Case Digest: Guerrero vs. Bihis, G.R. No. 211972, July 22, 2015

 Succession, Prescription, Trust

Provision:
-

Ponente:
Perlas-Bernabe, J.,

Petitioners: Wilson Go and Peter Go; Ella Guerrero, Delfin Guerrero and Lester Alvin Guerrero

Respondent: Resurreccion Bihis, Rhea Bihis, Regina Bihis

Recit Version:

In 1960, Felisa transferred ownership of the subject property to her daughter Bella, married to Delfin, Sr., and Felimon, Sr., to assist them in securing a loan from GSIS. 

Upon Felisa's death in 1994, the Bihis Family, her other heirs who had been residing in the property, placed an adverse claim on the property. This claim was cancelled on January 22, 1997. The next day, the Heirs of Felimon, Sr. executed an Extrajudicial Settlement of his estate, resulting in title being replaced in the names of Bella, et al. Subsequently, the property was sold to Wilson and Peter.

The Court determined that an express trust existed between Felisa and Bella, Delfin, Sr., and Felimon, Sr. The action for reconveyance had not yet prescribed, and Wilson and Peter were not considered purchasers in good faith.

Facts:

In 1959, Felisa Tamio de Buenaventura purchased a parcel of land and constructed a three-storey building thereon, called D'Lourds Building, where she resided.

In 1960, Felisa transferred the title of the property to her daughter Bella Guerrero, Bella's husband Delfin Guerrero Sr., and Felisa's common-law husband Felimon Buenaventura Sr. to assist them in procuring a loan from the GSIS. 

In 1968, Resurrecion A. Bihis, the other daughter of Felisa, sister of Bella, began to occupy the second floor of the D'Lourds Building and stayed therein until her death in 2007.

In 1994, Felisa died. She allegedly bequeathed, in a disputed last will and testament, half of the subject property to Resurrecion and her daughters Rhea and Regina. Thus, Bihis Family caused the annotation of an adverse claim on the property.

Bella, as administratrix, filed a petition for probate of Felisa's will.

In 1997, the adverse claim of the Bihis Family was cancelled. 

The next day, the Heirs of Felimon, Sr. executed an Extrajudicial Settlement of his estate, resulting in replacement of the title in the names of Bella, et al. 

In January 1997, Bella sold the property to Wilson and Peter Go for ₱4,500,000.00, unknown to Felisa's other heirs, the Bihis Family. Wilson and Peter filed ejectment cases against the occupants of the subject property.

In October 1997, Bihis Family (Estate of Felisa) filed a complaint for reconveyance and damages before the RTC against Bella, et al., Wilson, Peter, and the Register of Deeds of Quezon City. 

RTC: There was an implied trust between Felisa, on the one hand, and Bella and Felimon, Sr., on the other, created by operation of law. Reconveyance can no longer be effected since the subject property had already been transferred to Wilson and Peter, whom it found to be purchasers in good faith. Consequently, as Bella, Delfin, Sr., and Felimon, Sr. were unjustly enriched at the expense of the respondents who, as compulsory heirs, were also entitled to their share in the subject property,

CA: Modified the RTC Decision, and thereby ordered the nullification of the Deed of Sale in favor of Wilson and Peter and the reconveyance of the disputed property to the Estate of Felisa.

Issues:

1. WoN the CA erred in ruling that there was an implied trust created between Felisa, on one hand, and Bella, Delfin, Sr., and Felimon, Sr., on the other. YES

2. WoN the action for reconveyance had not yet prescribed. NO

3. WoN Wilson and Peter are purchasers in good faith. NO

 

Held:

The Court holds that:

1. A trust was established between Felisa, on the one hand, and Bella, Delfin, Sr., and Felimon, Sr., on the other, albeit not an implied trust as concluded by the RTC and the CA but an express one;

2. The present action for reconveyance has not yet prescribed; and,

3. Wilson and Peter are not purchasers in good faith.

I. Express Trust

Trust is the right to the beneficial enjoyment of property, the legal title to which is vested in another. It is a fiduciary relationship that obliges the trustee to deal with the property for the benefit of the beneficiary. Trust relations between parties may either be express or implied. An express trust is created by the intention of the trustor or of the parties, while an implied trust comes into being by operation of law.

Express trusts are created by direct and positive acts of the parties, by some writing or deed, or will, or by words either expressly or impliedly evincing an intention to create a trust. Under Article 1444 of the Civil Code, "no particular words are required for the creation of an express trust, it being sufficient that a trust is clearly intended." It is possible to create a trust without using the word "trust" or "trustee." Conversely, the mere fact that these words are used does not necessarily indicate an intention to create a trust. The question in each case is whether the trustor manifested an intention to create the kind of relationship which to lawyers is known as trust. It is immaterial whether or not he knows that the relationship which he intends to create is called a trust, and whether or not he knows the precise characteristics of the relationship which is called a trust.

Further, in the case of Tamayo v. Callejo, the Court recognized that a trust may have a constructive or implied nature in the beginning, but the registered owner's subsequent express acknowledgement in a public document of a previous sale of the property to another party effectively converted the same into an express trust.

In the present case, both the RTC and the CA found that an implied trust was established, heavily giving credence, among others, to the September 21, 1970 letter executed by Felisa during her lifetime, which partly reads:

Dear Delfin,

Ipinaaabot ko sa iyo ang sulat kong ito upang malaman mo ang aking nagiging damdamin. Hinihiling ko sa iyo at ipinakikiusap sa iyo tungkol doon sa late at building ng D 'lourds.

Hindi naman kaila sa iyo kung papaano ko ito naisalin sa inyong pangalan nina Filemon C. Buenaventura Sr., Bella Alvarez Guerrero at Delfin Guerrero Sr. Ang dahilan nito ay dahil sa pag-utang sa GSIS.

Kaya gusto kong malaman mo na ito ay nagpapatotoo na ito ay sarili kong pag-aari at walang sinumang nagbigay o tumulong sa akin sa lupang ito. At maski si Ka Feling mo ay walang naibigay na pera dito.

Kaya hinihiling ko ang gusto kong mangyari sa ngayon ay maging kaparehong-kapareho ang paghahati ng bawat isa sa anumang aking kabuhayan.

Kaya hinihiling ko sa iyo Delfin na kung maaari lamang ay ang lahat ng nakatala dito ay pirmahan ninyo.

x x x x

Beneath the letter appear the signatures of Bella and Delfin, and the signature of Felisa signing as "MOMMY" as well.

Taking the contents of the foregoing letter into consideration – the validity and due execution of which were never put in issue, hence, indubitably established - the Court therefore differs from the finding of the courts a quo that an implied trust was established; instead, the Court rules that an express trust was duly proved in this case.

The words of Felisa in the above-quoted letter unequivocally and absolutely declared her intention of transferring the title over the subject property to Bella, Delfin, Sr., and Felimon, Sr. in order to merely accommodate them in securing a loan from the GSIS. She likewise stated clearly that she was retaining her ownership over the subject property and articulated her wish to have her heirs share equally therein. Hence, while in the beginning, an implied trust was merely created between Felisa, as trustor, and Bella, Delfin, Sr., and Felimon, Sr., as both trustees and beneficiaries, the execution of the September 21, 1970 letter settled, once and for all, the nature of the trust established between them as an express one, their true intention irrefutably extant thereon.

Bella's attempt to thwart the express trust established in this case by claiming that she affixed her signature on the September 21, 1970 letter only "to appease" her mother, Felisa, and that she could afford to sign the letter since the title covering the subject property was in their name as owners anyway, does not hold water. As correctly ruled by the CA, citing Lee Tek Sheng v. CA, the "mere issuance of the certificate of title in the name of any person does not foreclose the possibility that the real property may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other parties may have acquired interest subsequent to the issuance of the certificate of title," as in this case  Registration does not vest title; it is merely the evidence of such title. Moreover, the Court notes that even during the proceedings before the RTC, Bella never denied the purpose for which the sale to them of the subject property was effected. Instead, they relied heavily and anchored their defense on the existence of their certificate of title covering the subject property, which, to reiterate, was insufficient to prove their ownership over the same independent of the express trust.

In light of the foregoing, while the Court agrees with the RTC, as affirmed by the CA, that Bella, Delfin, Sr., and Felimon, Sr. only hold the subject property in trust for Felisa, the Court however finds that an express trust, not an implied one, was established in this case.

II. Not Yet Prescribed

Anent the issue of prescription, the Court finds that the action for reconveyance instituted by respondents has not yet prescribed, following the jurisprudential rule that express trusts prescribe in ten (10) years from the time the trust is repudiated.

In this case, there was a repudiation of the express trust when Bella, as the remaining trustee, sold the subject property to Wilson and Peter on January 23, 1997. As the complaint for reconveyance and damages was filed by respondents on October 17, 1997, or only a few months after the sale of the subject property to Wilson and Peter, it cannot be said that the same has prescribed.

III. Buyers in Bad Faith

Finally, with regard to the question of whether or not Wilson and Peter are purchasers of the subject property in good faith, the Court concurs with the CA' s finding that they are not.

A purchaser in good faith is one who buys the property of another without notice that some other person has a right to, or an interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of some other person's claim or interest in the property. Corollary thereto, when a piece of land is in the actual possession of persons other than the seller, the buyer must be wary and should investigate the rights of those in possession. Without making such inquiry, one cannot claim that he is a buyer in good faith. When a man proposes to buy or deal with realty, his duty is to read the public manuscript, that is, to look and see who is there upon it and what his rights are. A want of caution and diligence, which an honest man of ordinary prudence is accustomed to exercise in making purchases, is in contemplation of law, a want of good faith. The buyer who has failed to know or discover that the land sold to him is in adverse possession of another is a buyer in bad faith.

In his testimony before the R TC, Wilson claimed to have verified the validity of the title covering the subject property before the Registry of Deeds. However, he also admitted that two (2) months had lapsed before the sale could be consummated because his lawyer advised him to request Bella, one of the sellers, to cancel the encumbrance annotated on the title of the subject property. He also claimed that he had no knowledge about the details of such annotation, and that he was aware that individuals other than the sellers were in possession of the subject property.

As aptly concluded by the CA, such knowledge of the existence of an annotation on the title covering the subject property and of the occupation thereof by individuals other than the sellers negates any presumption of good faith on the part of Wilson and Peter when they purchased the subject property. A person who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an innocent purchaser for value, as in this case.