G.R. No. 211972 and G.R. No. 212045, July 22, 2015.
WILSON GO and PETER GO, Petitioners, vs. THE ESTATE OF THE LATE FELISA TAMIO DE BUENA VENTURA, represented by RESURRECCION A. BIHIS, RHEA A. BIHIS, and REGINA A. BIHIS; and RESURRECCION A. BIHIS, RHEA A. BIHIS and REGINA A. BIHIS, in their personal capacities, Respondents. ( G.R. No. 211972 )

ELLA A. GUERRERO, DELFIN A. GUERRERO, JR. and LESTER ALVIN A. GUERRERO, Petitioners, vs. THE ESTATE OF THE LATE FELISA TAMIO DE BUENA VENTURA, herein represented by RESURRECION A. BIHIS, RHEA A. BIHIS and REGINA A. BIHIS, and RESURRECION A. BIHIS, RHEA A. BIHIS and REGINA A. BIHIS, in their personal capacities, Respondents. (G.R. No. 212045)

FACTS

Felisa Tamio de Buenaventura purchased a parcel of land in Quezon City in 1959 and constructed a building thereon. On February 10, 1960, Felisa supposedly sold the property to her daughter Bella Guerrero, Bella’s husband Delfin Guerrero, Sr., and Felisa’s common-law husband Felimon Buenaventura, Sr. The title was issued in the names of Felimon, Sr. and Bella, married to Delfin, Sr. Felisa continued to reside on the property until her death in 1994. In a letter dated September 21, 1970, Felisa reminded Bella, Delfin, Sr., and Felimon, Sr. that the property was merely entrusted to them to secure a loan from the GSIS, which letter was signed by Bella and Delfin, Sr. Upon Felisa’s death, a disputed will bequeathed half of the property to her other daughter, Resurrecion Bihis, and Resurrecion’s daughters (the Bihis Family), who caused an adverse claim to be annotated on the title. Bella, as administratrix of Felisa’s estate, included the property in the estate’s inventory. On January 23, 1997, after the adverse claim was cancelled, the heirs of Felimon, Sr. and Bella, et al. executed an Extrajudicial Settlement, and on the same day, sold the property to Wilson Go and Peter Go. Wilson and Peter then filed ejectment cases against the occupants. After Bella’s removal as administratrix, the Estate of Felisa (represented by the Bihis Family) and the Bihis Family filed a complaint for reconveyance and damages against Bella, et al. and the Go brothers, alleging the existence of an implied trust and that the Gos were buyers in bad faith. The Regional Trial Court (RTC) found an implied trust was created but held that reconveyance was not possible as Wilson and Peter were purchasers in good faith; it instead awarded damages against Bella, et al. The Court of Appeals (CA) modified the RTC decision, nullifying the deed of sale to the Gos, ordering reconveyance of the property to the Estate of Felisa, and cancelling the Gos’ title.

ISSUE

The core issues, as simplified by the CA, were: (1) whether a trust was established by Felisa in favor of Bella, Delfin, Sr., and Felimon, Sr.; (2) whether the action for reconveyance had prescribed; and (3) whether Wilson and Peter are purchasers in good faith.

RULING

The Supreme Court denied the petitions and affirmed the CA decision. It held that an implied trust was created under Article 1448 of the Civil Code, as the circumstances showed Felisa did not intend to transfer beneficial ownership. The September 21, 1970 letter was crucial evidence of this intent. The action for reconveyance, based on an implied trust, prescribes in ten years from the issuance of the title, which in this case was the reconstituted title issued to Bella and Felimon, Sr. The complaint, filed in 1997, was within the prescriptive period. Finally, Wilson and Peter were not purchasers in good faith. As buyers of a tenanted property, they were required by law to investigate the rights of the occupants. Their failure to inquire into the Bihis Family’s possession, coupled with the fact that the sale was consummated on the same day the adverse claim was cancelled and the extrajudicial settlement was annotated, demonstrated gross negligence equivalent to bad faith. Therefore, the Deed of Sale in their favor was nullified, and reconveyance to the Estate of Felisa was ordered.