18. CABACUNGAN vs.

LAIGO
G.R. No. 175073 August 15, 2011
FACTS:
Margarita Cabacungan owned three parcels of unregistered land in La Union which are
covered by tax declaration all in her name. Sometime in 19!" Margarita#s son" $oberto
Laigo" %r. applied for a non&immigrant visa to the United States" and to support his
application" he allegedly as'ed Margarita to transfer the tax declarations of the
properties in his name. (or said purpose" Margarita" un'nown to her other children"
executed an )ffidavit of *ransfer of $eal +roperty whereby the sub,ect properties were
transferred by donation to $oberto.
$oberto adopted respondents +edro Laigo and Marilou Laigo. -n %uly 199." $oberto
sold the aforementioned three parcel of land. /ne parcel of land was sold to spouses
Mario and %ulia Campos and the rest were sold to +edro Laigo and Marilou Laigo.
*hese sales were not 'nown to Margarita and her other children.

0uring $oberto#s wa'e" Margarita came to 'now of the sales as told by +edro himself.
Margarita" represented by her daughter" Lu1" instituted a complaint for the annulment of
said sales and for the recovery of ownership and possession of the sub,ect properties
as well as for the cancellation of $icardo#s tax declarations.
Spouses Campos advanced that they were innocent purchasers for value and in good
faith. (urther" they noted that Margarita#s claim was already barred by prescription and
laches owing to her long inaction in recovering the sub,ect properties.
Marilou and +edro contends to be buyers in good faith and for value. *hey also 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 bac' in 19! upon the execution of the affidavit of transfer
by virtue of which an implied trust had been created. -n this regard" they emphasi1ed
that the law allowed only a period of ten 21.3 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.

Margarita and the Spouses Campos amicably entered into a settlement whereby they
waived their respective claims against each other. Margarita died two days later and
was substituted by her estate.
/n (ebruary !" 1999" the trial court rendered a +artial 0ecision approving the
compromise agreement and dismissing the complaint against the Spouses Campos.
*rial on the merits ensued with respect to +edro and Marilou.
*rial court rendered ,udgment dismissing the complaint. -t explained that the 19!
)ffidavit of *ransfer operated as a simple transfer of the sub,ect properties from
Margarita to $oberto. -t found no express trust created between $oberto and Margarita
by virtue merely of the said document as there was no evidence of another document
showing $oberto#s underta'ing to return the sub,ect properties. -t concluded that an
4implied or constructive trust4 was created between the parties" as if affirming that there
was indeed an agreement to have the properties returned to Margarita in due time.
Moreover" the trial court barred recovery from respondents who were found to have
ac5uired the properties supposedly in good faith and for value. -t also pointed out that
recovery could no longer be pursued in this case because Margarita had li'ewise
exhausted the ten&year prescriptive period for reconveyance based on an implied trust
which had commenced to run in 19! upon the execution of the )ffidavit of *ransfer.
*he appellate court had found no implied trust relation in the transaction between
Margarita and $oberto" nevertheless" it held that the ten&year prescriptive period under
)rticle 1166 of the Civil Code" in relation to an implied trust created under )rticle 167"
had already been exhausted by Margarita because her cause of action had accrued
way bac' in 19! and that while laches and prescription as defenses could have availed
against $oberto" the same would be unavailing against +edro and Marilou because the
latter were supposedly buyers in good faith and for value.
-SSU8S9
:hether or not an action for reconveyance under a constructive implied trust in
accordance with )rticle 167 does not prescribe.
;8L09
*he Court disagree with the Court of )ppeals# finding that there was no evidence on
record showing that an implied trust relation arose between Margarita and $oberto. -t
finds that petitioner had offered evidence to prove the intention of Margarita to transfer
to $oberto only the legal title to the properties in 5uestion" with expectation that $oberto
would return the same to her on accomplishment of that specific purpose for which the
transaction was entered into.
-t explained that trust is the legal relationship between one person having an e5uitable
ownership of property and another person owning the legal title to such property" the
e5uitable ownership of the former entitling him to the performance of certain duties and
the exercise of certain powers by the latter. 8xpress 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. -mplied trusts arise by legal
implication based on the presumed intention of the parties or on e5uitable principles
independent of the particular intention of the parties.
Constructive trusts" on the one hand" come about in the main by operation of law and
not by agreement or intention. *hey 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 ,ustice. Constructive trusts are illustrated in )rticles 167." 1676"
1677 and 167
$oberto is merely a depositary of legal title having no duties as to the management"
control or disposition of the property except to ma'e a conveyance when called upon by
the cestui 5ue trust. ;ence" the sales he entered into with respondents are a wrongful
conversion of the trust property and a breach of the trust.
*he Court finds that an action for reconveyance under a constructive implied trust in
accordance with )rticle 167 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.
-n the present case" however" the lands involved are unregistered lands. *here is no
way by which Margarita" during her lifetime" could be notified of the furtive and
fraudulent sales made in 199< by $oberto in favor of respondents" except by actual
notice from +edro himself in )ugust 1997. ;ence" it is from that date that prescription
began to toll. *he filing of the complaint in (ebruary 199 is well within the prescriptive
period. (inally" such delay of only six 23 months in instituting the present action hardly
be sufficient to ,ustify a finding of inexcusable delay or to create an inference that
Margarita has allowed her claim to stale by laches.
*he Court granted the petition" affirming the ,udgment of the $egional *rial Court and
reversed the decision of the Court of )ppeals. -t also directed the cancellation of the tax
declarations covering the sub,ect properties in the name of $oberto 0. Laigo and his
transferees" nullified the deeds of sale executed by $oberto 0. Laigo in favor of
respondents +edro $oy Laigo and Marilou Laigo and directed said respondents to
execute reconveyance in favor of petitioner.