BUSINESS ORGANIZATION I | CASE SUMMARIES | 3-MANRESA 2018-2019
NAKPIL v IAC
GR 74449, August 20, 1993
Digest by Ergel Rosal
Facts: The property subject of this case is Pulong
Maulap, a summer residence in Baguio City.
Pinggoy Nakpil and Charlie Valdes (private respondent
Valdes) were the best of friends. Charlie easily became
Pinggoy's confidant, and later, his lawyer, accountant,
auditor, and on some occasions, a business and
financial consultant.
However, on July 8, 1973, Pinggoy drowned and died.
Charlie then went to the succor of Pinggoy's distressed
wife Nena (petitioner). He acted as the legal counsel and
accountant of Nena, who became the administratrix of
her husband's estate.
On March 21, 1979, petitioner instituted an action for
reconveyance with damages for breach of trust against
respondents Carlos "Charlie" Valdes and Caval Realty
Corporation. She alleged that her husband Pinggoy,
prior to his death, had requested Valdes to purchase
Pulong Maulap and thereafter register the sale and hold
the title thereto in trust for him (Pinggoy), which
respondent Valdes did. But after Pinggoy's death,
Valdes concealed and suppressed all information
regarding the trust agreement and transferred Pulong
Maulap in the name of Caval Realty Corporation which is
99.7% owned by him.
Respondent Valdes denied the existence of any trust
agreement over Pulong Maulap. He averred that he
bought the summer residence for himself with his own
funds and without any participation of the late Pinggoy;
that neither was it bought in trust for Pinggoy. He claims
that he only informed Pinggoy of the purchase and the
latter showed interest in buying the property. Valdes also
claims that, considering their friendship, he offered the
usufruct of the property to the Nakpils who in turn agreed
to shoulder its maintenance expenses, real estate taxes,
fire insurance premiums and servicing of interest in the
mortgage obligation constituted on the property.
Records show:
 Valdeses bought Pulong Maulap for P150,000.
Made downpayment of P50,000 and obtained
mortgage of P100,000 with PNB. Valdes
borrowed P75,000 to facilitate the servicing of
the mortgage obligation from First United Bank
where Pinggoy was then VP. He also got loan of
P65,000 to finance the repair and renovation of
Pulong Maulap.
 Deed of Sale was executed and TCT was issued
in the name of Valdes.
 Even before the execution of the Deed, the
Nakpils moved in and stayed in Pulong Maulap
even until after Pinggoy’s death.
1
Petitioner says that Valdes recognized Pinggoy’s
ownership of Pulong Maulap as shown in:
(1) Exh. H — a letter written by Valdes to the City
Treasurer of Baguio remitting to the City treat “on
behalf of our clients, Mr. Jose Nakpil .. The
following FUB checks for the payment of their
1969 real estate taxes on Pulong Maulap” and
(2) Exh J — handwritten letters written by Valdes to
Imelda saying that the loans while under
Charlie’s name, were really obtained for
Pinggoy.
(3) Exh L — letter of Valdes to petitioner stating the
balance for payment of Pulong Maulap.
Other records show that Valdes assigned Pulong
Maulap to Caval Realty; that Pasay City Mayor Cuneta
wanted to buy the property from petitioner. Valdes told
petitioner that he could not executed the deed of
conveyance because Pulong Maulap was his and had
no intention of selling it.
RTC: A trust relationship existed. The property was
acquired with funds partly loaned by Valdes to Nakpil
and partly borrowed by Nakpil from FUB albeit in Valdes'
name. Exhibits J and L are confirmatory of a pre-existing
express trust relationship between Valdes and the late
Nakpil over the property in dispute.
The real agreement between the plaintiff and the
defendant Valdes under the Exhibits is that Valdes was
to take over the two FUB loans of the plaintiff's late
husband in consideration of the plaintiff giving up her
claim to the disputed property, but with a right to
continued occupancy for a period of 5 years, free from
any encumbrance or payment, except maintenance
expenses, and under an option yet in favor of the latter
to purchase back the property within the stipulated 5
years upon the payment of the said FUB loans, including
interests, plus the further sim of 75,000 initially advanced
by Valdes on the property, also with interests, or the total
amount of 375,056.64.
Plaintiff has waived whatever right she may have over
the property.
CA: Reversed the trial court ruling that there was no
trust at all.
Issue 1: WON Article 1450 of the Civil Code applies
(WON there was an implied trust) - YES
Held: Implied trusts, which may either be resulting or
constructive, are those which, without being express, are
deducible from the nature of the transaction as matters
of intent, or which are superinduced on the transaction
by operation of law as matter of equity, independently of
 BUSINESS ORGANIZATION I | CASE SUMMARIES | 3-MANRESA 2018-2019 2

the particular intention of the parties. 8 Article 1450,
which petitioner invokes in the case at bar, is an
illustration of an implied trust which is constructive
Article 1450 presupposes a situation where a person,
using his own funds, purchases a certain piece of land in
behalf of another who, in the meantime, may not have
sufficient funds to purchase the land. The property is
then transferred in the name of the trustee, the person
who paid for the land, until he is reimbursed by the
beneficiary, the person for whom the land is purchased.
It is only after the beneficiary reimburses the trustee of
the purchase price that the former can compel
conveyance of the purchased property from the latter
Held: At first glance, it may seem that after the death of
Pinggoy, petitioner ceded ownershio of the property to
Valdes by way of dacion en pago as shown by her
acquiescence to Exhibit J. However, Exhibit J does not
show that petitioner, as administratrix of the estate of
Pinggoy, released or surrendered the latter's interest
over Pulong Maulap to Valdes. Thus, there can be no
dacion en pago to speak of since ownership of the thing
delivered was never transferred to the creditor.
Furthermore, petitioner could not have waived the
interest of her children who are her co-heirs to the Nakpil
estate.

From the evidence adduced, respondent Valdes, using

his own funds, purchased Pulong Maulap in behalf of the
late Nakpil. This is based on the letters of Valdes to
petitioner where he categorically admitted that "both of
these loans, while in my (Valdes') name, were obtained
by Pinggoy for his person, and that the 75,000 initially
advanced for the Moran property still remains unpaid.
While the balance of 75,000 on the mortgage of the
vendors with PNB was liquidated from the proceeds of a
loan obtained from FUB, such loan was actually secured
by Pinggoy by merely using Charlie Valdes' name.

The letter of Valdes to the City Treasurer of Baguio

made while remitting payment of real estate taxes
provides that the payment being tendered was "on
behalf of the Nakpils" which is an express recognition of
the implied trust.

Hence, constructive trust under Article 1450 of the New

Civil Code existed between the parties.

Issue 2: WON petitioner can redeem and compel

conveyance of the property - YES but NOT YET.

Held: Valdes must still be reimbursed for the advanced

he made in the disputed property. Such reimbursement
is a condition sine qua non for compelling conveyance
under Article 1450.

The period within which to compel conveyance of Pulong

Maulap is not imprescriptible. The action for
reconveyance based on an implied trust or constructive
trust prescribes in 10 years. In the case at bar, petitioner
can still compel conveyance of the disputed property
from respondent provided the former reimburses the
latter all his expenses. After all, Valdes never repudiated
the constructive trust during the lifetime of Pinggoy. On
the contrary, he expressly recognized it.

The prescriptive period therefore did not begin to run

until after Valdes repudiated the trust, and such
repudiation came when Valdes excluded Pulong Maulap
form the list of properties of the late Pinggoy submitted
to the intestste court in 1973.

Issue 3: WON there was dacion en pago – NO