THIRD DIVISION available to sign the pertinent documents to effect the transfer. TCT No.

195213
was finally issued in petitioner’s name on May 5, 1993.
G.R. No. 179543 October 6, 2010
On April 2, 1993, 19 years after Rodolfo’s co-owners of the property were notified
CAMPER REALTY CORP., Petitioner, vs. MARIA NENA PAJO- two days after the notarization of SPA of the forged signatures, Nena, Rodolfo’s
REYES represented by her Attorney-in-Fact Eliseo B. Ballao, AUGUSTO P. sister-co-owner, filed a complaint against Augusto and her brothers Rodolfo and
BAJADO, RODOLFO PAJO and GODOFREDO PAJO, JR., Respondents. Godofredo, Jr. for "declaration of nullity and/or inexistence of contracts,
cancellation of title, quieting of title and possession, damages and attorney’s fees
with prayer for writ of preliminary injunction and a temporary restraining
DECISION 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.
CARPIO MORALES, J.:
Rodolfo Pajo (Rodolfo) caused the notarization on March 27, 1974 by Atty. Nena alleged that only her brother Godofredo, Jr. remained as co-owner, her
Camilo Naraval of a Special Power of Attorney (SPA) executed by him and other brothers Rodolfo and Tito having ceded to her their respective shares in the
purportedly by his four siblings Maria Nena Pajo Reyes (Nena), Godofredo, Jr. property by a notarized Deed of Confirmation on May 5, 1976; and her brother
(Godofredo), Tito (Tito), and Isaias (Isaias). The SPA authorized Rodolfo to sell a Isaias had died without issue.
parcel of land (the property) containing an area of 8,060 square meters, situated
in Catalunan Pequeño, Davao City, and covered by Transfer Certificate of Title
(TCT) No. T-41086 in the name of the siblings. 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
A day after the notarization of the SPA or on March 28, 1974, Rodolfo sold the acts of harassment against the plaintiff (Nena) . . . "2
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. On learning of Augusto’s sale of part of his interest in the property to petitioner,
Nena, by Amended Complaint dated April 20, 1993, impleaded petitioner as a
necessary party. Nena contended that no right could have been transmitted to
Two days after he notarized the SPA, Atty. Naraval observed that all the Ligaya and the subsequent transferees, the SPA being a forged document.
signatures therein, except that of Rodolfo, were forged, drawing him to write
Rodolfo’s co-owners respecting his cancellation of the SPA from his notarial
register. By Decision of September 5, 1997, 3 Branch 16 of the Davao RTC dismissed
Nena’s complaint, disposing as follows:
After Ligaya passed away, the property was bequeathed to her son-respondent
Augusto Bajado (Augusto) via Partition Agreement dated June 14, 1985. Ligaya’s PREMISES CONSIDERED, judgment, is hereby rendered:
title was thereafter cancelled and TCT No. T- 118270 was, in its stead, issued on
July 16, 1986 in the name of Augusto. 1) dismissing plaintiff’s complaint against defendants Augusto Bajado
and Camper Realty Corporation;
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, 2) ordering defendant Rodolfo Pajo to pay plaintiff the sums of:
Augusto sold the bigger portion thereof consisting of 7,420 square meters, later a) ₱50,000.00 as moral damages;
covered by TCT No. 185958 issued on December 11, 1992 still in his name, to b) ₱10,000.00 as exemplary damages; and
Camper Realty Corporation (petitioner). Augusto retained ownership of the c) ₱10,000.00 as attorney’s fees; and
remaining 640 square meters of the property (covered by TCT No. 185959 in his
name. 3) ordering the dismissal of defendants Augusto Bajado and Camper
Realty Corporation counterclaims. SO ORDERED. (underscoring
By Augusto’s claim, despite his sale of the 7,420 square meter lot to petitioner, supplied)
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 The trial court, albeit finding that Rodolfo’s co-owners’ signatures on the SPA
were forged, held that Nena is guilty of laches and declared the validity of the
transfer of the property to Augusto by way of judicial partition, and of the No. T-41086 of the Register of Deeds of Bataan (sic) to its full force and
subsequent sale to petitioner in this wise: effect;

Titles to the property were already under the names of the transferors at the time 4. Ordering defendant Rodolfo Pajo to pay appellant the following sums:
of the transfer – From Ligaya Vda. de Bajado to Augusto Bajado thru
succession/partition and from Augusto Majado to Camper Realty Corporation by a. ₱50,000.00 as moral damages;
Deed of Sale. On this basis, the Court cannot declare the nullity or inexistence of b. ₱25,000.00 as attorney’s fees; and
the succeeding contracts, to wit: Partition Agreement and the Deed of Sale c. ₱20,000.00 as exemplary damages.
executed by Augusto Bajado to Camper Realty Corporation, much more cancel
the Certificate of Title which at present is under Camper’s name for lot previously
titled No. 185958 now 195213 and Augusto Bajado for the smaller lot under Title 5. Ordering defendant-appellee Augusto Bajado to return the amount of
No. 185959. This aside, the Court also finds plaintiff Maria Nena Pajo- the purchase price and/or consideration of sale of the disputed land he
Reyes guilty of laches – defined as the failure or neglect to do that which, by sold to his co-defendant Camper Realty Corporation within ten (10) days
exercising due diligence could or should have been done earlier; x x from the finality of this decision with legal interest thereon from date of
x5 (underscoring supplied) the sale;

On appeal, the Court of Appeals (CA), by the challenged Decision, 6 reversed the 6. Ordering Rodolfo Pajo to return to the heirs of Ligaya Bajado the
trial court’s decision. It demurred to the trial court’s finding that Nena is guilty amount of the purchase price of the sale of the subject land within ten
of laches. It held that Augusto, as an heir of Ligaya, did not acquire a better right (10) days from the finality of this decision with legal interest from date of
over the property, viz: the sale.8

x x x There was no valid transfer to Ligaya and, accordingly, her son (Augusto), It appears that petitioner’s counsel of record, Atty. Raul C. Nengasca, died during
the appellee, did not acquire any right over the subject lot since an heir merely the pendency of the appeal, notice of which the appellate court was given.
steps into the shoes of the decedent and is merely the continuation of the Petitioner, who opted not to retain the services of a new counsel, claims not to
personality of his predecessor-in-interest. have received a copy of the decision and that it was only informed of it by
Augusto’s counsel, hence, its filing of a Motion for Reconsideration on March 8,
2007 of the appellate court’s decision.
Having thus declared that appellee acquired no right whatsoever over the
property in question, it follows that the contract of sale he entered into with
Camper was invalid and did not effectively transfer ownership over the By Resolution of July 25, 2007, the Court of Appeals resolved to deny petitioner’s
property.7 (underscoring supplied) motion for review for being filed out of time, it relying on the Postmaster’s
certification that a copy of its decision was actually received by petitioner on
December 28, 2006.
Thus the appellate court disposed:
Hence, the present petition for review on certiorari.
WHEREFORE, the appealed Decision is hereby REVERSED and SET ASIDE,
and judgment rendered:
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
1. Declaring null and void and of no effect, the Deed of Absolute Sale Belleza (Daisy) who, petitioner avers, was not authorized to receive the copy, she
dated March 28, 1974, and TCT No. T- 43326; being a mere househelper of petitioner’s director Arturo F. Campo.

2. Declaring null and void and of no effect, the Deed of Absolute Sale Although petitioner’s principal office and Campo’s residence are housed in the
dated August 31, 1992 and TCT Nos. T-185959 and T-195213; same building, Campo’s househelper Daisy cannot be considered as a person-in-
charge of petitioner’s office to consider her receipt of copy of the decision on
3. Ordering the Register of Deeds for Davao City to cancel TCT No. T- behalf of petitioner.9 Neither can the househelper’s receipt suffice as service to
185959 in the name of Augusto P. Bajado and TCT No. T-195213 in the Campo, even if he is a member of petitioner’s Board of Directors, absent a
name of Camper Realty Corporation and to restore and/or reinstate TCT showing that he had been authorized by petitioner to accept service.
On to the merits of the petition. Augusto presented a certified true copy of a Certificate Authorizing Registration
issued by the Bureau of Internal Revenue on September 3, 1992 14 to show that
In sales involving real property or any interest therein, a written authority in favor capital gains tax had been duly paid on the transfer. The Court takes judicial
of the agent is necessary, otherwise the sale is void. 10 Since the property was notice that said certificate is necessary for presentation to the Register of Deeds
subjected to ensuing transfers, it is necessary to establish the rights, if any, of the to register the transfer.
transferees vis-à-vis that of Nena’s.
AT ALL EVENTS, factual findings of the trial court are accorded great respect
Respondent Augusto acquired the property as his share in his mother Ligaya’s and shall not be disturbed on appeal, save for exceptional circumstances. It
estate. As compulsory heir, he merely stepped into the shoes of Ligaya. Since bears noting that despite the appellate court’s reversal of the trial court’s
Ligaya’s title was derived from Rodolfo’s sale to her on the basis of a forged decision, it did not disturb the trial court’s findings respecting petitioner’s good
SPA, Augusto’s title must be cancelled. Nemo dat quod non habet. In fact, it faith.
appears that Augusto did not interpose an appeal from the appellate court’s
decision divesting him of his title, rendering it final and executory as to him. 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
The nullity of Augusto’s title notwithstanding, the Court finds petitioner, who conclusive and indefeasible, however, in the hands of petitioner, it being an
acquired the bigger portion of the property from Augusto, a purchaser in good innocent purchaser for value.
faith. Cayana v. Court of Appeals reiterates a well-ensconced doctrine:
A word on the legal interest due on the reimbursement of the purchase price to
. . . a person dealing with registered land has a right to rely on the Torrens Nena and her remaining co-owner Godofredo, Jr. In accordance with Eastern
certificate of title and to dispense with the need of inquiring further except when Shipping Lines v. Court of Appeals, 15 since the claim does not involve a loan or
the party has actual knowledge of facts and circumstances that would impel a forbearance of money, imposition of interest rate of six percent (6%) per annum
reasonably cautious man to make such inquiry or when the purchaser has from date of filing of the complaint is in order.
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 WHEREFORE, the assailed Court of Appeals Decision in CA-G.R. CV.
suspicion should then prompt the vendee to look beyond the certificate and 59600 is SET ASIDE and another isrendered as follows:
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 1) The Deed of Absolute Sale dated March 28, 1974 executed by
for value nor a purchaser in good faith; and hence does not merit the protection respondent Rodolfo Pajo in favor of Ligaya Vda. De Bajado is declared
of the law.11 NULL and VOID.

A forged deed can legally be the root of a valid title when an innocent purchaser 2) Transfer Certificate of Title No. 195213 in the name of petitioner,
for value intervenes.12 For a prospective buyer of a property registered under the Camper Realty Corporation, is declared VALID. The Register of Deeds
Torrens system need not go beyond the title, especially when he has no notice of of Davao City is accordingly ORDERED to RETAIN in the Registry said
any badge of fraud or defect that would place him on guard. 13 His rights are thus Transfer Certificate of Title.
entitled to full protection, for the law considers him an innocent purchaser.
3) Respondent Rodolfo Pajo is ORDERED to pay respondent Maria
There was no duty on petitioner’s part to go beyond the face of Augusto’s title Nena Pajo-Reyes the amounts of ₱50,000.00 as moral damages,
and conduct inquiries on its veracity. Nena did not present proof of any ₱25,000.00 as attorney’s fees, and ₱20,000.00 as exemplary damages;
circumstance that could serve as caveat for petitioner to undertake a searching and
investigation respecting the title. Moreover, the property was registered in
Ligaya’s name in 1974 yet, and Augusto’s in 1986, and no encumbrance or lien
was annotated either on Ligaya’s or Augusto’s title. For 18 years or in 1992, there 4) Respondent Augusto Bajado is ORDERED to return the purchase
was no controversy or dispute hounding the property to caution petitioner about price paid by petitioner for the land covered by Transfer Certificate of
Augusto’s title thereto. 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.
Contrary to Nena’s assertion that the sale to petitioner was a mere subterfuge by
Augusto to validate his claim on the property, evidence shows that it was not.
The Register of Deeds of Davao City is FURTHER ORDERED to cancel Transfer court) for detainer brought by Joaquin V. Bass against Jose C. Robles and
Certificate of Title No. T-185959 in the name of respondent Augusto Bajado and Aminta T. de Robles, in which Rebecca Levin and Eugenio Mintu intervened, and
to issue in its stead a title in the names of respondents Maria Nena Pajo-Reyes where the last named intervenor is the appellant; G.R. No. L-4345 is the same
and Godofredo Pajo, Jr. SO ORDERED. case for detainer where Joaquin V. Bass is the appellant; G. R. No. L-4342 is an
action (case No. 516 of the same court) for annulment of sale brought by Joaquin
V. Bass against Eugenio Mintu where the latter is the appellant; G. R. No. L-4344
is an action (case No. 71159 of the same court) for detainer of a building located
at No. 328 San Rafael street brought by Joaquin V. Bass against Rebecca Levin
where the former is the appellant; and G. R. No. L-4346 is an action (case No.
2371 of the same court) for detainer brought by Joaquin V. Bass against Aminta
EN BANC T. de Robles where the former is the appellant. The two main cases (G. R. No. L-
4340 and No. L-4342) around which others revolve all under the appellate
G.R. No. L-4340 May 28, 1952 jurisdiction of this court.

REBECCA LEVIN, plaintiff-appellee, vs. JOAQUIN V. BASS, ET After a joint hearing the trial court rendered judgment annulling Exhibit A dated 5
AL., defendants. EUGENIO MINTU, defendant-appellant. January 1944, where it appears that, for and in consideration of P30,000,
x--------------------------------------------------------x Rebecca Levin and conveyed to Emiliano Eustaquio a lot containing an area of
G.R. No. L-4341 May 28, 1952 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
JOAQUIN V. BASS, plaintiff-appellee, vs. JOSE C. ROBLES, ET AL., defendants. and in consideration of P38,000, Emiliano R. Eustaquio sold and conveyed to
REBECCA LEVIN, ET EL., intervenors. EUGENIO MINTU, intervenor-appellant. Joaquin V. Bass the same lot and house; and Exhibit C dated 18 February 1944,
x---------------------------------------------------------x where it appears that, for and consideration of P65,000, Rebecca Levin sold and
G.R. No. L-4342 May 1952 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
JOAQUIN V. BASS, plaintiff-appellee, vs. EUGENIO MINTU, defendant-appellant. cancel transfer of certificates of title Nos. 73450 and 73451 issued in the name of
x---------------------------------------------------------x Joaquin V. Bass and in lieu thereof to issue new Torrens certificates of title in the
G.R. No. L-4343 May 28, 1952 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
REBECCA LEVIN, plaintiff-appellee, vs. JOAQUIN V. BASS, defendant-appellant. mortgage in favor of Co Chin Leng, entry No. 1616, as said mortgage appears on
x---------------------------------------------------------x both transfer certificate of titles Nos. 73450 and 73451 to be cancelled, and the
G.R. No. L-4344 May 28, 1952 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
JOAQUIN V. BASS, plaintiff-appellant, vs. REBECCA LEVIN, defendant-appellee. pendens noted on said transfer certificate of title in connection with civil case No.
x---------------------------------------------------------x 2562 of the Court of First Instance of Manila entitled "Isabelo
G.R. No. L-4345 May 28, 1952 Martinez vs. Joaquin V. Bass," entry No. 20955; holding that Rebecca Levin is
JOAQUIN V. BASS, plaintiff-appellant, vs. JOSE C. ROBLES and AMINTA T. DE entitled to recover from Joaquin V. Bass," damages for losses which she may
ROBLES, defendants-appellees. suffer by reason of said mortgage annotation and notice of lis pendens;
x---------------------------------------------------------x dismissing the complaint of Joaquin V. Bassin civil case No. 516, holding that the
G.R. No. L-4346 May 28, 1952
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, plaintiff-appellant, vs. AMINTA T. DE ROBLES, defendant-appellee. 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
PADILLA, J.: in said civil case, until paid; dismissing the complaint of Joaquin V. Bass in civil
G. R. No. L-4340 is an action (case No. 70054 of the Court of First Instance of cases Nos. 71159, 71549 and 2371 and declaring Rebecca Levin to be entitled
Manila) for annulment of sales of, and mortgage on, a lot and two houses erected to the payment of rentals by Jose C. Robles and/or Aminta T. de Robles for the
thereon and damages brought by Rebecca Levin against Joaquin V. Bass, use and occupation of the premises at No. 326 San Rafael street, Manila, from
Emiliano R. Eustaquio, Co Chin Leng and Eugenio Mintu where the last named 11 March 1945 until the tenants move out of the premises and to receive from the
defendant is the appellant; G. R. No. L-4343 is the same case where Joaquin V. clerk of court the sums of money deposited by Aminta T. de Robles and/or Jose
Bass is the appellant; G.R. No. L-4341 is an action (case No. 71549 of the same 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 receipt showing payment of realty tax on her property. None of the documents
be granted upon by and between them or those which may be declared by final Rebecca Levin signed was left to her. The following day (6 January 1944),
judgment to be the reasonable compensation for the use of occupation of the Joaquin V. Bass called on Rebecca Levin at her house and handed to her
premises; and ordering Joaquin V. Bass to render an accounting of the sums of P10,000 saying that it was a partial payment of the purchase price of the lot and
money he had received from the court, or otherwise, as rentals of the house at house at No. 326 San Rafael street which he represented had been sold to a
No. 326 San Rafael street from and after 11 March 1945, and to pay to Rebecca Japanese and asked her to give him the Torrens title of the house and lot. Upon
Levin the balance that may result from said accounting. Costs are taxed against being informed by her that the Torrens title of the houses and lot was in the
Joaquin V. Bass. 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
In 1943 Rebecca Levin was a widow, 65 years old and the registered owner of a him to the Agricultural and Industrial Bank where they paid the mortgage debt of
lot on which two houses stood—one bearing No. 326 and the other No. 328 San Isidore Reich (presumably the predecessor of the late husband of Rebecca
Rafael Street, Manila—as evidenced by transfer certificate of title No. 62680. She [Exhibit M]) and received a mortgage release and the Torrens certificate of title
was illiterate and knew only how to sign her name. At about the end of December No. 62680 (Exhibit K and K-1); and on February 1944, she signed a receipt for
1943 Joaquin V. Bass called on Rebecca Levin at her house on No. 328 San P2,000 (Exhibits L and L-1). Joaquin V. Bass not only took P2,000 to pay the
Rafael street, Manila, and representing himself to be a real estate broker asked mortgage debt to the Agricultural and Industrial Bank (Exhibit M) but also the
her whether she would sell her lot and house at No. 326 adjoining her residence. balance of P8,000 telling her that he would pay it to the owner of the building on
At that time there lived in the house of Rebecca Levin some Japanese civilians, Antonio Rivera street; that the balance of the repurchase price of her house At
officers or employees of the Pacific Mining Co., occupying or renting two rooms, No. 326 San Rafael street would be paid to her as soon as the lot and house sold
Angelita Martinez a brother, and Meliton Villasenor, a houseboy. In addition to be segragated or separated from the larger lot on which her house at No 328 San
P50 collected by her as monthly rental for the house at No 326, the Japanese Rafael street stood; and that it was necessary to make such subdivision to be
renting the two rooms paid her P200 monthly and supplied her with rice and other approved by the court in order that the sale of her house and lot not to arose any
foodstuffs without charge. Rebecca Levin told Joaquin V. Bass that she was not suspicion on her part Joaquin V. Bass gave her a receipt from that partial amount
selling her house at No. 326 San Rafael street. On subsequent calls Joaquin V. paid for the building on Antonio Rivera street signed by one Mariano Irurin y
Bass told Rebecca Levin that it would be to her advantage and benefit to sell the Reyes but the amount written therein was just P6,000. The signer of the receipt
lot and house at No. 326 San Rafael street and with the proceeds of the sale to promised to deliver the deed of sale of the building of Antonio Rivera street within
purchase another house. He told her that if she would not sell the lot and house 5 days from the date of payment of P20,000, the balance of the purchase price
the Japanese who had been looking for houses to occupy might deprive her (Exhibit H). Being illiterate Rebecca Levin did not notice that the amount
thereof without getting anything in exchange therefor. He told her further that by appearing in the receipt was P6,000 instead of P8,000 which was the sum taken
selling her house, which she rented for P50 a month only, and buying for from her by Joaquin V. Bass. To make her believe that she was the owner of the
P26,000 one on Antonio Rivera street she would gain because the monthly rental building on Antonio Rivera street, Joaquin V. Bass turned over to her the monthly
of the latter was P140. She consented to see the house at Antonio Rivera street rentals of the building for five months which he claimed he had collected from the
and went there accompanied by Joaquin V. Bass and Meliton Villasenor, her tenants of the building. Not long after the signing by Rebecca Levin of the
houseboy. Joaquin V. Bass pointed to a building (Exhibit G) of for apartments documents giving Joaquin V. Bass authority to sell the house at No. 326 San
(accessorias) not far from the Tutuban railroad station. They were not able to see Rafael street and the pretended purchase by her through him of the building on
the second story of the building because, according to Joaquin V. Bass, the Antonio Rivera street, the latter called on the former at her house. He found her
owner had gone to Pampanga. For the second time, they went to see the building sick. He told her that he had tested medicine or drug for ailments such as the one
on Antonio Rivera street but they again failed to see the second story of the she was suffering from and that if she would take it she would feel immediately
building for the same reason given by Joaquin V. Bass when they went to see it and completely relieved. He went down. Immediately after his return to the house
the first time. Relying upon the representations made by Joaquin V. Bass, he called and told the houseboy Meliton Villasenor to bring a glass of water
Rebecca Levin finally consented to sell her house. One of the last days of where he diluted the drug and asked Rebecca Levin to take it. The latter did not
December 1943 or of the first days of January 1944, while Rebecca Levin was hesitate to take it as until then she did not have the least suspicion of him who
engaged in conversation with Dr. Pastor L. Manlapaz and Angelita Martinez, succeeded in winning and enjoyed her trust and confidence. After taking the
Joaquin V. Bass called on her bringing along with him certain papers. Upon medicine she become to vomit and suffer stomach pains and her face and lips
Joaquin V. Bass" suggestion Rebecca Levin followed by him entered a room became swollen. She went for Dr. Pastor L. Manlapaz who found that she was
adjoining that where she, Dr. Manlapaz and Angelita Martinez were conversing, poisoned. After application of antidotes she recovered from the poisoning. This
and upon repeated representations and assurances made by Joaquin V. Bass incident coupled with the failure of Joaquin V. Bass to return to her the
that the papers he brought were just an authority to sell the house at No. 326 San documents she had been asking made Rebecca Levin suspicious of him and
Rafael street, Rebecca Levin signed five documents and Bass took from her bag consulted with Dr. Pastor L. Manlapaz and Filemon Poblador, the latter when
which she placed on a small table in the room her residence certificate and the 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 Mintu the lot and house at No. 328 San Rafael street desrcibed in transfer
office of the President of the Republic at Malacañang refused to handle the case certificate of title No. 73450, P90,000 of which was paid on the date of the
but promised to investigate it. After investigation Nedruda found that the lots were execution of the deed of sale; P10,000, to be retained by the vendee (Eugenio
transferred and registered in the name of Joaquin V. Bass and mortgaged him. Mintu) and to be paid to the vendor (Joaquin V. Bass) after the notice of lis
Finally, the services of attorney Cesar de Larrazabal on the property of Rebecca pendens in connection with civil case No. 2652 of the Court First Instance of
Levin which were registered in the office of Register of Deeds of Manila. It was Manila entitled "Isabelo Martinez vs. Joaquin V. Bass" shall have been removed
found out that the papers signed by her on 5 January 1944 were a deed of sale or cancelled; and P100,00, the balance, to be deposited by the vendee (Eugenio
of her house and lot at No. 326 San Rafael street for P30,000 in favor of Emiliano Mintu) upon instructions of the vendor (Joaquin V. Bass) with the clerk of court of
R. Eustaquio acknowledge on the same day before notary public Eliezar A. Manila after return of the former from a trip to Ilocos Norte, the deposit to be
Manikan (Exhibit A) and another deed of sale of her house and a lot No. 328 San made within 30 days from the date of the deed of sale and for the purpose of
Rafael street for P65,000 in favor of Joaquin V. Bass dated 18 February 1944 securing there release of the mortgage in favor of Co Chin Leng, the vendor
and acknowledge on that date before the same notary public Elizer A. Manikan (Joaquin V. Bass) undertaking to obtain the release of the mortgage on the
(Exhibit C); and that on 30 March 1944, for and in consideration of P38,000, property sold and to deliver it (the mortgage release) to the vendee (Eugenio
Emiliano R. Eustaquio sold to Joaquin V. Bass the lot and the house at No. 326 Mintu) and the cancellation of the notice of lis pendens on or before 8 April 1945
San Rafael street (Exhibit B.). Prior to the registration of these three deeds of (Exhibit 3-Mintu). To secure the fulfillment of the undertaking-the mortgage
sale, or on 24 February 1944, a petition was filed by attorney Eliezer A. Manikan release and cancellation of the notice of lis pendens-the vendor (Joaquin V.
in the name of Rebecca Levin praying for the subdivision of parcels of land into Bass) assigned, transferred and conveyed by way of liquidated damages to the
two lots-the certificate of title to lot No. 1 containing an area of 317.7 square vendee (Eugenio Mintu) his title, rights, interest, participation or share in and to
meters to be issued in the name of Emiliano R. Eustaquio and the certificate of lot No. 2, the larger lot on which house No. 328 San Rafael street is errected, and
title to lot No. 2 containing an area of 1,006.80 square meters to be issued in the both parties agreed that if the condition provided for in paragraph (d) of the deed
name of Rebecca Levin (Exhibit I). On February 1944, the petition was granted of sale be fulfilled, the condition in paragraph (e) thereof relative to the
by the Court of First Instance of Manila, Fourth Branch, presided over by Judge assignment, transfer and conveyance of lot No. 2 to the vendee would be null
Gervasio Diaz, (Exhibit J.) Transfer certificate of title No. 62680 in the name of and void without legal effect, otherwise it would remain in full force and effect.
Rebecca Levin describing a parcel of land located on San Rafael street The following clause was inserted with initials of both parties: "force majeure and
containing an area of 1,3228.40 square meters entered on September 1941, fortuitous events exempts the vendor from compliance thereto" (Exhibit 3-Mintu.)
together with a memorandum of mortgage executed in favor of the Agricultural On 1 November 1944, Eugenio Mintu and Jose C. Robles entered into a lease
and Industrial Bank entered on 26 September 1939-a memorandum noted on the contract on the house and lot No. 326 San Rafael street, Manila (Exhibit 1-Mintu).
previous certificate of title No. 9220-was cancelled, and in lieu thereof Transfer From November 1944 to January 1945 Jose C. Robles paid to Eugenio Mintu the
certificate of title No. 71907 in the name of Emiliano R. Eustaquio for a parcel of rental of P45 a month as agreed upon (Exhibit 2-Mintu), but beginning February
land containing an area of 317.70 square meters more or less, and the house the rental of the house were not paid to Mintu because there was a dispute as to
erected thereon, and transfer certificate of title No. 71908 in the name of who was the owner of the house. On 3 November 1944, Eugenio Mintu deposited
Rebecca Levin for the remaining area of 1,006.80 square meters and the house with the sheriff of Manila for the account of Joaquin V. Bass the sum of
erected thereon, were issued by the Registrar of Deeds of Manila on 27 February P100,416.67 as full payment of the purchase price of the property sold to him on
1944, pursuant to the order of the court dated 22 February referred to (Exhibit J). 14 October 1944. The sum of P100,000 is the total of Bass" indebtedness to Co
On 11 May 1944, transfer certificate of title No. 71908 in the name of Rebecca Chin Leng-P70,000 secured by mortgaged and P30,000 unsecured, the sum of
Levin was cancelled and in the lieu thereof transfer certificate of title No. 73451 P416,67 represents the interest on the amount owned to Co Chin Leng up to the
was issued in the name of Joaquin V. Bass by the Registrar of Deeds of Manila; time of the deposit (Exhibit 4-Mintu) and the sum of P158.92 represents the
and on 10 April 1944, transfer of certificate of title No. 71907 in the name of sheriff's fees on the amount deposited (Exhibit 5-Mintu). On November 1944,
Emiliano R. Eustaquio was cancelled and in lieu thereof transfer certificate of title Eugenio Mintu presented and filed with the office of Registrar of Deeds of Manila
No. 73450 was issued in the name of Joaquin V. Bass by the Registrar of Deeds. the original of the deed of sale (Exhibit E) duly notarized and paid the sum of
On 8 April 1944, to secure the payment of P70,000, together with interests P224.50: P.50 for entry in the day book; P220 for registration fees; and P4 for the
thereon at 5 per cent per annum, payable in five years, Joaquin V. Bass issuance of two titles (Exhibit 6-Mintu). On the same date, together with the
mortgaged to Co Chin Leng the two lots and house selected thereon and the original deed of sale (Exhibit E) the owner's duplicates of transfer of certificate of
instrument of mortgage was registered on 10 April 1944 on both certificates of title Nos. 73450 and 73451 were presented and filed with the office of Registrar
title Nos. 73450 and 73451. On 6 July 1944, a notice of lis pendens was noted in of Deeds of Manila but said documents were not among those salvaged and
the back of transfer certificate of title No. 73450 in connection with civil case No. were presumed to have been lost or burned according to the certification of the
2562 of the Court of First Instance of Manila entitled "Isabelo Registrar of Deeds in and for the City of Manila (Exhibit 8-Mintu). On 19 January
Martinez vs. Joaquin V. Bass." On October 1944, for and in consideration of 1945, Eugenio Mintu paid to Joaquin V. Bass the sum of P10,000 in full
P200,000 "presenting circulating currency," Joaquin V. Bass sold to Eugenio 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 Bass to sign papers which he represented were mere authorization to sell is
the back of transfer certificate of title No. 70054 of the Court of First Instance of corroborated by Dr. Pastor L. Manlapuz, Angelita Martinez and Meliton
Manila entitled "Rebecca Levin vs. Joaquin V. Bass". Villasenor.

Joaquin V. Bass testifies that he acquired the lot and house at No. 328 San These witnesses had no interest to pervert the truth. Rebecca Levin was not in
Rafael street from Emiliano R. Eustaquio for P38,000 and the lot and house at need of money of fact she led quite a comfortable life. Only because of the
No. 328 San Rafael street from Rebecca Levin for P65,000, the first on 30 March misrepresentation that she would gain by selling her house at No. 326 San
1944 and the second on 18 February 1944; that Rebecca Levin paid him the Rafael street and of the threat made by Joaquin V. Bass that she might lose it did
monthly rental of P150 for the lot and house at No. 328 San Rafael street from she finally consent to sell it.
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 On the other hand, Joaquin V. Bass has a criminal record — was convicted
February unless it was reduced to P100; that on 19 May 1945 he brought against of estafa (Exhibit O) — and was involved ina shady deal (Exhibit R) and found to
her an action for detainer which on appeal to the Court of First Instance of Manila have presented a promisory note for P5,000 and a chattel mortgage which he
bears No. 71159; that after he acquired the property at No. 326 San Rafael street claimed Rebecca Levin had signed and upon which he brought an action against
from Emiliano R. Eustaquio the latter brought him to the tenant, Rosario Vda. de her for foreclosure (civil case No. 71481, the Court of First Instance of Manila),
Altonaga, who left the premises to go to the Cagayan to look for her daughter; when in truth and in fact, as pronounced by the trial court, they were not signed
that Vicente Tagle rented the premises signing a contract for one year but after 2 and acknowledged by her before a notary public (Exhibit P). He succeeded in
or 4 months he left the premises and his daughter Aminta T. de Robles married winning the trust and confidence of Rebecca Levin, a widow, 65 years old, a
to Jose C. Robles became the tenant; that in February 1945 Jose C. Robles left foreigner in this country and without relatives. Joaquin V. Bass claims he was
the premise after a quarrel he had with his wife Aminta T. de Robles; that in April employed at that time by the Manila Electric Co. as mechanical engineer but on
1945 he brought against Jose C. Robles and Aminta T. de Robles an action for cross examination he had to admit that he did not have any degree nor was he
detainer on which on appeal to the Court of First Instance of Manila bears No. licensed by the Government of the Philippines to practice the profession of
71549; that on May 1946 Aminta T. de Robles and he signed a lease contract mechanical engineer. When he was pressed to answer the question whether he
(Exhibit 1-Bass); that he did not make Rebecca Levin sign documents authorizing was actually employed by the Manila Electric Co. he evaded it by saying that he
him to sell her house at No. 326 San Rafael street as testified to by Dr. was employed by White and Co. which owned 60 per cent of the shares of the
Manlapaz; that he did not show to Rebecca Levin any house on Calle Antonio Manila Electric Co. During the occupation of the country by the enemy he was
Rivera to be exchanged with or for her property at No. 326 San Rafael street, as engaged in the buy and sell business and had no known income. It is
testified to by Dr. Manlapaz, Meliton Villaseñor and Angelita Martinez; that it is unbelieavable that he could acquire the house and lot of Rebecca Levin at No.
not true that Rebecca Levin did not receive the consideration for the sale of her 328 San Rafael street for P65,000 and the one allegedly sold to Emiliano R.
house at No. 328 San Rafael street; that on October 1944 he sold for P200,000 Eustaquio at No. 326, same street, through his machinations, for P38,000. He
the house and lot at No. 326 San Rafael street to Eugenio Mintu, who handed to claims he deposited his money in the Bank of Taiwan but in the same way that
him P65,000 and a check for P25,000 which the bank refused to cash, but later he presented his pass book (Exhibit 7) showing his deposits in the Bank of the
on Mintu told him that he had deposited funds in the bank and so the check was Philippine Islands, he could have presented the pass book of certificate of
honored and cashed at the bank of the Philippine Islands; that all in all he was deposit of money he had in the Bank of Taiwan, Ltd. In fact, during the
paid P90,000 and P10,000 for 16 gantas of rice given him to Mintu; that the occupation of the country by the enemy and before he mortgaged the two houses
balance of P100,000 was never and has not been paid to him; that he has not and lots to Co Chin Leng Joaquin V. Bass had no money. According to Exhibit 7,
given possession of the property to Eugenio Mintu the transaction not having on 10 April 1944 only he made the first or initial deposit of P50,000 with the Bank
been consummated because of force majeure; and that he was bound to return of the Philippine Islands. That money must be of the P70,000 loaned to him by
to Eugenio Mintu the P100,000 received by him. 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, the notary public before whom the deeds of sale sought to be
annulled were acknowledged, testifies that Rebecca Levin appeared before him Eliezer A. Manikan perverted the truth when he testified that P10,000 was paid to
and acknowledged the execution of the documents in favor of Emiliano R. or received by Rebecca Levin in his office, whereas Joaquin V. Bass testified that
Eustaquio on 5 January 1944 and in favor of Joaquin V. Bass on 18 February she received it in her house; when he testified that on the date of the excecution
1944. 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
The testimony of Rebecca Levin as to how she consented to sell her house and fact the title was on that date kept by the Agricultural and Industrial Bank and
lot No. 326 San Rafael street and the manner she was induced by Joaquin V. 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 civil case No. 70054 of Court of First Instance of Manila entitled "Rebecca
the deed of sale by Rebecca Levin the sum of P35,000 in Japanese war notes, Levin vs. Joaquin V. Bass et al."
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 The claim of Joaquin V. Bass that the sale between him and Mintu was
mortgaged her house to him for P35,000 and later converted it into an absolute conditional is devoid of merit, because the conditional part of the deed of sale
sale for P65,000 (Exhibits S and S-1). Eliezer A. Manikan did not tell the truth concerns the guarantee undertaken by him as vendor to obtain the release of the
when he testified that the deed of sale marked Exhibit C was executed two or mortgage of Co Chin Leng and the cancellation of the notice of lis pendens in
three weeks after the order of the court-referring to the order approving the connection with civil case No. 2562 entitled "Isabelo Martinez vs. Joaquin V.
subdivisions of the parcels of land of Rebecca Levin into two lots presented for Bass," which release and cancellation he promised and would secure on or
registration on 24 February 1944-because the deed of sale (Exhibit C) dated before 8 April 1945. It is not a condition which, if not fulfilled, would avoid the sale
February 1944 was executed and acknowledged on that date, whereas the court made of the lot and house at No. 328 San Rafael street, but one which, if not
order approving the subdivision and six days before its presentation for performed, would cause the vesting in the vendee (Eugenio Mintu) of the title to
registration. On the cross examination Joaquin V. Bass testified that the the lot and house at No. 328, same street, which was given as security for the
consideration for the sale of the house and lot on No. 328 San Rafael street fulfillment of the undertaking.
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 We now take up the question between Eugenio Mintu and Rebecca Levin. Under
between him and Rebecca Levin was P60,000 plus P2,800 which was not the Torrens system the act of registration is the operative act to convey and
included in the price. 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
There is overwhelming evidence to support the conclusion of the trial court that complete act of registration which operates to convey and affect the land? In
Rebecca Levin did not execute the deeds of sale Exhibit A and Exhibit C. What voluntary registration such as sale, mortgage, lease and the like, if the owner's
she was made to believe she signed was an authorization to sell the house at duplicate certificate be not surrendered and presented or if no payment of
No. 326 San Rafael street. 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
As to the mortgage in favor of Co Chin Leng we hold that the court below that registration, such as an attachment, levy upon, execution, lis pendens and the
there is no evidence to show that the mortgage was made in bad faith and like entry thereof in the day book is a sufficient notice to all persons of such
without consideration. He must, therefore, be deemed to be a mortgaged in good adversed claim.3 Eugenio Mintu fulfilled or took the steps he was expected to
faith and for value. As to the sum consigned by Eugenio Mintu for Joaquin V. take in order to have the Registrar of Deeds in and for the City of Manila issue to
Bass' account there is no evidence as to the outcome of the complaint for him the corresponding transfer certificate of title on the lot and house at No. 328
consignation filed 3 November 1944 by Joaquin V. Bass against Co Chin Leng in San Rafael Street sold to him by Joaquin V. Bass. The evidence shows that
the Court of First Instance of Manila (case No. 2984). 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
As regards Eugenio Mintu, the evidence shows that he paid P200,000 to Joaquin force and effect because of the express provision of law which in part says:
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 . . . Provided, however, That in all cases of registration procured by fraud
73451, was presented for registration on 8 November 1944 in the office of the owner may pursue all his legal and equitable remedies against the
Registrar of Deeds of Manila and entered in the day book-entry No. 27161, but parties to such fraud, without prejudice, however, to the rights of any
that, according to the certification of the registrar, the original deed of sale and innocent holder for value of certificate of title; (Section 55, Act 496, as
the owner's duplicate certificate of titles have not been found, were not among amended by Act 3322).
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 In other words, the sale made by Joaquin V. Bass to Eugenio Mintu is valid as
fee for the entry in the day book; P220, the registration fees for a sale of between them but not as against Rebecca Levin who could avail herself of all her
P200,000; and P4, the fee for the issuance of two certificates of title were paid by legal and equitable remedies against Joaquin V. Bass and reach the property
Eugenio Mintu (Exhibit 6-Mintu). On the other hand, on October 1945, a notice acquired fraudulently by the latter and subsequently sold to Eugenio Mintu who
of lis pendens was filed in the office of Registrar of Deeds of Manila and noted on admittedly is an innocent purchaser for value, for the reason that the later though
the backof transfer certificate of title Nos. 73450 and 73451 in connection with an innocent purchaser for value is not a holder of a certificate of title. The
pronouncement of the court below is to the effect that an innocent purchaser for
value has no right to the property because he is not a holder of a certificate of
title to such property acquired by him for value in good faith. It amounts to holding
that for failure of the Registrar of Deeds to amply and perform his duty an
innocent purchaser for value loses that character—he is not an "innocent holder
for value of a certificate of title." The court below has strictly and literally
construed the provision of law applicable to the case. If the strict and literal
construction of the law made by the court below be the true and correct meaning
and intent of the lawmaking body, the act of registration—the operative act to
convey and effect registered property—would be left to the Registrar of Deeds.
True, there is a remedy available to the registrant to compel the Registrar of
Deeds to issue him the certificate of title but the step would entail expense and
cause unpleasantness. Neither violence to, nor stretching of the meaning of, the
law would be done, if we should hold that an innocent purchaser for value of
registered land becomes the registered owner and in the contemplation of law
the holders of a certificate thereof the moment he presents and files a duly
notarized and lawfull deed of sale and the same is entered on the day book and
at the same he surrenders or presents the owner's duplicate certificate of title to
the property sold and pays the full amount of registration fees, because what
remains to be done lies within his power to perform. The Registrar of Deeds is in
duty bound to perform it. We believe that is a reasonable and practical
interpretation of the law under consideration—a construction which would lead to
no inconsistency and injustice.

Taking into consideration all the circumstances of the case and bearing in mind
that the only objective courts must strive to attain is to do justice, we believe that
our interpretation of the law applicable to the case at bar subserves the interests
of justice. True, Rebecca Levin loses he house and lot No. 326 San Rafael
street, but "as between not innocent persons, one of whom must suffer the
consequence of a breach of trust, the one who made it possible by his act of
confidence must bear the loss."4

We hold, therefore, that Eugenio Mintu is the rightful owner of the lot and house
at No. 326 San Rafael street since 8 November 1944 and entitled to collect the
rentals due and unpaid from that date until possession of the premises shall have
been restored to him and the balance by Joaquin V. Bass of rentals and moneys
received by him imputable to such rentals as ordered by the trial court, subject to
the registered mortgage in favor of Co Chin Leng. What has been awarded to
Rebecca Levin in the judgment appealed from, in so far as the lot and house at
No. 326 San Rafael street are concerned, is deemed awarded to Eugenio Mintu.

The rest of the judgment appealed from not inconsistent herewith, is affirmed,
with costs against Joaquin V. Bass.

Let a copy of this decision be furnished the City Fiscal of Manila who is directed
an investigation of Joaquin V. Bass and attorney and notary public Eliezer A.
Manikan in connection with the execution and acknowledgment of the
documents, involved and the testimony given by them in these cases and to take
such action as the result of the investigation may warrant.
 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
FIRST DIVISION 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
G.R. No. 183448 June 30, 2014
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
SPOUSES DOMINADOR PERALTA AND OFELIA PERALTA, Petitioners, vs. issued in their names. Lot 1679-B, on the other hand, was first sold to Eduardo
HEIRS OF BERNARDINA ABALON, represented by MANSUETO Lotivio (Lotivio) who thereafter transferred his ownership thereto to Marissa
ABALON, Respondents. 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
x-----------------------x name of the Andals. The Andals likewise acquired Lot 1679-C as evidenced by
G.R. No. 183464 the issuance of TCT No. 42821 in their favor on December 27, 1995.
HEIRS OF BERNARDINA ABALON, represented by MANSUETO
ABALON, Petitioners, vs. MARISSA ANDAL, LEONIL AND AL, ARNEL AND Claiming that the Deed of Absolute Sale executed by Abalon in favor of Rellama
AL, SPOUSES DOMINDOR PERALTA AND OFELIA PERALTA, and HEIRS of was a forged document, and claiming further that they acquired the subject
RESTITUTO RELLAMA, represented by his children ALEX, IMMANUEL, property by succession, they being the nephew and niece of Abalon who died
JULIUS and SYLVIA, all surnamed RELLAMA. without issue, plaintiff-appellees Mansueta Abalon and Amelia Abalon filed the
case below against Rellama, Spouses Peralta, and the Andals, the herein
DECISION defendants-appellants and the Bank of the Philippines [sic] Islands which was
later dropped as a party defendant.
SERENO, CJ:
Before us are the consolidated Petitions for Review on Certiorari under Rule 45 It was alleged in their Complaint and subsequent Amended Complaint, under five
of the Rules of Court assailing the 30 May 2007 Decision 1 of the Court of Appeals separate causes of action, that Rellama was able to cause the cancellation of
(CA) Seventeenth Division in CA-G.R. CV No. 85542. The CA had reversed the OCT No. (O) 16, and in lieu thereof the issuance of TCT No. 42108 in his own
14 April 2005 Decision2 of the Regional Trial Court (RTC), Fifth Judicial Region of name from which the defendants-appellants derived their own titles, upon
Legaspi City, Branch 5, in Civil Case No. 9243. presentation of a xerox copy of the alleged forged deed of absolute sale and the
order granting the issuance of a second owner’s duplicate copy of OCT No. (O)
16 in his favor in Miscellaneous Cadastral Case No. 10648, which he had filed on 1. Ordering the restoration of Original Certificate of Title No. (O) 16
the pretext that Lot 1679 covered by OCT No. (O) 16 was sold to him and that embracing Lot 1679 in the name of Bernardina Abalon into the official files
the owner’s duplicate copy of the said title got lost in 1976 after the same was of the Registry of Deeds of Legaspi City – a copy of the owner’s duplicate
delivered to him. They averred that the owner’s duplicate copy of Oct NO. (O) 16 certificate embodying the technical description of Lot 1679 forming official
had always been with Abalon and that upon her death, it was delivered to them. part of the record as Exhibit "D" – as well as ordering the cancellation of any
Likewise, they alleged that Abalon had always been in possession of the subject and all transfer certificates of title succeeding Original Certificate of title No.
property through her tenant Pedro Bellen who was thereafter succeeded by his (O) 16 – including Transfer Certificates (sic) of Title Nos. 42108, 42254,
wife, Ruperta Bellen, and then his son, Godofredo Bellen. On the other hand, 42255, 42256, 42821 [,] and 42482;
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 2. Ordering the defendants Marissa Andal, Leonil Andal, Arnel Andal[,] and
to them upon the death of Abalon, they took possession thereof and retained the spouses Dominador and Ofelia Peralta to vacate Lot 1679 and to
Godofredo as their own tenant. However, they averred that in 1995 the peacefully surrender such lot to the plaintiffs;
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 3. Ordering the defendants to pay the plaintiffs the amount of ₱50,000.00 as
plaintiffs-appellees at the time they made the purchase. They thus claim that the litigation expenses; and
titles issued to the defendants-appellants are null and void.
4. Ordering the defendants to pay the costs of suit.
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 The counterclaims by [sic] the defendants are all dismissed. SO ORDERED.
delivered to him upon the execution of the said deed of transfer.
Spouses Peralta and the Andals filed their separate Notices of Appeal and
As for Spouses Peralta and the Andals, who filed their separate answers to the thereafter, upon approval, filed their respective Defendants-Appellants’ Briefs.
complaint, they mainly alleged that they are buyers in good faith and for value. The Heirs of Rellama, on the other hand, opted not to challenge the ruling of the
lower court.3
During the trial, Rellama passed away. He was substituted by his heirs.
The Andals and Spouses Peralta – appellants in CA-G.R. CV No. 85542 – raised
After the plaintiffs-appellees rested their case, instead of presenting their own several issues, which the CA summarized as follows:
evidence, the defendants-appellants and the Heirs of Restituto Rellama, on
different occasions, filed a demurrer to evidence. 1. Whether the Deed of Absolute Sale executed by Abalon in favor of
Rellama was spurious
On April 14, 2005, the court a quo rendered judgment in favor of the plaintiffs- 2. Whether the Andals and Spouses Peralta were buyers in good faith
appellees and ordered the restoration of OCT No. (O) 16 in the name of Abalon and for value
and the cancellation of the titles issued to the defendants-appellants. The fact 3. Who among the parties were entitled to their claims for damages.4
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 THE RULING OF THE COURT OF APPEALS
absence of such xerox copy on the official files of the said Office made the court On 30 May 2007, the Seventeenth Division of the Court of Appeals promulgated
a quo conclude that the said document was a mere forgery. On the other hand, its assailed judgment setting aside the RTC Decision. The CA ruled that the
the court a quo noted that the duplicate copy of OCT No. (O) 16 in the hands of circumstances surrounding the sale of the subject property showed badges of
the plaintiffs-appellees bears [sic] the perforated serial number B 221377, which fraud or forgery against Rellama. It found that Abalon had not parted with her
it held is a convincing proof of its authenticity and genuineness. It thus stated that ownership over the subject property despite the claim of Rellama that they both
"Miscellaneous Cadastral Case No. 10648 is a (mere) strategem [sic] executed a Deed of Absolute Sale. As proof, the CA pointed out the existence of
fraudulently concocted ... for the issuance of a fabricated (second) owner’s a notarized contract of leasehold executed by Abalon with Ruperta Bellen on 11
duplicate certificate of Oct No. (O) 16" since the owner’s duplicate copy of OCT June 1976. The genuineness and due execution of the said leasehold agreement
No. (O) 16 has not been lost at all. It said that any subsequent registration was uncontroverted by the parties. On this basis, the appellate court concluded
procured by the presentation of such forged instrument is null and void. The that Abalon could not have leased the subject parcel of land to Bellen if the
dispositive portion of the court a quo’s decision reads: WHEREFORE, [p]remises former had parted with her ownership thereof.5
[c]onsidered, judgment is rendered as follows, to wit:
The CA also found no evidence to show that Rellama exercised dominion over On 11 August 2008, Spouses Peralta filed with this Court a Petition for Review
the subject property, because he had not introduced improvements on the under Rule 45 of the Rules of Court assailing the 30 May 2007 Decision in CA-
property, despite claiming to have acquired it in 1975.6 Further, the CA noted that G.R. CV No. 85542.13 On the same day, the heirs of Bernardina Abalon,
he did not cause the annotation of the Deed of Sale, which he had executed with represented by Mansueto Abalon, filed a similar Petition questioning the portion
Abalon, on OCT No. (O) 16. It observed that when the original copy of OCT No. of the mentioned CA Decision declaring the validity of the title issued to the
(O) 16 was allegedly lost in 1976, while Rellama was on his way to Legaspi City Andals, who were adjudged by the appellate court as buyers in good faith.14
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 THE ISSUES
cast doubt on the veracity of Rellama’s claim of ownership over such a significant The Petition filed by Spouses Peralta, docketed as G.R. No. 183448, lists the
property, which was almost a hectare.7 following issues:

The CA also ruled that the heirs of Bernardina Abalon had the legal standing to a) The case for annulment should have been dismissed because the
question the sale transaction between Rellama and their predecessor-in-interest. purported Deed of Sale executed by Abalon and Rellama was not
It concluded that the heirs of Abalon had acquired the subject property by introduced in evidence and thus, forgery was not proven.
ordinary acquisitive prescription and thus had every right to attack every
document that intended to divest them of ownership thereof, 8 which in this case
was the Deed of Sale that Bernardina executed in favor of Rellama. Lastly, the b) The heirs of Abalon are notforced heirs of Bernardina Abalon; hence,
appellate court considered the Spouses Peralta as buyers in bad faith for relying they do not have the legal personality to file the action to annul the subject
on a mere photocopy of TCT No. 42108 when they bought the property from Deed of Sale.
Rellama.9 On the other hand, it accorded the Andals the presumption of good
faith, finding no evidence that would rebut this presumption.10 c) The heirs of Abalon failed to prove that they had inherited the subject
property.
The dispositive portion of the assailed CA Decision in CA-G.R. CV No. 85542 is
as follows: d) Spouses Peralta are buyers in good faith and, thus title to their portion of
the subject property must be upheld15
WHEREFORE, the assailed decision is SET ASIDE and a new judgment is
rendered as follows: As for the heirs of Abalon, their Petition, docketed as G.R. No. 183464, raises the
following issues:
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. a) The Andals cannot be considered as buyers in good faith by simply
applying the ordinary presumption in the absence of evidence showing the
2. Transfer Certificate of Title No. 42254 registered in the names of contrary.
Spouses Peralta is cancelled for being null and void. Hence, they are
ordered to vacate the land covered thereby and to surrender possession b) The CA erred in applying in favor of the Andals, the doctrine that a forged
thereof in favor of the plaintiffs-appellees. SO ORDERED.11 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 heirs of Abalon filed a Motion for Reconsideration of the 30 May 2007 the valid and uncancelled title over the subject property
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. c) The CA erred in declaring the validity of the title issued in the names of
Spouses Peralta, for their part, filed a Motion for Partial Reconsideration of the the Andals, because Rellama was bereft of any transmissible right over the
said CA Decision pertaining to the portion that declared them as buyers in bad portion of the property he had sold to them.16
faith which accordingly nullified the title issued to them.
THE COURT’S RULING
On 10 June 2008, the CA denied the Motions for Partial Reconsideration of the We deny the Petitions and affirm the ruling of the CA.
movants for lack of merit.12
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 lawful owners of their title for the purpose of transferring it to another one who
is valid and has not been cancelled. 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
It is well-settled that "a certificate of title serves as evidence of an indefeasible shield the commission of fraud or to enrich oneself at the expense of another. 19
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 It is well-established in our laws and jurisprudence that a person who is dealing
quiet title to land and put a stop forever to any question as to the legality of the with a registered parcel of land need not go beyond the face of the title. A person
title."17 is only charged with notice of the burdens and claims that are annotated on the
title.20 This rule, however, admits of exceptions, which we explained in Clemente
In Tenio-Obsequio v. Court of Appeals,18 we explained the purpose of the v. Razo:21
Torrens system and its legal implications to third persons dealing with registered
land, as follows: 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
The main purpose of the Torrens system is to avoid possible conflicts of title to investigate the titles of the seller appearing on the face of the certificate. And, he
real estate and to facilitate transactions relative thereto by giving the public the is charged with notice only of such burdens and claims as are annotated on the
right to rely upon the face of a Torrens certificate of title and to dispense with the title.
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 We do acknowledge that the rule thus enunciated is not cast in stone. For,
such further inquiry. Where innocent third persons, relying on the correctness of indeed, there are exceptions thereto. Thus, in Sandoval vs. CA, we made clear
the certificate of title thus issued, acquire rights over the property, the court the following:
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 aforesaid principle admits of an unchallenged exception: that a person
the certificate of title, for everyone dealing with property registered under the dealing with registered land has a right to rely on the Torrens certificate of title
Torrens system would have to inquire in every instance as to whether the title and to dispense with the need of inquiring further except when the party has
has been regularly or irregularly issued by the court. Every person dealing with actual knowledge of facts and circumstances that would impel a reasonably
registered land may safely rely on the correctness of the certificate of title issued cautious man to make such inquiry or when the purchaser has knowledge ofa
therefor and the law will in no way oblige him to go beyond the certificate to defect or the lack of title in his vendor or of sufficient facts to induce a reasonably
determine the condition of the property. 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
The Torrens system was adopted in this country because it was believed to be vendee to look beyond the certificate and investigate the title of the vendor
the most effective measure to guarantee the integrity of land titles and to protect appearing on the face of said certificate. One who falls within the exception can
their indefeasibility once the claim of ownership is established and recognized. If neither be denominated an innocent purchaser for value nor a purchaser in good
a person purchases a piece of land on the assurance that the seller's title thereto faith; and hence does not merit the protection of the law.22
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 Thus, the determination whether one is a buyer in good faith or can be
this were permitted, public confidence in the system would be eroded and land considered an innocent purchaser for value becomes imperative. Section 55 of
transactions would have to be attended by complicated and not necessarily the Land Registration Act provides protection to an innocent purchaser for
conclusive investigations and proof of ownership. The further consequence would value23 by allowing him to retain the parcel of land bought and his title is
be that land conflicts could be even more numerous and complex than they are considered valid. Otherwise, the title would be cancelled and the original owner
now and possibly also more abrasive, if not even violent. The Government, of the parcel of land is allowed to repossess it.
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. 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
The Torrens system was intended to guarantee the integrity and conclusiveness purchase or before receiving a notice of the claim or interest of some other
of the certificate of registration, but the system cannot be used for the persons in the property. Buyers in good faith buy a property with the belief that
perpetration of fraud against the real owner of the registered land. The system the person from whom they receive the thing is the owner who can convey title to
merely confirms ownership and does not create it. It cannot be used to divest
the property. Such buyers do not close their eyes to facts that should put a disputed. When, therefore, he transferred this title to the herein petitioners, third
reasonable person on guard and still claim that they are acting in good faith.24 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 assailed Decision of the CA held that the Andals were buyers in good faith, the properties to him.
while Spouses Peralta were not. Despite its determination that fraud marred the
sale between Bernardina Abalon and Rellama, a fraudulent or forged document After executing the Deed of Sale with Bernardina Abalon under fraudulent
of sale may still give rise to a valid title. The appellate court reasoned that if the circumstances, Rellama succeeded in obtaining a title in his name and selling a
certificate of title had already been transferred from the name of the true owner to portion of the property to the Andals, who had no knowledge of the fraudulent
that which was indicated by the forger and remained as such, the land is circumstances involving the transfer from Abalon to Rellama. In fact, the
considered to have been subsequently sold to an innocent purchaser, whose title Decisions of the RTC and the CA show no factual findings or proof that would
is thus considered valid.25 The CA concluded that this was the case for the rebut the presumption in favor of the Andals as buyers in good faith. Thus, the
Andals. CA correctly considered them as buyers in good faith and upheld their title.

The appellate court cited Fule v. Legare26 as basis for its ruling. In the said case, The Abalons counter this ruling and allege that the CA erred in relying on Fuleto
the Court made an exception to the general rule that a forged or fraudulent deed justify its assailed Decision. They argue that Torres v. Court of Appeals 27 is the
is a nullity and conveys no title. A fraudulent document may then become the root applicable ruling, because the facts therein are on all fours with the instant
of a valid title, as it held in Fule: case.28

Although the deed of sale in favor of John W. Legare was fraudulent, the fact In Torres, the subject property was covered by TCT No. 53628 registered in the
remains that he was able to secure a registered title to the house and lot. It was name of Mariano Torres. His brother-in-law Francisco Fernandez,
this title which he subsequently conveyed to the herein petitioners. We have misrepresenting that the copy of the title had been lost, succeeded in obtaining a
indeed ruled that a forged or fraudulent deed is a nullity and conveys no title court Order for the issuance of another copy of TCT No. 53628. He then forged a
(Director of Lands vs. Addison, 49 Phil., 19). However, we have also laid down simulated deed of sale purportedly showing that Torres had sold the property to
the doctrine that there are instances when such a fraudulent document may him and caused the cancellation of TCT No. 53628, as well as the issuance of
become the root of a valid title. One such instance is where the certificate of title TCT No. 86018 in his name. Soon, Fernandez mortgaged the property to Mota.
was already transferred from the name of the true owner to the forger, and while Upon learning of the fraud committed by Fernandez, Torres caused the
it remained that way, the land was subsequently sold to an innocent purchaser. annotation of an adverse claim on the former’s copy and succeeded in having
For then, the vendee had the right to rely upon what appeared in the certificate Fernandez’s title declared null and void. Meanwhile, Mota was able to foreclose
(Inquimboy vs. Cruz, G.R. No. L-13953, July 28, 1960). on Fernandez’s real estate mortgage, as well as to cause the cancellation of TCT
No. 86018 and the issuance of a new one– TCT No. 105953 – in her name. The
We have been constrained to adopt the conclusion here set forth because under issue to be resolved in Torres was whether Mota can be considered an innocent
the Torrens system, "registration is the operative act that gives validity to the mortgagee for value, and whether her title can be deemed valid. Ruling in the
transfer or creates a lien upon the land (Secs. 50 and 51, Land Registration Act). negative, the Court explained:
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 There is nothing on the records which shows that Torres performed any act or
purchaser is not required to explore farther than what the Torrens title upon its omission which could have jeopardized his peaceful dominion over his realties.
face indicates in quest for any hidden defect or inchoate right that may The decision under review, however, in considering Mota an innocent mortgagee
subsequently defeat his right thereto. If the rule were otherwise, the efficacy and protected under Section 65 of the Land Registration Law, held that Torres was
conclusiveness of the certificate of title which the Torrens system seeks to insure bound by the mortgage. Inevitably, it pronounced that the foreclosure sale, where
would entirely be futile and nugatory. (Reynes vs. Barrera, 68 Phil., 656; De Lara Mota was the highest bidder, also bound Torres and concluded that the
and De Guzman vs. Ayroso, 50 O.G. No 10, 4838). The public shall then be certificate of title issued in the name of Mota prevails over that of Torres'. As
denied of its foremost motivation for respecting and observing the Land correctly pointed out by Torres, however, his properties were sold on execution,
Registration Act. In the end, the business community stands to be and not on foreclosure sale, and hence, the purchaser thereof was bound by his
inconvenienced and prejudiced immeasurably. 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
Furthermore, when the Register of Deeds issued a certificate of title in the name doctrine relied upon by the appellate court that a forged instrument may become
of John W. Legare, and thereafter registered the same, John W. Legare, insofar the root of a valid title, cannot be applied where the owner still holds a valid and
as third parties were concerned, acquired valid title to the house and lot here 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 On the other hand in Torres, the original owner retained possession of the title,
Phil. 144 [1916], Fule v. De Legare, No. L-17951, February 28, 1963, 7 SCRA but through fraud, his brother-in-law secured a court order for the issuance of a
351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the forger thru copy thereof. While the title was in the name of the forger, the original owner
insidious means obtains the owner’s duplicate certificate of title, converts it in his annotated the adverse claim on the forged instrument. Thus, before the new title
name, and subsequently sells or otherwise encumbers it to an innocent holder for in the name of the forger could be transferred to a third person, a lien had already
value, for in such a case the new certificate is binding upon the owner (Sec.55, been annotated on its back. The chain of registered titles was broken and sullied
Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a valid and existing by the original owner’s annotation of the adverse claim. By this act, the
certificate of title, his would be indefeasible as against the whole world, and not mortgagee was shown to be in bad faith.
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, In the instant case, there is no evidence that the chain of registered titles was
13 SCRA 46, citing Legarda v. Saleeby, 31 Phil.590, Roman Catholic Bishop v. broken in the case of the Andals. Neither were they proven to have knowledge of
Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791.29(Emphasis and anything that would make them suspicious of the nature of Rellama’s ownership
underscoring supplied) over the subject parcel of land. Hence, we sustain the CA’s ruling that the Andals
were buyers in good faith. Consequently, the validity of their title to the parcel of
We do not agree with the contention of the Abalons that the ruling in Torresis the land bought from Rellama must be upheld.
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 As for Spouses Peralta, we sustain the ruling of the CA that they are indeed
the title procured by Fernandez prior to the execution sale, in which Mota was the buyers in bad faith. The appellate court made a factual finding that in purchasing
highest bidder. This Court declared her as a mortgagee in bad faith because, at the subject property, they merely relied on the photocopy of the title provided by
the back of Fernandez’s title, Torres made an annotation of the adverse claim Rellama. The CA concluded that a mere photocopy of the title should have made
and the notice of lis pendens. The annotation of the adverse claim was made Spouses Peralta suspicious that there was some flaw in the title of Rellama,
while the forged document was still in the name of the forger, who in this case is because he was not in possession of the original copy. This factual finding was
Fernandez. That situation does not obtain in the instant case. supported by evidence.

The records of the RTC and the CA have a finding that when Rellama sold the The CA pointed out Spouses Peralta’s Answer to the Complaint of the Abalons in
properties to the Andals, it was still in his name; and there was no annotation that Case No. 9243 in the RTC of Legaspi City, Branch 5. In their Answer, they
would blight his clean title. To the Andals, there was no doubt that Rellama was specifically alleged as follows:
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. 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
The established rule is that a forged deed is generally null and cannot convey Atty. Otilio Bongon, Legaspi City on March 2, 1995 copy of which is
title, the exception thereto, pursuant to Section 55 of the Land Registration Act, attached as and made part of this answer as Exhibit "1;"
denotes the registration of titles from the forger to the innocent purchaser for
value. Thus, the qualifying point here is that there must be a complete chain of
registered titles.30 This means that all the transfers starting from the original 3- That these defendants were handed over by Rellama xerox [sic] copy
rightful owner to the innocent holder for value – and that includes the transfer to of the Transfer Certificate of Title No. 42103 issued by the Register of
the forger – must be duly registered, and the title must be properly issued to the Deed of Legaspi City on the 2nd day of August 1995 copy attached and
transferee. Contrary to what the Abalons would like to impress on us, Fuleand made integral part as Exhibit "1-A" and also Original Certificate of Title
Torresdo not present clashing views. In Fule, the original owner relinquished No. (O) 16 as Exhibit "1-B"31
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 We have no reason to disturb this factual finding of the CA because it is
one. The forged instrument eventually became the root of a valid title in the supported by the evidence on record. Spouses Peralta filed a Petition for Review
hands of an innocent purchaser for value. The new title under the name of the on Certiorari under Rule 45, which allows only questions of law to be raised. It is
forger was registered and relied upon by the innocent purchaser for value. a settled rule that questions of fact are not reviewable in this kind of appeal.
Hence, it was clear that there was a complete chain of registered titles. Under Rule 45, Section 1, "petitions for review on certiorari shall raise only
questions of law which must be distinctly set forth."32 A question of fact arises
when there is "as to the truth or falsehood of facts or when there is a need to
calibrate the whole evidence considering mainly the credibility of the witnesses,
the existence and relevancy of specific surrounding circumstances, as well as
their relation to each other and to the whole, and the probability of the
situation."33 It is further pointed out that "the determination of whether one is a
buyer in good faith is a factual issue, which generally is outside the province of
this Court to determine in a petition for review."34

Whether or not Spouses Peralta are buyers in good faith, is without a doubt, a
factual issue. Although this rule admits of exceptions, 35 none of these applies to
their case. There is no conflict between the factual findings and legal conclusions
of the RTC and those of the CA, both of which found them to be buyers in bad
faith. The fact that they did not participate in the proceedings before the lower
court does not help their case either.

On the issue of the legal standing of the Abalons to file this case, we find that the
CA correctly upheld their standing as heirs of the deceased Bernardina Abalon.
The appellate court ruled that during her lifetime, Bernardina Abalon had
promised her heirs - siblings Mansueto and Amelia - that she would give them
the subject property. A duplicate copy of OCT No. (0) 16 was delivered to them
upon her death. Thus, the CA concluded that the two siblings acquired the
subject property by ordinary prescription. Further, it deduced that the mode of
transmission of the property from Bernardina to her nephew and niece was a
form of donation mortis causa, though without the benefit of a will. 36 Despite this
omission, it still held that Mansueto and Amelia acquired the subject property
through ordinary acquisitive prescription because, since the death of their aunt
Bernardina, they had been in possession of the property for more than 10 years
that ripened into full ownership.37

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

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

SO ORDERED.
 Factual Antecedents
Respondent Bernardo F. Dimailig (Bernardo) was the registered owner of a
parcel ofland covered by TCT No. T-361747 located inAlapan, Imus, Cavite. 4 In
October 1997, he entrusted the owner’s copy of the said TCT to his brother,
Jovannie,5 who in turn gave the title to Editha Sanggalang (Editha), a broker, for
its intended sale. However, in January 1998, the property was mortgaged to
Evelyn V. Ruiz (Evelyn) as evidenced by a Deed of REM6 without Bernardo’s
knowledge and consent. Hence, Bernardo instituted this suit for annulment of the
Deed of REM.7

In her Answer,8 Evelyn contended that she met Jovannie when she inspected the
subject property and assured her that Bernardo owned the property and his title
thereto was genuine. She further claimed that Jovannie mortgaged the property
to her. She also insisted that as a mortgagee in good faith and for value, the
REM cannot be annulled and that she had the right to keep the owner's copy of
TCT No. T-3617 4 7 until the loan was fully paid to her.

During pre-trial, the parties arrived at the following stipulations:9

1. That x x x it was not [Bernardo] who signed as mortgagor in the subject Deed
of Real Estate Mortgage.
2. That there was a demand letter sent to [Evelyn] x x x to cause a release of
mortgage on the subject property.
3. The x x x controversy [was referred] to the Barangay for conciliation and
mediation.
[4.] That Jovannie x x x is the brother of [Bernardo].

Thereafter, trial on the merits ensued.

Bernardo testified that when he went abroad on October 19, 1997, he left the
owner's copy of the TCT of the subject property to Jovannie as they intended to
SECOND DIVISION
sell the subject property.10 However, on January 26, 1998, a REM was executed
on the subject property. Bernardo argued that his alleged signature appearing
November 9, 2016 G.R. No. 204280 therein was merely forged11as he was still abroad at that time. When he learned
in September or November 1998 that Editha mortgaged the subject property, be
EVELYN V. RUIZ, Petitioner vs. BERNARDO F. DIMAILIG, Respondent personally told Evelyn that the REM was fake and demanded the return of his
title. Not heeding his request, he filed a complaint for estafa through falsification
DECISION of public document against Editha and Evelyn, The criminal case against Evelyn
was dismissed12 while Editha was found guilty as charged.13
DEL CASTILLO, J.:
This Petition for Review on Certiorari assails the October 22, 2012 Decision1 of Jovannie also took the witness stand. He testified that sometime in December
the Court of Appeals (CA) in CA-GR. CV No. 95046 which reversed and set 1997, Editha convinced him to surrender the owner's copy of TCT No. T-361747
aside the November 26, 2009 Decision2 and the March 19, 2010 Order3of the which she would show her buyer.14 Subsequently, however, Editha informed him
Regional Trial Court (RTC) of Cavite City, Branch 16 in Civil Case No. N-7573. that she misplaced the title. Hence, he executed in August 1998 15 an affidavit of
The CA declared void the Real Estate Mortgage (REM) constituted on the loss and registered it with the Register of Deeds (RD).16 In September 1998,
property covered by Transfer Certificate of Tit1e (TCT) No. T-361747. Editha finally admitted that the title was not lost but was in Evelyn's possession
because of the REM.17 Upon learning this, Jovannie inquired from Evelyn if
Editha mortgaged Bernardo's property to her. Purportedly, Evelyn confirmed said title or the property covered by it. In fine, Evelyn did all that was necessary before
mortgage and told him that she would not return the owner's copy of TCT No. T- parting with her money and entering into the REM.
361747 unless Editha pay the loan, 18 Jovannie also alleged that he told Evelyn
that Bernardo's alleged signature in the REM was not genuine since he was On March 19, 2010, the RTC denied Bernardo's Motion for Reconsideration.
abroad at the time of its execution.19
Thus, he appealed to the CA.
On the other hand, Evelyn maintained that she was a mortgagee in good faith.
She testified that sales agents - Editha, Corazon Encarnacion, and a certain
Parani, - and a person introducing himself as "Bernardo" mortgaged the subject Ruling of the Court of Appeals
property to her for ₱300,000.00 payable within a period of three months. 20 She On October 22, 2012, the CA rendered the assailed Decision reversing and
asserted that even after the expiration of said period, "Bernardo" failed to pay the setting aside the RTC Decision. The decretal portion of the CA Decision reads:
loan.21
WHEREFORE, the appeal is GRANTED. The assailed dispositions of the RTC
Evelyn narrated that before accepting the mortgage of the subject property, she, are REVERSED and SET ASIDE. The complaint of Bernardo F. Dimailig is
the sales agents, her aunt, and "Bernardo," visited the property. She pointed out GRANTED. The Deed of Real Estate Mortgage constituted on the real property
that her companions inspected it while she stayed in the vehicle as she was still covered by TCT No. T-361747 of the Registry of Deeds for the Province of
recuperating from an operation.22 She admitted that she neither verified from the Cavite, registered in his name, is DECLARED null and void. Evelyn V. Ruiz is
neighborhood the owner of the property nor approached the occupant thereof.23 ORDERED to reconvey or return to him the owner's duplicate copy of the said
title. His claims for the payment of attorney's fees and costs of suits are DENIED.
Costs against Evelyn V. Ruiz. SO ORDERED.30
Moreover, Evelyn asserted that when the Deed of REM was executed, the
person who introduced himself as Bernardo presented a community tax
certificate and his picture as proof of identity.24 She admitted that she did not ask The CA held that the "innocent purchaser (mortgagor in this case) for value
for any identification card from "Bernardo."25 protected by law is one who purchases a titled land by virtue of a deed executed
by the registered owner himself, not by a forged deed." 31 Since the Deed of REM
was forged, and the title to the subject property is still in the name of the rightful
Contrary to the allegation in her Answer that Jovannie mortgaged the property, owner, and the mortgagor is a different person who only pretended to be the
Evelyn clarified that she met Jovannie for the first time when he went to her owner, then Evelyn cannot seek protection from the cloak of the principle of
house and told her that Bernardo could not have mortgaged the property to her mortgagee in good faith. The CA held that in this case, "the registered owner will
as he was abroad.26 not personally lose his title."32

Corazon Abella Ruiz (Corazon), the sister-in-law of Evelyn, was presented to The CA further decreed that Evelyn's claim of good faith cannot stand as she
corroborate her testimony. Corazon averred that in January 1998, she failed to verify the real identity of the person introduced by Editha as Bernardo. It
accompanied Evelyn and several others in inspecting the subject property. 27 The noted that the impostor did not even exhibit any identification card to prove his
day after the inspection, Evelyn and '"Bernardo'' executed the Deed of REM in identity; and, by Evelyn's admission, she merely relied on the representation of
the office of a certain Atty. Ignacio; Evelyn handed ₱300,000.00 to Editha, not to Editha relative to the identity of "Bernardo." It also held that Evelyn transacted
"Bernardo;"28 in turn, Editha handed to Evelyn the owner's copy of TCT No. T- only with Editha despite the fact that the purported owner was present during the
361747.29 inspection of the property, and during the execution of the REM.

Ruling of the Regional Trial Court In sum, the CA ruled that for being a forged instrument, the Deed of REM was a
On November 26, 2009, the RTC dismissed the Complaint. It held that while nullity, and the owner's copy of TCT No. T-361747 must be returned to its rightful
Bernardo was the registered owner of the subject property, Evelyn was a owner, Bernardo.
mortgagee in good faith because she was unaware that the person who
represented himself as Bernardo was an impostor. It noted that Evelyn caused
the verification of the title of the property with the RD and found the same to be Issue
free from any lien or encumbrance. Evelyn also inspected the property and met Hence, Evelyn filed this Petition raising the sole assignment of error as follows:
Jovannie during such inspection. Finally, the RTC declared that there was no
showing of any circumstance that would cause Evelyn to doubt the validity of the
[T]he Court of Appeals erred in holding that petitioner is not a mortgagee in good Such doctrine of mortgagee in good faith presupposes "that the mortgagor, who
faith despite the presence of substantial evidence to support such conclusion of is not the rightful owner of the property, has already succeeded in obtaining a
fact.33 Torrens title over the property in his name and that, after obtaining the said title,
he succeeds in mortgaging the property to another who relies on what appears
Petitioner’s Arguments on the said title."37 In short, the doctrine of mortgagee in good faith assumes that
Petitioner insists that she is a mortgagee in good faith. She claims that she was the title to the subject property had already been transferred or registered in the
totally unaware of the fraudulent acts employed by Editha, Jovannie, and the name of the impostor who thereafter transacts with a mortgagee who acted in
impostor to obtain a loan from her. She stresses that a person dealing with a good faith. In the case at bench, it must be emphasized that the title remained to
property covered by a certificate of title is not required to look beyond what be registered in the name of Bernardo, the rightful and real owner, and not in the
appears on the face of the title. name of the impostor.

Respondent’s Arguments The burden of proof that one is a mortgagee in good faith and for value lies with
Bernardo, on his end, contends that since the person who mortgaged the the person who claims such status. A mortgagee cannot simply ignore facts that
property was a mere impostor, then Evelyn cannot claim that she was a should have put a reasonable person on guard, and thereafter claim that he or
mortgagee in good faith. This is because a mortgage is void where the mortgagor she acted in good faith under the belief that the mortgagor's title is not
has no title at all to the property subject of such mortgage. defective.38 And, such good faith entails an honest intention to refrain from taking
unconscientious advantage of another.39
Bernardo asserts that there were circumstances that should have aroused
suspicion on the part of Evelyn relative to the mortgagor's title over the property. In other words, in order for a mortgagee to invoke the doctrine of mortgagee in
He specifies that throughout the negotiation of the mortgage, Evelyn transacted good faith, the impostor must have succeeded in obtaining a Torrens title in his
only with Editha, not with "Bernardo," despite the fact that Editha and the other name and thereafter in mortgaging the property. Where the mortgagor is an
real estate agents who assisted Evelyn in the mortgage transaction were not impostor who only pretended to be the registered owner, and acting on such
armed with a power of attorney. pretense, mortgaged the property to another, the mortgagor evidently did not
succeed in having the property titled in his or her name, and the mortgagee
Bernardo likewise stresses that although Evelyn caused the inspection of the cannot rely on such pretense as what appears on the title is not the impostor's
subject property, she herself admitted that she did not alight from the vehicle name but that of the registered owner.40
during the inspection, and she failed to verify the actual occupant of the property.
In this case, Evelyn insists that she is a mortgagee in good faith and for value.
Our Ruling Thus, she has the burden to prove such claim and must provide necessary
The Petition is without merit. evidence to support the same. Unfortunately, Evelyn failed to discharge her
burden.
As a Rule, the issue of whether a person is a mortgagee in good faith is not
within the ambit of a Rule 45 Petition. The determination of presence or absence First, the Deed of REM was established to be a forged instrument. As aptly
of good faith, and of negligence are factual matters, which are outside the scope discussed by the CA, Bernardo did not and could not have executed it as he was
of a petition for review on certiorari.34 Nevertheless, this rule allows certain abroad at the time of its execution, to wit:
exceptions including cases where the RTC and the CA arrived at different or
conflicting factual findings,35 as in the case at bench. As such, the Court deems it Verily, Bernardo could not have affixed his signature on the said deed on January
necessary to re-examine and re-evaluate the factual findings of the CA as they 26, 1998 for he left the Philippines on March 21, 1998. Not only that, his
differ with those of the RTC. signature on his Seafarer’s Identification and Record Book is remarkably different
from the signature on the assailed mortgage contract. The variance is obvious
No valid mortgage will arise unless the mortgagor has a valid title or ownership even to the untrained eye. This is further bolstered by Evelyn’s admission that
over the mortgaged property. By way of exception, a mortgagee can invoke that Bernardo was not the one who represented himself as the registered owner of
he or she derived title even if the mortgagor's title on the property is defective, if the subject property and was not the one who signed the questioned contract.
he or she acted in. good faith. In such instance, the mortgagee must prove that Thus, there can be no denying the fact that the signature on the Deed of Real
no circumstance that should have aroused her suspicion on the veracity of the Estate Mortgage was not affixed or signed by the same person.41
mortgagor's title on the property was disregarded.36
In fact, during pre-trial, both parties agreed that it was not Bernardo who signed Notably, the RTC misapprehended certain facts when it held that Evelyn
as the mortgagor in the Deed of REM. It was only an impostor - representing inspected the property and met Jovannie during the inspection. By her own
himself as Bernardo - who mortgaged the property. This impostor is not only account, Evelyn clarified that she met Jovannie for the first time only when the
without rightful ownership on the mortgaged property, he also has no Torrens title latter visited her house to inform her that an impostor mortgaged Bernardo's
in his own name involving said property. property to her.

Simply put, for being a forged instrument, the Deed of REM is a nullity and Four, the Court observes that Evelyn hastily granted the loan and entered into
conveys no title.42 the mortgage contract. As also testified by Corazon, a day after the supposed
ocular inspection on the property, Evelyn and "Bernardo" executed the Deed of
Second, Evelyn cannot invoke the protection given to a mortgagee in good faith. REM even without Evelyn verifying the identity of the property's occupant as well
As discussed, the title to the subject property remained registered in the name of as the right of the mortgagor, if any, over the same. Indeed, where the mortgagee
Bernardo. It was not transferred to the impostor's name when Evelyn transacted acted with haste in granting the loan, without first determining the ownership of
with the latter. Hence, the principle of mortgagee in good faith finds no the property being mortgaged, the mortgagee cannot be considered as an
application; correspondingly, Evelyn cannot not seek refuge therefrom. innocent mortgagee in good faith.44

Third, even assuming that the impostor has caused the property to be titled in his Thus, considering that the mortgage contract was forged as it was entered into
name as if he had rightful ownership thereof, Evelyn would still not be deemed a by Evelyn with an impostor, the registered owner of the property, Bernardo,
mortgagee in good faith. This is because Evelyn did not take the necessary steps correspondingly did not lose his title thereon, and Evelyn did not acquire any right
to dete1mine any defect in the title of the alleged owner of the mortgaged or title on the property and cannot invoke that she is a mortgagee in good faith
property. She deliberately ignored pertinent facts that should have aroused and for value.45
suspicion on the veracity of the title of the mortgagor "Bernardo."43
WHEREFORE, the Petition is DENIED. Accordingly, the October 22, 2012
One, while '"Bernardo" introduced himself to Evelyn as the owner of the property, Decision of the Court of Appeals in CA·G.R. CV No. 95046 is AFFIRMED.
he did not present any proof of identification. To recall, he only exhibited his
co1rununity tax certificate and a picture when he introduced himself to Evelyn. SO ORDERED.
''Bernardo's" failure to sufficiently establish his identity should have aroused
suspicion on the part of Evelyn whether the person she was transacting with is
the real Bernardo or a mere impostor. She should have investigated further and
verified the identity of ''Bernardo" but she failed to do so. She even admitted that
she did not at all ask for any identification card from "'Bernardo."

Two, Evelyn also ignored the fact that "Bernardo'' did not participate in the
negotiations/transactions leading to the execution of the Deed of REM. Notably,
no power of attorney was given to Editha who supposedly transacted in behalf of
Bernardo. Despite "Bernardo's" presence during the ocular inspection of the
property and execution of the mortgage contract, it was Editha who transacted
with Evelyn. As gathered from the testimony of Corazon, after the execution of
the deed, Evelyn handed the loan amount of ₱300,000.00 to Editha, not to
"Bernardo," and it was Editha who handed to Evelyn the owner's copy of TCT
No. T-361747.

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