Tong vs. Go Tiat Kun

An implied purchase-money resulting trust arises where property is sold, legal title is granted to one party, but the price is paid by another for the purpose of having beneficial interest, with the trustee obligated in equity to hold for the beneficiary. Here, Juan Tong furnished the consideration for Lot 998 while title was placed in his Filipino son Luis, Sr. solely to facilitate acquisition for the family lumber business, Luis, Sr. thus holding only legal title for the family.

The petitioners are nine of the ten children of Spouses Juan Tong and Sy Un, the deceased Vicente Juan Tong being represented by his widow and children, while the respondents are the surviving spouse and children of the deceased tenth child, Luis Juan Tong, Sr. The family operated a lumber business under the single proprietorship Juan Tong Lumber, later incorporated as Juan Tong Lumber, Inc. on December 8, 1978. At the time of acquisition, Juan Tong was a Chinese citizen disqualified from acquiring land, while his eldest son Luis, Sr. was of age and the only Filipino citizen among the children.

Sometime in 1957, Juan Tong met with all his children to inform them of his intention to purchase Lot 998 for use in the family's lumber business called Juan Tong Lumber. Since he was a Chinese citizen disqualified from acquiring the lot, title would be registered in the name of his eldest son, Luis, Sr., then of age and the only Filipino citizen among the children. On May 11, 1957, Juan Tong bought Lot 998 from the heirs of Jose Ascencio, and on May 16, 1957, Transfer Certificate of Title No. 10346 was issued by the Register of Deeds in the name of Luis, Sr.

Luis, Sr. died on May 30, 1981. Thereafter, the respondents, his surviving spouse Go Tiat Kun and their children, claimed ownership over Lot 998 by succession, alleging that no trust agreement existed and that Luis, Sr. had bought the lot himself. On July 2, 1982, the respondents executed a Deed of Extra-Judicial Settlement of Estate of Luis, Sr., adjudicating Lot 998 unto themselves as conjugal property, which the Juvenile and Domestic Relations Court of Iloilo City approved on June 28, 1982. Upon registration on July 19, 1982, TCT No. 10346 was cancelled and TCT No. T-60231 issued in respondents' names. Meanwhile, Sy Un and Juan Tong died intestate on October 31, 1984 and November 13, 1990, respectively.

On October 12, 1992, the respondents subdivided Lot 998, resulting in TCT No. 97068 over Lot 998-A in the name of Go Tiat Kun and her children and TCT No. T-96216 over Lot 998-B in the name of Luis, Jr. Luis, Jr. then sold Lot 998-B to Fine Rock Development Corporation, which resold it to Visayas Goodwill Credit Corporation. Only upon receipt of a letter from Visayas Goodwill Credit Corporation on August 31, 1995 did petitioners discover the breach of trust. To protect their rights, petitioners filed Civil Case No. 22730 for annulment of sales, titles, reconveyance and damages over Lot 998-B against Luis, Jr., Fine Rock Development Corporation and Visayas Goodwill Credit Corporation. On March 6, 1997, the trial court ruled in petitioners' favor, later affirmed by the Court of Appeals and this Court, resulting in reconveyance of Lot 998-B and issuance of TCT No. T-14839 in petitioners' names including the late Luis, Sr.

On February 24, 2001, Go Tiat Kun executed a Deed of Sale of Undivided Interest over Lot 998-A in favor of her children Leon, Mary, Lilia, Tomas and the late Jaime, resulting in issuance of TCT No. T-134082 over Lot 998-A. Hence, on August 2, 2005, petitioners filed the instant action for nullification of titles and deeds of extra-judicial settlement and sale and damages, claiming ownership of Lot 998-A. Throughout, Lot 998 had remained in petitioners' physical possession as stockyard of the family lumber business, real property taxes from 1966 to early 2008 were paid by Juan Tong and Juan Tong Lumber, Inc. with original receipts in petitioners' possession, and Luis, Sr. during his lifetime built no structure thereon, resided with the family in the Juan Tong building fronting the lot, maintained a separate residence at Ledesco Village, La Paz, Iloilo City, and sent no communication claiming ownership.

• Ownership by Purchase and Succession: Respondent countered that no trust agreement exists and it was Luis, Sr. who bought Lot 998, such that respondents claimed ownership thereof by succession as his surviving heirs and as conjugal property of Luis, Sr. and his wife.
• Prescription, Laches and Estoppel: Respondent maintained that petitioners' action for reconveyance was barred by prescription, laches and estoppel.

• Implied Resulting Trust: Whether an implied resulting trust was constituted over Lot 998 when Juan Tong purchased the property and registered it in the name of Luis, Sr.
• Parol Evidence: Whether parol evidence may be used as proof of the establishment of the trust.
• Prescription, Estoppel and Laches: Whether petitioners' action was barred by prescription, estoppel and laches.

• Implied Resulting Trust: Yes. An implied purchase-money resulting trust under the first sentence of Article 1448 was established, Juan Tong having furnished the consideration while legal title was placed in Luis, Sr. as mere trustee for the family.
• Parol Evidence: Yes. Parol evidence is admissible to prove an implied trust, intention being inferable from the nature of the transaction and surrounding facts and circumstances, including the source of consideration.
• Prescription, Estoppel and Laches: No. The action for reconveyance of property standing in the trustee's name is imprescriptible until repudiation, and no unreasonable delay or estoppel was shown, especially between near relatives.

• Implied Resulting Trust: The elements of a purchase-money resulting trust were satisfied: (a) actual payment of valuable consideration and (b) furnishing thereof by the alleged beneficiary. Juan Tong had the financial means to pay ₱55,000.00, while respondents presented no witness corroborating that Luis, Sr., then merely working for his father for ₱200.00 monthly with free board and lodging, bought it with his own money. Possession always remained with petitioners as stockyard of the family lumber business; Lot 998 remained undivided until after Luis, Sr.'s death; respondent Leon admitted petitioners' possession, family residence in the front tenement, absence of any ownership claim letter from Luis, Sr., and respondents' separate residences; and taxes were paid by Juan Tong and Juan Tong Lumber, Inc. from 1966 to early 2008, with petitioners holding original receipts even when in Luis, Sr.'s name. The prior final rulings in Civil Case No. 22730, CA-G.R. CV No. 56602 and G.R. No. 156068 similarly found Lot 998-B, the other half of subdivided Lot 998, held in implied resulting trust. The disputable presumption of donation under Article 1448 where title is conveyed to a child was clearly disputed by such evidence, and registration in the trustee's name does not defeat the trust.
• Parol Evidence: Intention, although only presumed, implied or supposed by law from the nature of the transaction and accompanying facts, particularly the source of consideration, remains an element of resulting trust inferable from acts or conduct rather than direct expression. Because an implied trust is neither dependent upon express agreement nor required to be evidenced by writing, Article 1457 authorizes admission of parol evidence, here the trustworthy oral testimonies of Simeon Juan Tong and Jose Juan Tong, to prove its existence. The appellate conclusion of express trust requiring written proof thus yielded to clear evidence that registration in Luis, Sr.'s name was only to facilitate purchase by an alien father through his Filipino son, with tax declarations naturally in the trustee's name to effect payment.
• Prescription, Estoppel and Laches: Implied resulting trusts do not prescribe except upon repudiation by the trustee, and reconveyance does not prescribe so long as property stands in the trustee's name, title being mere proof of registration and not vesting ownership against the true owner. Title to Lot 998 remained in Luis, Sr. even when he predeceased Juan Tong, repudiation occurring only through such death, so Lot 998 could not be included in his estate except for his undivided share. Upon learning of the breach through the August 31, 1995 letter and of the February 24, 2001 sale of undivided interest, petitioners promptly sued, first for Lot 998-B then for Lot 998-A, with tax declarations and payments corroborating possession in the concept of owner. Laches is not strictly applied between near relatives connected by blood or marriage.

• Purchase-money resulting trust — There is an implied trust when property is sold and the legal estate is granted to one party but the price is paid by another for the purpose of having beneficial interest; the former is trustee, the latter beneficiary. Its elements are (a) actual payment of money, property or services or equivalent constituting valuable consideration, and (b) furnishing of such consideration by the alleged beneficiary. Applied here to hold Luis, Sr. a mere trustee, Juan Tong having paid for Lot 998.
• Resulting trust vs. constructive trust — A resulting trust is based on the equitable doctrine that valuable consideration, not legal title, determines equitable title, arising from the nature or circumstances of consideration whereby one becomes invested with legal title but must hold for another's benefit. A constructive trust does not emanate from fiduciary relation but is constructed by equity to satisfy justice and prevent unjust enrichment, arising contrary to intention against one who by fraud, duress or abuse of confidence holds property he ought not in conscience hold. The distinction supported finding a resulting, not constructive, trust at acquisition.
• Non-repudiation by registration — A trustee who puts a certificate of registration in his name cannot repudiate the trust by relying on registration, a well-known limitation upon title, as trust deriving strength from confidence especially between families does not lose character because of what appears in a legal document. Applied to reject respondents' reliance on Torrens titles derived from Luis, Sr.
• Parol evidence to prove implied trust — Because an implied trust is neither dependent upon express agreement nor required to be evidenced by writing, Article 1457 authorizes admission of parol evidence, which must be trustworthy and not rest on loose, equivocal or indefinite declarations, with intent inferable from acts, conduct and statements at or before title passes. Applied to sustain reliance on testimonial evidence and circumstances of consideration, possession and tax payments.
• Imprescriptibility of action for reconveyance based on implied resulting trust — Implied resulting trusts do not prescribe except when repudiated, and reconveyance does not prescribe so long as property stands in the trustee's name, for to allow prescription would let a trustee acquire title against his principal. Applied to hold the Lot 998-A reconveyance action imprescriptible, repudiation having occurred only upon Luis, Sr.'s death.
• Tax declarations and receipts as indicia of ownership — Tax declarations or realty tax payments are not conclusive evidence of ownership but are good indicia of possession in the concept of owner, as no one would pay taxes for property not in actual or constructive possession. Applied to amplify petitioners' claim through possession of original receipts and assessments naming Juan Tong.
• Disputable presumption of donation to child; laches among relatives — Under Article 1448, conveyance to a child of one paying the price is disputably presumed a gift, but the presumption may be rebutted by evidence of contrary intent. Laches is not strictly applied between near relatives, blood or marriage excusing otherwise unreasonable delay. Applied to reject donation and delay defenses.

• "The principle of a resulting trust is based on the equitable doctrine that valuable consideration and not legal title determines the equitable title or interest and are presumed always to have been contemplated by the parties." — States the canonical basis for resulting trust and why beneficial ownership followed Juan Tong's payment despite title in Luis, Sr.
• "The principle that a trustee who puts a certificate of registration in his name cannot repudiate the trust by relying on the registration is one of the well-known limitations upon a title." — Defines the limitation on Torrens indefeasibility invoked to void respondents' derived titles.
• "Because an implied trust is neither dependent upon an express agreement nor required to be evidenced by writing, Article 1457 of our Civil Code authorizes the admission of parol evidence to prove their existence." — States the evidentiary rule justifying reliance on testimonial and circumstantial proof of intent.
• "To allow prescription would be tantamount to allowing a trustee to acquire title against his principal and true owner." — Articulates the rationale for imprescriptibility of reconveyance while property stands in the trustee's name.

• Tigno vs. CA, 345 Phil. 486, 498 (1997) — Followed for definitions of resulting and constructive trusts and for the limitation that registration in the trustee's name does not defeat the trust.
• Comilang vs. Burcena, 517 Phil. 538, 546 (2006) — Followed for the two elements of purchase-money resulting trust under Article 1448.
• Estate of Margarita D. Cabacungan vs. Laigo, G.R. No. 175073, August 15, 2011, 655 SCRA 366, 380 — Followed for the rule that intent is an indispensable element of resulting trust inferable from acts and that trustworthy parol evidence is admissible.
• Ringor vs. Ringor, 480 Phil. 141, 160-161 (2004) — Followed for the rule that implied resulting trusts do not prescribe except upon repudiation and reconveyance does not prescribe while property stands in the trustee's name.
• Tating vs. Marcella, 548 Phil. 19, 29 (2007) — Followed for the rule that tax declarations and payments, though not conclusive of ownership, are good indicia of possession in concept of owner.
• Juan vs. Yap, Sr., G.R. No. 182177, March 30, 2011, 646 SCRA 753, 758 — Cited to justify review of the factual question of implied trust under Rule 45 in light of conflicting rulings below.

• Article 1448, Civil Code — Provides that implied trust arises when legal estate is granted to one but price paid by another for beneficial interest, with disputable presumption of gift if conveyee is child of payor. Applied to find purchase-money resulting trust rebutting donation, Juan Tong having paid while Luis, Sr. took title.
• Article 1457, Civil Code — Authorizes proof of implied trusts by parol evidence as they do not require writing. Applied to admit oral testimonies and circumstantial evidence of intent and consideration.

Sereno, C.J., Chairperson, Leonardo-De Castro, J., Bersamin, J., Villarama, Jr., J.