Marga owned three parcels of unregistered land and were individually covered by tax declarations all in her name. Marga’s son, Rob, applied for a non-immigrant visa to the United States, and to support his application, he allegedly asked Marga to transfer the tax declarations of the properties in his name. For said purpose, Marga, unknown to her other children, executed an Affidavit of Transfer of Real Property whereby she transferred by donation to Rob the said properties. Not long after, Rob’s visa was issued and he was able to travel to the US as a tourist and returned in due time.
Unknown to Marga and his siblings, Rob sold the first lot to spouses Mar and Julie. Then he individually sold the remaining two lots to his adopted children, Malou and Peter, respectively.
The untimely demise of Rob broke Marga’s heart. At Rob’s wake, however, Marga was completely shattered to pieces when she found out of the sales of her parcels of land.
Marga, represented by her daughter, Lucy, filed a complaint for the annulment of said sales and for the recovery of ownership and possession of the subject properties as well as for the cancellation of the tax declarations.
Spouses Mar and Julie, Malou and Peter claimed that they were innocent purchasers for value and in good faith, and had merely relied on Rob’s representation that he had the right to sell the property; and that, hence, they were not bound by whatever agreement entered by Marga with her son.
During the trial spouses Mar and Julie concluded a compromise agreement with Marga.
Q: What is a trust?
A: A trust is the legal relationship between one person having an equitable ownership of 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.
Q: What are the two kinds of trusts?
A: Trusts are either express or implied. Express or direct trusts are created by the direct and positive acts of the parties, by some writing or deed, or will, or by oral declaration in words evincing an intention to create a trust. Implied trusts—also called “trusts by operation of law,” “indirect trusts” and “involuntary trusts”—arise by legal implication based on the presumed intention of the parties or on equitable principles independent of the particular intention of the parties. They are those which, without being expressed, are deducible from the nature of the transaction as matters of intent or, independently of the particular intention of the parties, as being inferred from the transaction by operation of law basically by reason of equity.
Q: What are the kinds of implied trusts?
A: Implied trusts are further classified into constructive trusts and resulting trusts. Constructive trusts, on the one hand, come about in the main by operation of law and not by agreement or intention. They arise not by any word or phrase, either expressly or impliedly, evincing a direct intention to create a trust, but one which arises in order to satisfy the demands of justice. On the other hand, resulting trusts arise from the nature or circumstances of the consideration involved in a transaction whereby one person becomes invested with legal title but is obligated in equity to hold his title for the benefit of another. This is based on the equitable doctrine that valuable consideration and not legal title is determinative of equitable title or interest and is always presumed to have been contemplated by the parties. Such intent is presumed as it is not expressed in the instrument or deed of conveyance and is to be found in the nature of their transaction. Implied trusts of this nature are hence describable as “intention-enforcing trusts.”
Q: Was an implied trust relation arose between Marga and Rob?
A: Yes, it was the intention of Marga to transfer to Rob only the legal title to the properties in question, with attendant expectation that Rob would return the same to her on accomplishment of that specific purpose for which the transaction was entered into. The inscription of Rob’s name in the Affidavit of Transfer as Marga’s transferee is not for the purpose of transferring ownership to him but only to enable him to hold the property in trust for Margarita.
Q: As a trustee of a resulting trust, what are the obligations of Rob?
A: Rob is merely a depositary of legal title having no duties as to the management, control or disposition of the property except to make a conveyance when called upon by the cestui que trust. Hence, the sales he entered into with respondents are a wrongful conversion of the trust property and a breach of the trust.
Q: Is the good or bad faith of the buyer relevant in the sale of unregistered lands?
A: No. Fundamental is the rule in land registration law that the issue of whether the buyer of realty is in good or bad faith is relevant only where the subject of the sale is registered land and the purchase was made from the registered owner whose title to the land is clean, in which case the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith and for value. Since the properties in question are unregistered lands, the buyers purchased the same at their own peril. A claim of that lands were bought in good faith, i.e., without notice that there is some other person with a right to or interest therein, would not protect them should it turn out, as it in fact did in this case, that their seller, Rob in this case, had no right to sell them.
(Source: Estate of Margarita Cabacungan vs. Laigo, G.R. No. 175073 , Aug. 15, 2011)
Ma. Soledad Deriquito-Mawis Dean, College of Law Lyceum of the Philippines; University Trustee at Large, Philippine Association of Law Schools; Mawis Law Office