Tigno vs. Court of Appeals

Where a person purchases land with his own money and takes the conveyance in the name of another, a purchase money resulting trust arises in favor of the one furnishing the consideration, unless a different intention or understanding appears; the trustee holds only legal title and cannot transfer ownership to a third person. The trust requires (1) an actual payment of money, property or services, or an equivalent, constituting valuable consideration, and (2) that such consideration be furnished by the alleged beneficiary. Being an implied trust, it may be proved by oral evidence under Article 1457 of the Civil Code, provided the proof is trustworthy, clear, and satisfactory.

Eduardo M. Tigno and Rodolfo M. Tigno are brothers. At the time of the transactions in question, Eduardo was an executive of an American firm based in Makati, Metro Manila, while Rodolfo was jobless and had at one time been financially supported by Eduardo. The dispute concerns three adjoining parcels of fishpond land situated along Padilla Street, Lingayen, Pangasinan, owned respectively by Bienvenido Sison, the heirs of Isaac Sison, and Remedios Sison, which the Sison owners had entrusted to Dominador Cruz as agent for sale. The case turns on the statutory framework of implied trusts under the Civil Code, particularly Article 1448 on purchase money resulting trusts and Article 1457 permitting oral proof of such trusts.

Eduardo M. Tigno and Rodolfo M. Tigno are brothers. Eduardo was then an executive of an American firm based in Makati, Metro Manila, while Rodolfo was jobless and had at one time been supported financially by Eduardo. The controversy centers on three adjoining parcels of fishpond land along Padilla Street, Lingayen, Pangasinan, owned respectively by Bienvenido Sison, the heirs of Isaac Sison (Manuel, Gerardo and Adelaida Sison), and Remedios Sison.

Sometime in January 1980, the Sison owners appointed Dominador Cruz as agent to sell the three parcels. In April 1980, Rodolfo learned that the properties were for sale and approached Cruz, asking him to offer the lands to his brother Eduardo. Cruz and Rodolfo then went to Eduardo's Makati office to persuade him to buy; Eduardo was at first reluctant but was eventually convinced, and it was agreed that each parcel would cost P10,000.00. Eduardo instructed Cruz to bring the owners to his ancestral house at Guilig Street, Lingayen, Pangasinan on May 2, 1980, when he would be there for the town fiesta.

On May 2, 1980, Cruz, together with Bienvenido Sison, Manuel Sison, Adelaida Sison and Remedios Sison, went to Eduardo's house, and at about five o'clock in the afternoon they proceeded to the house of Atty. Modesto Manuel at Defensores West Street, Lingayen, for the preparation of the deeds of sale. No deed was prepared that day because Bienvenido had failed to bring the tax declarations for his property, Remedios had mortgaged her property to a certain Mr. Tuliao, and Manuel had no special power of attorney from his sister in the United States to evidence her consent to the sale. Despite this, the vendors asked Eduardo for a fifty percent downpayment; he acceded and gave P5,000.00 each to Remedios, Bienvenido and Manuel, for a total of P15,000.00, in the presence of Cruz and Atty. Manuel. After giving the downpayment, Eduardo instructed Cruz and Atty. Manuel to place the name of Rodolfo as "vendee" in the deeds of sale to be subsequently prepared, so that Rodolfo could mortgage the properties with the Philippine National Bank, Lingayen Branch, and raise funds for developing the parcels as fishponds.

On May 6, 1980, May 12, 1980 and June 12, 1980, the deeds of sale were finally prepared by Atty. Manuel and signed by Bienvenido Sison, the heirs of Isaac Sison, and Remedios Sison, respectively. In all three deeds, Rodolfo Tigno was named as vendee pursuant to Eduardo's verbal instruction, and Cruz signed as a witness. Sometime in the second week of July 1980, Cruz brought and showed the deeds to Eduardo at his Makati office; after going over the documents, Eduardo issued a Pacific Bank check in the amount of P26,000.00, representing the P15,000.00 balance for the three parcels, P6,000.00 as Cruz's commission as agent, and P5,000.00 for capital gains tax, registration and other incidental expenses. Upon encashment of the check at the PNB Lingayen Branch, Cruz paid the vendors the balance due them.

On April 29, 1989, Rodolfo, without the knowledge and consent of Eduardo, sold 508.56 square meters of the land previously owned by Bienvenido Sison to Spouses Edualino and Avelina Casipit. At the time of the sale, the Casipits were aware that the portion they bought was owned by Eduardo, not Rodolfo. On May 16, 1989, Eduardo learned that Rodolfo was "negotiating" a portion of his land to the Casipits, and he accordingly sent a letter to the Casipits advising them to desist from the intended sale, not knowing that it had already been consummated on April 29, 1989. A few days thereafter, upon learning that the sale had been consummated, Eduardo confronted the Casipits and Rodolfo and asked them to annul the sale, but his request was not heeded.

The trial court dismissed Eduardo's complaint, relying mainly on the deeds of sale naming Rodolfo as vendee and on the tax declarations and tax payment receipts in Rodolfo's name, and concluded that Rodolfo was the true buyer and owner of the lands. The Court of Appeals found otherwise on the facts: that Eduardo was the real buyer and true owner of the lands in question; that Rodolfo was merely a trustee constituted over the lands on Eduardo's behalf; that Rodolfo was jobless at the time and lacked the financial means to pay the total price of P53,000.00; and that no delay could be attributed to Eduardo, who filed suit only five days after learning of his brother's infidelity.

• Authentication of Receipts: Petitioners argued that the evidence of record showed that the receipts of payments of Rodolfo Tigno for the fishponds were authenticated, contrary to the finding of the Court of Appeals, and that Dominador Cruz, an "instrumental witness," should not be allowed to vary the plain content of the two documents indicating that Rodolfo Tigno was the vendee.
• Ownership of Rodolfo: Petitioners maintained that the documents and circumstances substantiated the ownership of Rodolfo Tigno over the parcels of land, and that Rodolfo, "being the real purchaser" of the parcels, "could validly transfer the ownership of a portion" to Spouses Casipit.
• Absence of Fiduciary Relationship: Petitioners contended that no fiduciary relationship existed between Rodolfo Tigno and Eduardo Tigno, arguing that Rodolfo "had exercised all the acts of dominion and ownership over the fishponds in question," as nobody "shared in the produce of the fishponds for the past nine (9) years."
• Good Faith of the Casipits: Spouses Edualino and Evelyn Casipit contended that they "are purchasers in good faith" and for valuable consideration, and that they therefore cannot be deprived of the land they bought from Rodolfo Tigno.

• Real Buyer and True Owner: Respondent Eduardo Tigno maintained that he purchased the three parcels of land so that his brother Rodolfo, then jobless, could have a source of income as caretaker of the fishponds, and that he furnished the entire purchase price, having paid the P15,000.00 downpayment and later the P26,000.00 check covering the balance, the agent's commission, and incidental expenses.
• Implied Trust: Respondent argued that he and Rodolfo agreed that the latter would secure a loan from the Philippine National Bank at Lingayen using the lands as collateral, and that because of his busy schedule as executive vice-president of an American firm based in Makati, it was made to appear in the deeds of sale that Rodolfo was the vendee so that the latter could secure the loan without need of respondent's signature and personal presence, the loan proceeds to be used as seed capital for the fishponds.
• Violation of Trust and Bad Faith of the Casipits: Respondent asserted that Rodolfo violated the trust and confidence reposed in him by selling a portion of the land, and that the Casipit spouses had previous knowledge that he, and not Rodolfo, was the real owner of the lands; demands for reconveyance, surrender of possession and cancellation of the deed of sale were unjustifiably refused.

• Implied Trust: Whether the evidence on record proves the existence of an implied trust between Petitioner Rodolfo Tigno and Private Respondent Eduardo Tigno.
• Good Faith Purchasers: Whether Petitioners Edualino and Evelyn Casipit are purchasers in good faith and for value of a portion of the lots allegedly held in trust, and whether they may thus acquire ownership over the said property.

• Implied Trust: Yes. A purchase money resulting trust under Article 1448 of the Civil Code was created, the purchase price having been paid by Eduardo while legal title was conveyed to Rodolfo, who held the property merely as trustee for his brother's benefit.
• Good Faith Purchasers: No. Rodolfo, as a mere trustee, had no right to transfer ownership of the property, and the Casipits did not acquire ownership thereof; their claim of good faith is immaterial because no valid sale was made in the first place.

• Implied Trust: Implied trusts are those deducible by operation of law from the nature of the transaction as matters of equity, independently of the particular intention of the parties. 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. This is a purchase money resulting trust, created to effectuate what the law presumes to have been the intention of the parties — that the person to whom the land was conveyed holds it as trustee for the person who supplied the purchase money. To give rise to such a trust, two elements must concur: (1) an actual payment of money, property or services, or an equivalent, constituting valuable consideration; and (2) such consideration must be furnished by the alleged beneficiary of the resulting trust. The recognized exceptions — conveyance to a child or to one standing in loco parentis, proof of an actual contrary intention, and purchase in violation of an existing statute — do not obtain here. The burden of proving the existence of a trust rests on the party asserting it, and the proof must clearly and satisfactorily show the trust and its elements; while an implied trust may be proved by oral evidence under Article 1457, such evidence must be trustworthy and received with extreme caution, and should not rest on loose, equivocal or indefinite declarations. On the record, Eduardo's testimony that he paid P5,000.00 each to the three vendors as first installment, and later issued a P26,000.00 check covering the P15,000.00 balance, the P6,000.00 agent's commission, and P5,000.00 for capital gains tax, registration and incidental expenses, was corroborated by Dominador Cruz, the agent who signed as witness in all three deeds, and by Atty. Modesto Manuel, who prepared and notarized the deeds. Both witnesses testified that Rodolfo's name was placed as vendee solely upon Eduardo's instruction, to enable Rodolfo to mortgage the lands with the PNB Lingayen Branch for seed capital, and because Eduardo was a Makati-based executive who would be abroad and could not personally attend to the loan. Eduardo's financial capacity was shown by his Certificate of Income Tax Withheld on Wages for 1980, reflecting P311,700.79. Against this, Rodolfo's bare testimony that he was the real buyer, partly with his own money and partly with P20,000.00 allegedly borrowed from Jose Manaoat, was uncorroborated; his failure to present Manaoat gave rise to the presumption under Section 3(e), Rule 131 of the Rules of Court that the latter's testimony, if given, would have been unfavorable to him. Rodolfo was jobless at the time and had at one time been supported financially by Eduardo, and no evidence of income, such as an income tax return, was presented to support his claim of a piggery business. The tax declarations and tax payment receipts in Rodolfo's name were not conclusive evidence of ownership, and since he was named as vendee in the deeds of sale, it was only natural that the tax declarations and receipts be in his name. Contrary to petitioners' insistence, no delay could be imputed to Eduardo: he filed the case on May 24, 1989, only five days after learning from Edualino Casipit of the consummation of the sale, and before that he had no reason to sue. Thus Article 1448 finds application: although the deeds of sale were in Rodolfo's name, the purchase price was paid by Eduardo, the real owner; Rodolfo is the trustee and Eduardo the beneficiary.

• Good Faith Purchasers: The Casipits' posture that they are purchasers in good faith and for value is unacceptable. First, unrebutted is Eduardo's emphatic testimony that Edualino Casipit was invited on May 2, 1980 to a picnic at the fishpond, where Eduardo informed him that he was the owner of the property. Second, also uncontested is the testimony of Dominador Cruz that he met Edualino on April 24, 1989, five days before the consummation of the sale between Rodolfo and the Casipits, and told Edualino that he had bought from Eduardo a portion of the subject property for the purpose of building a dike, after which Edualino asked Cruz to buy a portion of the property from Eduardo. Third, and in any event, the Casipits did not acquire absolute ownership over the property because the apparent vendor, Rodolfo, did not have the right to transfer ownership thereof. The fishponds were not registered under the Torrens system. Under Article 1459 of the Civil Code, the thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. As a matter of basic principle in the law on sales, a person cannot transfer ownership, by way of sale, of something over which he has no right to transfer. Since Rodolfo was not the owner of the lands in question but a mere trustee, he could not by way of sale have transferred ownership of a portion thereof at the time of delivery, and the question of the Casipits' good faith is entirely immaterial.

• Purchase Money Resulting Trust (Article 1448, 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 trust is created to effectuate what the law presumes to have been the intention of the parties — that the person to whom the land was conveyed holds it as trustee for the person who supplied the purchase money. Two elements are essential: (1) an actual payment of money, property or services, or an equivalent, constituting valuable consideration; and (2) such consideration must be furnished by the alleged beneficiary of the resulting trust. The Court applied this doctrine to hold that Rodolfo held the fishponds merely as trustee for Eduardo, who furnished the entire purchase price.
• Exceptions to the Purchase Money Resulting Trust — No trust results where the person to whom title is conveyed is a child, legitimate or illegitimate, of the one paying the price, it being disputably presumed that there is a gift; where an actual contrary intention is proved; and where the purchase is made in violation of an existing statute and in evasion of its express provision, no trust can result in favor of the party guilty of the fraud. None of these exceptions was present in the case.
• Proof of Implied Trusts — The burden of proving the existence of a trust is on the party asserting it, and such proof must clearly and satisfactorily show the existence of the trust and its elements. While implied trusts may be proved by oral evidence under Article 1457 of the Civil Code, the evidence must be trustworthy and received by the courts with extreme caution, and should not be made to rest on loose, equivocal or indefinite declarations, because oral evidence can easily be fabricated. The Court found the testimonies of Cruz and Manuel credible and sufficient to establish the trust.
• Tax Declarations as Evidence of Ownership — Tax declarations and realty tax payment receipts, by themselves, are not conclusive evidence of ownership of the declarant or payor. The Court held that the probative value of the tax declarations in Rodolfo's name was utterly minimal, since it was only natural for such documents to be in his name given that he appeared as vendee in the deeds of sale.
• Nemo Dat Quod Non Habet (Article 1459, Civil Code) — The thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. A person cannot transfer ownership, by way of sale, of something over which he has no right to transfer. Because Rodolfo was a mere trustee and not the owner, he could not transfer ownership of any portion of the unregistered fishponds to the Casipits, rendering their claim of good faith immaterial.
• Exception to the Rule 45 Limitation on Factual Review — Although petitions for review under Rule 45 ordinarily raise only questions of law, the Court may take up and rule on a factual issue where there is a conflict between the factual findings of the trial court and those of the Court of Appeals. The Court applied this exception to resolve whether an implied trust existed.
• Presumption from Failure to Present a Witness (Section 3[e], Rule 131, Rules of Court) — The failure of a party to present a witness who was in the best position to corroborate his claim gives rise to the presumption that the witness's testimony, if given, would have been adverse to that party. The Court applied this presumption against Rodolfo, who failed to present Jose Manaoat to corroborate his claim of a P20,000.00 loan.

• "An implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of another. In such a case, the property is held on resulting trust in favor of the one furnishing the consideration for the transfer, unless a different intention or understanding appears." — This passage states the ratio decidendi of the case, articulating the canonical formulation of the purchase money resulting trust that governed the disposition of the controversy.
• "To give rise to a purchase money resulting trust, it is essential that there be: 1. an actual payment of money, property or services, or an equivalent, constituting valuable consideration; 2. and such consideration must be furnished by the alleged beneficiary of a resulting trust." — This passage enumerates the two essential requisites of a purchase money resulting trust, which the Court found to have been satisfied by Eduardo's payment of the purchase price.
• "As a rule, the burden of proving the existence of a trust is on the party asserting its existence, and such proof must be clear and satisfactorily show the existence of the trust and its elements." — This passage defines the evidentiary standard for establishing an implied trust, which the Court applied in weighing the testimonies of Cruz and Manuel against Rodolfo's uncorroborated claim.
• "As a matter of basic principle in the law on sales, a person cannot transfer ownership, by way of sale, of something over which he has no right to transfer." — This passage, quoted from the Court of Appeals and adopted by the Court, supplies the controlling rule on the second issue, rendering the Casipits' claim of good faith immaterial.

• Morales, et al. vs. Court of Appeals, et al., G.R. No. 117228, June 19, 1997 — Cited as the source of the extensive discussion of the nature, characteristics, and classification of trusts (express, implied, resulting, and constructive), which the Court adopted in explaining the species of implied trust raised by private respondent.
• Lim vs. Court of Appeals, 65 SCRA 160 — Cited for the rule that an implied trust arises where a person purchases land with his own money and takes conveyance thereof in the name of another, the property being held on a resulting trust in favor of the one furnishing the consideration unless a different intention or understanding appears.
• Chiao Liong Tan vs. Court of Appeals, 228 SCRA 75, November 19, 1993 — Cited for the rule that a certificate of registration in one's name creates a strong but rebuttable presumption of ownership, and for the principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust by relying on the registration, a trust deriving its strength from the confidence reposed in another especially between brothers not losing that character simply because of what appears in a legal document.
• Heirs of Candelaria, et al. vs. Romero, et al., 109 Phil. 500 — Cited for the rule that where property is taken by a person under an agreement to hold it for or convey it to another or the grantor, a resulting or implied trust arises in favor of the person for whose benefit the property was intended.
• Martinez vs. Griño, 42 Phil. 35 — Cited in connection with the rule that where property is taken by a person under an agreement to hold it for or convey it to another or the grantor, a resulting or implied trust arises in favor of the person for whose benefit the property was intended.
• Salao vs. Salao, 70 SCRA 65 [1976] — Cited for the rule that while implied trusts may be proved by oral evidence, such evidence must be trustworthy and received by the courts with extreme caution, and should not be made to rest on loose, equivocal or indefinite declarations.
• Rivera vs. Court of Appeals, 244 SCRA 218, May 22, 1995 — Cited for the rule that tax declarations are not conclusive evidence of ownership.
• De Guzman vs. Court of Appeals, L-47378, February 27, 1987 — Cited for the rule that tax declarations or payments of real estate taxes on the land are not conclusive evidence of ownership of the declarant or payor.
• Bornales vs. Intermediate Appellate Court, G.R. No. 75336, 166 SCRA 524 [1988]; Amerol vs. Bagumbayan, G.R. No. L-33261, 154 SCRA 403 [1987]; Cardiente vs. Intermediate Appellate Court, G.R. No. 73651, 155 SCRA 689 [1987] — Cited collectively for the principle that even under the Torrens system of land registration, the Court has in some instances done away with the irrevocability or indefeasibility of a certificate of title to prevent injustice against the rightful owner of the property.

• Article 1448, 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 being the trustee and the latter the beneficiary. The Court applied this provision as the specific basis for the purchase money resulting trust, holding that although the deeds of sale were in Rodolfo's name, the purchase price was paid by Eduardo, making Rodolfo the trustee and Eduardo the beneficiary.
• Article 1457, Civil Code — Provides that an implied trust may be proved by oral evidence. The Court applied this provision to admit the testimonies of Eduardo, Cruz and Manuel establishing the trust, notwithstanding that the deeds of sale named Rodolfo as vendee.
• Article 1441, Civil Code — Defines trusts as either express or implied, express trusts being created by the intention of the trustor or of the parties, and implied trusts coming into being by operation of law. The Court cited this provision in explaining that Article 1448, being a specific provision, prevails over and qualifies Article 1441, a general provision, under the rule generalia specialibus non derogant.
• Article 1459, Civil Code — Provides that the thing must be licit and the vendor must have a right to transfer the ownership thereof at the time it is delivered. The Court applied this provision to hold that Rodolfo, not being the owner of the lands but a mere trustee, could not by way of sale have transferred ownership of a portion thereof to the Casipits at the time of delivery.
• Section 3(e), Rule 131, Rules of Court — Establishes the presumption that evidence willfully suppressed would be adverse if produced. The Court applied this presumption against Rodolfo, who failed to present Jose Manaoat to corroborate his claim that he borrowed P20,000.00 to raise part of the purchase price.
• Rule 45, Rules of Court — Governs petitions for review on certiorari raising only questions of law. The Court acknowledged this limitation but applied the recognized exception allowing review of factual issues where there is a conflict between the factual findings of the trial court and those of the Court of Appeals.

Narvasa, C.J., Romero, Melo and Francisco, JJ., concur.