1.) In 1980, Maureen purchased two lots in a plush subdivision registering Lot 1 in her name and Lot 2 in the name of her brother Walter with the latter’s consent. The idea was to circumvent a subdivision policy against the acquisition of more than one lot by one buyer. Maureen constructed a house on Lot 1 with an extension on Lot 2 to serve as a guest house. In 1987, Walter who had suffered serious business losses demanded that Maureen remove the extension house since the lot on which the extension was built was his property. In 1992, Maureen sued for the reconveyance to her of Lot 2 asserting that a resulting trust was created when she had thelot registered in Walter’s name even if she paid the purchase price. Walter opposed the suit arguing that assuming the existence of a resulting trust the action of Maureen has already prescribed since ten years have already elapsed from the registration of the title in his name. Decide. Discuss fully.
This is a case of an implied resulting trust. If Walter claims to have acquired ownership of the land by prescription or if he anchors his defense on extinctive prescription, the ten year period must be reckoned from 1987 when he demanded that Maureen remove the extension house on Lot No. 2 because such demand amounts to an express repudiation of the trust and it was made known to Maureen. The action for reconveyance filed in 1992 is not yet barred by prescription.
A constructive trust is a trust not created by any word or phrase, either expressly or impliedly, evincing a direct intention to create a trust, but is one that arises in order to satisfy the demands of justice. It does not come about by agreement or intention but mainly operation of law and construed as a trust against one who, by fraud, duress or abuse of confidence, obtains or holds the legal right to property which he ought not, in equity and good conscience, to hold. (Heirs of Lorenzo Yap v. Court of Appeals, 371 Phil. 523 )
The following are examples of constructive trust:
1. Article 1456 NCC which provides: “If property is acquired through mistake or fraud, the person obtaining it is, by force of law considered a trustee of an implied trust for the benefit of the person from whom the property comes.”
2. Article 1451 NCC which provides: “When land passes by succession to any person and he causes the legal title to be put in the name of another, a trust is established by implication of law for the benefit of the true-owner.”
3. Article 1454 NCC which provides: “If an absolute conveyance of property is made in order to secure the performance of an obligation of the grantor toward the grantee, a trust by virtue of law is established. If the fulfillment of the obligation is offered by the grantor when it becomes due, he may demand the reconveyance of the property to him.”
4. Article 1455 NCC which provides: “When any trustee, guardian or other person holding a fiduciary relationship uses trust funds for the purchase of property, and causes the conveyance to be made to him or to a third person, a trust is established to whom the findings belong.
3.) With regard to an award of interest in the concept of actual and compensatory damages, please state the guidelines regarding the manner of computing legal interest in the following situations: 1. When the obligation is breached and it consists in the payment of a sum of money like a loan or forbearance of money; 2. When the obligation does not constitute a loan or forbearance of money. Consider the issuance of BSP-MB Circular No. 799, which became effective on July 1, 2013.
When the obligation is breached and it consists in the payment of sum of money like a loan or forbearance of money, in the absence of stipulation, the rate of interest shall be the legal rate of 6% per annum, (Art. 2209, CC) which was increased to 12% per NB Circular 905, series of 1982 to be computed from default. The twelve percent (12%) per annum legal interest shall apply only until June 30, 2013. From July 1, 2013, the new rate of six percent (6%) per annum shall be the prevailing rate of interest when applicable. (Nacar v. Gallery Frames, 703 SCRA 439 , applying BSP-MB Circular No. 799)
The interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per No interest, however, shall be adjudged on unliquidated claims or damages, except when or until the demand can be established with reasonable uncertainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extra- judicially, but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be on the amount finally adjudged. (Nacar v. Gallery Frames, 703 SCRA 439 )