LOCSIN V. HIZON AND SPS.

GUEVARA
G.R. No. 204369               September 17, 2014

FACTS:
Petitioner Enriqueta M. Locsin (Locsin) was the registered owner of a 760-sq.m. lot
covered by (TCT) located in Quezon City. In 1992, she filed an ejectment case Aceron (Aceron)
before the Branch 38 in Quezon City (MTC) to recover possession over the land in issue.
Eventually, the two entered into a compromise agreement, which the MTC approved on August
6, 1993.
Locsin later went to the United States without knowing whether Aceron has complied
with his part of the bargain under the compromise agreement. In spite of her absence, however,
she continued to pay the real property taxes on the subject lot.

In 1994, after discovering that her copy of TCT No. 235094 was missing, Locsin filed a
petition for administrative reconstruction in order to secure a new one, TCT No. RT-97467.
Sometime in early 2002, she then requested her counsel to check the status of the subject lot. It
was then that they discovered the following:

1. One Marylou Bolos (Bolos) had TCT No. RT-97467 cancelled on February 11, 1999,
and then secured a new one, TCT No. N-200074, in her favor by registering a Deed of
Absolute Sale dated November 3, 1979 allegedly executed by Locsin with the Registry
of Deeds;

2. Bolos later sold the subject lot to Bernardo Hizon (Bernardo) for PhP 1.5 million, but it
was titled under Carlos Hizon’s (Carlos’) name on August 12, 1999. Carlos is Bernardo’s
son;

3. On October 1, 1999, Bernardo, claiming to be the owner of the property, filed a Motion
for Issuance of Writ of Execution for the enforcement of the court-approved compromise
agreement in Civil Case No. 38-6633;

4. The property was already occupied and was, in fact, up for sale

Locsin then sent a letter requesting the return of the property since her signature in the
purported deed of sale is indeed was a forgery. Carlos denied Locsin’s request, claiming that he
was unaware of any defect or flaw in Bolos’ title and he is, thus, an innocent purchaser for value
and good faith. Carlos had already sold the property for PhP 1.5 million to his sister and her
husband, herein respondents Lourdes and Jose Manuel Guevara (spouses Guevara),
respectively, who, as early as May 24, 2002, had a new certificate of title, TCT No. N-237083,
issued in their names. The spouses Guevara then immediately mortgaged the said property to
secure a PhP 2.5 million loan/credit facility with Damar Credit Corporation (DCC).

Appellate court held that respondents, having dealt with property registered under the
Torrens System, need not go beyond the certificate of title, but only has to rely on the said
certificate. CA ruled that Locsin can no longer recover the subject lot.
ISSUE:

WON respondents are innocent purchasers for value.

RULING:

No, respondents are not purchasers in good faith.

An innocent purchaser for value is one who buys the property of another without notice
that some other person has a right to or interest in it, and who pays a full and fair price atthe
time of the purchase or before receiving any notice of another person’s claim. 16 As such, a
defective title–– or one the procurement of which is tainted with fraud and misrepresentation––
may be the source of a completely legal and valid title, provided that the buyer is an innocent
third person who, in good faith, relied on the correctness of the certificate of title, or an innocent
purchaser for value.17

In the case at bar, Bolos’ certificate of title was concededly free from liens and
encumbrances on its face. However, the failure of Carlos and the spouses Guevara to exercise
the necessary level of caution in light of the factual milieu surrounding the sequence of transfers
from Bolos to respondents bars the application of the mirror doctrine and inspires the Court’s
concurrence.

A purchaser of property under the Torrens system cannot simply invoke that he is an
innocent purchaser for value when there are attending circumstances that raise suspicions. In
that case, he cannot merely rely on the title and must look beyond to ascertain the truth as to
the right of the seller to convey the property.

Consequently, this Court could not give respondents the protection accorded to innocent
purchasers in good faith and for value.

Locsin is entitled to nominal damages.

. 
 YAP v. REPUBLIC OF THE PHILIPPINES

G.R. No. 199810 March 15, 2017

FACTS:

Consuelo Vda. de dela Cruz applied for free patent over a parcel of land constituting about
1,292 square meters, designated as Lot No. 9087, Cad. 102, located in Daliao, Toril, Davao City. As
she could not wait for the approval of her application, she executed a Deed of Waiver/Quitclaim  on5

November 25, 1981 in favor of Rollie Pagarigan (Pagarigan).

Pagarigan filed his own Free Patent Application (FPA)  and subsequently, Free Patent No.
7

(XI-1)5133 was issued to him over said lot. Original Certificate of Title (OCT) No. P-11182  was
8

thereby issued in his name on November 25, 1982. 9

On September 5, 1989, Pagarigan mortgaged the lot to Banco Davao-Davao City

Development Bank (the Bank). For failure to pay his loan, the property was foreclosed, and was
eventually sold to the Bank at public auction on October 26, 1990.

However, the land covered by OCT No. P-11182 was allegedly occupied by Teodoro
Valparaiso and Pedro Malalis (protestants). On October 24, 1990, the protestants filed a formal
protest with the Bureau of Lands (Bureau) considering that they have been in adverse, exclusive,
and continuous occupation of the subject property since 1945, cultivating it, and planting various
crops, nipa palms and coconut trees on said land.

Meanwhile, on November 5, 1992, without consolidating title over the land in its name, the
Bank sold the subject property Beverly Anne C. Yap (Yap) and Rosanna F. Villamor (Villamor) with
execution of deed of sale and T-CT named after Yap and Villamor on 2003.

Yap asserts that she and Villamor purchased the subject property in good faith and for value.
She maintains that on its face, nothing appears in OCT No. P-11182 indicating that some other
person has a right to, or interest over the property covered thereby.

Yap asserts that the respondent failed to discharge the burden of proving the alleged fraud
and misrepresentation which attended Pagarigan's FPA.

ISSUE:

WON Yap’s contention is tenable; are they purchasers in good faith?

RULING:

Yap's contentions are untenable. They are not purchasers in good faith.

As pointed out by the CA, the respondent argued that at the time Yap and Villamar
purchased the said lot from the Bank, a notice of lis pendens was already annotated on OCT No. P-
11182; hence, they cannot be considered as innocent purchasers for value. Yap and Villamor, on
the other hand, contended that the owner's duplicate copy they received from the Bank did not
contain any annotations of encumbrance or liens; hence, they cannot be bound by such annotation.
 In the present petition, Yap maintains that the presumption that she and Villamor are buyers
in good faith and for value has not been rebutted. She adds that even if it is assumed, for the sake of
argument, that their predecessor-in-interest committed fraud and misrepresentation, their title as
innocent purchasers and for value will not in any way be affected.

Court has ruled that the burden of proof to establish the status of a purchaser and registrant
in good faith lies upon the one who asserts it.

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 comers 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.

Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice
and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of title
and examining all factual circumstances in order to determine the seller's title and capacity to
transfer any interest in the property. Under such circumstance, it is no longer sufficient for said buyer
to merely show that he relied on the face of the title; he must now also show that he exercised
reasonable precaution by inquiring beyond the title. Failure to exercise such degree of precaution
makes him a buyer in bad faith.
 SPOUSES PATRICIO and MYRNA BERNALES vs. HEIRS OF JULIAN SAMBAAN G.R.No.
163271, January 15, 2010 Del Castillo, J.:

Facts: 

Spouses Julian and Guillerma Sambaan were the registered owner of a property located
in Bulua, Cagayan de oro City. The respondents and the petitioner Myrna Bernales are the
children of Julian and Guillerma. Myrna, who is the eldest of the siblings, is the present owner
and possessor of the property in question.

Julian died in an ambush in 1975. Before he died, he requested that the property in question be
redeemed from Myrna and her husband Patricio Bernales.  Thus, in 1982 one of Julian’s
siblings offered to redeem the property but the petitioners refused because they were allegedly
using the property as tethering place for their cattle.

In January 1991, respondents received an information that the subject property was already
transferred to Myrna Bernales. The Deed of Absolute Sale dated December 7, 1970 bore the
forged signatures of their parents, Julian and Guillerma.

On April 1993, the respondents, together with their mother Guillerma, filed a complaint for
Annulment of Deed of Absolute Sale and cancellation of TCT No. T-14204 alleging that their
parent’s signatures were forged. The trial court rendered a decision on August 2, 2001
cancelling the TCT and ordering another title to be issued in the name of the late Julian
Sambaan.

Petitioners went to the CA and appealed the decision. The CA affirmed the decision of the lower
court. A motion for reconsideration of the decision was, likewise, denied in 2004. Hence, this
petition for certiorari.

Issue: 

Whether or not the Deed of Absolute Sale is authentic as to prove the ownership of the
petitioners over the subject property.

Held: 

It is a question of fact rather than of law. Well-settled is the rule that the Supreme Court
is not a trier of facts.  Factual findings of the lower courts are entitled to great weight and
respect on appeal, and in fact accorded finality when supported by substantial evidence on the
record. Substantial evidence is more than a mere scintilla of evidence.  It is that amount of
relevant evidence that a reasonable mind might accept as adequate to support a conclusion,
even if other minds, equally reasonable, might conceivably opine otherwise. But to erase any
doubt on the correctness of the assailed ruling, we have carefully perused the records and,
nonetheless, arrived at the same conclusion.  We find that there is substantial evidence on
record to support the Court of Appeals and trial court’s conclusion that the signatures of Julian
and Guillerma in the Deed of Absolute Sale were forged.

Conclusions and findings of fact by the trial court are entitled to great weight on appeal and
should not be disturbed unless for strong and cogent reasons because the trial court is in a
better position to examine real evidence, as well as to observe the demeanor of the witnesses
while testifying in the case. The fact that the CA adopted the findings of fact of the trial court
makes the same binding upon this court.

Thus, we hold that with the presentation of the forged deed, even if accompanied by the owner’s
duplicate certificate of title, the registered owner did not thereby lose his title, and neither does
the assignee in the forged deed acquire any right or title to the said property.
 PERALTA v. HEIRS OF BERNARDINA ABALON

GR NO. 183448 JUNE 30. 2014

FACTS:

The subject parcel of land was originally covered by (OCT) No. (O) 16 and registered in the
name of Bernardina Abalon (Abalon). It appears that a Deed of Absolute Sale was executed over the
subject property in favor of Restituto M. Rellama (Rellama) on June 10, 1975. By virtue of such
conveyance OCT No. (O) 16 was cancelled and in lieu thereof Transfer Certificate of Title (TCT) No.
42108 was issued in the name of Rellama.

Claiming that the Deed of Absolute Sale executed by Abalon in favor of Rellama was a
forged document, and claiming further that they acquired the subject property by succession, they
being the nephew and niece of Abalon who died without issue, plaintiff-appellees Mansueta Abalon
and Amelia Abalon filed the case below against Rellama, Spouses Peralta, and the Andals, the
herein defendants-appellants and the Bank of the Philippines [sic] Islands which was later dropped
as a party defendant.

Appellate court concluded that Abalon could not have leased the subject parcel of land to
Bellen if the former had parted with her ownership thereof. CA also found no evidence to show that
Rellama exercised dominion over the subject property, because he had not introduced
improvements on the property, despite claiming to have acquired it in 1975.

The CA also ruled that the heirs of Bernardina Abalon had the legal standing to question the
sale transaction between Rellama and their predecessor-in-interest. It concluded that the heirs of
Abalon had acquired the subject property by ordinary acquisitive prescription and thus had every
right to attack every document that intended to divest them of ownership thereof,  which in this case
8

was the Deed of Sale that Bernardina executed in favor of Rellama. Lastly, the appellate court
considered the Spouses Peralta as buyers in bad faith for relying on a mere photocopy of TCT No.
42108 when they bought the property from Rellama.

ISSUES:

a) Whether a forged instrument may become the root of a valid title in the hands of an innocent
purchaser for value, even if the true owner thereof has been in possession of the genuine
title, which is valid and has not been cancelled.

b) Spouses Peralta are buyers in good faith and, thus title to their portion of the subject
property must be upheld

RULING:

It is well-settled that "a certificate of title serves as evidence of an indefeasible and

incontrovertible title to the property in favor of the person whose name appears therein. The real
purpose of the Torrens system of land registration is to quiet title to land and put a stop forever to
any question as to the legality of the title."
 It is well-established in our laws and jurisprudence that a person who is dealing with a
registered parcel of land need not go beyond the face of the title. A person is only charged with
notice of the burdens and claims that are annotated on the title.

Despite its determination that fraud marred the sale between Bernardina Abalon and
Rellama, a fraudulent or forged document of sale may still give rise to a valid title. 

The appellate court reasoned that if the certificate of title had already been transferred from
the name of the true owner to that which was indicated by the forger and remained as such, the land
is considered to have been subsequently sold to an innocent purchaser, whose title is thus
considered valid.  The CA concluded that this was the case for the Andals.
25

We have been constrained to adopt the conclusion here set forth because under the Torrens
system, "registration is the operative act that gives validity to the transfer or creates a lien upon the
land (Secs. 50 and 51, Land Registration Act). 

After executing the Deed of Sale with Bernardina Abalon under fraudulent circumstances,
Rellama succeeded in obtaining a title in his name and selling a portion of the property to the
Andals, who had no knowledge of the fraudulent circumstances involving the transfer from Abalon to
Rellama.

Andals were buyers in good faith. Consequently, the validity of their title to the parcel of the
land bought from Rellama must be upheld.

As for Spouses Peralta, we sustain the ruling of the CA that they are indeed buyers in bad
faith. The appellate court made a factual finding that in purchasing the subject property, they merely
relied on the photocopy of the title provided by Rellama. The CA concluded that a mere photocopy of
the title should have made Spouses Peralta suspicious that there was some flaw in the title of
Rellama, because he was not in possession of the original copy. 
 SPS. JESUS CHING AND LEE POE TIN vs. SPS. ADOLFO & ARSENIA ENRILE

G.R. No. 156076                   September 17, 2008

FACTS

Petitioners purchased the subject property thru a deed of absolute sale. The owner’s duplicate
certificate of title was delivered and they took physical possession of the property. However, the
conveyance was not registered in the Register of Deeds. Instead, they executed an Affidavit of
Adverse Claim which was recorded and annotated at the back of TCT No. 83618 reflected in the
Memorandum of Encumbrances. In the meantime, petitioners peacefully and continuously
possessed the subject property.

Three years after they purchased the disputed property, petitioners received a Notice of Levy on
Attachment and Writ of Execution issued by the Regional Trial Court (RTC) of Pasig in favor of
respondents.

The petitioners filed a Petition to Remove Cloud on or Quiet Title to Real Property asserting
ownership of the disputed property. On May 11, 1993, the RTC rendered judgment in favor of
petitioners upholding the latter’s superior right over the disputed property in view of the
registration of the Affidavit of Adverse Claim prior to the Certificate of Sale annotated in favor of
respondents.

The respondents appealed to the Court of Appeals (CA), arguing that

1. The petitioners did not have a better right over the disputed property on the theory that
mere registration of their adverse claim was insufficient. They should have registered the Deed
of Absolute Sale with the Register of Deeds pursuant to Section 51 of PD 1529 and not merely
register an adverse claim under Section 70 of the same law; and
2. that the annotated Adverse Claim of petitioners had already expired, hence, it offered no
protection when respondents acquired the disputed property through execution sale as cited in
the second paragraph of Section 70 which provides that an adverse claim shall be effective for a
period of thirty days from the date of registration.

The CA ruled in favor of the respondents.

ISSUE

1. Whether a notice of adverse claim remains valid even after the lapse of the 30-day
period provided by Section 70 of PD 1529.
 RULING

1. Yes, a notice of adverse claim remains valid even after the lapse of the 30-day period
provided by Section 70 of PD 1529. Section 70 provides:

Whoever claims any part or interest in registered land adverse to the registered owner, arising
subsequent to the date of the original registration, may, if no other provision is made in this
Decree for registering the same, make a statement in writing, setting forth fully his alleged right
or interest, and how or under whom acquired, a reference to the number of the certificate of title
of the registered owner, and a description of the land in which the right or interest is claimed.

The statement shall be signed and sworn to, and shall state the adverse claimant’s residence,
and a place at which all notices may be served upon him. This statement shall be entitled to
registration as an adverse claim on the certificate of title. The adverse claim shall be effective
for a period of thirty days from the date of registration. After the lapse of said period, the
annotation of adverse claim may be cancelled upon filing of a verified petition therefor by
the party in interest. Provided, however that after cancellation, no second adverse claim based
on the same ground shall be registered by the same claimant.

As long as there is yet no petition for its cancellation, the notice of adverse claim remains
subsisting.

If the rationale of the law was for the adverse claim to ipso facto lose force and effect after the
lapse of thirty days, then it would not have been necessary to include the foregoing caveat to
clarify and complete the rule. For then, no adverse claim need be cancelled. If it has been
automatically terminated by mere lapse of time, the law would not have required the party in
interest to do a useless act.

In a petition for cancellation of adverse claim, a hearing must first be conducted. The hearing
will afford the parties an opportunity to prove the propriety or impropriety of the adverse claim.

The Supreme Court reversed and set aside the decision of the CA.
 ECILIA AMODIA VDA. DE MELENCION vs. COURT OF APPEALS
G.R. No. 148846 September 25, 2007

FACTS:

The subject property is a 30,351 square meter parcel of land denominated as Lot No.
3368, located at Lapu-Lapu City, and part of a total area of 30,777 square meters covered by
Transfer Certificate of Title No. 20626 in the name of the late petitioner Go Kim Chuan.

The entire property was originally owned by Esteban Bonghanoy, the great grand father
of the petitioners (the Amodias). The entire property was brought under the operation of the
Torrens System. However, the title thereto was lost during the Second World War.

The Amodias allegedly executed an Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale whereby they extra-judicially settled the estate of Esteban Bonghanoy and
conveyed the subject property to respondent Aznar Brothers Realty Company (AZNAR) for a
consideration of P10,200.00. The said Extra-Judicial Partition of Real Estate with Deed of
Absolute Sale was registered under Act 3344 as there was no title on file at the Register of
Deeds of Lapu-Lapu City (Register of Deeds). Thereafter, AZNAR made some improvements
and constructed a beach house thereon.

On February 18, 1989, the Amodias executed a Deed of Extra-Judicial Settlement with
Absolute Sale, conveying the subject property in favor of Go Kim Chuan for and in consideration
of P70,000.00. The lost title covering the subject property was reconstituted pursuant to
Republic Act (RA) No. 26. A reconstituted title particularly designated as Original Certificate of
Title (OCT) No. RO-2899 was issued in the name of Esteban Bonghanoy and, subsequently, a
derivative title (TCT No. 20626) was issued in the name of Go Kim Chuan on December 1,
1989. Thereafter, Go Kim Chuan exercised control and dominion over the subject property in an
adverse and continuous manner and in the concept of an owner.

On February 14, 1990, AZNAR wrote a letter to petitioners Amodias asking the latter to
withdraw and/or nullify the sale entered into between them and Go Kim Chuan. On the same
date, a Notice of Adverse Claimwas annotated by AZNAR on TCT No. 20626. Because
petitioners did not heed AZNAR's demand, on April 25, 1990, AZNAR filed a case against
petitioners Amodias and Go Kim Chuan for Annulment of Sale and Cancellation of TCT No.
20626 alleging that the sale to Go Kim Chuan was an invalid second sale of the subject property
which had earlier been sold to it. Petitioners Amodias denied that they executed the Extra-
Judicial Partition of Real Estate with Deed of Absolute Sale in favor of AZNAR, claiming that
their purported signatures thereon were forged. Trial on the merits ensued.

ISSUE:

Whether or not Go Kim Chuan or AZNAR has the better right over the subject property.

RULING:
 AZNAR registered the sale in its favor under Act 3344 despite its full knowledge that the
subject property is under the operation of the Torrens System. To repeat, there can be no
constructive notice to the second buyer through registration under Act 3344 if the property is
registered under the Torrens system.

Moreover, before buying the subject property, Go Kim Chuan made verifications with the
Office of the City Assessor of Lapu-Lapu City and the Register of Deeds. He likewise visited the
premises of the subject property and found that nobody interposed any adverse claim against
the Amodias. After he decided to buy the subject property, he paid all taxes in arrears, caused
the publication of the Deed of Extra-Judicial Settlement with Absolute Sale in a newspaper of
general circulation, caused the reconstitution of the lost certificate of title and caused the
issuance of the assailed TCT in his name. Given these antecedents, good faith on the part of
Go Kim Chuan cannot be doubted.

WHEREFORE, the instant petition for review is GRANTED. The Decision of the Court of
Appeals in CA-G.R. CV No. 51814 is REVERSED and SET ASIDE.