MENDIOLA, ROSSEANNE GAYLE THERESE

Tong v. Go Tiat Kun

722 SCRA 623 (2014)

Area of Law on Agency Covered: Prescription Rules of Resulting Trusts

SALIENT FACTS:

1. Juan Tong wanted to purchase land to use for his family’s lumber business but
since he is a Chinese citizen and thus disqualified from acquiring land, the title
to the property was registered in the name of his eldest son, Luis.

2. Luis died in 1981 and his heirs claimed ownership over the land, alleging that
there was no trust agreement and that Luis bought the lot himself.

3. The lot was subdivided then registered to the names of the heirs of Luis and
was subsequently sold by them to a corporation (FRDC) who then sold it to
another corporation (VGCC).

4. The other children of Juan Tong received a letter from VGCC in 1995 which led
to their discovery of the breach of the trust agreement of Luis’s heirs this
prompting them to immediately file an action for Annulment of Sales, Titles,
Reconveyance and Damages.

5. In 2001, Go Tiat Kun, wife of Luis also executed a Deed of Sale of Unidivided
Interest over the other subdivided portion of the land in favor of her children,
prompting Juan Tong’s heirs to file a case for Nullification of Titles and Deeds
of Extra-Judicial Settlement and Sale and Damages.

6. On appeal, the CA ruled that even granting that an implied resulting trust was
created; the petitioners are still barred by prescription because the said
resulting trust was terminated upon the death of Luis and was then converted
into a constructive trust and since an action for reconveyance based on a
constructive trust prescribes in ten years, the action has already prescribed.

ISSUES: Have the Action for Reconveyance and Nullification of the Titles and
Deeds based on the implied resulting trust prescribed?

SUPREME COURT HELD:

Resolution of the Issue: No. Implied resulting trusts do not prescribe except
when the trustee repudiates the trust and the action to reconvey does not prescribe
so long as the property stands in the name of the trustee.
 Law Applicable to the ISSUE and FACTS: In the 1960 case of Heirs of
Candelaria v. Romero, the Supreme Court has ruled that “the continuous recognition
of a resulting trust precludes any defense of laches in a suit to declare and enforce
the trust”. This means that the action to recover based on a resulting trust is
imprescriptible if the trustee has not yet repudiated the trust.

Application of the Law Cited to the Facts of the Problem: The death of Luis
is a repudiation of the trust, but the land cannot be included in his estate except only
insofar as his undivided share thereof is concerned. Further, the Heirs of Juan Tong
have been in possession of the land as evidenced by realty tax receipts and tax
declarations which are good indicia of possession in the concept of owner. These
realty tax payments are proof that the holder has a claim of title over the property
and thus, the action for reconveyance is imprescriptible and the Heirs of Juan Tong
may claim ownership thereof.

Doctrine of the Case: Even if the trust has been repudiated, the action to
reconvey does not prescribe so long as the property stands in the name of the
trustee and if it can be proven that the beneficiary in possession has a claim of title
over the property.

MY CRITIQUE AND ANALYSIS:

The death of the trustee constitutes a repudiation of the trust. Thus, the action
could have prescribed against the Heirs of Juan Tong. However, the Supreme Court
applied the laws on possession to assert that the action for reconveyance and
nullification of the titles and deeds were imprescriptible. Further, it was in the
essence of justice that the court allowed the case of the Heirs of Juan Tong to
prosper as they immediately filed their actions as soon as they discovered the
breach of trust agreement committed by the Heirs of Luis.

—oOo—