G.R. No. 183448, June 30, 2014
SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA, Petitioners, v. HEIRS OF BERNARDINA ABALON, REPRESENTED BY MANSUETO ABALON, Respondents.
G. R. No. 183464
HEIRS OF BERNARDINA ABALON, REPRESENTED BY MANSUETO ABALON, Petitioners, v. MARISSA ANDAL, LEONIL ANDAL, ARNEL ANDAL, SPOUSES DOMINDOR PERALTA AND OFELIA PERALTA, AND HEIRS OF RESTITUTO RELLAMA, REPRESENTED BY HIS CHILDREN ALEX, IMMANUEL, JULIUS AND SYLVIA, ALL SURNAMED RELLAMA, Respondents.
D E C I S I O N
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:ChanRoblesVirtualawlibraryThe counterclaims by [sic] the defendants are all dismissed.
- 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;
- 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;
- Ordering the defendants to pay the plaintiffs the amount of P50,000.00 as litigation expenses; and
- Ordering the defendants to pay the costs of suit.
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.3cralawlawlibrary
- Whether the Deed of Absolute Sale executed by Abalon in favor of Rellama was spurious
- Whether the Andals and Spouses Peralta were buyers in good faith and for value
- Who among the parties were entitled to their claims for damages.4
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.
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 not forced 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
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.16cralawlawlibrary
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.
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:ChanRoblesVirtualawlibraryThe 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 of a 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
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.
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 , 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)
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
1 Decision in CA-G.R. CV No. 85542 dated 30 May 2007 penned by Associate Justice Amelita G. Tolentino and concurred in by Associate Justices Lucentino N. Tagle and Sixto C. Marella, Jr., rollo (G.R. No. 183448), pp.70-84.
2 RTC Decision dated 14 April 2005 in Civil Case No. 9243 penned by Judge Pedro R. Soriao, rollo (G.R. No. 183448), pp. 65-68.
3 Rollo (G.R. No. 183448), pp. 70-74.
4 Id. at 76
5 Id. at 78.
7 Id. at 79.
9 Id. at 82.
10 Id. at 83.
11 Id. at 83-84.
12 Id. at 61-63.
13 Id. at 10-37.
14Rollo (G.R. No. 183464), pp. 17-45
15Rollo (G.R. No. 183448), p. 14.
16Rollo (G.R. No. 183464), pp. 28-29.
17Pioneer Insurance and Surety Corporation vs. Heirs of Vicente Coronado, G.R. No. 180357, 04 August 2009, 595 SCRA 263, 272.
18 G.R. No. 107967, 01 March 1994, 230 SCRA 550.
19Heirs of Marcelino Doronio v. Heirs of Fortunato Doronio, G.R. No. 169454, 27 December 2007, 541 SCRA 479, 506.
20Tiongco v. Dela Merced, 157 Phil. 92 (1972).
21 493 Phil. 119 (2005).
22 Id. at 128.
23 Land Registration Act, Section 55:
The production of the owner's duplicate certificate whenever any voluntary instrument is presented for registration shall be conclusive authority from the registered owner to the register of deeds to enter a new certificate or to make a memorandum of registration in accordance with such instrument, and the new certificate or memorandum shall be binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and in good faith: 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 a certificate of title: And provided further, That after the transcription of the decree of registration on the original application, any subsequent registration under this Act procured by the presentation of a forged duplicate certificate, or of a forged deed or other instrument, shall be null and void. In case of the loss or theft of an owner's duplicate certificate, notice shall be sent by the owner or by someone in his behalf to the register of deeds of the province in which the land lies as soon as the loss or theft is discovered.
24Yared v. Tiongco, G.R. No. 161360, 19 October 2011, 659 SCRA 545, 555.
25Rollo (G.R. No.183448), p. 80.
26 117 Phil. 367 (1963).
27 264 Phil. 1062 (1990).
28 Rollo (G.R. No. 183464), p. 36.
29 Id. at 1067.
30 Noblejas and Noblejas, Registration of Land Titles and Deeds, 416 (2007 Rev. Ed.).
31 RTC records, p. 33.
32 Abalos v. Heirs of Vicente Torio, G.R. No. 175444, 14 December 2011, 662 SCRA 450, 456.
33 Guy v. Court of Appeals, G.R. No. 165849, 10 December 2007, 539 SCRA 584, 606-667.
34 Orquiola v. Court of Appeals, 435 Phil. 323, 331 (2002).
35 Among the recognized exceptions to the rule are the following:
(a) When the findings are grounded entirely on speculation, surmises, or conjectures;
(b) When the inference made is manifestly mistaken, absurd, or impossible;
(c) When there is grave abuse of discretion;
(d) When the judgment is based on a misapprehension of facts;
(e) When the findings of facts are conflicting;
(f) When in making its findings the CA went beyond the issues of the case, or its findings are contrary to the admissions of both the appellant and the appellee;
(g) When the CA's findings are contrary to those by the trial court;
(h) When the findings are conclusions without citation of specific evidence on which they are based;
(i) When the facts set forth in the petition as well as in the petitioner's main and reply briefs are not disputed by the respondent;
(j) When the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record; or
(k) When the CA manifestly overlooked certain relevant facts not disputed by the parties, which, if properly considered, would justify a different conclusion. Spouses Andrada v. Pilhino Sales Corporation, G.R. No. 156448, 23 February 2011 (644 SCRA 1, 10), as cited in Abalos v., Heirs of Vicente Torio, id.
36Rollo (G.R. No. 183448), p. 79.
37 Id. at 80.
38 Civil Code of the Philippines, Article 975. When children of one or more brothers or sisters of the deceased survive, they shall inherit from the latter by representation, if they survive with their uncles or aunts. But if they alone survive, they shall inherit in equal portions.
39 Reyes v. Court of Appeals, 328 Phil. 171 (1996).