Morales v. CA G.R. No.

117228 1 of 15

Republic of the Philippines

SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 117228 June 19, 1997
RODOLFO MORALES, represented by his heirs, and PRISCILA MORALES, petitioners,
vs.
COURT OF APPEALS (Former Seventeenth Division), RANULFO ORTIZ, JR., and ERLINDA ORTIZ,
respondents.
DAVIDE, JR., J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners urge this Court to reverse
the 20 April 1994 decision of the Court of Appeals (Seventeenth Division) in CA-G.R. CV No. 34936, which
affirmed in toto the 26 August 1991 decision of the Regional Trial Court of Calbayog City in Civil Case No. 265.
Civil Case No. 265 was an action for recovery of possession of land and damages with a prayer for a writ of
preliminary mandatory injunction filed by private respondents herein, spouses Ranulfo Ortiz, Jr. and Erlinda Ortiz,
against Rodolfo Morales. The complaint prayed that private respondents be declared the lawful owners of a parcel
of land and the two-storey residential building standing thereon, and that Morales be ordered to remove whatever
improvements he constructed thereon, vacate the premises, and pay actual and moral damages, litigation expenses,
attorney's fees and costs of the suit.
On 2 February 1988, Priscila Morales, one of the daughters of late Rosendo Avelino and Juana Ricaforte, filed a
motion to intervene in Case No. 265. No opposition thereto having been filed, the motion was granted on 4 March
1988.
On 30 November 1988 Rodolfo Morales passed away. In its order of 9 February 1989 the trial court allowed his
substitution by his heirs, Roda, Rosalia, Cesar and Priscila, all surnamed Morales. Thereafter, pre-trial and trial on
the merits were had and the case was submitted for decision on 16 November 1990.
On 26 August 1991 the Trial Court rendered its decision in favor of plaintiffs, private respondents herein, the
dispositive portion of which reads as follows:
WHEREFORE, judgment is hereby rendered in favor of the Plaintiffs and against Defendants-
Intervenor:
1. Declaring the Plaintiffs the absolute and rightful owners of the premises in question;
2. Ordering the Defendants-Intervenor to:
a. vacate from the premises in question;
b. remove the beauty shop thereat;
c. jointly and severally, pay the Plaintiffs, a monthly rental of P1,500.00 of the
premises starting from March 1987, and the amounts of P75,000.00 for moral
damages, P5,000.00 for litigation expenses, and P10,000.00 for Attorney's fees; and
Morales v. CA G.R. No. 117228 2 of 15

d. to pay the costs.

The injunction issued in this case is hereby made permanent.
SO ORDERED.
The following is trial court's summary of the evidence for the plaintiffs:
The evidence adduced by the Plaintiffs discloses that the Plaintiffs are the absolute and exclusive
owners of the premises in question having purchased the same from Celso Avelino, evidenced by a
Deed of Absolute Sale (Exh. "C"), a public instrument. They later caused the transfer of its tax
declaration in the name of the female plaintiff (Exh. "I") and paid the realty taxes thereon (Exh. "K"
& series).
Celso Avelino (Plaintiffs' predecessor in interest) purchased the land in question consisting of two
adjoining parcels while he was still a bachelor and the City Fiscal of Calbayog City from Alejandra
Mendiola and Celita Bartolome, through a "Escritura de Venta" (Exh. "B"). After the purchase, he
caused the transfer of the tax declarations of the two parcels in his name (Exhs. "D" & "E to "G" &
"H") as well as consolidated into one the two tax declarations in his name (Exh. "F"). With the
knowledge of the Intervenor and the defendant, (Cross-examination of Morales, t.s.n. pp. 13-14)
Celso Avelino caused the survey of the premises in question, in his name, by the Bureau of Lands
(Exh. "J"). He also built his residential house therein with Marcial Aragon (now dead) as his master
carpenter who was even scolded by him for constructing the ceiling too low.
When the two-storey residential house was finished, he took his parents, Rosendo Avelino and Juana
Ricaforte, and his sister, Aurea, who took care of the couple, to live there until their deaths. He also
declared this residential house in his tax declaration to the premises in question (Exh. "F") and paid
the corresponding realty taxes, keeping intact the receipts which he comes to get or Aurea would go
to Cebu to give it to him (t.s.n. Morales, pp. 4-6).
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.
Inasmuch as the Plaintiffs are the purchasers of the other real properties of Celso Avelino, one of
which is at Acedillo (now Sen. J.D. Avelino) street, 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 Exh. "C" was executed in
their favor.
However, despite due notice from his uncle to vacate the premises in question (Exh. "N"), the
defendant refused to vacate or demolish the beauty shop unless he is reimbursed P35,000.00 for it
although it was valued at less than P5,000.00. So, the Plaintiffs demanded, orally and in writing
(Exhs. "L" & "M") to vacate the premises. The defendant refused.
Morales v. CA G.R. No. 117228 3 of 15

As the plaintiffs were about to undertake urgent repairs on the dilapidated residential building, the
defendant had already occupied the same, taking in paying boarders and claiming already ownership
of the premises in question, thus they filed this case.
Plaintiffs, being the neighbors of Celso Avelino, of their own knowledge are certain that the
premises in question is indeed owned by their predecessor-in-interest because the male plaintiff used
to play in the premises when he was still in his teens while the female plaintiff resided with the late
Judge Avelino. Besides, their inquiries and documentary evidence shown to them by Celso Avelino
confirm this fact. Likewise, the defendant and Intervenor did not reside in the premises in question
because they reside respectively in Brgy. Tarobucan and Brgy. Trinidad (Sabang), both of Calbayog
City with their own residential houses there.
Due to the damages they sustained as a result of the filing of this case, the plaintiffs are claiming
P50,000.00 for mental anguish; monthly rental of the premises in question of P1,500.00 starting
from March 1987; litigation expenses of P5,000.00 and P10,000.00 for Attorney's fees.
The trial court's summary of the evidence for the defendants and intervenor is as follows:
Defendants'-Intervenor's testimonial evidence tend to show that the premises is question (land and
two-storey building) is originally owned by the spouses, Rosendo Avelino and Juana Ricaforte, who,
through their son, Celso Avelino, through an Escritura de Venta (Exh. "2") bought it from the
Mendiolas on July 8, 1948. After the purchase the couple occupied it as owners until they died.
Juana died on May 31, 1965 while Rosendo died on June 4, 1980. Upon their demise, their children:
Trinidad A. Cruz, Concepcion A. Peralta, Priscila A. Morales and Aurea Avelino (who died single)
succeeded as owners thereof, except Celso Avelino who did not reside in the premises because he
was out of Calbayog for more than 30 years until his death in Cebu City.
The premises in question was acquired by Celso Avelino who was entrusted by Rosendo with the
money to buy it. Rosendo let Celso buy it being the only son. The property is in the name of Celso
Avelino and Rosendo told his children about it (TSN, Morales, p. 21). In 1950 Rosendo secured
gratuitous license (Exh. "1") and constructed the two-storey house, having retired as Operator of the
Bureau of Telecommunications, buying lumber from the father of Simplicia Darotel and paying the
wages of Antonio Nartea as a laborer.
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.
Celso Avelino kept the receipts for the realty tax payments of the premises. Sometimes Aurea would
go to Cebu to deliver these receipts to Celso or the latter will come to get them. Rodolfo also gave
some of the receipts to Celso.
The sale of the subject premises to the Plaintiffs is fraudulent because it included her (Intervenor's)
share and the beauty shop of her son, the defendant.
Morales v. CA G.R. No. 117228 4 of 15

As a result of this case she is worried and suffered moral damages, lost her health, lacks sleep and
appetite and should be compensated for P80,000.00 and the expenses for litigation in the amount of
P30,000.00 until the case is finished.
The Intervenor would not claim ownership of the premises if her son, the defendant is not being
made to vacate therefrom by the Plaintiffs.
The trial court reached the aforementioned disposition on the basis of its findings of facts and conclusions, which
we quote:
During the ocular inspection of the premises in question on April 4, 1988, conducted by the Court
upon motion of the parties, the Court found that the two-storey residential building urgently needed
major general repairs and although the bedrooms seemed occupied by lodgers, neither the defendant
nor the Intervernor informed the Court where or in which of the rooms they occupied.
Observing the questioned premises from the outside, it is easily deducible that it has not been
inhabited by a true or genuine owner for a long time because the two-story building itself has been
left to deteriorate or ruin steadily, the paint peeling off, the window shutters to be replaced, the
lumber of the eaves about to fall and the hollow-block fence to be straightened out, a portion along
Umbria street (West) cut in the middle with the other half to the south is tilting while the premises
inside the fence farther from the beauty shop to be cleaned.
From the evidence adduced by the parties, the following facts are undisputed:
1. The identity of the premises in question which is a parcel of land together with the two residential
building standing thereon, located at corner Umbria St. (on the West) and Rosales Blvd. (on the
North), Brgy. Central, Calbayog City, with an area of 318 sq. meters, presently covered by Tax
Declaration No. 47606 in the name of the female Plaintiff and also bounded on the East by lot 03-
002 (1946) and on the South by lot 03-006 (1950);
2. The Deeds of Conveyance of the questioned premises the Escritura de Venta (Exh. "B") from
the Mendiolas to Celso Avelino and the Deed of Sale (Exh. "C") from Celso Avelino to the Plaintiffs
are both public instruments;
3. The couple, Rosendo and Juana Avelino as well as their daughter, Aurea, resided and even died in
the disputed premises;
4. The defendant, Rodolfo Morales, constructed the beauty parlor in the said premises and later
occupied the two-storey residential house;
5. Not one of the children or grandchildren of Rosendo Avelino ever contested the ownership of
Celso Avelino of the disputed premises;
6. There has no extra-judicial-partition effected on the subject property since the death of Rosendo
Avelino although two of the Intervenor's children are full-pledged lawyers;
7. Since the premises in question had been acquired by Celso Avelino, it has been declared in his
name for taxation purposes and the receipts of the realty taxes thereon were kept by him, some were
either delivered to him by Aurea or by defendant; and
Morales v. CA G.R. No. 117228 5 of 15

8. Ever since the Plaintiffs acquired the disputed premises, its tax declaration is now in the name of
the female Plaintiff with the current realty taxes thereon paid by her.
A very careful study and meticulous appraisal of the evidence adduced by both parties and the
applicable laws and jurisprudence show a preponderance of evidence conclusively in favor of the
Plaintiffs, due to the following facts and circumstances, all borne of the record.
One. While Plaintiffs claim of ownership over the premises in question is duly supported by
documentary evidences, such as the Deed of Conveyance (Exhs. "B" and "C"), Tax declarations and
payments of the realty taxes on the disputed property, both as to the land and the two-storey building
(Exhs. "D", "E", "F", "G", "H", and "I" and "K" and series) and the survey plan of the land (Exh.
"J"), Defendants-Intervenor's claim of ownership is based merely on testimonial evidence which is
self-serving and cannot prevail over documentary evidence because it is a settled rule in this
jurisdiction that testimonial evidence cannot prevail over documentary evidence.
Two. While Plaintiffs' evidence of ownership of the disputed premises is clear, positive, categorical
and credible, Intervenor's testimony that the disputed premises was acquired by his brother (p. 16);
that the document of conveyance of the land and the building (p. 14) is in the name of her brother;
that it was surveyed in her brother's name with her knowledge (pp. 13-14); that during the lifetime
of her father the muniments of title of the premises was never transferred in her father's name (pp.
10-11 & 20); that not one of the heirs of Rosendo Avelino ever contested Celso Avelino's ownership
thereof, despite their knowledge (p. 21); that no extra-judicial partition or settlement was instituted
by all the female children of Rosendo Avelino, especially by the Intervenor herself even though two
of her children are full-pledge lawyers (p. 15); and the fact that the Intervenor is not even interested
to see the document of the disputed premises (19), very clearly show that her claim is neither
positive nor categorical but is rather unconvincing.
Three. The foregoing testimony of the Intervenor also show that she is already in laches.
Four. The present condition of the premises, especially the two-storey building which has been left
to deteriorate or ruin steadily clearly betrays or belies Intervenor's pretense of ownership of the
disputed premises.
Five. If the premises in question is really owned in common by the children of Rosendo and Juana
Avelino, why is it that the surviving sisters of the Intervenor did not join her in this case and
intervene to protect their respective interests?
Six. On the witness chair, Intervenor's demeanor and manner of testifying show that she was evasive
and shifty and not direct in her answers to simple questions that she was admonished by the Court
not be evasive and be direct or categorical in her answers; and which rendered her testimony
unworthy of full faith and credit.
Seven. That Plaintiff's predecessor-in-interest is the true and absolute owner of the disputed
premises having purchased it from the Mendiolas while he was the City Fiscal of Calbayog and still
a bachelor and later became an Immigration Officer and later became a CFI (now RTC) Judge when
the two-storey building was constructed by Marcial Aragon, thus he declared both the land and the
residential building in his name, had it surveyed in his name and continuously paid the realty taxes
Morales v. CA G.R. No. 117228 6 of 15

thereon, is more in conformity with common knowledge, experience and belief because it would be
unnatural for a man to continuously pay realty taxes for a property that does not belong to him.
Thus, our Supreme Court, ruled: "Tax receipts are not true evidence of ownership, but no person in
his right mind would continue paying taxes for land which he thinks does not belong to him."
(Ramos vs. Court of Appeals, 112 SCRA 543).
Eight. Intervenor's claim of implied trust is untenable because even from the different cases
mentioned in her Memorandum, it is very apparent that in order for implied trust to exist there must
be evidence of an equitable obligation of the trustee to convey, which circumstance or requisite is
absent in this case. What is instead clear from the evidence is Celso Avelino's absolute ownership of
the disputed property, both as to the land and the residential house (Exh. "F") which was sold to the
Plaintiffs (Exh. "C") while Intervenors self-serving and unconvincing testimony of co-ownership is
not supported by any piece of credible documentary evidence.
On the contrary, the last part of Art. 1448 of Our New Civil Code bolsters Plaintiff's ownership over
the disputed premises. It expressly provides: ". . . 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." (emphasis
supplied).
Finally, from the testimony of the Intervenor (p. 22) the truth is out in that the Intervenor is putting
up her pretense of ownership over the disputed premises only when the defendant was being advised
to vacate and only to shield him from vacating therefrom. Thus, on question of the Court, she
declared:
Q When your father died, as a co-owner were you not interested to look at the
document so that you can lawfully claim, act as owner of that land?
A We just claim only when my son, Rodolfo was driven by the Plaintiff.
Q In other words what you are saying is that if your son was not dispossessed of the
property in question, you would not claim ownership?
A No, sir.
In her Memorandum, Intervenor raises the issue whether or not the plaintiffs are entitled to the
damages being claimed which were duly supported or proven by direct evidence.
On this particular issue, the Plaintiffs' evidence has established that before the Plaintiffs paid the
purchase price of the premises in question, they talked with the defendant about the intended sale
and the latter even encouraged them to purchase it and that he will vacate the premises as soon as
the payment is made therefore (TSN, Ortiz, Jr., p. 20, April 4, 1988). Hence, they paid the purchase
price and Exh. "C" was duly executed by the owner in their favor. The defendant, however, despite
his encouragement and notice from his uncle to vacate the subject premises (Exh. "N") reneged on
his words and refused to vacate or demolish his beauty shop inside the premises in question unless
he is paid P35,000.00 for it although it is valued at less than P5,000.00.
With that unreasonable demand of the defendant, the plaintiffs demanded, orally and in writing
Morales v. CA G.R. No. 117228 7 of 15

(Exhs. "L" and "M") to vacate the premises. The defendant refused.
Later, as the plaintiffs were about to undertake urgent repairs on the dilapidated residential building
and make it as their residence, they found out that the defendant rather than vacate the premises, had
already occupied the said residential building and admitted lodgers to it (id., p. 24) and claimed
ownership thereof, to the damage, prejudice and injury and mental anguish of the plaintiffs. So, the
plaintiffs, as the true and lawful owners of the premises in question, filed the instant case incurring
expenses in the process as they hired the services of a lawyer to protect their interests from the
willful and wrongful acts or omissions of the defendant.
Dissatisfied with the trial court's decision, defendants heirs of Rodolfo Morales and intervenor Priscila Morales,
petitioners herein, appealed to the Court of Appeals, which docketed the appeal as CA-G.R. CV No. 34936, and in
their Appellant's Brief they assigned the following errors:
1. The RTC erred in ruling that Celso Avelino, appellee's predecessor-in-interest, was the true and
lawful owner of the house and lot in question.
2. . . . in not ruling that Celso Avelino purchased the house and lot in question as a mere trustee,
under an implied trust, for the benefit of the truster, his father, Rosendo Avelino, and the latter's
heirs.
3. . . . in ruling that the Intervenor is barred by laches from asserting her status as a beneficiary of
the aforesaid implied trust.
4. . . . in ruling that Celso Avelino validly sold the house and lot in question to appellees without the
consent of the other heirs of Rosendo Avelino and Juana Ricaforte Avelino.
5. . . in declaring appellees the absolute and rightful owners of the house and lot in question by
virtue of the sale of those properties to them by Celso Avelino.
6. . . . in not ruling that appellants are rightful co-owners and possessors of the house and lot in
question in their capacities as heirs of Rosendo Avelino and Juana Ricaforte Avelino, the true owners
of those properties.
7. . . . in ordering defendants to remove the beauty shop on the disputed land instead of declaring
Rodolfo Morales a builder in good faith and providing for the protection of his rights as such.
8. . . . in ordering appellants to vacate the disputed premises and to pay appellees a monthly rental,
moral damages, litigation expenses, and attorney's fees.
9. . . . in not awarding appellants the damages and costs prayed for in "answer with counterclaim"
and "answer in intervention," considering that the action to dispossess them of the house and land in
question is clearly without legal foundation.
In its decision of 20 April 1994 the Court of Appeals affirmed the decision of the trial court.
Their motion to reconsider the decision having been denied in the resolution of 14 September 1994 for lack of
merit, petitioners filed the instant petition wherein they claim that:
1. Respondent CA erred in adopting the trial court's reasoning that "it would be unnatural for a man
Morales v. CA G.R. No. 117228 8 of 15

to continuously pay realty taxes for a property that does not belong to him" on the basis of a
misreading and misapplication of Ramos v. Court of Appeals, 112 SCRA 543 (1982). Respondent
CA also erred in concluding that the payment of realty taxes is conclusive evidence of ownership,
which conclusion ignores this Honorable Court's rulings in Ferrer-Lopez v. Court of Appeals, 150
SCRA 393 (1987), De Guzman v. Court of Appeals, 148 SCRA 75 (1987), and heirs of Celso
Amarante v. Court of Appeals, 185 SCRA 585 (1990).
2. . . . in relying on Conception Peralta's alleged "Confirmation" (Exhibit O) in ruling that Celso
Avelino (and later the respondents) had exclusive and absolute ownership of the disputed property.
Exhibit O was not identified by the purported affiant at the trial, and was therefore plainly hearsay.
Respondent CA erred in admitting Exhibit O in evidence over the objection of the petitioner's
counsel.
3. . . . in inferring and surmising that Celso Avelino's alleged exclusive ownership of the disputed
property was affirmed by the inaction of his four sisters.
4. . . . in ruling that the petitioners' testimonial evidence could not prevail over the respondent's
evidence for the purpose of establishing the existence of an implied trust. This ruling ignores this
Honorable Court's decision in De Los Santos v. Reyes, 205 SCRA 437 (1992).
5. . . . in ignoring unrebutted evidence on record that Celso Avelino held title to the disputed
property merely as a trustee for his father, mother, and siblings. In so doing, respondent CA: (i)
ignored decided cases where this Honorable Court found the existence of trusts on the bases of
similar evidence, including the cases of Valdez v. Olorga, 51 SCRA 71 (1973), De Buencamino, et
al. v. De Matias, 16 SCRA 849 (1966), Gayos v. Gayos, 67 SCRA 146 (1975), and Custodio v.
Casiano, 9 SCRA 841 (1963); and (ii) refused to apply the clear language of Article 1448 of the
Civil Code.
6. . . . in not ruling that Rodolfo Morales should have at least been regarded as a builder in good
faith who could not be compelled to vacate the disputed property or to pay a monthly rental unless
he was first indemnified for the cost of what he had built. In so doing, respondent CA: (i) refused to
apply the clear language of Articles 448 and 453 of the Civil Code; and (ii) ignored this Honorable
Court's rulings in Municipality of Oas v Roa, 7 Phil. 20 (1906) Merchant v. City of Manila, 11 Phil.
116 (1908), Martinez v. Baganus, 28 Phil. 500 (1914), Grana v. Court of Appeals, 109 Phil. 260
(1960), and Miranda v. Fadullon, 97 Phil. 810 (1955).
7. . . . in affirming the Trial Court's award of damages in favor of the respondents. In so doing,
respondent CA: (i) misapplied Articles 2199, 2208, 2219, and 2220 of the Civil Code; and (ii)
ignored this Honorable Court's ruling in San Miguel Brewery, Inc. v. Magno, 21 SCRA 292 (1967).
8. . . . in refusing to rule that the respondents are liable to petitioners for moral damages, and
attorney's fees and costs of litigation. In so doing, respondent CA ignored unrebutted evidence on
record and Articles 2208, 2217, and 2219 of the Civil Code.
On 13 September 1995, after the filing of private respondent's comment on the petition and petitioner's reply
thereto, we resolved to deny the petition for failure of petitioners to sufficiently show that the respondent Court of
Appeals committed reversible error.
Morales v. CA G.R. No. 117228 9 of 15

Undaunted, petitioners on 17 October 1995 filed a motion for reconsideration of our resolution of 13 September
1995 based on the following grounds:
1. The Honorable Court erred in not ruling that at the very least, Rodolfo Morales should have been
considered a builder in good faith who could not be compelled to vacate the disputed property or to
pay monthly rental unless he was first indemnified for the cost of what he had built.
2. . . . in not ruling that the Court of Appeals and the Trial Court gravely misapplied the law in ruling
that there was no implied trust over the premises.
3. . . . in not ruling that the Court of Appeals and the Trial Court gravely misapplied the law in
awarding damages to the respondents.
We required respondents to comment on the motion for reconsideration; however it was not until 1 July 1996 and
after we required their counsel to show cause why he should not be disciplinarily dealt with for failure to file
comment when said counsel filed the comment by mail. Upon prior leave of court, petitioners filed a reply to the
comment.
On 19 August 1996 we granted petitioners' motion for reconsideration and required the parties to submit their
respective memoranda. Petitioners and private respondents submitted their memoranda on 4 and 28 October 1996,
respectively.
The grant of the motion for reconsideration necessarily limits the issues to the three grounds postulated in the
motion for reconsideration, which we restate as follows:
1. Did Celso Avelino purchase the land in question from the Mendiolas on 8 July 1948 as a mere
trustee for his parents and siblings or, simply put, is the property the former acquired a trust
property?
2. Was Rodolfo Morales a builder in good faith?
3. Was there basis for the award of damages, attorney's fees and litigation expenses to the private
respondents?
We shall discuss these issues in seriatim.
I
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:
1. It is a relationship;
2. it is a relationship of fiduciary character;
3. it is a relationship with respect to property, not one involving merely personal duties;
4. 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
5. it arises as a result of a manifestation of intention to create the relationship.
Morales v. CA G.R. No. 117228 10 of 15

Trusts are either express or implied. Express trusts are created by the intention of the trustor or of the parties, while
implied trusts come into being by operation of law, either through implication of an intention to create a trust as a
matter of law or through the imposition of the trust irrespective of, and even contrary to, any such intention. In
turn, implied trusts are either resulting or constructive trusts. Resulting trusts are based on the equitable doctrine
that valuable consideration and not legal title determines the equitable title or interest and are presumed always to
have been contemplated by the parties. They arise from the nature or circumstances of the consideration involved
in a transaction whereby one person thereby becomes invested with legal title but is obligated in equity to hold his
legal title for the benefit of another. On the other hand, constructive trusts are created by the construction of equity
in order to satisfy the demands of justice and prevent unjust enrichment. They arise contrary to intention against
one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in
equity and good conscience, to hold.
A 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.
The trust created under the first sentence of Article 1448 is sometimes referred to as a purchase money
resulting trust. The trust is created in order to effectuate what the law presumes to have been the intention
of the parties in the circumstances 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 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.
There are recognized exceptions to the establishment of an implied resulting trust. The first is stated in the last part
of Article 1448 itself. Thus, where A pays the purchase money and title is conveyed by absolute deed to A's child or
to a person to whom A stands in loco parentis and who makes no express promise, a trust does not result, the
presumption being that a gift was intended. Another exception is, of course, that in which an actual contrary
intention is proved. Also 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 who is guilty of the fraud.
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. Trustworthy evidence is required because oral evidence
can easily be fabricated.
In the instant case, petitioners' theory is that Rosendo Avelino owned the money for the purchase of the property
and he requested Celso, his son, to buy the property allegedly in trust for the former. The fact remains, however,
that title to the property was conveyed to Celso. Accordingly, the situation is governed by or falls within the
Morales v. CA G.R. No. 117228 11 of 15

exception under the third sentence of Article 1448, which for convenience we quote:
. . . 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. (Emphasis supplied).
On this basis alone, the case for petitioners must fall. The preponderance of evidence, as found by the trial
court and affirmed by the Court of Appeals, established positive acts of Celso Avelino indicating, without
doubt, that he considered the property he purchased from the Mendiolas as his exclusive property. He had
its tax declaration transferred in his name, caused the property surveyed for him by the Bureau of Lands,
and faithfully paid the realty taxes. Finally, he sold the property to private respondents.
The theory of implied trust with Celso Avelino as the truster and his parents Rosendo Avelino and Juan Ricaforte as
trustees is not even alleged, expressly or impliedly, in the verified Answer of Rodolfo Morales nor in the Answer in
Intervention of Priscila A. Morales. In the former, Rodolfo alleged that:
A. [T]he lot and the two-storey building in question . . . which are actually possessed by Rodolfo
Morales, defendant herein, and by his parents Priscila A. Morales and Cesar Morales and
consequently, the ones now in litigation in the above-entitled case, were originally and exclusively
owned and possessed by his grandparents-Rosendo Avelino and Juana Ricaforte;
B. [S]laid lot, together with an old house then thereon, were (sic) acquired by said couple
Rosendo Avelino and Juana Ricaforte on July 8, 1948, which they right away possessed
exclusively in the concept of owner;
Priscila, on her part, merely reiterated the foregoing allegations in subparagraphs A and B of paragraph 2 of
her Answer in Intervention.
Rodolfo and Priscila likewise even failed to suggest in their respective Special and Affirmative Defenses that Celso
Avelino held the property in trust despite Rodolfo's claim that:
4. [T]he alleged sale by Celso Avelino alone of the properties in question in favor of plaintiff Erlinda
Ortiz and the alleged TD-47606 in the name of Erlinda Ortiz, were clandestine, fraudulent, null and
void because, first, said documents cover the entire properties in question of the late Rosendo
Avelino and Juana Ricaforte; second, only Celso Avelino sold the entire properties, without the
knowledge and consent of said Priscila A. Morales, Trinidad A. Cruz and Concepcion E. Peralta
children and heirs of said Rosendo Avelino and Juana Ricaforte; and, third, said documents were
also made without the knowledge and consent of defendant Rodolfo Morales who has prior and
legal possession over the properties in question and who is a builder in good faith of the shop
building thereon.
Not surprisingly, Priscila merely restated these allegations in paragraph 2 of her Special and Affirmative
Defenses. If truly they were convinced that Celso Avelino acquired the property in trust for his parents, it
would have been far easier for them to explicitly state such fact.
The separate Answers of Rodolfo and Priscila do not likewise allege that Celso Avelino committed any breach of
the trust by having the property declared in his name and paying the realty taxes thereon and by having the lot
surveyed by the Bureau of Lands which gave it a lot number: Lot 1949. Even more telling is that in the Pre-Trial
Morales v. CA G.R. No. 117228 12 of 15

Order of the trial court, petitioners did not claim the existence of an implied trust; the parties merely agreed that the
main issues were:
a. Who is the owner of the premises in question?
b. Who is entitled to the possession thereof?
Yet, petitioners now want us to reverse the rulings of the courts below that Celso Avelino was the absolute and
exclusive owner of the property in question, on strength of, primarily, their "implied trust" theory. The problem
with petitioners is that they entirely forgot that the trial court and the Court of Appeals did not base their rulings on
this alone. As shown earlier, the trial court pointed out numerous other flaws in petitioners' theory, such as laches.
Then, too, the rule is settled that the burden of proving the existence of a trust is on the party asserting its existence
and that such proof must be clear and satisfactory. As to that, petitioners relied principally on testimonial evidence.
It is, of course, doctrinally entrenched that the evaluation of the testimony of witnesses by the trial court is received
on appeal with the highest respect, because it is the trial court that has the direct opportunity to observe them on the
stand and detect if they are telling the truth or lying through their teeth. The assessment is accepted as correct by
the appellate court and binds it, absent a clear showing that it was reached arbitrarily. In this case, petitioners failed
to assail, much less overcome, the following observation of the trial court:
Six. On the witness chair, Intervenor's demeanor and manner of testifying show that she was evasive
and shifty and not direct in her answers to simple questions that she was admonished by the Court
not to be evasive and direct and categorical in her answers; and which rendered her testimony
unworthy of full faith and credit.
Likewise fatal to petitioners' cause is that Concepcion Peralta's sworn Confirmation dated 14 May 1987 cannot be
considered hearsay evidence due to Concepcion's failure to testify. On the contrary, it is an exception to the hearsay
rule under Section 38 of Rule 130 of the Rules of Court, it having been offered as evidence of an act or declaration
against interest. As declarant Concepcion was a daughter of Rosendo Avelino and Juana Ricaforte, and a sister of
Celso Avelino and intervenor Priscila Morales, Concepcion was thus a co-heir of her siblings, and would have had
a share, equal to that of each of her co-heirs, in the estate of Rosendo and Juana. However, Concepcion explicitly
declared therein thus:
That my aforenamed brother [Celso Avelino], during the time when he was City Fiscal of Calbayog
City and still a bachelor, out of his own money, bought the parcels of land located at corner Umbria
Street and Rosales Blvd., Brgy. Central, Calbayog City, from Culets Mendiola de Bartolome and
Alejandra Fua Mendiola by virtue of a Deed of Sale entered as Doc. No. 37; Page No. 20; Book No.
XI; Series of 1948 in the Notarial Book of Atty. Celedonio Alcazar, Notary Public of Calbayog,
Samar; Likewise, out of his own money, he constructed a residential building on the lot which
building is made of strong materials.
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. Petitioners, realizing that the Confirmation was admissible, attempted to
cushion its impact by offering in evidence as Exhibit "4" Concepcion's affidavit, dated 16 June 1987,
wherein Concepcion stated:
3. The property in question (particularly the house), however forms part of the state of our deceased
Morales v. CA G.R. No. 117228 13 of 15

parents, and, therefore, full and complete conveyance of the right, title and interest in and to such
property can only be effected with the agreement of the other heirs, namely, my sisters Trinidad A.
Cruz and Priscila A. Morales, and myself.
Note that Concepcion seemed to be certain that only the house formed part of the estate of her deceased
parents. In light of the equivocal nature of Concepcion's later affidavit, the trial court and the Court of
Appeals did not then err in giving more weight to Concepcion's earlier Confirmation.
At bottom, the crux of the matter is whether petitioners discharged their burden to prove the existence of an
implied trust. We rule in the negative. Priscila's justification for her and her sisters' failure to assert co-ownership of
the property based on the theory of implied trust is, to say the least, flimsy. In light of their assertion that Celso
Avelino did not have actual possession of the property because he "was away from Calbayog continuously for
more than 30 years until he died on October 31, 1987, and the established fact that the tax declarations of the
property were in Celso's name and the latter paid the realty taxes thereon, there existed no valid and cogent reason
why Priscila and her sisters did not do anything to have their respective shares in the property conveyed to them
after the death of Rosendo Avelino in 1980. Neither is there any evidence that during his lifetime Rosendo
demanded from Celso that the latter convey the land to the former, which Rosendo could have done after Juana's
death on 31 May 1965. This omission was mute and eloquent proof of Rosendo's recognition that Celso was the
real buyer of the property in 1948 and the absolute and exclusive owner thereof.
II
Was Rodolfo Morales a builder in good faith? Petitioners urge us to so rule and apply Article 448 of the Civil
Code, which provides:
The owner of the land on which anything has been built, sown or planted in good faith, shall have
the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to
buy the land if its value is considerably more than that of the building or trees. In such case, he shall
pay reasonable rent, if the owner of the land does not choose to appropriate the building or trees
after proper indemnity. The parties shall agree upon the terms of the lease and in case of
disagreement, the court shall fix the terms thereof.
Clearly, Article 448 applies only when the builder, planter or sower believes he has the right to so build, plant or
sow because he thinks he owns the land or believes himself to have a claim of title. In the instant case Rodolfo
Morales knew from the very beginning that he was not the owner of the land. He alleged in his answer that the land
was acquired by his grandparents Rosendo Avelino and Juana Ricaforte and he constructed the shop building in
1979 "upon due permission and financial assistance from his mother, Priscila A. Morales and from his aunts
Trinidad A. Cruz and Concepcion A. Peralta . . . , with the knowledge and consent of his uncle Celso Avelino.
Petitioners, however, contend that:
Even assuming the argument that Rodolfo Morales was a builder in bad faith because he was aware of Celso
Avelino's supposed exclusive ownership of the land, still, however, the unrebutted evidence shows that Celso
Avelino consented to Rodolfo Morales' construction of the beauty shop on the land. TSN, April 4, 1988, p. 40;
TSN, April 4, 1988, p. 40; TSN, October 19, 1990, p. 21. Under Article 453 of the Civil Code, such consent is
Morales v. CA G.R. No. 117228 14 of 15

considered bad faith on the part of the landowner. In such a case, the rights of the landowner and the builder shall
be considered as though both acted in good faith.
This so-called unrebutted testimony was rejected by the courts below, and with good reason. First, it was clearly
self-serving and inconsistent with petitioners' vigorous insistence that Celso Avelino was away from Calbayog City
continuously for more than 30 years until he died on October 31, 1987." The circumstances of when and where
allegedly the consent was given are unclear. Second, only Celso Avelino could have rebutted it; but the testimony
was given after Avelino's death, thus forever sealing his lips. Reason and fairness demand that the attribution of an
act to a dead man must be viewed with utmost caution. Finally, having insisted with all vigor that the land was
acquired by Rosendo Avelino and Juanita Ricaforte, it would be most unlikely that Rodolfo would have taken the
trouble of securing Celso's consent, who had been "continuously away from Calbayog City for more than 30
years," for the construction of the shop building.
III
We cannot however give our affirmance to the awards of moral damages, attorney's fees and litigation expenses.
Pursuant to Article 2217 of the Civil Code, moral damages, which include physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury may be recovered in the cases enumerated in Article 2219 and 2220 of the same Code. For moral damages to
be recovered, it must be shown that they are the proximate result of the defendant's wrongful act or omission in the
cases provided for in Articles 2219 and 2220, i.e., it must be shown that an injury was suffered by the claimant and
that such injury sprang from any of the cases stated in Articles 2219 and 2220. Moral damages are emphatically not
intended to enrich a plaintiff at the expense of the defendant. They are awarded only to enable the injured party to
obtain means, diversion, or amusements that will serve to alleviate the moral sufferings he underwent, by reason of
the defendant's culpable action and must, perforce, be proportionate to the suffering inplicted. In the same vein,
moral damages must be understood to be in concept of grants, not punitive or corrective in nature, calculated to
compensate the claimant for the injury suffered.
In the instant case, the private respondents have not convincingly shown that they suffered "mental anguish" for
certain acts of herein petitioner which fell under any of the cases enumerated in Articles 2219 and 2220 of the Civil
Code. However, the trial court invoked Articles 19, 20, 21, 2217, 2219, 2220 to support the award for moral
damages. Article 2220 is definitely inapplicable since this is not a case of willful injury to property or breach of
contract.
The attendant circumstances in this case also reject the application of Articles 19, 20 and 21 of the Chapter on
Human Relations of the Civil Code.
Accordingly, for lack of factual and legal basis, the award of moral damages must be set aside.
For the same reason the award of attorney's fees and litigation expenses must suffer the same fate. The award of
attorney's fees is the exception rather than the rule and counsel's fees are not to be awarded every time a party wins
a suit. The power of the court to award attorney's fees under Article 2208 of the Civil Code demands factual, legal
and equitable justification; its basis cannot be left to speculation and conjecture. The general rule is that attorney's
fees cannot be recovered as part of damages because of the policy that no premium should be placed on the right to
litigate.
WHEREFORE, premises considered, except as to the award of moral damages, attorney's fees and litigation
Morales v. CA G.R. No. 117228 15 of 15

expenses which are hereby DELETED, the judgment of the respondent Court of Appeals is AFFIRMED.
Cost against petitioners.
SO ORDERED.
Narvasa, C.J., Melo, and Panganiban, JJ., concur.
Francisco, J., is on leave.