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 led 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 A davit 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.
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. 1 0 Allegedly, these sales were not known to Margarita and her
other children. 1 1 EHTIcD

It was only in August 1995, at Roberto's wake, that Margarita came to know of
the sales as told by Pedro himself. 1 2 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 speci c purpose of supporting his U.S. visa
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 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 ctitious 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. 1 3 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. 1 4
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. 1 5
In much the same way, Marilou and Pedro, 1 6 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 a davit 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. 1 7
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. 1 8 Margarita died two days later and was forthwith substituted by her
estate. 1 9 On February 8, 1999, the trial court rendered a Partial Decision 2 0 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. 2 1
The trial court ruled that the 1968 A davit 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 a rming that there was indeed an
agreement — albeit unwritten — to have the properties returned to Margarita in due
time. 2 2
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 A davit 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
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 respondents who were found to have acquired the properties supposedly in good faith
and for value. 2 3 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 A davit of Transfer. 2 4 Finally, it emphasized that mere inadequacy of
the price as alleged would not be a su cient ground to annul the sales in favor of
Pedro and Marilou absent any defect in consent. 2 5
Aggrieved, petitioner appealed to the Court of Appeals which, on October 13,
2006, a rmed 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. 2 6
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. 2 7 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. 2 8
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 nding that there is an implied trust created between
Margarita and her son Roberto. 2 9
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 con dential relationship
precludes a nding 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
con dence in Roberto. Petitioner also refutes the Court of Appeals' nding 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 ling 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
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 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 A davit of Transfer, then there should have
been a written agreement evincing such intention of the parties. They note that
petitioner's reliance on the A davit 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 duciary 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
ndings. 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. 3 0 Trusts are either express or implied.
3 1 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. 3 2 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. 3 3 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. 3 4
Implied trusts are further classi ed 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. 3 5 Also known as trusts ex male cio , trusts ex delicto
and trusts de son tort, they are construed against one who by actual or constructive
fraud, duress, abuse of con dence, commission of a wrong or any form of
unconscionable conduct, arti ce, 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. 3 6 They are
aptly characterized as "fraud-rectifying trust," 3 7 imposed by equity to satisfy the
demands of justice 3 8 and to defeat or prevent the wrongful act of one of the parties. 3 9
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 Constructive trusts are illustrated in Articles 1450, 1454, 1455 and 1456. 4 0
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 bene t 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. 4 1 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.
4 2 Implied trusts of this nature are hence describable as "intention-enforcing trusts." 4 3
Speci c examples of resulting trusts may be found in the Civil Code, particularly
Articles 1448, 1449, 1451, 1452 and 1453. 4 4 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, 4 5 that is, that they be not in con ict with the New Civil Code, the Code of
Commerce, the Rules of Court and special laws. 4 6
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
e cient form and preventing a failure of justice, must decree the existence of such a
trust. 4 7 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 bene t of another. 4 8 It also arises in some instances where the underlying
transaction is without consideration, such as that contemplated in Article 1449 4 9 of
the Civil Code. Where property, for example, is gratuitously conveyed for a particular
purpose and that purpose is either ful lled or frustrated, the court may a rm the
resulting trust in favor of the grantor or transferor, 5 0 where the bene cial interest in
property was not intended to vest in the grantee. 5 1
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
5 2 and may be inferred from the acts or conduct of the parties rather than from direct
expression of conduct. 5 3 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. 5 4 Because an implied trust is
neither dependent upon an express agreement nor required to be evidenced by writing,
5 5 Article 1457 5 6 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. 5 7
Thus, contrary to the Court of Appeals' nding that there was no evidence on
record showing that an implied trust relation arose between Margarita and Roberto, we
nd 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 speci c purpose for which the transaction was entered into.
The evidence of course is not documentary, but rather testimonial. TAECSD

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 We recall that the complaint before the trial court alleged that the 1968 A davit
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. 5 8 Margarita, however, died before trial on
the merits ensued; 5 9 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 a rmed under oath her own presence at the execution
of the A davit 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 nancial 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 con dence 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. 6 0 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. 6 1 Hilaria's testimony ran along the same line. Like Luz, she
was admittedly present at the execution of the A davit of Transfer which took place at
the house she shared with Jacinto Costales, the notarizing o cer 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. 6 2
While indeed at one point at the stand both of Luz's and Hilaria's presence at the
execution of the a davit had been put to test in subtle interjections by respondents'
counsel to the effect that their names and signatures did not appear in the A davit 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 A davit 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 A davit of Transfer, absolute ownership over the covered
properties.
It is deducible from the foregoing that the inscription of Roberto's name in the
A davit 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
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 respondents, together with the testimony of their witness from the municipal
assessor's o ce who authenticated said forms, are utterly minimal to show Roberto's
ownership. It su ces 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. 6 3 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 A davit 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. 6 4 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. 6 5 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 6 6 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. 6 7 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. 6 8 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, 6 9 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. 7 0 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
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 strictly in a way that would obliterate an otherwise valid claim especially between blood
relatives. The existence of a con dential relationship based upon consanguinity is an
important circumstance for consideration; hence, the doctrine is not to be applied
mechanically as between near relatives. 7 1 Adaza v. Court of Appeals 7 2 held that the
relationship between the parties therein, who were siblings, was su cient 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 con dence normally connoted in our
culture by that relationship should not be taken against him. Too, Sotto v. Teves 7 3 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 identi ed, 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 bene ciary 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. 7 4
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 identi cation,
even into the hands of a transferee other than a bona de purchaser for value, or
restitution will be enforced at the election of the bene ciary 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 identi ed. 7 5 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 de 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
bene ciary. 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. 7 6
This scenario is characteristic of a constructive trust imposed by Article 1456 7 7
of the Civil Code, which impresses upon a person obtaining property through mistake
or fraud the status of an implied trustee for the bene t 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, 7 8 citing Buan Vda. de Esconde v. Court of
Appeals, 7 9 explained this form of implied trust as follows:
A deeper analysis of Article 1456 reveals that it is not a trust in the
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 technical sense for in a typical trust, con dence is reposed in one person who is
named a trustee for the bene t of another who is called the cestui que trust,
respecting property which is held by the trustee for the bene t of the cestui que
trust. A constructive trust, unlike an express trust, does not emanate from, or
generate a duciary relation. While in an express trust, a bene ciary and a
trustee are linked by con dential or duciary 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 con dence,
obtains or holds the legal right to property which he ought not, in equity and
good conscience, to hold. 8 0
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. 8 1
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. 8 3
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. 8 4 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 noti ed 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 ling 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 su ces to justify a nding 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
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 Court of Appeals in CA-G.R. CV No. 72371, a rming 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.
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 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.

39.76 Am Jur 2d, §163, citing Martin v. Kehl (2nd Dist.), 145 Cal App 3d 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.

43.76 Am Jur 2d, §163, citing Martin v. Kehl (2nd Dist.), 145 Cal App 3d 228.
44.Lopez v. Court of Appeals, supra note 40.
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 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.

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 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?
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 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?
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 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?
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 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;
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 (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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