G.R. No. 144148 . March 18, 2005.
SPS. FELIZA DUYAN GOMEZ and EUGENIO GOMEZ, Petitioners, vs. PURISIMA DUYAN, et al., Respondents.

FACTS

The property in dispute is a portion of an 800-square meter lot originally owned by Eulogio Duyan. In 1968, Eulogio allowed his sister, petitioner Feliza Duyan Gomez, to build a house on the lot out of benevolence. To formalize this arrangement, the siblings executed a “Pagpapahayag” in 1974, where Feliza acknowledged Eulogio’s ownership and promised never to assert ownership over the property. Later, on January 25, 1978, Eulogio and his wife, respondent Purisima Duyan, executed a Deed of Absolute Sale over the lot in favor of the petitioner spouses for ₱20,000. Purisima, however, claimed this sale was merely executed to give color of legality to the petitioners’ stay and not to transfer true ownership.
Crucially, on February 10, 1978, another “Pagpapahayag” was executed between Eulogio and Feliza. In this document, Feliza expressly acknowledged that the lot subject of the sale would eventually be transferred to the respondents, who are Eulogio’s children. Despite this subsequent agreement, the petitioners registered the earlier deed of sale and secured a Transfer Certificate of Title (TCT) in their names in 1981. The respondents later filed an action for reconveyance and cancellation of the title.

ISSUE

Whether the respondents are entitled to the reconveyance of the property based on an implied trust.

RULING

Yes, the Supreme Court affirmed the Court of Appeals’ decision ordering reconveyance. The legal logic rests on the establishment of an implied trust under Article 1450 of the Civil Code, which provides that if property is sold but the beneficial interest is not intended to pass to the grantee, an implied trust is created in favor of the intended beneficiary. The February 10, 1978 “Pagpapahayag” is the pivotal evidence. In this document, executed shortly after the deed of sale, petitioner Feliza expressly covenanted that the property would be transferred to her nieces and nephews, the respondents. This document clearly demonstrates that the true intention of the parties was not to confer beneficial ownership upon the petitioners but to hold the property in trust for the respondents.
The petitioners’ subsequent act of registering the sale and obtaining a title in their own names, contrary to the express terms of the second “Pagpapahayag,” constituted a breach of that fiduciary obligation. The Court ruled that the respondents’ action for reconveyance, which seeks to compel the trustee to return the property to the rightful beneficiary, is the proper remedy. This action is imprescriptible as long as the property remains registered under the trustee’s name, as the trust relationship endures. The formal title in the petitioners’ names is thus held in trust for the benefit of the respondents, who are the true equitable owners.