FACTS:

The case involves a parcel of land located in Quezon City that was originally purchased by Felisa Tamio de Buenaventura in 1959. Felisa constructed a building on the property where she resided until her death in 1994. In 1960, Felisa supposedly sold the property to her daughter Bella Guerrero, Bella's husband Delfin Guerrero Sr., and Felimon Buenaventura Sr., Felisa's common-law husband. A new certificate of title was issued in the names of Felimon Sr. and Bella.

Another daughter of Felisa, Resurrecion Bihis, occupied a portion of the building beginning in 1968 until her death in 2007. The original certificate of title was irretrievably destroyed, so Bella had it reconstituted and a new one was issued in their names. When Felisa died, she allegedly left half of the property to Resurrecion and her daughters.

Bella filed a petition for the probate of Felisa's will and was appointed as the administratrix of Felisa's estate. Bella included the property in the estate's inventory. In 1997, the adverse claim on the property was cancelled and a purported extrajudicial settlement of the estate was executed by the heirs of Felimon Sr., resulting in the cancellation of the previous certificate of title and the issuance of a new one in their names.

On the same day, Bella sold the property to Wilson and Peter Go. The Bihis Family, representing the Estate of Felisa, filed a complaint for reconveyance and damages, alleging that Felisa merely entrusted the property to Bella and Felimon Sr. for the purpose of obtaining a loan, and that Wilson and Peter were buyers in bad faith.

The sellers, Bella and Felimon, Jr., claimed that they owned the property as evidenced by TCT No. RT-74910 (49869) issued to them in February 1960. They asserted that they had exercised acts of ownership over the property and that Bella's inclusion of the property in the inventory of the Estate of Felisa was due to inadvertence. Wilson, one of the buyers, claimed that he was not aware of the judicial settlement of the Estate of Felisa when he purchased the property. He verified the validity of the title with the Registry of Deeds before the sale and believed that he was a purchaser in good faith.

The RTC ruled that there was an implied trust between Felisa and Bella and Felimon, Sr., and that while reconveyance could no longer be effected, the sellers were ordered to pay compensatory damages to the plaintiffs. The CA upheld the implied trust and ordered the nullification of the deed of sale and reconveyance of the property to the Estate of Felisa.

This case involves a dispute over ownership of a property located in a building called D'Lourds Building in Manila. The subject property was initially owned by Felisa Bihis. She allowed her niece, Bella Buenaventura Delas Alas, and Bella's husband, Delfin, Sr., to reside in the property. Felisa later executed a Deed of Absolute Sale in favor of Bella, Delfin, Sr., and another person named Felimon, Sr. The deed was not registered, and Felisa remained in possession of the property.

In the year 2000, Felisa died, and her children, Felimon, Jr., and Rosalinda, inherited her share in the property. They allowed their cousin, Lester Bihis, to reside in the property. However, Bella, Delfin, Sr., and Felimon, Sr., managed to secure a Transfer Certificate of Title (TCT) under their names over the subject property.

In 2007, Bella and Delfin, Sr. sold the subject property to Wilson Tan Tiong and his brother, Peter Tan Tiong. Wilson allegedly had knowledge of the adverse claim of the Bihis family on the property but denied knowledge of its contents.

The Bihis family filed a complaint for reconveyance of the property, claiming that an implied trust was created between Felisa and Bella, Delfin, Sr., and Felimon, Sr., and that the action had not yet prescribed. The trial court dismissed the complaint, ruling that the Bihis family failed to prove the existence of an implied trust. On appeal, the Court of Appeals (CA) reversed the trial court's decision and ruled in favor of the Bihis family, declaring that an implied trust existed and that the action for reconveyance had not yet prescribed. The CA also held that Wilson and Peter were not purchasers in good faith.

ISSUES:

1. Whether an express trust was established between Felisa and Bella, Delfin Sr., and Felimon Sr.

2. Whether the action for reconveyance has prescribed.

3. Whether Wilson and Peter are purchasers in good faith.

4. Whether an express trust or an implied trust was established in this case.

5. Whether the action for reconveyance has already prescribed.

6. Whether Wilson and Peter are purchasers in good faith.

RULING:

1. An express trust was duly proved in this case. Felisa's letter dated September 21, 1970 unequivocally declared her intention of transferring the title over the subject property to Bella, Delfin Sr., and Felimon Sr. to accommodate them in securing a loan from the GSIS. The letter also stated that Felisa was retaining ownership of the property and expressed her wish to have her heirs share equally in it. Therefore, while an implied trust was initially created, the execution of the said letter established the trust as an express one.

2. The action for reconveyance has not yet prescribed.

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

4. An express trust was established in this case, as affirmed by the CA. Bella and her co-trustees only hold the subject property in trust for Felisa.

5. The action for reconveyance has not yet prescribed, as the complaint was filed within ten years from the time the trust was repudiated.

6. Wilson and Peter are not purchasers in good faith, as they failed to investigate the rights of those in possession of the subject property and had knowledge of an annotation on the title and occupation by individuals other than the sellers.

PRINCIPLES:

• 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 may be express or implied.

• Express trusts are created by direct and positive acts of the parties, or by some writing, deed, will, or words that clearly intend to create a trust. The use of the words "trust" or "trustee" is not necessary to establish a trust.

• Implied trusts come into being by operation of law. They may have a constructive or implied nature initially but can be converted into an express trust through the registered owner's subsequent express acknowledgement of a previous sale in a public document.

• The execution of a written document that unequivocally declares the intention of the trustor to transfer the title over the property to the trustees and beneficiaries can establish an express trust.

• The prescription period for an action for reconveyance does not apply until the adverse party repudiates the trust.

• To be considered purchasers in good faith, the buyers must show that they bought the property without knowledge or notice of any defect or flaw in the title of the seller and paid the full and fair price for it at the time of the acquisition.

• Mere issuance of a certificate of title does not foreclose the possibility of co-ownership or the existence of an express trust.

• Registration of a property does not vest ownership; it is merely evidence of title.

• Express trusts prescribe in ten years from the time the trust is repudiated.

• A buyer in good faith is one who buys the property without notice of another person's right or interest and pays a full and fair price.

• A person who deliberately ignores a significant fact that would create suspicion is not an innocent purchaser for value.