Case Summary (G.R. No. 196023)
Petitioner’s Claim and Subject Property
The dispute concerns Lot 998 of the Cadastral Survey of Iloilo (2,525 sqm), later subdivided into Lots 998-A and 998-B and covered by various Transfer Certificates of Title (TCT). Petitioners allege that Spouses Juan Tong funded the purchase of Lot 998 in 1957 but had it titled in Luis Sr.’s name solely to comply with nationality requirements, creating an implied resulting trust for the benefit of the family lumber business.
Key Dates
• May 11, 1957 – Purchase of Lot 998 by Juan Tong; May 16, 1957 – TCT No. 10346 issued in Luis Sr.’s name
• May 30, 1981 – Death of Luis Sr.; July 2, 1982 – Extra-Judicial Settlement (EJS) executed by his heirs; July 19, 1982 – TCT No. T-60231 issued
• October 12, 1992 – Subdivision into Lots 998-A (TCT No. 97068) and 998-B (TCT No. T-96216)
• August 31, 1995 – Petitioners learn of subdivision and sale of 998-B; file suit for reconveyance (Civil Case No. 22730)
• February 24, 2001 – Go Tiat Kun’s sale of undivided interest in 998-A to her children; issuance of TCT No. T-134082
• August 2, 2005 – Filing of this action for nullification of titles and deeds over Lot 998-A (Civil Case No. 05-28626)
Applicable Law
• 1987 Philippine Constitution – Supreme Court’s jurisdiction under Rule 45 on errors of law
• Civil Code of the Philippines (Articles 1448, 1457) – Implied resulting trusts; admissibility of parol evidence
• Rule of Court 45 – Petition for review on matters of law
Procedural History
• May 21, 2009 (RTC, Branch 37, Iloilo City): Judgment in favor of petitioners declaring an implied resulting trust over Lot 998, nullifying respondents’ deeds and titles, ordering reconveyance, damages, litigation expenses, attorney’s fees, and issuance of new title in petitioners’ names.
• October 28, 2010 (CA, CA-G.R. CV No. 03078): Reversal of RTC decision; dismissal of petitioners’ complaint on grounds that (a) an express trust requires written evidence; (b) resulting trust, if any, converted to constructive trust upon Luis Sr.’s death and barred by ten-year prescription; (c) presumption of gift to child under Art. 1448; (d) estoppel and laches.
• Petition for review under Rule 45 filed with the Supreme Court.
Issues Presented
- Whether an implied resulting trust arose when Juan Tong purchased Lot 998 and titled it in Luis Sr.’s name.
- Whether parol evidence may be admitted to prove a resulting trust.
- Whether petitioners’ action is barred by prescription, estoppel, or laches.
Supreme Court’s Ruling
- Implied Resulting Trust Established
– Under Article 1448, a “purchase-money resulting trust” arises when one party furnishes the purchase price but title is taken in another’s name.
– Evidence shows Juan Tong paid the P55,000 purchase price, the lot remained in service of the family lumber business, possession and tax payments were by Juan Tong (and later Juan Tong Lumber, Inc.), and respondents never exercised ownership until after Luis Sr.’s death. - Parol Evidence Admissible
– Article 1457 permits parol evidence to prove implied trusts. Testimony regarding source of funds, possession, and family arrangements is reliable and supports finding of intent. - No Prescription, Estoppel, or Laches
– Actions for reconveyance under an implied resulting trust are imprescriptible as long as legal title re
Case Syllabus (G.R. No. 196023)
Facts
- Petitioners are nine of the ten children of Spouses Juan Tong and Sy Un; respondent heirs descend from the deceased Luis Juan Tong, Sr., the only Filipino child of Spouses Juan Tong.
- In May 1957, Juan Tong purchased Lot 998 (2,525 sq. m.) for the family lumber business but, being a Chinese citizen, had title registered under his son Luis, Sr.; TCT No. 10346 issued May 16, 1957 in Luis, Sr.'s name.
- December 1978: Juan Tong Lumber proprietorship incorporated as Juan Tong Lumber, Inc.
- May 30, 1981: Luis, Sr. died; his heirs executed an Extra-Judicial Settlement (July 2, 1982) adjudicating Lot 998 to themselves; TCT No. T-60231 issued upon registration (July 19, 1982).
- October 12, 1992: Lot 998 subdivided into Lot 998-A (TCT No. 97068 in name of Go Tiat Kun & children) and Lot 998-B (TCT No. T-96216 in name of Luis, Jr.).
- Petitioners discovered breach of trust re Lot 998-B in 1995, filed Civil Case No. 22730; RTC, CA, and the Supreme Court confirmed reconveyance of Lot 998-B and issued TCT No. T-14839 in their names.
- February 24, 2001: Go Tiat Kun sold undivided interest in Lot 998-A to her children; TCT No. T-134082 issued.
- August 2, 2005: Petitioners filed Civil Case No. 05-28626 for Nullification of Titles and Deeds of Extra-Judicial Settlement and Sale and Damages over Lot 998-A.
Procedural History
- RTC, Branch 37, Iloilo City (May 21, 2009): Ruled for petitioners, finding an implied resulting trust in their favor, nullified respondents’ deeds and titles covering Lot 998-A, ordered reconveyance, damages (Php200,000 moral), litigation expenses (Php100,000), attorney’s fees (Php200,000), and issuance of a new TCT.
- Court of Appeals (October 28, 2010; Resolution March 3, 2011): Reversed RTC, dismissed complaint; held an express trust requiring written deed, ruled any implied trust terminated at trustee’s death and converted to constructive trust subject to ten-year prescription, invoked presumptio