any fare brought in on the efforts
of Sevilla, 4% was to go to Sevilla and 3% was to be withheld by TWS.
TWS appears to have been informed that Sevilla was connected with a rival firm, the Philippine
Travel Bureau, and, since the branch office was anyhow losing, the TWS considered closing down its
office. Two resolutions of the TWS board of directors were passed to abolish the office of the manager
and vice president of the branch office and authorizing the corporate secretary to receive the properties
in the said branch office.
Subsequently, the corporate secretary went to the branch office, and finding the premises
locked and being unable to contact Sevilla, padlocked the premises to protect the interests of TWS.
When neither Sevilla nor her employees could enter the locked premises, she filed a complaint
against TWS with a prayer for the issuance of a mandatory preliminary injunction.
The trial court dismissed the case holding that TWS, being the true lessee, was within its
prerogative to terminate the lease and padlock the premises. It likewise found that Sevilla was a mere
employee of TWS and as such, was bound by the acts of her employer.
The CA affirmed. Hence this petition.
ISSUES
1. Whether or not there was an employer-employee relationship between TWS and Sevilla?
2. Whether or not the padlocking of the premises by TWS without the knowledge and consent of Sevilla
entitled the latter to the relief of damages prayed for?
HELD
1. NO. It was a principal-agent relationship. In this jurisdiction, there has been no uniform test to
determine the existence of an employer-employee relation. In general, We have relied on the so-
called right of control test, where the person for whom the services are performed reserves a
right to control not only the end to be achieved but also the means to be used in reaching such end.
In addition, the existing economic conditions prevailing between the parties, like the inclusion
of the employee in the payrolls, are also considered in determining the existence of an employer-
employee relationship.
Sevilla was not subject to control by TWS either as to the result of the enterprise or as to the means
used in connection therewith.
Under the contract of lease, Sevilla bound herself in solidum for the rental payments; an
arrangement that would belie the claims of a master-servant relationship for a true employee cannot
be made to part with his own money in pursuance of his employers business, or otherwise assume
liability thereof.
Sevilla was not in the companys payroll. She retained 4% in commissions from airline bookings, the
remaining 3% going to TWS. Unlike an employee who usually earns a fixed salary, she earned
compensation in fluctuating amounts depending on her booking successes.
The fact that Sevilla has been designated branch manager does not make her, ergo, TWS
employee. Employment is determined by the right of control test and certain economic parameters.
Titles are weak indicators.
 When Sevilla agreed to man TWS Ermita branch office, she did so pursuant to a contract of agency.
It is the essence of this contract that the agent renders services in representation or on behalf of
another. In the case at bar, Sevilla solicited airline fares, but she did so for and on behalf of her
principal, TWS.
2. YES. For its unwarranted revocation of the contact of agency, TWS should be sentenced to pay
damages.
Sevilla had acquired a personal stake in the business itself, and necessarily, in the equipment
pertaining thereto.
Sevilla was not a stranger to that contract of lease having been explicitly named therein as third
party in charge of rental payments. She could not be ousted from possession summarily as
one would eject an interloper.
The Court is satisfied with the chronicle of events, there was indeed some malevolent design to put the
petitioner Sevilla in a bad light following the disclosures that she had worked for a rival firm.
ARTURO P. VALENZUELA and HOSPITALITA N. VALENZUELA, petitioners, vs.
THE HONORABLE COURT OF APPEALS, BIENVENIDO M. ARAGON, ROBERT E. PARNELL,
CARLOS K. CATOLICO and THE PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY, INC.,
respondents. G.R. No. 83122 October 19, 1990
Facts:
Petitioner Valenzuela, a General Agent respondent Philamgen, was authorized to solicit and sell all kinds
of non-life insurance. He had a 32.5% commission rate. From 1973 to 1975, Valenzuela solicited marine
insurance from Delta Motors, Inc. in the amount of P4.4 Million from which he was entitled to a
commission of 32%. However, Valenzuela did not receive his full commission which amounted to P1.6
Million from the P4.4 Million. Premium payments amounting to P1,946,886.00 were paid directly to
Philamgen. Valenzuelas commission amounted to P632,737.00.
Philamgen wanted to cut Valenzuelas commission to 50% of the amount. He declined.
When Philamgen offered again, Valenzuela firmly reiterated his objection.
Philamgen took drastic action against Valenzuela. They: reversed the commission due him, threatened
the cancellation of policies issued by his agency, and started to leak out news that Valenzuela has a
substantial debt with Philamgen. His agency contract was terminated.
The petitioners sought relief by filing the complaint against the private respondents. The trial court found
that the principal cause of the termination as agent was his refusal to share his Delta commission.
The court considered these acts as harassment and ordered the company to pay for the resulting damage
in the value of the commission. They also ordered the company to pay 350,000 in moral damages.
The company appealed. The CA ordered Valenzuela to pay the entire amount of the commission. Hence,
this appeal by Valenzuela.
Issue:
whether or not Philamgen could continue to hold Valenzuela jointly and severally liable with the insured
for unpaid premiums
Held: NO.
The principal cause of the termination of Valenzuela as General Agent of Philamgen arose from his
refusal to share his Delta commission. The apparent bad faith of the private respondents in terminating
the General Agency Agreement of petitioners. The agency involving petitioner and private respondent is
one "coupled with an interest," and, therefore, should not be freely revocable at the unilateral will of the
latter. With the termination of the General Agency Agreement, Valenzuela would no longer be entitled to
commission on the renewal of insurance policies of clients sourced from his agency.
Despite the termination of the agency, Philamgen continued to hold Valenzuela jointly and severally liable
with the insured for unpaid premiums. Valenzuela had an interest in the continuation of the agency when
it was unceremoniously terminated not only because of the commissions he should continue to receive
from the insurance business he has solicited and procured but also for the fact that by the very acts of
the respondents, he was made liable to Philamgen in the event the insured fail to pay the premiums due.
They are estopped by their own positive averments and claims for damages. Therefore, the respondents
cannot state that the agency relationship between Valenzuela and Philamgen is not coupled with interest.
There is an exception to the principle that an agency is revocable at will and that is when the agency has
been given not only for the interest of the principal but for the interest of third persons or for the mutual
interest of the principal and the agent. In these cases, it is evident that the agency ceases to be freely
revocable by the sole will of the principal.
The factor rendering Philamgen and the private respondents liable in damages is that the termination by
them of the General Agency Agreement was tainted with bad faith. If a principal acts in bad faith and with
abuse of right in terminating the agency, then he is liable in damages.
Valenzuela is not liable to Philamgen for the unpaid and uncollected premiums. Under Section 77 of the
Insurance Code, the remedy for the non-payment of premiums is to put an end to and render the
insurance policy not binding
Sec. 77 ... [N]otwithstanding any agreement to the contrary, no policy or contract of insurance is valid
and binding unless and until the premiums thereof have been paid except in the case of a life or industrial
life policy whenever the grace period provision applies
In Philippine Phoenix Surety v. Woodworks, we held that the non-payment of premium does not merely
suspend but puts an end to an insurance contract since the time of the payment is peculiarly of the
essence of the contract. And in Arce v. The Capital Insurance and Surety Co. Inc. (117 SCRA 63, [1982]),
we reiterated the rule that unless premium is paid, an insurance contract does not take effect. Thus:
It is to be noted that Delgado (Capital Insurance & Surety Co., Inc. v. Delgado, 9 SCRA 177 [1963] was
decided in the light of the Insurance Act before Sec. 72 was amended by the underscored portion. Supra.
Prior to the Amendment, an insurance contract was effective even if the premium had not been paid so
that an insurer was obligated to pay indemnity in case of loss and correlatively he had also the right to
sue for payment of the premium. But the amendment to Sec. 72 has radically changed the legal regime
in that unless the premium is paid there is no insurance.
In Philippine Phoenix Surety case, we held:
Moreover, an insurer cannot treat a contract as valid for the purpose of collecting premiums and invalid
for the purpose of indemnity.
No contract of Insurance by an insurance company is valid and binding unless and until the premium
thereof has been paid, notwithstanding any agreement to the contrary
Since admittedly the premiums have not been paid, the policies issued have lapsed. The insurance
coverage did not go into effect or did not continue and the obligation of Philamgen as insurer ceased.
Hence, for Philamgen which had no more liability under the lapsed and inexistent policies to demand,
much less sue Valenzuela for the unpaid premiums would be the height of injustice and unfair dealing. In
this instance, with the lapsing of the policies through the nonpayment of premiums by the insured there
were no more insurance contracts to speak of. As this Court held in the Philippine Phoenix Surety case,
supra "the non-payment of premiums does not merely suspend but puts an end to an insurance contract
since the time of the payment is peculiarly of the essence of the contract."
The circumstances of the case, however, require that the contractual relationship between the parties
shall be terminated upon the satisfaction of the judgment. No more claims arising from or as a result of
the agency shall be entertained by the courts after that date.
ACCORDINGLY, the petition is GRANTED.
 ZENAIDA G. MENDOZA, Petitioner, VS. ENGR. EDUARDO PAULE,
ENGR. ALEXANDER COLOMA and NATIONAL IRRIGATION ADMINISTRATION (NIA MUOZ,
NUEVA ECIJA), Respondents.
G.R. No. 175885 February 13, 2009
FACTS:
Engineer Paule is the proprietor of E.M. Paule Construction and Trading (EMPCT). PAULE executed an
SPA authorizing Mendoza to participate in the pre-qualification and bidding of a National Irrigation
Administration (NIA) project, the Casicnan Multi-Purpose Irrigation and Power Plant (CMIPPL). Mendoza
was given the power to bid and secure bonds with the NIA as well as receive and collect payments.
EMPCT, through Mendoza, was awarded the project.
When Cruz learned the Mendoza was in need of heavy equipment for use in the NIA project, he met up
with him to discuss an agreement for such project. The product of their agreement was two job orders for
dump trucks on December of 1999.
On April 2000, Paule revoked the SPA of Mendoza prompting NIA to refuse payment on her billings.
CRUZ, therefore, could not be paid for the rent of the equipment. Upon advice of MENDOZA, CRUZ
addressed his demands for payment of lease rentals directly to NIA but the latter refused to acknowledge
the same and informed CRUZ that it would be remitting payment only to EMPCT as the winning contractor
for the project.
Cruz then sued Paule (EMPTC) and NIA. Paule proceeds against Mendoza. MENDOZA alleged in her
cross-claim that because of PAULEs whimsical revocation of the SPA, she was barred from collecting
payments from NIA, thus resulting in her inability to fund her checks which she had issued to suppliers of
materials, equipment and labor for the project. She claimed that estafa and B.P. Blg. 22 cases were filed
against her.
RECAP!
Cruz: Mendoza/Paule/EMPTC/NIA needs to pay because Mendoza was the agent of EMPTC and she
incurred liabilities pursuant to the NIA project!
Paule: I shouldnt pay nor forward the money I have from NIA because Mendoza acted outside the scope
of her authority!
Mendoza: I acted within the scope of my authority and am now facing charges with liabilities I incurred
which werent even mine to begin with since I was just an agent! Paule/EMPTC/NIA should pay me!
1. YES. Although the SPA limited Mendoza only to bid on behalf of EMPTC with regard the project,
MENDOZAs actions were in accord with what she and PAULE originally agreed upon, as to division
of labor and delineation of functions within their partnership. Under the Civil Code, every partner is
an agent of the partnership for the purpose of its business; each one may separately execute all acts
of administration, unless a specification of their respective duties has been agreed upon, or else it is
stipulated that any one of them shall not act without the consent of all the others. At any rate, PAULE
does not have any valid cause for opposition because his only role in the partnership is to provide
his contractors license and expertise, while the sourcing of funds, materials, labor and equipment has
been relegated to MENDOZA.
2. YES. Given the present factual milieu, CRUZ has a cause of action against PAULE and MENDOZA.
Thus, the Court of Appeals erred in dismissing CRUZs complaint on a finding of exceeded agency.
There was no valid reason for PAULE to revoke MENDOZAs SPAs. Since MENDOZA took care of
the funding and sourcing of labor, materials and equipment for the project, it is only logical that she
controls the finances, which means that the SPAs issued to her were necessary for the proper
performance of her role in the partnership, and to discharge the obligations she had already
contracted prior to revocation. Without the SPAs, she could not collect from NIA, because as far as
it is concerned, EMPCT and not the PAULE-MENDOZA partnership is the entity it had contracted
with. Without these payments from NIA, there would be no source of funds to complete the project
and to pay off obligations incurred. As MENDOZA correctly argues, an agency cannot be revoked if
a bilateral contract depends upon it, or if it is the means of fulfilling an obligation already contracted,
or if a partner is appointed manager of a partnership in the contract of partnership and his removal
from the management is unjustifiable.
Moreover, PAULE should be made civilly liable for abandoning the partnership, leaving MENDOZA
to fend for her own, and for unduly revoking her authority to collect payments from NIA, payments which
were necessary for the settlement of obligations contracted for and already owing to laborers and
suppliers of materials and equipment like CRUZ, not to mention the agreed profits to be derived from the
venture that are owing to MENDOZA by reason of their partnership agreement.

Lower Court said Paule is liable as Mendoza acted as agent while CA reversed and said that Mendoza
was in excess so Paule was not liable.

ISSUES:

1. On Paules and Mendozas side: Whether or not Mendoza, as agent, could claim from Paule/EMPTC
for debts she incurred from Cruz?
2. On Cruzs side: Whether or not Paule/EMPTC is liable as Mendoza was an agent that acted within
the scope of her authority?

HELD:

BIGLA NALANG MAY PARTNERSHIP WHOA. Records show that PAULE (or, more appropriately,
EMPCT) and MENDOZA had entered into a PARTNERSHIP in regard to the NIA project. PAULEs
contribution thereto is his contractors license and expertise, while MENDOZA would provide and secure
the needed funds for labor, materials and services; deal with the suppliers and sub-contractors; and in
general and together with PAULE, oversee the effective implementation of the project. For this, PAULE
would receive as his share three per cent (3%) of the project cost while the rest of the profits shall go to
MENDOZA. PAULE admits to this arrangement in all his pleadings.
 FACTS:

The spouses Manuel Salao and Valentina Ignacio of Barrio Dampalit, Malabon, Rizal begot
four children: Patricio, Alejandra, Juan (Banli) and Ambrosia.
Manuel Salao died in 1885. No documentary evidence as to what properties formed part of his
estate.
Patricio (eldest son) died in 1886 & survived by Valentin Salao (his only child).
Valentina died in 1914, her estate was administered by her daughter Ambrosia.
It was extrajudicially partitioned in a deed (December 29, 1918) but notarized on May 22, 1919
-> signed by her four legal heirs: her 3 remaining children & Valentin (grandson; succeeded
Patricio).
To each of the legal heirs was a distributive share of Php 8,135.25.
Valentin was given an aggregate appraised value of Php 13,501 (exceeded distributive share,
composed of biggest fishpond 50T+ sqm, smaller fishpond area 6T+ sqm & Riceland 9T+ sqm)
-> in the deed, he was directed to pay his co-hrs Php 5T+ (to avoid fragmentation of land;
beneficial to Valentin)
The documentary evidence proves that in 1911/prior to the death of Valentina Ignacio -> her 2
children (Juan Y. Salao, Sr. & Ambrosia Salao) secured a Torrens title (OCT No. 185) in their
names at ROD Pampanga.
The property in question is the 47-ha. fishpond located at Sitio Calunuran, Lubao, Pampanga,
wherein Benita Salao-Marcelo (daughter of Valentin Salao) claimed 1/3 interest on the said
fishpond.
Plaintiffs theory (no documentary evidence):

o Juan Y. Salao, Sr and Ambrosia Salao had engaged in the fishpond business ->
where they obtained the capital was not shown in any documentary evidence
o Valentin Salao and Alejandra Salao were included in that joint venture
o the funds used were the earnings of the properties supposedly inherited from Manuel
Salao,
o those earnings were used in the acquisition of the Calunuran fishpond.

Defendants contention: the Calunuran fishpond consisted of lands purchased by Juan

Salao, Jr & Ambrosia Salao from 1905 1908 (w/ exhibits) -> disputed by plaintiffs.

Undisputed that after securing title (1911), Juan & Ambrosia exercised dominical rights over it
-> exclusion of Valentin (nephew).

Ambrosia sold the Calunuran fishpond under pacto de retro to Vicente Villongco -> confirmed
in the deed of sale: they were duenos proindivisos of the said pisqueria

Villongco conveyed the same fishpond -> Ambrosia by lease for an anual canon of Php 128

The same fishpond was redeemed by Ambrosia & Juan and then sold it again (pacto de retro)
128 G.R. No. L-26699 March 16, 1976 to Eligio Naval but was later redeemed and reconveyed to the vendors
BENITA SALAO, assisted by her husband, GREGORIO MARCELO; ALMARIO ALCURIZA,
ARTURO ALCURIZA, OSCAR ALCURIZA and ANITA ALCURIZA, the latter two being minors are 1930 survey -> computation sheets of BOL:
represented by guardian ad litem, ARTURO ALCURIZA, plaintiffs-appellants,
vs. o Calunuran fishpond 479,205 sqm claimed by Juan & Ambrosia
JUAN S. SALAO, later substituted by PABLO P. SALAO, Administrator of the Intestate of JUAN S. o Pinanganacan fishpond 975,952 sqm acquired by Juan & Ambrosia
SALAO; now MERCEDES P. VDA. DE SALAO, ROBERTO P. SALAO, MARIA SALAO VDA. DE
SANTOS, LUCIANA P. SALAO, ISABEL SALAO DE SANTOS, and PABLO P. SALAO, as Undisputed: Ambrosia bought for 4T from the heirs of Engracio Santiago a parcel of swampland
successors-in-interest of the late JUAN S. SALAO, together with PABLO P. SALAO, planted to bacawan & nipa-> area: 96+ has at Lewa, Pinanganacan, Lubao, Pampanga -> OCT
Administrator, defendants-appellants. was issued in the name of Juan Salao & Ambrosia Salao
Eusebio V. Navarro for plaintiffs-appellants. This Pinanganacan/Lewa fishpond became Cad. Lot #544 of Hermosa Cad -> adjoining
Nicolas Belmonte & Benjamin T. de Peralta for defendants-appellants. Calunuran fishpond
 Juan Salao Sr died (80yo) in 1931 -> Valentin (nephew; 60yo) died in 1933
Intestate estate of Valentin (2 fishponds inherited in 1918 from grandmother Valentina Ignacio)
was partitioned extrajudicially 1934 -> b/n 2 daughters: Benita & Victorina
o No mention of Valentins 1/3 interest in the Calunuran & Lewa fishponds (registered
in the names of his aunt & uncle Ambrosia & Juan Sr in 1911 & 1917 respectively)
In 1940, Ambrosia donated to Benita (grandniece) 3 lots at Dampalit & the latter signed the
Deed of Donation w/o asking for reconveyance of the alleged share of his father Valentin in the
Calunuran fishpond alleged held in trust by Ambrosia because of the alleged joint venture.
Benita made no demand until Ambrosia died -> Benita filed an ACTION FOR
RECONVEYANCE OF THE CALUNURAN FISHPOND -> allegedly held in trust & become sole
property of Juan Salao y Santiago (Juani)
o In 1944 (during Japanese occupation) & 1 yr BEFORE Ambrosias death due to
senility -> she donated her proindiviso share in the 2 fishponds in question to Juan
Salao Jr (Juani; nephew) who owned the other half because of his fathers share
(Juan Sr (Banli))
o Donation includes other real properties of Ambrosia; she reserved for herself the
usufruct over the said properties during her lifetime
o Deed of Donation registered only in 1950
In 1951, lawyer of Benita Salao & children of Victorina Salao in a letter informed Juan S. Salao,
Jr. that his clients had a 1/3 share in the 2 fishponds and that when Juan took possession
thereof in 1945, in which he refused to give Benita and Victorinas children their 1/3 share of
the net fruits which allegedly amounted to P200,000. However, no mention on the deeds as to
the share of Valentin and Alejandra.
Juan S. Salao, Jr. in his answer categorically stated that Valentin Salao did not have any
interest in the two fishponds and that the sole owners thereof his father Banli and his aunt
Ambrosia, as shown in the Torrens titles issued in 1911 and 1917, and that he was the donee
of Ambrosias 1/2 share.
Benita Salao & her nephews and niece asked for the ANNULMENT OF THE DONATION to
Juan S. Salao, Jr. and for the RECONVEYANCE to them of the Calunuran fishpond as Valentin
Salaos supposed 1/3 share in the 145 hectares of fishpond registered in the names of Juan
Y. Salao, Sr. & Ambrosia Salao.
Juan Jr invoked indefeasibility of the Torrens title (Ambrosia & Juan Sr), Statute of Frauds,
prescription and laches and damages.
Juan Jr (71yo) died in 1958 and succeeded by Mercedes Pascual & 6 children and
administrator of his estate.
In the intestate proceedings of the estate of Juan Jr, the 2 fishponds were adjudicated in equal
shares to his 7 legal heirs.
ISSUES:
1. Whether or not the Calunuran fishpond was held in trust for Valentin Salao by Juan Y. Salao, Sr.
and Ambrosia Salao.
HELD:
1. There was no resulting trust in this case because there never was any intention on the part of
Juan Y. Salao, Sr., Ambrosia Salao and Valentin Salao to create any trust. There was no
constructive trust because the registration of the two fishponds in the names of Juan and
Ambrosia was not vitiated by fraud or mistake. This is not a case where to satisfy the demands of
justice it is necessary to consider the Calunuran fishpond being held in trust by the heirs of
Juan Y. Salao, Sr. for the heirs of Valentin Salao.
Ratio:
The plaintiffs utterly failed to prove by clear, satisfactory and convincing evidence. It cannot rest on vague
and uncertain evidence or on loose, equivocal or indefinite declarations.
Trust and trustee; establishment of trust by parol evidence; certainty of proof. Where a trust is
to be established by oral proof, the testimony supporting it must be sufficiently strong to prove the right
of the alleged beneficiary with as much certainty as if a document proving the trust were shown. A trust
cannot be established, contrary to the recitals of a Torrens title, upon vague and inconclusive proof.
Trusts; evidence needed to establish trust on parol testimony. In order to establish a trust in real
property by parol evidence, the proof should be as fully convincing as if the act giving rise to the trust
obligation were proven by an authentic document. Such a trust cannot be established upon testimony
consisting in large part of insecure surmises based on ancient hearsay. (Syllabus, Santa Juana vs. Del
Rosario 50 Phil. 110).
The foregoing rulings are good under article 1457 of the Civil Code which, as already noted, allows an
implied trust to be proven by oral evidence. Trustworthy oral evidence is required to prove an implied
trust because, oral evidence can be easily fabricated.
On the other hand, a Torrens title is generally a conclusive evidence of the ownership of the land referred
to therein (Sec. 47, Act 496). A strong presumption exists that Torrens titles were regularly issued and
that they are valid. In order to maintain an action for reconveyance, proof as to the fiduciary relation of
the parties must be clear and convincing.
The real purpose of the Torrens system is, to quiet title to land. Once a title is registered, the owner may
rest secure, without the necessity of waiting in the portals of the court, or sitting in the mirador de su
casa, to avoid the possibility of losing his land.
DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COMMISSION ON AUDIT, respondent.
[G.R. No. 144516. February 11, 2004]
FACTS:
O]n February 20, 1980, the Development Bank of the Philippines (DBP) Board of Governors adopted
Resolution No. 794 creating the DBP Gratuity Plan and authorizing the setting up of a retirement fund to
cover the benefits due to DBP retiring officials and employees under Commonwealth Act No. 186, as
amended. The Gratuity Plan was made effective on June 17, 1967 and covered all employees of the
Bank as of May 31, 1977.
On February 26, 1980, a Trust Indenture was entered into by and between the DBP and the Board of
Trustees of the Gratuity Plan Fund, vesting in the latter the control and administration of the Fund. The
trustee, subsequently, appointed the DBP Trust Services Department (DBP-TSD) as the investment
manager thru an Investment Management Agreement, with the end in view of making the income and
principal of the Fund sufficient to meet the liabilities of DBP under the Gratuity Plan.
In 1983, the Bank established a Special Loan Program availed thru the facilities of the DBP Provident
Fund and funded by placements from the Gratuity Plan Fund. This Special Loan Program was adopted
as part of the benefit program of the Bank to provide financial assistance to qualified members to enhance
and protect the value of their gratuity benefits because Philippine retirement laws and the Gratuity Plan
do not allow partial payment of retirement benefits. The program was suspended in 1986 but was revived
in 1991 thru DBP Board Resolution No. 066 dated January 5, 1991.
Under the Special Loan Program, a prospective retiree is allowed the option to utilize in the form of a loan
a portion of his outstanding equity in the gratuity fund and to invest it in a profitable investment or
undertaking. The earnings of the investment shall then be applied to pay for the interest due on the
gratuity loan which was initially set at 9% per annum subject to the minimum investment rate resulting
from the updated actuarial study. The excess or balance of the interest earnings shall then be distributed
to the investor-members.
Pursuant to the investment scheme, DBP-TSD paid to the investor-members a total of P11,626,414.25
representing the net earnings of the investments for the years 1991 and 1992. The payments were
disallowed by the Auditor under Audit Observation Memorandum No. 93-2 dated March 1, 1993, on the
ground that the distribution of income of the Gratuity Plan Fund (GPF) to future retirees of DBP is irregular
and constituted the use of public funds for private purposes which is specifically proscribed under Section
4 of P.D. 1445.

The Ruling of the Commission on Audit - The Gratuity Plan Fund is supposed to be accorded separate
personality under the administration of the Board of Trustees but that concept has been effectively
eliminated when the Special Loan Program was adopted. Retirement benefits may only be availed of
upon retirement. It can only be demanded and enjoyed when the employee shall have met the last
requisite, that is, actual retirement under the Gratuity Plan. During employment, the prospective retiree
shall only have an inchoate right over the benefits. There can be no partial payment or enjoyment of the
benefits, in whatever guise, before actual retirement.

ISSUE: whether the income of the Fund is income of DBP

RULING:

The COA alleges that DBP is the actual owner of the Fund and its income, on the following grounds: (1)
DBP made the contributions to the Fund; (2) the trustees of the Fund are merely administrators; and (3)
DBP employees only have an inchoate right to the Fund. The DBP counters that the Fund is the subject
of a trust, and that the Agreement transferred legal title over the Fund to the trustees. The income of the
Fund does not accrue to DBP. Thus, such income should not be recorded in DBPs books of account.

A trust is a fiduciary relationship with respect to property which involves the existence of equitable duties
imposed upon the holder of the title to the property to deal with it for the benefit of another.[27] A trust is
either express or implied. Express trusts are those which the direct and positive acts of the parties create,
by some writing or deed, or will, or by words evincing an intention to create a trust.[28]

In the present case, the DBP Board of Governors (now Board of Directors) Resolution No. 794 and the
Agreement executed by former DBP Chairman Rafael Sison and the trustees of the Plan created an
express trust, specifically, an employees trust. An employees trust is a trust maintained by an employer
to provide retirement, pension or other benefits to its employees.[29] It is a separate taxable entity[30]
established for the exclusive benefit of the employees.

In a trust, one person has an equitable ownership in the property while another person owns the legal
title to such property, the equitable ownership of the former entitling him to the performance of certain
duties and the exercise of certain powers by the latter.[34] A person who establishes a trust is the trustor.
One in whom confidence is reposed as regards property for the benefit of another is the trustee. The
person for whose benefit the trust is created is the beneficiary.[35]

In the present case, DBP, as the trustor, vested in the trustees of the Fund legal title over the Fund as
well as control over the investment of the money and assets of the Fund. The powers and duties granted
to the trustees of the Fund under the Agreement were plainly more than just administrative.

Clearly, the trustees received and collected any income and profit derived from the Fund, and they
maintained separate books of account for this purpose. The principal and income of the Fund will not
revert to DBP even if the trust is subsequently modified or terminated. The Agreement states that the
principal and income must be used to satisfy all of the liabilities to the beneficiary officials and employees
under the Gratuity Plan.

As COA correctly observed, the right of the employees to claim their gratuities from the Fund is still
inchoate. RA 1616 does not allow employees to receive their gratuities until they retire. However, this
does not invalidate the trust created by DBP or the concomitant transfer of legal title to the trustees. As
far back as in Government v. Abadilla,[42] the Court held that it is not always necessary that the cestui
que trust should be named, or even be in esse at the time the trust is created in his favor. It is enough
that the beneficiaries are sufficiently certain or identifiable.

DIAZ VS. GORRICHO AND AGUADO
G.R. L-11229
March 29, 1958
FACTS: 2 lots originally belonged to the conjugal partnership of Francisco Diaz and Maria Sevilla, the
OCTs under their name. Francisco died and was survived by wife and 3 children.
Appellee Gorricho filed an action against Maria in the CFI of Manila, and a writ of attachment was issued
upon the shares of Maria in said lots. Thereafter, said parcels were sold at public auction and purchased
by Gorricho. Maria failed to redeem within one year, whereupon the acting provincial sheriff executed a
final deed of sale in favor of Gorricho. In said final deed, however, the sheriff conveyed to Gorricbo the
whole of the 2 parcels instead of only the half-interest of Maria therein. Pursuant to said deed, Gorricho
obtained a TCT in her name and has been possessing said land is as owner ever since.
Then, Maria died. Her 3 children filed the action in CFI of Nueva Ecija against Gorricho and her husband
Aguado to compel them to execute in their favor a deed of reconveyance over an undivided one-half
interest over the lots in question (the share therein of their deceased father illegally conveyed by the
provincial sheriff to Gorricho), which defendants were allegedly holding in trust for them. Defendants
answered denying the allegations of the complaint and alleging, as a special defense, that plaintiffs action
has long prescribed.
After trial, the court below rendered judgment, holding that while a constructive trust in plaintiffs favor
arose when defendant Gorricho took advantage of the error of the provincial sheriff in conveying to her
the whole of the parcels in question and obtained title in herself, the action of plaintiffs was, however,
barred by laches and prescription. From this judgment, plaintiffs appealed.
The principal contention of appellants is that their fathers half of the disputed property was acquired by
Gorricho through an error of the provincial sheriff; that having been acquired through error, it was subject
to an implied trust, as provided by Article 1456 of the new Civil Code; and therefore, since the trust is
continuing and subsisting, the appellants may compel reconveyance of the property despite the lapse of
time, specially, because prescription does not run against titles registered under Act 496
ISSUE: WON laches constitutes a bar to actions to enforce a constructive trust
HELD: The judgment appealed from is affirmed
YES
Article 1456 of the new Civil Code, while not retroactive in character, merely expresses a rule already
recognized by our courts prior to the Codes promulgation. Appellants are, however, in error in believing
that like express trusts, such constructive trusts may not be barred by lapse of time. The American law
on trusts has always maintained a distinction between express trusts created by intention of the parties,
and the implied or constructive trusts that are exclusively created by law, the latter not being trusts in their
technical sense.
The express trusts disable the trustee from acquiring for his own benefit the property committed to his
management or custody, at least while he does not openly repudiate the trust, and makes such
repudiation known to the beneficiary or cestui que trust. For this reason, the old Code of Civil Procedure
declared that the rules on adverse possession do not apply to continuing and subsisting (i.e.,
unrepudiated) trusts.
In constructive trusts, as pointed out by the court below, the rule is that laches constitutes a bar to actions
to enforce the trust, and repudiation is not required, unless there is concealment of the facts giving rise
to the trust
The reason for the difference in treatment is obvious. In express trusts, the delay of the beneficiary is
directly attributable to the trustee who undertakes to hold the property for the former, or who linked to the
beneficiary by confidential or fiduciary relations. The trustees possession is, therefore, not adverse to
the beneficiary, until and unless the latter is made aware that the trust has been repudiated. But in
constructive trusts (that are imposed by law), there is neither promise nor fiduciary relation; the so-called
trustee does not recognize any trust and has no intent to hold for the beneficiary; therefore, the latter is
not justified in delaying action to recover his property. It is his fault if he delays; hence, he may be
estopped by his own laches.
Of course the equitable doctrine of estoppel by laches requires that the one invoking it must show, not
only the unjustified inaction, but that some unfair injury would result to him unless the action is held
barred. This requirement the appellees have not met, and they are thereby bereft of the protection of this
rule.
We are of the opinion that the judgment of dismissal should be upheld, because the appellants cause of
action to attack the sheriffs deed and cancel the TCTs issued to the appellees accrued from the year of
issuance and recording, 1937, and appellants have, allowed fifteen (15) years to elapse before taking
remedial action, notwithstanding the appellees public assertion of title during this entire period, to
extinguish appellants action. Under the old Code of Civil Procedure, in force at the time, the longest
period extinctive prescription was only ten years.
ODOLFO MORALES, represented by his heirs, and PRISCILA MORALES, petitioners, vs. COURT
OF APPEALS (Former Seventeenth Division), RANULFO ORTIZ, JR., and ERLINDA ORTIZ,
respondents.
[G.R. No. 117228. June 19, 1997]
Doctrine:
1. A trust is the legal relationship between one person having an equitable ownership in property and
another person owning the legal title to such property, the equitable ownership of the former entitling him
to the performance of certain duties and the exercise of certain powers by the latter.
The characteristics of a trust are:
a. It is a relationship;
b. It is a relationship of fiduciary character;
c. It is a relationship with respect to property, not one involving merely personal duties;
d. It involves the existence of equitable duties imposed upon the holder of the title to the property to deal
with it for the benefit of another; and e. It arises as a result of a manifestation of intention to create the
relationship.
2. Art. 1448. 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 the beneficial interest of the property. The former
is the trustee, while the latter is the beneficiary. However, if the person to whom the title is conveyed is a
child, legitimate or illegitimate, of the one paying the price of the sale, no trust is implied by law, it being
disputably presumed that there is a gift in favor of the child.
Facts: Cast of Characters: Celso Avelino Owner of the premises in question; Priscilla Morales Sister
of Celso Avelino, claims ownership of the land; Rodolfo Morales Son of Priscilla, built beauty shop on
premises in question; Ranulfo and Erlinda Ortiz Purchased premises in question from Celso Avelino;
Aurea Avelino Sister of Celso, caretaker of the premises in question; Rosendo Avelino and Juana
Ricaforte Parents of Celso, Aurea and Priscilla Ranulfo and Erlinda Ortiz claim that they are the absolute
and exclusive owners of the premises in question (318 sq.m. land located at corner Umbria St. and
Rosales Blvd. Brgy. Central, Calbayog City) through their purchase of the said property from Celso
Avelino and stated the following: The property was purchased by Celso Avelino (the Ortiz's predecessor
in interest) when he was still a bachelor and a city fiscal of Calbayog city from Alejandra Mendiola and
Celita Bartolome through an "Escritura de Venta."
After the purchase, he caused the transfer of the title as well as the tax declarations in his name. He
faithfully paid the taxes and kept the receipts thereof. He also caused a survey of the premises in question
with the Bureau of Lands and built a residential house thereon. He took his parents Rosendo Avelino and
Juana Ricaforte and his sister Aurea to live in his property until their death. Celso Avelino then became
an Immigration Officer and later a Judge of the Court of First Instance in Cebu so he left his property
under the care of his sister, Aurea. Without his knowledge, his nephew Rodolfo Morales (a son of his
other sister, Priscilla) constructed a beauty shop on the premises in question.
Celso thereafter sold the property to Ranulfo and Erlinda Ortiz (Celso's neighbors), they paid the
purchase price and a deed of absolute sale was executed. Rodolfo Morales, however, refused to vacate
the premises unless he is reimbursed P35,000. He also occupied the residential building on the property,
took in paying boarders and even claimed ownership of the premises in question. Rodolfo Morales
contends that his grandparents Rosendo Avelino and Juana Ricaforte originally owned the premises in
question. The property was allegedly bought by Celso Avelino who was entrusted by Rosendo with the
money to buy it. They caused the name of the property to be under Celso Avelino being the only son.
When Rosendo Avelino and Juana Ricaforte died, their children: Celso Avelino, Trinidad Cruz,
Concepcion Peralta, Priscilla Morales and Aurea Avelino succeeded as owners thereof.
Issues: 1. W/N Celso Avelino acquired the property as a mere trustee.
2. W/N Rodolfo Morales a builder in good faith that would entitle him to reimbursement.
Held: 1. NO. Trusts are either express or implied. Express trusts are created by the intention of the trustor
or of the parties. Implied trusts come into being by operation of law, either through implication of an
intention to create a trust as a matter of law or through the imposition of the trust irrespective of and even
contrary to, any such intention. Implied trusts are either resulting or constructive trusts.
Constructive trusts are created by the construction of equity in order to satisfy the demands of justice and
prevent unjust enrichment. Resulting trusts are based on the equitable doctrine that valuable
consideration and not legal title determines the equitable title or interest and are presumed always to
have been contemplated by the parties. They arise from the nature of circumstances of the consideration
involved in a transaction whereby one person becomes invested with legal title but is obligated in equity
to hold his legal title for the benefit of another.
A resulting trust in exemplified by Article 1448 of the Civil Code: "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 having the beneficial
interest of the property. The former is the trustee, while the latter is the beneficiary. However, if the person
to whom title is conveyed is a child, legitimate or illegitimate, of the one paying the price of the sale, no
trust is implied by law, it being disputable presumed that there is gift in favor of a child.
The last sentence of Article 1448 gives one of the recognized exceptions to the establishment of an
implied resulting trust. (The other two would be: when actual contrary intention is proved and when
purchase is made in violation of an existing statute and in evasion of its express provision.) As a rule the
burden of proving the existence of trust is on the party asserting its existence, and such proof must be
clear and satisfactorily show the existence of trust. While implied trusts may be proved by oral evidence,
evidence must be trustworthy and received by the courts wth extreme caution.
On this basis alone, Rodolfo and Priscilla Morales' claim must fail. Rodolfo and Priscilla relied merely on
testimonial evidences which are self-serving. Proof of Ranulfo and Erlinda Ortiz's lawful acquisition of the
property through Celso Avelinos ownership on the other hand was supported by documentary evidences
such as the deed of absolute sale and tax declarations. Even testimonies of Celso's other sisters prove
that they believe that he is the true owner of the property. The fact that the other siblings did not intervene
in this case to protect their right and that upon the death of their parents no extra-judicial partition occurred
further strengthens Celso's ownership.
Moreover, assuming that their claim that Celso was a mere trustee is true, it still falls under the exemption
under the last sentence of Article 1448 which states that if the person to whom the title conveyed is a
child, there is a presumption that it is a gift in favor of the child.
2. NO. Article 448 (This is on builders in good faith, look it up nalang if you want) only applies when a
builder thinks he owns the land or believes himself to have a claim of title. From the evidences adduced,
Rodolfo Morales knew from the beginning that he was not the owner of the land. Rodolfo is not entitled
to reimbursement.
MINDANAO DEVELOPMENT AUTHORITY V. CA
G.R. No. L-49087 April 5, 1982
FACTS:
Respondent Francisco Ang Bansing was the owner of a big tract of land situated in Barrio Panacan Davao
City. Ang Bansing sold a portion thereof, with an area of about 5 hectares to Juan Cruz Yap Chuy. A
cadastral survey was made and Lot 664-B-3 was designated as Lot 1846-C of the Davao Cadastre. Juan
Cruz sold Lot 1846-C to the Commonwealth of the Philippines for the amount of P6,347.50. On February
25, 1965, the President of the Philippines issued Proclamation No. 459, transferring ownership of certain
parcels of land situated in Sasa Davao City, to the Mindanao Development Authority, now the Southern
Philippines Development Administration, subject to private rights, if any. Lot 1846-C, the disputed parcel
of land, was among the parcels of land transferred to the Mindanao Development Authority in said
proclamation.
ISUE: Whether or not there was an express trust between Ang Bansing and Juan Cruz over Lot 1846-C RULING:
of Davao Cadastre
No. The Court held that a trust is a fiduciary relationship with respect to property which involves the
HELD: existence of equitable duties imposed upon the holder of the title to the property to deal with it for the
No express trust had been created between Ang Bansing and Juan Cruz over Lot 1846-C of the Davao benefit of another. A trust is either express or implied. Express trusts are those which the direct and
Cadastre. Herein petitioner relies mainly upon the following stipulation in the deed of sale executed by positive acts of the parties create, by some writing or deed, or will, or by words evincing an intention
Ang Bansing in favor of Juan Cruz to prove that an express trust had been established with Ang Bansing to create a trust.
as the settlor and trustee and Juan Cruz as the cestui que trust or beneficiary. The stipulation, however,
is nothing but a condition that Ang Bansing shall pay the expenses for the registration of his land and for
Juan Cruz to shoulder the expenses for the registration of the land sold to him. The stipulation does not
categorically create an obligation on the part of Ang Bansing to hold the property in trust for Juan Cruz.
Hence, there is no express trust. Thus, the petition is denied.

In a separate opinion of Justice Aquino, however, it is said that the disputed land should be adjudicated
to the government agency known as the Southern Philippines Development Administration, the successor
of the Commonwealth of the Philippines. It is argued that Ang Bansing did not touch at all Lot No. 1846-
C because he knew that it was not his property and that it belonged to the State. It is claimed that Ang
Bansing was the true owner of Lot No. 1846-C, there being an express trust in this case. In any event,
the real plaintiff in this case is the Republic of the Philippines and prescription does not run against the
State. The maxim is nullum tempus occurrit regi or nullum tempus occurrit reipublicae (lapse of time does
not bar the right of the crown or lapse of time does not bar the commonwealth). The best reason for its
existence is the great public policy of preserving public rights and property from damage and loss through
the negligence of public officers. The government officials concerned were negligent in not intervening in
the land registration proceeding or in not promptly asking Ang Bansing to reconvey the disputed lot to the
Commonwealth or to the Republic of the Philippines. Such negligence does not prejudice the State. The
negligence or omissions of public officers as to their public duties will not work an estoppel against the
State.

Metropolitan Bank & Trust Company, Inc. vs. Board of Trustees of Riverside Mills Corporation
Provident and Retirement Fund 630 SCRA 350
FACTS:
The Riverside Mills Corporation (RMC) established a Plan for its regular employees. The contributions
to the plan shall form part of the Fund which shall be held, invested and distributed by the Commercial
Bank and Trust Company. The BOT of the fund entered into an agreement with Philbank to act as an
agent of the BOT and to hold, manage, invest and reinvest the Fund in Trust Account No. 1797 in its
behalf. When RMC ceased its business operations, the BOD of Philbank decided to apply the
remaining trust assets held by it in the name of the Fund against part of the RMCs outstanding
obligations.

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

ISSUE:
Whether the BODs contention is correct.