Case Digest on Obligations and Contracts: Trusts - Express Trusts - Wilson Go and Peter Go v. Resureccion Bihis G.R. No. 21197

Wilson Go and Peter Go v. Resureccion Bihis

G.R. No. 211972, July 22, 2015

Facts:

In 1960, Felisa Buenaventura who owns a parcel of land in Quezon City supposedly sold to her daughter Bella and the latter‘s husband Delfin and Felimon Buenaventura the subject property to assist them in obtaining a loan from the GSIS. A new TCT was issued in the name of Bella, Delfin, and Felimon.

Sometime in 1970, Felisa wrote a letter to Bella and Delfin reiterating therein the reason why she allowed the transfer of the title in their names. In the same letter, Felisa stated that she wanted that all her properties including the subject land to be divided equally among her heirs.

Upon Felisa's death in 1994, the Bihis Family, Felisa's other heirs who have long been occupying the subject property, caused the annotation of their adverse claim over the same on TCT. Subsequently, however, or on January 22, 1997, the said annotation was cancelled, and the next day, the Heirs of Felimon, Sr. executed an Extrajudicial Settlement of his estate and caused its annotation on said title. The old TCT was then cancelled and a new TCT was issued in the names of Bella, et al. Finally, by a Deed of Sale dated January 23, 1997, the subject property was sold to Wilson and Peter, in whose names TCT currently exists. Months later, the complaint for reconveyance and damages was instituted by the Bihis family.

Issues: (1)Whether or not a trust was established and what kind, if any.

(2) Whether or not the action for reconveyance over the property had already prescribed.

Ruling:

The SC ruled that an implied trust was initially established between the parties but was subsequently converted into an express trust by virtue of the letter of Felisa in 1970. 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.

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. 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.

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.

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, "[n]o 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."

The action for reconveyance had not yet prescribed. 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.