GR 196023; (April, 2014) (Digest)
G.R. No. 196023 , April 21, 2014
JOSE JUAN TONG, ET AL., Petitioners, vs. GO TIAT KUN, ET AL., Respondents.
FACTS
The petitioners are nine of the ten children of Spouses Juan Tong and Sy Un. The respondents are the surviving heirs of the tenth child, Luis Juan Tong, Sr. (Luis, Sr.). In 1957, Juan Tong, a Chinese citizen disqualified from owning land, purchased Lot 998 with the intention of using it for the family lumber business. As Luis, Sr. was the only Filipino citizen of age among the children, the title (TCT No. 10346) was registered in his name, with the understanding he would hold it in trust for the family. Juan Tong Lumber was incorporated in 1978. Juan Tong and his wife died in 1984 and 1990, respectively. Luis, Sr. died in 1981. Thereafter, the respondents, claiming ownership by succession, executed a Deed of Extra-Judicial Settlement in 1982, adjudicating Lot 998 to themselves, leading to the cancellation of the original title and issuance of TCT No. T-60231 in their names. Lot 998 was later subdivided into Lots 998-A and 998-B. Lot 998-B was sold to third parties, leading to a prior successful action (Civil Case No. 22730) by the petitioners for annulment and reconveyance, which was affirmed by the Supreme Court. Regarding Lot 998-A, the respondents executed a Deed of Sale of Undivided Interest in 2001, resulting in TCT No. T-134082. The petitioners then filed the instant case for nullification of titles and deeds, claiming ownership of Lot 998-A based on an implied resulting trust.
ISSUE
1. Whether an implied resulting trust was constituted over Lot 998 when Juan Tong purchased it and registered it in the name of Luis, Sr.
2. Whether parol evidence may be used as proof of the establishment of the trust.
3. Whether the petitioners’ action was barred by prescription, estoppel, and laches.
RULING
1. Yes, an implied resulting trust was constituted. The Supreme Court found that the circumstances surrounding the acquisition of Lot 998 demonstrated Juan Tong’s intent that Luis, Sr. hold only the legal title in trust for the family. This was supported by testimonial evidence and the fact that Luis, Sr. never exercised acts of ownership over the property (e.g., did not build on it, resided elsewhere, did not pay taxes). The presumption of donation under Article 1448 of the Civil Code (as Luis, Sr. was a child of Juan Tong) was rebutted by this clear evidence of a trust agreement. The Court noted that the issue was already settled in the prior case involving Lot 998-B, which was part of the same property.
2. Yes, parol evidence may be used. The Court of Appeals erred in ruling that the trust, if express, must be proven by writing. The Supreme Court clarified that the trust in this case was an implied resulting trust, which arises by operation of law from the circumstances of the transaction (i.e., one person pays the price but the property is registered in another’s name). Parol evidence is admissible to prove the facts giving rise to such an implied trust.
3. No, the action was not barred. The Court held that an action for reconveyance based on an implied resulting trust does not prescribe as long as the property is registered under the Torrens system and the trustee has not repudiated the trust. Repudiation must be clear, made known to the beneficiary, and followed by the lapse of the required prescriptive period. The respondents’ acts of executing the Extra-Judicial Settlement in 1982 constituted repudiation. However, the petitioners’ cause of action accrued from that repudiation. The petitioners filed the instant case in 2005, but their prior action in 1995 involving the subdivided portion (Lot 998-B) constituted a timely assertion of their rights over the entire Lot 998, thereby interrupting prescription. The defense of laches also failed as the petitioners did not neglect to assert their rights.
The Supreme Court GRANTED the petition, REVERSED the Court of Appeals Decision and Resolution, and REINSTATED the Regional Trial Court’s Decision which declared the respondents’ deeds and titles null and void, ordered reconveyance of Lot 998-A to the petitioners, and awarded damages.