G.R. No. 108121 May 10, 1994
HERMINIA L. RAMOS and HEIRS OF HERMINIO RAMOS, petitioners, vs. HON. COURT OF APPEALS, SPOUSES HILARIO CELESTINO and LYDIA CELESTINO, respondents.

FACTS

Sometime in 1961, the People’s Homesite & Housing Corporation (PHHC) awarded Central Bank employees rights to buy parcels of land. Herminio Ramos, an employee, was awarded the right to buy Lot 25, Block 86 in Sikatuna Village, Quezon City. Herminio sold and transferred this right to his co-employee, Lydia Celestino, for P3,800.00, which she fully paid. Lydia then assumed the obligation to pay the PHHC the monthly amortizations for the lot, completing full payment in 1974. However, the Transfer Certificate of Title (TCT No. 204173) issued was in the name of “HERMINIO T. RAMOS, married to Herminia L. Ramos.” The owner’s duplicate copy was delivered to and remained in Lydia’s possession. On November 26, 1974, Herminio and his spouse Herminia executed an irrevocable special power of attorney in favor of Lydia, empowering her to sell, mortgage, or lease the property. After Herminio’s death in 1985, Herminia petitioned the RTC (Branch 104) in LRC Case No. Q-3150(85), claiming the owner’s duplicate copy was lost, and secured an order for the issuance of a new one. Upon learning this, Lydia filed LRC Case No. Q-3387(86) to declare the order null and void. The spouses Celestino also filed Civil Case No. Q-49272 for reconveyance, seeking to be declared lawful owners and to compel the Ramos heirs to execute a deed of sale, vacate the lot, and pay damages.

ISSUE

The primary issue is whether an implied trust was created in favor of Lydia Celestino, making her the beneficial owner of the lot, and whether she and her spouse are entitled to reconveyance.

RULING

Yes. The Supreme Court affirmed the decisions of the lower courts. An implied trust under Article 1448 of the Civil Code was created. Herminio Ramos (and subsequently his heirs) became the trustee, holding the legal title, while Lydia Celestino, who paid the purchase price, became the beneficiary and beneficial owner. The Court found the transaction between Herminio and Lydia was a sale of his award rights, not a mortgage. The execution of the special power of attorney and the delivery of the owner’s duplicate title to Lydia confirmed the trust relationship and the parties’ recognition of her beneficial ownership. Herminia’s act of securing a new owner’s duplicate copy by falsely claiming the original was lost constituted a repudiation of the trust, justifying the action for reconveyance. The Court ordered the petitioners to execute a deed of absolute sale in favor of the respondents, vacate the property, remove improvements, and pay attorney’s fees. The Court also ordered the Register of Deeds to cancel TCT No. 204173 and issue a new one in the name of the respondents, and directed the petitioners to reimburse the respondents the sum of P3,800.00 with interest.