G.R. No.

202247

June 19, 2013

SIME DARBY PILIPINAS, INC., Petitioner, vs. JESUS B. MENDOZA, Respondent.

The Facts
Petitioner Sime Darby Pilipinas, Inc. (Sime Darby) employed Jesus B. Mendoza (Mendoza) as sales
manager to handle sales, marketing, and distribution of the company's tires and rubber products. On
3 July 1987, Sime Darby bought a Class "A" club share 4 in Alabang Country Club (ACC) from
Margarita de Araneta as evidenced by a Deed of Absolute Sale. 5 The share, however, was placed
under the name of Mendoza in trust for Sime Darby since the By-Laws 6 of ACC state that only
natural persons may own a club share. 7 As part of the arrangement, Mendoza endorsed the Club
Share Certificate8 in blank and executed a Deed of Assignment, 9 also in blank, and handed over the
documents to Sime Darby. From the time of purchase in 1987, Sime Darby paid for the monthly dues
and other assessments on the club share.
When Mendoza retired in April 1995, Sime Darby fully paid Mendoza his separation pay amounting
to more thanP3,000,000. Nine years later, or sometime in July 2004, Sime Darby found an interested
buyer of the club share for P1,101,363.64. Before the sale could push through, the broker required
Sime Darby to secure an authorization to sell from Mendoza since the club share was still registered
in Mendozas name. However, Mendoza refused to sign the required authority to sell or special
power of attorney unless Sime Darby paid him the amount ofP300,000, claiming that this
represented his unpaid separation benefits. As a result, the sale did not push through and Sime
Darby was compelled to return the payment to the prospective buyer.
On 13 September 2005, Sime Darby filed a complaint 10 for damages with writ of preliminary
injunction against Mendoza with the Regional Trial Court (RTC) of Makati City. On 15 November
2005, Mendoza filed an Answer alleging ownership of the club share. On 3 January 2006, the RTC
denied Sime Darbys prayer for restraining order and preliminary injunction. On 30 April 2007, the
trial court rendered a Decision in favor of Sime Darby. Mendoza filed an appeal with the Court of
Appeals. On 30 March 2012, the appellate court reversed the ruling of the trial court. Hence, the
instant petition.
The Issues
The issues for our resolution are: (1) whether Sime Darby is entitled to damages and injunctive relief
against Mendoza, its former employee; and (2) whether the appellate court erred in declaring that
Mendoza is the owner of the club share.
The Courts Ruling
The petition has merit.
In the present case, petitioner Sime Darby has sufficiently established its right over the subject club
share. Sime Darby presented evidence that it acquired the Class "A" club share of ACC in 1987
through a Deed of Sale. Being a corporation which is expressly disallowed by ACCs By-Laws to

acquire and register the club share under its name, Sime Darby had the share registered under the
name of respondent Mendoza, Sime Darbys former sales manager, under a trust arrangement.
Such fact was clearly proved when in the application form 17 dated 17 July 1987 of the ACC for the
purchase of the club share, Sime Darby placed its name in full as the owner of the share and
Mendoza as the assignee of the club share. Also, in connection with the application for membership,
Sime Darby sent a letter18 dated 17 September 1987 addressed to ACC confirming that "Mendoza,
as Sime Darbys Sales Manager, is entitled to club membership benefit of the Company."
Even during the trial, at Mendozas cross-examination, Mendoza identified his signature over the
printed words "name of assignee" as his own and when confronted with his Reply-Affidavit, he did
not refute Sime Darbys ownership of the club share as well as Sime Darbys payment of the monthly
billings from the time the share was purchased. 19 Further, Mendoza admitted signing the club share
certificate and the assignment of rights, both in blank, and turning it over to Sime Darby. Clearly,
these circumstances show that there existed a trust relationship between the parties.
While the share was bought by Sime Darby and placed under the name of Mendoza, his title is only
limited to the usufruct, or the use and enjoyment of the clubs facilities and privileges while employed
with the company. In Thomson v. Court of Appeals, 20 we held that a trust arises in favor of one who
pays the purchase price of a property in the name of another, because of the presumption that he
who pays for a thing intends a beneficial interest for himself. While Sime Darby paid for the purchase
price of the club share, Mendoza was given the legal title. Thus, a resulting trust is presumed as a
matter of law. The burden then shifts to the transferee to show otherwise.
Mendoza, as the transferee, claimed that he only signed the assignment of rights in blank in order to
give Sime Darby the right of first refusal in case he decides to sell the share later on. A right of first
refusal, in this case, would mean that Sime Darby has a right to match the purchase price offer of
Mendozas prospective buyer of the club share and Sime Darby may buy back the share at that
price. However, Mendozas contention of the right of first refusal is a self-serving statement. He did
not present any document to show that there was such an agreement between him and the
company, not even an acknowledgment from Sime Darby that it actually intended the club share to
be given to him as a reward for his performance and past service.
It can be gathered then that Sime Darby did not intend to give up its beneficial interest and right over
the share. The company merely wanted Mendoza to hold the share in trust since Sime Darby, as a
corporation, cannot register a club share in its own name under the rules of the ACC. At the same
time, Mendoza, as a senior manager of the company, was extended the privilege of availing a club
membership, as generously practiced by Sime Darby.
1wphi1

However, Mendoza violated Sime Darbys beneficial interest and right over the club share after he
was informed by Atty. Ronald E. Javier of Sime Darbys plan to sell the share to an interested buyer.
Mendoza refused to give an authorization to sell the club share unless he was paid P300,000
allegedly representing his unpaid retirement benefit. In August 2004, Mendoza tried to appropriate
the club share and demanded from ACC that he be recognized as the true owner of the share as the
named member in the stock certificate as well as in the annual report issued by ACC. Despite being
informed by Sime Darby to stop using the facilities and privileges of the club share, Mendoza
continued to do so. Thus, in order to prevent further damage and prejudice to itself, Sime Darby
properly sought injunction in this case.

CHU JR V CAPARAS G.R. No. 175428April 15, 2013

FACTS: At the root of the case is a parcel of land located at Maguyam, Silang, Cavite, originally owned
and registered in the name of Miguela Reyes. The petitioners filed a complaint to recover possession of
the subject property against the respondents, with a prayer to annul the sale of the subject property
executed between the respondents. In the complaint, the petitioners alleged that they are the successorsin-interest of Miguela over the subject property, which Caparas held in trust for Miguela. The petitioners
also averred that the subject property was erroneously included in the sale of land between the
respondents.
The petitioners evidence showed that the subject property was previously part of the tract of land owned
by Miguela at Maguyam, Silang, Cavite. Miguela sold to Caparas the eastern portion of the land. Miguela
retained for herself the rest of the subject property, located at the western portion of the original property.
Further, the deed of conveyance executed between Miguela and Caparas described the boundaries of the
parcel of land purchased by Caparas as: "sa ibaba ay Faustino Amparo, sa silangan ay Silang at Carmona
boundary, sa ilaya ay Aquilino Ligaya, at sa kanluran ay ang natitirang lupa ni Miguela Reyes."
The petitioners asserted that more than fourteen years later, Caparas caused the preparation of a
consolidated survey plan (Caparas survey plan) under her name for several parcels of land (consolidated
parcels of land) located at Silang-Carmona, Cavite, with a total land area of 40,697 square meters. Under
the Caparas survey plan, the parcel of land supposedly retained by Miguela was erroneously transferred to
the eastern portion of the original land and now allegedly owned by Caparas.
The petitioners also alleged that Caparas sold to the spouses Perez the consolidated parcels of land in a
deed. Considering the alleged error in the Caparas survey plan, the petitioners demanded the
reconveyance of the subject property from Caparas and the spouses Perez, who refused to reconvey the
subject property.
After an ex parte hearing, the RTC ruled in the petitioners favor.12 The RTC, however, refused to
approve, for lack of authority, the new survey plan for the subject property13 that the petitioners
submitted.
The spouses Perez averred that the parcel of land sold to the petitioners was not the subject property
whose title had been confirmed in their (spouses Perezs) names. In the alternative, the spouses Perez
claimed that they bought the subject property in good faith and for value and had been in open,
continuous, public and adverse possession of it since 1991.
ISSUE:

Whether or not the parcel of land sold to the petitioners is the subject property included in
the consolidated parcels of land sold to the spouses Perez.

HELD/RATIO:

NO. The petitioners action against Caparas and the spouses Perez for reconveyance,
based on trust, must fail for lack of basis. An action for reconveyance is a legal and

equitable remedy that seeks to transfer or reconvey property, wrongfully registered in

another persons name, to its rightful owner. To warrant reconveyance of the land, the
plaintiff must allege and prove, among others, ownership of the land in dispute and the
defendants erroneous, fraudulent or wrongful registration of the property.
In the present petition, the petitioners failed to prove that the parcel of land they owned was the
subject property. Logically, there is nothing to reconvey as what the spouses Perez registered in their
names did not include the parcel of land which the petitioners, by their evidence, own.
We also see no trust, express or implied, created between the petitioners and the spouses Perez over
the subject property. A trust by operation of law is the right to the beneficial enjoyment of a property
whose legal title is vested in another. A trust presumes the existence of a conflict involving one and
the same property between two parties, one having the rightful ownership and the other holding the
legal title. There is no trust created when the property owned by one party is separate and distinct
from that which has been registered in anothers name.
In this case, the Caparas survey plan and the deed of sale between the petitioners and Miguela showed
that the parcel of land sold to the petitioners is distinct from the consolidated parcels of land sold by
Caparas to the spouses Perez.
Even granting that the Caparas survey plan did erroneously switch the positions of the petitioners and
the spouses Perezs respective landholdings, we agree with the RTC that reconveyance was still an
inappropriate remedy. The petitioners recourse should have been to file the proper action before the
Department of Environment and Natural Resources-Land Management Bureau for the cancellation of
the Caparas survey plan and for the approval of a new survey plan that correctly reflects the position
of their respective landholdings. For until the Caparas survey plan has been cancelled, the petitioners
claim of encroachment has no basis.
Another perspective, too, that must be considered is Miguelas act in selling to the petitioners Lot No.
3 using the Caparas survey plan, which can be regarded as a ratification of any perceived error under
the circumstances.
On November 10, 1995, the petitioners filed a complaint to recover possession of the subject
property5 against the respondents, with a prayer to annul the sale of the subject property executed
between the respondents. In the complaint, the petitioners alleged that they are the successors-ininterest of Miguela over the subject property, which Caparas held in trust for Miguela. The petitioners
also averred that the subject property was erroneously included in the sale of land between the
respondents.
The respondents failed to file an answer to the complaint and were declared in default. The RTC
thus allowed the petitioners to present their evidence ex parte against the respondents.
The petitioners evidence showed that the subject property was previously part of the 51,151-square
meter tract of land owned by Miguela at Maguyam, Silang, Cavite. On July 5, 1975, Miguela sold to
Caparas 25,000 square meters of the eastern portion of the 51,151-square meter tract of land.
Miguela retained for herself the balance (or 26, 151 square meters) of the subject property, located
at the western portion of the original 51,151-square meter property. Further, the deed of conveyance

executed between Miguela and Caparas, entitled "Kasulatan ng Tuluyang Bilihan ng

Lupa,"6 described the boundaries of the parcel of land purchased by Caparas as: "sa ibaba ay
Faustino Amparo, sa silangan ay Silang at Carmona boundary, sa ilaya ay Aquilino Ligaya, at sa
kanluran ay ang natitirang lupa ni Miguela Reyes."7
The petitioners asserted that more than fourteen (14) years later, Caparas caused the preparation of
a consolidated survey plan8 (Caparas survey plan) under her name for several parcels of land
(consolidated parcels of land) located at Silang-Carmona, Cavite, with a total land area of 40,697
square meters. Under the Caparas survey plan, the parcel of land supposedly retained by Miguela
was erroneously transferred to the eastern portion of the original 51,151-square meter tract of land.
As a result of the error, the subject property was included in the consolidated parcels of land owned
by Caparas. The petitioners asserted that Caparas admitted the wrongful inclusion of the subject
property owned by Miguela in the consolidated parcels of land through Caparas "Sinumpaang
Salaysay ng Pagpapatotoo"9 dated August 27, 1990.
The petitioners also alleged that on November 8, 1991, Caparas sold to the spouses Perez the
consolidated parcels of land in a deed entitled "Kasulatan ng Bilihang Tuluyan." The petitioners
claimed that included in the aforesaid sale was a parcel of land with boundary description similar to
the 25,000-square meter parcel of land sold by Miguela to Caparas.
According to the petitioners, Miguela, on July 24, 1994, sold the subject property to the
petitioners10 for which they (the petitioners) secured a tax declaration (TD No. 22477A).11 Considering the alleged error in the Caparas survey plan, the petitioners demanded the
reconveyance of the subject property from Caparas and the spouses Perez, who refused to
reconvey the subject property.
After an ex parte hearing, the RTC ruled in the petitioners favor. 12 The RTC, however, refused to
approve, for lack of authority, the new survey plan for the subject property 13 that the petitioners
submitted.
The spouses Perez filed a petition for relief from judgment 14 on the ground of excusable negligence.
The spouses Perez averred that the parcel of land sold to the petitioners was not the subject
property whose title had been confirmed in their (spouses Perezs) names. 15 In the alternative, the
spouses Perez claimed that they bought the subject property in good faith and for value and had
been in open, continuous, public and adverse possession of it since 1991.
The Issue
In sum, the core issue for determination is: whether the parcel of land sold to the petitioners is the
subject property included in the consolidated parcels of land sold to the spouses Perez.
The Courts Ruling
In the present petition, the petitioners failed to prove that the parcel of land they owned was the
subject property. Logically, there is nothing to reconvey as what the spouses Perez registered in their
names did not include the parcel of land which the petitioners, by their evidence, own.
We also see no trust, express or implied, created between the petitioners and the spouses Perez
over the subject property. A trust by operation of law is the right to the beneficial enjoyment of a
property whose legal title is vested in another.37 A trust presumes the existence of a conflict involving

one and the same property between two parties, one having the rightful ownership and the other
holding the legal title. There is no trust created when the property owned by one party is separate
and distinct from that which has been registered in anothers name.
In this case, the Caparas survey plan and the deed of sale between the petitioners and Miguela
showed that the parcel of land sold to the petitioners is distinct from the consolidated parcels of land
sold by Caparas to the spouses Perez.
Although we are aware of an apparent discrepancy between the boundary description of the parcel
of land described in the "Kasulatan ng Tuluyang Bilihan ng Lupa" executed between Caparas and
Miguela, the "Kasulatan ng Tuluyang Bilihan ng Lupa" executed between Caparas and the spouses
Perez, and Caparas TD on the one hand, and the boundary description of the consolidated parcels
of land stated in the Caparas survey plan and the spouses Perezs title on the other hand, we find
the discrepancy more imagined than real. This perceived discrepancy does not help the petitioners
cause in light of the evidence that the deed of sale between the petitioners and Miguela used the
Caparas survey plan that clearly identified the parcel of land sold to them was different from the
subject property.

G.R. No. 182177

March 30, 2011

RICHARD JUAN, Petitioner, vs. GABRIEL YAP, SR., Respondent.

The Facts
On 31 July 1995, the spouses Maximo and Dulcisima Caeda (Caeda spouses) mortgaged to
petitioner Richard Juan (petitioner), employee and nephew of respondent Gabriel Yap, Sr.
(respondent), two parcels of land in Talisay, Cebu to secure a loan of P1.68 million, payable within
one year. The Contract was prepared and notarized by Atty. Antonio Solon (Solon).
On 30 June 1998, petitioner, represented by Solon, sought the extrajudicial foreclosure of the
mortgage. Although petitioner and respondent participated in the auction sale, the properties were
sold to petitioner for tendering the highest bid of P2.2 million.3 No certificate of sale was issued to
petitioner, however, for his failure to pay the sales commission. 4
On 15 February 1999, respondent and the Caeda spouses executed a memorandum of agreement
(MOA) where (1) the Caeda spouses acknowledged respondent as their "real mortgagee-creditor x
x x while Richard Juan [petitioner] is merely a trustee" 5 of respondent; (2) respondent agreed to allow
the Caeda spouses to redeem the foreclosed properties for P1.2 million; and (3) the Caeda
spouses and respondent agreed to initiate judicial action "either to annul or reform the [Contract] or
to compel Richard Juan to reconvey the mortgagees rights" 6 to respondent as trustor. Three days
later, the Caeda spouses and respondent sued petitioner in the Regional Trial Court of Cebu City
(trial court) to declare respondent as trustee of petitioner vis a vis the Contract, annul petitioners bid
for the foreclosed properties, declare the Contract "superseded or novated" by the MOA, and require
petitioner to pay damages, attorneys fees and the costs. The Caeda spouses consigned with the
trial court the amount of P1.68 million as redemption payment.

In his Answer, petitioner insisted on his rights over the mortgaged properties. Petitioner also
counterclaimed for damages and attorneys fees and the turn-over of the owners copy of the titles
for the mortgaged properties.
The Ruling of the Trial Court
The trial court ruled against respondent and his co-plaintiffs and granted reliefs to petitioner by
declaring petitioner the "true and real" mortgagee, ordering respondent to pay moral damages and
attorneys fees, and requiring respondent to deliver the titles in question to petitioner.7
Ruling of the Court of Appeals
The CA granted the petition, set aside the trial courts ruling, declared respondent the Contracts
mortgagee, directed the trial court to release the redemption payment to respondent, and ordered
petitioner to pay damages and attorneys fees.8
The Issues
The petition raises the following questions:
1. Whether an implied trust arose between petitioner and respondent, binding petitioner to
hold the beneficial title over the mortgaged properties in trust for respondent; and
2. Whether respondent is entitled to collect damages.
The Ruling of the Court
We hold in the affirmative on both questions, and thus affirm the CA.
Conflicting
Rule 45 Review

Rulings

Below

Justify

The question of the existence of an implied trust is factual, 11 hence, ordinarily outside the purview of
a Rule 45 review of purely legal questions. 12 Nevertheless, our review is justified by the need to
make a definitive finding on this factual issue in light of the conflicting rulings rendered by the courts
below.13
Implied Trust in Mortgage Contracts
An implied trust arising from mortgage contracts is not among the trust relationships the Civil Code
enumerates.14The Code itself provides, however, that such listing "does not exclude others
established by the general law on trust x x x." 15 Under the general principles on trust, equity converts
the holder of property right as trustee for the benefit of another if the circumstances of its acquisition
makes the holder ineligible "in x x x good conscience [to] hold and enjoy [it]." 16 As implied trusts are
remedies against unjust enrichment, the "only problem of great importance in the field of constructive
trusts is whether in the numerous and varying factual situations presented x x x there is a wrongful
holding of property and hence, a threatened unjust enrichment of the defendant." 17
Applying these principles, this Court recognized unconventional implied trusts in contracts involving
the purchase of housing units by officers of tenants associations in breach of their obligations, 18 the
partitioning of realty contrary to the terms of a compromise agreement, 19 and the execution of a sales

contract indicating a buyer distinct from the provider of the purchase money.20 In all these cases, the
formal holders of title were deemed trustees obliged to transfer title to the beneficiaries in whose
favor the trusts were deemed created. We see no reason to bar the recognition of the same
obligation in a mortgage contract meeting the standards for the creation of an implied trust.