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Property rules

Hold it for me

Maxie was a natural-born Filipino citizen who later became an Australian citizen. She alleged that prior to reacquiring Filipino citizenship, she financed the purchase of a house and two lots from Spouses Dan and Na One. Maxie then had the house and lots registered in the name of her niece, Ruthie. Deeds of sale were executed by which the One Spouses sold the properties to Ruthie.

Thereafter, Ruthie and Al possessed the properties. Ruthie declared herself the owner, as shown in the pertinent tax declarations. The properties were subsequently consolidated as one under one tax declaration.

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After reacquiring her Philippine citizenship by virtue of Republic Act No. 9225, Maxie demanded that the properties be transferred to her name. When Ruthie refused to comply, Maxie filed the complaint before the Municipal Circuit Trial Court.

The first level court found that a purchase money resulting trust under Article 1448 of the Civil Code existed. The Municipal Circuit Trial Court held that the parties’ intent was to give legal title over the properties to Ruthie because Maxie believed she was precluded from owning realty after she became an Australian citizen. Hence, Ruthie and Al were merely the depository of a legal title who were obligated to convey the property when called upon by Maxie.

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Q: What is a trust?

A: The Civil Code provides that a trust is created when a property is sold to one party but paid for by another for the purpose of having beneficial interest in said property.

Q: How is an implied trust created?

A: Article 1448 of the Civil Code provides that 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.

Q: Was an implied trust created by the parties over the properties?

A: Yes, evidence shows that the legal estate over the properties was granted to Ruthie while the price was paid by Maxie. Further, it was established that the purpose of this arrangement was for respondent to have beneficial interest over the property.

Q: Can the purchase money that was used for the purchase of the properties be considered a donation instead?

A: No. A donation must comply with the mandatory formal requirements set forth by law for its validity. When the subject of donation is purchase money, Article 748 of the NCC is applicable. Accordingly, the donation of money as well as its acceptance should be in writing. Otherwise, the donation is invalid for non-compliance with the formal requisites prescribed by law.

(Source: Sps. Devisfruto vs. Greenfell, G.R. No. 227725, July 1, 2020)The author is the Dean, Lyceum of the Philippines University; Chairman, Philippine Association of Law Schools; and founder of Mawis Law Office

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