LBP v POBLETE
Injunction. Named defendants were Maniego, Land Bank,
Respondent Barbara Sampaga Poblete (Poblete) is the
registered owner of a parcel of land, known as Lot No. 29,
in Buenavista, Sablayan, Occidental Mindoro, under
Original Certificate of Title (OCT) No. P-12026. Poblete
obtained a 300,000.00 loan from (Kapantay). Poblete
mortgaged Lot No. 29 to Kapantay to guarantee payment
of the loan. Kapantay, in turn, used OCT No. P-12026 as
collateral under its Loan Account No. 97-CC-013 with
petitioner LBP.
Poblete decided to sell Lot No. 29 to pay her loan. She
instructed her son-in-law Domingo Balen (Balen) to look
for a buyer. Balen referred Angelito Joseph Maniego
(Maniego) to Poblete. According to Poblete, Maniego
agreed to buy Lot No. 29 for 900,000.00, but Maniego
suggested that a deed of absolute sale for 300,000.00 be
executed instead to reduce the taxes. Thus, Poblete
executed the Deed of Absolute Sale with 300,000.00 as
consideration. In the Deed, Poblete described herself as a
"widow." Poblete, then, asked Balen to deliver the Deed
to Maniego and to receive the payment in her behalf.
Balen testified that he delivered the Deed to Maniego.
However, Balen stated that he did not receive from
Maniego the agreed purchase price. Maniego told Balen
that he would pay the amount upon his return from the
United States. In an Affidavit, Poblete stated that she
agreed to have the payment deposited in her Land Bank
Savings Account.6
Based on a Certification issued by Land Bank-Sablayan
Branch Department Manager Marcelino
Pulayan,7 Maniego paid Kapantays Loan Account No. 97-
CC-013 for 448,202.08.
Maniego applied for a loan of 1,000,000.00 with Land
Bank, using OCT No. P 12026 as collateral. Petitioner LBP
alleged that as a condition for the approval of the loan, the
title of the collateral should first be transferred to
Maniego.
Pursuant to the Deed of Absolute Sale, Register of Deeds
of Occidental Mindoro issued Transfer Certificate of Title
(TCT) No. T-20151 in Maniegos name. One day later,
Maniego and Land Bank executed a Credit Line Agreement
and a Real Estate Mortgage over TCT No. T- 20151. On the
same day, Land Bank released the 1,000,000.00 loan
proceeds to Maniego. Subsequently, Maniego failed to
pay the loan with Land Bank. LBP filed an Application for
Extra-judicial Foreclosure of Real Estate Mortgage stating
that Maniegos total indebtedness amounted to
1,154,388.88.
Poblete filed a Complaint for Nullification of the Deed
dated 11 August 2000 and TCT No. T-20151, Reconveyance
of Title and Damages with Prayer for Temporary
Restraining Order and/or Issuance of Writ of Preliminary
the Register of Deeds of Occidental Mindoro and Elsa Z.
Aguirre in her capacity as Acting Clerk of Court of RTC San
Jose, Occidental Mindoro.
POBLETE: Poblete alleged that despite her demands on
Maniego, she did not receive the consideration of
900,000.00 for Lot No. 29. Upon her verification with the
Register of Deeds, the Deed was used to obtain TCT No. T-
20151. Poblete claimed that the Deed dated 11 August
2000 bearing her and her deceased husbands, Primo
Poblete, supposed signatures was a forgery as their
signatures were forged. As proof of the forgery, Poblete
presented the Death Certificate dated 27 April 1996 of
her husband and Report No. 294-502 of the Technical
Services Department of the National Bureau of
Investigation showing that the signatures in the Deed
were forgeries. Accordingly, Poblete also filed a case for
estafa through falsification of public document against
Maniego and sought injunction of the impending
foreclosure proceeding.
LBP: Land Bank filed its Answer with Compulsory
Counterclaim and Cross-claim. Land Bank claimed that it is
a mortgagee in good faith and it observed due diligence
prior to approving the loan by verifying Maniegos title
with the Office of the Register of Deeds. Land Bank
likewise interposed a cross-claim against Maniego for the
payment of the loan, with interest, penalties and other
charges. Maniego, on the other hand, separately filed his
Answer. Maniego denied the allegations of Poblete and
claimed that it was Poblete who forged the Deed dated 11
August 2000. He also alleged that he paid the
consideration of the sale to Poblete and even her loans
from Kapantay and Land Bank.
RTC AND CA ruled in favour of Poblete.
Issues: 1. WON the deed is void for being forged; 2. WON
LBP was a mortgagee in good faith
Ruling: 1. YES; 2. NO. Petition is denied and the CA ruling is
affirmed.
1. A forged or fraudulent deed is a nullity and
conveys no title. Moreover, where the deed of
sale states that the purchase price has been
paid but in fact has never been paid, the deed
of sale is void ab initio for lack of
consideration.18 Since the Deed dated 11
August 2000 is void, the corresponding TCT No.
T-20151 issued pursuant to the same deed is
likewise void.
When the instrument presented for registration is forged,
even if accompanied by the owners duplicate certificate
of title, the registered owner does not thereby lose his
title, and neither does the mortgagee acquire any right or
title to the property. In such a case, the mortgagee under
the forged instrument is not a mortgagee protected by
law.
It is settled that a decision that has acquired finality
becomes immutable and unalterable and may no longer
be modified in any respect, even if the modification is
meant to correct erroneous conclusions of fact or law and
whether it will be made by the court that rendered it or by
the highest court of the land. This is without prejudice,
however, to the right of Maniego to recover from Poblete
what he paid to Kapantay for the account of Poblete,
otherwise there will be unjust enrichment by Poblete.
Since TCT No. T-20151 has been declared void by final
judgment, the Real Estate Mortgage constituted over it is
also void. In a real estate mortgage contract, it is essential
that the mortgagor be the absolute owner of the
property to be mortgaged; otherwise, the mortgage is
void.
2. There is indeed a situation where, despite the
fact that the mortgagor is not the owner of the
mortgaged property, his title being fraudulent,
the mortgage contract and any foreclosure sale
arising therefrom are given effect by reason of
public policy. This is the doctrine of "the
mortgagee in good faith" based on the rule that
buyers or mortgagees dealing with property
covered by a Torrens Certificate of Title are not
required to go beyond what appears on the face
of the title.However, it has been consistently
held that this rule does not apply to banks,
which are required to observe a higher standard
of diligence. A bank whose business is impressed
with public interest is expected to exercise more
care and prudence in its dealings than a private
individual, even in cases involving registered
lands. A bank cannot assume that, simply
because the title offered as security is on its
face free of any encumbrances or lien, it is
relieved of the responsibility of taking further
steps to verify the title and inspect the
properties to be mortgaged.
Facts of how LBP did not act in good faith: Based on the
evidence, Land Bank processed Maniegos loan application
upon his presentation of OCT No. P-12026, which was still
under the name of Poblete. Land Bank even ignored the
fact that Kapantay previously used Pobletes title as
collateral in its loan account with Land Bank. The records
do not even show that Land Bank investigated and
inspected the property to ascertain its actual occupants.
Land Bank merely mentioned that it inspected Lot No. 29
to appraise the value of the property. Land Bank claims
that it conditioned the approval of the loan upon the
transfer of title to Maniego, but admits processing the
loan based on Maniegos assurances that title would soon
be his.37 Thus, only one day after Maniego obtained TCT
No. T-20151 under his name, Land Bank and Maniego
executed a Credit Line Agreement and a Real Estate
Mortgage. Because of Land Banks haste in granting the
loan, it appears that Maniegos loan was already
completely processed while the collateral was still in the
name of Poblete. This is also supported by the testimony
of Land Bank Customer Assistant Andresito Osano. Where
the mortgagee acted with haste in granting the mortgage
loan and did not ascertain the ownership of the land being
mortgaged, as well as the authority of the supposed agent
executing the mortgage, it cannot be considered an
innocent mortgagee.
LEGARDA v CA ET AL
Facts: The parties hereto entered into a lease agreement
over a certain Quezon City property owned by petitioner
Victoria Legarda. She refused to sign the contract
although respondent lessee, Cathay, made a deposit and
a down payment of rentals, prompting the latter to file
before the RTC a complaint against the former for specific
performance with preliminary injunction and damages.
The court a quo issued the injunction. In the meantime,
Legardas counsel, Coronel, requested a 10-day extension
of time to file an answer which the court granted. Atty.
Coronel, failed to file an answer within the extended
period. His client was eventually declared in default,
Cathay was allowed to present evidence ex-parte, and a
judgment by default was reached by the trial court
ordering Legarda to execute the lease contract in favor of
Cathay and to pay her damages.
RTC Ruling: A copy of said decision was served on Atty.
Coronel but he took no action until the judgment became
final and executor. RTC issued a writ of execution and a
public auction was held where Cathays manager, Cabrera
as highest bidder, was awarded the property for
P376,500.00 in satisfaction of the judgment debt.
Consequently, a Certificate of Sale was issued by the
sheriff. Upon failure of Legarda to redeem her property
within the one-year redemption period, a Final Deed of
Sale was issued which was registered by Cabrera with the
Register of Deeds three days later. Title was transferred
from the name of Legarda to Cabrera.
Despite the lapse of over a year since the judgment by
default became final and executory, Atty. Coronel made
no move on behalf of his client. He did not even inform
her of all these developments. When Legarda did learn of
the adverse decision, she retained Coronel as her counsel
and prevailed upon him to seek appropriate relief. Thus,
he filed a petition for annulment of judgment with prayer
for the issuance of a writ of preliminary mandatory
injunction before the Court of Appeals.
CA Ruling: CA rendered a decision affirmed the decision of
the RTC and dismissed the petition for annulment of
judgment, and holding Legarda bound by the negligence
of her counsel. It considered her allegation of fraud by
Cathay to be improbable, and added that there was pure
and simple negligence on the part of petitioners counsel
who failed to file an answer and, later, a petition for relief
from judgment by default.
THE NEW LAWYER: Legarda learned of the adverse
decision of the Court of Appeals not from Atty. Coronel
but from his secretary. She then hired a new counsel for
the purpose of elevating her case to this Court. The new
lawyer filed a petition for certiorari praying for the
annulment of the decision of the trial and appellate courts
and of the sheriffs sale, alleging, among other things, that
Legarda lost in the courts below because her previous
lawyer was grossly negligent and inefficient, whose
omissions cannot possibly bind her because this amounted
to a violation of her right to due process of law. She,
therefore, asked Cathay (not Cabrera) to reconvey the
subject property to her.
DECISION BY GANCAYCO: A decision was rendered in this
case by Mr. Justice Gancayco, ruling in favour of the
request by Legardas new counsel. The decisions of the
RTC and the CA were all reversed and the title was given
back to Legarda.
The Court then declared that Atty. Coronel committed, not
just ordinary or simple negligence, but reckless,
inexcusable and gross negligence, which deprived his
client of her property without due process of law. His
acts, or the lack of it, should not be allowed to bind
Legarda who has been consigned to penury because her
lawyer appeared to have abandoned her case not once
but repeatedly. Thus, the Court ruled against tolerating
such unjust enrichment of Cathay at Legardas expense,
and noted that counsels lack of devotion to duty is so
gross and palpable that this Court must come to the aid of
his distraught client. ***This was held by the Court as
impermissible, for the Court seeks sound judgment and
does not consider emotions.
CATHAYS DEFENSE: Cathay filed the instant motion for
reconsideration, alleging, inter alia, that reconveyance is
not possible because the subject property had already
been sold by its owner, Cabrera, even prior to the
promulgation of said decision.
The impossibility of this directive is immediately apparent,
for two reasons: First, Cathay neither possessed nor
owned the property so it is in no position to reconvey the
same; second, even if it did, ownership over the property
had already been validly transferred to 3 innocent third
parties at the time of promulgation of said judgment.
Issue: WON Cabrera was a purchaser in good faith
Ruling: YES.
1. Cabrera was simply a vendee whose payment
effectively extinguished Legardas liability to
Cathay as the judgment creditor. What is clear
from the records is that the auction sale was
conducted regularly, that a certificate of sale
and, subsequently, a final deed of sale were
issued to Cabrera which allowed him to
consolidate his ownership over the subject
property, register it and obtain a title in his own
name, and sell it to Nancy Saw, an innocent
purchaser for value, at a premium price. Nothing
on record would demonstrate that Cathay was
the beneficiary of the sale between Cabrera and
Saw. Cabrera himself maintained that he was
acting in his private (as distinct from his
corporate) capacity when he participated in the
bidding.
Since the decision of the Court of Appeals gained finality
the subject property has been sold and ownership thereof
transferred no less than three times.
As a result, all the successors-in-interest of Cabrera to the
subject lot were transferees for value and in good faith,
having relied as they did on the clean titles of their
predecessors. The successive owners were each armed
with their own indefeasible titles which automatically
brought them under the aegis of the Torrens System.
2. Though not raised as an issue in this case, is the
fact that Cabrera was impleaded as a party-
respondent only after the promulgation of the
Gancayco decision. The dispositive portion itself
ordered Cathay, instead of Cabrera to reconvey
the property to Legarda. Cabrera was never a
party to this case, either as plaintiff-appellee
below or as respondent in the present action.
Neither did he ever act as Cathays
representative. Assuming arguendo that
reconveyance is possible, it would still not
address the issue in this case.
3. Under the Gancayco ruling, the order of
reconveyance was premised on the alleged gross
negligence of Legardas counsel which should not
be allowed to bind her as she was deprived of
her property without due process of law.
It is, however, basic that as long as a party was given
the opportunity to defend her interests in due course,
she cannot be said to have been denied due process
of law, for this opportunity to be heard is the very
essence of due process. The chronology of events
shows that the case took its regular course in the trial
and appellate courts but Legardas counsel failed to
act as any ordinary counsel should have acted, his
negligence every step of the way amounting to
abandonment, in the words of the Gancayco decision.
Absent any irregularity on the part of Cabrera and
the proceedings he underwent to acquire valid title
over the land, the presumption of regularity stands.
Nor did the fact that Cabrera is an officer of Cathay
make him a purchaser in bad faith. His act in
representing the company was never questioned nor
disputed by Legarda.
4. Neither Cathay nor Cabrera should be made to
suffer for the gross negligence of Legardas
counsel. If she may be said to be innocent
because she was ignorant of the acts of
negligence of her counsel, with more reason are
respondents truly innocent. As between two
parties who may lose due to the negligence or
incompetence of the counsel of one, the party
who was responsible for making it happen
should suffer the consequences. This reflects the
basic common law maxim that was stated by
Justice JBL Reyes. In this case, Legarda was
clearly at fault in retaining her counsels services
despite his gross negligence over her case. The
proceedings were complete with notice and
publication, so Legarda could not be held as
totally in the dark about the status of her
property.
5. These twin judgments, which were nullified by
the Gancayco decision, should be respected and
allowed to stand by this Court for having become
final and executory.
Void judgments may be classified into two groups: those
rendered by a court without jurisdiction to do so and
those obtained by fraud or collusion.This case must be
tested in light of the guidelines governing the latter class
of judgments. In this regard, an action to annul a
judgment on the ground of fraud will not lie unless the
fraud is extrinsic or collateral and facts upon which it is
based (have) not been controverted or resolved in the
case where (the) judgment was rendered.
It must be noted that, aside from the fact that no
extrinsic fraud attended the trial and resolution of this
case, the jurisdiction of the court a quo over the parties
and the subject matter was never raised as an issue by
Legarda. Such being the case, the decision of the trial
court cannot be nullified.
GABUTAN v NACALABAN
Godofredo Nacalaban (Godofredo) purchased a land
(property) in Poblacion, Cagayan de Oro City from three
people surnamed Daamo. Pursuant to the sale, title
covering the property was issued in the name of
Godofredo. He thereafter built a house on it.
Godofredo died and was survived by his wife, Baldomera,
and their children. Baldomera issued a Certification in
favor of her mother, Melecia, allowing her to build and
occupy a house on the portion of the property.
Accordingly, the house was declared for taxation
purposes. The tax declaration presented in evidence
showed that Melecia owned the building on the land
owned by Godofredo.
Baldomera died, so her children executed an Extrajudicial
Settlement of Estate of Deceased Person with Sale where
they adjudicated unto themselves the property and sold
it to the College. Title covering the property was issued in
the name of the College.
Melecia died and was survived by her children, Trifonia
Gabutan, Buna, Felisia, Crisanta, and Tirso.
In a letter, the College demanded Trifonia D. Gabutan,
and other heirs of Melecia who were occupying the
house on the property, to vacate the premises.
Gabutan, et al. filed a Complaint for Reconveyance of
Real Property, Declaration of Nullity of Contracts, Partition
and Damages with Writ of Preliminary Attachment and
Injunction against Nacalaban, et al. and the College. They
alleged that: (1) Melecia bought the property using her
own money but Godofredo had the Deed of Absolute
Sale executed in his name instead of his mother-in-
law;22 (2) Godofredo and Baldomera were only trustees
of the property in favor of the real owner and
beneficiary, Melecia; (3) they only knew about the
Extrajudicial Settlement with Sale upon verification with
the Registry of Deeds; and (4) the College was a buyer in
bad faith, being aware they were co-owners of the
property. ***ALL OF THESE WERE DECLARED AFFIRMED
BY THE COURT
MTCC AND RTC WERE IN FAVOR OF THE COLLEGE ON THE
UNLAWFUL DETAINER CASE. BUT IN THE RECONVEYANCE
CASE, RTC WAS IN FAVOR OF GABUTAN; CA AFFIRMED
THE RTC DECISION ON THE UNLAWFUL DETAINER AND
RECONVEYANCE CASES. found the testimonies of
their witnesses credible, in that the money of
Melecia was used in buying the property but the
name of Godofredo was used when the title was
obtained because Godofredo lived in Cagayan de
Oro City while Melecia lived in Bornay, Gitagum,
Misamis Oriental.
NACALABAN: Filed their motion for
reconsideration of the CA Decision, but it was
denied so they filed the present petition
for certiorari under Rule 65, where they allege
that: (1) the action for reconveyance already
expired; (2) for an action for reconveyance
to prosper, the property should not have
passed into the hands of another who
bought the property in good faith and for
value; and (3) the title of Godofredo could
not be attacked collaterally.
GABUTAN: Filed the present petition for review
on certiorari under Rule 45, seeking a partial
appeal of the CA Decision. She alleges that the
College is not a buyer in good faith because
it did not buy the property from the
registered owner.Since Godofredo was the
registered owner of the property and not
Nacalaban, et al., the College should have
exercised a higher degree of prudence in
establishing their capacity to sell it. Further,
despite knowing that other persons possessed the
property, the College did not inquire with
Gabutan, et al. the nature of their stay on the
property.
Issues:
1. Whether the petition for certiorari of
Nacalaban, et al. shall prosper; NO
2. Whether the action for reconveyance was
proper; YES
3. Whether the College is a buyer in good
faith. NO
Ruling:
1. Appeal in the form of review of certiorari
not a petition for certiorari is the
proper remedy. Rule 65 is a limited form
of review and is a remedy of last
recourse. This extraordinary action lies
only where there is no appeal nor plain,
speedy and adequate remedy in the
ordinary course of law.
Under the Rules of Court, Nacalaban had 15 days
or until September 22, 2010 to file an appeal
before us. Nacalaban, et al. allowed this period to
lapse without doing so and, instead, filed a
petition for certiorari on November 5, 2010.
Being the wrong remedy, the petition of
Nacalaban, et al. is, therefore, dismissible.
Requisites: We have the discretion to treat a
Rule 65 petition for certiorari as a Rule 45 petition
for review on certiorari if (1) the petition is filed
within the reglementary period for filing a petition
for review; (2) when errors of judgment are
averred; and (3) when there is sufficient reason
to justify the relaxation of the rules. The first
and third requisites are absent in this case.
To reiterate, the petition was filed beyond
the 15-day reglementary period of filing a
petition for review on certiorari.
2. Action for reconveyance is a proper
remedy being there an implied trust
between Melecia and Goddofredo, for it
was Melecias money that was used in
building the house.
Article 1448 of the Civil Code provides in part
that there is an implied trust when property is
sold, and the legal estate is granted to one party
but the price is paid by another for the purpose of
having the beneficial interest of the property. The
former is the trustee, while the latter is the
beneficiary. Requisites: (1) an actual payment of
money, property or services, or an equivalent,
constituting valuable consideration; (2) and such
consideration must be furnished by the alleged
beneficiary of a resulting trust.90 These two
elements are present here.
Gabutan, et al., through the testimonies of
Felisia, Crisanta, and Trifonia, established that
Melecia's money was used in buying the property,
but its title was placed in Godofredo's name. She
purchased the property because Felisia wanted to
build a pharmacy on it. On one occasion in
Melecia's house, and when the entire family was
present, Melecia gave Godofredo the money to
purchase the property.Melecia entrusted the
money to Godofredo because he was in
Cagayan de Oro, and per Melecia's
instruction, the deed of sale covering the
property was placed in his name. It was
allegedly her practice to buy properties and place
them in her children's name, but it was
understood that she and her children co-own the
properties.ha nr
Melecia built a residential building on the
property, where her daughter Crisanta and
some of her grandchildren
resided.95 Godofredo also thereafter built a
house on the property. Twice, he also
mortgaged the property to secure loans.
Melecia allowed him to do so because she
trusted him.96 After Godofredo's death, and
when Baldomera fell ill, there were family
discussions to transfer the title in Melecia's name
so Melecia's children can divide it together with
the rest of Melecia's properties. The plans,
however, always fell through.
The action for reconveyance is imprescriptible
because the plaintiffs are in possession of
the property.
3. To prove good faith, a buyer of registered
and titled land need only show that he
relied on the face of the title to the
property. He need not prove that he
made further inquiry for he is not obliged
to explore beyond the four corners of the
title. Such degree of proof of good
faith, however, is sufficient only
when the following
conditions concur: first, the seller is
the registered owner of the
land; second, the latter is in
possession thereof; and third, at the
time of the sale, the buyer was not
aware of any claim or interest of
some other person in the property,
or of any defect or restriction in the
title of the seller or in his capacity to
convey title to the property.
Thus, the College, which has the burden to prove
the status of being a purchaser in good faith, is
required to prove the concurrence of the above
conditions. We find that the College failed to
discharge this burden.
As correctly pointed out by Gabutan, et al.,
Nacalaban, et al. are not the registered
owners of the property, but Godofredo.
In Bautista v. Court of Appeals,129 we held:
chanRoble svirtual Lawlib ra ry
Secondly, the College was aware that aside
from Nacalaban, et al., the Heirs of Melecia,
were also in possession of the property. The
College cited the tax declaration which bore an
annotation that Melecia owned a residential
building and Godofredo owned the lot.
Although the College in its Answer alleged that it
made an exhaustive investigation and verification
from all reliable sources and found that the
possession of Melecia and her heirs was merely
tolerated,135 it failed to specify who or what
these sources were. There is no evidence
that the College did inquire from Melecia or
her heirs themselves, who were occupying the
property, the nature and authority of their
possession.
CUSI v DOMINGO
The property in dispute was a vacant unfenced lot situated
in White Plains, Quezon City and covered TCT issued in the
name of respondent Lilia V. Domingo by the Registry of
Deeds of Quezon City. Domingo learned that construction
activities were being undertaken on her property without
her consent. She soon unearthed the series of anomalous
transactions affecting her property
One Radelia Sy (Sy), representing herself as the owner of
the property, petitioned the RTC for the issuance of a
new owners copy of Domingos TCT No. N-165606,
appending to her petition a deed of absolute sale dated
July 14, 1997 purportedly executed in her favor by
Domingo; and an affidavit of loss whereby she claimed
that her bag containing the owners copy of the TCThad
been snatched from her while she was at the SM City in
North EDSA, Quezon City.
The RTC granted Sys petition. The Registry of Deeds of
Quezon City then issued a new owners duplicate copy of
TCT No. N-165606, which was later cancelled by virtue of
the deed of absolute sale dated July 14, 1997, and in its
stead the Registry of Deeds of Quezon City issued TCT No.
186142 in Sys name.
Sy subsequently subdivided the property into two, and
sold each half by way of contract to sell to Spouses
Edgardo and Ramona Liza De Vera and to Spouses
Alfonso and Maria Angeles Cusi. The existence of the
individual contracts to sell was annotated on the dorsal
portion of Sys TCT stating that the consideration of the
sale was 1,000,000.00 for each set of buyers, or for a
total of 2,000,000.00 for the entire property that had an
actual worth of not less than 14,000,000.00. TCT No.
186142 in the name of Sy was then cancelled by virtue of
the deeds of sale executed between Sy and Spouses De
Vera, and between Sy and Spouses Cusi. All the while, the
transactions between Sy and the De Veras, and between
Sy and the Cusis were unknown to Domingo, whose TCT
No. N-165606 remained in her undisturbed possession.
It turned out that the construction activities taking place
on the property that Domingo learned about were upon
the initiative of the De Veras in the exercise of their
dominical and possessory rights.
Domingo commenced this action against Sy and her
spouse, the De Veras and the Cusis in the RTC, the
complaint entitled Lilia V. Domingo v. Spouses Radelia and
Alfred Sy, Spouses Alfonso G. and Maria Angeles S. Cusi,
Spouses Edgardo M. and Ramona Liza L. De Vera, BPI
Family Savings Bank and The Register of Deeds of Quezon
City, seeking the annulment or cancellation of titles,
injunction and damages. Domingo applied for (TRO). The
RTC granted Domingos application for the TRO enjoining
the defendants from proceeding with the construction
activities on the property. The RTC later granted her
application for the writ of preliminary injunction.
RTC RULING: At first, RTC said the purchasers were in good
faith, but held a subsequent decision that they were in bad
faith. In both decisions, the deed of absolute sale between
Sy and Domingo was held void.
CA affirmed the last decision of the CA and denied the
motions for reconsideration of De Vera, Sy, and Cusi.
Issue:
1. WHETHER OR NOT THE HONORABLE COURT OF
APPEALS ERRED IN FINDING THAT TRANSFER
CERTIFICATE OF TITLE NO. 186142 REGISTERED
IN THE NAME OF RADELIA SY IS A
RECONSTITUTED TITLE. NO
2. WHETHER OR NOT THE PETITIONERS ARE
BUYERS IN GOOD FAITH AND FOR VALUE. NO
Ruling:
The sale of the property from Domingo to Sy was null and
void and conveyed no title to the latter for being effected
by forging the signature of Domingo; that Sy thereby
acquired no right in the property that she could convey to
the Cusis and De Veras as her buyers; that although
acknowledging that a purchaser could rely on what
appeared on the face of the certificate of title, the Cusis
and De Veras did not have the status of purchasers in good
faith and for value by reason of their being aware of Sys
TCT No. 186142 being a reconstituted owners copy,
thereby requiring them to conduct an inquiry or
investigation into the status of the title of Sy in the
property, and not simply rely on the face of Sys TCT No.
186142; and that the Cusis and De Veras were also aware
of other facts that should further put them on guard,
particularly the several nearly simultaneous transactions
respecting the property, and the undervaluation of the
purchase price from 7,000,000.00/half to only
1,000,000.00/half to enable Sy to pay a lesser capital
gains tax.
There is no question that the petitioners exerted some
effort as buyers to determine whether the property did
rightfully belong to Sy. For one, they did not find any
encumbrance, like a notice of lis pendens, being annotated
on the TCT of Sy. Nonetheless, their observance of a
certain degree of diligence within the context of the
principles underlying the Torrens system was not their
only barometer under the law and jurisprudence by which
to gauge the validity of their acquisition of title. As the
purchasers of the property, they also came under the
clear obligation to purchase the property not only in
good faith but also for value.
Therein lay the problem. The petitioners were shown to
have been deficient in their vigilance as buyers of the
property.
It was not enough for them to show that the property was
unfenced and vacant; otherwise, it would be too easy for
any registered owner to lose her property, including its
possession, through illegal occupation. Nor was it safe for
them to simply rely on the face of Sys TCT No. 186142 in
view of the fact that they were aware that her TCT was
derived from a duplicate owners copy reissued by virtue
of the loss of the original duplicate owners copy. That
circumstance should have already alerted them to the
need to inquire beyond the face of Sys TCT No. 186142.
There were other circumstances, like the almost
simultaneous transactions affecting the property within a
short span of time, as well as the gross undervaluation of
the property in the deeds of sale, ostensibly at the behest
of Sy to minimize her liabilities for the capital gains tax,
that also excited suspicion, and required them to be extra-
cautious in dealing with Sy on the property.