Implied Trust If Property Is Acquired By Fraudulent Act

The act of petitioners in misrepresenting that they were in actual possession and occupation of the property, obtaining patents and original certificates of title in their names, created an implied trust in favor of the actual possessors of the property. Under the law, if the 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. (Art. 1456, NCC).

In other words, if the registration of the land is fraudulent, the person in whose name the land is registered holds it as a mere trustee, and the real owner is entitled to file an action for reconveyance of the property. (Mendizabel, et al. vs. Apao, et al., G.R. No. 143185, February 20, 2006).