Spouses Devisfruto vs. Greenfell

A purchase money resulting trust under Article 1448 of the Civil Code arises when one party pays the price of property but the legal estate is granted to another for the payer’s beneficial interest; and a claim that the purchase money was a gratuitous donation must comply with the written-donation requirement of Article 748 when the amount exceeds P5,000. Here, the SC affirmed the implied trust in Greenfell’s favor and rejected petitioners’ donation theory for lack of written compliance.

Petitioners are Spouses Ruth Dizon Devisfruto and Allan Devisfruto. Ruth is the niece of respondent Maxima L. Greenfell.

Maxima L. Greenfell was a natural-born Filipino citizen who later became an Australian citizen. Prior to reacquiring Filipino citizenship, she financed the purchase of a house and two lots in Tampo, Botolan, Zambales from Spouses Dante and Erna Magisa. The lots were registered in the name of her niece, Ruth Dizon Devisfruto. Deeds of sale were executed by which the Magisa Spouses sold the properties to Ruth for P20,000.00 and P25,000.00, respectively. Thereafter, the Devisfruto Spouses possessed the properties, and Ruth declared herself the owner under Tax Declaration Nos. 021-0464R and 021-0659R. The properties were subsequently consolidated as one under Tax Declaration No. 021-0842.

In April 2009, after reacquiring her Philippine citizenship by virtue of Republic Act No. 9225, Greenfell demanded that the properties be transferred to her name. When Ruth refused to comply, Greenfell filed a Complaint for Reconveyance and Damages before the Municipal Circuit Trial Court against the Devisfruto Spouses, impleading the Office of the Municipal Assessor of Botolan, Zambales. In their Answer, the Devisfruto Spouses admitted that Greenfell provided the purchase money for the properties. The MCTC found that the parties’ intent was to give legal title over the properties to Ruth because Greenfell believed she was precluded from owning realty after she became an Australian citizen, and that the Devisfruto Spouses were merely the depository of legal title obligated to convey the property when called upon by Greenfell.

Petitioners, for their part, claimed that the properties had been given gratuitously to them. They alleged that Greenfell gave the properties to Ruth because she is her favorite niece, and that Greenfell only filed the case after their relationship turned sour. They insisted that it was not unlikely for Greenfell to gratuitously give the property to Ruth, as she has the financial capacity to assist less fortunate relatives, and they claimed that Greenfell admitted giving them a monthly allowance of more than P20,000.00 from 1999 onwards. They also asserted that, assuming a trust had been created, it was an express trust that could not be proven by parole evidence, and that Greenfell did not present any documentary proof of an express trust.

The CA found that Greenfell had provided the purchase money for the properties on the condition that the Devisfruto Spouses surrender them to her upon her re-acquisition of Philippine citizenship. It also found that Dante Magisa, the properties’ former owner, testified that the parties had an agreement where Ruth was obligated to transfer the titles to Greenfell once permitted by law.

• No Legal or Factual Basis for Trust: Petitioners claimed that there was no legal or factual basis to find that the parties had created a trust.
• Express Trust and Parole Evidence: Petitioners argued that, assuming a trust had been created, it was an express trust, which cannot be proven by parole evidence; testimonial evidence is insufficient to prove express trusts, and Greenfell presented no documentary proof of an express trust.
• Gratuitous Donation: Petitioners argued that the properties had been given gratuitously to them; Greenfell gave the properties to Ruth because she is her favorite niece, and Greenfell only filed a case after their relationship turned sour; it was not unlikely for Greenfell to gratuitously give the property to Ruth as she has the financial capacity to assist less fortunate relatives; Greenfell admitted giving them a monthly allowance of more than P20,000.00 from 1999 onwards.

• Ownership and Original Owner’s Testimony: Respondent argued that the issue involves ownership of the subject properties; the best person to identify the current owner would be its original owner, Dante O. Magisa, who testified that the person who bought his property was respondent, through her niece Ruth; this finding of the lower courts is supported by the evidence on record.

• Implied Trust: Whether the CA erred in finding that an implied trust had been created by the parties.
• Gratuitous Donation: Whether the CA erred in not finding that the properties were given gratuitously to petitioners.

• Implied Trust: No. The CA did not err; the evidence showed that the legal estate was granted to Ruth while the price was paid by Greenfell for the purpose of having the beneficial interest, creating an implied trust under Article 1448 of the Civil Code.
• Gratuitous Donation: No. The CA did not err; assuming no trust, petitioners’ donation theory required compliance with Article 748 of the Civil Code for a donation of personal property exceeding P5,000, and they presented no evidence of written donation and acceptance.

• Implied Trust: The SC quoted Article 1448 of the Civil Code, which provides that an implied trust arises 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. Based on the evidence, both the CA and the RTC determined that the legal estate over the properties was granted to Ruth while the price was paid by Greenfell, and that the purpose of the arrangement was for Greenfell to have beneficial interest over the property. The SC saw no cogent reason to revisit these conclusions. Petitioners asserted that Article 1448 was inapplicable because the trust, if any, was an express trust, but the SC held that this argument cannot be sustained because issues may not be raised for the first time on appeal. The SC cited Metropolitan Bank & Trust Co. vs. G & P Builders, Inc. and Trinidad vs. Acapulco for the rule and its exceptions. Petitioners did not raise the distinction between express and implied trusts before the CA; they relied mainly on the premise that Greenfell gratuitously gave the property to Ruth, and they did not sufficiently explain why the SC should make an exception and consider the issue for the first time on appeal.

• Gratuitous Donation: The parties admitted that Greenfell supplied the purchase money for the properties. Thus, assuming that neither an implied nor an express trust was created, the facts as presented by petitioners required the application of the laws on donation. If, as petitioners insisted, the purchase money was gratuitously given, Article 748 of the Civil Code required that donations of personal property exceeding P5,000.00 be in writing; an oral donation requires the simultaneous delivery of the thing or of the document representing the right donated, and if the value exceeds P5,000.00, the donation and acceptance shall be made in writing, otherwise the donation is void. In Carinan vs. Spouses Cueto, the SC held that donations of purchase money must follow the formal requirements mandated by law. Although petitioners repeatedly insisted that the purchase money was gratuitously given, they did not, at any stage, present evidence that the donation complied with Article 748. Thus, the SC saw no reason to consider the argument further.

• Purchase Money Resulting Trust — Under Article 1448 of the Civil Code, 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. The exception is when the person to whom the title is conveyed is a child, legitimate or illegitimate, of the one paying the price, in which case no trust is implied by law, it being disputably presumed that there is a gift in favor of the child. In this case, the legal estate was granted to Ruth while the price was paid by Greenfell for Greenfell’s beneficial interest, so an implied trust arose.
• Issues Not Raised Below Cannot Be Raised for the First Time on Appeal — As a general rule, issues may not be raised for the first time on appeal. The exceptions include: (a) grounds not assigned as errors but affecting jurisdiction over the subject matter; (b) matters not assigned as errors on appeal but evidently plain or clerical errors within contemplation of law; (c) matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and complete resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice; (d) matters not specifically assigned as errors on appeal but raised in the trial court and are matters of record having some bearing on the issue submitted; (e) matters not assigned as errors on appeal but closely related to an error assigned; and (f) matters not assigned as errors on appeal but upon which the determination of a question properly assigned is dependent. The SC applied the general rule because petitioners did not raise the express-versus-implied trust distinction before the CA and did not sufficiently explain why an exception should apply.
• Donation of Purchase Money Must Comply with Article 748 — Article 748 of the Civil Code governs donations of movable property. An oral donation requires simultaneous delivery of the thing or of the document representing the right donated; if the value of the personal property donated exceeds P5,000.00, the donation and acceptance shall be made in writing, otherwise the donation is void. When the subject of the donation is purchase money, Article 748 applies. Petitioners claimed that the purchase money was a gratuitous donation but presented no evidence of written donation and acceptance, so the claim failed.

• "ARTICLE 1448. 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." — This is the codal rule the SC applied in finding a purchase money resulting trust in Greenfell’s favor.
• "As a general rule, issues may not be raised for the first time on appeal." — The SC used this rule to reject petitioners’ express-trust theory because it was not raised before the CA.
• "If the value of the personal property donated exceeds five thousand pesos, the donation and the acceptance shall be made in writing, otherwise, the donation shall be void." — The SC applied this formal requirement to petitioners’ claim that the purchase money was a gratuitous donation.

• Metropolitan Bank & Trust Co. vs. G & P Builders, Inc., 773 Phil. 289 (2015) — Explained the principle behind the rule barring issues raised for the first time on appeal; followed by the SC.
• Trinidad vs. Acapulco — Cited for the exceptions to the rule against raising new issues on appeal; followed.
• Carinan vs. Spouses Cueto, 745 Phil. 186 (2014) — Held that donations of purchase money must follow the formal requirements of Article 748; followed.

• Article 1448, Civil Code — Defines 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; applied because Ruth held legal title while Greenfell paid the price for her own beneficial interest.
• Article 748, Civil Code — Requires written donation and acceptance for movable property exceeding P5,000.00; applied to reject petitioners’ gratuitous-donation claim because no written compliance was shown.