Coronel vs IAC (155 SCRA 270) – Exceptions to the IPV

Facts: The property in dispute is the 2/8 share of Bernabela Lontoc who was survived by three sets of
heirs: 1) Bernardino Merlan; 2) Jose Merlan and Brigido Merlan, the defendants, and 3) Daniel Anuat
and Paz Anuat.

Later, heirs 1 & 3 sold their 2/3 undivided portion of the lot to spouses Ignacio Manalo and Marcela
Nobelo (registered). Ignacio Manalo further sold his interest to spouses Mariano Manalo and Jorga
Manalo (registered). However, the title issued to the spouses Manalo covered the whole property in
dispute and did not mention the 1/3 share which was not sold to them.

Relying on the title, petitioner, Rodolfo Coronel, bought the lot (registered). Petitioner Rodolfo
Coronel then filed a complaint for recovery of possession of a parcel of land registered under his name.

Petitioner: Alleged that he was a purchaser in good faith and that at the time he purchased the subject
parcel of land, the defendants were already occupying a portion thereof as "tenants at will" and that
despite demands to vacate the premises, the defendants failed and refused to move out from the land.
Respondents: Denied that Coronel was the owner of the whole parcel of land and alleged that the lots
occupied by them form part of the 1/3 undivided share. They never sold their share and have been in
open and peaceful possession of their undivided share of the lot throughout the years. They also filed
and action against heirs 1 & 2, the third-party defendants, for fraud when they sold the whole lot.
Third-Party Defendants: The defendants' co-owners of the lot denied that they had something to do
with the fraudulent acts or illegal machinations which deprived the defendants of their share in the
subject parcel of land, and that what they sold was only their 2/3 undivided shares in said parcel.

The lower court ruled in favor of the defendants.

Issue: Whether the court erred in ruling that petitioner was not a purchaser in good faith

Ruling: Neither the respondents nor their co-owners of the lot sold the former's share of the lot.
Whether or not there was fraud or just a mistake or oversight of an employee of the Register of Deeds is
not clear from the records. The point is that the 1/3 undivided portion of the respondents over the lot
was mistakenly included in the transfer certificate of title of Mariano Manalo. The petitioner is bound
to recognize the lien in favor of the respondents which was mistakenly excluded and therefore not
inscribed in the Torrens title of the land of his predecessors-in-interest.

Doctrine/Basis of the Ruling: Philippine Commercial and Industrial Bank v. Villalva - There is, however, a
countervailing doctrine, certainly not of lesser weight, that mitigates the harshness of the iron-clad
application of the principle attaching full faith and credit to a Torrens certificate. It is inspired by the
highest concept of what is fair and what is equitable.

Caragay-Layno v. Court of Appeals - The simple possession of a certificate of title, under the Torrens
System, does not necessarily make the possessor a true owner of all the property described therein. If a
person obtains a title, under the Torrens system, which includes by mistake or oversight land which
cannot be registered under the Torrens systems, he does not, by virtue of said certificate alone, become
the owner of the lands illegally included.