When innocence prevails over one’s title

“Life is like a cash register,” said American clergyman Fulton J. Sheen. “… [E]very account, every thought, every deed, like every sale, is registered and recorded.”

Insofar as transactions involving real property are concerned, the Supreme Court has consistently held that affected parties may safely rely on the correctness of a certificate of title registered under the Torrens system and are not otherwise obliged to go beyond it to determine the condition of the property.

This rule, however, recognizes exceptions to this rule, as highlighted in Spouses Dominador and Ofelia Peralta v. Heirs of Bernardina Abalon.

In this case, Bernardina Abalon was the registered owner of a parcel of land, which was allegedly sold to a certain Restituto Rellama. It was sold in portions to Spouses Dominador and Ofelia Peralta, and Eduardo Lotivio, who subsequently sold the same to Marissa, Arnel, and Leonil Andal.

Abalon’s heirs, Mansueta and Amelia, however, filed a civil case against Rellama, Spouses Peralta, and the Andals, claiming, among others, that the Deed of Absolute Sale supposedly executed by Abalon and Rellama was forged. While Rellama was able to cause the cancellation of Abalon’s title to the property by presenting the forged deed, Abalon had never foregone of the owner’s duplicate copy of her title, and had retained possession of the property through her tenant.

Thus, Mansueta and Amelia succeeded Abalon as such property owner upon her death, unlike with Rellama, who never even set foot within the premises.

Moreover, Spouses Peralta and the Andals could not be considered buyers in good faith since they were aware that Mansueta and Amelia had possessed the property at the time they purchased it. Consequently, their titles should be considered void.

After trying the case, the Regional Trial Court (RTC) ruled in favor of Mansueta and Amelia by directing that the title under Abalon’s name be restored and the titles issued in favor of Spouses Peralta and the Andals be cancelled.

Likewise, it concluded that the facts that a mere photocopy of the deed between Abalon and Rellama was presented before the Registry of Deeds for registration and that it could not be found from the latter’s records confirmed that the deed was a mere forgery.

Upon appeal, the Court of Appeals reversed the RTC’s decision. While it held that the sale between Abalon and Rellama was fraudulent, such that, among others, Abalon could not have executed the same when she executed a leasehold contract with her tenant during this time, it found that Spouses Peralta were buyers acting in bad faith for relying on a mere photocopy of Rellama’s alleged title to the property.

Meanwhile, it found that the Andals were presumably buyers acting in good faith, absent contrary proof thereto.

The Supreme Court has affirmed the Court of Appeals’ findings, reiterating that a certificate of title under the Torrens system serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. Thus, any person dealing with a registered parcel of land is not obliged to go beyond the face of the title, but is only charged with notice of the burdens and claims annotated thereto.

Nevertheless, this rule does not apply when that person has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry—that is, among others, when the purchaser knows of a defect or lack of title in his vendor. When these facts or circumstances are present, the person should look beyond the certificate and investigate the vendor’s title appearing on its face.

Failure to exercise such caution will not make the person an innocent purchaser for value or purchaser in good faith whose claim of title over the property is valid under the law.

In this case, the Andals were purchasers in good faith whose title to the portion of the dispute property remains valid, even when it stemmed from a forged or fraudulent deed. To be sure, they were not shown to have known the fraudulent circumstances concerning the transfer of the ownership of Abalon’s property to Rellama when they bought said portion.

Meanwhile, Spouses Peralta were buyers in bad faith. A mere photocopy of Rellama’s title should have made them suspicious that his title was flawed because he did not possess the original thereof.

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