G.R. No. 175073 - Estate of Cabacungan v. Laigo

2/2/2020 G.R. No. 175073 | Estate of Cabacungan v.
Laigo
THIRD DIVISION
[G.R. No. 175073. August 15, 2011.]
ESTATE OF MARGARITA D. CABACUNGAN, represented by

LUZ LAIGO-ALI, petitioner, vs. MARILOU LAIGO, PEDRO
ROY LAIGO, STELLA BALAGOT and SPOUSES MARIO B.
CAMPOS AND JULIA S. CAMPOS, respondents.
DECISION
PERALTA, J : p
This Petition for Review under Rule 45 of the Rules of Court assails
the October 13, 2006 Decision 1 of the Court of Appeals in CA-G.R. CV
No. 72371. The assailed decision affirmed the July 2, 2001 judgment 2
rendered by the Regional Trial Court of La Union, Branch 33 in Civil Case
No. 1031-BG — a complaint for annulment of sale of real property,
recovery of ownership and possession, cancellation of tax declarations and
damages filed by Margarita Cabacungan, 3 represented by her daughter,
Luz Laigo-Ali against Marilou Laigo and Pedro Roy Laigo, respondents
herein, and against Estella Balagot, 4 and the spouses Mario and Julia
Campos.
The facts follow.
Margarita Cabacungan (Margarita) owned three parcels of
unregistered land in Paringao and in Baccuit, Bauang, La Union, each
measuring 4,512 square meters, 1,986 square meters and 3,454 square
meters. The properties were individually covered by tax declaration all in
her name. 5 Sometime in 1968, Margarita's son, Roberto Laigo, Jr.
(Roberto), applied for a non-immigrant visa to the United States, and to
support his application, he allegedly asked Margarita to transfer the tax
declarations of the properties in his name. 6 For said purpose, Margarita,
unknown to her other children, executed an Affidavit of Transfer of Real
Property whereby the subject properties were transferred by donation to
Roberto. 7 Not long after, Roberto's visa was issued and he was able to
travel to the U.S. as a tourist and returned in due time. In 1979, he adopted
respondents Pedro Laigo (Pedro) and Marilou Laigo (Marilou), 8 and then
he married respondent Estella Balagot.
https://cdasiaonline.com/jurisprudences/54880/print 1/21
2/2/2020 G.R. No. 175073 | Estate of Cabacungan v. Laigo
In July 1990, Roberto sold the 4,512 sq. m. property in Baccuit to the
spouses Mario and Julia Campos for P23,000.00. 9 Then in August 1992,
he sold the 1,986 sq. m. and 3,454 sq. m. lots in Paringao, respectively, to
Marilou for P100,000.00 and to Pedro for P40,000.00. 10 Allegedly, these
sales were not known to Margarita and her other children. 11 EHTIcD
It was only in August 1995, at Roberto's wake, that Margarita came

to know of the sales as told by Pedro himself. 12 In February 1996,
Margarita, represented by her daughter, Luz, instituted the instant
complaint for the annulment of said sales and for the recovery of
ownership and possession of the subject properties as well as for the
cancellation of Ricardo's tax declarations. Margarita admitted having
accommodated Roberto's request for the transfer of the properties to his
name, but pointed out that the arrangement was only for the specific
purpose of supporting his U.S. visa application. She emphasized that she
never intended to divest herself of ownership over the subject lands and,
hence, Roberto had no right to sell them to respondents and the Spouses
Campos. She likewise alleged that the sales, which were fictitious and
simulated considering the gross inadequacy of the stipulated price, were
fraudulently entered into by Roberto. She imputed bad faith to Pedro,
Marilou and the Spouses Campos as buyers of the lots, as they
supposedly knew all along that Roberto was not the rightful owner of the
properties. 13 Hence, she principally prayed that the sales be annulled; that
Roberto's tax declarations be cancelled; and that the subject properties be
reconveyed to her. 14
The Spouses Campos advanced that they were innocent purchasers
for value and in good faith, and had merely relied on Roberto's
representation that he had the right to sell the property; and that, hence,
they were not bound by whatever agreement entered by Margarita with her
son. They posited that the alleged gross inadequacy of the price would not
invalidate the sale absent a vitiation of consent or proof of any other
agreement. Further, they noted that Margarita's claim was already barred
by prescription and laches owing to her long inaction in recovering the
subject properties. Finally, they believed that inasmuch as Roberto had
already passed away, Margarita must have, instead, directed her claim
against his estate. 15
In much the same way, Marilou and Pedro, 16 who likewise
professed themselves to be buyers in good faith and for value, believed
that Margarita's cause of action had already been barred by laches, and
that even assuming the contrary, the cause of action was nevertheless
barred by prescription as the same had accrued way back in 1968 upon
the execution of the affidavit of transfer by virtue of which an implied trust
had been created. In this regard, they emphasized that the law allowed
only a period of ten (10) years within which an action to recover ownership
of real property or to enforce an implied trust thereon may be brought, but
Margarita merely let it pass. 17
On February 3, 1999, prior to pre-trial, Margarita and the Spouses
Campos amicably entered into a settlement whereby they waived their
respective claims against each other. 18 Margarita died two days later and
was forthwith substituted by her estate. 19 On February 8, 1999, the trial
court rendered a Partial Decision 20 approving the compromise agreement
and dismissing the complaint against the Spouses Campos. Forthwith, trial
on the merits ensued with respect to Pedro and Marilou.
On July 2, 2001, the trial court rendered judgment dismissing the
complaint as follows: TaCEHA
WHEREFORE, in view of the foregoing considerations, the

complaint is DISMISSED. 21
The trial court ruled that the 1968 Affidavit of Transfer operated as a
simple transfer of the subject properties from Margarita to Roberto. It found
no express trust created between Roberto and Margarita by virtue merely
of the said document as there was no evidence of another document
showing Roberto's undertaking to return the subject properties.
Interestingly, it concluded that, instead, an "implied or constructive trust"
was created between the parties, as if affirming that there was indeed an
agreement — albeit unwritten — to have the properties returned to
Margarita in due time. 22
Moreover, the trial court surmised how Margarita could have failed to
recover the subject properties from Roberto at any time between 1968,
following the execution of the Affidavit of Transfer, and Roberto's return
from the United States shortly thereafter. Finding Margarita guilty of laches
by such inaction, the trial court barred recovery from respondents who
were found to have acquired the properties supposedly in good faith and
for value. 23 It also pointed out that recovery could no longer be pursued in
this case because Margarita had likewise exhausted the ten-year
prescriptive period for reconveyance based on an implied trust which had
commenced to run in 1968 upon the execution of the Affidavit of Transfer.
24 Finally, it emphasized that mere inadequacy of the price as alleged
would not be a sufficient ground to annul the sales in favor of Pedro and
Marilou absent any defect in consent. 25
Aggrieved, petitioner appealed to the Court of Appeals which, on
October 13, 2006, affirmed the trial court's disposition. The appellate court
dismissed petitioner's claim that Roberto was merely a trustee of the
subject properties as there was no evidence on record supportive of the
allegation that Roberto merely borrowed the properties from Margarita
upon his promise to return the same on his arrival from the United States.
Further, it hypothesized that granting the existence of an implied trust, still

Margarita's action thereunder had already been circumscribed by laches.
26
Curiously, while the appellate court had found no implied trust

relation in the transaction between Margarita and Roberto, nevertheless, it
held that the ten-year prescriptive period under Article 1144 of the Civil
Code, in relation to an implied trust created under Article 1456, had
already been exhausted by Margarita because her cause of action had
accrued way back in 1968; and that while laches and prescription as
defenses could have availed against Roberto, the same would be
unavailing against Pedro and Marilou because the latter were supposedly
buyers in good faith and for value. 27 It disposed of the appeal, thus: CcTIDH
WHEREFORE, the Appeal is hereby DENIED. The assailed

Decision dated 2 July 2001 of the Regional Trial Court of Bauang,
La Union, Branch 33 is AFFIRMED.
SO ORDERED. 28
Hence, the instant recourse imputing error to the Court of Appeals in
holding: (a) that the complaint is barred by laches and prescription; (b) that
the rule on innocent purchaser for value applies in this case of sale of
unregistered land; and (c) that there is no evidence to support the finding
that there is an implied trust created between Margarita and her son
Roberto. 29
Petitioner posits that the Court of Appeals should not have
haphazardly applied the doctrine of laches and failed to see that the
parties in this case are bound by familial ties. They assert that laches must
not be applied when an injustice would result from it. Petitioner believes
that the existence of such confidential relationship precludes a finding of
unreasonable delay on Margarita's part in enforcing her claim, especially in
the face of Luz's testimony that she and Margarita had placed trust and
confidence in Roberto. Petitioner also refutes the Court of Appeals' finding
that there was a donation of the properties to Roberto when the truth is
that the subject properties were all that Margarita possessed and that she
could not have failed to provide for her other children nor for means by
which to support herself. It reiterates that the transfer to Roberto was only
an accommodation so that he could submit proof to support his U.S. visa
application.
On the issue of prescription, petitioner advances that it runs from the
time Roberto, as trustee, has repudiated the trust by selling the properties
to respondents in August 15, 1992; that hence, the filing of the instant
complaint in 1996 was well within the prescriptive period. Finally, petitioner
states that whether a buyer is in good or bad faith is a matter that attains
relevance in sales of registered land, as corollary to the rule that a
purchaser of unregistered land uninformed of the seller's defective title
acquires no better right than such seller.
Respondents stand by the ruling of the Court of Appeals. In their

Comment, they theorize that if indeed Margarita and Roberto had agreed
to have the subject properties returned following the execution of the
Affidavit of Transfer, then there should have been a written agreement
evincing such intention of the parties. They note that petitioner's reliance
on the Affidavit of Transfer as well as on the alleged unwritten agreement
for the return of the properties must fail, simply because they are not even
parties to it. Be that as it may, the said document had effectively
transferred the properties to Roberto who, in turn, had acquired the full
capacity to sell them, especially since these properties could well be
considered as Roberto's inheritance from Margarita who, on the contrary,
did have other existing properties in her name. Moreover, they believe that
the liberal application of the rule on laches between family members does
not apply in the instant case because there is no fiduciary relationship and
privity between them and Margarita. TAacIE
There is merit in the petition.

To begin with, the rule is that the latitude of judicial review under
Rule 45 generally excludes factual and evidentiary reevaluation, and the
Court ordinarily abides by the uniform conclusions of the trial court and the
appellate court. Yet, in the case at bar, while the courts below have both
arrived at the dismissal of petitioner's complaint, there still remains
unsettled the ostensible incongruence in their respective factual findings. It
thus behooves us to be thorough both in reviewing the records and in
appraising the evidence, especially since an opposite conclusion is
warranted and, as will be shown, justified.
A trust is the legal relationship between one person having an
equitable ownership of property and another person owning the legal title
to such property, the equitable ownership of the former entitling him to the
performance of certain duties and the exercise of certain powers by the
latter. 30 Trusts are either express or implied. 31 Express or direct trusts are
created by the direct and positive acts of the parties, by some writing or
deed, or will, or by oral declaration in words evincing an intention to create
a trust. 32 Implied trusts — also called "trusts by operation of law," "indirect
trusts" and "involuntary trusts" — arise by legal implication based on the
presumed intention of the parties or on equitable principles independent of
the particular intention of the parties. 33 They are those which, without
being expressed, are deducible from the nature of the transaction as
matters of intent or, independently of the particular intention of the parties,
as being inferred from the transaction by operation of law basically by
reason of equity. 34
Implied trusts are further classified into constructive trusts and
resulting trusts. Constructive trusts, on the one hand, come about in the
main by operation of law and not by agreement or intention. They arise not
by any word or phrase, either expressly or impliedly, evincing a direct
intention to create a trust, but one which arises in order to satisfy the
demands of justice. 35 Also known as trusts ex maleficio, trusts ex delicto
and trusts de son tort, they are construed against one who by actual or
constructive fraud, duress, abuse of confidence, commission of a wrong or
any form of unconscionable conduct, artifice, concealment of questionable
means, or who in any way against equity and good conscience has
obtained or holds the legal right to property which he ought not, in equity
and good conscience, hold and enjoy. 36 They are aptly characterized as
"fraud-rectifying trust," 37 imposed by equity to satisfy the demands of
justice 38 and to defeat or prevent the wrongful act of one of the parties. 39
Constructive trusts are illustrated in Articles 1450, 1454, 1455 and 1456. 40
On the other hand, resulting trusts arise from the nature or
circumstances of the consideration involved in a transaction whereby one
person becomes invested with legal title but is obligated in equity to hold
his title for the benefit of another. This is based on the equitable doctrine
that valuable consideration and not legal title is determinative of equitable
title or interest and is always presumed to have been contemplated by the
parties. 41 Such intent is presumed as it is not expressed in the instrument
or deed of conveyance and is to be found in the nature of their transaction.
42 Implied trusts of this nature are hence describable as "intention-
enforcing trusts." 43 Specific examples of resulting trusts may be found in

the Civil Code, particularly Articles 1448, 1449, 1451, 1452 and 1453. 44
EHACcT
Articles 1448 to 1456 of the Civil Code enumerate cases of implied

trust, but the list according to Article 1447 is not exclusive of others which
may be established by the general law on trusts so long as the limitations
laid down in Article 1442 are observed, 45 that is, that they be not in conflict
with the New Civil Code, the Code of Commerce, the Rules of Court and
special laws. 46
While resulting trusts generally arise on failure of an express trust or
of the purpose thereof, or on a conveyance to one person upon a
consideration from another (sometimes referred to as a "purchase-money
resulting trust"), they may also be imposed in other circumstances such
that the court, shaping judgment in its most efficient form and preventing a
failure of justice, must decree the existence of such a trust. 47 A resulting
trust, for instance, arises where, there being no fraud or violation of the
trust, the circumstances indicate intent of the parties that legal title in one
be held for the benefit of another. 48 It also arises in some instances where
the underlying transaction is without consideration, such as that
contemplated in Article 1449 49 of the Civil Code. Where property, for
example, is gratuitously conveyed for a particular purpose and that
purpose is either fulfilled or frustrated, the court may affirm the resulting
trust in favor of the grantor or transferor, 50 where the beneficial interest in
property was not intended to vest in the grantee. 51
Intention — although only presumed, implied or supposed by law
from the nature of the transaction or from the facts and circumstances
accompanying the transaction, particularly the source of the consideration
— is always an element of a resulting trust 52 and may be inferred from the
acts or conduct of the parties rather than from direct expression of
conduct. 53 Certainly, intent as an indispensable element, is a matter that
necessarily lies in the evidence, that is, by evidence, even circumstantial,
of statements made by the parties at or before the time title passes. 54
Because an implied trust is neither dependent upon an express agreement
nor required to be evidenced by writing, 55 Article 1457 56 of our Civil Code
authorizes the admission of parole evidence to prove their existence.
Parole evidence that is required to establish the existence of an implied
trust necessarily has to be trustworthy and it cannot rest on loose,
equivocal or indefinite declarations. 57
Thus, contrary to the Court of Appeals' finding that there was no
evidence on record showing that an implied trust relation arose between
Margarita and Roberto, we find that petitioner before the trial court, had
actually adduced evidence to prove the intention of Margarita to transfer to
Roberto only the legal title to the properties in question, with attendant
expectation that Roberto would return the same to her on accomplishment
of that specific purpose for which the transaction was entered into. The
evidence of course is not documentary, but rather testimonial. TAECSD
We recall that the complaint before the trial court alleged that the
1968 Affidavit of Transfer was executed merely to accommodate Roberto's
request to have the properties in his name and thereby produce proof of
ownership of certain real properties in the Philippines to support his U.S.
visa application. The agreement, the complaint further stated, was for
Margarita to transfer the tax declarations of the subject properties to
Roberto for the said purpose and without the intention to divest her of the
rights of ownership and dominion. 58 Margarita, however, died before trial
on the merits ensued; 59 yet the allegation was substantiated by the open-
court statements of her daughter, Luz, and of her niece, Hilaria Costales
(Hilaria), a disinterested witness.
In her testimony, Luz, who affirmed under oath her own presence at
the execution of the Affidavit of Transfer, described the circumstances
under which Margarita and Roberto entered into the agreement. She
narrated that Roberto had wanted to travel to the U.S and to show the
embassy proof of his financial capacity, he asked to "borrow" from
Margarita the properties involved but upon the condition that he would give
them back to her upon his arrival from the United States. She admitted that
Roberto's commitment to return the properties was not put in writing
because they placed trust and confidence in him, and that while she had
spent most of her time in Mindanao since she married in 1956, she would
sometimes come to La Union to see her mother but she never really knew
whether at one point or another her mother had demanded the return of
the properties from Roberto. 60 She further asserted that even after
Roberto's arrival from the United States, it was Margarita who paid off the
taxes on the subject properties and that it was only when her health started
to deteriorate that Roberto had taken up those obligations. 61 Hilaria's
testimony ran along the same line. Like Luz, she was admittedly present at
the execution of the Affidavit of Transfer which took place at the house she
shared with Jacinto Costales, the notarizing officer who was her own
brother. She told that Roberto at the time had wanted to travel to the U.S.
but did not have properties in the Philippines which he could use to back
up his visa application; as accommodation, Margarita "lent" him the tax
declarations covering the properties but with the understanding that upon
his return he would give them back to Margarita. She professed familiarity
with the properties involved because one of them was actually sitting close
to her own property. 62
While indeed at one point at the stand both of Luz's and Hilaria's
presence at the execution of the affidavit had been put to test in subtle
interjections by respondents' counsel to the effect that their names and
signatures did not appear in the Affidavit of Transfer as witnesses, this, to
our mind, is of no moment inasmuch as they had not been called to testify
on the fact of, or on the contents of, the Affidavit of Transfer or its due
execution. Rather, their testimony was offered to prove the circumstances
surrounding its execution — the circumstances from which could be
derived the unwritten understanding between Roberto and Margarita that
by their act, no absolute transfer of ownership would be effected. Besides,
it would be highly unlikely for Margarita to institute the instant complaint if it
were indeed her intention to vest in Roberto, by virtue of the Affidavit of
Transfer, absolute ownership over the covered properties.
It is deducible from the foregoing that the inscription of Roberto's
name in the Affidavit of Transfer as Margarita's transferee is not for the
purpose of transferring ownership to him but only to enable him to hold the
property in trust for Margarita. Indeed, in the face of the credible and
straightforward testimony of the two witnesses, Luz and Hilaria, the
probative value of the ownership record forms in the names of
respondents, together with the testimony of their witness from the
municipal assessor's office who authenticated said forms, are utterly
minimal to show Roberto's ownership. It suffices to say that respondents
did not bother to offer evidence that would directly refute the statements
made by Luz and Hilaria in open court on the circumstances underlying the
1968 Affidavit of Transfer. SAHEIc
As a trustee of a resulting trust, therefore, Roberto, like the trustee of

an express passive trust, is merely a depositary of legal title having no
duties as to the management, control or disposition of the property except
to make a conveyance when called upon by the cestui que trust. 63 Hence,
the sales he entered into with respondents are a wrongful conversion of
the trust property and a breach of the trust. The question is: May
respondents now be compelled to reconvey the subject properties to
petitioner? We rule in the affirmative.
Respondents posit that petitioner's claim may never be enforced
against them as they had purchased the properties from Roberto for value
and in good faith. They also claim that, at any rate, petitioner's cause of
action has accrued way back in 1968 upon the execution of the Affidavit of
Transfer and, hence, with the 28 long years that since passed, petitioner's
claim had long become stale not only on account of laches, but also under
the rules on extinctive prescription governing a resulting trust. We do not
agree.
First, fundamental is the rule in land registration law that the issue of
whether the buyer of realty is in good or bad faith is relevant only where
the subject of the sale is registered land and the purchase was made from
the registered owner whose title to the land is clean, in which case the
purchaser who relies on the clean title of the registered owner is protected
if he is a purchaser in good faith and for value. 64 Since the properties in
question are unregistered lands, respondents purchased the same at their
own peril. Their claim of having bought the properties in good faith, i.e.,
without notice that there is some other person with a right to or interest
therein, would not protect them should it turn out, as it in fact did in this
case, that their seller, Roberto, had no right to sell them.
Second, the invocation of the rules on limitation of actions relative to
a resulting trust is not on point because the resulting trust relation between
Margarita and Roberto had been extinguished by the latter's death. A trust,
it is said, terminates upon the death of the trustee, particularly where the
trust is personal to him. 65 Besides, prescription and laches, in respect of
this resulting trust relation, hardly can impair petitioner's cause of action.
On the one hand, in accordance with Article 1144 66 of the Civil Code, an
action for reconveyance to enforce an implied trust in one's favor
prescribes in ten (10) years from the time the right of action accrues, as it
is based upon an obligation created by law. 67 It sets in from the time the
trustee performs unequivocal acts of repudiation amounting to an ouster of
the cestui que trust which are made known to the latter. 68 In this case, it
was the 1992 sale of the properties to respondents that comprised the act
of repudiation which, however, was made known to Margarita only in 1995
but nevertheless impelled her to institute the action in 1996 — still well
within the prescriptive period. Hardly can be considered as act of
repudiation Roberto's open court declaration which he made in the 1979
adoption proceedings involving respondents to the effect that he owned the

subject properties, 69 nor even the fact that he in 1977 had entered into a
lease contract on one of the disputed properties which contract had been
subject of a 1996 decision of the Court of Appeals. 70 These do not suffice
to constitute unequivocal acts in repudiation of the trust. THIAaD
On the other hand, laches, being rooted in equity, is not always to be

applied strictly in a way that would obliterate an otherwise valid claim
especially between blood relatives. The existence of a confidential
relationship based upon consanguinity is an important circumstance for
consideration; hence, the doctrine is not to be applied mechanically as
between near relatives. 71 Adaza v. Court of Appeals 72 held that the
relationship between the parties therein, who were siblings, was sufficient
to explain and excuse what would otherwise have been a long delay in
enforcing the claim and the delay in such situation should not be as strictly
construed as where the parties are complete strangers vis-a-vis each
other; thus, reliance by one party upon his blood relationship with the other
and the trust and confidence normally connoted in our culture by that
relationship should not be taken against him. Too, Sotto v. Teves 73 ruled
that the doctrine of laches is not strictly applied between near relatives,
and the fact that the parties are connected by ties of blood or marriage
tends to excuse an otherwise unreasonable delay.
Third, there is a fundamental principle in agency that where certain
property entrusted to an agent and impressed by law with a trust in favor of
the principal is wrongfully diverted, such trust follows the property in the
hands of a third person and the principal is ordinarily entitled to pursue and
recover it so long as the property can be traced and identified, and no
superior equities have intervened. This principle is actually one of trusts,
since the wrongful conversion gives rise to a constructive trust which
pursues the property, its product or proceeds, and permits the beneficiary
to recover the property or obtain damages for the wrongful conversion of
the property. Aptly called the "trust pursuit rule," it applies when a
constructive or resulting trust has once affixed itself to property in a certain
state or form. 74
Hence, a trust will follow the property — through all changes in its
state and form as long as such property, its products or its proceeds, are
capable of identification, even into the hands of a transferee other than a
bona fide purchaser for value, or restitution will be enforced at the election
of the beneficiary through recourse against the trustee or the transferee
personally. This is grounded on the principle in property law that ownership
continues and can be asserted by the true owner against any withholding
of the object to which the ownership pertains, whether such object of the
ownership is found in the hands of an original owner or a transferee, or in a
different form, as long as it can be identified. 75 Accordingly, the person to
whom is made a transfer of trust property constituting a wrongful
conversion of the trust property and a breach of the trust, when not
protected as a bona fide purchaser for value, is himself liable and
accountable as a constructive trustee. The liability attaches at the moment
of the transfer of trust property and continues until there is full restoration
to the beneficiary. Thus, the transferee is charged with, and can be held to
the performance of the trust, equally with the original trustee, and he can
be compelled to execute a reconveyance. 76
This scenario is characteristic of a constructive trust imposed by
Article 1456 77 of the Civil Code, which impresses upon a person obtaining
property through mistake or fraud the status of an implied trustee for the
benefit of the person from whom the property comes. Petitioner, in laying
claim against respondents who are concededly transferees who professed
having validly derived their ownership from Roberto, is in effect enforcing
against respondents a constructive trust relation that arose by virtue of the
wrongful and fraudulent transfer to them of the subject properties by
Roberto. SCDaET
Aznar Brother Realty Co. v. Aying, 78 citing Buan Vda. de Esconde v.

Court of Appeals, 79 explained this form of implied trust as follows:
A deeper analysis of Article 1456 reveals that it is not a trust
in the technical sense for in a typical trust, confidence is reposed in
one person who is named a trustee for the benefit of another who is
called the cestui que trust, respecting property which is held by the
trustee for the benefit of the cestui que trust. A constructive trust,
unlike an express trust, does not emanate from, or generate a
fiduciary relation. While in an express trust, a beneficiary and a
trustee are linked by confidential or fiduciary relations, in a
constructive trust, there is neither a promise nor any fiduciary
relation to speak of and the so-called trustee neither accepts any
trust nor intends holding the property for the beneficiary.
xxx xxx xxx
. . . [C]onstructive trusts are created by the construction of
equity in order to satisfy the demands of justice and prevent unjust
enrichment. They arise contrary to intention against one who, by
fraud, duress or abuse of confidence, obtains or holds the legal
right to property which he ought not, in equity and good conscience,
to hold. 80
It is settled that an action for reconveyance based on a constructive
implied trust prescribes in 10 years likewise in accordance with Article
1144 of the Civil Code. Yet not like in the case of a resulting implied trust
and an express trust, prescription supervenes in a constructive implied
trust even if the trustee does not repudiate the relationship. In other words,
repudiation of said trust is not a condition precedent to the running of the
prescriptive period. 81
As to when the prescriptive period commences to run, Crisostomo v.

Garcia 82 elucidated as follows:
When property is registered in another's name, an implied or
constructive trust is created by law in favor of the true owner. The
action for reconveyance of the title to the rightful owner prescribes
in 10 years from the issuance of the title. An action for
reconveyance based on implied or constructive trust prescribes in
ten years from the alleged fraudulent registration or date of
issuance of the certificate of title over the property.
It is now well settled that the prescriptive period to recover
property obtained by fraud or mistake, giving rise to an implied trust
under Art. 1456 of the Civil Code, is 10 years pursuant to Art. 1144.
This ten-year prescriptive period begins to run from the date
the adverse party repudiates the implied trust, which
repudiation takes place when the adverse party registers the
land. 83
From the foregoing, it is clear that an action for reconveyance under
a constructive implied trust in accordance with Article 1456 does not
prescribe unless and until the land is registered or the instrument affecting
the same is inscribed in accordance with law, inasmuch as it is what binds
the land and operates constructive notice to the world. 84 In the present
case, however, the lands involved are concededly unregistered lands;
hence, there is no way by which Margarita, during her lifetime, could be
notified of the furtive and fraudulent sales made in 1992 by Roberto in
favor of respondents, except by actual notice from Pedro himself in August
1995. Hence, it is from that date that prescription began to toll. The filing of
the complaint in February 1996 is well within the prescriptive period.
Finally, such delay of only six (6) months in instituting the present action
hardly suffices to justify a finding of inexcusable delay or to create an
inference that Margarita has allowed her claim to stale by laches. cSTHAC
WHEREFORE, the Petition is GRANTED. The October 13, 2006

Decision of the Court of Appeals in CA-G.R. CV No. 72371, affirming the
July 2, 2001 judgment of the Regional Trial Court of La Union, Branch 33
in Civil Case No. 1031-BG, is REVERSED and SET ASIDE, and a new
one is entered (a) directing the cancellation of the tax declarations
covering the subject properties in the name of Roberto D. Laigo and his
transferees; (b) nullifying the deeds of sale executed by Roberto D. Laigo
in favor of respondents Pedro Roy Laigo and Marilou Laigo; and (c)
directing said respondents to execute reconveyance in favor of petitioner.
SO ORDERED.
Carpio, * Velasco, Jr., Brion ** and Sereno, *** JJ., concur.
Footnotes
* Designated as an additional member in lieu of Associate Justice Roberto

A. Abad, per Special Order No. 1059 dated August 1, 2011.
** Designated as an additional member in lieu of Associate Justice Jose
Catral Mendoza, per Special Order No. 1056 dated July 27, 2011.
*** Designated as an additional member, per Special Order No. 1028 dated
June 21, 2011.
1. Penned by Associate Justice Japar B. Dimaampao, with Associate
Justices Marina L. Buzon and Regalado E. Maambong, concurring; rollo,
pp. 43-54.
2. Signed by Judge Rose Mary R. Molina Alim; id. at 173-181.
3. Petitioner was later on substituted by the Estate of Margarita D.
Cabacungan, represented by Luz Laigo-Ali.
4. Estella Balagot's name was dropped from the subsequent pleadings
filed with the trial court.
5. Tax Declaration Nos. 12234 series of 1953, 34668 series of 1967 and
15052 series of 1953, records, pp. 216-218.
6. Records, p. 2.
7. Id. at 2-3, 8 and 215.
8. Id. at 219-221.
9. See Deed of Absolute Sale, id. at 9.
10. See Deed of Sale of a Residential Land, and Deed of Sale of Portions
of Land, id. at 10-11.
11. Records, pp. 3-4.
12. Id. at 5; TSN, February 9, 2000, pp. 8-9.
13. See Compliant, records, pp. 2-5.
14. Records, p. 6.
15. Records, p. 33.
16. These respondents initially submitted a Motion to Dismiss, but the trial
court denied the same in its March 10, 1998 Order. See records, pp. 91-98,
116-119.
17. See Answer, records, pp. 122-127.
18. Records, p. 173.
19. Id. at 179-182.
20. Id. at 177-178.
21. Id. at 288.
22. Rollo, p. 178.
23. Id. at 178.

24. Id. at 179.
25. Id. at 181.
26. CA rollo, p. 223.
27. Id. at 224-225.
28. Id. at 226.
29. Id. at 28.
30. Cañezo v. Rojas, G.R. No. 148788, November 23, 2007, 538 SCRA
242, 251; Tigno v. Court of Appeals, G.R. No. 110115, October 8, 1997, 280
SCRA 262, 271-272, citing Morales v. Court of Appeals, 274 SCRA 282
(1997).
31. Article 1441, Civil Code of the Philippines states:
ART. 1441. Trusts are either express or implied. — Express trusts
are created by the intention of the trustor or of the parties. Implied trusts
come into being by operation of law.
32. Cañezo v. Rojas, supra note 30, at 251-252, citing Buan Vda. de
Esconde v. Court of Appeals, 323 Phil. 81, 89 (1996); Ringor v. Ringor, G.R.
No. 147863, August 13, 2004, 436 SCRA 484, 497.
33. Tigno v. Court of Appeals, supra note 30, at 271; 76 Am Jur 2d, §159,
p. 191, citing Gifford v. Dennis, 335 SE2d 371; Sorrels v. McNally, 105 So
106; and Emberry Community Church v. Bloomington Dist. Missionary &
Church Extension Soc., 482 NE2d 288.
34. See Buan Vda. de Esconde, supra note 32, at 89, citing Philippine
National Bank v. Court of Appeals, 217 SCRA 347 (1993); Cañezo v. Rojas,
supra note 30, at 252.
35. Cañezo v. Rojas n, supra note 30, at 258; citing Heirs of Yap v. Court of
Appeals, 371 Phil. 523, 531 (1999).
36. Roa, Jr. v. Court of Appeals, G.R. No. L-27294, June 23, 1983, 123
SCRA 3, 15-16.
37. 76 Am Jur 2d, §163, citing Martin v. Kehl (2nd Dist.), 145 Cal App 3d
228.
38. Roa, Jr. v. Court of Appeals, supra note 36, at 16.
228.
40. Lopez v. Court of Appeals, G.R. No. 157784, December 16, 2008, 574
SCRA 26.
41. Buan Vda. de Esconde, supra note 32, at 89-90.
42. Salao v. Salao, G.R. No. L-26699, March 16, 1976, 70 SCRA 65, 81.
228.
44. Lopez v. Court of Appeals, supra note 40.
45. Roa, Jr. v. Court of Appeals, supra note 36, at 15.
46. Article 1442 incorporates and adopts a large part of the American law
on trusts and thereby the Philippine legal system will be amplified and will
be rendered more suited to a just and equitable solution of many questions.
See The Report of the Code Commission, p. 60.
47. 76 Am Jur 2d, §166, citing McClure v. Moore, 565 So 2d 8; Western
Union Te. Co. v. Shepard, 169 NY 170.
48. See 76 Am Jur 2d, §166, note 50 which cites Jones v. Jones, 459 P2d
603 and Re Wilder, 42 BR 6.
49. Art. 1449. There is also an implied trust when a donation is made to a
person but it appears that although the legal estate is transmitted to the
donee, he nevertheless is either to have no beneficial interest or only a part
thereof.
50. Rebillard v. Hagedorn, 6 Conn App 355, 505 A2d 731.
51. Frame v. Wright, 9 NW2d 364, 147 ALR 1154.
52. 76 Am Jur 2d, §169, p. 201, citing Smith v. Smith, 196 So 409 and
Swon v. Huddleston, 282 SW2d 18.
53. American Hotel Management Associates, Inc. v. Jones, 768 F2d 562.
54. See 76 Am Jur 2d, §170, p. 203.
55. See 76 Am Jur 2d, §166, p. 197.
56. Art. 1457. An implied trust may be proved by oral evidence.
57. Tigno v. Court of Appeals, supra note 30, at 274; Morales v. Court of
Appeals, 274 SCRA 282 (1997); Ong Ching Po v. Court of Appeals, 239
SCRA 341 (1994); Salao v. Salao, supra note 42, at 83, citing De Leon v.
Molo-Peckson, 116 Phil. 1267 (1962).
58. Records, pp. 2-3.
59. Id. at 179-180.
60. TSN, February 9, 2000, pp. 7, 8, 16, 17.
ATTY. LIBATIQUE:
Q: Madam witness, why do you know this transferor's affidavit?
WITNESS:
A: I was present when they signed, sir.
Q: Who signed this?
A: My mother, sir.
Q: And whom?
A: And Roberto Laigo, Jr., sir.
Q: You said you were present, whose signature appears under the
name, Roberto Laigo?
A: Roberto Laigo, sir.
Q: Your brother?
A: My brother.
Q: . . . and the signature Margarita Laigo, whose signature is that?
A: My mother.
xxx xxx xxx
Q: Madam witness, tell the court under what circumstances was
that transferor's affidavit executed.
A: What do you mean?
Q: Under what circumstances?
A: He just borrowed it because he was going to the United States,
he is going to show and he wants to use that as evidence that he owns
land in the Philippines.
Q: What was the condition of that transfer, since you said you
were present?
A: He will return it as soon as he will arrive (sic), and that was
agreed upon, sir.
Q: Was Roberto able to go to America?
A: Yes, sir.
Q: And one of the evidence that was used . . . to secure a visa were
these 3 tax declarations of properties?
A: Yes, sir.
Q: You said that (Roberto Laigo) promised to return these properties in
the name of Margarita Laigo. How long did Roberto Laigo stay in America?
A: He did not stay long, sir.
Q: How long?
A: Maybe (3) to (4) months.
Q: And after he has returned from America, did he return the titles of
these properties in the name of your mother?
A: We did not know about it because when we came to know (of) it, it
was already sold and my mother was surprised to know that it was already
sold.
Q: When did you come to know (of) it?

A: In 1995 when my brother died.
xxx xxx xxx
Q: Earlier you said that you were aware of this transferee's
affidavit . . .
A: Yes, sir.
Q: Did you act as witness in the transferee's affidavit?
A: No, I was there only, sir.
Q: So that is the reason why you have no signature . . . as
witness?
A: Yes, sir.
xxx xxx xxx
Q: Also, you said that the reason why this transferee's affidavit
and the transferor's affidavit were executed was because your brother
was going to the United States and he will return this transferee's
affidavit when he comes back.
A: Yes, sir.
Q: Was that agreement put in writing?
A: No, sir.
Q: Why was it not put in writing?
A: He was my brother and we trusted him so much.
Q: Why did you not ask that your brother put it in writing so that
he will not forget it?
A: Because of the trust we had with (sic) him, he was my brother
and we trusted him.
Q: So you admit that there is no document in writing to show that
that agreement was the actual agreement?
A: None, sir. (Emphasis supplied.)
61. TSN, February 9, 2000, pp. 12-17.
62. TSN, March 23, 2000, pp. 3-7.
Q: Do you know Margarita Laigo Cabacungan?
A: Yes, sir. I know her. She is the sister of my mother, Clara.
Q: Do you know how many children does she have (sic)?
A: There are three children namely: Luz Laigo, Roberto Laigo, and
Paulina Laigo.
Q: Do you know the properties that are subjects of this case?
A: Yes, I know.
Q: Where are these properties located?
A: At Paringao and Baccuit.
Q: These properties in Paringao, where are these properties in relation
to the Cresta Ola and the Mark Theresa Apartments? Are these properties
near those sites?
A: Yes sir, they are very near each other.
Q: Now, do you know the subject properties, one of which is west of the
national road and corner part of Cresta Del Mar?
A: Yes, I know it.
Q: Why do you know it?
A: Because the Cresta Del Mar and ours is the Cresta Ola, they are
very near each other.
Q: What about the property east of the national road near the Mark
Theresa Apartment, . . . where is this property?
A: It is east of the road . . . South of the Mark Theresa Apartment.
xxx xxx xxx
Q: You said that these properties were owned by Margarita Laigo
Cabacungan. Do you know how these properties were transferred to
Roberto Laigo, Jr.?
A: I know it.
Q: Why do you know?
A: Because the papers were made by my brother, Jacinto Costales, in
our house.
Q: When you say Jacinto Costales, is this the same person who was
once a judge of Bagulin Trial Court?
A: Oh, yes!
Q: Where is he now?
A: He is already dead.
xxx xxx xxx
Q: Now, will you tell the court why was this document (sic)
executed by Margarita Laigo and Roberto Laigo.
A: When Roberto Laigo wanted to go to America, he has no
properties in his name. That is why his mother lent him that document
to show that he has properties in the Philippines, but after he goes to
America those properties will go back to his mother.
xxx xxx xxx
Q: How far is your house to that of Margarita Cabacungan?

Atty. Libatique: Your Honor, for the record, that is about from the town hall to
that place four (4) kilometers . . . I think that would be the approximate
distance.
xxx xxx xxx
Q: At the time (Jacinto Costales) was a judge and he executed this
affidavit sometime in 1968, where were you if you still remember?
A: I was in the house of my brother (Jacinto).
Q: You [were] staying in just one house?
A: Yes, sir.
Q: And you said you were a witness to the execution of this
transferee's affidavit?
A: Yes, sir.
Q: If you were a witness, do you remember if you signed a
document which will show that you were a witness?
A: No, sir.
Q: You did not sign?
A: No. sir.
xxx xxx xxx
Q: Earlier you said that you know for a fact that there was an
agreement that Margarita Laigo signed this in favor of Roberto Laigo
because Roberto Laigo at that time (was) going to the United States,
and Roberto Laigo will be using this Transferee's Affidavit?
A: Yes, sir.
Q: Do you know, madam witness, if that was reduced into writing?
xxx xxx xxx
A: That is a verbal agreement.
Q: How did you come to know that?
A: I was in the house.
Q: In the house of Margarita Laigo?
A: Yes, sir, because she is my auntie.
Q: Are you still staying there full time in the house of Margarita Laigo?
A: Sometimes only.
xxx xxx xxx
Q: So that means that sometimes, you were not there. It could be that
Mrs. Laigo told Roberto Laigo that that was (his) property already.
A: No, it cannot be because Margarita Laigo has two daughters, Luz

Laigo and Paulina Laigo.
Q: So that is your opinion?
A: Yes, sir. (Emphasis supplied.)
63. 76 Am Jur 2d, §162, citing Hocking v. Hocking, 484 NE2d 406.
64. Spouses Rayos v. Reyes, 446 Phil. 32, 50 (2003), citing Sales v. Court
of Appeals, 211 SCRA 858 (1992); David v. Bandin, G.R. Nos. L-48322, L-
49712, L-49716 and 49687, April 8, 1987, 149 SCRA 140, 150.
65. Cañezo v. Rojas n, supra note 30, at 257.

66. Art. 1144. The following actions must be brought within ten years from
the time the right of action accrues:
(1) Upon a written contract;
(2) Upon an obligation created by law;
(3) Upon a judgment.
67. Heirs of Maria Vda. de Vega v. Court of Appeals, G.R. No. 93507, July
12, 1991, 199 SCRA 168, 177; Tale v. Court of Appeals, G.R. No. 101028,
April 23, 1992, 208 SCRA 266.
68. Pilapil v. Briones, G.R. No. 150175 (Resolution on the Motion for
Reconsideration), February 5, 2007, 514 SCRA 197; Cañezo v. Rojas n,
supra note 30, at 252-253; Ramos v. Ramos, 158 Phil. 935 (1974).
69. Decision of the Municipal Trial Court of San Fernando, La Union,
Branch I in SP. PROC. No. 193, CA rollo, pp. 363-365.
70. Decision of the Court of Appeals in CA-G.R. SP No. 36220, id. at 371-
378.
71. See Adaza v. Court of Appeals, 253 Phil. 364, 376 (1989).
72. Id.
73. 175 Phil. 343 (1978).
74. See 76 Am Jur §292, p. 306.
75. See 76 Am Jur §292, pp. 306-307.
76. See 76 Am Jur §297, pp. 311-312.
77. Art. 1456. If property is acquired through mistake or fraud, the person
obtaining it is, by force of law, considered a trustee of an implied trust for the
benefit of the person from whom the property comes.
78. 497 Phil. 788, 799 (2005).
79. Supra note 32.
80. Aznar Brothers Realty Co. v. Aying, supra note 78, at 799-800.
81. Buan Vda. de Esconde v. Court of Appeals, supra note 32; Aznar
Brothers Realty Co. v. Aying, id.
82. 516 Phil. 743 (2006).
83. Id. at 753, citing Austria-Magat v. Court of Appeals, 426 Phil. 263, 278
(2002) (Emphasis supplied.); Pascual v. Court of Appeals, G.R. No. 115925,
August 15, 2003, 409 SCRA 105, 113; Spouses Alfredo v. Spouses Borras,
452 Phil. 178, 204 (2003); Vda. de Delgado v. Court of Appeals, 416 Phil.
263, 274 (2001); Villanueva-Mijares v. Court of Appeals, 386 Phil. 555, 566
(2000).
84. Spouses Abrigo v. De Vera, 476 Phil. 641, 653 (2004).
n Note from the Publisher: Written as "Cañezo v. Roxas" in the original
document.
n Note from the Publisher: Written as "Canezo v. Rojas" in the original
document.
n Note from the Publisher: Written as "Canezo v. Rojas" in the original
document.

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2/2/2020 G.R. No. 175073 | Estate of Cabacungan v.

[G.R. No. 175073. August 15, 2011.]

ESTATE OF MARGARITA D. CABACUNGAN, represented by

It was only in August 1995, at Roberto's wake, that Margarita came

WHEREFORE, in view of the foregoing considerations, the

Further, it hypothesized that granting the existence of an implied trust, still

Curiously, while the appellate court had found no implied trust

WHEREFORE, the Appeal is hereby DENIED. The assailed

Respondents stand by the ruling of the Court of Appeals. In their

There is merit in the petition.

enforcing trusts." 43 Specific examples of resulting trusts may be found in

Articles 1448 to 1456 of the Civil Code enumerate cases of implied

As a trustee of a resulting trust, therefore, Roberto, like the trustee of

adoption proceedings involving respondents to the effect that he owned the

On the other hand, laches, being rooted in equity, is not always to be

Aznar Brother Realty Co. v. Aying, 78 citing Buan Vda. de Esconde v.

As to when the prescriptive period commences to run, Crisostomo v.

WHEREFORE, the Petition is GRANTED. The October 13, 2006

* Designated as an additional member in lieu of Associate Justice Roberto

23. Id. at 178.

Q: When did you come to know (of) it?

Q: How far is your house to that of Margarita Cabacungan?

A: No, it cannot be because Margarita Laigo has two daughters, Luz

65. Cañezo v. Rojas n, supra note 30, at 257.

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