54 Spouses Lim v. Chuatoco Carunungan

LAND TITLES: Chap.
14 (Subsequent
Spouses Lim v. Chuatoco
54 Registration)
GR No. 161861 March 11, 2005 TINGA, J. Meluvin
Petitioners: Respondents:
SPS. WILLIAM and JULIE LIM, SPS. EDGAR and JUDY EDUARDO, JORGE, FELIPE and
LIM, STEVENS C. LIM, EDWIN C. LIM, JOSEPH C. LIM, FRANCISCO, all surnamed CHUATOCO
RAFAEL Y. CHUATOCO, TERESITA Y. CHUATOCO and
the REGISTER OF DEEDS MANILA
Recit Ready Summary
Note: Rafael is 1 of the Chuatoco brothers; he joins the Lims as part of the petitioners. The respondents
are Rafael’s 4 other brothers.
Spouses Jose and Leoncia Chuatoco and Leoncia Yap were the registered owners of a land where
the built a school in Binondo, Manila. Jose died, and so the TCT in the name of the Spouses Chuatoco
was replaced by a TCT in the name of Leoncia and their children. After, Leoncia also died. Eduardo,
Jorge, Felipe and Francisco allege that their brother, Rafael, used a fictitious deed of sale dated 1979 to
obtain title to the property in his own name. They claim that their signatures on the deed were forged.
Rafael filed a petition for reconstitution of the owner’s duplicate of the TCT, alleging that their owner’s
duplicate had been lost. Rafael then executed a Deed of Absolute Sale to the Lims for P600,000.
Respondents demanded the reconveyance of the property, but the Lims refused, so the respondents filed
a complaint with the RTC. The RTC ruled that since the property was already titled in the name of Rafael
before it was sold to the Lims, the Lims had the right to rely upon what appeared on the certificate of
title. The CA reversed and held that the Lims were not buyers in good faith.
The issue is W/N the Lims are purchasers in good faith. The Court ruled in the affirmative.
The Court ruled that all the signatures were forged. The fraudulent registration of the property in
Rafael’s name using the forged deed of sale is NOT sufficient to vest title to the entire property to him.
Certificates of title merely confirm/record title already existing and vested. They cannot be used to protect
a usurper from the true owner, nor can they be used as a shield for the commission of fraud, nor permit
one to enrich himself at the expense of others.
However, a forged or fraudulent document may become the root of a valid title, if the property
has already been transferred from the name of the owner to that of the forger. A person who deals
with registered property in good faith will acquire good title from a forger and be absolutely protected by a
Torrens title.
The Lims had no obligation to look beyond the face of the Torrens Title, however, they exerted
efforts beyond a facial examination of the title to verify the ownership thereof. They went to the Register
of Deeds of Manila to verify Rafael’s claim over the property, and saw therein the Deed of Sale executed
by respondents and their mother in favor of Rafael, as well as the certificates of title. They discovered that
the TCT was issued solely in the name of Rafael.
Facts
1. Spouses Jose and Leoncia Chuatoco and Leoncia Yap were the registered owners of a land with
improvements located at Calle Veronica St., Binondo, Manila.
2. Jose died, and so the TCT in the name of the Spouses Chuatoco was replaced by a TCT in the
name of Leoncia and their children. After, Leoncia also died.
3. Eduardo, Jorge, Felipe and Francisco allege that their brother, Rafael, obtained title to the property
in his own name by using a fictitious deed of sale dated 1979. They claim that their signatures on the
deed were forged.
4. Rafael filed a petition for reconstitution of the owner’s duplicate of the TCT, alleging that their
owner’s duplicate had been lost.
5. Rafael then executed a Deed of Absolute Sale to the Lims for P600,000.
6. Respondents demanded the reconveyance of the property, but the Lims refused, so the respondents
filed a complaint with the RTC.
7. RTC dismissed the complaint. The RTC ruled that since the property was already titled in the name
of Rafael before it was sold to the Lims, the Lims had the right to rely upon what appeared on
the certificate of title.
8. The CA reversed. The CA held that the Lims were not buyers in good faith because in 1985, the
Lims went to the US to negotiate with Eduardo who was residing there, thus the Lims knew that the
Chuatoco’s collectively owned the property, and that the consent of Eduardo to the sale was
essential. The CA ordered the Lims to reconvey 4/5 of the property and pay moral damages and
attorney’s fees.
9. The Lims argue that they were not required to go beyond the 4 corners of the certificate of title to
ascertain its authenticity and regularity because there was nothing on it that would have put them on
notice of any defect in their seller’s title.
10. Respondents argue that the issue of whether petitioners were buyers in good faith is one of fact and
not of law, thus, the instant petition should be dismissed. The Lims should have been put on guard
by the fact that the property was titled solely in the name of Rafael, despite the annotations on the
TCT indicated that all of Leoncia’s sons are the beneficiaries of the property. They also note the
haste in the sale of the property to petitioners only 1 day after the order of reconstitution of Rafael’s
title was issued by the RTC, and the fact that the title to the property was issued only 2 years after
the date of the Deed of Sale. They contend that since Rafael’s reconstituted title was obtained by
fraud, the same is void and did not transmit valid and legal title to the Lims.
Issues Ruling
1. W/N the Lims are purchasers in good faith 1. Yes
Rationale
1. W/N the Lims are purchasers in good faith - YES
- The Court ruled that all the signatures were forged, not just of Eduardo, Jorge and Felipe.
- The fraudulent registration of the property in Rafael’s name using the forged deed of sale is NOT
sufficient to vest title to the entire property to him. A certificate is not conclusive evidence of title;
registration does not vest title, it is merely evidence of such title over a particular property.
- Certificates of title merely confirm/record title already existing and vested. They cannot be used to
protect a usurper from the true owner, nor can they be used as a shield for the commission of fraud,
nor permit one to enrich himself at the expense of others. The Torrens System has never been
recognized as a mode of acquiring ownership.
- However, a forged or fraudulent document may become the root of a valid title, if the property has
already been transferred from the name of the owner to that of the forger. A person who deals with
registered property in good faith will acquire good title from a forger and be absolutely protected by a
Torrens title. Good faith, while it is always to be presumed in the absence of proof to the contrary,
requires a well founded belief that the person from whom title was received was himself the owner of
the land, with the right to convey it.
- Given that the CA and RTC arrived at wholly different conclusion on this question of fact, it is settled
that this Court has to inquire into questions of fact if the courts below have conflicting findings.
- The Court does not agree with the CA’s conclusion that the Lims went to the US to secure
Eduardo’s consent. The Lims were only there on vacation. Even if the Lims met with Eduardo in the
US, it is not evident that it was with the intent of negotiating with him. This was the only
circumstance, flimsy and self-serving, drawn upon by the CA to conclude that the Lims were not
innocent purchasers in good faith. Certainly, the presumption of good faith cannot be overcome by
haphazard conjectures premised on a disputed fact.
- The Lims had no obligation to look beyond the face of the Torrens Title, however, they exerted
efforts beyond a facial examination of the title to verify the ownership thereof. They went to the
Register of Deeds of Manila to verify Rafael’s claim over the property, and saw therein the Deed of
Sale executed by respondents and their mother in favor of Rafael, as well as the certificates of title.
They discovered that the TCT was issued solely in the name of Rafael.
Disposition
Petition granted. Lims were innocent purchasers for value.

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LAND TITLES: Chap.

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