45 SCRA 475


Maximo Sta. Maria obtained crop loans from the Philippine National Bank with Associated Insurance & Surety Co., Inc. (Associated) acted as surety of Sta. Maria acting as surety for Antonio R. Banzon and Emilio Ma. Naval in turn acted as indemnitors of Associated. When Sta. Maria failed to pay his obligations to the bank, the said bank demanded payment from Surety Co. Instead of paying the loan, Associated file a complaint against the debtor, Banzon and Naval.

A writ of execution was issued and the properties of Banzon were levied and later on sold in execution. In 1965, the spouses Pedro Cardenas and Leonila Baluyot were able to execute upon and buy one of the properties of Banzon to satisfy the judgment debt of Associated in favor of the Cardenas spouses. The Banzons however refused to vacate the premises and to remove the improvements thereon. Petitioner spouses Antonio Banzon and Rosa Balmaceda filed a complaint against


Whether or not Banzon has the right to ask for conveyance of his two (2) lots.


Yes. When Associated nevertheless prematurely and contrary to the intent and condition of the basic 1957 judgment levied in execution on the two Caloocan City lots of Banzon. Such acquisition is considered a trustee of implied trust for the benefit of the person from whom the property comes by virtue of Article 1456 since Associated not having paid nor having been compelled to pay the bank had no right in law or equity to so execute the judgment against Banzon as indemnitor.

Since no fraudulent concealment or suppression of the fact of such non-payment by Associated or a mistaken notion just assumed without factual basis that Associated had paid the bank and was thus entitled to enforce its judgement against Banzon as indemnitor, the writ for execution of the judgment against Banzon’s properties would not been issued. Associated therefore stands legally bound by force of law to now discharge its implied trust and return Banzon’s properties to him as their true and rightful owner.

*Case digest by Sherl Dianne S. Estoque, JD 3-, Andres Bonifacio Law School, SY 2019-2020