Cuaycong vs. Cuaycong

An alleged trust is express, and therefore subject to the writing requirement of Article 1443 of the Civil Code for trusts over immovable property, where the complaint alleges that the trustor expressly told the trustee of his intention to establish the trust; such trust may not be proved by parole evidence and the complaint is dismissible absent written evidence. Even if the trust were implied, the right to enforce it prescribes in ten years.

Eduardo Cuaycong, married to Clotilde de Leon, died in 1936 without issue, survived by his siblings Lino, Justo, Meliton, and Basilisa. His estate included two haciendas in Victorias, Negros Occidental, known as Haciendas Sta. Cruz and Pusod or Hacienda Bacayan, which were later titled in the name of Luis D. Cuaycong, son of Justo. The dispute among Eduardo's heirs concerns the alleged trust over those haciendas and the applicability of the Civil Code provisions on express and implied trusts, including the writing requirement for express trusts over immovable property and the prescriptive period for implied trusts.

Eduardo Cuaycong, married to Clotilde de Leon, died on June 21, 1936 without issue but with three brothers and a sister surviving him: Lino, Justo, Meliton, and Basilisa. Upon his death, his properties were distributed to his heirs as he willed except two haciendas in Victorias, Negros Occidental, devoted to sugar and other crops — Haciendas Sta. Cruz and Pusod, both known as Hacienda Bacayan. Hacienda Bacayan comprised eight lots: No. 28, covered by T.C.T. No. T-22130; Nos. 8, 17, 18, and 135, covered by T.C.T. No. T-22131; and Nos. 21, 22, and 23, covered by T.C.T. No. 22132, all titled in the name of Luis D. Cuaycong, son of Justo Cuaycong.

Lino Cuaycong died on May 4, 1937 and was survived by his children Paz, Carolina, Gertrudes, Carmen, Virgilio, Benjamin, Praxedes, and Anastacio. Praxedes Cuaycong, married to Jose Betia, was already deceased and was survived by her children Jose Jr., Jesus, Mildred, Nenita, and Nilo, all surnamed Betia. Anastacio Cuaycong was also deceased and was survived by his children Ester, Armando, Lourdes, Luis T., Eva, and Aida, all surnamed Cuaycong. Meliton and Basilisa died without any issue.

According to the complaint, Eduardo had on several occasions made known to his brothers and sisters that he and his wife Clotilde had an understanding and made arrangements with Luis Cuaycong and his father Justo Cuaycong that Haciendas Sta. Cruz and Pusod should be divided among his brothers and sister and his wife Clotilde. With Clotilde's consent, Eduardo asked his brothers and sister to pay Clotilde P75,000, the haciendas being worth P150,000, and then divide equally the remaining one-half share of Eduardo. The brothers and sister failed to pay Clotilde's one-half share over the two haciendas, which were later acquired by Luis Cuaycong through clever strategy, fraud, misrepresentation, and in disregard of Eduardo's wishes by causing the issuance in his name of certificates of title covering the properties. As the two haciendas were the subject of transactions between the spouses and Justo and Luis Cuaycong, Eduardo told Justo and Luis, and the two agreed, to hold in trust what might belong to his brothers and sister as a result of the arrangements and to deliver to them their share when the proper time came. As far back as 1936, Lino demanded from Justo and Luis his share, and especially after Eduardo's and Clotilde's deaths, the plaintiffs demanded their shares. Their demands were refused, and in 1960, during the estate proceedings of Praxedes Escalon, deceased wife of Luis D. Cuaycong, Luis fraudulently made it appear that the plaintiffs had nothing to do with the land; Luis had possessed the lands since June 21, 1936, from which time he should be made to account for the plaintiffs' share, and P1,500 in attorney's fees should be paid in their favor.

On October 3, 1961, the surviving children of Lino Cuaycong — Gertrudes, Carmen, Paz, Carolina, and Virgilio — the surviving children of Anastacio — Ester, Armando, Lourdes, Luis T., Eva, and Aida — and the Betia children of deceased Praxedes Cuaycong Betia filed, as pauper litigants, a suit against Justo, Luis, and Benjamin Cuaycong for conveyance of inheritance and accounting before the Court of First Instance of Negros Occidental, Civil Case No. 6314. Benjamin Cuaycong was made a defendant because he refused to sue as a plaintiff.

• Nature of the Trust: Plaintiffs-appellants maintained that the trust alleged in the complaint was an implied trust under Article 1457 of the Civil Code and, as such, could be proved by parole evidence.
• Whole Complaint: They argued that not only paragraph 8 should be considered but the whole complaint, in which case an implied trust should be construed to exist.
• Article 1453: They cited Article 1453, contending that when property is conveyed to a person in reliance upon his declared intentions to hold it for or transfer it to another or the grantor, an implied trust arises in favor of the person whose benefit is contemplated.
• Inability to Allege Written Trust: They manifested that because there was no written instrument of trust, they could not amend the complaint to include such an instrument.

• Statute of Frauds: Luis D. Cuaycong moved to dismiss on the ground that the claim was unenforceable under the statute of frauds.
• No Cause of Action: He moved to dismiss on the ground that the complaint stated no cause of action under Rule 8, Section 1(f) of the Rules of Court.
• Statute of Limitations: He moved to dismiss on the ground that the causes of action were barred by the statute of limitations under Rule 8, Section 1(e).

• Nature of the Trust: Whether the trust alleged in the complaint is an express trust or an implied trust.
• Parole Evidence / Article 1443: Whether an express trust over immovable property may be proved by parole evidence or must be evidenced by a writing under Article 1443 of the Civil Code.
• Implied Trust under Article 1453: Whether the whole complaint supports an implied trust under Article 1453 despite the allegation that the trustor expressly stated his intention to establish the trust.
• Prescription: Whether the right to enforce the alleged trust has prescribed.
• Default: Whether the trial court erred in refusing to declare Benjamin Cuaycong in default.

• Nature of the Trust: Express. The trust alleged in paragraph 8 is express because the trustor expressly told the defendants of his intention to establish the trust; an express trust over an immovable is governed by Article 1443 of the Civil Code.
• Parole Evidence / Article 1443: No. An express trust over immovable property may not be proved by parole evidence under Article 1443; absent written evidence, the complaint was properly dismissed.
• Implied Trust under Article 1453: No. Article 1453 does not apply where the person conveying the property expressly stated that he was establishing the trust; the allegations show an express trust, not an implied one.
• Prescription: Yes. Even assuming the trust was implied, the right to enforce it prescribed in ten years, and the complaint was filed more than ten years after the alleged refusals beginning in 1936.
• Default: No. A declaration of default would have been pointless because, without a written instrument evidencing the alleged trust, the case for plaintiffs had to be dismissed.

• Nature of the Trust: The Civil Code defines an express trust as one created by the intention of the trustor or of the parties, and an implied trust as one that comes into being by operation of law. Express trusts are created by the direct and positive acts of the parties, by some writing or deed or will, or by words evidencing an intention to create a trust. Implied trusts are those which, without being expressed, are deducible from the nature of the transaction by operation of law as matters of equity, independently of the particular intention of the parties. Thus, if the intention to establish a trust is clear, the trust is express; if the intent to establish a trust is to be taken from circumstances or other matters indicative of such intent, the trust is implied. Paragraph 8 of the complaint alleged that Eduardo told Justo and Luis to hold in trust what might belong to his brothers and sister as a result of the arrangements and to deliver their shares when the proper time came, and that Justo and Luis agreed. Because the trustor was alleged to have expressly told the defendants of his intention to establish the trust, the trust alleged was express, not implied.
• Parole Evidence / Article 1443: An express trust over an immovable falls under Article 1443 of the Civil Code and may not be proved by parole evidence. The trial court gave plaintiffs ten days to file an amended complaint alleging written evidence of the alleged trust, but plaintiffs did not amend; instead, they manifested that there was no written instrument of trust and that they could not amend to include one. Without the required written evidence, no enforceable claim was stated, and the lower court did not err in dismissing the complaint.
• Implied Trust under Article 1453: Appellants argued that the whole complaint, not just paragraph 8, should be considered and that an implied trust under Article 1453 should be construed. The argument is untenable. The intention of the trustor to establish the alleged trust may be seen in paragraphs 5 and 6 of the complaint. Article 1453 would apply if the person conveying the property did not expressly state that he was establishing the trust; here, the trustor was alleged to have expressed such intent. Consequently, Article 1453 does not apply, and the lower court did not err in dismissing the complaint.
• Prescription: Even assuming the alleged trust to be an implied one, the right alleged by plaintiffs would have already prescribed. Starting in 1936, when the trustor died, plaintiffs had already been allegedly refused by the defendants in their demands over the land, and the complaint was filed only in 1961 — more than the ten-year period of prescription for the enforcement of such rights under the trust. It is settled that the right to enforce an implied trust in one's favor prescribes in ten years. Even under the Code of Civil Procedure, an action to recover real property such as lands prescribes in ten years under Section 40 of Act No. 190.
• Default: It was pointless to declare Benjamin Cuaycong in default because, without a written instrument as evidence of the alleged trust, the case for the plaintiffs had to be dismissed. A default declaration would serve no purpose.

• Express Trust vs. Implied Trust — An express trust is created by the intention of the trustor or of the parties, by direct and positive acts, by some writing or deed or will, or by words evidencing an intention to create a trust. An implied trust comes into being by operation of law, without being expressed, and is deducible from the nature of the transaction as a matter of equity, independently of the particular intention of the parties. If the intention to establish a trust is clear, the trust is express; if the intent is to be taken from circumstances or other matters indicative of such intent, the trust is implied. In this case, because the complaint alleged that the trustor expressly told the defendants of his intention to establish the trust, the trust was express.
• Article 1443, Civil Code — Express Trust Over Immovable Property — An express trust concerning an immovable may not be proved by parole evidence; it must be evidenced by a writing. The Court applied this rule because the alleged trust was express and involved Hacienda Bacayan, an immovable. Since no written instrument was alleged or produced, the complaint was dismissible.
• Article 1453, Civil Code — Implied Trust from Declared Intentions — When property is conveyed to a person in reliance upon his declared intentions to hold it for or transfer it to another or the grantor, an implied trust arises in favor of the person whose benefit is contemplated. The provision applies only if the person conveying the property did not expressly state that he was establishing the trust. Here, the trustor was alleged to have expressly stated such intent, so Article 1453 did not apply.
• Prescription of Implied Trust — The right to enforce an implied trust in one's favor prescribes in ten years. An action to recover real property also prescribes in ten years under Section 40 of Act No. 190. Even assuming the trust was implied, the action had prescribed because the alleged refusals began in 1936 and the complaint was filed in 1961.
• Default When Complaint Is Dismissible — A declaration of default is pointless where the complaint must be dismissed for failure to allege an enforceable claim, because no useful purpose would be served by proceeding against a defaulting defendant. The Court applied this principle to Benjamin Cuaycong.

• "Thus, if the intention to establish a trust is clear, the trust is express; if the intent to establish a trust is to be taken from circumstances or other matters indicative of such intent, then the trust is implied." — This passage states the Court's controlling test for distinguishing an express trust from an implied trust, which determined the writing requirement applicable to the alleged trust over Hacienda Bacayan.
• "From these and from the provisions of paragraph 8 of the complaint itself, We find it clear that the plaintiffs alleged an express trust over an immovable, especially since it is alleged that the trustor expressly told the defendants of his intention to establish the trust." — This is the ratio decidendi: the allegation of an express declaration by the trustor made the trust express and subject to Article 1443.
• "Article 1453 would apply if the person conveying the property did not expressly state that he was establishing the trust, unlike the case at bar where he was alleged to have expressed such intent." — This passage distinguishes Article 1453 and explains why the implied-trust theory invoked by appellants failed.
• "It is settled that the right to enforce an implied trust in one's favor prescribes in ten (10) years." — This states the alternative prescriptive bar that independently supported affirmance of the dismissal.

• Gonzales vs. Jimenez, L-19073, Jan. 30, 1965 — Cited by the Court for the rule that the right to enforce an implied trust in one's favor prescribes in ten years; applied as an alternative ground for affirming the dismissal because the complaint was filed in 1961, more than ten years after the alleged refusals beginning in 1936.

• Article 1441, Civil Code — Defines an express trust as one created by the intention of the trustor or of the parties, and an implied trust as one that comes into being by operation of law. The Court used this definition to classify the trust alleged in the complaint.
• Article 1443, Civil Code — Provides that an express trust concerning an immovable may not be proved by parole evidence. The Court applied this provision because the alleged trust was express and involved immovable property, requiring written evidence that plaintiffs failed to allege.
• Article 1453, Civil Code — Provides that when property is conveyed to a person in reliance upon his declared intentions to hold it for or transfer it to another or the grantor, an implied trust arises in favor of the person whose benefit is contemplated. The Court held it inapplicable because the trustor was alleged to have expressly stated his intention to establish the trust.
• Article 1457, Civil Code — Invoked by plaintiffs-appellants for the proposition that an implied trust may be proved by parole evidence. The Court did not apply it because the trust alleged was express, not implied.
• Section 40, Act No. 190 (Code of Civil Procedure) — Provides that an action to recover real property prescribes in ten years. The Court cited it as an additional prescriptive bar to the action, even if the trust were implied.
• Rule 8, Section 1(e) and (f), Rules of Court — Grounds for a motion to dismiss based on the statute of limitations and failure to state a cause of action. These were the grounds invoked by Luis D. Cuaycong in his motion to dismiss.

Concepcion, C.J.; Reyes, J.B.L.; Dizon; Makalintal; Zaldivar; Sanchez; Castro; Angeles; and Fernando, JJ.