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Opinion

Invalid trust - A Law Each Day (Keeps Trouble Away)

A LAW EACH DAY (KEEPS TROUBLE AWAY) - Jose C. Sison -

Even without any agreement or an intention to create a trust, a trust relationship in real property may come about by operation of law to satisfy the demands of justice and equity. Thus one who obtains or holds the legal right to a real property which he ought not, in equity and good conscience, to hold because of fraud, duress or abuse to be holding the said property only in the trust for another. This is known as implied constructive trust which may be established by parol evidence. This case sets forth the kind of proof required to establish the trust and when it could not be enforced even if proven.

This case involves three brothers, Vicente, Mario and Carlos. While these brothers were of Chinese ancestry, Carlos and Mario had acquired Filipino citizenship. Only Vicente had not yet been granted Philippine citizenship. He was then staying in a southern Luzon City with his wife Mercy and their children where their business establishment was razed by fire just two years before.

Sometime in February 1966, Carlos an accountant, purchased a parcel of titled land in Quezon City as evidenced by a Deed of Absolute Sale executed by its owners. So the title of the said lot and its tax declaration was transferred in the name of Carlos who had since then been paying the taxes thereon. The next year Carlos constructed a two storey three door apartment building for the use of their family (the three brothers and their mother). One fifth of the cost of construction was defrayed by Carlos while the rest was shouldered by their mother. Upon its completion, the apartment was declared for real estate tax purposes in the name of Vicente in deference to the wishes of their mother.

Four years later, or in 1970, Vicente died while then still residing in another Southern Luzon city with his family. Upon his death, his wife Mercy and their children left their dwelling to reside permanently in the apartment building with Carlos' permission.

Later on in 1992, Carlos sold the land his share of the three door apartment to his brother Mario. A new TCT was in due time issued in the name of Mario.

Upon learning of such sale, Mercy and the children of the deceased Vicente advised both Carlos and Mario of their claim of ownership over said property as heirs of Vicente. They demanded that the necessary deed be executed to transfer title of the property to them. To prove the existence of the implied trust, Mercy testified that the land was first offered to her late husband by the previous owner for P15,000. Since both Vicente and herself were at that time still Chinese citizens, Vicente requested her brother Carlos to allow the use of the latter's name in the purchase, registration and declaration for tax purposes of the subject lot to which Carlos consented. It was agreed that the property would remain registered in the name of Carlos until such time as Vicente would have acquired Philippine citizenship, but that should Vicente predecease the lot would then be transferred to his heirs upon the latter's naturalization. Mercy further contended that it was Vicente who had caused the construction of the apartment on the property merely entrusting the money to Carlos and the death of her husband prompted them to move in and occupy the apartment and the lot without any objections from Carlos and Mario. It was only in 1991 when they were naturalized according to Mercy that they requested the transfer of title in their names but they were surprised to learn that Carlos had already sold the property to Mario. Was this enough to prove the existence of a trust in favor of Mercy and her children?

No. It is true that an implied trust may be established by parol evidence like what Mercy sought to do. Even then, in order to establish an implied trust in real property by parol evidence, the proof should be as fully convincing as if the acts giving rise to the trust obligation are proven by an authentic document. An implied trust, in fine cannot be established upon vague and inconclusive proof. The evidence submitted by Mercy consisting mainly of herself-serving testimony is utterly wanting as against the Deed of Absolute Sale executed by the previous owner in favor of Carlos which is public document and is presumed to have been regularly executed. The fact that their business establishment was razed by fire would somehow place to doubt her claim that Vicente had indeed the means to purchase the subject land about two years later. On the other hand, Carlos was but then an accountant with apparent means to buy the property himself.

Furthermore, the trust agreement between Carlos and Vicente even if extant would have been in contravention of the fundamental law limiting the transfer or assignment of land only to citizens of the Philippines (Sec. 5 Art. XIII 1935 Constitution, Section 7 Art. XII 1987 Constitution). This is based on the long standing and broad doctrine of clean hands that will not allow the creation or the use of a juridical relation, a trust whether express or impiled included, to perpetrate fraud or tolerate bad faith nor to subvert, directly or indirectly, the law. A trust or a provision in the terms of the trust would be invalid if the enforcement thereof is against the law even though its performance does not involve the commission of a criminal tortuous act (Heirs of Lorenzo Yap et. al. vs. Court of Appeals et. al. G.R. No. 133047 Aug. 17, 1998).

* * *

Atty. Sison's e-mail address is: [email protected]

CARLOS

CARLOS AND MARIO

CARLOS AND VICENTE

COURT OF APPEALS

DEED OF ABSOLUTE

DEED OF ABSOLUTE SALE

MARIO

MERCY

PROPERTY

TRUST

VICENTE

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