G.R. No.
179543 October 6, 2010 Augusto sold the bigger portion thereof consisting of 7,420 square meters, later
CAMPER REALTY CORP., Petitioner,
vs.
MARIA NENA PAJO-REYES represented by her Attorney-in-Fact Eliseo B. Ballao,
AUGUSTO P. BAJADO, RODOLFO PAJO and GODOFREDO PAJO, JR.,
Respondents.
DECISION
CARPIO MORALES, J.:
Rodolfo Pajo (Rodolfo) caused the notarization on March 27, 1974 by Atty.
Camilo Naraval of a Special Power of Attorney (SPA) executed by him and
purportedly by his four siblings Maria Nena Pajo Reyes (Nena), Godofredo, Jr.
(Godofredo), Tito (Tito), and Isaias (Isaias). The SPA authorized Rodolfo to sell
a parcel of land (the property) containing an area of 8,060 square meters,
situated in Catalunan Pequeño, Davao City, and covered by Transfer Certificate
of Title (TCT) No. T-41086 in the name of the siblings.
A day after the notarization of the SPA or on March 28, 1974, Rodolfo sold the
property to Ligaya Vda. De Bajado (Ligaya) who thereafter caused the
cancellation of the title thereto and the issuance on April 1, 1974 of TCT No. T-
43326 in her name.
Two days after he notarized the SPA, Atty. Naraval observed that all the
signatures therein, except that of Rodolfo, were forged, drawing him to write
Rodolfo’s co-owners respecting his cancellation of the SPA from his notarial
register.
After Ligaya passed away, the property was bequeathed to her son-respondent
Augusto Bajado (Augusto) via Partition Agreement dated June 14, 1985.
Ligaya’s title was thereafter cancelled and TCT No. T- 118270 was, in its stead,
issued on July 16, 1986 in the name of Augusto.
In 1992, Augusto caused the division of the property into two. Before the
completion of the technical survey of the property or on August 31, 1992,
covered by TCT No. 185958 issued on December 11, 1992 still in his name, to
Camper Realty Corporation (petitioner). Augusto retained ownership of the
remaining 640 square meters of the property (covered by TCT No. 185959 in his
name.
By Augusto’s claim, despite his sale of the 7,420 square meter lot to petitioner,
petitioner acquiesced to the issuance of the title in his name since its
representative, Jose Campo, was still out of the country and he would thus not
be available to sign the pertinent documents to effect the transfer. TCT No.
195213 was finally issued in petitioner’s name on May 5, 1993.
On April 2, 1993, 19 years after Rodolfo’s co-owners of the property were
notified two days after the notarization of SPA of the forged signatures, Nena,
Rodolfo’s sister-co-owner, filed a complaint against Augusto and her brothers
Rodolfo and Godofredo, Jr. for "declaration of nullity and/or inexistence of
contracts, cancellation of title, quieting of title and possession, damages and
attorney’s fees with prayer for writ of preliminary injunction and a temporary
restraining order,"1 before the Regional Trial Court (RTC) of Davao City.
Godofredo, Jr. was impleaded as defendant allegedly because he refused to be
a co-plaintiff.
Nena alleged that only her brother Godofredo, Jr. remained as co-owner, her
other brothers Rodolfo and Tito having ceded to her their respective shares in
the property by a notarized Deed of Confirmation on May 5, 1976; and her
brother Isaias had died without issue.
By Order of April 7, 1993, the RTC issued a Temporary Restraining Order
restraining the "defendants Augusto P. Bajado, his privies and all persons
working for him or under his control or order to cease and desist from
committing acts of harassment against the plaintiff (Nena) . . . "2
On learning of Augusto’s sale of part of his interest in the property to petitioner,
Nena, by Amended Complaint dated April 20, 1993, impleaded petitioner as a
necessary party. Nena contended that no right could have been transmitted to
Ligaya and the subsequent transferees, the SPA being a forged document.
By Decision of September 5, 1997,3 Branch 16 of the Davao RTC dismissed
Nena’s complaint, disposing as follows:
PREMISES CONSIDERED, judgment, is hereby rendered:
1) dismissing plaintiff’s complaint against defendants Augusto Bajado and
Camper Realty Corporation;
2) ordering defendant Rodolfo Pajo to pay plaintiff the sums of:
a) ₱50,000.00 as moral damages;
b) ₱10,000.00 as exemplary damages; and
c) ₱10,000.00 as attorney’s fees; and
3) ordering the dismissal of defendants Augusto Bajado and Camper Realty
Corporation counterclaims.
SO ORDERED. (underscoring supplied)4
The trial court, albeit finding that Rodolfo’s co-owners’ signatures on the SPA
were forged, held that Nena is guilty of laches and declared the validity of the
transfer of the property to Augusto by way of judicial partition, and of the
subsequent sale to petitioner in this wise:
Titles to the property were already under the names of the transferors at the
time of the transfer – From Ligaya Vda. de Bajado to Augusto Bajado thru
succession/partition and from Augusto Majado to Camper Realty Corporation by
Deed of Sale. On this basis, the Court cannot declare the nullity or inexistence
of the succeeding contracts, to wit: Partition Agreement and the Deed of Sale
executed by Augusto Bajado to Camper Realty Corporation, much more cancel
the Certificate of Title which at present is under Camper’s name for lot
previously titled No. 185958 now 195213 and Augusto Bajado for the smaller lot
under Title No. 185959. This aside, the Court also finds plaintiff Maria Nena
Pajo-Reyes guilty of laches – defined as the failure or neglect to do that which,
by exercising due diligence could or should have been done earlier; x x x5
(underscoring supplied)
On appeal, the Court of Appeals (CA), by the challenged Decision,6 reversed the
trial court’s decision. It demurred to the trial court’s finding that Nena is guilty
of laches. It held that Augusto, as an heir of Ligaya, did not acquire a better
right over the property, viz:
x x x There was no valid transfer to Ligaya and, accordingly, her son (Augusto),
the appellee, did not acquire any right over the subject lot since an heir merely
steps into the shoes of the decedent and is merely the continuation of the
personality of his predecessor-in-interest.
Having thus declared that appellee acquired no right whatsoever over the
property in question, it follows that the contract of sale he entered into with
Camper was invalid and did not effectively transfer ownership over the
property.7 (underscoring supplied)
Thus the appellate court disposed:
WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE, and
judgment rendered:
1. Declaring null and void and of no effect, the Deed of Absolute Sale dated
March 28, 1974, and TCT No. T- 43326;
2. Declaring null and void and of no effect, the Deed of Absolute Sale dated
August 31, 1992 and TCT Nos. T-185959 and T-195213;
3. Ordering the Register of Deeds for Davao City to cancel TCT No. T-185959 in
the name of Augusto P. Bajado and TCT No. T-195213 in the name of Camper
Realty Corporation and to restore and/or reinstate TCT No. T-41086 of the
Register of Deeds of Bataan (sic) to its full force and effect;
4. Ordering defendant Rodolfo Pajo to pay appellant the following sums:
a. ₱50,000.00 as moral damages;
b. ₱25,000.00 as attorney’s fees; and
c. ₱20,000.00 as exemplary damages.
5. Ordering defendant-appellee Augusto Bajado to return the amount of the
purchase price and/or consideration of sale of the disputed land he sold to his
co-defendant Camper Realty Corporation within ten (10) days from the finality
of this decision with legal interest thereon from date of the sale;
6. Ordering Rodolfo Pajo to return to the heirs of Ligaya Bajado the amount of
the purchase price of the sale of the subject land within ten (10) days from the
finality of this decision with legal interest from date of the sale.8
It appears that petitioner’s counsel of record, Atty. Raul C. Nengasca, died
during the pendency of the appeal, notice of which the appellate court was
given. Petitioner, who opted not to retain the services of a new counsel, claims
not to have received a copy of the decision and that it was only informed of it
by Augusto’s counsel, hence, its filing of a Motion for Reconsideration on March
8, 2007 of the appellate court’s decision.
By Resolution of July 25, 2007, the Court of Appeals resolved to deny
petitioner’s motion for review for being filed out of time, it relying on the
Postmaster’s certification that a copy of its decision was actually received by
petitioner on December 28, 2006.
Hence, the present petition for review on certiorari.
The records show that service via registered mail of the copy of the decision
addressed to petitioner was made on December 28, 2006 on a certain Daisy
Belleza (Daisy) who, petitioner avers, was not authorized to receive the copy,
she being a mere househelper of petitioner’s director Arturo F. Campo.
Although petitioner’s principal office and Campo’s residence are housed in the
same building, Campo’s househelper Daisy cannot be considered as a person-in-
charge of petitioner’s office to consider her receipt of copy of the decision on
behalf of petitioner.9 Neither can the househelper’s receipt suffice as service to
Campo, even if he is a member of petitioner’s Board of Directors, absent a
showing that he had been authorized by petitioner to accept service.
On to the merits of the petition.
In sales involving real property or any interest therein, a written authority in
favor of the agent is necessary, otherwise the sale is void.10 Since the property
was subjected to ensuing transfers, it is necessary to establish the rights, if any,
of the transferees vis-à-vis that of Nena’s.
Respondent Augusto acquired the property as his share in his mother Ligaya’s
estate. As compulsory heir, he merely stepped into the shoes of Ligaya. Since
Ligaya’s title was derived from Rodolfo’s sale to her on the basis of a forged
SPA, Augusto’s title must be cancelled. Nemo dat quod non habet. In fact, it
appears that Augusto did not interpose an appeal from the appellate court’s
decision divesting him of his title, rendering it final and executory as to him.
The nullity of Augusto’s title notwithstanding, the Court finds petitioner, who
acquired the bigger portion of the property from Augusto, a purchaser in good
faith. Cayana v. Court of Appeals reiterates a well-ensconced doctrine:
. . . a person dealing with registered land has a right to rely on the Torrens
certificate of title and to dispense with the need of inquiring further except
when the party has actual knowledge of facts and circumstances that would
impel a reasonably cautious man to make such inquiry or when the purchaser
has knowledge of a defect or the lack of title in his vendor or status of the title
of the property in litigation. The presence of anything which excites or arouses
suspicion should then prompt the vendee to look beyond the certificate and
investigate the title of the vendor appearing on the face of said certificate. One
who falls within the exception can neither be denominated an innocent
purchaser for value nor a purchaser in good faith; and hence does not merit the
protection of the law.11
A forged deed can legally be the root of a valid title when an innocent purchaser
for value intervenes.12 For a prospective buyer of a property registered under
the Torrens system need not go beyond the title, especially when he has no
notice of any badge of fraud or defect that would place him on guard.13 His
rights are thus entitled to full protection, for the law considers him an innocent
purchaser. SET ASIDE and another is rendered as follows:

There was no duty on petitioner’s part to go beyond the face of Augusto’s title
and conduct inquiries on its veracity. Nena did not present proof of any
circumstance that could serve as caveat for petitioner to undertake a searching
investigation respecting the title. Moreover, the property was registered in
Ligaya’s name in 1974 yet, and Augusto’s in 1986, and no encumbrance or lien
was annotated either on Ligaya’s or Augusto’s title. For 18 years or in 1992,
there was no controversy or dispute hounding the property to caution petitioner
about Augusto’s title thereto.
Contrary to Nena’s assertion that the sale to petitioner was a mere subterfuge
by Augusto to validate his claim on the property, evidence shows that it was
not. Augusto presented a certified true copy of a Certificate Authorizing
Registration issued by the Bureau of Internal Revenue on September 3, 199214
to show that capital gains tax had been duly paid on the transfer. The Court
takes judicial notice that said certificate is necessary for presentation to the
Register of Deeds to register the transfer.
1) The Deed of Absolute Sale dated March 28, 1974 executed by respondent
Rodolfo Pajo in favor of Ligaya Vda. De Bajado is declared NULL and VOID.
2) Transfer Certificate of Title No. 195213 in the name of petitioner, Camper
Realty Corporation, is declared VALID. The Register of Deeds of Davao City is
accordingly ORDERED to RETAIN in the Registry said Transfer Certificate of
Title.
3) Respondent Rodolfo Pajo is ORDERED to pay respondent Maria Nena Pajo-
Reyes the amounts of ₱50,000.00 as moral damages, ₱25,000.00 as attorney’s
fees, and ₱20,000.00 as exemplary damages; and
4) Respondent Augusto Bajado is ORDERED to return the purchase price paid by
petitioner for the land covered by Transfer Certificate of Title No. 195213 to
respondents Maria Nena Pajo-Reyes and Godofredo Pajo, Jr., the amount to
bear legal interest of 6% per annum from the date of filing of the complaint.

AT ALL EVENTS, factual findings of the trial court are accorded great respect The Register of Deeds of Davao City is FURTHER ORDERED to cancel Transfer
and shall not be disturbed on appeal, save for exceptional circumstances. It Certificate of Title No. T-185959 in the name of respondent Augusto Bajado and
bears noting that despite the appellate court’s reversal of the trial court’s to issue in its stead a title in the names of respondents Maria Nena Pajo-Reyes
decision, it did not disturb the trial court’s findings respecting petitioner’s good and Godofredo Pajo, Jr.
faith.1avvphi1
SO ORDERED.
In fine, the title in the name of Augusto is defeasible, he having acquired no
better right from that of his predecessor-in-interest Ligaya. His title becomes
conclusive and indefeasible, however, in the hands of petitioner, it being an
innocent purchaser for value.

A word on the legal interest due on the reimbursement of the purchase price to
Nena and her remaining co-owner Godofredo, Jr. In accordance with Eastern
Shipping Lines v. Court of Appeals,15 since the claim does not involve a loan or
forbearance of money, imposition of interest rate of six percent (6%) per
annum from date of filing of the complaint is in order.

WHEREFORE, the assailed Court of Appeals Decision in CA-G.R. CV. 59600 is


G.R. No. L-4340 May 28, 1952
REBECCA LEVIN, plaintiff-appellee,
vs.
JOAQUIN V. BASS, ET AL., defendants.
EUGENIO MINTU, defendant-appellant.
PADILLA, J.:
G. R. No. L-4340 is an action (case No. 70054 of the Court of First Instance of
Manila) for annulment of sales of, and mortgage on, a lot and two houses
erected thereon and damages brought by Rebecca Levin against Joaquin V.
Bass, Emiliano R. Eustaquio, Co Chin Leng and Eugenio Mintu where the last
named defendant is the appellant; G. R. No. L-4343 is the same case where
Joaquin V. Bass is the appellant; G.R. No. L-4341 is an action (case No. 71549
of the same court) for detainer brought by Joaquin V. Bass against Jose C.
Robles and Aminta T. de Robles, in which Rebecca Levin and Eugenio Mintu
intervened, and where the last named intervenor is the appellant; G.R. No. L-
4345 is the same case for detainer where Joaquin V. Bass is the appellant; G. R.
No. L-4342 is an action (case No. 516 of the same court) for annulment of sale
brought by Joaquin V. Bass against Eugenio Mintu where the latter is the
appellant; G. R. No. L-4344 is an action (case No. 71159 of the same court) for
detainer of a building located at No. 328 San Rafael street brought by Joaquin
V. Bass against Rebecca Levin where the former is the appellant; and G. R. No.
L-4346 is an action (case No. 2371 of the same court) for detainer brought by
Joaquin V. Bass against Aminta T. de Robles where the former is the appellant.
The two main cases (G. R. No. L-4340 and No. L-4342) around which others
revolve all under the appellate jurisdiction of this court.
After a joint hearing the trial court rendered judgment annulling Exhibit A dated
5 January 1944, where it appears that, for and in consideration of P30,000,
Rebecca Levin and conveyed to Emiliano Eustaquio a lot containing an area of
317.70 square meters and the house erected thereon bearing No. 326 San
Rafael street Manila; Exhibit B dated 30 March 1944, where it appears that, for
and in consideration of P38,000, Emiliano R. Eustaquio sold and conveyed to
Joaquin V. Bass the same lot and house; and Exhibit C dated 18 February 1944,
where it appears that, for and consideration of P65,000, Rebecca Levin sold and
conveyed to Joaquin V. Bass a lot containing an area of 1,006.80 square meters
and the house erected thereon bearing No 328 San Rafael Street Manila; to
cancel transfer of certificates of title Nos. 73450 and 73451 issued in the name
of Joaquin V. Bass and in lieu thereof to issue new Torrens certificates of title in
the names of Rebecca Levin, widow, of legal age and resident of the City of
Manila at No. 328 San Rafael Street, said new certificates to bear a
memorandum of mortgage in favor of Co Chin Leng, entry No. 1616, as said
mortgage appears on both transfer certificate of titles Nos. 73450 and 73451 to
be cancelled, and the certificate of title to be issued in the name of Rebecca
Levin, in lieu of transfer certificate of title No. 73450, to bear a memorandum of
a notice of lis pendens noted on said transfer certificate of title in connection
with civil case No. 2562 of the Court of First Instance of Manila entitled "Isabelo
Martinez vs. Joaquin V. Bass," entry No. 20955; holding that Rebecca Levin is
entitled to recover from Joaquin V. Bass," damages for losses which she may
suffer by reason of said mortgage annotation and notice of lis pendens;
dismissing the complaint of Joaquin V. Bassin civil case No. 516, holding that
the deed of sale under certain conditions executed by Joaquin V. Bass in favor
of Eugenio Munti is without force and effect as against Rebecca Levin and
ordering Joaquin V. Bass to pay Eugenio Mintu the sum of P4,173.16, together
with lawful interests thereon from 23 October 1946, the date of the filing of the
said answer in said civil case, until paid; dismissing the complaint of Joaquin V.
Bass in civil cases Nos. 71159, 71549 and 2371 and declaring Rebecca Levin to
be entitled to the payment of rentals by Jose C. Robles and/or Aminta T. de
Robles for the use and occupation of the premises at No. 326 San Rafael street,
Manila, from 11 March 1945 until the tenants move out of the premises and to
receive from the clerk of court the sums of money deposited by Aminta T. de
Robles and/or Jose C. Robles by way of rentals for the said property at No. 326
San Rafael street, still remaining in his possession, the said amounts to be
applied to the rentals to be granted upon by and between them or those which
may be declared by final judgment to be the reasonable compensation for the
use of occupation of the premises; and ordering Joaquin V. Bass to render an
accounting of the sums of money he had received from the court, or otherwise,
as rentals of the house at No. 326 San Rafael street from and after 11 March
1945, and to pay to Rebecca Levin the balance that may result from said
accounting. Costs are taxed against Joaquin V. Bass.
In 1943 Rebecca Levin was a widow, 65 years old and the registered owner of a
lot on which two houses stood—one bearing No. 326 and the other No. 328 San
Rafael Street, Manila—as evidenced by transfer certificate of title No. 62680.
She was illiterate and knew only how to sign her name. At about the end of
December 1943 Joaquin V. Bass called on Rebecca Levin at her house on No.
328 San Rafael street, Manila, and representing himself to be a real estate
broker asked her whether she would sell her lot and house at No. 326 adjoining
her residence. At that time there lived in the house of Rebecca Levin some
Japanese civilians, officers or employees of the Pacific Mining Co., occupying or
renting two rooms, Angelita Martinez a brother, and Meliton Villasenor, a
houseboy. In addition to P50 collected by her as monthly rental for the house at
No 326, the Japanese renting the two rooms paid her P200 monthly and
supplied her with rice and other foodstuffs without charge. Rebecca Levin told
Joaquin V. Bass that she was not selling her house at No. 326 San Rafael street.
On subsequent calls Joaquin V. Bass told Rebecca Levin that it would be to her
advantage and benefit to sell the lot and house at No. 326 San Rafael street and
with the proceeds of the sale to purchase another house. He told her that if she
would not sell the lot and house the Japanese who had been looking for houses
to occupy might deprive her thereof without getting anything in exchange
therefor. He told her further that by selling her house, which she rented for P50
a month only, and buying for P26,000 one on Antonio Rivera street she would
gain because the monthly rental of the latter was P140. She consented to see
the house at Antonio Rivera street and went there accompanied by Joaquin V.
Bass and Meliton Villasenor, her houseboy. Joaquin V. Bass pointed to a building
(Exhibit G) of for apartments (accessorias) not far from the Tutuban railroad
station. They were not able to see the second story of the building because,
according to Joaquin V. Bass, the owner had gone to Pampanga. For the second
time, they went to see the building on Antonio Rivera street but they again
failed to see the second story of the building for the same reason given by
Joaquin V. Bass when they went to see it the first time. Relying upon the
representations made by Joaquin V. Bass, Rebecca Levin finally consented to
sell her house. One of the last days of December 1943 or of the first days of
January 1944, while Rebecca Levin was engaged in conversation with Dr. Pastor
L. Manlapaz and Angelita Martinez, Joaquin V. Bass called on her bringing along
with him certain papers. Upon Joaquin V. Bass" suggestion Rebecca Levin
followed by him entered a room adjoining that where she, Dr. Manlapaz and
Angelita Martinez were conversing, and upon repeated representations and
assurances made by Joaquin V. Bass that the papers he brought were just an
authority to sell the house at No. 326 San Rafael street, Rebecca Levin signed
five documents and Bass took from her bag which she placed on a small table in
the room her residence certificate and the receipt showing payment of realty tax
on her property. None of the documents Rebecca Levin signed was left to her.
The following day (6 January 1944), Joaquin V. Bass called on Rebecca Levin at
her house and handed to her P10,000 saying that it was a partial payment of
the purchase price of the lot and house at No. 326 San Rafael street which he
represented had been sold to a Japanese and asked her to give him the Torrens
title of the house and lot. Upon being informed by her that the Torrens title of
the houses and lot was in the possession of the Agricultural and Industrial Bank,
to which they were mortgage for P2,000, Joaquin V. Bass took from her P2,000
and requested her to go with him to the Agricultural and Industrial Bank where
they paid the mortgage debt of Isidore Reich (presumably the predecessor of
the late husband of Rebecca [Exhibit M]) and received a mortgage release and
the Torrens certificate of title No. 62680 (Exhibit K and K-1); and on February
1944, she signed a receipt for P2,000 (Exhibits L and L-1). Joaquin V. Bass not
only took P2,000 to pay the mortgage debt to the Agricultural and Industrial
Bank (Exhibit M) but also the balance of P8,000 telling her that he would pay it
to the owner of the building on Antonio Rivera street; that the balance of the
repurchase price of her house At No. 326 San Rafael street would be paid to her
as soon as the lot and house sold be segragated or separated from the larger
lot on which her house at No 328 San Rafael street stood; and that it was
necessary to make such subdivision to be approved by the court in order that
the sale of her house and lot not to arose any suspicion on her part Joaquin V.
Bass gave her a receipt from that partial amount paid for the building on
Antonio Rivera street signed by one Mariano Irurin y Reyes but the amount
written therein was just P6,000. The signer of the receipt promised to deliver
the deed of sale of the building of Antonio Rivera street within 5 days from the
date of payment of P20,000, the balance of the purchase price (Exhibit H).
Being illiterate Rebecca Levin did not notice that the amount appearing in the
receipt was P6,000 instead of P8,000 which was the sum taken from her by
Joaquin V. Bass. To make her believe that she was the owner of the building on
Antonio Rivera street, Joaquin V. Bass turned over to her the monthly rentals of
the building for five months which he claimed he had collected from the tenants
of the building. Not long after the signing by Rebecca Levin of the documents
giving Joaquin V. Bass authority to sell the house at No. 326 San Rafael street
and the pretended purchase by her through him of the building on Antonio
Rivera street, the latter called on the former at her house. He found her sick. He
told her that he had tested medicine or drug for ailments such as the one she
was suffering from and that if she would take it she would feel immediately and
completely relieved. He went down. Immediately after his return to the house
he called and told the houseboy Meliton Villasenor to bring a glass of water
where he diluted the drug and asked Rebecca Levin to take it. The latter did not
hesitate to take it as until then she did not have the least suspicion of him who
succeeded in winning and enjoyed her trust and confidence. After taking the
medicine she become to vomit and suffer stomach pains and her face and lips
became swollen. She went for Dr. Pastor L. Manlapaz who found that she was
poisoned. After application of antidotes she recovered from the poisoning. This
incident coupled with the failure of Joaquin V. Bass to return to her the
documents she had been asking made Rebecca Levin suspicious of him and
consulted with Dr. Pastor L. Manlapaz and Filemon Poblador, the latter when
working in the office of the President of the Republic. As Poblador was not a
lawyer he talked to attorney Esteban Nedruda who being also an employee in
the office of the President of the Republic at Malacañang refused to handle the
case but promised to investigate it. After investigation Nedruda found that the
lots were transferred and registered in the name of Joaquin V. Bass and
mortgaged him. Finally, the services of attorney Cesar de Larrazabal on the
property of Rebecca Levin which were registered in the office of Register of
Deeds of Manila. It was found out that the papers signed by her on 5 January
1944 were a deed of sale of her house and lot at No. 326 San Rafael street for
P30,000 in favor of Emiliano R. Eustaquio acknowledge on the same day before
notary public Eliezar A. Manikan (Exhibit A) and another deed of sale of her
house and a lot No. 328 San Rafael street for P65,000 in favor of Joaquin V.
Bass dated 18 February 1944 and acknowledge on that date before the same
notary public Elizer A. Manikan (Exhibit C); and that on 30 March 1944, for and
in consideration of P38,000, Emiliano R. Eustaquio sold to Joaquin V. Bass the
lot and the house at No. 326 San Rafael street (Exhibit B.). Prior to the
registration of these three deeds of sale, or on 24 February 1944, a petition was
filed by attorney Eliezer A. Manikan in the name of Rebecca Levin praying for
the subdivision of parcels of land into two lots-the certificate of title to lot No. 1
containing an area of 317.7 square meters to be issued in the name of Emiliano
R. Eustaquio and the certificate of title to lot No. 2 containing an area of
1,006.80 square meters to be issued in the name of Rebecca Levin (Exhibit I).
On February 1944, the petition was granted by the Court of First Instance of
Manila, Fourth Branch, presided over by Judge Gervasio Diaz, (Exhibit J.)
Transfer certificate of title No. 62680 in the name of Rebecca Levin describing a
parcel of land located on San Rafael street containing an area of 1,3228.40
square meters entered on September 1941, together with a memorandum of
mortgage executed in favor of the Agricultural and Industrial Bank entered on
26 September 1939-a memorandum noted on the previous certificate of title No.
9220-was cancelled, and in lieu thereof Transfer certificate of title No. 71907 in
the name of Emiliano R. Eustaquio for a parcel of land containing an area of
317.70 square meters more or less, and the house erected thereon, and
transfer certificate of title No. 71908 in the name of Rebecca Levin for the
remaining area of 1,006.80 square meters and the house erected thereon, were
issued by the Registrar of Deeds of Manila on 27 February 1944, pursuant to the
order of the court dated 22 February referred to (Exhibit J). On 11 May 1944,
transfer certificate of title No. 71908 in the name of Rebecca Levin was
cancelled and in the lieu thereof transfer certificate of title No. 73451 was
issued in the name of Joaquin V. Bass by the Registrar of Deeds of Manila; and
on 10 April 1944, transfer of certificate of title No. 71907 in the name of
Emiliano R. Eustaquio was cancelled and in lieu thereof transfer certificate of
title No. 73450 was issued in the name of Joaquin V. Bass by the Registrar of
Deeds. On 8 April 1944, to secure the payment of P70,000, together with
interests thereon at 5 per cent per annum, payable in five years, Joaquin V.
Bass mortgaged to Co Chin Leng the two lots and house selected thereon and
the instrument of mortgage was registered on 10 April 1944 on both certificates
of title Nos. 73450 and 73451. On 6 July 1944, a notice of lis pendens was
noted in the back of transfer certificate of title No. 73450 in connection with civil
case No. 2562 of the Court of First Instance of Manila entitled "Isabelo Martinez
vs. Joaquin V. Bass." On October 1944, for and in consideration of P200,000
"presenting circulating currency," Joaquin V. Bass sold to Eugenio Mintu the lot
and house at No. 328 San Rafael street desrcibed in transfer certificate of title
No. 73450, P90,000 of which was paid on the date of the execution of the deed
of sale; P10,000, to be retained by the vendee (Eugenio Mintu) and to be paid
to the vendor (Joaquin V. Bass) after the notice of lis pendens in connection
with civil case No. 2652 of the Court First Instance of Manila entitled "Isabelo
Martinez vs. Joaquin V. Bass" shall have been removed or cancelled; and
P100,00, the balance, to be deposited by the vendee (Eugenio Mintu) upon
instructions of the vendor (Joaquin V. Bass) with the clerk of court of Manila
after return of the former from a trip to Ilocos Norte, the deposit to be made
within 30 days from the date of the deed of sale and for the purpose of securing
there release of the mortgage in favor of Co Chin Leng, the vendor (Joaquin V.
Bass) undertaking to obtain the release of the mortgage on the property sold
and to deliver it (the mortgage release) to the vendee (Eugenio Mintu) and the
cancellation of the notice of lis pendens on or before 8 April 1945 (Exhibit 3-
Mintu). To secure the fulfillment of the undertaking-the mortgage release and
cancellation of the notice of lis pendens-the vendor (Joaquin V. Bass) assigned,
transferred and conveyed by way of liquidated damages to the vendee (Eugenio
Mintu) his title, rights, interest, participation or share in and to lot No. 2, the
larger lot on which house No. 328 San Rafael street is errected, and both parties
agreed that if the condition provided for in paragraph (d) of the deed of sale be
fulfilled, the condition in paragraph (e) thereof relative to the assignment,
transfer and conveyance of lot No. 2 to the vendee would be null and void
without legal effect, otherwise it would remain in full force and effect. The
following clause was inserted with initials of both parties: "force majeure and
fortuitous events exempts the vendor from compliance thereto" (Exhibit 3-
Mintu.) On 1 November 1944, Eugenio Mintu and Jose C. Robles entered into a
lease contract on the house and lot No. 326 San Rafael street, Manila (Exhibit 1-
Mintu). From November 1944 to January 1945 Jose C. Robles paid to Eugenio
Mintu the rental of P45 a month as agreed upon (Exhibit 2-Mintu), but
beginning February the rental of the house were not paid to Mintu because
there was a dispute as to who was the owner of the house. On 3 November
1944, Eugenio Mintu deposited with the sheriff of Manila for the account of
Joaquin V. Bass the sum of P100,416.67 as full payment of the purchase price
of the property sold to him on 14 October 1944. The sum of P100,000 is the
total of Bass" indebtedness to Co Chin Leng-P70,000 secured by mortgaged and
P30,000 unsecured, the sum of P416,67 represents the interest on the amount
owned to Co Chin Leng up to the time of the deposit (Exhibit 4-Mintu) and the
sum of P158.92 represents the sheriff's fees on the amount deposited (Exhibit
5-Mintu). On November 1944, Eugenio Mintu presented and filed with the office
of Registrar of Deeds of Manila the original of the deed of sale (Exhibit E) duly
notarized and paid the sum of P224.50: P.50 for entry in the day book; P220 for
registration fees; and P4 for the issuance of two titles (Exhibit 6-Mintu). On the
same date, together with the original deed of sale (Exhibit E) the owner's
duplicates of transfer of certificate of title Nos. 73450 and 73451 were
presented and filed with the office of Registrar of Deeds of Manila but said
documents were not among those salvaged and were presumed to have been
lost or burned according to the certification of the Registrar of Deeds in and for
the City of Manila (Exhibit 8-Mintu). On 19 January 1945, Eugenio Mintu paid to
Joaquin V. Bass the sum of P10,000 in full settlement of the purchase price of
the property acquired by him on 14 October 1944 (Exhibit 7-Mintu). On 29
October 1945, a notice of lis pendens was noted at the back of transfer
certificate of title No. 70054 of the Court of First Instance of Manila entitled
"Rebecca Levin vs. Joaquin V. Bass".
Joaquin V. Bass testifies that he acquired the lot and house at No. 328 San
Rafael street from Emiliano R. Eustaquio for P38,000 and the lot and house at
No. 328 San Rafael street from Rebecca Levin for P65,000, the first on 30 March
1944 and the second on 18 February 1944; that Rebecca Levin paid him the
monthly rental of P150 for the lot and house at No. 328 San Rafael street from
March 1944 to January 1945, as shown by the stubs of the receipts issued to
her (Exhibits 20-Bass to 20-K-Bass); that Rebecca Levin refused to pay the
rental for February unless it was reduced to P100; that on 19 May 1945 he
brought against her an action for detainer which on appeal to the Court of First
Instance of Manila bears No. 71159; that after he acquired the property at No.
326 San Rafael street from Emiliano R. Eustaquio the latter brought him to the
tenant, Rosario Vda. de Altonaga, who left the premises to go to the Cagayan to
look for her daughter; that Vicente Tagle rented the premises signing a contract
for one year but after 2 or 4 months he left the premises and his daughter
Aminta T. de Robles married to Jose C. Robles became the tenant; that in
February 1945 Jose C. Robles left the premise after a quarrel he had with his
wife Aminta T. de Robles; that in April 1945 he brought against Jose C. Robles
and Aminta T. de Robles an action for detainer on which on appeal to the Court
of First Instance of Manila bears No. 71549; that on May 1946 Aminta T. de
Robles and he signed a lease contract (Exhibit 1-Bass); that he did not make
Rebecca Levin sign documents authorizing him to sell her house at No. 326 San
Rafael street as testified to by Dr. Manlapaz; that he did not show to Rebecca
Levin any house on Calle Antonio Rivera to be exchanged with or for her
property at No. 326 San Rafael street, as testified to by Dr. Manlapaz, Meliton
Villaseñor and Angelita Martinez; that it is not true that Rebecca Levin did not
receive the consideration for the sale of her house at No. 328 San Rafael street;
that on October 1944 he sold for P200,000 the house and lot at No. 326 San
Rafael street to Eugenio Mintu, who handed to him P65,000 and a check for
P25,000 which the bank refused to cash, but later on Mintu told him that he had
deposited funds in the bank and so the check was honored and cashed at the
bank of the Philippine Islands; that all in all he was paid P90,000 and P10,000
for 16 gantas of rice given him to Mintu; that the balance of P100,000 was
never and has not been paid to him; that he has not given possession of the
property to Eugenio Mintu the transaction not having been consummated
because of force majeure; and that he was bound to return to Eugenio Mintu
the P100,000 received by him.
Eliezer A. Manikan, the notary public before whom the deeds of sale sought to
be annulled were acknowledged, testifies that Rebecca Levin appeared before
him and acknowledged the execution of the documents in favor of Emiliano R.
Eustaquio on 5 January 1944 and in favor of Joaquin V. Bass on 18 February
1944.
The testimony of Rebecca Levin as to how she consented to sell her house and
lot No. 326 San Rafael street and the manner she was induced by Joaquin V.
Bass to sign papers which he represented were mere authorization to sell is
corroborated by Dr. Pastor L. Manlapuz, Angelita Martinez and Meliton
Villasenor.
These witnesses had no interest to pervert the truth. Rebecca Levin was not in
need of money of fact she led quite a comfortable life. Only because of the
misrepresentation that she would gain by selling her house at No. 326 San
Rafael street and of the threat made by Joaquin V. Bass that she might lose it
did she finally consent to sell it.
On the other hand, Joaquin V. Bass has a criminal record — was convicted of
estafa (Exhibit O) — and was involved ina shady deal (Exhibit R) and found to
have presented a promisory note for P5,000 and a chattel mortgage which he
claimed Rebecca Levin had signed and upon which he brought an action against
her for foreclosure (civil case No. 71481, the Court of First Instance of Manila),
when in truth and in fact, as pronounced by the trial court, they were not signed
and acknowledged by her before a notary public (Exhibit P). He succeeded in
winning the trust and confidence of Rebecca Levin, a widow, 65 years old, a
foreigner in this country and without relatives. Joaquin V. Bass claims he was
employed at that time by the Manila Electric Co. as mechanical engineer but on
cross examination he had to admit that he did not have any degree nor was he
licensed by the Government of the Philippines to practice the profession of
mechanical engineer. When he was pressed to answer the question whether he
was actually employed by the Manila Electric Co. he evaded it by saying that he
was employed by White and Co. which owned 60 per cent of the shares of the
Manila Electric Co. During the occupation of the country by the enemy he was
engaged in the buy and sell business and had no known income. It is
unbelieavable that he could acquire the house and lot of Rebecca Levin at No.
328 San Rafael street for P65,000 and the one allegedly sold to Emiliano R.
Eustaquio at No. 326, same street, through his machinations, for P38,000. He
claims he deposited his money in the Bank of Taiwan but in the same way that
he presented his pass book (Exhibit 7) showing his deposits in the Bank of the
Philippine Islands, he could have presented the pass book of certificate of
deposit of money he had in the Bank of Taiwan, Ltd. In fact, during the
occupation of the country by the enemy and before he mortgaged the two
houses and lots to Co Chin Leng Joaquin V. Bass had no money. According to
Exhibit 7, on 10 April 1944 only he made the first or initial deposit of P50,000
with the Bank of the Philippine Islands. That money must be of the P70,000
loaned to him by Co Chin Leng on April 8 1944 secured by mortgage on the
houses and lots he had acquired fraudulently from Rebecca Levin.
Eliezer A. Manikan perverted the truth when he testified that P10,000 was paid
to or received by Rebecca Levin in his office, whereas Joaquin V. Bass testified
that she received it in her house; when he testified that on the date of the
excecution of the deed of sale (Exhibit A) by Rebecca Levin, or on 5 January
1944, the Torrens title to the property was brought by her to his office, when in
truth and in fact the title was on that date kept by the Agricultural and
Industrial Bank and taken from it the following day when the motrgage debt
was paid. Eliezer A. Manikan did not tell the truth when he testified that on the
date of the execution of the deed of sale by Rebecca Levin the sum of P35,000
in Japanese war notes, consisting of six packages of P10,000 each P10 bills and
the rest of P5 bills, was counted by her, because, according to Joaquin V. Bass,
Rebecca Levin mortgaged her house to him for P35,000 and later converted it
into an absolute sale for P65,000 (Exhibits S and S-1). Eliezer A. Manikan did
not tell the truth when he testified that the deed of sale marked Exhibit C was
executed two or three weeks after the order of the court-referring to the order
approving the subdivisions of the parcels of land of Rebecca Levin into two lots
presented for registration on 24 February 1944-because the deed of sale
(Exhibit C) dated February 1944 was executed and acknowledged on that date,
whereas the court order approving the subdivision and six days before its
presentation for registration. On the cross examination Joaquin V. Bass testified
that the consideration for the sale of the house and lot on No. 328 San Rafael
street consisted of payment in cash of P35,000 and the transfer to or
assumption by him of Rebecca Levin's debt for P30,000 to one Concepcion de la
Rama. On further cross-examination he testified that the purchase price agreed
upon between him and Rebecca Levin was P60,000 plus P2,800 which was not
included in the price.
There is overwhelming evidence to support the conclusion of the trial court that
Rebecca Levin did not execute the deeds of sale Exhibit A and Exhibit C. What
she was made to believe she signed was an authorization to sell the house at
No. 326 San Rafael street.
As to the mortgage in favor of Co Chin Leng we hold that the court below that
there is no evidence to show that the mortgage was made in bad faith and
without consideration. He must, therefore, be deemed to be a mortgaged in
good faith and for value. As to the sum consigned by Eugenio Mintu for Joaquin
V. Bass' account there is no evidence as to the outcome of the complaint for
consignation filed 3 November 1944 by Joaquin V. Bass against Co Chin Leng in
the Court of First Instance of Manila (case No. 2984).
As regards Eugenio Mintu, the evidence shows that he paid P200,000 to Joaquin
V. Bass in the manner and form above stated; that the orignal deed of sale
(Exhibit E), together with the owner's duplicate certificate of title Nos. 73450
and 73451, was presented for registration on 8 November 1944 in the office of
Registrar of Deeds of Manila and entered in the day book-entry No. 27161, but
that, according to the certification of the registrar, the original deed of sale and
the owner's duplicate certificate of titles have not been found, were not among
the salvaged records and were, therefore, presumed to have been lost or
burned (Exhibit 8-Mintu). It also appears that the registration free consisting of
P.50, the fee for the entry in the day book; P220, the registration fees for a sale
of P200,000; and P4, the fee for the issuance of two certificates of title were
paid by Eugenio Mintu (Exhibit 6-Mintu). On the other hand, on October 1945, a
notice of lis pendens was filed in the office of Registrar of Deeds of Manila and
noted on the backof transfer certificate of title Nos. 73450 and 73451 in
connection with civil case No. 70054 of Court of First Instance of Manila entitled
"Rebecca Levin vs. Joaquin V. Bass et al."
The claim of Joaquin V. Bass that the sale between him and Mintu was
conditional is devoid of merit, because the conditional part of the deed of sale
concerns the guarantee undertaken by him as vendor to obtain the release of
the mortgage of Co Chin Leng and the cancellation of the notice of lis pendens
in connection with civil case No. 2562 entitled "Isabelo Martinez vs. Joaquin V.
Bass," which release and cancellation he promised and would secure on or
before 8 April 1945. It is not a condition which, if not fulfilled, would avoid the
sale made of the lot and house at No. 328 San Rafael street, but one which, if
not performed, would cause the vesting in the vendee (Eugenio Mintu) of the
title to the lot and house at No. 328, same street, which was given as security
for the fulfillment of the undertaking.
We now take up the question between Eugenio Mintu and Rebecca Levin. Under
the Torrens system the act of registration is the operative act to convey and
affect the land.1 Do the entry in the day book of a deed of sale which was
presented and filed together with the owner's duplicate certificate of title with
the office of Register of Deeds and full payment of registration fees constituted
a complete act of registration which operates to convey and affect the land? In
voluntary registration such as sale, mortgage, lease and the like, if the owner's
duplicate certificate be not surrendered and presented or if no payment of
registration fees be made within 15 days, entry in the day book of the deed of
sale does not operate to convey and affect the land sold.2 In voluntary
registration, such as an attachment, levy upon, execution, lis pendens and the
like entry thereof in the day book is a sufficient notice to all persons of such
adversed claim.3 Eugenio Mintu fulfilled or took the steps he was expected to
take in order to have the Registrar of Deeds in and for the City of Manila issue
to him the corresponding transfer certificate of title on the lot and house at No.
328 San Rafael Street sold to him by Joaquin V. Bass. The evidence shows that
Eugenio Mintu is an innocent purchaser for value. Nevertheless, the court below
held that the sale made by Bass to Mintu is as against Rebecca Levin without
force and effect because of the express provision of law which in part says:

. . . Provided, however, That in all cases of registration procured by fraud the
owner may pursue all his legal and equitable remedies against the parties to
such fraud, without prejudice, however, to the rights of any innocent holder for
value of certificate of title; (Section 55, Act 496, as amended by Act 3322).
In other words, the sale made by Joaquin V. Bass to Eugenio Mintu is valid as
between them but not as against Rebecca Levin who could avail herself of all
her legal and equitable remedies against Joaquin V. Bass and reach the property
acquired fraudulently by the latter and subsequently sold to Eugenio Mintu who
admittedly is an innocent purchaser for value, for the reason that the later
though an innocent purchaser for value is not a holder of a certificate of title.
The pronouncement of the court below is to the effect that an innocent
purchaser for value has no right to the property because he is not a holder of a
certificate of title to such property acquired by him for value in good faith. It
amounts to holding that for failure of the Registrar of Deeds to amply and
perform his duty an innocent purchaser for value loses that character—he is not
an "innocent holder for value of a certificate of title." The court below has
strictly and literally construed the provision of law applicable to the case. If the
strict and literal construction of the law made by the court below be the true
and correct meaning and intent of the lawmaking body, the act of registration—
the operative act to convey and effect registered property—would be left to the
Registrar of Deeds. True, there is a remedy available to the registrant to compel
the Registrar of Deeds to issue him the certificate of title but the step would
entail expense and cause unpleasantness. Neither violence to, nor stretching of
the meaning of, the law would be done, if we should hold that an innocent
purchaser for value of registered land becomes the registered owner and in the
contemplation of law the holders of a certificate thereof the moment he
presents and files a duly notarized and lawfull deed of sale and the same is
entered on the day book and at the same he surrenders or presents the owner's
duplicate certificate of title to the property sold and pays the full amount of
registration fees, because what remains to be done lies within his power to
perform. The Registrar of Deeds is in duty bound to perform it. We believe that
is a reasonable and practical interpretation of the law under consideration—a
construction which would lead to no inconsistency and injustice.
Taking into consideration all the circumstances of the case and bearing in mind
that the only objective courts must strive to attain is to do justice, we believe
that our interpretation of the law applicable to the case at bar subserves the
interests of justice. True, Rebecca Levin loses he house and lot No. 326 San
Rafael street, but "as between not innocent persons, one of whom must suffer
the consequence of a breach of trust, the one who made it possible by his act of
confidence must bear the loss."4
We hold, therefore, that Eugenio Mintu is the rightful owner of the lot and
house at No. 326 San Rafael street since 8 November 1944 and entitled to
collect the rentals due and unpaid from that date until possession of the
premises shall have been restored to him and the balance by Joaquin V. Bass of
rentals and moneys received by him imputable to such rentals as ordered by the
trial court, subject to the registered mortgage in favor of Co Chin Leng. What
has been awarded to Rebecca Levin in the judgment appealed from, in so far as
the lot and house at No. 326 San Rafael street are concerned, is deemed
awarded to Eugenio Mintu.
The rest of the judgment appealed from not inconsistent herewith, is affirmed,
with costs against Joaquin V. Bass.
Let a copy of this decision be furnished the City Fiscal of Manila who is directed
an investigation of Joaquin V. Bass and attorney and notary public Eliezer A.
Manikan in connection with the execution and acknowledgment of the
documents, involved and the testimony given by them in these cases and to
take such action as the result of the investigation may warrant.
Paras, C.J., Feria, Pablo, Bengzon, Montemayor, Reyes, and Bautista Angelo JJ.,
concur.
Separate Opinions
TUASON, J., concurring:
Crime and fraud can not serviced as the root of a valid title notwithstanding the
good faith of the purchase for value. This rule is qualified by the condition that
the rightfull owner was not guilty for any negligence contributing to or
facilitating the commission of the crime or fraud. Subject to this qualification,
the doctrine that, as between two innocent parties, the one who made the
crime or fraud possible must bear the loss, should be applied. From the facts of
this case, it appears that Rebecca Levin was not free from blame for the
issuance of a certificate of title in the names of Bass. With these circumstances
in mind, I concur in the foregoing decision.
G.R. No. 183448 June 30, 2014
SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA, Petitioners,
vs.
HEIRS OF BERNARDINA ABALON, represented by MANSUETO ABALON,
Respondents.
x-----------------------x
G.R. No. 183464
HEIRS OF BERNARDINA ABALON, represented by MANSUETO ABALON,
Petitioners,
vs.
MARISSA ANDAL, LEONIL AND AL, ARNEL AND AL, SPOUSES
DOMINDOR PERALTA AND OFELIA PERALTA, and HEIRS of RESTITUTO
RELLAMA, represented by his children ALEX, IMMANUEL, JULIUS and
SYLVIA, all surnamed RELLAMA.
DECISION
SERENO, CJ:
Before us are the consolidated Petitions for Review on Certiorari under Rule 45
of the Rules of Court assailing the 30 May 2007 Decision1 of the Court of
Appeals (CA) Seventeenth Division in CA-G.R. CV No. 85542. The CA had
reversed the 14 April 2005 Decision2 of the Regional Trial Court (RTC), Fifth
Judicial Region of Legaspi City, Branch 5, in Civil Case No. 9243.
The civil case before the RTC of Legaspi City involved a parcel of land registered
under the name of Bernardina Abalon and fraudulently transferred to Restituto
Rellama and who, in turn, subdivided the subject property and sold it separately
to the other parties to this case – Spouses Dominador and Ofelia Peralta; and
Marissa, Leonil and Arnel, all surnamed Andal. Thereafter, Spouses Peralta and
the Andals individually registered the respective portions of the land they had
bought under their names. The heirs of Bernardina were claiming back the land,
alleging that since it was sold under fraudulent circumstances, no valid title
passed to the buyers. On the other hand, the buyers, who were now title
holders of the subject parcel of land, averred that they were buyers in good
faith and sought the protection accorded to them under the law.
THE FACTS
The RTC and the CA have the same findings of fact, but differ in their legal
conclusions. There being no factual issues raised in the Petitions, we adopt the
findings of fact of the CA in CA-G.R. No. 85542, as follows:
The subject parcel of land, described as Lot 1679 of the Cadastral Survey of
Legaspi, consisting of 8,571 square meters, was originally covered by Original
Certificate of Title (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.
The subject property was then subdivided into three (3) portions: Lot 1679-A,
Lot 1679-B, Lot 1679-C. Lot 1679-A was sold to Spouses Dominador P. Peralta,
Jr. and Ofelia M. Peralta (Spouses Peralta) for which reason TCT No. 42254 was
issued in their names. Lot 1679-B, on the other hand, was first sold to Eduardo
Lotivio (Lotivio) who thereafter transferred his ownership thereto to Marissa
Andal, Arnel Andal, and Leonil Andal (the Andals) through a Deed of Absolute
Sale dated October 9, 1995. On even date, TCT No. 42482 was issued in the
name of the Andals. The Andals likewise acquired Lot 1679-C as evidenced by
the issuance of TCT No. 42821 in their favor on December 27, 1995.
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.
It was alleged in their Complaint and subsequent Amended Complaint, under
five separate causes of action, that Rellama was able to cause the cancellation
of OCT No. (O) 16, and in lieu thereof the issuance of TCT No. 42108 in his own
name from which the defendants-appellants derived their own titles, upon
presentation of a xerox copy of the alleged forged deed of absolute sale and the
order granting the issuance of a second owner’s duplicate copy of OCT No. (O)
16 in his favor in Miscellaneous Cadastral Case No. 10648, which he had filed on
the pretext that Lot 1679 covered by OCT No. (O) 16 was sold to him and that
the owner’s duplicate copy of the said title got lost in 1976 after the same was
delivered to him. They averred that the owner’s duplicate copy of Oct NO. (O)
16 had always been with Abalon and that upon her death, it was delivered to
them. Likewise, they alleged that Abalon had always been in possession of the
subject property through her tenant Pedro Bellen who was thereafter succeeded
by his wife, Ruperta Bellen, and then his son, Godofredo Bellen. On the other
hand, they said that Rellama had never set foot on the land he was claiming.
They further alleged that after the ownership over the subject property was
transferred to them upon the death of Abalon, they took possession thereof and
retained Godofredo as their own tenant. However, they averred that in 1995 the
defendants-appellants were able to wrest possession of the subject property
from Godofredo Bellen. They alleged that the defendants-appellants are not
buyers in good faith as they were aware that the subject land was in the
possession of the plaintiffs-appellees at the time they made the purchase. They
thus claim that the titles issued to the defendants-appellants are null and void.
In his answer, Rellama alleged that the deed of absolute sale executed by
Abalon is genuine and that the duplicate copy of OCT No. (O) 16 had been
delivered to him upon the execution of the said deed of transfer.
As for Spouses Peralta and the Andals, who filed their separate answers to the
complaint, they mainly alleged that they are buyers in good faith and for value.
During the trial, Rellama passed away. He was substituted by his heirs.
After the plaintiffs-appellees rested their case, instead of presenting their own
evidence, the defendants-appellants and the Heirs of Restituto Rellama, on
different occasions, filed a demurrer to evidence.
On April 14, 2005, the court a quo rendered judgment in favor of the plaintiffs-
appellees and ordered the restoration of OCT No. (O) 16 in the name of Abalon
and the cancellation of the titles issued to the defendants-appellants. The fact
that only a xerox copy of the purported deed of sale between Rellama and
Abalon was presented before the Register of Deeds for registration and the
absence of such xerox copy on the official files of the said Office made the court
a quo conclude that the said document was a mere forgery. On the other hand,
the court a quo noted that the duplicate copy of OCT No. (O) 16 in the hands of
the plaintiffs-appellees bears [sic] the perforated serial number B 221377, which
it held is a convincing proof of its authenticity and genuineness. It thus stated
that "Miscellaneous Cadastral Case No. 10648 is a (mere) strategem [sic]
fraudulently concocted ... for the issuance of a fabricated (second) owner’s
duplicate certificate of Oct No. (O) 16" since the owner’s duplicate copy of OCT
No. (O) 16 has not been lost at all. It said that any subsequent registration
procured by the presentation of such forged instrument is null and void. The
dispositive portion of the court a quo’s decision reads: WHEREFORE, [p]remises
[c]onsidered, judgment is rendered as follows, to wit:
1. Ordering the restoration of Original Certificate of Title No. (O) 16 embracing
Lot 1679 in the name of Bernardina Abalon into the official files of the Registry
of Deeds of Legaspi City – a copy of the owner’s duplicate certificate embodying
the technical description of Lot 1679 forming official part of the record as Exhibit
"D" – as well as ordering the cancellation of any and all transfer certificates of
title succeeding Original Certificate of title No. (O) 16 – including Transfer
Certificates (sic) of Title Nos. 42108, 42254, 42255, 42256, 42821 [,] and
42482;
2. Ordering the defendants Marissa Andal, Leonil Andal, Arnel Andal[,] and the
spouses Dominador and Ofelia Peralta to vacate Lot 1679 and to peacefully
surrender such lot to the plaintiffs;
3. Ordering the defendants to pay the plaintiffs the amount of ₱50,000.00 as
litigation expenses; and
4. Ordering the defendants to pay the costs of suit.
The counterclaims by [sic] the defendants are all dismissed.
SO ORDERED.
Spouses Peralta and the Andals filed their separate Notices of Appeal and
thereafter, upon approval, filed their respective Defendants-Appellants’ Briefs.
The Heirs of Rellama, on the other hand, opted not to challenge the ruling of
the lower court.3
The Andals and Spouses Peralta – appellants in CA-G.R. CV No. 85542 – raised
several issues, which the CA summarized as follows:
1. Whether the Deed of Absolute Sale executed by Abalon in favor of Rellama
was spurious
2. Whether the Andals and Spouses Peralta were buyers in good faith and for
value
3. Who among the parties were entitled to their claims for damages.4
THE RULING OF THE COURT OF APPEALS
On 30 May 2007, the Seventeenth Division of the Court of Appeals promulgated
its assailed judgment setting aside the RTC Decision. The CA ruled that the
circumstances surrounding the sale of the subject property showed badges of
fraud or forgery against Rellama. It found that Abalon had not parted with her
ownership over the subject property despite the claim of Rellama that they both
executed a Deed of Absolute Sale. As proof, the CA pointed out the existence of
a notarized contract of leasehold executed by Abalon with Ruperta Bellen on 11
June 1976. The genuineness and due execution of the said leasehold agreement
was uncontroverted by the parties. On this basis, the 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.5
The 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 1975.6 Further, the CA noted
that he did not cause the annotation of the Deed of Sale, which he had
executed with Abalon, on OCT No. (O) 16. It observed that when the original
copy of OCT No. (O) 16 was allegedly lost in 1976, while Rellama was on his
way to Legaspi City to register the title to his name, it took him almost 20 years
to take steps to judicially reconstitute a copy thereof. To the appellate court,
these circumstances cast doubt on the veracity of Rellama’s claim of ownership
over such a significant property, which was almost a hectare.7
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,8 which in this
case 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.9 On the other hand, it accorded the Andals the presumption of
good faith, finding no evidence that would rebut this presumption.10
The dispositive portion of the assailed CA Decision in CA-G.R. CV No. 85542 is
as follows:
WHEREFORE, the assailed decision is SET ASIDE and a new judgment is
rendered as follows:
1. Transfer Certificate of Title No. 42482 and Transfer Certificate of Title No.
42821, both in the names of Andals, are held legal and valid.
2. Transfer Certificate of Title No. 42254 registered in the names of Spouses
Peralta is cancelled for being null and void. Hence, they are ordered to vacate
the land covered thereby and to surrender possession thereof in favor of the
plaintiffs-appellees.
SO ORDERED.11
The heirs of Abalon filed a Motion for Reconsideration of the 30 May 2007
Decision, insofar as the CA declared the Andals to be buyers in good faith of the
subject property and, thus, that the land title issued in their favor was valid.
Spouses Peralta, for their part, filed a Motion for Partial Reconsideration of the
said CA Decision pertaining to the portion that declared them as buyers in bad
faith which accordingly nullified the title issued to them.
On 10 June 2008, the CA denied the Motions for Partial Reconsideration of the
movants for lack of merit.12
On 11 August 2008, Spouses Peralta filed with this Court a Petition for Review
under Rule 45 of the Rules of Court assailing the 30 May 2007 Decision in CA-
G.R. CV No. 85542.13 On the same day, the heirs of Bernardina Abalon,
represented by Mansueto Abalon, filed a similar Petition questioning the portion
of the mentioned CA Decision declaring the validity of the title issued to the
Andals, who were adjudged by the appellate court as buyers in good faith.14
THE ISSUES
The Petition filed by Spouses Peralta, docketed as G.R. No. 183448, lists the
following issues:
a) The case for annulment should have been dismissed because the purported
Deed of Sale executed by Abalon and Rellama was not introduced in evidence
and thus, forgery was not proven.
b) The heirs of Abalon are notforced heirs of Bernardina Abalon; hence, they do
not have the legal personality to file the action to annul the subject Deed of
Sale.
c) The heirs of Abalon failed to prove that they had inherited the subject
property.
d) Spouses Peralta are buyers in good faith and, thus title to their portion of the
subject property must be upheld15
As for the heirs of Abalon, their Petition, docketed as G.R. No. 183464, raises
the following issues:
a) The Andals cannot be considered as buyers in good faith by simply applying
the ordinary presumption in the absence of evidence showing the contrary.
b) The CA erred in applying in favor of the Andals, the doctrine that a forged
instrument may become the root of a valid title in the hands of an innocent
purchaser for value, because Abalon never parted with her possession of the
valid and uncancelled title over the subject property
c) The CA erred in declaring the validity of the title issued in the names of the
Andals, because Rellama was bereft of any transmissible right over the portion
of the property he had sold to them.16
THE COURT’S RULING
We deny the Petitions and affirm the ruling of the CA.
The main issue to be resolved in this case is 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.
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."17
In Tenio-Obsequio v. Court of Appeals,18 we explained the purpose of the
Torrens system and its legal implications to third persons dealing with registered
land, as follows:
The main purpose of the Torrens system is to avoid possible conflicts of title to
real estate and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens certificate of title and to dispense with
the need of inquiring further, except when the party concerned has actual
knowledge of facts and circumstances that should impel a reasonably cautious
man to make such further inquiry. Where innocent third persons, relying on the
correctness of the certificate of title thus issued, acquire rights over the
property, the court cannot disregard such rights and order the total cancellation
of the certificate. The effect of such an outright cancellation would be to impair
public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance as
to whether the title has been regularly or irregularly issued by the court. Every
person dealing with registered land may safely rely on the correctness of the
certificate of title issued therefor and the law will in no way oblige him to go
beyond the certificate to determine the condition of the property.
The Torrens system was adopted in this country because it was believed to be
the most effective measure to guarantee the integrity of land titles and to
protect their indefeasibility once the claim of ownership is established and
recognized. If a person purchases a piece of land on the assurance that the
seller's title thereto is valid, he should not run the risk of being told later that his
acquisition was ineffectual after all. This would not only be unfair to him. What
is worse is that if this were permitted, public confidence in the system would be
eroded and land transactions would have to be attended by complicated and not
necessarily conclusive investigations and proof of ownership. The further
consequence would be that land conflicts could be even more numerous and
complex than they are now and possibly also more abrasive, if not even violent.
The Government, recognizing the worthy purposes of the Torrens system,
should be the first to accept the validity of titles issued thereunder once the
conditions laid down by the law are satisfied.
The Torrens system was intended to guarantee the integrity and conclusiveness
of the certificate of registration, but the system cannot be used for the
perpetration of fraud against the real owner of the registered land. The system
merely confirms ownership and does not create it. It cannot be used to divest
lawful owners of their title for the purpose of transferring it to another one who
has not acquired it by any of the modes allowed or recognized by law. Thus, the
Torrens system cannot be used to protect a usurper from the true owner or to
shield the commission of fraud or to enrich oneself at the expense of another.19
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.20 This rule, however, admits of exceptions, which we explained in
Clemente v. Razo:21
Any buyer or mortgagee of realty covered by a Torrens certificate of title, in the
absence of any suspicion, is not obligated to look beyond the certificate to
investigate the titles of the seller appearing on the face of the certificate. And,
he is charged with notice only of such burdens and claims as are annotated on
the title.
We do acknowledge that the rule thus enunciated is not cast in stone. For,
indeed, there are exceptions thereto. Thus, in Sandoval vs. CA, we made clear
the following:
The aforesaid principle admits of an unchallenged exception: that a person
dealing with registered land has a right to rely on the Torrens certificate of title
and to dispense with the need of inquiring further except when the party has
actual knowledge of facts and circumstances that would impel a reasonably
cautious man to make such inquiry or when the purchaser has knowledge ofa
defect or the lack of title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title of the property in
litigation. The presence of anything which excites or arouses suspicion should
then prompt the vendee to look beyond the certificate and investigate the title
of the vendor appearing on the face of said certificate. One who falls within the
exception can neither be denominated an innocent purchaser for value nor a
purchaser in good faith; and hence does not merit the protection of the law.22
Thus, the determination whether one is a buyer in good faith or can be
considered an innocent purchaser for value becomes imperative. Section 55 of
the Land Registration Act provides protection to an innocent purchaser for
value23 by allowing him to retain the parcel of land bought and his title is
considered valid. Otherwise, the title would be cancelled and the original owner
of the parcel of land is allowed to repossess it.
Jurisprudence has defined an innocent purchaser for value as one who buys the
property of another without notice that some other person has a right to or
interest therein and who then pays a full and fair price for it at the time of the
purchase or before receiving a notice of the claim or interest of some other
persons in the property. Buyers in good faith buy a property with the belief that
the person from whom they receive the thing is the owner who can convey title
to the property. Such buyers do not close their eyes to facts that should put a
reasonable person on guard and still claim that they are acting in good faith.24
The assailed Decision of the CA held that the Andals were buyers in good faith,
while Spouses Peralta were not. 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.25 The CA concluded that this was the case for the
Andals.
The appellate court cited Fule v. Legare26 as basis for its ruling. In the said
case, the Court made an exception to the general rule that a forged or
fraudulent deed is a nullity and conveys no title. A fraudulent document may
then become the root of a valid title, as it held in Fule:
Although the deed of sale in favor of John W. Legare was fraudulent, the fact
remains that he was able to secure a registered title to the house and lot. It was
this title which he subsequently conveyed to the herein petitioners. We have
indeed ruled that a forged or fraudulent deed is a nullity and conveys no title
(Director of Lands vs. Addison, 49 Phil., 19). However, we have also laid down
the doctrine that there are instances when such a fraudulent document may
become the root of a valid title. One such instance is where the certificate of
title was already transferred from the name of the true owner to the forger, and
while it remained that way, the land was subsequently sold to an innocent
purchaser. For then, the vendee had the right to rely upon what appeared in the
certificate (Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960).
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). Consequently, where there was nothing in the certificate of title to indicate
any cloud or vice in the ownership of the property, or any encumbrance
thereon, the purchaser is not required to explore farther than what the Torrens
title upon its face indicates in quest for any hidden defect or inchoate right that
may subsequently defeat his right thereto. If the rule were otherwise, the
efficacy and conclusiveness of the certificate of title which the Torrens system
seeks to insure would entirely be futile and nugatory. (Reynes vs. Barrera, 68
Phil., 656; De Lara and De Guzman vs. Ayroso, 50 O.G. No 10, 4838). The
public shall then be denied of its foremost motivation for respecting and
observing the Land Registration Act. In the end, the business community stands
to be inconvenienced and prejudiced immeasurably.
Furthermore, when the Register of Deeds issued a certificate of title in the name
of John W. Legare, and thereafter registered the same, John W. Legare, insofar
as third parties were concerned, acquired valid title to the house and lot here
disputed. When, therefore, he transferred this title to the herein petitioners,
third persons, the entire transaction fell within the purview of Article 1434 of the
Civil Code. The registration in John W. Legare's name effectively operated to
convey the properties to him.
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. In fact, the
Decisions of the RTC and the CA show no factual findings or proof that would
rebut the presumption in favor of the Andals as buyers in good faith. Thus, the
CA correctly considered them as buyers in good faith and upheld their title.
The Abalons counter this ruling and allege that the CA erred in relying on Fuleto
justify its assailed Decision. They argue that Torres v. Court of Appeals27 is the
applicable ruling, because the facts therein are on all fours with the instant
case.28
In Torres, the subject property was covered by TCT No. 53628 registered in the
name of Mariano Torres. His brother-in-law Francisco Fernandez,
misrepresenting that the copy of the title had been lost, succeeded in obtaining
a court Order for the issuance of another copy of TCT No. 53628. He then
forged a simulated deed of sale purportedly showing that Torres had sold the
property to him and caused the cancellation of TCT No. 53628, as well as the
issuance of TCT No. 86018 in his name. Soon, Fernandez mortgaged the
property to Mota. Upon learning of the fraud committed by Fernandez, Torres
caused the annotation of an adverse claim on the former’s copy and succeeded
in having Fernandez’s title declared null and void. Meanwhile, Mota was able to
foreclose on Fernandez’s real estate mortgage, as well as to cause the
cancellation of TCT No. 86018 and the issuance of a new one– TCT No. 105953
– in her name. The issue to be resolved in Torres was whether Mota can be
considered an innocent mortgagee for value, and whether her title can be
deemed valid. Ruling in the negative, the Court explained:
There is nothing on the records which shows that Torres performed any act or
omission which could have jeopardized his peaceful dominion over his realties.
The decision under review, however, in considering Mota an innocent
mortgagee protected under Section 65 of the Land Registration Law, held that
Torres was bound by the mortgage. Inevitably, it pronounced that the
foreclosure sale, where Mota was the highest bidder, also bound Torres and
concluded that the certificate of title issued in the name of Mota prevails over
that of Torres'. As correctly pointed out by Torres, however, his properties were
sold on execution, and not on foreclosure sale, and hence, the purchaser
thereof was bound by his notice of adverse claim and lis pendens annotated at
the back of Fernandez' TCT. Moreover, even if We grant Mota the status of an
innocent mortgagee, the doctrine relied upon by the appellate court that a
forged instrument may become the root of a valid title, cannot be applied where
the owner still holds a valid and existing certificate of title covering the same
interest in a realty. The doctrine would apply rather when, as in the cases for
example of De la Cruz v. Fabie, 35 Phil. 144 [1916], Fule v. De Legare, No. L-
17951, February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687,
April 10, 1989, the forger thru insidious means obtains the owner’s duplicate
certificate of title, converts it in his name, and subsequently sells or otherwise
encumbers it to an innocent holder for value, for in such a case the new
certificate is binding upon the owner (Sec.55, Act 496; Sec. 53, P.D. No. 1529).
But if the owner holds a valid and existing certificate of title, his would be
indefeasible as against the whole world, and not that of the innocent holder's.
"Prior tempore potior jure" as We have said in Register of Deeds v. Philippine
National Bank, No. L-17641, January 30, 1965, 13 SCRA 46, citing Legarda v.
Saleeby, 31 Phil.590, Roman Catholic Bishop v. Philippine Railway, 49 Phil. 546,
Reyes v. Borbon, 50 Phil. 791.29 (Emphasis and underscoring supplied)
We do not agree with the contention of the Abalons that the ruling in Torresis
controlling in this case. They quoted a portion in the said case that is clearly an
obiter. In Torres, it was shown that Mariano had annotated an adverse claim on
the title procured by Fernandez prior to the execution sale, in which Mota was
the highest bidder. This Court declared her as a mortgagee in bad faith
because, at the back of Fernandez’s title, Torres made an annotation of the
adverse claim and the notice of lis pendens. The annotation of the adverse
claim was made while the forged document was still in the name of the forger,
who in this case is Fernandez. That situation does not obtain in the instant case.
The records of the RTC and the CA have a finding that when Rellama sold the
properties to the Andals, it was still in his name; and there was no annotation
that would blight his clean title. To the Andals, there was no doubt that Rellama
was the owner of the property being sold to them, and that he had
transmissible rights of ownership over the said property. Thus, they had every
right to rely on the face of his title alone.
The established rule is that a forged deed is generally null and cannot convey
title, the exception thereto, pursuant to Section 55 of the Land Registration Act,
denotes the registration of titles from the forger to the innocent purchaser for
value. Thus, the qualifying point here is that there must be a complete chain of
registered titles.30 This means that all the transfers starting from the original
rightful owner to the innocent holder for value – and that includes the transfer
to the forger – must be duly registered, and the title must be properly issued to
the transferee. Contrary to what the Abalons would like to impress on us,
Fuleand Torresdo not present clashing views. In Fule, the original owner
relinquished physical possession of her title and thus enabled the perpetrator to
commit the fraud, which resulted in the cancellation of her title and the issuance
of a new one. The forged instrument eventually became the root of a valid title
in the hands of an innocent purchaser for value. The new title under the name
of the forger was registered and relied upon by the innocent purchaser for
value. Hence, it was clear that there was a complete chain of registered titles.
On the other hand in Torres, the original owner retained possession of the title,
but through fraud, his brother-in-law secured a court order for the issuance of a
copy thereof. While the title was in the name of the forger, the original owner
annotated the adverse claim on the forged instrument. Thus, before the new
title in the name of the forger could be transferred to a third person, a lien had
already been annotated on its back. The chain of registered titles was broken
and sullied by the original owner’s annotation of the adverse claim. By this act,
the mortgagee was shown to be in bad faith.
In the instant case, there is no evidence that the chain of registered titles was
broken in the case of the Andals. Neither were they proven to have knowledge
of anything that would make them suspicious of the nature of Rellama’s
ownership over the subject parcel of land. Hence, we sustain the CA’s ruling
that the 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. This
factual finding was supported by evidence.
The CA pointed out Spouses Peralta’s Answer to the Complaint of the Abalons in
Case No. 9243 in the RTC of Legaspi City, Branch 5. In their Answer, they
specifically alleged as follows:
2- These defendants [Spouses Peralta] acquired lot No. 1679-A by purchase in
good faith and for value from Restituto Rellama under Doc. No. 11212, page
No. 26, Book No. 60, Series of 1996 of Notary Public Atty. Otilio Bongon,
Legaspi City on March 2, 1995 copy of which is attached as and made part of
this answer as Exhibit "1;"
3- That these defendants were handed over by Rellama xerox [sic] copy of the
Transfer Certificate of Title No. 42103 issued by the Register of Deed of Legaspi
City on the 2nd day of August 1995 copy attached and made integral part as
Exhibit "1-A" and also Original Certificate of Title No. (O) 16 as Exhibit "1-B"31
We have no reason to disturb this factual finding of the CA because it is
supported by the evidence on record. Spouses Peralta filed a Petition for Review
on Certiorari under Rule 45, which allows only questions of law to be raised. It
is a settled rule that questions of fact are not reviewable in this kind of appeal.
Under Rule 45, Section 1, "petitions for review on certiorari shall raise only
questions of law which must be distinctly set forth."32 A question of fact arises
when there is "as to the truth or falsehood of facts or when there is a need to
calibrate the whole evidence considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding circumstances, as well as
their relation to each other and to the whole, and the probability of the
situation."33 It is further pointed out that "the determination of whether one is
a buyer in good faith is a factual issue, which generally is outside the province
of this Court to determine in a petition for review."34
Whether or not Spouses Peralta are buyers in good faith, is without a doubt, a
factual issue. Although this rule admits of exceptions,35 none of these applies to
their case. There is no conflict between the factual findings and legal
conclusions of the RTC and those of the CA, both of which found them to be
buyers in bad faith. The fact that they did not participate in the proceedings
before the lower court does not help their case either.
On the issue of the legal standing of the Abalons to file this case, we find that
the CA correctly upheld their standing as heirs of the deceased Bernardina
Abalon. The appellate court ruled that during her lifetime, Bernardina Abalon
had promised her heirs - siblings Mansueto and Amelia - that she would give
them the subject property. A duplicate copy of OCT No. (0) 16 was delivered to
them upon her death. Thus, the CA concluded that the two siblings acquired the
subject property by ordinary prescription. Further, it deduced that the mode of
transmission of the property from Bernardina to her nephew and niece was a
form of donation mortis causa, though without the benefit of a will.36 Despite
this omission, it still held that Mansueto and Amelia acquired the subject
property through ordinary acquisitive prescription because, since the death of
their aunt Bernardina, they had been in possession of the property for more
than 10 years that ripened into full ownership.37

Under Article 97538 of the Civil Code, siblings Mansueto and Amelia Abalon are
the legal heirs of Bernardina, the latter having had no issue during her
marriage. As such, they succeeded to her estate when she passed away. While
we agree with the CA that the donation mortis causa was invalid in the absence
of a will, it erred in concluding that the heirs acquired the subject property
through ordinary acquisitive prescription. The subject parcel of land is a titled
property; thus, acquisitive prescription is not applicable.39 Upon the death of
Bernardina, Mansueto and Amelia, being her legal heirs, acquired the subject
property by virtue of succession, and not by ordinary acquisitive prescription.

WHEREFORE, the petitions in G.R. Nos. 183448 and 183464 are DENIED for
lack of merit. The Decision in CA-G.R. CV No. 85542 is hereby AFFIRMED.

SO ORDERED.

G.R. No. 204280
EVELYN V. RUIZ, Petitioner
vs.
BERNARDO F. DIMAILIG, Respondent
DECISION
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the October 22, 2012 Decision1 of
the Court of Appeals (CA) in CA-GR. CV No. 95046 which reversed and set aside
the November 26, 2009 Decision2 and the March 19, 2010 Order3 of the
Regional Trial Court (RTC) of Cavite City, Branch 16 in Civil Case No. N-7573.
The CA declared void the Real Estate Mortgage (REM) constituted on the
property covered by Transfer Certificate of Tit1e (TCT) No. T-361747.
Factual Antecedents
Respondent Bernardo F. Dimailig (Bernardo) was the registered owner of a
parcel ofland covered by TCT No. T-361747 located inAlapan, Imus, Cavite.4 In
October 1997, he entrusted the owner’s copy of the said TCT to his brother,
Jovannie,5 who in turn gave the title to Editha Sanggalang (Editha), a broker,
for its intended sale. However, in January 1998, the property was mortgaged to
Evelyn V. Ruiz (Evelyn) as evidenced by a Deed of REM6 without Bernardo’s
knowledge and consent. Hence, Bernardo instituted this suit for annulment of
the Deed of REM.7
In her Answer,8 Evelyn contended that she met Jovannie when she inspected
the subject property and assured her that Bernardo owned the property and his
title thereto was genuine. She further claimed that Jovannie mortgaged the
property to her. She also insisted that as a mortgagee in good faith and for
value, the REM cannot be annulled and that she had the right to keep the
owner's copy of TCT No. T-3617 4 7 until the loan was fully paid to her.
During pre-trial, the parties arrived at the following stipulations:9
1. That x x x it was not [Bernardo] who signed as mortgagor in the subject
Deed of Real Estate Mortgage.
2. That there was a demand letter sent to [Evelyn] x x x to cause a release of
mortgage on the subject property.
3. The x x x controversy [was referred] to the Barangay for conciliation and
mediation.
[4.] That Jovannie x x x is the brother of [Bernardo].
Thereafter, trial on the merits ensued.
Bernardo testified that when he went abroad on October 19, 1997, he left the
owner's copy of the TCT of the subject property to Jovannie as they intended to
sell the subject property.10 However, on January 26, 1998, a REM was
executed on the subject property. Bernardo argued that his alleged signature
appearing therein was merely forged11 as he was still abroad at that time.
When he learned in September or November 1998 that Editha mortgaged the
subject property, be personally told Evelyn that the REM was fake and
demanded the return of his title. Not heeding his request, he filed a complaint
for estafa through falsification of public document against Editha and Evelyn,
The criminal case against Evelyn was dismissed12 while Editha was found guilty
as charged.13
Jovannie also took the witness stand. He testified that sometime in December
1997, Editha convinced him to surrender the owner's copy of TCT No. T-361747
which she would show her buyer.14 Subsequently, however, Editha informed
him that she misplaced the title. Hence, he executed in August 199815 an
affidavit of loss and registered it with the Register of Deeds (RD).16 In
September 1998, Editha finally admitted that the title was not lost but was in
Evelyn's possession because of the REM.17 Upon learning this, Jovannie
inquired from Evelyn if Editha mortgaged Bernardo's property to her.
Purportedly, Evelyn confirmed said mortgage and told him that she would not
return the owner's copy of TCT No. T-361747 unless Editha pay the loan,18
Jovannie also alleged that he told Evelyn that Bernardo's alleged signature in
the REM was not genuine since he was abroad at the time of its execution.19
On the other hand, Evelyn maintained that she was a mortgagee in good faith.
She testified that sales agents - Editha, Corazon Encarnacion, and a certain
Parani, - and a person introducing himself as "Bernardo" mortgaged the subject
property to her for ₱300,000.00 payable within a period of three months.20 She
asserted that even after the expiration of said period, "Bernardo" failed to pay
the loan.21
Evelyn narrated that before accepting the mortgage of the subject property,
she, the sales agents, her aunt, and "Bernardo," visited the property. She
pointed out that her companions inspected it while she stayed in the vehicle as
she was still recuperating from an operation.22 She admitted that she neither
verified from the neighborhood the owner of the property nor approached the
occupant thereof.23
Moreover, Evelyn asserted that when the Deed of REM was executed, the
person who introduced himself as Bernardo presented a community tax
certificate and his picture as proof of identity.24 She admitted that she did not
ask for any identification card from "Bernardo."25
Contrary to the allegation in her Answer that Jovannie mortgaged the property,
Evelyn clarified that she met Jovannie for the first time when he went to her
house and told her that Bernardo could not have mortgaged the property to her
as he was abroad.26
Corazon Abella Ruiz (Corazon), the sister-in-law of Evelyn, was presented to
corroborate her testimony. Corazon averred that in January 1998, she
accompanied Evelyn and several others in inspecting the subject property.27
The day after the inspection, Evelyn and '"Bernardo'' executed the Deed of REM
in the office of a certain Atty. Ignacio; Evelyn handed ₱300,000.00 to Editha,
not to "Bernardo;"28 in turn, Editha handed to Evelyn the owner's copy of TCT
No. T-361747.29
Ruling of the Regional Trial Court
On November 26, 2009, the RTC dismissed the Complaint. It held that while
Bernardo was the registered owner of the subject property, Evelyn was a
mortgagee in good faith because she was unaware that the person who
represented himself as Bernardo was an impostor. It noted that Evelyn caused
the verification of the title of the property with the RD and found the same to be
free from any lien or encumbrance. Evelyn also inspected the property and met
Jovannie during such inspection. Finally, the RTC declared that there was no
showing of any circumstance that would cause Evelyn to doubt the validity of
the title or the property covered by it. In fine, Evelyn did all that was necessary
before parting with her money and entering into the REM.
On March 19, 2010, the RTC denied Bernardo's Motion for Reconsideration.
Thus, he appealed to the CA.
Ruling of the Court of Appeals
On October 22, 2012, the CA rendered the assailed Decision reversing and
setting aside the RTC Decision. The decretal portion of the CA Decision reads:
WHEREFORE, the appeal is GRANTED. The assailed dispositions of the RTC are
REVERSED and SET ASIDE. The complaint of Bernardo F. Dimailig is GRANTED.
The Deed of Real Estate Mortgage constituted on the real property covered by
TCT No. T-361747 of the Registry of Deeds for the Province of Cavite,
registered in his name, is DECLARED null and void. Evelyn V. Ruiz is ORDERED
to reconvey or return to him the owner's duplicate copy of the said title. His
claims for the payment of attorney's fees and costs of suits are DENIED. Costs
against Evelyn V. Ruiz.
SO ORDERED.30
The CA held that the "innocent purchaser (mortgagor in this case) for value
protected by law is one who purchases a titled land by virtue of a deed
executed by the registered owner himself, not by a forged deed."31 Since the
Deed of REM was forged, and the title to the subject property is still in the
name of the rightful owner, and the mortgagor is a different person who only
pretended to be the owner, then Evelyn cannot seek protection from the cloak
of the principle of mortgagee in good faith. The CA held that in this case, "the
registered owner will not personally lose his title."32
The CA further decreed that Evelyn's claim of good faith cannot stand as she
failed to verify the real identity of the person introduced by Editha as Bernardo.
It noted that the impostor did not even exhibit any identification card to prove
his identity; and, by Evelyn's admission, she merely relied on the representation
of Editha relative to the identity of "Bernardo." It also held that Evelyn
transacted only with Editha despite the fact that the purported owner was
present during the inspection of the property, and during the execution of the
REM.
In sum, the CA ruled that for being a forged instrument, the Deed of REM was a
nullity, and the owner's copy of TCT No. T-361747 must be returned to its
rightful owner, Bernardo.
Issue
Hence, Evelyn filed this Petition raising the sole assignment of error as follows:
[T]he Court of Appeals erred in holding that petitioner is not a mortgagee in
good faith despite the presence of substantial evidence to support such
conclusion of fact.33
Petitioner’s Arguments
Petitioner insists that she is a mortgagee in good faith. She claims that she was
totally unaware of the fraudulent acts employed by Editha, Jovannie, and the
impostor to obtain a loan from her. She stresses that a person dealing with a
property covered by a certificate of title is not required to look beyond what
appears on the face of the title.
Respondent’s Arguments
Bernardo, on his end, contends that since the person who mortgaged the
property was a mere impostor, then Evelyn cannot claim that she was a
mortgagee in good faith. This is because a mortgage is void where the
mortgagor has no title at all to the property subject of such mortgage.
Bernardo asserts that there were circumstances that should have aroused
suspicion on the part of Evelyn relative to the mortgagor's title over the
property. He specifies that throughout the negotiation of the mortgage, Evelyn
transacted only with Editha, not with "Bernardo," despite the fact that Editha
and the other real estate agents who assisted Evelyn in the mortgage
transaction were not armed with a power of attorney.
Bernardo likewise stresses that although Evelyn caused the inspection of the
subject property, she herself admitted that she did not alight from the vehicle
during the inspection, and she failed to verify the actual occupant of the
property.
Our Ruling
The Petition is without merit.
As a Rule, the issue of whether a person is a mortgagee in good faith is not
within the ambit of a Rule 45 Petition.1âwphi1 The determination of presence or
absence of good faith, and of negligence are factual matters, which are outside
the scope of a petition for review on certiorari.34 Nevertheless, this rule allows
certain exceptions including cases where the RTC and the CA arrived at different
or conflicting factual findings,35 as in the case at bench. As such, the Court
deems it necessary to re-examine and re-evaluate the factual findings of the CA
as they differ with those of the RTC.

No valid mortgage will arise unless the mortgagor has a valid title or ownership
over the mortgaged property. By way of exception, a mortgagee can invoke that
he or she derived title even if the mortgagor's title on the property is defective,
if he or she acted in. good faith. In such instance, the mortgagee must prove
that no circumstance that should have aroused her suspicion on the veracity of
the mortgagor's title on the property was disregarded.36
Such doctrine of mortgagee in good faith presupposes "that the mortgagor, who
is not the rightful owner of the property, has already succeeded in obtaining a
Torrens title over the property in his name and that, after obtaining the said
title, he succeeds in mortgaging the property to another who relies on what
appears on the said title."37 In short, the doctrine of mortgagee in good faith
assumes that the title to the subject property had already been transferred or
registered in the name of the impostor who thereafter transacts with a
mortgagee who acted in good faith. In the case at bench, it must be
emphasized that the title remained to be registered in the name of Bernardo,
the rightful and real owner, and not in the name of the impostor.
The burden of proof that one is a mortgagee in good faith and for value lies
with the person who claims such status. A mortgagee cannot simply ignore facts
that should have put a reasonable person on guard, and thereafter claim that
he or she acted in good faith under the belief that the mortgagor's title is not
defective.38 And, such good faith entails an honest intention to refrain from
taking unconscientious advantage of another.39
In other words, in order for a mortgagee to invoke the doctrine of mortgagee in
good faith, the impostor must have succeeded in obtaining a Torrens title in his
name and thereafter in mortgaging the property. Where the mortgagor is an
impostor who only pretended to be the registered owner, and acting on such
pretense, mortgaged the property to another, the mortgagor evidently did not
succeed in having the property titled in his or her name, and the mortgagee
cannot rely on such pretense as what appears on the title is not the impostor's
name but that of the registered owner.40
In this case, Evelyn insists that she is a mortgagee in good faith and for value.
Thus, she has the burden to prove such claim and must provide necessary
evidence to support the same. Unfortunately, Evelyn failed to discharge her
burden.
First, the Deed of REM was established to be a forged instrument. As aptly
discussed by the CA, Bernardo did not and could not have executed it as he was
abroad at the time of its execution, to wit:
Verily, Bernardo could not have affixed his signature on the said deed on
January 26, 1998 for he left the Philippines on March 21, 1998. Not only that,
his signature on his Seafarer’s Identification and Record Book is remarkably
different from the signature on the assailed mortgage contract. The variance is
obvious even to the untrained eye. This is further bolstered by Evelyn’s
admission that Bernardo was not the one who represented himself as the
registered owner of the subject property and was not the one who signed the
questioned contract. Thus, there can be no denying the fact that the signature
on the Deed of Real Estate Mortgage was not affixed or signed by the same
person.41
In fact, during pre-trial, both parties agreed that it was not Bernardo who
signed as the mortgagor in the Deed of REM. It was only an impostor -
representing himself as Bernardo - who mortgaged the property. This impostor
is not only without rightful ownership on the mortgaged property, he also has
no Torrens title in his own name involving said property.
Simply put, for being a forged instrument, the Deed of REM is a nullity and
conveys no title.42
Second, Evelyn cannot invoke the protection given to a mortgagee in good faith.
As discussed, the title to the subject property remained registered in the name
of Bernardo. It was not transferred to the impostor's name when Evelyn
transacted with the latter. Hence, the principle of mortgagee in good faith finds
no application; correspondingly, Evelyn cannot not seek refuge therefrom.
Third, even assuming that the impostor has caused the property to be titled in
his name as if he had rightful ownership thereof, Evelyn would still not be
deemed a mortgagee in good faith. This is because Evelyn did not take the
necessary steps to dete1mine any defect in the title of the alleged owner of the
mortgaged property. She deliberately ignored pertinent facts that should have
aroused suspicion on the veracity of the title of the mortgagor "Bernardo."43
One, while '"Bernardo" introduced himself to Evelyn as the owner of the
property, he did not present any proof of identification. To recall, he only
exhibited his co1rununity tax certificate and a picture when he introduced
himself to Evelyn. ''Bernardo's" failure to sufficiently establish his identity should
have aroused suspicion on the part of Evelyn whether the person she was
transacting with is the real Bernardo or a mere impostor. She should have
investigated further and verified the identity of ''Bernardo" but she failed to do
so. She even admitted that she did not at all ask for any identification card from
"'Bernardo."
ocular inspection on the property, Evelyn and "Bernardo" executed the Deed of
REM even without Evelyn verifying the identity of the property's occupant as
well as the right of the mortgagor, if any, over the same. Indeed, where the
mortgagee acted with haste in granting the loan, without first determining the
ownership of the property being mortgaged, the mortgagee cannot be
considered as an innocent mortgagee in good faith.44
Thus, considering that the mortgage contract was forged as it was entered into
by Evelyn with an impostor, the registered owner of the property, Bernardo,
correspondingly did not lose his title thereon, and Evelyn did not acquire any
right or title on the property and cannot invoke that she is a mortgagee in good
faith and for value.45

Two, Evelyn also ignored the fact that "Bernardo'' did not participate in the WHEREFORE, the Petition is DENIED. Accordingly, the October 22, 2012
negotiations/transactions leading to the execution of the Deed of REM. Notably, Decision of the Court of Appeals in CA·G.R. CV No. 95046 is AFFIRMED.
no power of attorney was given to Editha who supposedly transacted in behalf
of Bernardo. Despite "Bernardo's" presence during the ocular inspection of the SO ORDERED.
property and execution of the mortgage contract, it was Editha who transacted
with Evelyn. As gathered from the testimony of Corazon, after the execution of
the deed, Evelyn handed the loan amount of ₱300,000.00 to Editha, not to
"Bernardo," and it was Editha who handed to Evelyn the owner's copy of TCT
No. T-361747.

Three, Evelyn likewise failed to ascertain the supposed title of "Bernardo" over
the property, Evelyn admitted that during the ocular inspection, she remained in
the vehicle. She did not inquire from the subject property's occupant or from
the occupants of the surrounding properties if they knew "Bernardo" and
whether or not he owned the subject property.

Notably, the RTC misapprehended certain facts when it held that Evelyn
inspected the property and met Jovannie during the inspection. By her own
account, Evelyn clarified that she met Jovannie for the first time only when the
latter visited her house to inform her that an impostor mortgaged Bernardo's
property to her.

Four, the Court observes that Evelyn hastily granted the loan and entered into
the mortgage contract. As also testified by Corazon, a day after the supposed