PHILIPPINE NATIONAL BANK vs.

COURT OF APPEALS
G.R. No. 97995 - January 21, 1993

FACTS:
B. P. Mata & Co. Inc. (Mata), is a private corporation engaged in providing goods and
services to Star Kist Foods, Inc. As part of their agreement, Mata makes advances for the
crew’s expenses, which Star Kist reimburses by telegraphic transfer through banks.

On Feb 21, 1976, SEPAC of Los Angeles, which had an arrangement with PNB,
transmitted a cable message to PNB to pay $14,000 to Mata’s account with Insular Bank
of Asia and America. PNB noticed an error, informed SEPAC Bank, who replied with the
correction that the $14,000 is actually only for $1,400.

On the basis of this message, a cable check worth $1,400 was issued to Mata, from Star
Kist. However, 14 days after, PNB issued another check to Star Kist in the amount of
$14,000.

Six years later, PNB requested Mata for a refund of the erroneous $14,000 check.
Thereafter, it filed a civil case for collection and refund of $14,000 arguing that based on
constructive trust under Art. 1456 of the Civil Code, it has the right to recover the amount
erroneously credited to Mata.

RTC Manila dismissed the complaint, ruling that the case falls under Art. 2156 on solutio
indebiti, and NOT under Art. 1456 on constructive trust. CA affirmed, but concluded that
the action for recovery has already prescribed under Art. 1145(2). Hence, this petition for
certiorari.

ISSUE:
Whether or not the basis of Mata’s obligation to return $14,000 is governed by Article
1456 on constructive trust, or Art. 2154 of the Civil Code?
Whether or not the action has prescribed?

RULING:
The basis of obligation is governed by Art. 1456 on constructive trust. However, the
action to recover damages has already prescribed due to laches.

A deeper analysis of Article 1456 reveals that it is not a trust in the technical sense for in
a typical trust, confidence is reposed in one person who is named a trustee for the benefit
of another who is called the cestui que trust, respecting property which is held by the
trustee for the benefit of the cestui que trust. A constructive trust, unlike an express trust,
does not emanate from, or generate a fiduciary relation. While in an express trust, a
beneficiary and a trustee are linked by confidential or fiduciary relations, in a
constructive trust, there is neither a promise nor any fiduciary relation to speak of and the
so-called trustee neither accepts any trust nor intends holding the property for the
beneficiary.

In the case at bar, Mata, in receiving the US$14,000 in its account through IBAA, had no
intent of holding the same for a supposed beneficiary or cestui que trust, namely PNB.
But under Article 1456, the law construes a trust, namely a constructive trust, for the
benefit of the person from whom the property comes, in this case PNB, for reasons of
justice and equity.
while petitioner may indeed opt to avail of an action to enforce a constructive trust or the
quasi-contract of solutio indebiti, it has been deprived of a choice, for prescription has
effectively blocked quasi-contract as an alternative, leaving only constructive trust as the
feasible option.

Proceeding now to the issue of whether or not petitioner may still claim the US$14,000 it
erroneously paid private respondent under a constructive trust, we rule in the negative.
Although we are aware that only seven (7) years lapsed after petitioner erroneously
credited private respondent with the said amount and that under Article 1144, petitioner is
well within the prescriptive period for the enforcement of a constructive or implied trust,
we rule that petitioner’s claim cannot prosper since it is already barred by laches. It is a
well-settled rule now that an action to enforce an implied trust, whether resulting or
constructive, may be barred not only by prescription but also by laches.

While prescription is concerned with the fact of delay, laches deals with the effect of
unreasonable delay.

It is unbelievable for a bank, and a government bank at that, which regularly publishes its
balanced financial statements annually or more frequently, by the quarter, to notice its
error only seven years later. As a universal bank with worldwide operations, PNB cannot
afford to commit such costly mistakes. Moreover, as between parties where negligence is
imputable to one and not to the other, the former must perforce bear the consequences of
its neglect. Hence, petitioner should bear the cost of its own negligence.

MIGUEL J. OSSORIO PENSION FOUNDATION, INCORPORATED vs.

COURT OF APPEALS and COMMISSIONER OF INTERNAL REVENUE
G.R. No. 162175 - June 28, 2010.
FACTS:
MJO Pension Foundation Inc. was organized for the purpose of holding title to and
administering the Employees’ Trust Fund established for the benefit of the employees of
Victorias Milling Company, Inc. (VMC). Petitioner, as trustee, claims that the income
earned by the Employees’ Trust Fund is tax exempt under Section 53(b) of the National
Internal Revenue Code (Tax Code). Petitioner, as trustee, claims that the income earned
by the Employees’ Trust Fund is tax exempt under Section 53(b) of the National Internal
Revenue Code (Tax Code).

Sometime in 1992, MJOPFI bought the MBP lot through VMC. MJOPFI claims that
its share in the MBP lot is 49.59%. Petitioner’s investment manager, Citytrust, in
submitting its Portfolio Mix Analysis, regularly reported the Employees’ Trust
Fund’s share in the MBP lot.

On 26 March 1997, VMC eventually sold the MBP lot to Metrobank for
P81,675,000.

Petitioner claims that it is a co-owner of the MBP lot as trustee of the Employees’ Trust
Fund, based on the notarized Memorandum of Agreement. Petitioner maintains that its
ownership of the MBP lot is supported by the excerpts of the minutes and the resolutions
of petitioner’s Board Meetings. Petitioner further contends that there is no dispute that the
Employees’ Trust Fund is exempt from income tax. Since petitioner, as trustee,
purchased 49.59% of the MBP lot using funds of the Employees’ Trust Fund, petitioner
asserts that the Employees’ Trust Fund's 49.59% share in the income tax paid should be
refunded.

The CTA denied petitioner's claim for refund of withheld creditable tax of
P3,037,500 arising from the sale of real property of which petitioner claims to be
a co-owner as trustee of the employees' trust or retirement funds.

CA agreed with the CTA that pieces of documentary evidence submitted by

petitioner are largely self-serving and can be contrived easily. The CA ruled that
these documents failed to show that the funds used to purchase the MBP lot
came from the Employees’ Trust Fund.

ISSUE:
1. Whether petitioner or the Employees’ Trust Fund is estopped from claiming that
the Employees’ Trust Fund is the beneficial owner of 49.59% of the MBP lot, and
that VMC merely held 49.59% of the MBP lot in trust for the Employees’ Trust
Fund?
RULING:
No, they are not estopped.

The law expressly allows a co-owner (first co-owner) of a parcel of land to register his
proportionate share in the name of his co-owner (second co-owner) in whose name the
entire land is registered. The second co-owner serves as a legal trustee of the first co-
owner insofar as the proportionate share of the first co-owner is concerned. The first co-
owner remains the owner of his proportionate share and not the second co-owner in
whose name the entire land is registered. Article 1452 of the Civil Code provides:

Art. 1452. If two or more persons agree to purchase a property and by

common consent the legal title is taken in the name of one of them for the
benefit of all, a trust is created by force of law in favor of the others in
proportion to the interest of each.

For Article 1452 to apply, all that a co-owner needs to show is that there is
“common consent” among the purchasing co-owners to put the legal title to the
purchased property in the name of one co-owner for the benefit of all. Once
this “common consent” is shown, “a trust is created by force of law.” The
BIR has no option but to recognize such legal trust as well as the beneficial
ownership of the real owners because the trust is created by force of law. The
fact that the title is registered solely in the name of one person is not conclusive
that he alone owns the property.

Thus, this case turns on whether petitioner can sufficiently establish that
petitioner, as trustee of the Employees’ Trust Fund, has a common agreement
with VMC and VFC that petitioner, VMC and VFC shall jointly purchase the MBP
lot and put the title to the MBP lot in the name of VMC for the benefit petitioner,
VMC and VFC.

We rule that petitioner, as trustee of the Employees’ Trust Fund, has more
than sufficiently established that it has an agreement with VMC and VFC to
purchase jointly the MBP lot and to register the MBP lot solely in the name of
VMC for the benefit of petitioner, VMC and VFC.

The appellate courts failed to consider the genuineness and due execution
of the notarized Memorandum of Agreement acknowledging petitioner’s
ownership of the MBP lot. The BIR failed to present any clear and convincing
evidence to prove that the notarized Memorandum of Agreement is fictitious or
has no legal effect. Likewise, VMC, the registered owner, did not repudiate
petitioner’s share in the MBP lot. Further, Citytrust, a reputable banking
institution, has prepared a Portfolio Mix Analysis for the years 1994 to 1997
showing that petitioner invested P5,504,748.25 in the MBP lot. Absent any proof
that the Citytrust bank records have been tampered or falsified, and the BIR has
presented none, the Portfolio Mix Analysis should be given probative value.