G.R. No. 182252 . August 03, 2016.
JOSE NORBERTO ANG, PETITIONER, VS. THE ESTATE OF SY SO, RESPONDENT.

FACTS

Respondent Sy So, a Chinese citizen, acquired two parcels of land in Caloocan City. In keeping with Chinese tradition, she registered both properties under the name of her ward, petitioner Jose Norberto Ang, who was a minor at the time. Sy So financed the construction of apartment units on one lot and managed the properties, retaining physical custody of the titles. Decades later, Jose Norberto, upon reaching adulthood, obtained duplicate titles without Sy So’s knowledge and sold one property. He subsequently demanded rent from Sy So and filed ejectment suits against her.
Sy So filed a complaint before the Regional Trial Court (RTC) seeking the reconveyance of the properties, arguing that Jose Norberto held them under an implied trust for her benefit. The RTC dismissed the complaint, ruling that no implied trust existed under Article 1448 of the Civil Code, as a disputable presumption of a gift arises when property is registered in the name of a child of the person paying the price. The Court of Appeals (CA) reversed the RTC, finding that an implied trust was established. The CA ordered Jose Norberto to reconvey the remaining unsold property to Sy So, declaring him a trustee who breached his fiduciary duty.

ISSUE

The core issue is whether an implied trust existed over the properties registered in Jose Norberto Ang’s name but paid for by Sy So, and if so, whether reconveyance is the proper remedy.

RULING

The Supreme Court reversed the Court of Appeals but did not reinstate the RTC’s dismissal. The Court agreed with the CA that an implied trust under Article 1448 was established. The legal estate was granted to Jose Norberto, but the price was paid by Sy So for her own beneficial interest, as evidenced by her continuous possession, management, and payment for improvements. The presumption of a gift in favor of a child under Article 1448 is merely disputable and was successfully rebutted by Sy So’s evidence of her intent to retain beneficial ownership.
However, the Supreme Court denied reconveyance to Sy So based on a paramount constitutional prohibition. The subject property is private agricultural land. At the time of acquisition, Sy So was a Chinese citizen, disqualified under the Constitution from owning such land. The implied trust, while proven, was created for an illegal purpose—to circumvent the constitutional ban on alien ownership. Consequently, both parties are in pari delicto (in equal fault). The courts will not aid either party to an illegal agreement. The proper remedy is reversion to the State. The Court thus directed the Office of the Solicitor General to initiate escheat or reversion proceedings. The title in Jose Norberto’s name, though acquired in violation of the trust, cannot be validated in favor of the alien beneficiary.