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b. Implied – Arts.

1447-1457 – created by operation of law
ART. 1447. The enumeration of the following cases of implied trust does not
exclude others established by the general law of trust, but the limitation laid
down in Article 1442 shall be applicable.
Concept of implied trust.
Implied trusts are those which, without being express, are deducible from the nature of
the transaction as matters of intent, or which are superinduced on the transaction by
operation of law, as matters of equity, independently of the particular intention of the
parties. (89 C.J.S. 724; Philippine National Bank vs. Court of Appeals, 217 SCRA 347
[1993].)
Implied trusts are not created voluntarily, but imposed by law or inferred from the
conduct or dealings of the parties. The concept of implied trusts is that from the facts
and circumstances of a given case, the existence of a trust relationship is inferred in
order to effect the presumed intention of the parties. Thus, there is no implied trust
where a contrary intention is proved. (Abellana vs. Ponce, 437 SCRA 531 [2004].)
Kinds of implied trust.
Implied trusts are ordinarily subdivided into:
(1) Resulting trust. — It is broadly defined as a trust which is raised or created by the
act or construction of law. In its more restricted sense, it is a trust raised by implication
of law and pre- sumed always to have been contemplated by the parties, the intention
as to which is to be found in the nature of their transaction, but not expressed in the
deed or instrument of conveyance. (89 C.J.S. 725.)
This kind of trust is based on the equitable doctrine that valuable consideration and not
legal title determines the equitable title or interest. (O’laco vs. Co Cho Chit, 220 SCRA
656 [1993].) The trust is said to result in law from the act of the parties. Examples of this
kind of trust are found in Articles 1448, 1449, 1451, 1452, and 1453; and
(2) Constructive trust. — It is also a trust raised by construction of law or arising by
operation by law. In a more restricted sense, and as contra-distinguished from a
resulting trust, constructive trust is a trust not created by any words, either expressly or
impliedly, evincing a direct intention to create a trust but by the construction of equity in
order to satisfy the demands of justice and prevent unjust enrichment. It does not arise
by agreement or intention but by operation of law 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. (Ibid.; Vda. de Esconde vs. Court of Appeals, 253
SCRA 66 [1996]; Vda. de Retuerto vs. Barz, 372 SCRA 712 [2001]; 89 C.J.S. 726-727.)
“If a person obtains legal title to property by fraud or concealment, courts of equity will
impress upon the title a so- called constructive trust in favor of the defrauded party.’’
This kind of trust is illustrated in Articles 1450, 1454, 1455, and 1456.
However, a trust will not be created when for the purpose of evading the law prohibiting
one from taking or holding real property he takes conveyance thereof in the name of a
third person. (Kiel vs. Estate of P.S. Sabert, 46 Phil. 193 [1924].) For example, a
homestead applicant is required by law to occupy and cultivate the land for his own

benefit, and not for the benefit of someone else. Hence, a trust created in favor of one
already disqualified from applying additional homestead under the Public Land Act (Sec.
112, CA No. 141.) is null and void considering that it is in direct violation of the Act as
regards the acquisition of homestead patent. (Sollega de Romero vs. Court of Appeals,
319 SCRA 180 [1999].)
A constructive trust is not a trust in a technical sense. (see Art. 1456; Ramos vs.
Ramos, 61 SCRA 284 [1974]; see Sinaon vs. Sorongon, 136 SCRA 407 [1985];
Salvatierra vs. Court of Appeals, 261 SCRA 45 [1996].) It is substantially an appropriate
remedy against unjust enrichment. 1 (see Sumaoang vs. Judge, RTC, 215 SCRA 136
[1992].)
While in an express trust, a beneficiary and a trustee are linked by a confidential or
fiduciary relation, 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. (Phil. National Bank vs. Court of Appeals, 217
SCRA 347 [1993].)
Constructive trusts are illustrated in Articles 1450, 1454, 1455, and 1456.

i) resulting – bare or passive trust – there is an intent to create a trust but it is not
effective as an express trust –
- Heirs of Francisco Narvasa Sr., et al. vs. Emiliana Imbornal, G.R. No. 182908,
August 6, 2014, 732 SCRA 171.
Facts: Basilia Imbornal (Basilia) had four (4) children, namely, Alejandra, Balbina,
Catalina, and Pablo. Francisco I. Narvasa, Sr. (Francisco) and Pedro Ferrer (Pedro)
were the children of Alejandra, while petitioner Petra Imbornal (Petra) was the daughter
of Balbina. Petitioners are the heirs and successors-in-interest of Francisco, Pedro, and
Petra (Francisco, et al.). On the other hand, respondents Emiliana, Victoriano, Felipe,
Mateo, Raymundo, Maria, and Eduardo, all surnamed Imbornal, are the descendants of
Pablo. During her lifetime, Basilia owned a parcel of land situated at Sabangan,
Barangay Nibaliw West, San Fabian, Pangasinan with an area of 4,144 square meters
(sq. m.), more or less(Sabangan property), which she conveyed to her three (3)
daughters Balbina, Alejandra, and Catalina (Imbornal sisters) sometime in 1920.
Catalina’s husband Ciriaco, applied for and was granted a homestead patent over a
31,367-sq. m. riparian land (Motherland) On December 5, 1933, OCT No. 1462 was
issued in his name and later was cancelled, and TCT No. 101495 was issued in the
name of Ciriaco’s heirs. Ciriaco and his heirs had since occupied the northern portion of
the Motherland, while respondents occupied the southern portion. Sometime in 1949,
the First Accretion, approximately 59,772 sq. m. in area,adjoined the southern portion of
the Motherland. On August 15, 1952, OCT No. P-318 was issued in the name of
respondent Victoriano, married to Esperanza Narvarte, covering the First Accretion.
Decades later, or in 1971, the Second Accretion, which had an area of 32,307 sq. m.,
more or less, abutted the First Accretion on its southern portion.19 On November 10,
1978, OCT No. 21481 was issued in the names of all the respondents covering the
Second Accretion. Claiming rights over the entire Motherland, Francisco, et al., filed an
Amended Complaint for reconveyance, partition, and/or damages against respondents.

They anchored their claim on the allegation that Ciriaco, with the help of his wife
Catalina, urged Balbina and Alejandra to sell the Sabangan property, and that Ciriaco
used the proceeds therefrom to fund histhen-pending homestead patent application
over the Motherland. In return, Ciriaco agreed that once his homestead patent is
approved, he will be deemed to be holding the Motherland – which now included both
accretions – in trust for the Imbornal sisters. Likewise, Francisco, et al. alleged that
through deceit, fraud, falsehood, and misrepresentation, respondent Victoriano, with
respect to the First Accretion, and the respondents collectively, with regard to the
Second Accretion, had illegally registered the said accretions in their names,
notwithstanding the fact that they were not the riparian owners (as they did not own the
Motherland to which the accretions merely formed adjacent to). In this relation
Francisco, et al. explained that they did not assert their inheritance claims over the
Motherland and the two (2) accretions because they respected respondents’ rights, until
they discovered in 1983 that respondents have repudiated their (Francisco, et al.’s)
shares thereon.22 Thus, bewailing that respondents have refused them their rights not
only with respect to the Motherland, but also to the subsequent accretions, Francisco, et
al. prayed for the reconveyance of said properties, or, in the alternative, the payment of
their value, as well as the award of moral damages in the amount of P100,000.00,
actual damages in the amount of P150,000.00, including attorney’s fees and other
costs. RTC rendered a Decision in favor of Francisco, et al. and thereby directed
respondents to: (a) reconvey to Francisco, et al. their respective portions in the
Motherland and in the accretions thereon, or their pecuniary equivalent; and (b) pay
actual damages in the amount of P100,000.00, moral damages in the amount of
P100,000.00, and attorney’s fees in the sum of P10,000.00, as well as costs of suit. On
appeal, the CA rendered a Decision reversing and setting aside the RTC Decision and
entering a new one declaring: (a) the descendants of Ciriaco as the exclusive owners of
the Motherland; (b) the descendants of respondent Victoriano as the exclusive owners
of the First Accretion; and (c)the descendants of Pablo (i.e., respondents collectively) as
the exclusive owners of the Second Accretion. Hence this petition.
Issue(s): One of the issues raised is whether or not implied trust existed between
the Imbornal sisters and Ciriaco.
Held: NO. An implied trust arises, not from any presumed intention of the parties, but by
operation of law in order to satisfy the demands of justice and equity and to protect
against unfair dealing or downright fraud. Article 1456 of the Civil Code states that“[i]f
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.” The burden of proving the existence of a trust is on the party asserting
its existence, and such proof must be clear and satisfactorily show the existence of the
trust and its elements. While implied trusts may be proven by oral evidence, the
evidence must be trustworthy and received by the courts with extreme caution, and
should not be made to rest on loose, equivocal or indefinite declarations. Trustworthy
evidence is required because oral evidence can easily be fabricated. In this case, it
cannot be said, merely on the basis of the oral evidence offered by Francisco, et al. that
the Motherland had been either mistakenly or fraudulently registered in favor of Ciriaco.
Accordingly, it cannot be said either that he was merely a trustee of an implied trust
holding the Motherland for the benefit of the Imbornal sisters or their heirs. Homestead
patent award requires proof that the applicant meets the stringent conditions set forth
under Commonwealth Act No. 141, as amended, which includes actual possession,

cultivation, and improvement of the homestead. It must be presumed, therefore, that
Ciriaco underwent the rigid process and duly satisfied the strict conditions necessary for
the grant of his homestead patent application. As such, it is highly implausible that the
Motherland had been acquired and registered by mistake or through fraud as would
create an implied trust between the Imbornal sisters and Ciriaco, especially considering
the dearth of evidence showing that the Imbornal sisters entered into the possession of
the Motherland, or a portion thereof, or asserted any right over the same at any point
during their lifetime. Hence, when OCT No. 1462 covering the Motherland was issued in
his name pursuant to Homestead Patent No. 24991 on December 15, 1933, Ciriaco’s
title to the Motherland had become indefeasible. It bears to stress that the proceedings
for land registration that led to the issuance of Homestead Patent No. 24991 and
eventually, OCT No. 1462 in Ciriaco’s name are presumptively regular and proper,
which presumption has not been overcome by the evidence presented by Francisco, et
al. In this light, the Court cannot fully accept and accord evidentiary value to the oral
testimony offered by Francisco, et al. on the alleged verbal agreement between their
predecessors, the Imbornal sisters, and Ciriaco with respect to the Motherland.
Weighed against the presumed regularity of the award of the homestead patent to
Ciriaco and the lack of evidence showing that the same was acquired and registered by
mistake or through fraud, the oral evidence of Francisco, et al. would not effectively
establish their claims of ownership. It has been held that oral testimony as to a certain
fact, depending as it does exclusively on human memory, is not as reliable as written or
documentary evidence, especially since the purported agreement transpired decades
ago, or in the 1920s. Hence, with respect to the Motherland, the CA did not err in
holding that Ciriaco and his heirs are the owners thereof, without prejudice to the rights
of any subsequent purchasers for value of the said property.
- Tong vs. Go Tiat Kun, G.R. No. 196023, 722 SCRA 623
Juan Tong v. Go Tiat Kun
FACTS: The petitioners are nine of the ten children of Spouses Juan Tong. Sometime in
1957, Juan Tong purchased Lot 998 to be used for the family’s lumber business called
“Juan Tong Lumber.” However, since he was a Chinese citizen and was disqualified
from acquiring the said lot, the title to the property will be registered in the name of his
eldest son, Luis, Sr., who at that time was already of age and was the only Filipino
citizen among his children. Accordingly, a TCT was issued in the name of Luis, Sr.
Meanwhile, Luis, Sr. died and the respondents, being his surviving heirs, claimed
ownership over Lot 998 by succession, alleging that no trust agreement exists and it
was Luis, Sr. who bought Lot 998.
Subsequently, the respondents agreed to subdivide Lot 998 (A&B), thus, two new titles
were issued and was sold Lot 998-B to Fine Rock Development Corporation (FRDC),
which in turn sold the same to Visayas Goodwill Credit Corporation (VGCC). It was only
after the petitioners received a letter from VGCC, on August 31, 1995, that they
discovered about the breach of the trust agreement committed by the respondents.
To protect their rights, the petitioners filed an action for Annulment of Sales, Titles,
Reconveyance and Damages of Lot 998-B docketed as Civil Case No. 22730 against
Luis, Jr., FRDC and VGCC.

After trial, the court a quo rendered its judgment in favor of the petitioners, ruling that
there was an implied resulting trust between Juan Tong, Luis, Sr.
The CA reveresed the decision and also ruled that even granting that an implied
resulting trust was created; the petitioners are still barred by prescription because the
said resulting trust was terminated upon the death of Luis, Sr. and was then converted
into a constructive trust.[11] Since in an action for reconveyance based on a
constructive trust prescribes in ten years from the issuance of the Torrens title over the
property, counting from the death of Luis, Sr. in 1981, the action has already prescribed.
ISSUE: Whether or not there was a constructive trust, hence the action for
reconveyance has prescribed
HELD: It is well-settled that title to property does not vest ownership but it is a mere
proof that such property has been registered. And, the fact that the petitioners are in
possession of all the tax receipts and tax declarations of Lot 998 all the more amplify
their claim of ownership over Lot 998-A. Although these tax declarations or realty tax
payments of property are not conclusive evidence of ownership, nevertheless, they are
good indicia of possession in the concept of owner, for no one in his right mind would be
paying taxes for a property that is not in his actual or at least constructive possession.
Such realty tax payments constitute proof that the holder has a claim of title over the
property. Therefore, the action for reconveyance of Lot 998-A, which forms part of Lot
998, is imprescriptible and the petitioners are not estopped from claiming ownership
thereof.
- Banco Filipino Savings and Mortgage Bank v. Tala Realty Services Corporation,
G.R. No. 158866, 181933, 187551, September 9, 2013
Banco Filipino Savings and Mortgage Bank (Banco Filipino) filed before 17 Regional
Trial Courts (RTC) 17 complaints for reconveyance of different properties against Tala
Realty Services Corporation (Tala Realty) et al.
Banco Filipino‘s complaints commonly alleged that in 1979, expansion of its operations
required the purchase of real properties for the purpose of acquiring sites for more
branches; that as Sections 25(a) and 34 of the General Banking Act limit a bank‘s
allowable investments in real estate to 50% of its capital assets, its board of directors
decided to warehouse some of its existing properties and branch sites. Thus, Nancy L.
Ty, a major stockholder and director, persuaded Pedro Aguirre and his brother Tomas
Aguirre, both major stockholders of Banco Filipino, to organize and incorporate Tala
Realty to hold and purchase real properties in trust for Banco Filipino; that after the
transfer of Banco Filipino properties to Tala Realty, the Aguirres‘ sister Remedios
prodded her brother Tomas to, as he did, endorse to her his shares in Tala Realty and
registered them in the name of her controlled corporation, Add International.
Thus, Nancy, Remedios, and Pedro Aguirre controlled Tala Realty, with Nancy
exercising control through her nominees Pilar, Cynthia, and Dolly, while Remedios
exercised control through Add International and her nominee Elizabeth. Pedro Aguirre

exercised control through his own nominees, the latest being Tala Realty‘s president,
Rubencito del Mundo.
In the course of the implementation of their trust agreement, Banco Filipino sold to Tala
Realty some of its properties. Tala Realty simultaneously leased to Banco Filipino the
properties for 20 years, renewable for another 20 years at the option of Banco Filipino
with a right of first refusal in the event Tala Realty decided to sell them.
Tala Realty repudiated the trust, claimed the titles for itself, and demanded payment of
rentals, deposits, and goodwill, with a threat to eject Banco Filipino. Thus arose Banco
Filipino‘s 17 complaints for reconveyance against Tala Realty.
ISSUE:
Whether or not the trust agreement is void
HELD:
In Tala Realty Services Corporation v. Banco Filipino Savings and Mortgage Bank, the
Court, by Decision dated November 22, 2002, ruling on one of several ejectment cases
filed by Tala Realty against Banco Filipino arising from the same trust agreement in the
reconveyance cases subject of the present petitions, held that the trust agreement is
void and cannot thus be enforced.
An implied trust could not have been formed between the Bank and Tala as the Court
has held that “where the purchase is made in violation of an existing statute and in
evasion of its express provision, no trust can result in favor of the party who is guilty of
the fraud.”
The bank cannot use the defense of nor seek enforcement of its alleged implied trust
with Tala since its purpose was contrary to law. As admitted by the Bank, it
“warehoused” its branch site holdings to Tala to enable it to pursue its expansion
program and purchase new branch sites including its main branch in Makati, and at the
same time avoid the real property holdings limit under Sections 25(a) and 34 of the
General Banking Act which it had already reached.
Clearly, the Bank was well aware of the limitations on its real estate holdings under the
General Banking Act and that its “warehousing agreement” with Tala was a scheme to
circumvent the limitation. Thus, the Bank opted not to put the agreement in writing and
call a spade a spade, but instead phrased its right to reconveyance of the subject
property at any time as a “first preference to buy” at the “same transfer price.” This
agreement which the Bank claims to be an implied trust is contrary to law. Thus, while
the Court finds the sale and lease of the subject property genuine and binding upon the
parties, the Court cannot enforce the implied trust even assuming the parties intended
to create it. In the words of the Court in the Ramos case, “the courts will not assist the
payor in achieving his improper purpose by enforcing a resultant trust for him in

accordance with the ‗clean hands‘ doctrine.” The Bank cannot thus demand
reconveyance of the property based on its alleged implied trust relationship with Tala.

- Dico, Sr. v. Vizcaya Management Corporation, 701 SCRA 367, July 17, 2013
FACTS:
Celso Dico was the registered owner of Lot No. 486 of the Cadiz Cadastre, comprising
an area of 67,300 square meters and covered by Transfer Certificate of Title (TCT) No.
22922 of the land records of Negros Occidental. Lot No. 486 was adjacent to Lot No.
29-B and Lot No. 1412 (formerly Lot No. 1118-B), both also of the Cadiz Cadastre.
Celso and his wife Angeles resided on Lot No. 486 since 1958. On May 30, 1964,
Angeles filed in the District Office of the Bureau of Lands in Bacolod City, her free patent
application covering a portion of Lot No. 29-B. On his part, Celso also filed in the same
office an application for free patent covering Lot No. 1412. It does not appear, however,
that the Bureau of Lands acted on their applications. 2
Respondent Vizcaya Management Corporation (VMC) was the registered owner under
TCT No. T-41835 of Lot No. 29-B, also of the Cadiz Cadastre, comprising an area of
369,606 square meters, more or less. 3 VMC derived its title to Lot No. 29-B from
Eduardo and Cesar, both surnamed Lopez, the registered owners under TCT No. T14827, which emanated from TCT No. RT-9933 (16739) in the names of Victoria,
Eduardo and Cesar, all surnamed Lopez. TCT No. RT-9933 (16739) was a transfer from
TCT No. T-14281, which had been transferred from Original Certificate of Title (OCT)
No. 21331 in the name of Negros Philippines Lumber Company. OCT No. 21331 was
issued pursuant to Decree No. 190483 of G.L.R.O. Cadastral Record No. 196.
VMC likewise claimed to be the owner of Lot No. 1412, formerly known as Lot No. 1118B, also of the Cadiz Cadastre, containing an area of 85,239 square meters, more or
less, and registered in its name under TCT No. T-41834. 4
Lot Nos. 1426-B, with an area of 6,635 square meters covered by TCT No. T-24135,
and 1426-C, with an area of 6,107 square meters covered by TCT No. T-24136, appear
to be registered in the names of Eduardo Lopez and Cesar Lopez, who had earlier
formed VMC.
In 1967, VMC, then newly formed, caused the consolidation and subdivision of Lot No.
29-B, Lot No. 1412, Lot No. 1426-B, and Lot No. 1426-C. The consolidation-subdivision
plan was prepared by Engr. Ricardo Quilop and filed in the Land Registration
Commission (LRC), renamed National Land Titles and Deeds Registration
Administration, but presently known as the Land Registration Authority. The
consolidation-subdivision plan was assigned the number (LRC) PCS-6611. On July 26,
1967, LRC Commissioner Antonio L. Noblejas approved the consolidation-subdivision
plan, resulting in Lot No. 29-B, Lot No. 1412, Lot No. 1426-B, and Lot No. 1426-C being
consolidated and subdivided as follows: Lot No. 1 with an area of 238,518 square
meters under TCT No. T-47854; Lot No. 2 with an area of 216,176 square meters under
TCT No. T-47855; Lot No. 3 with an area of 11,496 square meters under TCT No. T47856; and Lot No. 4 with an area of 15,392 square meters under TCT No. T-47857. 5 In
all, the total landholding of VMC after the consolidation was 481,583 square meters.

VMC proceeded to develop the Don Eusebio Subdivision project using Lot No. 1 of the
consolidation-subdivision plan under (LRC) PCS-6611. The subdivision plan under
PSD-102560 subdivided Lot No. 1 into 547 small lots. Subsequently, VMC also
developed the Cristina Village Subdivision project using Lots Nos. 2, 3, and 4 under
(LRC) PCS-6611. Under PSD-12746 of the subdivision plan for Cristina Village
Subdivision, consolidated Lots Nos. 2, 3, and 4 were subdivided into 348 small lots.
Starting 1971, VMC sold lots in its Don Eusebio Subdivision and Cristina Village
Subdivision.
In 1981, VMC filed against the Dicos a complaint for unlawful detainer in the City Court
of Cadiz (Civil Case No. 649). On April 24, 1981, the City Court of Cadiz rendered its
decision in favor of VMC, ordering the Dicos to demolish the concrete water gate or
sluice gate (locally known as trampahan) located inside Lot No. 1, Block 3 of the
Cristina Village Subdivision. Inasmuch as the Dicos did not appeal, the decision
attained finality. On July 3, 1981, the City Court of Cadiz issued a writ of execution. On
November 11, 1985, a second alias writ of execution was issued.
On May 12, 1986, the Dicos commenced an action for the annulment and cancellation
of the titles of VMC (Civil Case No. 180-C), impleading VMC, the National Land Titles
and Deeds Registration Administration, and the Director of the Bureau of Lands. On
March 12, 1987, the Dicos amended the complaint. They averred, among others, that
they were the registered owners of Lot No. 486 and the possessors-by-succession of
Lot No. 1412 (formerly Lot No. 1118) and Lot No. 489; that VMC had land-grabbed a
portion of their Lot No. 486 totaling 111,966 square meters allegedly brought about by
the expansion of Cristina Village Subdivision; and that on May 30, 1964 they had filed
free patent applications in the Bureau of Lands for Lot No. 1412 and Lot No. 489. 6 They
prayed that the possession of Lot No. 486, Lot No. 1412, and Lot No. 489 be restored to
them; and that the judgment in Civil Case No. 649 be annulled.
Celso died during the pendency of the action, and was substituted by Angeles and their
children pursuant to the order of November 22, 1991.
Issues
Hence, this appeal, wherein the Dicos contend that the CA erred in holding that
prescription and/or laches already barred them from asserting their right; 12 in accepting
the theory of VMC that the consolidation of Lot No. 1246-B and Lot No. 1246-C had
resulted from a merely typographical error; 13 in reversing the decision of the RTC
despite its finding that VMC had committed land grabbing; 14 and in reversing the RTC
based on non-existing evidence that was contradicted by the evidence on records. 15
In its comment,16 VMC counters that the petition for review should not be given due
course because petitioners came to court with unclean hands; that the petition was filed
out of time even with the extension given by the Court; that the petition was fatally
defective in form and in substance; and that the dismissal of the complaint was in
accord with applicable laws and jurisprudence.
In their reply,17 the Dicos reiterate that the findings and conclusions of the RTC were
supported by evidence establishing fraud, encroachment and other anomalies
perpetrated by VMC; that the rules of procedure must not be rigidly applied to override

substantial justice; and that VMC could not validly invoke the indefeasibility of its titles to
defeat their right over the encroached land.
The decisive issue is whether prescription already barred petitioners’ cause of action. All
the other issues are subsumed therein.
Ruling
We find and hold that the action of the Dicos for reconveyance was properly dismissed.
To start with, the CA’s explanations for reversing the RTC were very thorough, wellfounded and well-reasoned, to wit:
Granting arguendo that fraud intervened in the procurement of the Certificates of Title to
Lot No. 29-B and plaintiffs-appellees had the personality to seek the reconveyance
thereof on the basis of implied or constructive trust, their complaint filed on May 12,
1986, or about 29 years after the issuance of the certificate of title to defendantappellant, indeed came too late. They were deemed to have discovered the fraud as
early as September 20, 1934 when TCT No. RT-9933 (16739) of the Lopezes was
recorded or on November 10, 1956 when TCT No. T-41835 of defendant-appellant was
registered. Their right to seek reconveyance of a portion of Lot No. 29-B, if it existed at
all, had already prescribed.
Plaintiffs-appellees also contend that defendant-appellant secured its Certificate of Title
to Lot No. 1412 through fraud. They contend that Celso Dico had filed with the Bureau
of Lands his Free Patent Application (Exh. "D", pp. 733-735, Records Vol. 3) with
respect to Lot No. 1412. On the other hand, the evidence on record shows that Lot No.
1412, formerly Lot No. 1118-B, appears to have been already registered in the name of
defendant-appellant under TCT No. T-41834 (Exh. "11").
We fail to see the fraud allegedly committed by defendant-appellant in securing its
Certificate of Title to Lot No. 1412. In their vain effort to show that Celso Dico filed a
Free Patent Application for Lot No. 1412, plaintiffs-appellees presented his alleged Free
Patent Application, Exhibit "D". Said Exhibit "D", however, is without evidentiary weight
since while the name of plaintiff-appellee Angeles Dico, as applicant therein, appears in
the Application for Free Patent, the Joint Affidavit in support thereof, and Notice of
Application for Free Patent, the signature of one Celso Dico was only clearly superimposed thereon to make it appear he was the applicant. Exhibit "D" is, in fact, a forged
document.
Thus, the court a quo erred when it concluded that defendant-appellant’s title to Lot No.
1412 came from a doubtful source. There is no evidence on record that clearly showed
the fraud allegedly employed by defendant-appellant when it secured its title to Lot No.
1412. Moreover, plaintiffs-appellees have not established their personality to seek the
reconveyance of Lot No. 1412 as they are not the registered owners thereof.
In fine, Lots Nos. 29-B and 1412 did not revert to the government, as they are already
the private properties of defendant-appellant corporation.

Anent the issue of encroachment on Lot No. 486 by defendant-appellant, the court a
quo found that defendant-appellant encroached on Lot 486 when it consolidated and
subdivided the contested lots.
The court a quo ruled, thus:
"From the evidence presented as revealed by the records of the case, this Court is of
the judicious finding that defendant Viscaya (sic) had encroached on lot 486 considering
that even if it claims it has a title over lot 29-B, still it had exceeded its area of
possession over lot 29-B. Exhibits "J", "K" and "L" reveal that lot 29-B only contains an
area of 369,606 square meters, however, when defendant Vizcaya caused the
consolidation of their lots the total area which is supposed to be 369,606 square meters
was increased. Basing on defendants’ exhibits "3" to "6" this Court finds that TCT No.
1735 (lot 1) has an area of 238,518 square meters, TCT No. 1736 (Lot 2), 216,176
square meters, TCT No. 1737 (Lot 3) 11,496 square meters and TCT No. 1738, 15,392
square meters which when added together will sum up to a total of 481,582 square
meters, clearly exceeding the original area of 369,606 square meters appearing and
described in
Exhibits "J":, "K" and "L".
"Likewise, this Court further finds after an exhausted (sic) examination of the records,
that defendant Vizcaya increased the area on the plan of Cristina Village Subdivision
which is Lot 2 contrary to what is contained in TCT No. 1736 (Exhibits "P-1" and "4")
containing an area of only 216,176 square meters.
"The increase in area in the title of defendant Vizcaya is 111,976 square meters. This
area was taken from the portion of Lot 486 of the plaintiffs covered by TCT No. T-22922
(Exh. "E") and which was derived from OCT No. 0-3146 (21337) adjacent to Lot 29-B
(Exh. "J") and later became Lot 2 covered by TCT No. (T-47855) 1736, Lot 1 covered by
TCT No. (T-47854) 1735 (Exh. "P") Lot 3 covered by TCT No. (T-47856) 1737 (Exh. "P2") and Lot 4 covered by TCT No. (T-47857) 1738 (Exh. "P-3"). To the mind of this
Court, the intrustion (sic) of the defendants over the area of Lot 486 is a clear and willful
manipulation hatched between defendant Vizcaya and its surveyor without regard to the
existing technical and (sic) descriptions of the adjacent lot, particularly the lot belonging
to the plaintiffs. Upon close examination of all the evidence on record, it appears that
the method and scheme employed in order to hide and confuse the increase in the area
was to consolidate lots 29-B, 1246-B, 1246-C and 1412 and then subdivide these lots
into several parts to become lots 1, 2, 3 and 4 with its corresponding titles, technical
descriptions and already containing variable but increased areas can no longer be
ascertained or if ascertained the same can be done with greater difficulty as the one
tasked to unravel these confusing mazes (sic) of lots will have to dig deep into the
history of the original titles. What this Court finds amusing, however, is the fact that Lots
1246-B and 1246-C were consolidated with Lots 29-B and 1412 which former lots are
located in Barangay Tinampa-an, Cadiz City while Lots 29-B and 1412 are located in
the City Proper and are non adjacent or contigeous (sic) lots.
"The claim of the defendants that the plaintiffs cannot establish a better right or title to
real properties over and above a valid and existing title, cannot be given credence by
this Court considering that a torrens title cannot cover fraud, and more particularly so,

because Lot 486 is also titled property registered in the name of the plaintiff Dico." (pp.
30-31, Decision; pp. 79-80, Rollo)
We do not agree with the above findings of the court a quo. The documentary evidence
found in the records reveals that defendant-appellant had two lots titled in its name,
namely: Lot No. 29-B comprising an area of 369,606 square meters, containing identical
technical description as appearing in plaintiffs-appellees’ Exhs. "J", "K" and "L" and Lot
No. 1412, formerly 1118-B, comprising an area of 85,239 square meters covered by
TCT No. T-41834 (Exh. "11"). Further, Eduardo and Cesar Lopez were the registered
owners of Lot No. 1426-B comprising an area of 6,635 square meters, covered by TCT
No. T-21435 (Exh. "9") and Lot No. 1426-C comprising an area of 6,107 square meters,
covered by TCT No. T-21436 (Exh. "10"). As contended by defendant-appellant, it
caused the consolidation and subdivision of these four lots following the approved
consolidation-subdivision plan (Exh. "7", p. 958, Records Vol. 4) it submitted to the then
Land Registration Commission. The said approved consolidation-subdivision plan was
assigned the number (LRC) PCS-6611. Hence, adding the land area of the four
consolidated lots, the total landholding of defendant-appellant after the approved
consolidation-subdivision plan would be 467,587 square meters only.
Defendant-appellant’s approved consolidation-subdivision plan (Exh. "7") reveals that it
was a consolidation-subdivision of Lots Nos. 29-B (Exh. "L"; Exh. "8"), PSD-5573; 1426B (Exh. "9") & 1426-C (Exh. "10"), PSD-44080, and 1412 (Exh. "11"), all of Cadiz
Cadastre, which contained a total area of 481,583 square meters. However, the total
land area of the four consolidated lots as added above is only 467,587 square meters.
Clearly, there exists an excess of 13,996 square meters, which was included in the
approved consolidation-subdivision plan of defendant-appellant. Worth noting is the fact
that defendant-appellant’s approved consolidation-subdivision plan contained a
handwritten entry which stated that the "x x x area is increased by 13996 sq.m" (Exh.
"7", p. 958, Records Vol. 4).
Thus, the court a quo erred when it concluded that there was an excess of 111,959
square meters in defendant-appellant’s landholdings. We agree with the contention of
defendant-appellant that the basis for computing its total landholding should not be
limited to the land area of Lot No. 29-B since three (3) other individual lots were
included in the consolidation-subdivision survey. The evidence on record reveals that
Lots Nos. 1412, 1426-B and 1426-C were included in the approved consolidationsubdivision plan (Exh. "7").
Further, the Trial Court’s finding that defendant-appellant encroached by 111,959 square
meters on Lot 486 belonging to plaintiffs-appellees finds no justifiable support from the
evidence on record. Lot No. 486 under TCT No. T-22922 (Exh. "E", p. 736, Records Vol.
3) in the name of Celso Dico contained an area of 67,300 square meters only. Following
the Trial Court’s reasoning, defendant-appellant shall return to plaintiffs-appellees
111,959 square meters it allegedly land grabbed from Lot No. 486. Thus, Lot No. 486
would now contain an area of 179,259 square meters, substantially increased by
111,959 square meters which is clearly beyond what is stated in TCT No. T-22922.
As We have found earlier, the excess in defendant-appellant’s landholding is only
13,996 square meters.

It is likewise the contention of plaintiffs-appellees that PCS-6611 does not exist in the
records of the then Land Registration Commission, as evidenced by the Certifications
(Exhs. "Q" and "R", pp. 758-758A, Records Vol. 3) issued by the Subdivision and
Consolidation Division, Vault Section I, Land Registration Authority.
The court a quo ruled:
"x x x. Thus, the defendants failed to overcome the preponderance of evidence
presented by the plaintiffs, particularly on Certifications (Exhs. "Q" and "R") certifying to
the effect that Pcs-6611 is not existing x x x" (p. 34, Decision).
We cannot agree with conclusion of the court a quo. The evidence on record clearly
reveals that defendant-appellant presented a copy of the approved consolidationsubdivision plan (Exh. "7") prominently showing the number (LRC) PCS-6611 assigned
by the Land Registration Commission, which is located at the bottom-right portion of the
document. The Certifications (Exhs. "Q" and "R") issued by the then Land Registration
Authority are not conclusive proof of the non-existence of the original of the
consolidation-subdivision plan (LRC) PCS-6611 together with all the survey records
pertaining thereto. As correctly pointed out by defendant-appellant, the person who
issued said certifications was not presented in court to identify and affirm the veracity of
their contents. Thus, as between the approved consolidation-subdivision plan (Exh. "7")
and the certifications (Exhs. "Q" and "R"), the former carries greater evidentiary weight.
Granting arguendo that no records pertaining to (LRC) PCS-6611 could be found in the
Vault Section of the then Land Registration Commission, the existence of (LRC) PCS6611 was already established with the presentation in evidence of a copy of the said
approved consolidation-subdivision plan (Exh. "’7") prominently reflecting therein the
number (LRC) PCS-6611 assigned by the Land Registration Commission. The
authenticity and existence of (LRC) PCS-6611 within the records of the Land
Registration Commission (now Land Registration Authority) was established by the fact
that it was used as a basis for the approval of the consolidation-subdivision plan for the
Don Eusebio Subdivision under (LRC) PSD-102560 (Exh. "14", "14-A", "14-B", pp. 983985, Records, Vol. 4) and Cristina Village Subdivision under (LRC) PCS-12746 (Exh.
"16", p. 982, Records, Vol. 4). In Exhibits "14" and "16", (LRC) PCS-6611 was clearly
reflected as the source of the consolidated lots.
Lastly, defendant-appellant contends that the court a quo erred in finding that there was
no typographical error committed in designating Lots Nos. 1246-B and 1246-C instead
of 1426-B and 1426-C, respectively, in its approved consolidation-subdivision plan.
The court a quo ruled:
"x x x. What this Court finds amusing, however, is the fact that Lots 1246-B and 1246-C
were consolidated with Lots 29-B and 1412 which former lots are located in Barangay
Tinampa-an, Cadiz City while Lots 29-B and 1412 are located in the City Proper and are
non adjacent or contigeous (sic) lots.
"x x x x
"Granting arguendo, that the denomination of Lots 1246-B and 1246-C are merely
typographical errors of Lots 1426-B and 1426-C as claimed by defendant Vizcaya, this

Court, upon judicious evaluation of the records cannot accept the argument relied upon
by the defendants since it is obvious from the evidence that defendant Vizcaya employs
a retained surveyor for purposes of their subdivision, and despite the technical
knowledge of its surveyor it did not bother to correct the error if indeed it is one, on the
lots subject matter of the case, but had invoked the said ground only during the litigation
proper" (pp. 30-35, Decision; pp. 179-184, Rollo).
Defendant-appellant contends that it failed to correct this typographical error as such
fact came to its knowledge only during the trial and two years after issuance of TCT No.
T-47854-57 (Exhs. "P", "P-1" to "P-3"; Exhs. "3" to "6", pp. 750-756 Records Vol. 3),
these Certificates of Title were subsequently cancelled and new TCTs were issued. On
the other hand, plaintiffs-appellees contend that Lots Nos. 1246-B and 1246-C could not
be possibly consolidated with Lot No. 29-B because the former lots were situated some
4 kilometers away from defendant-appellant’s subdivision area, besides being owned by
other persons.
We agree with defendant-appellant.
While we agree with plaintiffs-appellees’ assertion that consolidation of non-contiguous
and non-adjacent lots are not possible especially so when the lots are situated
considerably far from each other, the case at hand does not fall under this scenario. As
correctly explained by defendant-appellant there was a typographical error in the
technical description of its consolidated lots in that what was stated therein as included
in the consolidation plan were Lots Nos. 1246-B and 1246-C, Psd-44080, instead of
Lots Nos. 1426-B and 1426-C, Psd-44080.
Worth noting are the technical description of the subject lots before and after their
consolidation. –
Transfer Certificate of Title No. T-24135 (Exh. "9") covering Lot No. 1426-B reads:
"A parcel of land (Lot No. 1426-B of the subdivision plan Psd-44080, being a portion of
Lot 1426 of the Cadastral Survey of Cadiz, G.L.R.O. Cad. Record No. 196), situated in
the Poblacion, Municipality of Cadiz, Province of Negros Occidental, Bounded on the
NE., by Lot 1426-A of the subdivision plan; on the SE., by Lot No. 1423 of Cadiz, Cad.;
and on the SW., by Lot 1426-C of the subdivision plan. x x x"
Transfer Certificate of Title No. T-24136 (Exh. "10") covering Lot No. 1426-C reads.
"A parcel of land (Lot No. 1426-C of the subdivision plan Psd-44080, being a portion of
Lot 1426 of the Cadastral Survey of Cadiz, G.L.R.O. Cad. Record No. 196), situated in
the Poblacion, Municipality of Cadiz, Province of Negros Occidental, Bounded on the
NE., by Lot 1426-B of the subdivision plan; on the SE., by Lot 1423 of Cadiz Cad., and
on the SW., by Calle Cabahug. x x x."
On the other hand, the technical descriptions of the properties covered by Transfer
Certificates of Title Nos. T-47854 to T-47857 pertaining to Lot Nos. 1 to 4 (Exhs. "P", "P1" to "P-3) read:
Transfer Certification of Title No. T-14754:

"A parcel of land (Lot 1 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29-B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196), situated in the City of Cadiz, Island
of Negros x x x containing an area of two hundred thirty-eight thousand five hundred
eighteen (238, 518) square meters, more or less. x x x."
Transfer Certificate of Title No. T-14755:
"A parcel of land (Lot 2 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29-B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196, situated in the City of Cadiz, Island
of Negros x x x containing an area of TWO HUNDRED SIXTEEN THOUSAND ONE
HUNDRED SEVENTY-SIX (216,176) Square Meters, more or less. x x x."
Transfer Certificate of Title No. T-14756:
"A parcel of land (Lot 3 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196), situated in the City of Cadiz, Island
of Negros x x x containing an area of eleven thousand four hundred ninety-six (11,496)
square meters, more or less. x x x."
Transfer Certificate of Title No. T-14757:
"A parcel of land (Lot 4 of the consolidation-subdivision plan (LRC) Pcs-6611, being a
portion of the consolidation of Lots 29-B, Psd-5573, 1246-B, & 1246-C, Psd-44080 &
1412, Cadiz Cad., LRC (GLRO) Cad. Rec. No. 196), situated in the City of Cadiz, Island
of Negros. Bounded on the NE., points 31 to 1 and 1 to 6 by Lot 1426-A, Psd-44080 x x
x containing an area of fifteen thousand three hundred ninety-two (15,932) square
meters, more or less. x x x."
As can be gleaned clearly from the foregoing, Lots Nos. 1426-B and 1426-C came from
Psd-44080. In the same way that Lots Nos. 1246-B and 1246-C came from Psd-44080.
Defendant-appellant submitted a certified copy of the Cadastral Map of Cadiz (Exh.
"12", p. 986, Records Vol. 4) showing that adjacent to Lot No. 29-B was Lot No. 1426
and being continguous, these lots could be consolidated. Even plaintiffs-appellees’
witness Engr. Luvimin Canoy testified on the possibility that a typographical error might
have been committed in listing the lot numbers in the title (pp. 39-41, TSN, September
9, 1992).
There was no evidence to the effect that defendant-appellant caused the erroneous
designation of Lots Nos. 1426-B and 1426-C as Lots Nos. 1246-B and 1246-C,
respectively, when it consolidated these lots. The error indeed was only typographical
as the subject lots all came from Psd-44080. In the absence of evidence that defendantappellant employed fraud in consolidating these lots, a typographical error in the
designation of lot numbers in the Certificates of Title would not warrant their
cancellation. An amendment may cure the error. It has been aptly ruled in one case that
in the interest of justice and equity, the title-holder may not be made to bear the
unfavorable effect of the mistake or negligence of the State’s agents, in the absence of
proof of his complicity in a fraud or of manifest damage to third persons (Republic vs.
Court of Appeals, 301 SCRA 366).18

We have examined the factual bases of the CA in reaching its decision, and have found
that its aforequoted findings of fact and conclusions were based on the evidence
presented at the trial. In view of this, the Court accepts the findings of fact and
conclusions of the CA, not just because we are not a trier of facts, but, more importantly,
because the CA creditably performed its main task of conducting a thorough review of
the evidence and records of the case in order to eruditely and carefully address each of
the issues raised and argued by the Dicos.
Secondly, the CA correctly pointed out that under Article 1456 of the Civil Code, the
person obtaining property through mistake or fraud is considered by force of law a
trustee of an implied trust for the benefit of the person from whom the property comes.
Under Article 1144, Civil Code, an action upon an obligation created by law must be
brought within 10 years from the time the right of action accrues. Consequently, an
action for reconveyance based on implied or constructive trust prescribes in 10 years.
Here, the CA observed that even granting that fraud intervened in the issuance of the
transfer certificates of title, and even assuming that the Dicos had the personality to
demand the reconveyance of the affected property on the basis of implied or
constructive trust, the filing of their complaint for that purpose only on May 12, 1986
proved too late for them.
That observation was correct and in accord with law and jurisprudence.1âwphi1 Verily,
the reckoning point for purposes of the Dicos’ demand of reconveyance based on fraud
was their discovery of the fraud. Such discovery was properly pegged on the date of the
registration of the transfer certificates of title in the adverse parties’ names, because
registration was a constructive notice to the whole world. 19 The long period of 29 years
that had meanwhile lapsed from the issuance of the pertinent transfer certificate of title
on September 30, 1934 (the date of recording of TCT No. RT-9933 (16739) in the name
of the Lopezes) or on November 10, 1956 (the date of recording of TCT No. T-41835 in
VMC’s name) was way beyond the prescriptive period of 10 years.
And, lastly, the insistence of the Dicos that prescription could not be used by the CA to
bar their claim for reconveyance by virtue of VMC’s failure to aver them m a motion to
dismiss or m the answer was unwarranted.
We agree with VMC's contention to the contrary. Although defenses and objections not
pleaded in a motion to dismiss or in an answer are deemed waived, it was really
incorrect for the Dicos to insist that prescription could not be appreciated against them
for that reason. Their insistence was contrary to Section l, Rule 9 of the Rules of Court,
which provides as follows:
Section 1. Defenses and objections not pleaded.- Defenses and objections not pleaded
either in a motion to dismiss or in the answer are deemed waived. However, when it
appears from the pleadings or the evidence on record that the court has no jurisdiction
over the subject matter, that there is another action pending between the same parties
for the same cause, or that the action is barred by a prior judgment or by statute of
limitations, the court shall dismiss the claim. (2a)
Under the rule, the defenses of lack of jurisdiction over the subject matter, litis
pendentia, res judicata, and prescription of action may be raised at any stage of the

proceedings, even for the first time on appeal, except that the objection to the lack of
jurisdiction over the subject matter may be barred by laches
WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals promulgated
on September II, 2002; and ORDERS the petitioners to pay the costs of suit.