Arlegui v. Court of Appeals

Facts:

            The object of a controversy is a residential apartment unit which was formerly owned by Serafia Real Estate Inc. and leased to spouses Genguyon. Thereafter the spouses were informed that Serafia and its assets had been assigned to A. B. Barreto enterprises, which was subsequently sold to Mateo Tan Lu. Spouses Genguyon continued to make payments for the rental of the aforementioned apartment. Before the sale to Mateo Tan Lu and to Arlegui, the Genguyon Spouses expressed their desire to purchase the said apartment unit from A. B. Barreto Enterprises; offers for this was made through Barreto Apartments Tenant Association, with Mateo Tan Lu and Arlegui made officer s in this association. The sale of the property was done after Arlegui and Tan Lu were made officers in the aforementioned association.

Issue:

            Whether or no Mateo Tan Lu and Josue Arlegui cannot be considered innocent purchasers for value for violating the trust reposed upon them by the spouses Genguyon when they surreptitiously purchased the object property.

Held:

            Yes. It can be gainsaid that Arlegui violated the constructive trust that was created when Tan Lu and the Petitioner appropriated for themselves the property for which they were negotiating for in behalf of the Association. There is the presence of abuse of confidence. Petitioner avers that there was no constructive trust created; however, constructive trusts do not only arise from fraud or duress, but also by abuse of confidence, in order to satisfy the demands of justice. There is ample documentary and testimonial evidence to establish the existence of a fiduciary relationship between them, and those subsequent acts of the petitioner betrayed the trust and confidence reposed on him. Petitioner cannot argue that the spouses Genguyon should and could have negotiated directly with the Barretos after he had already accepted the responsibility and authority to negotiate in their behalf. American jurisprudence provides precedent rulings that a constructive trust is an appropriate remedy against unjust enrichment; it is raised by equity in respect of property, although acquired originally without fraud, it is against equity that it should be retained by the person holding it.

            An action for reconveyance of registered land on an implied trust prescribes in 10 years even if the decree of registration is no longer open to review.