What does the law provide when a property is acquired through mistake or fraud?
Under the law, 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[1].
What is a trust?
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.
Equitable ownership means ownership recognized by law and capable of being enforced in the courts at the suit of the beneficial owner. On the other hand, legal title means registered ownership.[2]
A trust may either be express or implied.
What is an implied trust?
It is a trust which arises by legal implication based on the presumed intention of the parties or on equitable principles independent of the particular intention of the parties.
Art. 1456 of the Civil Code as cited above is an implied trust, which means that it is created by operation of law and which is imposed by equity to satisfy the demands of justice and to defeat or prevent the wrongful act of one of the parties.
Who are the parties in an implied trust under Art. 1456?
The parties are the beneficiary who is the real owner of the property, and the trustee who holds the property in trust for the beneficiary.
What is the remedy of the real owner of the property?
The real owner may file with the court an action for reconveyance of the property.
What does reconveyance of property mean?
It is a legal and equitable remedy granted to the rightful owner of land which has been wrongfully or erroneously registered in the name of another for the purpose of compelling the latter to transfer or reconvey the land to him[3].
Within what period of time should the action be filed?
The action for reconveyance of the property should be filed within 10 years from the alleged fraudulent registration or date of issuance of the certificate of title over the property.
Main Reference: Estate of Cabacungan v. Laigo, G.R. No. 175073, August 15, 2011, unless otherwise specifically provided.