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G.R. No. L-49087 April5, 1982
MINDANAODEVELOPMENTAUTHORITY, now the SOUTHERN
PHILIPPINES DEVELOPMENTADMINISTRATION, petitioner,
vs.
THE COURTOF APPEALS and FRANCISCOANG BANSING, respondents.
CONCEPCION JR., J.:
Petition for review oncertiorariofthedecisionofthe CourtofAppealsin
CA-G.R. No. 48488-R, entitled: "MindanaoDevelopmentAuthority, etc.,
plaintiff-appellee,versus FranciscoAng Bansingdefendant-
appellant",which reversedthedecisionoftheCourt ofFirst Instance of
Davao and dismissed the complaint filedin Civil Case No. 6480ofthe
said court.
It is not disputed thatthe respondent Francisco Ang Bansing was the
owner ofa big tractofland withanarea ofabout300,000 sq.m.,
situatedin Barrio Panacan DavaoCity. On February 25,1939, Ang
Bansing sold a portionthereof, withanarea ofabout5 hectares to Juan
Cruz Yap Chuy The contract provided, among others, thefollowing:
That I herebyagreeto work for thetitling ofthe
entire area ofmy land under my ownexpenses
and the expenses for the titling oftheportion sold
to me shall beundertheexpenses ofthesaid Juan
Cruz Yap Chuy.1
After the sale, thelandofAng Banging was surveyed and designated as
Lot 664-B, Psd-1638.Lot664-B was further subdividedinto five(5) lots
and the portion soldto Juan Cruz Yap Chuy shortened to Juan Cruz, was
designated as Lot 664B-3,with anarea of61.107squaremeters, more or
less. 2 On June15-17and December15,1939, a cadastralsurvey was
made andLot664-B-3 was designatedas Lot1846-C oftheDavao
Cadastre. On December23,1939, Juan Cruz sold Lot1846-C to the
CommonwealthofthePhilippines for theamount ofP6,347.50.3 On that
same day, Juan Cruz, as vendor, andC.B. CamandMiguel N. Lansona as
sureties, executeda suretybondin favor ofthevendeeto guarantee the
vendor's absolutetitleover the land sold. 4
The cadastral survey plan was approvedby theDirector ofLands on July
10, 1940,5 and onMarch 7,1941, OriginalCertificate ofTitleNo. 26was
issuedin the means ofVictoriana Ang Bansing, Orfelina Ang Bansing and
Francisco Ang Bansing as claimants oftheland, pursuantto DecreeNo.
745358issuedon July 29,1940. On March 31, 1941,OCTNo. 26 was
cancelled pursuantto a Deed ofAdjudicationand TransferCertificateof
Title No. 1783 was issued inthenameofFranciscoAng Bansing. 6
On that day, March 31, 1941, Ang Banging soldLot1846-Ato Juan Cruz
and TCTNo. 1783 was cancelled. TCTNo. 1784was issued in thenameof
Juan Cruz, for Lot1846-AandTCTNo. 1785 was issued in thenameof
Ang Bansing for theremaining Lots 1846-B, 1846-C, 1846-D,and1846-E.
Later, Ang Bansing sold two subdivision lots ofLot1846-B, namely: Lot
1846-B-2-C and Lot1846-B-1 to VedastoCorcuera for whichTCTNo.
2551 andTCTNo. 2552,respectively,were issuedin thename ofthesaid
VedastoCorcuera on August10,1946. Thereafter,Lot1848-A, withan
area of9.6508 hectares, and Lots 1846-B-Aand1848-B-2-D all
subdividedportions ofLot1846-B, were similarly conveyedto Juan Cruz
for which TCTNo. 2599and TCTNo. 2600, respectively, wereissued in
the nameofJuan Cruz on September26,1946. TCTNo. 2601was issued
in the nameofAng Bansing for the remainderofthe property, including
the lot in question. Then, another portionof1846-B, designated inthe
subdivision plan as Lot 1848-B-2-B was sold to Juan Cruz for which TCT
No. 184 was issued inthelatter's name. On November 28, 1946, after
these conveyances,thereremainedin thepossessionofAng Bansing
under TCTNo. 2601, Lot 1846-C,thelotin question; Lot1846-D; and Lot
1846-E. However, TCTNo. 2601was againpartially cancelledwhen Ang
Bansing sold Lot1846-D to Vedasto Corcuera. 7
On February 25, 1965, thePresidentofthePhilippines issued
Proclamation No.459, transferring ownership ofcertain parcels ofland
situatedin Sasa DavaoCity, totheMindanao DevelopmentAuthority,
now the SouthernPhilippines Development Administration, subjectto
private rights,ifany. Lot1846-C, the disputed parcelofland,was among
the parcels oflandtransferred totheMindanao DevelopmentAuthority
in said proclamation. 8
On March 31, 1969, Atty. Hector L.Bisnar counselfor theMindanao
Development Authority, wroteAng Bansing requesting thelatterto
surrender the Owner's duplicate copy ofTCTNo. 2601sothat Lot 1846-C
could be formally transferred to his client but Ang Bansing
refused. 9 Consequently, on April11,1969, theMindanao Development
Authority filed a complaint against Francisco Ang Bansing beforethe
Court ofFirst Instance ofDavao City,docketedthereinas CivilCase No.
6480, for thereconveyanceofthetitleover Lot 1846-C, alleging, among
others, the following:
xxx xxx xxx
9. That the deedofsale, markedas Annex 'A', it
was stipulated by the parties thatthedefendant
would work to securetitle ofhis entiretract of

land ofabout 30hectares defraying theexpenses
for the sameand the expenses for thetitleofthe
portion soldby thedefendant toJuanCruz Yap
Chuy shall bebornedby thelatter;
10. That thedefendant as vendor andtheonewho
worked to securethetitleofhis entiretractof
land which included theportion soldby him. to
Juan Cruz Yap Chuy actedin the capacity ofand/or
served as trusteefor any and allparties who
become successor-in-interestto JuanCruz Yap
Chuy and thedefendant was bound andobligated
to give, deliver and reconvey toJuan Cruz Yap
Chuy and/or his successor-in-interestthetitle
pertaining to theportion ofland soldand
conveyed byhimto JuanCruz YapChuyby virtue
ofthe deed ofsale markedas Annex 'A'and his
affidavit markedas Annex 'C'. 10
In answer, Ang Bansing replied:
xxx xxx xxx
9. That defendantadmits that in Annex'A'ofthe
complaint, it was agreedandstipulated in
paragraph 6thereofthat:
That I herebyagreeto work
for the titling oftheentire
area ofmy land under my
own expenseand the
expenses for thetitling of
the portionsoldto meshall
be under theexpenses of
the saidJuanCruz YapChuy.
and defendant infact secured at his expensehis
OCTNo. 26 for his entireland; thatin the process
ofdefendant's securing his titleneither JuanCruz
Yap Chuy nor theCommonwealth ofthe
Philippines asserted any rightto ownershipofthe
subjectproperty andthat was almost 30years ago
until plaintifffiledits complaint,thus plaintiffis
forever barredfrom claiming any rightover the
subjectproperty.Therewas no realsalemade but
only the intention tosella portionoftheland as
statedby defendant in Annex 'C'ofthe complaint.
10. That defendant denies allegations contained in
paragraph 10 ofthecomplaint thathe acted as the
trusteeofJuan Cruz Yap Chuy Defendantwas
never such; matter offactJuanCruz YapChuy for
the last26years, that is untilhe. diedin October,
1965, nevermadeanydemand tohavethetitleof
the subjectproperty transferredin his name
because heknew allthetimethat the allegedsale
in his favor was per se null and voidhe also knew
that no salewas ever consummated. 11
After trial,theCourt ofFirstInstanceofDavaoCityfound that an express
trust hadbeen establishedandorderedthereconveyanceofthetitleto
Lot 1846-C of theDavao Cadastreto the plaintiffMindanao
Development Authority. 12
Ang Banging appealedto theCourt ofAppeals andthesaid appellate
court ruledthatno express trusthas been created and, accordingly,
reversed thejudgmentand dismissed the complaint. 13
Hence, thepresent recourse.
The petition is withoutmerit. As found by the respondentCourt of
Appeals, no express trusthad beencreated betweenAng Banging and
Juan Cruz overLot1846-C ofthe DavaoCadastre. "Trusts areeither
express or implied. Express trusts arecreated by the intention ofthe
trustor or of theparties. Implied trusts come intobeing by operation of
law." 14 It is fundamentalin the lawoftrusts that certain requirements
must existbefore an express trustwill berecognized.Basically, these
elements includea competent trustor and trustee,anascertainable
trustres, and sufficiently certain beneficiaries. Stiltedformalities are
unnecessary, but nevertheless each ofthe above elements is required to
be established,and, if any one ofthem is missing, itis fatalto thetrusts.
Furthermore,theremust bea presentand completedisposition ofthe
trust property, notwithstanding that the enjoyment inthebeneficiary
will takeplace inthefuture.It is essential, too, thatthepurposebe an
active one toprevent trust frombeing executed into a legal estateor
interest,andonethatis not in contravention ofsomeprohibition of
statuteor ruleofpublicpolicy. Theremust alsobe some power of
administration other thana mereduty to perform a contract although
the contractis for a third-party beneficiary.Adeclaration ofterms is
essential, and thesemustbe statedwith reasonablecertainty in order
that the trusteemayadminister, and that thecourt, ifcalled upon so to
do, may enforce,thetrust." 15
In this case, the herein petitioner relies mainly upon the following
stipulationin the deed ofsale executed by Ang Bansing in favor ofJuan
Cruz to prove that an express trusthad beenestablished with Ang
Bansing as thesettlorand trustee andJuan Cruz as the cestuique
trust or beneficiary:
That I herebyagreeto work for thetitling ofthe
entire area ofmy land under my ownexpenses
and the expenses for the titling oftheportion sold
to me shall beundertheexpenses ofsaid Juan
Cruz Yap Chuy.
The above-quoted stipulation, however, is nothing buta conditionthat
Ang Bansing shallpay theexpenses for the registrationofhis landand
for Juan Cruz to shoulder theexpenses for theregistration oftheland
sold to him. The stipulationdoes not categorically create an obligation
on the part ofAng Bansing to hold theproperty intrustfor Juan Cruz.
Hence, thereis no express trust. Itis essentialto the creation ofan
express trust thatthesettlor presently and unequivocally makea
dispositionofproperty and makehimselfthetrustee ofthepropertyfor
the benefit ofanother. 16
In case ofa declarationoftrust, thedeclaration
must be clear andunequivocal that the owner
holds property intrustfor thepurposes named. 17
While Ang Bansing hadagreed inthedeed ofsalethat hewillwork for
the titling of"the entirearea ofmy land under my ownexpenses,"it is
not cleartherefromwhether saidstatementrefers to the30-hectare
parcel oflandor to that portionleftto himafter thesale. Afailureon
the part ofthesettlor definitely to describethesubject-matter ofthe
supposed trust or thebeneficiaries or objectthereofis strong evidence
that he intended notrust. 18
The intent tocreatea trust mustbedefiniteandparticular. It mustshow
a desireto pass benefits through themediumofa trust, and not through
some relatedor similar device.19
Clear and unequivocallanguage is necessary to create a trustand mere
precatory language andstatements ofambiguous nature,are not
sufficientto establish a trust. As the Courtstated inthecaseof De Leon
vs. Packson,20 a trustmust beprovenby clear,satisfactory and
convincing evidence;it cannotreston vagueanduncertain evidenceor
on loose,equivocalor indefinite declarations. Considering that thetrust
intent has not been expressedwith suchclarity and definiteness, no
express trust can bededuced fromthestipulation aforequoted.
Nor will the affidavit executed by Ang Banging on April23,1941, 21 be
construed as having establishedanexpress trust.As counsel for the
herein petitioner has stated,"the onlypurpose ofthe Affidavit was to
clarify that the area oftheland sold by Ang Bansing to Juan Cruz Yap
Chuy is not only 5 hectares but 61,107 square meters or a littleover six
(6) hectares." 22
That no express trust hadbeen agreed upon by Ang Bansing and Juan
Cruz is evidentfrom the fact that Juan Cruz,thesupposedbeneficiary of
the trust,nevermadeany attempt to enforcethealleged trust and
require the trusteeto transfer the titleoverLot1846-Cin his name.
Thus, the records show that thedeedofsale, covering Lot1846-C, was
executed by Ang Bansing in favor ofJuan Cruz on February25,1939.
Two years later,or on March31, 1941, Ang Bansing soldLot 1846-Ato
the saidJuanCruz for whichTCTNo. 1784was issued in thenameof
Juan Cruz. Subsequently thereafter, Lot 1848-A, with an area of9.6508
hectares, and Lots 1846-Aand1848-B-2-D, all subdivided portions ofLot
1846-B, were similarly conveyedto thesaid Juan Cruz for which TCTNo.
2599 andTCTNo. 2600,respectively,were issuedin thename ofJuan
Cruz on September 26, 1946. Then, another portionof'Lot 1¬846-B,

designated inthesubdivisionplanas Lot1848-B-2-13, was soldto Juan
Cruz for which TCT No. 184was issuedin his nameon November28,
1948. Despite thesenumerous transfers ofportions oftheoriginal 30-
hectareparcelof land ofAng Bansing to JuanCruz and the issuanceof
certificates of titleinthenameofJuan Cruz, thelatter neversoughtthe
transferof the titleto Lot1846-C in his name. For sure,ifthe parties had
agreed thatAng Bansing shallhold the property intrust for Juan Cruz
until after theformer shall haveobtaineda certificateoftitleto the land,
the latter would haveasked for the reconveyanceofthe titleto him in
view of the surety bond executedby him infavorofthe Commonwealth
Government wherein hewarrants his title over theproperty. The
conduct of JuanCruz is inconsistentwith a trust andmay wellhave
probativeeffectagainst a trust.
But, even granting,arguendo, thatanexpress trust had been
established, as claimedby thehereinpetitioner, it wouldappearthat the
trusteehad repudiatedthetrustand thepetitioner herein, the alleged
beneficiary to the trust,didnot takeany actionthereinuntilafter the
lapse of 23years.Thus, in its Reply totheDefendant's Answer, filedon
June 29, 1969, theherein petitioneradmitted that "after the lastwar the
City Engineer's OfficeofDavao City maderepeated demands on the
defendants for thedelivery and conveyanceto theCommonwealth
Government,now the Republicofthe Philippines, ofthetitleoflandin
question, Lot 1846-C,but thedefendant ignored andevaded the
same." 23 Considering thatthedemandwas made in behalfofthe
CommonwealthGovernment,it is obvious thatthesaid demandwas
made before July4, 1946, whentheCommonwealth Governmentwas
dismantledandtheRepublic ofthePhilippines came intobeing.From
1946 to 1969, when theaction for reconveyancewas filedwith the
Court, 23 years hadpassed. For sure, theperiod for enforcing therights
ofthe allegedbeneficiary over theland inquestion aftertherepudiation
ofthe trust by the trustee, had already prescribed.
Needless to say, only an implied trust may havebeenimpressed upon
the titleof Ang Banging over Lot 1846-C oftheDavao Cadastresincethe
land in question was registered in his name although the land belonged
to another. In impliedtrusts,thereis neitherpromisenorfiduciary
relations, the so-called trusteedoes not recognize any trust andhas no
intent to holdtheproperty for the beneficiary." 24 It does notarise by
agreementor intention, butby operationoflaw. Thus,ifproperty is
acquired through mistake orfraud, the person obtaining it is, byforceof
law, considereda trusteeofan implied trust for the benefitofthe
person from whomtheproperty comes. 25
Ifa person obtains legaltitleto property by fraud orconcealment, courts
ofequity willimpress uponthetitlea so-calledconstructivetrustin favor
ofthe defraudedparty.26
There is also a constructivetrustifa person sells a parcelofland and
thereafterobtains titletoit through fraudulentmisrepresentation. 27
Such a constructivetrustis nota trust inthetechnical senseand is
prescriptible; it prescribes in10years. 28
Here, the 10-year prescriptive periodbeganon March 31, 1941,upon
the issuanceof OriginalCertificate ofTitle No. 26in the names of
Victoriana Ang Bansing Orfelina Ang Bansing andFranciscoAng Banging.
From that dateup toApril11, 1969, whenthecomplaintfor
reconveyancewas filed, morethan 28 years hadpassed.Clearly, the
action for reconveyance hadprescribed.
Besides,theenforcementoftheconstructivetrustthat mayhave been
impressed upon the titleofAng Bansing over Lot1846-C oftheDavao
Cadastreis barred by laches. 29 It appears thatthedeedofsalein favor
ofthe CommonwealthGovernment was executedby JuanCruz on
December 23, 1939,during the cadastral proceedings, andeven before
the cadastralsurvey planwas approvedby theDirector ofLands onJuly
10, 1940.But,thevendee therein did not file an answer,muchless an
oppositionto theanswer ofAng Bansing in thesaid Cadastral
proceedings. Thejudgmentrendered inthesaidcadastral proceeding,
awarding thelotin question to Ang Bansing is already final. After an
inexcusable delayof morethan 28years andacquiescence toexisting
conditions, itis now too late for the petitionerto complain.
WHEREFORE, the petition should be, as itis hereby, DENIED. No costs.
SO ORDERED.
De Castro, Ericta and Escolin, JJ., concur.
Barredo, J. (Chairman),I reserve my vote.
Separate Opinions
AQUINO, J., dissenting:
The disputedland shouldbe adjudicated to thegovernment agency
known as theSouthernPhilippines Development Administration, the
successor oftheCommonwealth ofthePhilippines.
To adjudge Francisco Ang Bansing as theownerofthe land is tosanction
a brazen breachoftrust ora form oflandgrabbing and to perpetratea
gross injustice. The facts areas follows:
1. Before thewar, Francisco Ang Banging was the owner ofa tract of
unregisteredland withanarea ofabouttwenty-ninehectares located at
Barrio Panacan(Sasa) DavaoCity.
2. On February25,1939, hesold toJuanCruz YapChuyfor sixthousand
pesos a portion ofthesaid landwith an area ofaround fivehectares,
bounded on the north by theland ofVedastoCorcuera, ontheeast by
the DavaoGulf, on thesouth by the land ofAng Ping and on the west by
the remaining portionbut separatedby theprovincialroad. Ang
Bansing's wife, Anatalia Cepeda, was oneofthetwowitnesses in the
deed ofsale.The sale was registered onMarch 1,1939in the registry of
deeds ofDavao City.
3. In the deed ofsale,Ang Bansing made the following commitment:
"That I hereby agree toworkfor thetitling oftheentirearea ofmy land
under my own expenses andtheexpenses for the titling oftheportion
sold to (by) me shallbe under the expenses ofthesaidJuanCruz Yap
Chuy It was also stipulatedthat the buyer couldtake possession ofthe
land and its improvements (p. 14, Record onAppeal).
4. After the surveyofAng Bansing's land,theportion soldto Juan Cruz
Yap Chuy cameto beknown as LotNo, 664B-3, described as follows:
"Bounded on theNorth by Lot No.664-B-4; ontheEast by theDavao
Gulf; on the Southby LotNo. 564andon the West by Lot No.664-B-5;
containing an area ofsixty-one thousand onehundredseven (61,107)
square meters moreor less."By reasonofthe 1939 cadastralsurvey, Lot
No. 664-B-3 cameto beknownas Lot No. 1846-C ofthe Davaocadastre.
The survey was madeon June15-17 andDecember 15,1939,and was
approvedon July 10, 1940.
5. About ten months later, or onDecember23,1939, JuanCruz YapChuy
sold to theCommonwealth ofthePhilippines thesameportion,
Identified as Lot No.664-B-3,with anarea of61,107squaremeters,
together withtheimprovements thereon, for the sumofP6,347.50
allocated as follows:
6.1107 hectares at P140a
hectare..........................................P 855.00756
coconut trees,all fruit-bearing,at P7 per
tree................ 5,292.00
200 coconut trees, notproductive, atonepesoa
tree.........................................................................
200.00
The sale includeda parcel oflandIdentified as lotNo. 664-B-5, with an
area of8,023squaremeters, whichwas a partofthe national road and
which Cruz donatedto theCommonwealth Government. The sale was
registered in the registry ofdeeds ofDavaoCity onDecember 27,1939,
meaning thatAng Bansing had constructive notice thereof
6. Simultaneously withthat deed ofsale,JuanCruz YapChuy as principal,
and G.B. CamandMiguel N. Lanzona as sureties, executed a bondin the
sum ofP6,347.50(thepriceofthe sale) in favor oftheCommonwealth
ofthe Philippines. The bond would becomevoid iftheCommonwealth
obtained absolute title totheland.
7. On April 23, 1941, Ang Bansing executedanaffidavitwherein he
confirmed the previous sale toJuanCruz YapChuy ofthe said Lot No.
1846-C. His wife, Anatalia Cepeda,was a witness in thesaid affidavit.
Ang Bansing clarifiedthat theexact area ofthelot soldis 16,107square
meters andnot fivehectares onlywhich latter area was merelyhis
calculation. Ang Bansing furthersaid in theaffidavit:
That I herebycertify that I haveno objection that
the saidportion afterthesurvey be transferred
and ceded, as I intended totransfer andcede the
same, to the said JuanCruz Yap Chuy byvirtue of

the said Deed ofSale above-mentioned (referring
to the 1939DeedofSale).
That affidavitwas registeredon May8, 1941.
8. Lot No. 664-B-3 or No. 1846-C was coveredby TaxDeclarations Nos.
80454, R-3612,R-5232 andA-12-123in thenameoftheRepublic ofthe
Philippines (pp. 88-89, Record onAppeal). On theotherhand,Ang
Bansing never declared LotNo. 1846-C for taxpurposes andnever paid
any realty taxes therefor.
9. Ang Bansing obtained DecreeNo. 745358for the registrationofthe
29-hectareland(including LotNo. 664-B-3or No. 1846-C). By virtue of
that decree, OriginalCertificateofTitleNo. 26was issued on March7,
1941 in thenames of Victoriana Ang Bansing Orfelina Ang Banging and
Francisco Ang Bansing
10. The issuanceof that title implies thatthegovernment official(may
be the provincial district engineer at Davao City),who was awareofthe
purchase of Lot No. 664-B-3 from Ang Bansing was negligentin not
intervening in theland registration proceeding soas to have that lot
registeredin the name ofthe Commonwealthofthe Philippines.
Another implicationis that Ang Banging had already acted fraudulently
or in bad faith innot asking his lawyerto segregateLotNo. 664-B-3 or
Lot No. 1846-C from his land andto seeto itthat a separatetitlefor that
lot was issued inthenameoftheCommonwealth ofthePhilippines.
11. On March 31, 1941, or24 days after theissuanceofOCTNo. 26, it
was cancelledbecauseofa "deed ofadjudication". Transfer Certificate
ofTitle No. 1783was issued for the19-hectare land inthenameof
Francisco Ang Bansing alone.
12. Ang Bansing's land,known as Lot No.1846,was subdividedinto five
lots, namely: Lots Nos. 1846-A, 1846-B, 1846-C,1846-D and 1846-E. On
that samedateof March31, 1941, whenAng Bansing obtained TCTNo.
1783, he sold Lot No. 1846-Ato Juan Cruz Yap Chuy Becauseofthat sale,
TCT No. 1783 was cancelledandTCTNo. 1784was issuedto Juan Cruz
Yap Chuy whileTCT No. 1785was issuedto Ang Banging for theother
four lots which (itshould berepeated) included Lot No. 1846-C the
disputed lot soldin 1939 by Ang Bansing to Juan Cruz Yap Chuy and in
turn sold by the latter totheCommonwealth ofthePhilippines.(The
name Juan Cruz Yap Chuy was shortened to Juan Cruz as shownin Entry
No. 8052 dated August4, 1953, appearing in TCTNo. 1784. Cruz died in
1965.)
13. Ang Bansing soldto Vedasto Corcuera Lots Nos.1846-B-1and 1846-
B-2-C, which aresubdivision lots ofLotNo. 1846-B. As a resultTCTNo.
1785 was cancelledand TCTNos.2551and 2552wereissuedto
Corcuera on August 10,1946. LotNo. 1846- D was alsosold byAng
Bansing toCorcuera.
14. Other portions of LotNo. 1846-B were sold by Ang Bansing to Juan
Cruz. Lots Nos. 1846-C and 1846-E, theremaining lots, registered in the
name of Ang Bansing as shown inTCTNo. T-2601(Exh. L), werenot
alienated byhim.
15. On September 25, 1965,PresidentDiosdadoMacapagal issued
Proclamation No.459, transferring to theMindanao 'Development
Authority (a corporatebody created by RepublicAct No. 3034), "subject
to privaterights, if any", eightparcels ofland forming part ofthe
Government's privatedomain.Among thoseparcels was Parcel6, Lot
No. 1846-C, Psd-16952, theherein disputedlot, with an area of61,107
square meters,bounded onthewestby thenationalhighway,on the
north by Lot No. 1846-D,on the eastby theGulfofDavao andon the
south by Lot No. 564-A. Thus, LotNo. 1846-C became a partofthe Port
Area Reservationfrom Sasa to Panacan Davao City.
16. In a letter dated March31, 1969, counsel for theMindanao
Development Authority requested Ang Bansing to surrender theowner's
duplicateof TCT No. T-2601sothat Lot No.1846-C could betransferred
to the said governmentagency (Exh. K). Ang Bansing didnot heed the
demand.
17. On April 11,1969, theMindanao Development Authority suedAng
Bansing for the reconveyanceofLot No.1846-C. After trial(during which
Ang Banging did nottestify), the trialcourt held thatAng Bansing held
Lot No. 1846-C in trust forthe State and that the prescriptiveperiodfor
recovering theLotfrom Ang Bansing started onlyin 1968when Ang
Banging allegedly repudiated the trust.
18. The trial courtcancelledAng Bansing's titleand directedtheregister
ofdeeds to issuea new titleto theMindanaoDevelopment Authority for
Lot No. 1846-C. Ang Bansing appealed to theCourtofAppeals.
19. That Court in its decisiondated December 27, 1977, reversing the
trial court's decision, heldthat Ang Banging was the owner ofthe
disputed lot. Itruledthat evenifAng Bansing heldLotNo. 1846-C in
express trust, the trust was Innovated"by subsequentcircumstances
and that the saleofLotNo. 1846-C to the Commonwealthofthe
Philippines was not consummatedbecause Ang Banging sold Lot No.
1846-Aand portions ofLot No. 1846-B toJuan Cruz in Lieu ofLotNo.
1846-C.
20. The AppellateCourt alsoheld thattheMindanao Development
Authority had no cause ofactionfor reconveyancebecauseithadno
privity withAng Bansing andthat thetrust,ifany, was animpliedor
constructivetrust andtheactionbased onthat kind oftrust was barred
by prescription.
21. PresidentialDecreeNo.690,which took effecton April 22, 1975,
establishedtheSouthern Philippines Development Administrationand
abolished theMindanao Development Authority. Thelatter's assets
were transferredto theAdministration.
I am ofthe opinionthat Ang Banging is a trusteein an express trust
covering LotNo. 1846-C.The trustis evidenced by his aforementioned
affidavit ofApril 23, 1941 which heexecuted twenty-threedays after
TCT No. 1783 was issued tohimfor that lot.
As already noted, Ang Bansing in that affidavit swore that heintended to
cede andtransferthat rot to Juan Cruz after the survey (Exh.C). That
sworn statement shouldbe considered in conjunctionwith the
stipulationin the 1939 deed ofsale that Ang Bansing would undertake
the titling ofthewholeLotNo. 1846and that theregistration expenses
corresponding toLotNo. 1846-C wouldbe borneby Juan Cruz, the
vendee ofthat subdivision lot (Exh.A).
The said statements createanexpress trust for Lot No.1846-C in favor
ofJuan Cruz andhis successors-in-interest or assignees. "No particular
words arerequired for thecreationofan express trust, itbeing sufficient
that a trustis clearly intended"(Art. 1444, Civil Code).
It is significant that, while Ang Bansing soldLots Nos.1846-A, 1846-B and
1846-D to Cruz andCorcuera, he did not touch at all Lot No. 1846-C. He
did not alienatethat lot because heknew that itwas not his property
and that it belonged to the State.
Equally significant and credibleis thetrial court's finding thatit was only
in 1968 thatAng Bansing laid claimto Lot No. 1846-C through Rufino
Boncayao, a surveyor who worked in theDavao City engineer's office
and who discoveredthatthetitleto the lot hadnot yet been placed in
the nameofthe Commonwealthofthe Philippines.
The trial courtfoundthat Boncayao, as the agent ofAng Banging and
with the adviceandbacking ofVicenteC. Garcia, Ang Bansing's lawyer,
claimed thatAng Bansing was thetrue owner ofLotNo. 1846-C. There
being an express trust in this case,theequitable action to compelthe
trusteeto reconvey thelandregistered inhis nameintrustfor the
benefit ofthecestuiquetrustdoes not prescribe (Manalang vs.Canlas,
94 Phil. 776;Ramos vs. Ramos,L-19872,December 3,1974,61 SCRA284,
299).
The defenseofprescriptioncannot besetup in an action to recover
property heldin trust for thebenefitofanother (Sevilla vs. Delos
Angeles, 97Phil. 875).
Property heldin trust canbe recoveredby thebeneficiaryregardless of
the lapse oftime(Marabilles vs.Quito100 Phil. 64; Bancairen vs. Diones,
98 Phil. 122,126; Juan vs. Zuniga 114 Phil. 1163; Vda. deJacinto vs. Vda.
de Jacinto,115Phil. 363,370). Prescription in thecaseofexpress trusts
can be invokedonly from the timethe trust is repudiated(Tamayovs.
Callejo, 68O.G. 8661,46 SCRA27,32).
And a trustee who takes a Torrens titlein his namefor theland held in
trust cannotrepudiatethe trust by relying on theregistration.Thatis
one ofthe limitations upon thefinality ofa decreeoftitleSotto vs.
Teves. L-38018,October 31, 1978, 86SCRA 154,178; Alvarez vs. Espiritu,
122 Phil.229, 235).
The rule, that an action for reconveyance prescribes inten years,applies
to an impliedtrust, notto an express trust(Carantes vs.Court of
Appeals, L-33360, April 25, 1977,76 SCRA514).

So, as a generalrulea trustestate(in an express trust) is exempt from
the operation of the statuteoflimitations.The exception is when the
trusteerepudiates thetrustin which casethetrusteemay acquire the
trust estateby prescription.The repudiation mustbe knownto
the cestui que trustandmustbe direct, clear,open and equivocal.
(Callejon Salinas vs.RomanTuasonand MorenoRoman, 55Phil.729;
Palma vs. Cristobal,77 Phil. 712; Valdez vs.Olorga,L-22571,May 25,
1973, 51 SCRA71.)
One who acquires a Torrens titlein his own name
to property which heis administering for himself
and his brothers andsisters as heirs incommonby
descentfrom a common ancestor may be
compelledto surrender to each ofhis co-heirs his
appropriateshare". Apartitionproceeding is an
appropriateremedy to enforce this right.(Castro
vs. Castro, 57 Phil. 675). An equitableaction for
reconveyanceis also a proper remedy(Laguna vs.
Levantino 71 Phil. 566;Sumira vs.Vistan,74 Phil.
138).
In any event, thereal plaintiffin this caseis theRepublic ofthe
Philippines and prescription does notrunagainst the State (Dela Vina vs.
Government of theP.I., 65Phil. 262,265; Republic vs. Ruiz, L-23712,
April 29, 1968, 23SCRA 348).
The maxim is nullumtempus occurritregior nullumtempus occurrit
reipublicae (lapseof timedoes not bar the rightofthe crown or lapseof
time does notbar thecommonwealth). The ruleis now embodiedin
article1108(4) of theCivil Code.
It is a maximof great antiquity in English law. Thebestreasonfor its
existenceis the great public policyofpreserving public rights and
property from damage andloss throughthenegligenceofpublicofficers.
(34 Am Jur. 301;Ballentines's Law Dictionary,p. 891; U.S.vs.Nashville,
Chattanooga &St. Louis RailwayCo., 118U.S. 120,125).
Thus, the right of reversionor reconveyancetotheStateoflands
fraudulently registered or not susceptibleofprivateappropriationor
acquisitiondoes not prescribe(Martines vs. Court ofAppeals, L-31271,
April 29, 1974, 56SCRA 647, 655; Republic vs. Ramos,117 Phil. 45, 49).
The government officials concerned werenegligent innotintervening in
the land registrationproceeding orin not promptlyasking Ang Banging
to reconveythedisputed lot totheCommonwealth or totheRepublic of
the Philippines.
Such negligence does not prejudicetheState. Thenegligenceor
omissions of public officers as to their public duties willnotworkan
estoppel againsttheState(10R.C.L. 705, cited inBachrach Motor Co.vs.
Unson, 50 Phil. 981,990; Central Azucarera de Tarlacvs.Collector of
InternalRevenue, 104 Phil. 653, 656;People vs. Ventura, 114Phil. 162,
169).
I vote to reverseand set asidethedecisionoftheCourt ofAppeals and
to affirm the trial court's decision withthemodificationthat the title
should beissuedto the Southern Philippines Development
Administration.
Separate Opinions
AQUINO, J., dissenting:
The disputedland shouldbeadjudicated to thegovernment agency
known as theSouthernPhilippines Development Administration, the
successor of theCommonwealth ofthePhilippines.
To adjudge Francisco Ang Bansing as theownerofthe land is tosanction
a brazen breachof trust ora form oflandgrabbing and to perpetratea
gross injustice. The facts areas follows:
1. Before thewar, Francisco Ang Banging was the owner ofa tract of
unregisteredland withanarea ofabouttwenty-ninehectares located at
Barrio Panacan(Sasa) DavaoCity.
2. On February25,1939, hesold toJuanCruz YapChuyfor sixthousand
pesos a portion of thesaid landwith an area ofaround fivehectares,
bounded on the north by theland ofVedastoCorcuera, ontheeast by
the DavaoGulf, on thesouth by the land ofAng Ping and on the west by
the remaining portionbut separatedby theprovincialroad. Ang
Bansing's wife, Anatalia Cepeda, was oneofthetwowitnesses in the
deed of sale.The sale was registered onMarch 1,1939in the registry of
deeds of Davao City.
3. In the deed ofsale,Ang Bansing made the following commitment:
"That I hereby agree toworkfor thetitling oftheentirearea ofmy land
under my own expenses andtheexpenses for the titling oftheportion
sold to (by) me shallbe under the expenses ofthesaidJuanCruz Yap
Chuy It was also stipulatedthat the buyer couldtake possession ofthe
land and its improvements (p. 14, Record onAppeal).
4. After the surveyofAng Bansing's land,theportion soldto Juan Cruz
Yap Chuy cameto beknown as LotNo, 664B-3, described as follows:
"Bounded on theNorth by Lot No.664-B-4; ontheEast by theDavao
Gulf; on the Southby LotNo. 564andon the West by Lot No.664-B-5;
containing an area ofsixty-one thousand onehundredseven (61,107)
square meters moreor less."By reasonofthe 1939 cadastralsurvey, Lot
No. 664-B-3 cameto beknownas Lot No. 1846-C ofthe Davaocadastre.
The survey was madeon June15-17 andDecember 15,1939,and was
approvedon July 10, 1940.
5. About ten months later, or onDecember23,1939, JuanCruz YapChuy
sold to theCommonwealth ofthePhilippines thesameportion,
Identified as Lot No.664-B-3,with anarea of61,107squaremeters,
together withtheimprovements thereon, for the sumofP6,347.50
allocated as follows:
6.1107 hectares at P140a
hectare........................................... P 855.00756
coconut trees,all fruit-bearing,at P7 per
tree................. 5,292.00
200 coconut trees, notproductive, atonepesoa
tree..........................................................................
200.00
The sale includeda parcel oflandIdentified as lotNo. 664-B-5, with an
area of8,023squaremeters, whichwas a partofthe national road and
which Cruz donatedto theCommonwealth Government. The sale was
registered in the registry ofdeeds ofDavaoCity onDecember 27,1939,
meaning thatAng Bansing had constructive notice thereof
6. Simultaneously withthat deed ofsale,JuanCruz YapChuy as principal,
and G.B. CamandMiguel N. Lanzona as sureties, executed a bondin the
sum ofP6,347.50(thepriceofthe sale) in favor oftheCommonwealth
ofthe Philippines. The bond would becomevoid iftheCommonwealth
obtained absolute title totheland.
7. On April 23, 1941, Ang Bansing executedanaffidavitwherein he
confirmed the previous sale toJuanCruz YapChuy ofthe said Lot No.
1846-C. His wife, Anatalia Cepeda,was a witness in thesaid affidavit.
Ang Bansing clarifiedthat theexact area ofthelot soldis 16,107square
meters andnot fivehectares onlywhich latter area was merelyhis
calculation. Ang Bansing furthersaid in theaffidavit:
That I herebycertify that I haveno objection that
the saidportion afterthesurvey be transferred
and ceded, as I intended totransfer andcede the
same, to the said JuanCruz Yap Chuy byvirtue of
the said Deed ofSale above-mentioned (referring
to the 1939DeedofSale).
That affidavitwas registeredon May8, 1941.
8. Lot No. 664-B-3 or No. 1846-C was coveredby TaxDeclarations Nos.
80454, R-3612,R-5232 andA-12-123in thenameoftheRepublic ofthe
Philippines (pp. 88-89, Record onAppeal). On theotherhand,Ang
Bansing never declared LotNo. 1846-C for taxpurposes andnever paid
any realty taxes therefor.
9. Ang Bansing obtained DecreeNo. 745358for theregistrationofthe
29-hectareland(including LotNo. 664-B-3or No. 1846-C). By virtue of
that decree, OriginalCertificateofTitleNo. 26was issued on March7,
1941 in thenames ofVictoriana Ang Bansing Orfelina Ang Banging and
Francisco Ang Bansing
10. The issuanceofthat title implies thatthegovernment official(may
be the provincial district engineer at Davao City),who was awareofthe
purchase ofLot No. 664-B-3 from Ang Bansing was negligentin not
intervening in theland registration proceeding soas to have that lot
registeredin the name ofthe Commonwealthofthe Philippines.
Another implicationis that Ang Banging had already acted fraudulently
or in bad faith innot asking his lawyerto segregateLotNo. 664-B-3 or
Lot No. 1846-C from his land andto seeto itthat a separatetitlefor that
lot was issued inthenameoftheCommonwealth ofthePhilippines.

11. On March 31, 1941, or24 days after theissuanceofOCTNo. 26, it
was cancelledbecauseofa "deed ofadjudication". Transfer Certificate
ofTitle No. 1783was issued for the19-hectare land inthenameof
Francisco Ang Bansing alone.
12. Ang Bansing's land,known as Lot No.1846,was subdividedinto five
lots, namely: Lots Nos. 1846-A, 1846-B, 1846-C,1846-D and 1846-E. On
that samedateof March31, 1941, whenAng Bansing obtained TCTNo.
1783, he sold Lot No. 1846-Ato Juan Cruz Yap Chuy Becauseofthat sale,
TCT No. 1783 was cancelledandTCTNo. 1784was issuedto Juan Cruz
Yap Chuy whileTCT No. 1785was issuedto Ang Banging for theother
four lots which (itshould berepeated) included Lot No. 1846-C the
disputed lot soldin 1939 by Ang Bansing to Juan Cruz Yap Chuy and in
turn sold by the latter totheCommonwealth ofthePhilippines.(The
name Juan Cruz Yap Chuy was shortened to Juan Cruz as shownin Entry
No. 8052 dated August4, 1953, appearing in TCTNo. 1784. Cruz died in
1965.)
13. Ang Bansing soldto Vedasto Corcuera Lots Nos.1846-B-1and 1846-
B-2-C, which aresubdivision lots ofLotNo. 1846-B. As a resultTCTNo.
1785 was cancelledand TCTNos.2551and 2552wereissuedto
Corcuera on August 10,1946. LotNo. 1846- D was alsosold byAng
Bansing toCorcuera.
14. Other portions of LotNo. 1846-B were sold by Ang Bansing to Juan
Cruz. Lots Nos. 1846-C and 1846-E, theremaining lots, registered in the
name of Ang Bansing as shown inTCTNo. T-2601(Exh. L), werenot
alienated byhim.
15. On September 25, 1965,PresidentDiosdadoMacapagal issued
Proclamation No.459, transferring to theMindanao 'Development
Authority (a corporatebody created by RepublicAct No. 3034), "subject
to privaterights, if any", eightparcels ofland forming part ofthe
Government's privatedomain.Among thoseparcels was Parcel6, Lot
No. 1846-C, Psd-16952, theherein disputedlot, with an area of61,107
square meters,bounded onthewestby thenationalhighway,on the
north by Lot No. 1846-D,on the eastby theGulfofDavao andon the
south by Lot No. 564-A. Thus, LotNo. 1846-C became a partofthe Port
Area Reservationfrom Sasa to Panacan Davao City.
16. In a letter dated March31, 1969, counsel for theMindanao
Development Authority requested Ang Bansing to surrender theowner's
duplicateof TCT No. T-2601sothat Lot No.1846-C could betransferred
to the said governmentagency (Exh. K). Ang Bansing didnot heed the
demand.
17. On April 11,1969, theMindanao Development Authority suedAng
Bansing for the reconveyanceofLot No.1846-C. After trial(during which
Ang Banging did nottestify), the trialcourt held thatAng Bansing held
Lot No. 1846-C in trust forthe State and that the prescriptiveperiodfor
recovering theLotfrom Ang Bansing started onlyin 1968when Ang
Banging allegedly repudiated the trust.
18. The trial courtcancelledAng Bansing's titleand directedtheregister
ofdeeds to issuea new titleto theMindanaoDevelopment Authority for
Lot No. 1846-C. Ang Bansing appealed to theCourtofAppeals.
19. That Court in its decisiondated December 27, 1977, reversing the
trial court's decision, heldthat Ang Banging was theowner ofthe
disputed lot. Itruledthat evenifAng Bansing heldLotNo. 1846-C in
express trust, the trust was Innovated"by subsequentcircumstances
and that the saleof LotNo. 1846-C to the Commonwealthofthe
Philippines was not consummatedbecauseAng Banging sold Lot No.
1846-Aand portions ofLot No. 1846-B toJuan Cruz in Lieu ofLotNo.
1846-C.
20. The AppellateCourt alsoheld thattheMindanao Development
Authority had no cause ofactionfor reconveyancebecauseithadno
privity withAng Bansing andthat thetrust,ifany, was animpliedor
constructivetrust andtheactionbased onthat kind oftrust was barred
by prescription.
21. PresidentialDecreeNo.690,which took effecton April 22, 1975,
establishedtheSouthern Philippines DevelopmentAdministrationand
abolished theMindanao Development Authority. Thelatter's assets
were transferredto theAdministration.
I am of the opinionthat Ang Banging is a trusteein an express trust
covering LotNo. 1846-C.The trustis evidenced by his aforementioned
affidavit of April 23, 1941 which heexecuted twenty-threedays after
TCT No. 1783 was issued tohimfor that lot.
As already noted, Ang Bansing in that affidavit swore that heintended to
cede andtransferthat rot to Juan Cruz after the survey (Exh.C). That
sworn statement shouldbe considered in conjunctionwith the
stipulationin the 1939 deed ofsale that Ang Bansing would undertake
the titling ofthewholeLotNo. 1846and that theregistration expenses
corresponding toLotNo. 1846-C wouldbe borneby Juan Cruz, the
vendee ofthat subdivision lot (Exh.A).
The said statements createanexpress trust for Lot No.1846-C in favor
ofJuan Cruz andhis successors-in-interest or assignees. "No particular
words arerequired for thecreationofan express trust, itbeing sufficient
that a trustis clearly intended"(Art. 1444, Civil Code).
It is significant that, while Ang Bansing soldLots Nos.1846-A, 1846-B and
1846-D to Cruz andCorcuera, he did not touch at all Lot No. 1846-C. He
did not alienatethat lot because heknew that itwas not his property
and that it belonged to the State.
Equally significant and credibleis thetrial court's finding thatit was only
in 1968 thatAng Bansing laid claimto Lot No. 1846-C through Rufino
Boncayao, a surveyor who worked in theDavao City engineer's office
and who discoveredthatthetitleto the lot hadnot yet been placed in
the nameofthe Commonwealthofthe Philippines.
The trial courtfoundthat Boncayao, as the agent ofAng Banging and
with the adviceandbacking ofVicenteC. Garcia, Ang Bansing's lawyer,
claimed thatAng Bansing was thetrue owner ofLotNo. 1846-C. There
being an express trust in this case,theequitable action to compelthe
trusteeto reconvey thelandregistered inhis nameintrustfor the
benefit ofthecestuiquetrustdoes not prescribe (Manalang vs.Canlas,
94 Phil. 776;Ramos vs. Ramos,L-19872,December 3,1974,61 SCRA284,
299).
The defenseofprescriptioncannot besetup in an action to recover
property heldin trust for thebenefitofanother (Sevilla vs. Delos
Angeles, 97Phil. 875).
Property heldin trust canbe recoveredby thebeneficiaryregardless of
the lapse oftime(Marabilles vs.Quito100 Phil. 64; Bancairen vs. Diones,
98 Phil. 122,126; Juan vs. Zuniga 114 Phil. 1163; Vda. deJacinto vs. Vda.
de Jacinto,115Phil. 363,370). Prescription in thecaseofexpress trusts
can be invokedonly from the timethe trust is repudiated(Tamayovs.
Callejo, 68O.G. 8661,46 SCRA27,32).
And a trustee who takes a Torrens titlein his namefor theland held in
trust cannotrepudiatethe trust by relying on theregistration.Thatis
one ofthe limitations upon thefinality ofa decreeoftitleSotto vs.
Teves. L-38018,October 31, 1978, 86SCRA 154,178; Alvarez vs. Espiritu,
122 Phil.229, 235).
The rule, that an action for reconveyance prescribes inten years,applies
to an impliedtrust, notto an express trust(Carantes vs.Court of
Appeals, L-33360, April 25, 1977,76 SCRA514).
So, as a generalrulea trustestate(in an express trust) is exempt from
the operation ofthe statuteoflimitations.The exception is when the
trusteerepudiates thetrustin which casethetrusteemay acquire the
trust estateby prescription.The repudiation mustbe knownto
the cestui que trustandmustbe direct, clear,open and equivocal.
(Callejon Salinas vs.RomanTuasonand MorenoRoman, 55Phil.729;
Palma vs. Cristobal,77 Phil. 712; Valdez vs.Olorga,L-22571,May 25,
1973, 51 SCRA71.)
One who acquires a Torrens titlein his own name
to property which heis administering for himself
and his brothers andsisters as heirs incommonby
descentfrom a common ancestor may be
compelledto surrender to each ofhis co-heirs his
appropriateshare". Apartitionproceeding is an
appropriateremedy to enforce this right.(Castro
vs. Castro, 57 Phil. 675). An equitableaction for
reconveyanceis also a proper remedy(Laguna vs.
Levantino 71 Phil. 566;Sumira vs.Vistan,74 Phil.
138).
In any event, thereal plaintiffin this caseis theRepublic ofthe
Philippines and prescription does notrunagainst the State (Dela Vina vs.
Government oftheP.I., 65Phil. 262, 265; Republic vs. Ruiz, L-23712,
April 29, 1968, 23SCRA 348).
The maxim is nullumtempus occurritregior nullumtempus occurrit
reipublicae (lapseoftimedoes not bar the rightofthe crown or lapseof

time does notbar thecommonwealth). The ruleis now embodiedin
article1108(4) of theCivil Code.
It is a maximof great antiquity in English law. Thebestreasonfor its
existenceis the great public policyofpreserving public rights and
property from damage andloss throughthenegligenceofpublic officers.
(34 Am Jur. 301;Ballentines's Law Dictionary,p. 891; U.S.vs.Nashville,
Chattanooga &St. Louis RailwayCo., 118U.S. 120,125).
Thus, the right of reversionor reconveyancetotheStateoflands
fraudulently registered or not susceptibleofprivateappropriationor
acquisitiondoes not prescribe(Martines vs. Court ofAppeals, L-31271,
April 29, 1974, 56SCRA 647, 655; Republic vs. Ramos,117 Phil. 45, 49).
The government officials concerned werenegligent innotintervening in
the land registrationproceeding orin not promptlyasking Ang Banging
to reconveythedisputed lot totheCommonwealth or totheRepublic of
the Philippines.
Such negligence does not prejudicetheState. Thenegligenceor
omissions of public officers as to their public duties willnotworkan
estoppel againsttheState(10R.C.L. 705, cited inBachrach Motor Co.vs.
Unson, 50 Phil. 981,990; Central Azucarera de Tarlacvs.Collector of
InternalRevenue, 104 Phil. 653, 656;People vs. Ventura, 114Phil. 162,
169).
I vote to reverseand set asidethedecisionoftheCourt ofAppeals and
to affirm the trial court's decision withthemodificationthat the title
should beissuedto the Southern Philippines Development
Administration.

G.R. No. L-21906 August 29, 1969
INOCENCIA DELUAOand FELIPEDELUAO, plaintiffs-appellees,
vs.
NICANOR CASTEEL and JUAN DEPRA, defendants,
NICANOR CASTEEL, defendant-appellant.
R E S O L U TI O N
CASTRO, J.:
Subject of this Resolutionis theappellees'motionofFebruary 8,
1969 for reconsiderationofour decisionofDecember 24, 1968.It poses
several propositions which wewill now discuss inseriatim.
I. The appellees initially argue that becausetheFisheries Act (Act
4003) does notcontainany prohibition againstthetransfer or sub-letting
offishponds covered by permits or leaseagreements, Fisheries
Administrative Order14,sec.7, which embodies said prohibition,is
thereforea nullitybecauseit is inconsistent with the Fisheries Act.They
cite sec. 63.
We disagree.
Sec. 63 of Act 4003 provides:
Permits or leases entitling the holders thereof, for a
certainstated period oftimenot toexceedtwenty years,to
enter upondefinitetracts ofa public forest landto be
devoted exclusively for fishponds purposes,or to takecertain
fishery products or to construct fishponds withintidal,
mangrove andother swamps, ponds and streams within
public forestlands orproclaimed timberlands orestablished
forest reserves,may beissuedor executedby theSecretary
of AgricultureandNaturalResources,subjectto the
restrictions and limitations imposed by the forest laws and
regulations,to suchpersons, associations orcorporations as
are qualifiedto utilizeor take forest products under Act
Number Thirty-six hundredandseventy-four.... . (Emphasis
supplied)
It is clear fromtheabove-quoted section ofthe Fisheries Act that
only holders of permits or leases issuedor executedby theSecretaryof
Agricultureand Natural Resources (hereinafter referredto as DANR
Secretary) can "enter upon definitetracts ofpublic forest landto be
devoted exclusively for fishpondpurposes, ... orto constructfishponds
within tidal, mangrove andother swamps, ponds and streams within
public forestlands orestablishedforestreserves ... ."Inferentially,
persons whodo nothave permits or leases properlyissuedor executed
by the DANR Secretary cannot do any oftheacts mentioned insec.63.
Certainly,a transfereeor sub-lesseeofa fishpondis nota holder ofa
permit or lease.He cannot, therefore,lawfully "enter upon definite
tracts of a publicforestlandto bedevoted exclusively for fishpond
purposes,...orto constructfishponds within tidal, mangroveand other
swamps, ponds and streams withinpublicforestlands or proclaimed
timber lands orestablished forestreserves ... ."No doubt, theintentof
the legislatureis to granttheprivilege ofconstructing, occupying and
operating fishponds withinpublic landonly to holders ofpermits and
leases,and to nooneelse.Inclusio unius est exclusio alterius. And in
declaring nulland void a sublease ortransferofthewhole orpart ofa
fishpond and/or its improvements unless previously approved by the
Director(Commissioner) ofFisheries, see. 37(a) ofFisheries
Administrative Order14 does nomorethancarry intoeffect thewillof
the legislatureas expressed intheFisheries Act.It is a valid
administrativeorder issued under the authority conferredby sec.4 of
the Fisheries Act onthe DANR Secretaryto "issueinstructions, orders,
rules and regulations consistentwith this Act,as may benecessaryto
carry into effecttheprovisions thereof."It is a salutary rulebecauseit is
issuedin fulfillmentof thedutyofthe administrativeofficials concerned
to preserve andconservethe naturalresources ofthecountry by
scrutinizing thequalifications ofthose who apply permission to establish
and operatefishponds ofthe publicdomain.It is a necessary
consequenceof theexecutiveand administrativepowers ofthe DANR
Secretary with regard tothesurvey, classification lease, saleor any other
form of concessionor disposition and management oflands ofthe public
domain, and, more specially, withregardto the grantor withholding of
licenses, permits, leases and contracts overportions ofthepublic
domain to beutilized as fishponds. Theprohibitionthus merely
implements theFisheries Act andsurely cannotbe considered anact of
legislation.
People v. Santos (63 Phil. 360) cited by the appellees has noapplication
to the case at bar.In thatcase,theSupreme Courtdeclarednull and void
an administrative order issued by the DANR Secretary prohibiting boats
not subject tolicensefrom fishing within three kilometers oftheshore
line of American militaryandnaval reservations withouta special permit
from the DANR Secretary uponrecommendation ofthemilitaryand
naval authorities,becausetheFisheries Act really does notcontain such
a provision.Here,sec.63 oftheFisheries Act, under theaforecited well-
ensconcedprincipleof"Inclusion unius estexclusio alterius,"prohibits
persons without permits or leases to operatefishponds ofthepublic
domain, because it allows only holders ofpermits or leases toconstruct,
occupy andenjoy such fishponds.
The appellees, however, insist that the prohibition in Fisheries
Administrative Order14,sec.37(a), refers tofishponds coveredby
permits or leases, andsinceno permitor lease hadas yetbeen granted
to Casteel, the prohibition does not apply. Stated elsewise, their theory
is that itwas perfectly allright for Casteel to violateFisheries
Administrative Order14,for, anyway, hehadnotyet been issued a
permit or lease.
The appellees advocatea dangerous theory which invites
promiscuous violation ofthesaid administrative order. Forall that a
would-be permitteeor lessee woulddo inorder toescape the
consequences ofan unauthorizedsubleaseor transfer, is toeffect such
sublease or transferbefore the issuanceoftheleaseor permit, and then
argue that thereis no violation becausesuchsubleaseor transfer was
effected beforea permit orleasewas issued. To besure,this theory
espousedby theappellees wouldviolatetheintentofthe legislatureto
grant the privilegeofoccupying, possessing, developing and enjoying
fishponds ofthepublic domainonly tobona fide holders ofpermits or
leaseagreements properly issuedor executedby theDANR Secretary.
The appellees assail as inaccuratethestatement in ourdecision
that "after theSecretary ofAgriculture andNaturalResources approved
the appellant's application,he became toall intents and purposes the
legal permitteeofthearea with the corresponding rightto possess,
occupy andenjoy the same,"becausethedecisions ofthe Secretary
allegedly did not approvetheappellant's fishpond application but
merely reinstated and gaveduecourse tothesame.This is not correct.
The decisions ofthe DANRSecretary inDANR cases 353 and353-B did
not merelyrecognize theoccupancy rights ofCasteel(and, necessarily,
his rights to possess andenjoy thefishpond), as admitted bytheDeluaos
(p. 13, motionfor reconsideration), butapproved his applicationas well.
Several orders, memoranda, letters andother officialcommunications of
the DANR Secretary andother administrative officials ofthe DANR,
found in the records ofthis caseand intherecords ofthe DANR(of
which this Court cantake judicial notice), attest tothis.
The decisions in cases 353and353-Ewere ordered executedway
back on August4, 1955. (rollo,p. 179) Then in a 1st Indorsement dated
July 1, 1961,theDANR ordered theDirectorofFisheries to executethe
said decisions,"it appearing from therecords ofthis Officethat the
same had long becomefinal andexecutory and that there is nothing in
said records to showthat this Officeis party-litigant in Civil CaseNo. 629,
allegedly filed by Inocencia Deluao and FelipeDeluao against Nicanor
Casteel for "SpecificPerformance, etc."(rollo,p. 100) On October 26,
1961 the DirectorofFisheries issued a memorandumto the District
Fishery Officer, DavaoCity, incompliance withtheaforementioned1st
Indorsement,instructing thelatter "to takeimmediate steps toexecute
the decisions oftheSecretaryofAgricultureand Natural Resourceboth
dated September15,1950... ."(rollo, p.101) Nextcamea memorandum
dated June 27,1962ofthe Director ofFisheries to theRegional Director,
Fishery Regional OfficeNo. VIII, Davao City, stating, "Your attentionis
again invited tothememorandum ofthis Office, dated October 26,
1961, whereinyou wereinstructed toexecutethedecisions both dated
September 15, 1950,in connection withtheabove-entitledcases ... . In
this connection,you arehereby directed toexecutetheaforesaid
decisions inthepresenceoftheparties concerned, ..."The Director of
Fisheries also sent a telegram dated July 21, 1962to the Fishery Officer,
Davao City enjoining the latter to "EXECUTEDECISIONS BY SECRETARY AS
INSTRUCTED PLACECASTEEL IN POSSESSION AREAS OF ARADILLOS

CARPIO AND CACAMDEPOSITREIMBURSEMENTFOR CACAMCLERK OF
COURT RIGHT OF CASTEEL TO AREAS SANCTIONED BY DECISIONS
ISSUANCEPERMITS WILL FOLLOW LATER."(rollo, p.102; emphasis
supplied)
A notice of executiondated September 11, 1962oftheRegional
Directorof the Fishery OfficeofDavaoCity was sent totheparties in this
case, requiring them"to bepresent in thepremises ofthearea underFp.
A. No. 1711 of Nicanor Casteelsituated inBarrioPalili, Padada (formerly
covered by the areas under F-299-C andF-539-C ofLeoncioAradillos and
AlejandroCacam,respectively,and Fp. A. No. 763ofVictorio D. Carpio),
on September 24,1962at 10 o'clock in the morning. This Officewill
place NicanorCasteelin possessionofthearea pursuantto the
instructions in thetelegrams oftheDirector ofFisheries, datedJuly 21,
1962, and September7, 1962, in connection with thedecisions ofthe
Honorable,theSecretary ofAgriculture andNaturalResources inDANR
Cases Nos.353 and 353-B, both datedSeptember 15, 1950."
The appellees, however, filedon July 9, 1963a new protest against
the execution of the decisions with the Commissioner ofFisheries.Said
protest was dismissed by the Acting Commissioner ofFisheries in a letter
to Mrs. Inocencia Deluaodated June1, 1964,which stated, inter alia:
This is in connection with your claimas embodiedin the
protest filed by youandyourhusband, FelipeDeluao, over
the area coveredby FishpondApplication No. 1717 of
Nicanor Casteel, locatedin Malalag, Padada,Davao. Pleasebe
advised thatthe right overthe areainquestionwas already
adjudicated or awardedto Nicanor Casteel, in theOrder of
the Secretary ofAgriculture andNaturalResources, dated
September 15, 1950 (DANR Cases Nos. 353-B and No. 353),
hence, this matteris a decided and closed case. The
aforestatedOrder has long becomefinaland executory. In
fact, it has been partially executed. Nothing new has been
raisedin your instant protest which appears tobe intended
mainly to delay thefullexecutionofthe order or Decision of
the Secretary. Your protest, therefore,lacks merit or basis.
It appearing, therefore, that there is nothing worth
taking intoconsideration in your claimor protest whichhas
not moreover beenofficially docketed for failureto pay the
protest fee, as required by the rules andregulations, your
instantprotestis hereby DISMISSED; and, thematter
definitely consideredCLOSED.(Emphasis supplied)
An appeal fromtheforegoing dismissal was taken by theappellees
to the DANR Secretarywho dismissed thesameina letterdated
September 12, 1967,thus:
In view ofthe finalityofour decisions in the two
aforementioned administrative cases (DANR Cases Nos. 353
and 353-B), execution ofthesame hadbeen ordered by this
Office as earlyas August 4, 1955, notwithstanding the
injunction proceeding,becauseit appears thatneitherthe
Secretary ofAgricultureand Natural Resourcenorthe
Directorof Fisheries was a partythereto.However,dueto
several incidentalrequirements necessaryin the
implementation ofsaid decisions, the execution thereofwas
delayed. In another directive ofthis Office totheDirector of
Fisheries contained ina 1stIndorsement datedJuly 5,1961,
the Office reiterated due execution ofthesaid decisions. The
Directorof Fisheries, inturn, relayed the directivetothe
Fisheries Regional Director inDavao City who gave noticeto
Nicanor Casteel and FelipeDeluaoto bepresent inthearea in
question on September 24, 1962 and that Casteel wouldbe
placed in possessionthereof.
The due executionofthedecisions sufferedagain
another delay becauseyou filedtwo separate"URGENT
OMNIBUS PETITIONS TO DECLARE RESPONDENTS (Nicanor
Casteel,Director ofFisheries and Regional DirectorCrispin
Mondragon) IN CONTEMPTOF COURT AND TO DIRECT
RESPONDENTS TO DESISTFROMPLACING RESPONDENT
NICANOR CASTEEL IN POSSESSION OF THELITIGATED
PROPERTY."The first was filedbeforetheCourt ofFirst
Instance of Davao andtheother, beforetheCourt ofAppeals
in Manila. However, in separateorders ofthe Courtof
Appeals dated October 12, 1962 and ofthe CourtofFirst
Instance ofDavao datedOctober 24, 1962, the"Urgent
Omnibus Petitions,etc."were bothdenied.
The denialby theCourts ofthesaid urgent omnibus
petitions to declarerespondents in contemptofcourtand to
direct therespondents todesistfrom placing Nicanor Casteel
in possessionofthe litigated property, could beinterpreted
to mean thatthereis no legal impediment, intheexecution
ofthe decisions ofthis Officewhich had long becomefinal
and executory, andanimpliedapproval by theCourts in the
enforcementofsaiddecisions.
Notwithstanding allthecircumstances, however, you
again filed onJuly 9, 1963,a new protest againstthe
execution oftheaforementioned finaldecisions ofthis Office
ofSeptember 15, 1950beforetheCommissioner ofFisheries.
A close study ofyourprotestshows thatthereis no new
matter raised in said protest which has not been disposed of
in previous resolutions either by this Officeor by the
PhilippineFisheries Commission. This Office is eveninclined
to share theopinion oftheActing Commissioner ofFisheries
that the protest apparently is a moveintended todelay
further the due execution ofthefinaldecisions.
IN VIEW OF ALL THEFOREGOING, and finding thenotice
ofappealto beunmeritorious, thesame, muchto ourregret,
cannot befavorably entertained and the sameis hereby
dismissed. The Commissioner ofFisheries is directedto
immediately execute the decisions ofthis Office inthe
aforementioned DANRCases Nos. 353 and 353-B upon
receiptofthis order, itappearing that saiddecisions had long
become finaland executory. However,in implementing the
said decisions,it is necessary thatNicanor Casteel firstbe
granted a permit, andoncethecorresponding permitis
granted, toplace him in possessionofthe area in question.
(rollo, pp. 179-180)
Pursuant to the direction made totheCommissioner ofFisheries in
the aboveletter-decision,thelattersent a memorandum datedMay 31,
1968 to theRegional Director,Fisheries Regional OfficeNo. VIII, Davao
City, quoted inpart as follows:
For the early executionofthedirective ofthe Secretary,
you are herebyordered topreparethesketchplan orplans of
the area or areas withrespective location and technical
description so thatthe necessary permit canbe issued in
favor ofMr. Casteel. This Officewill haveto abidewith the
latestdecisionofthe Secretary, hence, yourletter-
recommendationofJanuary 3, 1968,will haveto besetaside.
(Emphasis Supplied)
Again, in a letterdatedSeptember30,1967, theappellees moved
for reconsiderationofthe above dismissal. This was likewisedeniedby
the DANR Secretary inhis reply to themdated December 16, 1968,
holding that:
In connectionwith your letterdatedSeptember30,
1967 requesting for a reconsideration ofa letter-decision of
this Office dated September 12, 1967, andfor the
withholding oftheenforcement ofthe aforesaid decision,
pleasebeinformed thatwehave already considered the
reasons youadvancedand wesee nocogentreasonto
modify or reverseour stand onthematter.
x x x x x x x x x
In view ofthe foregoing, your request for
reconsiderationshould be, as herebyit is, denied. (seeannex
1-B ofappellant's answer to appellees'motion for
reconsiderationofdecision renderedon December24,1968.)
The overwhelming thrustofthe above-citedorders,memoranda,
and letter-decision,is that Casteel's Fp. A. 1717had beenapproved by
the Secretary inDANR cases 353 and353-B and that the area covered by
his application hadbeen adjudicatedand awardedto him. Infact, the
said decisions hadalready beenpartly executedbecause — contraryto
the appellees'allegation — Casteel had already complied withtheorder
in DANR case353-B thathe reimburse toLeoncioAradillos andAlejandro
Cacam theamountofthe improvements introducedby themin thearea

they formerly occupied (see annexAofthe appellees'motionfor
issuanceof temporary restraining orderand petition for contempt, rollo,
pp. 173-180). And the only reason why theissuanceofa permit to
Casteel was delayed was thenumerous legalmaneuvers oftheappellees
which, in thewords of boththeActing Commissioner ofFisheries and
the DANR Secretary,were "intended todelay"theexecution ofthe
aforestateddecisions.The non-issuanceofthe permitdueto the
deliberateattempts of the appellees to forestallthesamecannot and
should notbe takenagainst thehereinappellant,becauseclear and
unmistakableis theintention ofthe DANR Secretary to placehim in
possession of thewholefishpond in question.
Pursuing further their buckshotarguments underthefirst
proposition, the appellees insistthatthedecisions inDANR cases 353
and 353-B are not binding onthem because theywerenot parties to the
cases. Theyargue that eveniftheirsecond motion for reconsideration
dated January 9,1969 — which they allegedwas givenduecourse — of
the letter-decision of theDANR Secretary dated September 12, 1967
were denied, thedenial wouldmerely foreclosethequestionofwhether
or not they could stillintervenein DANRcases 353 and 353-B after the
same havebecome final, but willnotprecludethemfrom asserting their
interest inthefishpondthrough other means, such as the filing ofan
application over thehalfportionoccupied by themor a protest against
the issuanceof a permitto Casteel over the saidhalf.
Nothing couldbefarther from the truth. Therecords ofthis case
and of the cases in the DANRshow the severalprotests, appeals,motion
to interveneand motions for reconsideration oftheappellees — all
calculatedto preventtheexecutionofthedecisions inDANR cases 353
and 353-B. Inthefaceofall theselegal maneuvers, allofwhich had been
denied validity bytheFisheries Commissioner and the DANR Secretary,
how can they now assert thatthesaid decisions do notbind them?
Contrary totheir representations, they arecertainly precluded from
filing application over the halfportion occupied by them or a protest
against theissuanceof a permit toCasteeloverthesaid half.After all,
the area involvedin DANR cases 353 and 353-B is thetotalarea of
178.86 hectares, more orless, covered by Casteel's Fp. A. 1717. This is
clear notonly from the above discussion, butfrom appendix13ofthe
appellees'motion for reconsiderationitselfwhichis thecertification of
the Fisheries Commissionerstating that:
The records further show thatthearea under Fp. A. No
1717 is involved inadministrativecases towit:DANR CASES
353 and 353-B,entitled "NicanorCasteelvs.Victorio D.
Carpio"and"Nicanor Casteel vs. Alejandro Cacam, et al.,"
respectively, which has beendecidedby theSecretaryof
Agricultureand Natural Resources in a letter dated
September 12, 1967,in favor ofNicanor Casteel.... .
It is extremelydoubtfulthat their second motion for
reconsiderationallegedlyfiled onJanuary 9, 1969 was reallygiven due
course by the DANR.Appendix Ecitedby themwhich is the DANRLegal
Department's reply datedFebruary 4, 1969, merelymentions the
referenceof theirmotionto the Department's "ActionCommittee"for
deliberation and action. Nofavorableactionhas been taken onit to
date.
II. The appellees next arguethatthecontract ofservice, ex. A, is
not by itself a transfer orsublease but merelyan agreementto divide or
transfer, and thatpursuant toits intended"ultimate undertaking"of
dividing thefishpondinto twoequal parts theappellantis under
obligation,conformablywiththelaw onobligations andcontracts, to
executea formal transfer and to secureofficial approvalofthesame.
They allegethatactualdivision ofthefishpondwas predicated ona
favorabledecisionin the then pending DANR cases 353 and 353-B; that
the pendency of thesaidcases servedto suspendimplementation ofthe
agreementto divide; andthat after theDANR Secretary ruledin
Casteel's favor, the suspensivecondition was fulfilledand theultimate
undertaking to divide the fishpond became a demandableobligation.
The appellees seem tohave failedto grasp the rationaleofour
decision.We discussed at length — inthesaid decision and inthe
resolutionof their firstproposition above — that the contractof
partnershipto divide the fishpond between themafter such award
becameillegalbecauseit is at war withseveralprohibitory laws.As such,
it cannotbe made subject toany suspensive conditionthefulfillmentof
which could allegedly maketheultimateundertaking therein a
demandableobligation. It is an elementary rulein lawthat a partnership
cannot beformed for an illegal purpose oronecontrary topublic policy
and that where theobjectofa partnership is the prosecution ofan
illegalbusiness or onewhich is contrary topublicpolicy, the partnership
is void. And sincethecontract is null andvoid, theappellantis notbound
to executea formaltransferofone-halfofthe fishpond and tosecure
official approval ofthe same.
It must be recalled thattheappellees havealways vehemently
insistedthat the "contractofservice,"exh. A, created a contract ofco-
ownership betweentheparties over the fishpond inquestion.We,
however, refused to go along with their theory inorder not to be
compelledto declarethecontract a completenullity as being violativeof
the prohibitory laws,thus precluding the appellees from obtaining any
relief. It is precisely toenableus to grantreliefto the appellees that,in
our decision, weassumed thattheparties did not intendto violatethe
prohibitory laws governing thegrant andoperationoffisherypermits.
We cannot, however, requiretheappellantto divide the fishpond
in questionwith theappellees,in violation ofthedecisions ofthe DANR
Secretary rendered in DANR cases 353and 353-B way back on
September 15, 1950,because that wouldviolatethe principlethat
purely administrativeanddiscretionary functions may notbe interfered
with by the courts.We areloath to impose our judgmenton the DANR
Secretary on purely administrativeanddiscretionary functions in a case
where thelatter is not evena party. At allevents,we arepersuaded that
we have sufficiently protectedtheinterests ofthe appellees in our
decision.
III. The appellees next contend thatassuming that theprohibition
by mere administrative regulation against thetransfer offishpondrights
without prior officialapproval is valid; that the saidprohibition was
already operativenotwithstanding that no permithad as yet been issued
to Casteel; and thatthecontract ofservice is already a "transfer"and
not a mere agreement "todivide,"thecontract ofservice,even without
prior official approval, is not a nullity becauseundertherulings ofthe
Supreme Court andtheDANR in analogous cases, the requisiteapproval
may, on equitableand/orother considerations,be obtained evenafter
the transfer.
Zamboanga Transportation Co. vs. PublicUtility Commission (50 Phil.
237), cited by the appellees to buttress theirstand,is not inpoint. In
that case, this Court heldthat theapproval ofthemortgageon the
property ofthepublic utility involved, insteadofbeing prejudicial is
convenientandbeneficial tothepublic interest. Thus,considerations of
public interestmoved this Court tohold thattheapprovalby thePublic
Utility Commissionmay be givenbefore orafter the creation ofthelien.
On the other hand, norealconsiderations ofpublicinterest obtain inthis
case. This is merely a controversy betweentwo parties over a fishpond
ofthe publicdomain.Besides,thesubject matterofthecontractofsale
or mortgage intheZamboanga case is private property capableof
private ownership.Which explains why this Court held inthat casethat
"The approval ofthePublic Utility Commission requiredby law before
the execution ofa mortgage ontheproperty ofa publicutilityor thesale
thereof, has no more effectthan an authorizationto mortgageor sell
and does not affecttheessential formalities ofa contract, but its
efficacy."In other words, as long as thecontractto sellor mortgage a
public utility's properties is executed with alltheintrinsic and extrinsic
formalities ofa contract, itis validirrespectiveofthe presence or
absence oftheapprovalby thePublic Utility Commission. Only
the efficacy ofsuch a contract is affectedby thepreserveor absenceof
the approvalofthePublic Utility Commission.In thecaseatbar, the
subjectmatter is a fishpondwhich is partofthepublic domainthe
ownership ofwhichcannot beprivately acquired.Thus, withouttheprior
approvaloftheDANR Secretary, any contract purporting tosublease or
transfertherights to and/or improvements ofthefishpond, is null and
void.
Equally inapplicableto the caseatbar is Evangelistavs. Montaño,
et al. (93 Phil.275). Thesubjectmatterin thatcase is a homesteadwhich
is capable ofprivateownership, while involved hereis a fishpond ofthe
public domain incapable ofprivateownership. Theprovision oflaw
involved inthatcaseis sec. 118 ofthePublicLand Act(C.A. 141) which
explicitly provides thattheapproval oftheDANR Secretary to any

alienation, transfer or conveyanceofa homesteadshall not bedenied
except on constitutional and legalgrounds. Therewas noallegation in
the saidcase that "therewere constitutionalor legal impediments to the
sales, and nopretensethat ifthe sales had beensubmitted to the
Secretary concernedthey wouldhave been disapproved."Thus,there
this Courtheld that"approval was a ministerial duty, tobe hadas a
matter of courseanddemandableifrefused."In this case,sec. 37 of
Fisheries AdministrativeOrder 14very clearly provides that without the
approvalof theDANR Secretaryanysublease ortransferis null and void.
It does not state that approval maybe withheldonly on constitutional
and legalgrounds, so that intheabsenceofsaidground, approvalofthe
sublease or transferbecomes ministerial. In Evangelista this Court
appliedart. 1461 of theCivilCodeof1889, which providedthatthe
vendor was boundto deliver and warrant the subjectmatter ofthesale,
in relationto art.1474thereof, whichheld thevendor responsibleto the
vendee for thelegal andpeacefulpossessionofthesubjectmatterofthe
sale. Itconstrued theforegoing provisions as contemplating the
obligation todeliver clear title,including the securing oftheapprovalof
the sales by theDANR Secretary, and held thatby forceofthis
obligation,theplaintiffin that cage, whostepped into the shoes ofhis
grantor, cannot usethelack ofapprovalto nullify the sales becausea
sellerwill not beallowed to takeadvantage ofhis omissionor wrong.
Thus, under themaxim, "Equity regards that as donewhich should have
been done,"this Courtviewed the sales as thoughtheobligations
imposedupontheparties hadbeenmet, and treatedthepurchasers as
the owners of thesubject matter ofthesales, notwithstanding the
defects of theconveyances or oftheir execution. Certainly,thefactual
situationin the caseatbar does notwarrantapplication oftheabove-
quoted maxim. Here, a transfer by Casteelto Deluao ofone-halfofthe
fishpond inquestion withoutthe priorapproval oftheDANR Secretary is
legally objectionable, and nojustifying reasonexists for us to viewthe
requirement of prior approvalas merely directory.
The appellees citesec.33,sub-sec. (4) ofFisheries Administrative
Order 14, which states,1äwphï1.ñët
If a permitteetransfers his/her right toany area or land
improvements he introduced thereon,thetransfereemay
secure a permit by filing theproper application andpaying
the necessary fee, rental and bonddeposit. Therental maybe
as providedin sections 16and 20hereof.
and argue that thesaid administrativeorder evinces in its other
provisions anintention not togivetheprohibition in sec. 37 an absolute
and inflexibleeffect, because noreference is made totheprohibition in
section37as qualificatory. This is typicalofthe appellees'clutching-at-
straws reasoning. There is obviously no needto mention theprohibition
in sec. 37as qualificatory becausethe prefatory sentence ofsec. 33
provides that "Every permit or leaseshall begovernedby theprovisions
ofthis AdministrativeOrder,"among whichis sec. 37 thereof. Besides, if
the appellees should seeany conflictbetween sec. 33, subsection (r) (4)
and sec.37(a) — althoughthereis clearly none tobe found — then,
following therules of statutory construction, sec. 37(a),thelatter
provision should prevail.
The appellees'argumentthat theprohibitionitselfis self-
emasculating becausewhilestipulating in its first sentencethatany
unapproved transfer orsubleaseshall benullandvoid, itstates in the
second sentence that "a transfer not previously approved
or reported shallbe consideredsufficient causefor thecancellation of
the permit...,"thereby implying that a mere"report"ofthetransfer,
even without approvalthereof,maysufficeto preserveexisting rights of
the parties — is nowrendered academicby RevisedFisheries
Administrative Order60,effectiveJune29, 1960,which repealed
Fisheries AdministrativeOrder 14and its amendments. Thus, sec. 32of
Fisheries AdministrativeOrder No. 60 provides that:
A transfer or subleaseoftherights to, and/or improvements in, the
area covered bypermit or lease maybe allowed, subject tothefollowing
conditions:
x x x x x x x x x
(d) That any transfer or subleasewithouttheprevious
approvalof theSecretary shall beconsidered nulland void
and deemedsufficient causefor thecancellation ofthe
permit or lease,andtheforfeitureoftheimprovements and
the bond deposited inconnectiontherewith,in favor ofthe
Government.
Note that there is nomention whatsoever oftheword reportand
that it is theDANR Secretary's approvalwhich must besecured. Amere
report, therefore, ofthetransfer is notsufficient.In fact, although the
Bureau ofFisheries was fully informed ofthecontract ofpartnership
betweentheparties todividethe fishpond, still, thesaid Bureaudidnot
grant the reliefs prayed for bytheappellees in their numerous protests,
motions for reconsiderationandappeals. Thenumerous reports made
by the appellees to the BureauofFisheries were, therefore, disregarded.
Finally, theappellees citethecaseof Amado Lacuestavs. Roberto
Doromal,etc.(DANR case3270) in which theDANR Secretary has
allegedly interpreted the prohibitionfound in sec. 37(a) ofFisheries
Administrative Order14 as not absoluteso that the approvalrequired by
yet legally beobtainedeven afterthetransfer ofa permit.
It would not serve the cause ofinterdepartmental courtesywere
we to reviewor comment on the decision of theDANR Secretary in the
said case. But evenat that,thefactualsituation in Lacuestashows that
there was sufficientjustification for the DANR Secretary to dividethe
fishpond between the parties, which does notobtain in this case.
In Lacuesta theverbalagreementto divide thefishpond was
enteredinto even beforethe fishpond application was filed. The parties
there helped each other insecuring theapproval oftheapplication. The
DANR Secretary found for a factthat the appelleein thesaidcase would
not have succeededin securing the approvalofhis fishpondapplication,
coupled withtheissuance ofthepermit, wereit notfor
the indispensable aid bothmaterialand otherwise extended by the
appellant spouses. Thus,theappellantspouses paid the filing fee for the
application, the bond premiums and the surveying fees. They askedthe
assistanceoftheir congressmanwho facilitatedthereleaseofthe
permit. They paidtherentals for the fishpond for severalyears. Infact,
the permitwas even cancelled— althoughlater reinstated — because of
the appellee's failureto payrentals. Intheface oftheforegoing facts,
the DANR Secretary could notsimply ignore the equitablerights ofthe
appellants over one-halfofthe fishpond in question.
In this case, Casteel was theoriginal occupant andapplicant since
before the lastWorld War.He wanted toprecludesubsequent
applicants from entering andspreading themselves within thearea
appliedfor by him, by expanding his occupationthereofby the
construction ofdikes andthecultivation ofmarketablefishes. Thus, he
borrowed money from the Deluaos tofinance needed improvements for
the fishpond, andwas compelledby forceofthis circumstance toenter
into the contract ofpartnership to dividethefishpond after theaward
(see letter dated November 15, 1949 ofCasteelto FelipeDeluao
quoted inter aliaon page4 ofour Decision). This,however, was allthat
the appelleespouses did. Theappellant single-handedly opposedrival
applicants whooccupiedportions ofthefishpondarea, and relentlessly
pursued his claim tothesaid area upto theOfficeoftheDANR
Secretary, until itwas finally awarded tohim. Thereis hereneither
allegation nor proofthat,without the financial aidgiven by the Deluaos
in the amountofP27,000, thearea would nothavebeen awardednor
adjudicated to Casteel.This explains, perhaps, whytheDANR Secretary
did not find it equitableto awardone-halfofthefishpondto the
appelleespouses despite their many appeals and motions for
reconsideration.
IV. The appellees submitas their fourth propositionthat there
being no prohibitionagainst joint applicants for a fishpond permit, the
fact that Casteel and Deluao agreed to acquirethefishpond inquestion
in the nameofCasteelalone resulted ina trust by operation oflaw
(citing art.1452, CivilCode) in favor oftheappellees as regards their
one-halfinterest.
A trust is theright, enforceableinequity, to thebeneficial
enjoyment ofproperty the legaltitleto which is inanother(Ulmer v.
Fulton, 97 ALR 1170,120 Ohio St. 323, 195 NE557). However, sincewe
held as illegalthesecondpart ofthecontract ofpartnership between
the parties todividethefishpondbetweenthem after theaward, a
fortiori, no rights orobligations could havearisen therefrom.
Inescapably, notrustcould haveresulted becausetrustis foundedon
equity andcan never resultfrom an actviolativeofthe law. Art. 1452 of
the Civil Codedoes not supporttheappellees'stand because it

contemplates an agreementbetweentwoor more persons to purchase
property — capableof privateownership — the legaltitleofwhich is to
be taken inthenameofoneofthemfor thebenefit ofall. In the caseat
bar, the parties didnot agree topurchasethefishpond, and evenifthey
did, such is prohibited bylaw, a fishpond ofthepublicdomain not being
susceptible of privateownership. Theforegoing is alsoonereason
why Gauiranvs. Sahagun(93 Phil. 227) is inapplicable tothecase at bar.
The subject matter in thesaidcase is a homestead which,unlikea
fishpond of thepublic domainthetitle towhich remains inthe
Government,is capable ofbeing privately owned. Itis also noteworthy
that in thesaid case,theBureau ofLands was not apprised ofthejoint
tenancy betweentheparties andoftheir agreement todividethe
homestead between them, leading this Court tostatethepossibility of
nullificationof saidagreementiftheDirector oflands finds outthat
materialfacts set out intheapplication werenottrue, such as the
statement intheapplication that it"is made for the exclusivebenefit of
the applicant and not, either directly or indirectly, for thebenefit ofany
other personor persons,corporations, associations or partnerships."In
the caseatbar, despitethepresumedknowledgeacquiredby DANR
administrativeofficials ofthepartnershipto divide thefishpond
betweentheparties,duelargely tothereports madeby theDeluaos, the
latter's numerous appeals,motionfor interventionand motions for
reconsiderationof the DANRSecretary's decisions inDANR cases 353
and 353-B, wereall disregarded anddenied.
V. The appellees insist thattheparties'intention "to divide"the
fishpond remained unchanged; that thechangeinintention referred
solely tojoint administration beforetheactual divisionofthefishpond;
and that what can beheldas having beendissolved by the "will"ofthe
parties is merely thepartnershipto exploit thefishpondpending the
award butnot the partnershipto divide the fishpond aftersuch award.
In support of their argument, they cite Casteel's letters ofDecember 27,
1950 andJanuary 4, 1951 which allegedly merelysignifiedthelatter's
desire toputan endto thejointadministration, but to which the
Deluaos demurred.
Even admitting arguendothat Casteel's desireto terminate the
contractof partnership— as allegedly expressedin his aforecitedletters
— is equivocal in thatit contemplated thetermination merelyofthe
joint administration over the fishpond, the resolution oftheDeluaos to
terminatethesame partnership is unequivocal.Thus, in his letterof
December 29, 1950 toCasteel, Felipe Deluao expressed his
disagreement tothedivision (notjoint administration) ofthefishpond,
because hestated interalia that:
As regards your propositionto divide the fishpondinto
two amongourselves, I believe itdoes notfind any
appropriategrounds by now. ... .
Be informed that theconflicts overthefishpondat
Balasinon which youproposed todivide, has not as yetbeen
finally extinguished by the competent agency ofthe
governmentwhichshall have the lastsay on the matter.
Pending thefinalresolution ofthecase oversaidarea, your
propositionis outoforder. (Emphasis supplied)
It must be observed that, despitethedecisions oftheDANR
Secretary inDANR cases 353 and353-B awarding the area to Casteel,
and despite the latter's proposal that they dividethefishpond between
them, the Deluaos unequivocally expressedin their aforequoted letter
their decision not to sharethefishpondwith Casteel. This producedthe
dissolutionof the entirecontract ofpartnership (to jointly administer
and to divide thefishpond aftertheaward) between the parties, not to
mention its automatic dissolution for being contrary to law.
VI. Since we haveshownin the immediatepreceding discussion
that — evenif we considerCasteel's decision to terminatethecontract
ofpartnership todividethefishpondas equivocal — thedetermination
ofthe Deluaos to terminatesaid partnership is unequivocal, thenthe
appellees'sixth proposition thatCasteelis liableto the Deluaos for one-
halfof the fishpond or the actualvaluethereofdoes notmerit any
consideration. The appellees, afterall,alsocaused thedissolution ofthe
partnership.
Parenthetically, theappellees'statementthatthebeneficial right
over the fishpond inquestion is the "specificpartnershipproperty"
contemplated by art. 1811oftheCivil Codeis incorrect. Areading ofthe
said provision willshow that whatis meant is tangibleproperty, such as
a car, truck or a pieceofland,butnot an intangiblething suchas the
beneficialright toa fishpond. Ifwhat the appellees have in mind is the
fishpond itself, they are grossly inerror. Afishpond ofthe publicdomain
can neverbe considered a specificpartnershipproperty because only its
use and enjoyment— neverits titleor ownership — is grantedto
specificprivate persons.
VII. The appellees'finalproposition that only by giving effectto the
confirmed intention oftheparties may thecauseofequityandjustice be
served, is sufficiently answeredby our discussionandresolution oftheir
first six propositions. However,in answer tothefocal issue they present,
we must statethat sincethecontract ofservice,exh. A, is contraryto
law and, therefore, null andvoid, itis not andcan never be considered
as the law between theparties.
ACCORDINGLY, the appellees'February 8,1969 motionfor
reconsiderationis denied.1äwphï1.ñët
Concepcion, C.J., Dizon, Makalintal, Zaldivar, Sanchez, Fernandoand
Capistrano,JJ., concur.
Teehankee and Barredo, JJ., took nopart.
Reyes, J.B.L., J., is on leave.

[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.
D E C I S I ON
DAVIDE, JR., J.:
In this petitionfor review oncertiorari under Rule 45 oftheRules
ofCourt, petitioners urgethis Court to reversethe20April1994decision
of the Court of Appeals (Seventeenth Division) in CA-G.R. CV No.
34936,[1] which affirmed in toto the 26 August 1991 decision of the
Regional Trial Court ofCalbayog City in Civil Case No. 265.
Civil Case No. 265 was anaction for recovery ofpossessionofland
and damages with a prayer for a writ of preliminary mandatory
injunction filed by privaterespondents herein, spouses Ranulfo Ortiz, Jr.
and Erlinda Ortiz, againstRodolfo Morales. The complaint prayed that
private respondents be declared the lawful owners ofa parcel ofland
and the two-storey residential building standing thereon, and that
Morales beorderedto remove whatever improvements heconstructed
thereon, vacate the premises, and pay actual and moral damages,
litigation expenses, attorney's fees and costs ofthe suit.
On 2 February 1988,Priscila Morales, one ofthedaughters oflate
Rosendo Avelino andJuana Ricaforte, filed a motion tointervene in Case
No. 265. No opposition thereto having been filed, the motion was
granted on 4 March 1988.[2]
On 30 November 1988Rodolfo Morales passed away. In its order
of9 February 1989[3] thetrialcourt allowed his substitution byhis heirs,
Roda, Rosalia, Cesar and Priscila,all surnamedMorales. Thereafter, pre-
trial and trial onthemerits were had and the case was submitted for
decision on 16 November 1990.
On 26 August 1991 theTrial Courtrendered its decision[4] in favor
ofplaintiffs, privaterespondents herein, the dispositive portion ofwhich
reads as follows:
WHEREFORE, judgmentis hereby rendered infavor ofthePlaintiffs and
against Defendants-Intervenor:
1. Declaring the Plaintiffs the absolute andrightful owners ofthe
premises in question;
2. Ordering theDefendants-Intervenor to:
a. vacatefrom the premises in question;
b. remove thebeauty shopthereat;
c. jointly and severally,pay thePlaintiffs, a monthly
rental of P1,500.00 ofthepremises starting from
March 1987, and theamounts of P75,000.00 for
moral damages,P5,000.00for litigation expenses,
andP10,000.00for Attorney’s fees; and
d. to pay the costs.
The injunctionissued inthis caseis hereby madepermanent.
SO ORDERED.[5]
The following is trial court’s summary ofthe evidence for the
plaintiffs:
The evidenceadducedby thePlaintiffs discloses thatthePlaintiffs are
the absoluteand exclusive owners ofthepremises in question having
purchasedthesame fromCelso Avelino,evidencedby a Deed of
Absolute Sale (Exh.“C”),a public instrument. They later caused the
transferof its tax declaration in thenameofthefemale plaintiff(Exh.
“I”) and paid the realty taxes thereon(Exh. “K”& series).
Celso Avelino (Plaintiffs’predecessor ininterest) purchasedthelandin
question consisting of two adjoining parcels while hewas still a bachelor
and the City Fiscalof Calbayog City from Alejandra Mendiola andCelita
Bartolome,through a ‘Escriturade Venta’ (Exh. “B”). Afterthepurchase,
he caused the transferofthe taxdeclarations ofthetwoparcels inhis
name (Exhs. “D”& “E” to“G”& “H”) as wellas consolidated into one the
two tax declarations in his name(Exh. “F”). With the knowledge ofthe
Intervenor and the defendant, (Cross-examination ofMorales, t.s.n. pp.
13-14) Celso Avelino causedthesurvey ofthepremises in question, in
his name, by the BureauofLands (Exh. “J”). He alsobuilt his residential
house thereinwith Marcial Aragon (now dead) as his master carpenter
who was even scoldedby himfor constructing the ceiling too low.
When the two-storey residential house was finished,he took his parents,
Rosendo Avelino andJuana Ricaforte, and his sister, Aurea, whotook
care ofthe couple, to livethereuntiltheir deaths. Healsodeclaredthis
residential housein his taxdeclaration tothepremises inquestion (Exh.
“F”) and paid thecorresponding realty taxes,keeping intact thereceipts
which he comes toget orAurea would go to Cebuto giveitto him(t.s.n.
Morales,pp. 4-6).
After being theCity FiscalofCalbayog, Celso Avelino becamean
ImmigrationOfficerand later as Judge oftheCourtofFirst Instancein
Cebu with his sister, Aurea, taking careofthe premises inquestion.
While he was already in Cebu,thedefendant,without the knowledge
and consentoftheformer, constructed a smallbeauty shopin the
premises in question.
Inasmuch as thePlaintiffs arethepurchasers oftheother real properties
ofCelso Avelino, oneofwhich is at Acedillo (nowSen. J.D. Avelino)
street,after theywereofferedby Celso Avelino tobuy the premises in
question, theyexaminedthepremises inquestion andtalked withthe
defendant about thatfact, the latter encouraged themto purchase the
premises in question rather than the property going to somebody else
they do not knowand thathe willvacatethepremises as soon as his
uncle will notify him todo so. Thus,they paidthepurchasepriceand
Exh. “C” was executed intheirfavor.
However, despiteduenotice fromhis uncle tovacatethepremises in
question (Exh. “N”), the defendantrefused tovacateor demolish the
beauty shopunless he is reimbursed P35,000.00for it although it was
valued at less than P5,000.00. So, thePlaintiffs demanded,orally and in
writing (Exhs.“L”& “M”) to vacatethepremises. The defendant
refused.
As the plaintiffs wereabout to undertake urgent repairs on the
dilapidated residentialbuilding, thedefendanthad already occupiedthe
same, taking inpaying boarders andclaiming alreadyownership ofthe
premises in question, thus they filedthis case.
Plaintiffs, being theneighbors ofCelsoAvelino, oftheir ownknowledge
are certain thatthepremises inquestion is indeed owned by their
predecessor-in-interestbecausethemaleplaintiffusedto playin the
premises when hewas stillinhis teens whilethefemale plaintiffresided
with the lateJudgeAvelino. Besides, their inquiries anddocumentary
evidenceshown to themby Celso Avelinoconfirm this fact. Likewise,
the defendant and Intervenor didnotresidein the premises in question
because theyresiderespectively inBrgy. Tarobucanand Brgy. Trinidad
(Sabang), bothofCalbayog Citywiththeir ownresidential houses there.
Due to the damages they sustained as a result ofthe filing ofthis case,
the plaintiffs areclaiming P50,000.00for mentalanguish; monthly rental
ofthe premises in questionof P1,500.00starting from March 1987;
litigationexpenses of P5,000.00 and P10,000.00 for Attorney's fees.[6]
The trial court’s summary oftheevidence for thedefendants and
intervenor is as follows:
Defendants’-Intervenor’s testimonialevidencetend to show thatthe
premises is question (land and two-storey building) is originally owned
by the spouses, RosendoAvelino and Juana Ricaforte, who,through their
son, Celso Avelino,throughan Escritura deVenta (Exh. “2”) bought it
from the Mendiolas on July 8, 1948.After thepurchasethe couple
occupiedit as owners until they died. Juana diedon May 31,1965while
Rosendo diedon June4, 1980.Upontheir demise, their children:
Trinidad A. Cruz, ConcepcionA. Peralta,Priscila A. Morales andAurea
Avelino (who diedsingle) succeededas owners thereof, exceptCelso
Avelino who did not resideinthepremises becausehewas out of
Calbayog for morethan30 years untilhis death in Cebu City.
The premises inquestion was acquiredby Celso Avelino who was
entrustedby Rosendowiththemoneyto buyit. Rosendo letCelsobuy it
being the only son.The property is in the name ofCelso Avelinoand
Rosendo toldhis children about it(TSN, Morales, p. 21). In 1950 Rosendo
securedgratuitous license(Exh. “1”) and constructed thetwo-storey
house, having retiredas Operator oftheBureau ofTelecommunications,
buying lumber fromthefather ofSimplicia Daroteland paying thewages
ofAntonio Nartea as a laborer.
In 1979, defendantRodolfo Morales constructed beside the two-storey
house and beauty shop for his wife withtheconsent ofCelso and the
latter’s sisters.
Priscila Morales was awarethatthepremises inquestion was surveyed
in the nameofCelso butshe did not makeany attempt,not even her
father, to changethe munimentoftitleto RosendoAvelino. Despitethe

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