Chapter VIII - Voluntary Dealings with Registered Land

Tenio-Obsequio vs. CA, 230 SCRA 551, G.R. No. 107967, March 1, 1994
Levin vs. Bass, 91 Phil. 419, G.R. No. L-4340, May 28, 1952
Camper Realty vs. Reyes, GR 179543, October 6, 2010
Gurbax Singh vs. Reyes and Tantoco, G.R. No. L-3970, October 29, 1952
G.R. No. 183448, June 30, 2014 Sps. Peralta vs. Abalon; G.R. No. 183464 Abalon
Marissa Andal et. at. & Heirs of Restituto Rellama
Atty. Edna C. Del Rosario
Associate Dean
College of Law

G.R. No. 107967 March 1, 1994

CONSORCIA TENIO-OBSEQUIO, ORLANDO OBSEQUIO, and MANUEL, REGINA, TUNAY and
MELITON, all surnamed OBSEQUIO, petitioners,
vs.
COURT OF APPEALS, EUFRONIO ALIMPOOS, and PONCIANA ALIMPOOS respondents.
Estanislao G. Ebarle for petitioners.
Generoso S. Sansaet for private respondents.

REGALADO, J.:
This petition for review on certiorari seeks to annul and set aside the decision of the Court of
Appeals in CA-G.R. CV No. 22990, dated July 9, 1992, which reversed the judgment of the trial
court, as well as its resolution of November 6, 1992 denying the motion for reconsideration of its
aforesaid decision.
The subject matter of the present petition is a parcel of land, designated as Lot No. 846, Pls-225
located at Andanan, Baguyan, Agusan del Sur. This lot was previously covered by Original
Certificate of Title No. P-1181 registered in the name of herein respondent Eufronio Alimpoos and
which he acquired through a homestead application. 1 The said land is now registered in the

name of herein petitioner, Consorcia Tenio-Obsequio, as evidence by Transfer

Certificate of Title No. T-1421. 2
On September 10, 1986, private respondents filed a complaint in the court a quo against herein
petitioners Consorcia Tenio and her husband, Orlando Obsequio, and the heirs of Eduardo Deguro
for recovery of possession and ownership, alleging that sometime in 1964, they mortgaged the land
to Eduardo Deguro for P10,000.00; that to guaranty the loan they delivered to the latter the original

certificate of title to the land; that in the meantime, they continued to cultivate the same and, at the
end of the harvest season, they gave two-thirds (2/3) of the harvest to Eduardo Deguro; that on June
25, 1965, Eduardo Deguro and his wife, without the knowledge and consent of herein private
respondents, prepared a document of sale and through misrepresentation and other manipulations
made it appear that private respondents sold the land to them.
This deed of sale was annotated at the back of the said certificate of title as Entry No. 16007. By
virtue thereof, Original Certificate of Title No. P-1181 in the name of Eufronio Alimpoos was
cancelled and Transfer Certificate of Title No. T-1360 was correspondingly issued in favor of
Eduardo Deguro. After the death of Eduardo Deguro, his heirs sold the land to Consorcia TenioObsequio. On September 22, 1970, Transfer Certificate of Title No. T-1421 was issued in her name.
It was allegedly only in 1982, when Eufronio Alimpoos received a Certificate of Agricultural
Leasehold of his land from the Department of Agrarian Reform (DAR), that he learned that the land
was already titled in the name of another.
In their answer, the heirs of Eduardo Deguro claimed that respondent Alimpoos spouses sold the
land to their late parents on June 25, 1965 for a consideration of P10,000.00, as evidenced by the
deed of absolute sale; that as a result thereof, Transfer Certificate of Title No. T-1360 was issued in
favor of their parents, that on April 23, 1970, after the death of their parents, they sold the said land
to Consorcia Tenio-Obsequio; that on September 22, 1970, a new Transfer Certificate of Title No.
1421 was issued in the name of the latter. Consorcia Tenio-Obsequio, on the other hand, maintains
that she purchased the land in question from the heirs of Deguro in good faith, for valuable
consideration and without knowledge of any flaw or defect whatsoever.
The trial court, giving credence to the evidence presented by herein petitioners, defendants therein,
ruled in their favor and rendered judgment disposing as follows:
1) dismissing the herein complaint;
2) declaring defendant Consorcia Tenio Obsequio as the true and
absolute owner of the land in litis;
3) ordering plaintiffs to pay P10,000.00 by way of moral damages;
4) ordering plaintiffs to pay P10,000.00 by way of exemplary
damages;
5) ordering plaintiffs to pay the expenses of litigation in the amount of
P5,000.00;
6) ordering plaintiffs to pay (a)ttorney's fees in the amount of
P5,000.00; and
7) to pay the costs.
In like manner, the money deposited in the Municipal Treasurer's Office of Bayugan
in the amounts of P2,724.95 covered by Official Receipt No. 0442623 dated
September 7, 1988 and P1,658.10 covered by Official Receipt No. 5497715 dated
September 14, 1988, as well as the sum of P3,927.00 deposited in Court pursuant to
the Court's Orders of January 16, 1987 and March 13, 1987, consisting of the
proceeds from the sale of the harvest taken from the area involved, is awarded to

defendant Consorcia Tenio Obsequio, is owner thereof after deducting the necessary
expenses and Clerk of Court (s) commission fee. 3
On appeal, respondent Court of Appeals reversed the decision of the lower court and rendered
judgment:
1) Declaring the plaintiff Eufronio Alimpoos as the true and legal owner of the
property subject of this case;
2) Declaring null and void the Deed of Absolute Sale marked as Annex "C" or exhibit
"D" and ordering the cancellation of TCT Nos.
T-1360 and T-1421 in the names of Eduardo Deguro and Consorcia Tenio Obsequio,
respectively;
3) Ordering the heirs of Eduardo Deguro and Laureana Rabuya, namely, Gonzalo
Deguro, Manuel Deguro, Tunay Deguro and Regina Deguro to reconvey the said
property to the plaintiffs:
4) Ordering the Register of Deeds to cancel the annotation of the Deed of Absolute
Sale at the back of TCT P-1181 in favor of Consorcia Tenio Obsequio and to clear
said TCT of all encumbrances executed by Eduardo Deguro and/or his heirs.
In addition, the defendants are ordered to pay the plaintiffs, jointly and severally, the
sum of P50,000.00 bay way of moral damages; P30,000.00 by way of compensatory
damages and P5,000.00 by way of attorney's fees and costs of litigation. 4
Petitioners then filed a motion for reconsideration of the said decision which was denied by the Court
of Appeals in its resolution dated November 6, 1992, 5 hence the instant recourse by

petitioners.
After a careful review of the records of this case and the legal consideration applicable to the proven
facts thereof, we find the petition at bar to be meritorious. Reconveyance of the land in question to
the original owner is not in order.
Herein respondent Alimpoos, as the original owner of the said land, is assailing the title of petitioner
on the ground that their original certificate of title over the said land was cancelled by virtue of a
forged deed of absolute sale.
Under Section 55 the Land Registration Act, as amended by Section 53 of Presidential Decree No.
1529, an original owner, of registered land may seek the annulment of a transfer thereof on the
ground of fraud. However, such a remedy is without prejudice to the rights of any innocent holder for
value with a certificate of title.A purchaser in good faith and for value is one who buys the property of another, without notice that
some other person has a right to or interest in such property, and pays a full and fair price for the
same at the time of such purchase or before he has notice of the claim or interest of some other
person in the property 6 In consonance with this accepted legal definition, petitioner

Consorcia Tenio-Obsequio is a purchaser in good faith. There is no showing whatsoever

nor even an allegation that herein petitioner had any participation, voluntarily or
otherwise, in the alleged forgery.

Nor can we charge said petitioner with negligence since, at the time of the sale to her, the land was
already registered in the name of Eduardo Deguro 7 and the tax declaration was also issued in

the latter's name. 8It was also clearly indicated at the back of the original certificate of
title that Eduardo Deguro acquired ownership over the said land by virtue of the deed of
sale executed in his favor. 9 In fact, it is not disputed that one of his heirs was actually
residing therein. 10 There is no annotation, defect or flaw in the title that would have
aroused any suspicion as to its authenticity. Such being the case, petitioner has the
right to rely on what appears on the face of the certificate of title.
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. 11 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 property. 12
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. 13
Moreover, there is no reason to doubt the authenticity of the deed of sale which constituted the basis
for the issuance of the transfer certificate of title in the name of Eduardo Deguro, considering that not
only was the contract notarized but that it was also approved by the Secretary of Agriculture and
Natural Resources in compliance with Section 118 of the Public Land Act. 14
There is no indubitable, legal and convincing reason for nullifying the deed of sale. Herein private
respondents have not presented any cogent, complete and convincing proof to override the
evidentiary value of the duly notarized deed of sale. A notarial document is evidence of the facts in
the clear unequivocal manner therein expressed. It has in its favor the presumption of regularity. To
contradict all these, there must be evidence that is clear, convincing and more than merely
preponderant. 15
The fact alone that the signature of private respondent Eufronio Alimpoos appearing on the deed of
sale of Deguro differs in certain points from his signature appearing in the "Kasabutan sa Prenda" is
not enough to warrant the conclusion that the signature in said deed of sale is not genuine. The

records show that the signatures of private respondent Eufronio Alimpoos in one of the cash
advance receipts 16 and in the notice of the trial court's order dated March 4, 1988 17 are

similar to the signature appearing in the deed of sale. It is, therefore, not improbable
that, as claimed by herein petitioners, private respondent could have deliberately and
purposely altered their signatures on the mortgage contract to thereafter make it appear
that a discrepancy actually exists.
Forgery cannot be presumed; it must be proved by clear, positive and convincing evidence. Those
who make the allegation of forgery have the burden of providing it since a mere allegation is not
evidence. 18 Private respondents in this case ruefully failed to substantiate with sufficient

evidence their claim that their signatures appearing on the deed of sale were forged.
At any rate, there are several reasons to doubt the authenticity of the "Kasabutan sa Prenda." Firstly,
it has not been sufficiently explained why, although it should normally be with the mortgagee, the
original mortgage contract remained in the possession of the mortgagor and it was only after the
death of the alleged mortgagee that the same was presented, which was more than twenty years
from the date of its alleged execution. Secondly, the consideration of P10,000.00 for a mortgage in
1964 of a piece of rural land consisting of only 81,882 square meters, with the mortgagee paying the
taxes thereon, is too high or excessive, considering that the same piece of land was coetaneously
mortgaged with the Development Bank of the Philippine for only P1,900.00. 19 Thirdly, the texture

of the paper on which it was written and the clarity of the writing show that the
document, supposedly executed on July 25, 1964, is of recent vintage and could not be
more than twenty years old, even as of this late date. 20
Yet, even on the implausible assumption, ex gratia argumenti, that the deed of sale in favor of
Eduardo Deguro was forged and is, therefore, null and void, such fact cannot be successfully
invoked to invalidate the title subsequently issued to herein petitioner who, as earlier stated, is an
innocent purchaser for value and in good faith.
It has been consistently ruled that a forged deed can legally be the root of a valid title when an
innocent purchaser for value intervenes. 21 A deed of sale executed by an impostor without

the authority of the owner of the land sold is a nullity, and registration will not validate
what otherwise is an invalid document. However, 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, the vendee had the
right to rely upon what appeared in the certificate and, in the absence of anything to
excite suspicion, was under no obligation to look beyond the certificate and investigate
the title of the vendor appearing on the face of said certificate. 22
The Torrens Act, in order to prevent a forged transfer from being registered, erects a safeguard by
requiring that no transfer shall be registered unless the owner's certificate of title is produced along
with the instrument of transfer. However, an executed document of transfer of registered land placed
by the registered owner thereof in the hands of another operates as a representation to a third party
that the holder of the document of transfer is authorized to deal with the land. 23 In the case at bar,

it was even private respondents who made the allegation that they further delivered
their certificate of title to Eduardo Deguro, allegedly to secure the loan extended to
them. Consequently, petitioner cannot be faulted and, as a matter of fact, she is vested
with the right to rely on the title of Eduardo Deguro.

Furthermore, it was the very act of the respondent Alimpoos spouses in entrusting their certificate of
title to Eduardo Deguro that made it possible for the commission of the alleged fraud, if indeed there
was such a fraudulent conduct as imputed to the latter. Hence, the rule of law and justice that should
apply in this case is that as between two innocent persons, one of whom must suffer the
consequences of a breach of trust, the one who made it possible by his act of confidence must bear
the loss. 24
The right of the innocent purchaser for value must be respected and protected, even if the seller
obtained his title through fraud. The remedy of the person prejudiced is to bring an action for
damages against those who caused or employed the fraud, and if the latter are insolvent, an action
against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance
Fund. 25
It is also significant and worth noting that herein respondents filed the instant complaint only after
twenty-two years from the execution of the supposedly forged deed of absolute sale, and after
sixteen years from the date the title was transferred in the name of herein petitioner. An action for
reconveyance is a legal remedy granted to a landowner whose property has been wrongfully or
erroneously registered in another's name, but then the action must be filed within ten years from the
issuance of the title since such issuance operates as a constructive notice. 26
WHEREFORE, the decision and resolution of respondent court now under review are hereby
REVERSED and the decision of the court a quo is accordingly REINSTATED.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila
EN BANC
G.R. No. L-4340

May 28, 1952

REBECCA LEVIN, plaintiff-appellee,

vs.
JOAQUIN V. BASS, ET AL., defendants.
EUGENIO MINTU, defendant-appellant.
x---------------------------------------------------------x
G.R. No. L-4341

May 28, 1952

JOAQUIN V. BASS, plaintiff-appellee,

vs.
JOSE C. ROBLES, ET AL., defendants.
REBECCA LEVIN, ET EL., intervenors.
EUGENIO MINTU, intervenor-appellant.
x---------------------------------------------------------x

G.R. No. L-4342

May 1952

JOAQUIN V. BASS, plaintiff-appellee,

vs.
EUGENIO MINTU, defendant-appellant.
x---------------------------------------------------------x
G.R. No. L-4343

May 28, 1952

REBECCA LEVIN, plaintiff-appellee,

vs.
JOAQUIN V. BASS, defendant-appellant.
x---------------------------------------------------------x
G.R. No. L-4344

May 28, 1952

JOAQUIN V. BASS, plaintiff-appellant,

vs.
REBECCA LEVIN, defendant-appellee.
x---------------------------------------------------------x
G.R. No. L-4345

May 28, 1952

JOAQUIN V. BASS, plaintiff-appellant,

vs.
JOSE C. ROBLES and AMINTA T. DE ROBLES, defendants-appellees.
x---------------------------------------------------------x
G.R. No. L-4346

May 28, 1952

JOAQUIN V. BASS, plaintiff-appellant,

vs.
AMINTA T. DE ROBLES, defendant-appellee.
Josefina A. Calupitan for defendant-appellant Eugenio Mintu.
Jose S. Sarte for defendant-appellant Joaquin V. Bass.
Leodegario Alba for petitioner Pastor L. Manlapaz.
Mateo M. Nonato for petitioner and appellant Joaquin V. Bass.
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. L4342 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. L4342) 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 stoodone bearing No. 326 and the other No. 328 San Rafael Street, Manilaas 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 Malacaang 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 3Mintu). 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 5Mintu). 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 Villaseor 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 characterhe 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 registrationthe operative act to
convey and effect registered propertywould 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.

Republic of the Philippines

SUPREME COURT
Manila

THIRD DIVISION
G.R. No. 179543

October 6, 2010

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 Pequeo, 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 Rodolfos 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. Ligayas 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, Augusto sold the bigger portion thereof consisting of
7,420 square meters, later 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 Augustos 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 petitioners name on May 5, 1993.
On April 2, 1993, 19 years after Rodolfos co-owners of the property were notified two days after the
notarization of SPA of the forged signatures, Nena, Rodolfos 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
attorneys 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 Augustos 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 Nenas complaint,
disposing as follows:
PREMISES CONSIDERED, judgment, is hereby rendered:
1) dismissing plaintiffs complaint against defendants Augusto Bajado and Camper Realty
Corporation;
2) ordering defendant Rodolfo Pajo to pay plaintiff the sums of:
a) P50,000.00 as moral damages;
b) P10,000.00 as exemplary damages; and
c) P10,000.00 as attorneys 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 Rodolfos 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 Campers 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 courts
decision. It demurred to the trial courts 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 thecontract 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. P50,000.00 as moral damages;
b. P25,000.00 as attorneys fees; and
c. P20,000.00 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 petitioners 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 Augustos counsel, hence, its filing of a Motion for Reconsideration on March 8,
2007 of the appellate courts decision.
By Resolution of July 25, 2007, the Court of Appeals resolved to deny petitioners motion for review
for being filed out of time, it relying on the Postmasters 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 petitioners director Arturo F.
Campo.
Although petitioners principal office and Campos residence are housed in the same building,
Campos househelper Daisy cannot be considered as a person-in-charge of petitioners office to
consider her receipt of copy of the decision on behalf of petitioner.9 Neither can the househelpers
receipt suffice as service to Campo, even if he is a member of petitioners 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--vis that of Nenas.
Respondent Augusto acquired the property as his share in his mother Ligayas estate. As
compulsory heir, he merely stepped into the shoes of Ligaya. Since Ligayas title was derived from
Rodolfos sale to her on the basis of a forged SPA, Augustos title must be cancelled. Nemo dat
quod non habet. In fact, it appears that Augusto did not interpose an appeal from the appellate
courts decision divesting him of his title, rendering it final and executory as to him.
The nullity of Augustos 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.
There was no duty on petitioners part to go beyond the face of Augustos 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 Ligayas name in 1974 yet, and Augustos in 1986, and no encumbrance or lien was
annotated either on Ligayas or Augustos title. For 18 years or in 1992, there was no controversy or
dispute hounding the property to caution petitioner about Augustos title thereto.

Contrary to Nenas 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.
AT ALL EVENTS, factual findings of the trial court are accorded great respect and shall not be
disturbed on appeal, save for exceptional circumstances. It bears noting that despite the appellate
courts reversal of the trial courts decision, it did not disturb the trial courts findings respecting
petitioners good faith.
1avvphi1

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 SET ASIDE and
another isrendered as follows:
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 ofP50,000.00 as moral damages, P25,000.00 as attorneys fees, and P20,000.00
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.
The Register of Deeds of Davao City is FURTHER ORDERED to cancel Transfer Certificate of Title
No. T-185959 in the name of respondent Augusto Bajado and to issue in its stead a title in the
names of respondents Maria Nena Pajo-Reyes and Godofredo Pajo, Jr.
SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

EN BANC
G.R. No. L-3970

October 29, 1952

GURBAX SINGH PABLA & CO., GURBAX SINGH PABLA, BELA SINGH PABLA, OJAGAR SINGH,
DHARAM SINGH, TALOK SINGH and CIPRIANO TAN ENG KIAT, petitioners-appellees,
vs.
HERMOGENES REYES and TEODORA TANTOCO, respondents-appellants.
The facts are stated in the opinion of the Court.
Jose N. Buendia for appellants.
Eliseo Caunca for appellees.
LABRADOR, J.:
This is an appeal prosecuted by the respondents-appellants against an order of the Court of First
Instance of Manila dated November 29, 1949, compelling them to surrender owner's duplicates of
Transfer Certificates of Title Nos. 8071 and 8072, so that the contract of lease entered into between
petitioners-appellees and the owner of the land covered by said certificates of title be annotated
thereon. John Tan Chin Eng is the owner of the land covered by the above-mentioned certificates of
title, and on July 23, 1948, he entered into a contract (Exhibit A) with the petitioner-appellees, under
the terms of which petitioners-appellees were to construct thereon a three-story building of concrete
and of strong materials valued at from P80,000 to P90,000. The contract also provided that the
building shall become the exclusive property of the owner of the land, but that the petitionerappellees were to occupy, hold, or possess it as lessees for a period of three years and six months
from its completion, without paying any rentals therefor, the sum spent in the construction being
considered as the rentals; that after the above period of three years and six months petitionersappellees were to continue occupying the said building for another two years at a monthly rental of
P2,000. This contract of lease was filed and registered in the office of the Register of Deeds of
Manila on August 10, 1948, under Primary Entry No. 3352, Volume 15. At the time that the contract
was entered into there was an existing mortgage over the land in favor of Jose Calvo and Carlos
Calvo for the sum of P110,000. This mortgage in favor of the Calvos was cancelled, and a new
mortgage was executed by the owner in favor of respondents-appellants herein, Honorable
Hermogenes Reyes and his spouse Teodora Tantoco, dated March 8, 1949, which was registered on
the same date in the office of the Register of Deeds of Manila under Primary Entry No. 5014. On
May 14, 1949, the original contract of lease, Exhibit A, was amended by Exh. C, by virtue of which
the period under which the lessees were to hold any occupy the property without rentals was
extended to seven years and four months, and the rental for the additional two years thereafter
reduced to P1,148. This amended contract of lease, Exhibit C, was also registered in the office of the
Register of Deeds of Manila under Primary Entry No. 5014, Volume 16, on May 20, 1949.
On May 25, 1949, counsel for petitioners-appellees wrote respondents-appellants requesting them
to allow him to take the certificates of title to the office of the Register of Deeds of Manila for the
annotation of the contracts of lease entered into by the owner with them (Exhibit D), and on May 27,
1949, the son of respondents-appellants acknowledged receipt of the said letter but informed
counsel for the petitioner-appellees that the request could not be granted without the written consent
of the owner of the certificates of title (Exhibit E). On June 16, 1949, respondents-appellants' son
wrote the owner of the land (Exhibit M) demanding the payment of the overdue interest on the
mortgage with the following statement:
. . . For this reason, I wish to request that you come over to my office before 12:00 noon to
pay the said interest before we can deliver your Transfer Certificate of Title to Atty. Manuel P.

Calanog who will take charge of registering the lease contract between Mr. Singh Pabla and
your goodself.
On June 3, 1949, the petitioners-appellees filed a motion in the Court of First Instance of Manila
praying that an order issue to the owner for the delivery of the owner's duplicates of transfer
certificates of title Nos. 8071 and 8072 to the petitioners in order that the Register of Deeds of
Manila may be able to make the annotation thereon of the contract of lease, Exhibit A, and its
amendment, Exhibit C. Against this petition Hermogenes Reyes and Teodora Tantoco filed an
opposition, alleging that they had no knowledge whatsoever of the contract of lease, Exhibit A, or of
its amendments, Exhibit C, and that the execution of the amendment, Exhibit C, violated the express
provision of the mortgage, to the effect that the owner could not sell, assign, or encumber the
mortgaged premises without the written consent of the mortgages. It is to be noted that with respect
to the original contract of lease, Exhibit A, no allegation is made in the opposition of the respondentsappellants that they were not aware of the existence of the contract, Exhibit A, their only allegation
being that the only annotation on the certificates of title at the time they entered into the contract of
mortgage was the mortgage in favor of Jose Calvo and Carlos Calvo. It is also to be noted that
respondents-appellants do not deny an express allegation of paragraph 13 of the amended petition
to the effect that notice was given to the public by a big sign board placed on the premises while the
building was under construction that petitioners-appellees are the owners of the building. The
amended petition further states, without denial on the part of the respondents-appellants, that as
early as October 9, 1948, the Register of Deeds of Manila had demanded in writing from the owner
of the land the submission of his duplicate certificates of title Nos. 8071 and 8072 in order that the
lease executed by him in favor of the petitioners-appellees may be given due course. At the hearing
of the motion no oral evidence was submitted; only documentary evidence was presented.
Thereafter the Court of First Instance of Manila issued the order already mentioned above, directing
respondents to surrender the certificates of title to the Register of Deeds of Manila in order that
petitioners-appellees' contract of lease may be noted thereon. It expressly found that respondentsappellants had knowledge of the lease contract, Exhibit A, but that respondents' deed of mortgage of
March 8, 1949, has priority over petitioner's amended contract of lease, Exhibit C. As regards the
(supposed) prohibition contained in the contract of mortgage, the court held that the prohibition gives
a right of foreclosure; in other words, that in spite of the prohibition the amended contract of lease,
Exhibit C, may not be considered as null and void.
In this court on appeal claim is made on behalf of the respondents-appellants that the court a
quo erred in holding that respondents-appellants had knowledge of the contract of lease, Exhibit A;
that it erred in holding that Tirso T. Reyes is the attorney-in-fact of the respondents-appellants; that it
erred in ordering the registration of the contract of lease, Exhibit A; and that it erred in not holding
that the registration of the contracts, Exhibits A and C, will prejudice the rights and interest of
respondents-appellants.
It should be noted that all that the petitioners demand or pray for is the surrender of the titles to the
Register of Deeds so that their contracts of lease, Exhibits A and C, may be noted thereon. The only
issue, therefore, is whether petitioners have a right to have said deeds registered. It is not denied
that the contracts have been executed by the registered owner of the land, or that they have been
lawfully executed, or that they have all the qualities of registerable documents. Indeed, the owner is
agreeable to the registration. The objections interposed by respondents, who are mortgagees
merely, that they had no knowledge of the contract of lease, or that their mortgage has priority, or
that they will be prejudiced, are beside the issue.
The purpose of registering an instrument is to give notice thereof to all persons (section 51, Act No.
496); it is not intended by the proceedings for registration to seek to destroy or otherwise affect

already registered rights over the land, subsisting or existing at the time of the registration. The rights
of these parties, who have registered their rights, are not put in issue when an instrument is
subsequently presented for registration; nor are its effects on other instruments previously registered
put in issue by the procedure of registration. Thus, the objections raised by respondents-appellants
that they had no knowledge of the contract of lease, Exhibit A, before the property was mortgaged to
them, or that the same violates their contract of mortgage with the owner of the land these are not
passed upon by the order for the registration of petitioners-appellees' contract of lease. The
objections, as well as the relative rights of all parties who have registered their deeds, shall be
decided in the proper suit or proceeding when the opportune occasion arises; but they are not now
in issue, nor may they be adjudicated upon, simply because petitioners-appellees have applied for
the registration of their contract of lease.
The impropriety and inconvenience of proceeding to determine completely and in advance all the
possible consequences of a document, upon all parties affected thereby, in the proceeding for its
registration becomes apparent when, as in this case, important and complicated questions of fact
and of law were presented by the respondents-appellants about their alleged lack of knowledge of
the contracts of lease and the invalidity thereof. The court a quo passed upon vital issues of fact
upon the motion and the opposition thereto, and upon the documents, letters, and receipts
presented, without any other evidence than the above. Yet the question of knowledge is mainly a
question of fact and requires inquiry into many and complicated circumstances, which can not be
satisfactorily shown except by testimony.
On the other hand, the supposed invalidity of the contracts of lease is no valid objection to their
registration, because invalidity is no proof of their non-existence or a valid excuse for denying their
registration. The law on registration does not require that only valid instruments shall be registered.
How can parties affected thereby be supposed to know their invalidity before they become aware,
actually or constructively, of their existence or of their provisions? If the purpose of registration is
merely to give notice, then questions regarding the effect or invalidity of instruments are expected to
be decided after, not before, registration. It must follow as a necessary consequence that registration
must first be allowed, and validity or effect litigated afterwards.
The foregoing, however, must not be understood as an absolute and invariable rule of procedure, for
parties may, by mutual consent, submit issues for determination at the time of the proceeding to
register a document. But the court should only proceed therewith (determination of the issues) upon
giving all the parties concerned sufficient opportunity to present their respective sides and the
evidence in support thereof, and that if this can not be done, the determination of the issues should
be reserved in a subsequent proceeding and the registration of the document ordered.
In accordance with the above opinion, we find that the issues raised by respondents-appellants,
namely, that the contracts of lease, Exhibits A and C, are invalid because they violate the contracts
of mortgage executed in favor of the owner of the land, that Tirso T. Reyes is not the attorney-in-fact
of the respondents-appellants, and that the respondents-appellants had no knowledge of the
execution of the contract of lease, Exhibits A and C these issues were not properly investigated
because respondents-appellants did not have the opportunity to present evidence thereon and did
not even present copy of their mortgage at the hearing, and the trial court decided the questions
without full and complete investigation. The ruling of the trial court on the above issues should,
therefore, be set aside and their determination reserved in a proper proceeding.
Wherefore, the opposition to the motion for the surrender of the certificates of title to the Register of
Deeds of Manila is overruled, and the order appealed from, in so far as it orders the surrender of the
certificates of title for the registration of the contracts of lease, is hereby affirmed, but the other

rulings are reversed, and the other issues raised by respondents-appellants reserved for
determination in a proper proceeding. With costs against the respondents-appellants.
Paras, C. J., Bengzon, Padilla, Montemayor and Jugo, JJ., concur.

PABLO, J., dissenting:

Los opositores Hermogenes Reyes y Teodora Tantoco son acreedores hipotecarios de los lotes con
certificados de transferencia de titulo Nos. 8071 y 8072 y, en virtud de una clausula de dicha
hipoteca, el dueno no puede vender, trasparar o gravar dichos lotes hipotecados sin el
consentimiento por escrito de los acreedores. El dueno, por tanto, no podia legalmente arrendar
dichas fincas a los hoy mocionantes sin dicho consentimiento. Si, en contravencion de dicho
contrato, el dueno los arrendo a los mocionantes, dicho arrendamiento no debe ser anotado, en
proteccion de los arrendatarios que no obraron de buena fe, en los certificados de transferencia de
titulo Nos. 8071 y 8072. La inscripcion en la Oficina del Registrador de Titulos de la hipoteca era una
notificacion a todo el mundo de que el propietario no podia gravar, arrendar, etc., los lotes, sin
consentimiento de los acreedores hipotecarios.
Si los mocionantes hubieran obrado con la prudencia ordinaria de ver el titulo de dichos lotes en la
Oficina del Registrador de Titulos, habrian descubierto que el dueno no podia arrendarlos sin el
consentimiento de los acreedores hipotecarios. Es evidente que los mocionantes quieren subsanar
la falta de precaucion con que debian haber obrado antes de arrendar los lotes, en perjuicio de los
acreedores hipotecarios.
Ordenar la anotacion del arrendamiento es proteger a los arrendatarios que no obraron de acuerdo
con las disposiciones legales y conculcar los derechos legitimos de los acreedores, debidamente
inscritos.
El articulo 51 de la Ley No. 496 tiene aplicacion a los casos en que, sin intervencion de la otra parte
o sin su conocimiento, el interesado consigue inscribir escritura de traspaso, hipoteca,
arrendamiento, embargo, etc. an la Oficina del Registrador de Titulos. En tales casos, la inscripcion
surtira el efecto de notificacion a todos los que puedan tener reclamacion, y no en camos, como el
presente, en que los acreedores ya se oponen abiertamente a la anotacion pedida, despues de
notificados de la presentacion de la mocion. Cuando hay una oposicion que alega violacion de un
derecho substancial, lo que procede es no ordenar la inscripcion sino hacer que las partes
presenten todas las pruebas en apoyo de su respectiva alegacion, o que litiguen en el tribunal
correspondiente, suspendiento toda accion sobre la mocion en que se pide la presentacion al
registrador del duplicado del certificado de transferencia de titulo para la anotacion.
Siguiendo la teoria de la mayoria, la notificacion a los interesados solamente comenzara a tener
lugar despues que se haya inscrito el arrendamiento impugnado por orden de este Tribunal, y que
desde esa fecha pueden iniciar los pleitos que las partes quieran suscitar. Me parece que eso es
ceremonia innecessaria para este caso particular. Los acreedores ya han planteado su oposicion a
la anotacion. Su objecion esta fundada en los terminos precisos del contrato de hipoteca; parte de
las pruebas ya se han presentado; lo que procede, en mi opinion, es devolver el expediente al
juzgado de origen dando a las partes oportunidad de presentar todas sus pruebas y despues decidir
si cabe o no la anotacion. Es hacer perder el tiempo a las partes interesadas y a los juzgados
obligarles a litigar despues que este Tribunal haya ordenado la anotacion de dicho arrendamiento, y
en el caso de que se decidiese que los mocionantes no tienen derecho a anotar la escritura de

arrendamiento, entonces se habra de ordenar la cancelacion de la anotacion ya ordenada por este

Tribunal. Habra algun juzgado inferior que se atreva a ordenar la cancelacion de una anotacion
ordenada por este Tribunal? Y para que fueron notificados los acreedores de la vista de la mocion
si, despues de todo, sin oir sus pruebas, se ordena tal anotacion? Eso es contrario al espiritu que
informa nuestro sistema de legislacion: de proporcionar a las partes justa, pronta y no costosa
administracion de justicia.
Voto por la revocacion de la orden apelada y que se devuela el expediente para ulterior tramitacion,
como tengo indicado.

Republic of the Philippines

SUPREME COURT
Manila
FIRST DIVISION
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 Decision of the Court of Appeals (CA) Seventeenth Division in CA-G.R.
CV No. 85542. The CA had reversed the 14 April 2005 Decision of the Regional Trial Court (RTC),
Fifth Judicial Region of Legaspi City, Branch 5, in Civil Case No. 9243.
1

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 owners 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 owners duplicate copy of the said title got lost in
1976 after the same was delivered to him. They averred that the owners 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 plaintiffsappellees 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) owners duplicate certificate of Oct No. (O) 16" since the
owners 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 quos 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 owners 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 P50,000.00 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.

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. 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 Rellamas claim of ownership over
such a significant property, which was almost a hectare.
6

The CA also ruled that the heirs of Bernardina Abalon had the legal standing to question the sale
transaction between Rellama and their predecessor-in-interest. It concluded that the heirs of Abalon
had acquired the subject property by ordinary acquisitive prescription and thus had every right to
attack every document that intended to divest them of ownership thereof, which in this case 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. On the other hand, it accorded the Andals the presumption
of good faith, finding no evidence that would rebut this presumption.
8

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. 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. THE ISSUES
13

14

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 upheld
15

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 COURTS 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, we explained the purpose of the Torrens system and its
legal implications to third persons dealing with registered land, as follows:
18

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. This rule, however, admits of exceptions, which
we explained in Clemente v. Razo:
20

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 value 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.
23

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. The CA
concluded that this was the case for the Andals.
25

The appellate court cited Fule v. Legare 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:
26

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 Appeals is the applicable ruling, because the facts
therein are on all fours with the instant case.
27

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 formers copy and succeeded
in having Fernandezs title declared null and void. Meanwhile, Mota was able to foreclose on
Fernandezs 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 owners 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. (Emphasis and underscoring
supplied)
29

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 Fernandezs 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. 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.
30

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 owners 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 Rellamas ownership over the subject parcel of land. Hence, we sustain
the CAs 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 Peraltas 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." 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." 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."
32

33

34

Whether or not Spouses Peralta are buyers in good faith, is without a doubt, a factual issue.
Although this rule admits of exceptions, 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.
35

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. Despite this omission, it still held that Mansueto and Amelia acquired the subject property
36

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 975 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. 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.
38

39

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.