Case Name RODOLFO MORALES, represented by his heirs, and PRISCILA MORALES, petitioners,

vs.
COURT OF APPEALS (Former Seventeenth Division), RANULFO ORTIZ, JR., and
ERLINDA ORTIZ, respondents.
Topic Parties in Trust
Date June 19, 1997
Ponente Davide, Jr.
Doctrine Article 1440 - A person who establishes a trust is called the trustor; one in whom confidence
is reposed as regards property for the benefit of another person is known as the trustee; and
the person for whose benefit the trust has been created is referred to as the beneficiary.
Case Summary Celso bought a residential property where he let his parents and sister live while he works.
Without the knowledge of Celso, his nephew built a beauty shop on his property. When he was
offering to sell the property to the prospective buyers, Celso was able to discover the shop and
talked to his nephew to vacate the building once the property is sold. The nephew refuses to
do so and claims that the property is not owned by Celso, but merely a person entrusted by
his parents to buy the property under his name.
Ruling The CA held that that the current situation falls within the exception under the third sentence
of Article 1448. Also fatal to the case of the Sister and the Nephew is the declaration of their
other sister, Concepcion, who disclaimed any interest on the property and executed a
Confirmation that their brother bought the property using his own funds.
Trustee/Trustor There’s none. Seller/Owner- Celso Avelino

FACTS:

• On February 2, 1988, Priscilla Morales, one of the daughters of late Rosendo Avelino and Juan
Ricaforte filed a motion to intervene.
• On November 30, 1988, Rodolfo Morales passed away and the trial court allowed his substitution
by his heirs, Roda, Rosalia, Cesar and Priscila.
• Plaintiffs are the absolute and exclusive owners of the property purchased from Celso Avelino,
evidenced by a deed of absolute sale.
• Celso Avelino (Plaintiff’s predecessor in interest) purchased the land through Escritura de Venta.
When the residential house was finished, he let his parents and his sister live there until their
deaths.
• After being the City Fiscal of Calbayog, Celso Avelino became an Immigration Officer and later as
Judge of the Court of First Instance in Cebu with his sister, Aurea, taking care of the premises in
question. While he was already in Cebu, the defendant, without the knowledge and consent of the
former, constructed a small beauty shop in the premises in question.
• ThePlaintiffs are the purchasers of the other real properties of Celso Avelino, after they were offered
by Celso Avelino to buy the premises in question, they examined the premises in question and
talked with the defendant about that fact, the latter encouraged them to purchase the premises in
question rather than the property going to somebody else they do not know and that he will vacate
the premises as soon as his uncle will notify him to do so. Thus, they paid the purchase price and
was executed in their favor.
• Despite due notice from his uncle to vacate the premises, the defendant refused to vacate or
demolish the beauty shop unless reimbursed 35,000 pesos for it. The plaintiffs demanded and the
defendant refused.
• According to the defendant it was originally owned by the spouses, Rosendo Avelino and Juana
Ricaforte, through their son, Celso Avelino. The premises in question was acquired by Celso who
was entrusted by Rosendo with the money to buy it.
 • In 1979, defendant Rodolfo Morales constructed beside the two-storey house and beauty shop for
his wife with the consent of Celso and the latter's sisters.
• Priscila Morales was aware that the premises in question was surveyed in the name of Celso but
she did not make any attempt, not even her father, to change the muniment of title to Rosendo
Avelino. Despite the fact that Intervenor has two sons who are lawyers, no extra-judicial settlement
was filed over the premises in question since the death of Rosendo Avelino up to the present.
• The trial court ruled in favor of the spouses and ordered the nephew to vacate and remove the
beauty shop. The court also noted that the seller’s siblings and descendants did not disputed the
Seller’s ownership of the property nor the extra-judicial partition effected on the property.
• The court further ruled that their claim of implied trust is untenable, because in order for implied
trust to exist there must be evidence of an equitable obligation of the trustee to convey, which was
absent in this case. The CA affirmed the decision of the trial court.

ISSUE: Whether or not the seller was a mere Trustee for his parents and siblings. – NO

HELD:

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. While implied trusts
may be proved by oral evidence, 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.

A trust is the legal relationship between one person having an equitable ownership in property and another
person owning the legal title to such property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the latter. The characteristics of a trust
are:
(a) it is a relationship;
(b) it is a relationship of fiduciary character;
(c) It is a relationship with respect to property, not one involving merely personal duties;
(d) it involves the existence of equitable duties imposed upon the holder of the title to the property to deal
with it for the benefit of another; and
(e) it arises as a result of a manifestation of intention to create the relationship.

A resulting trust, also sometimes referred to as a purchase money resulting trust, is exemplified by Article
1448 of the Civil Code, which reads: Art. 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. 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.
The Court agreed with the lower courts that the current situation falls within the exception under the third
sentence of Article 1448. Also fatal to the case of the Sister and the Nephew is the declaration of their other
sister, Concepcion, who disclaimed any interest on the property and executed a Confirmation that their
brother bought the property using his own funds. If indeed the property was merely held in trust by Celso
for his parents, Concepcion would have been entitled to a proportionate part thereof as co-heir. However,
by her Confirmation, Concepcion made a solemn declaration against interest. Furthermore, the Seller’s
sisters did not do anything to have their respective shares in the property conveyed to them after the death
of their father. Neither is there any evidence that during his lifetime, their father demanded from the Seller
that the latter convey the land, which was mute and eloquent proof of the father’s recognition that the Seller
was the to be the absolute owner of the property.