Cristobal vs. Gomez, 50 Phil.

810 (1927)

Street, J

This action was instituted in the CFI of Cavite by Paulina Cristobal, wife of Epifanio Gomez, and her
children to recover from Marcelino Gomez (brother of Epifanio) two parcels of land located in the sitio of
Japay.

Facts:

1. Property in question belonged to Epifanio.

2. 13 Dec 1891 – Epifanio sold the property under contract of sale with pacto de retro to Luis
Yangco, redeemable in 5 years, for the sum of Php2,500
3. Epifanio remained in possession of the property but in the character of a lessee
4. Property was not redeemed in 5years. But Yangco after many years conceded to the vendor the
privilege of repurchasing
5. Epifanio had no means to repurchase applied to Bibiano Banas, a kinsman, for assistance.
Bibiano agreed on the condition that Epifanio’s brother, Marcelino, and sister, Telesfora, would
make themselves responsible for the loan. Banas eventually advanced Php7,000.00 to be used to
repurchase the property in the name of Marcelino and Telesfora.
6. Marcelino and Telesfora will administer the property until the capital advanced by Banas should
be paid off after which the property will be returned to Epifanio.
7. Marcelino and Telesfora created a “private partnership in participation” for the purpose of
redeeming the property. Marcelino will act as the manager.
8. Among the provisions in the partnership agreement:

a. (h) That all the income, rent, and produce of the aforesaid property of Epifanio Gomez
shall be applied exclusively to the amortization of the capital employed by the two
parties, that is to say, Don Marcelino Gomez and Doña Telesfora Gomez, with its
corresponding interest and other incidental expenses.

b. (i) As soon as the capital employed, with its interest and other incidental expenses, shall
have been covered, said properties shall be returned to our brother Epifanio Gomez or to
his legitimate children, with the direct intervention, however, of both parties, namely,
Don Marcelino Gomez and Doña Telesfora Gomez, or one of them.

c. (j) In order that the property of Epifanio Gomez may be returned, it is made essential
that he shall manifest good behavior in the opinion of Don Marcelino Gomez and Doña
Telesfora Gomez jointly.

9. Telesfora conveyed her interest and share to Marcelino to free herself from the responsibility she
assumed to Banas. Banas consented to such on 10 September 1909.
10. Since Marcelino is now the lone “debtor” , Banas required him to execute a contract of sale with
pacto de retro to secure the debt. This was executed also on 10 Sept 1909.
11. 1 April 1918 – Marcelino finally paid off his debt with Banas

Issue:

WON Marcelino acted as a mere trustee despite the improvements made to the property of Epifanio?

Held/Ratio
Yes.

1. The Court said that the trial court made no error in holding that Marcelino must surrender the
property in litigation (and that he being dead, the same obligation devolves on his heirs). The so-
called partnership between Marcelino and Telesfora created a TRUST for the express purpose of
securing the property of Epifanio; and that since the purpose had been accomplished, the
property should be returned to Epifanio’s legitimate children.
2. That under Art 1257 of the Civil Code, the successors of Epifanio are entitled to demand
fulfilment of the trust. (NCC Art. 1308. The contract must bind both contracting parties; its
validity or compliance cannot be left to the will of one of them. (1256a))
3. Marcelino claimed that the money used by him to redeem the property was his own. However,
the Court reasoned that since he was able to obtain enough from income from the property he
was already able to reimburse himself for all outlays.
4. Marcelino claimed that the trust agreement was kept secret from Epifanio such that the
stipulation could not have accepted by him before revocation of the same. However, the Court
pointed out that Banas testified that Epifanio was present when the contract was made
5. Revocation due to the “behavior” of Epifanio should have been when he was still alive.
6. Prescription on favor of Marcelino is not effective. Because Marcelino was not really holding
adversely under a claim of title exclusive of any other right and adverse to all other claimants.
He was a trustee in possession under a continuing and subsisting trust.

Dissenting:
John J

The legal effect of the majority The legal effect of the majority opinion is to penalize the defendant for
his thrift and prudent business methods, and to take the property away from him without any
compensation for his twenty years of long and faithful service upon the theory that he acquired the title
in trust, and at all times held it in trust for the use and benefit of his deceased brother and his heirs.
There is no evidence that the defendant acted as trustee or that he ever recognized a trust, or that
during the whole period of twenty years he ever rendered any accounting or that any one ever requested
him to make an accounting. The evidence is conclusive that at all times he acted, dealt with and treated
the property as his own, upon which he spent his own time, his own money, and improved the property,
so as to give it a commercial value. Because he did that and the property now has increased in value, it is
taken away from him without any compensation for his services, and he is denied the fruits of twenty
years of his labor in giving it a commercial value.