G.R. No. 175485. July 27, 2011.
CASIMIRO DEVELOPMENT CORPORATION, petitioner, vs.
RENATO L. MATEO, respondent.
Land Registration; Land Titles; Torrens System; The Torrens system
gives the registered owner complete peace of mind, in order that he will be
secured in his ownership as long as he has not voluntarily disposed of any
right over the covered land.—There is no doubt that the land in question,
although once a part of the public domain, has already been placed under
the Torrens system of land registration. The Government is required under
the Torrens system of registration to issue an official certificate of title to
attest to the fact that the person named in the certificate is the owner of the
property
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** Associate Justice Teresita J. Leonardo-De Castro is designated as Acting Member of
the Second Division as per Special Order No. 1006 dated 10 June 2011.
*** Associate Justice Diosdado M. Peralta is designated as Acting Member of the Second
Division as per Special Order No. 1040 dated 6 July 2011.
* FIRST DIVISION.
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Casimiro Development Corporation vs. Mateo
therein described, subject to such liens and encumbrances as thereon noted
or what the law warrants or reserves. The objective is to obviate possible
conflicts of title by giving the public the right to rely upon the face of the
Torrens certificate and to dispense, as a rule, with the necessity of inquiring
further. The Torrens system gives the registered owner complete peace of
mind, in order that he will be secured in his ownership as long as he has not
voluntarily disposed of any right over the covered land.
Same; Same; Same; Registration under the Torrens system, not being a
mode of acquiring ownership, does not create or vest title; The Torrens
certificate of title is merely an evidence of ownership or title in the
particular property described therein.—Registration under the Torrens
system, not being a mode of acquiring ownership, does not create or vest
title. The Torrens certificate of title is merely an evidence of ownership or
title in the particular property described therein. In that sense, the issuance
of the certificate of title to a particular person does not preclude the
possibility that persons not named in the certificate may be co-owners of the
real property therein described with the person named therein, or that the
registered owner may be holding the property in trust for another person.
Same; Same; Same; Registration of land under the Torrens System,
aside from perfecting the title and rendering it indefeasible after the lapse of
the period allowed by law, also renders the title immune from collateral
attack.—Moreover, the respondent’s suit is exposed as being, in reality, a
collateral attack on the title in the name of Laura, and for that reason should
not prosper. Registration of land under the Torrens System, aside from
perfecting the title and rendering it indefeasible after the lapse of the period
allowed by law, also renders the title immune from collateral attack. A
collateral attack occurs when, in another action to obtain a different relief
and as an incident of the present action, an attack is made against the
judgment granting the title. This manner of attack is to be distinguished
from a direct attack against a judgment granting the title, through an action
whose main objective is to annul, set aside, or enjoin the enforcement of
such judgment if not yet implemented, or to seek recovery if the property
titled under the judgment had been disposed of.
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678 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
Same; Same; Same; One who deals with property registered under the
Torrens system need not go beyond the certificate of title, but only has to
rely on the certificate of title.—One who deals with property registered
under the Torrens system need not go beyond the certificate of title, but only
has to rely on the certificate of title. He is charged with notice only of such
burdens and claims as are annotated on the title. The pertinent law on the
matter of burdens and claims is Section 44 of the Property Registration
Decree.
Same; Same; Same; The presence of anything that excites or arouses
suspicion should then prompt the vendee to look beyond the certificate and
to investigate the title of the vendor appearing on the face of said certificate.
—The vendee’s notice of a defect or flaw in the title of the vendor, in order
for it to amount to bad faith, should encompass facts and circumstances that
would impel a reasonably cautious person to make further inquiry into the
vendor’s title, or facts and circumstances that would induce a reasonably
prudent man to inquire into the status of the title of the property in litigation.
In other words, the presence of anything that excites or arouses suspicion
should then prompt the vendee to look beyond the certificate and to
investigate the title of the vendor appearing on the face of said certificate.
PETITION for review on certiorari of a decision of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Ponce Enrile, Reyes & Manalastas for petitioner.
Benitez, Legaspi, Barcelo, Rafael & Salamera (BELARUS LAW)
Law Offices for respondent Heirs.
BERSAMIN, J.:
The focus of this appeal is the faith that should be accorded to the
Torrens title that the seller holds at the time of the sale.
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Casimiro Development Corporation vs. Mateo
In its decision promulgated on August 31, 2006,1 the Court of
Appeals (CA) declared that the respondent and his three brothers
were the rightful owners of the land in litis, and directed the Office
of the Register of Deeds of Las Piñas City to cancel the transfer
certificate of title (TCT) registered under the name of petitioner
Casimiro Development Corporation (CDC) and to issue in its place
another TCT in favor of the respondent and his three brothers.
Thereby, the CA reversed the judgment of the Regional Trial Court
(RTC) rendered on May 9, 2000 (dismissing the respondent’s
complaint for quieting of title and reconveyance upon a finding that
CDC had been a buyer in good faith of the land in litis and that the
respondent’s suit had already been time-barred).
Aggrieved, CDC brought its petition for review on certiorari.
Antecedents
The subject of this case is a registered parcel of land (property)
with an area of 6,693 square meters, more or less, located in Barrio
Pulang Lupa, Las Piñas City, that was originally owned by Isaias
Lara,2 the respondent’s maternal grandfather. Upon the death of
Isaias Lara in 1930, the property passed on to his children, namely:
Miguela, Perfecta and Felicidad, and a grandson, Rosauro (son of
Perfecta who had predeceased Isaias in 1920). In 1962, the co-heirs
effected the transfer of the full and exclusive ownership to Felicidad
(whose married surname was Lara-Mateo) under an agreement
denominated as Pagaayos Na Gawa Sa Labas Ng Hukuman.
Felicidad Lara-Mateo had five children, namely: Laura,
respondent Renato, Cesar, Candido, Jr. and Leonardo. With the
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1 Rollo, pp. 55-76; penned by Associate Justice Arturo G. Tayag, with Associate
Justice Remedios A. Salazar-Fernando and Associate Justice Noel G. Tijam,
concurring.
2 Spelled in the complaint of the respondent as Isayas.
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680 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
agreement of the entire Lara-Mateo family, a deed of sale covering
the property was executed in favor of Laura, who, in 1967, applied
for land registration. After the application was granted, Original
Certificate of Title (OCT) No. 6386 was issued in Laura’s sole
name.
In due course, the property now covered by OCT No. 6386 was
used as collateral to secure a succession of loans. The first loan was
obtained from Bacoor Rural Bank (Bacoor Bank). To repay the loan
to Bacoor Bank and secure the release of the mortgage, Laura
borrowed funds from Parmenas Perez (Perez), who, however,
required that the title be meanwhile transferred to his name. Thus,
OCT No. 6386 was cancelled and Transfer Certificate of Title (TCT)
No. 438959 was issued in the name of Perez. Subsequently, Laura
recovered the property by repaying the obligation with the proceeds
of another loan obtained from Rodolfo Pe (Pe), resulting in the
cancellation of TCT No. 438595, and in the issuance of TCT No. S-
91595 in Laura’s name. She later executed a deed of sale in favor of
Pe, leading to the issuance of TCT No. S-91738 in the name of Pe,
who in turn constituted a mortgage on the property in favor of China
Banking Corporation (China Bank) as security for a loan. In the end,
China Bank foreclosed the mortgage, and consolidated its ownership
of the property in 1985 after Pe failed to redeem. Thus, TCT No.
(99527) T-11749-A was issued in the name of China Bank.
In 1988, CDC and China Bank negotiated and eventually came to
terms on the purchase of the property, with China Bank executing a
deed of conditional sale for the purpose. On March 4, 1993, CDC
and China Bank executed a deed of absolute sale over the property.
Resultantly, on March 29, 1993, CDC was issued TCT No. T-34640
in its own name.
In the meanwhile, on February 28, 1991, Felicidad died intestate.
On June 6, 1991, CDC brought an action for unlawful detainer in
the Metropolitan Trial Court (MeTC) in Las Piñas City against the
respondent’s siblings, namely: Cesar, Can-
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Casimiro Development Corporation vs. Mateo
dido, Jr., and Leonardo, and the other occupants of the property.
Therein, the defendants maintained that the MeTC did not have
jurisdiction over the action because the land was classified as
agricultural; that the jurisdiction belonged to the Department of
Agrarian Reform Adjudication Board (DARAB); that they had been
in continuous and open possession of the land even before World
War II and had presumed themselves entitled to a government grant
of the land; and that CDC’s title was invalid, considering that the
land had been registered before its being declared alienable.3
On October 19, 1992, the MeTC ruled in favor of CDC, viz.:
“The Court, after careful consideration of the facts and the laws
applicable to this case[,] hereby resolves:
1. On the issue of jurisdiction.
The defendants alleged that the land in question is an agricultural land by
presenting a Tax Declaration Certificate classifying the land as
“FISHPOND.” The classification of the land in a tax declaration certificate
as a “fishpond” merely refers to the use of the land in question for the
purpose of real property taxation. This alone would not be sufficient to bring
the land in question under the operation of the Comprehensive Agrarian
Reform Law.
2. On the issue of open and adverse possession by the defendants.
It should be noted that the subject land is covered by a Transfer
Certificate of Title in the name of plaintiffs’ predecessor-in-interest China
Banking Corporation. Certificates of Title under the Torrens System is
indefeasible and imprescriptible. As between two persons claiming
possession, one having a [T]orrens title and the other has none, the former
has a better right.
3. On the issue of the nullity of the Certificate of Title.
The defense of the defendants that the subject property was a forest land
when the same was originally registered in 1967 and hence, the registration
is void[,] is not for this Court to decide[,] for
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3 Mateo v. Court of Appeals, G.R. No. 128392, April 29, 2005, 457 SCRA 549, 551.
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682 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
lack of jurisdiction. The certificate of title over the property must be
respected by this Court until it has been nullified by a competent Court.
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiff[,] ordering the defendants
1. [sic] and all persons claiming right[s] under it to vacate the subject
premises located at Pulang Lupa I, Las Piñas, Metro Manila and surrender
the possession of the same to herein plaintiff;
2. to pay the plaintiff reasonable compensation for the use and
occupation of the subject premises hereby fixed at (P100.00) one hundred
pesos a month starting November 22, 1990 (the time when the demand letter
to vacate was given) until defendants actually vacate the property;
No pronouncement as to costs and attorney’s fees.
SO ORDERED.”4
The decision of the MeTC was assailed in the RTC via petition
for certiorari and prohibition. The RTC resolved against CDC, and
held that the MeTC had acted without jurisdiction because the land,
being a fishpond, was agricultural; hence, the dispute was within the
exclusive jurisdiction of the DARAB pursuant to Republic Act No.
6657 (Comprehensive Agrarian Reform Law of 1988).5
CDC appealed to the CA, which, on January 25, 1996, found in
favor of CDC, declaring that the MeTC had jurisdiction. As a result,
the CA reinstated the decision of the MeTC.6
On appeal (G.R. No. 128392), the Court affirmed the CA’s
decision in favor of CDC, ruling thusly:
“WHEREFORE, the petition is DENIED and the Court of Appeals’
Decision and Resolution in CA-G.R. SP No. 34039, dated January 25, 1996
and February 21, 1997 respectively, are AFFIRMED. No costs.
_______________
4 Id., pp. 551-552.
5 Id., pp. 552-553.
6 Id., pp. 555-558.
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Casimiro Development Corporation vs. Mateo
SO ORDERED.”7
The decision in G.R. No. 128392 became final.
Nonetheless, on June 29, 1994, the respondent brought an action
for quieting of title, reconveyance of four-fifths of the land, and
damages against CDC and Laura in the RTC in Las Piñas City
entitled Renato L. Mateo v. Casimiro Development Corporation and
Laura Mateo de Castro. In paragraph 4 of his complaint, he stated
that he was “bringing this action to quiet title on behalf of himself
and of his three (3) brothers—Cesar, Leonardo, and Candido, Jr., all
surnamed MATEO—in his capacity as one of the co-owners of a
parcel of land situated at Barrio Pulang Lupa, Municipality of Las
Piñas, Metro Manila.”
On May 9, 2001, the RTC held in favor of CDC, disposing:
“WHEREFORE, and by strong preponderance of evidence, judgment is
hereby rendered in favor of the defendant Casimiro Development
Corporation and against the plaintiff Renato L. Mateo by (1) Dismissing the
complaint, and upholding the validity and indefeasibility of Transfer
Certificate of Title No. T-34640 in the name of Casimiro Development
Corporation; (2) Ordering the plaintiff Renato Mateo to pay defendant
Casimiro Development Corporation the sum of [a] P200,000.00 as
compensatory damages; [b] P200,000.00 as attorney’s fees; and [c] to pay
the costs.
SO ORDERED.”8
On appeal (C.A.-G.R. CV No. 71696), the CA promulgated its
decision on August 31, 2006, reversing the RTC and declaring CDC
to be not a buyer in good faith due to its being charged with notice
of the defects and flaws of the title at the time it acquired the
property from China Bank, and decreeing:
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7 Id., pp. 560-561.
8 Rollo, p. 89.
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684 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
“WHEREFORE, the Decision dated May 9, 2001 of Branch 225,
Regional Trial Court, Las Piñas City in Civil Case No. 94-2045 is hereby
REVERSED and SET ASIDE and a new one rendered:
(1) Declaring appellant Renato Mateo and his brothers and co-owners
Cesar, Candido, Jr., and Leonardo, all surnamed Mateo as well as his sister,
Laura Mateo de Castro as the rightful owners of the parcel of land, subject
of this case; and
(2) Ordering the Register of Deeds of Las Piñas City, Metro-Manila to
cancel Transfer Certificate of Title No. T-34640 under the name of appellee
Casimiro Development Corporation, and that a new one be issued in favor
of the appellant and his co-heirs and siblings, mentioned above as co-
owners pro indiviso of the said parcel.
(3) No pronouncement as to cost.
SO ORDERED.”9
The CA denied CDC’s motion for reconsideration.
Hence, this appeal, in which CDC urges that the CA committed
serious errors of law,10 as follows:
(A) xxx in failing to rule that the decree of registration over the Subject
Property is incontrovertible and no longer open to review or attack after the
lapse of one (1) year from entry of such decree of registration in favor of
Laura Mateo de Castro.
(B) xxx in failing to rule that the present action is likewise barred by res
judicata.
(C) xxx in failing to rule that the instant action for quieting of title and
reconveyance under PD No. 1529 cannot prosper because the Subject
Property had already been conveyed and transferred to third parties who
claimed adverse title for themselves.
(D) xxx in failing to rule that the action of respondent for “quieting of title,
reconveyance and damages” is barred by laches.
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9 Id., p. 75.
10 Id., pp. 23-24.
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Casimiro Development Corporation vs. Mateo
(E) xxx in ruling that the Subject Property must be reconveyed to respondent
because petitioner Casimiro Development Corporation is not a “purchaser in
good faith.”
CDC argues that it was a buyer in good faith; and that the CA did
not rule on matters that fortified its title in the property, namely: (a)
the incontrovertibility of the title of Laura; (b) the action being
barred by laches and res judicata; and (c) the property having been
conveyed to third parties who had then claimed adverse title.
The respondent counters that CDC acquired the property from
China Bank in bad faith, because it had actual knowledge of the
possession of the property by the respondent and his siblings; that
CDC did not actually accept delivery of the possession of the
property from China Bank; and that CDC ignored the failure of
China Bank to warrant its title.
Ruling
We grant the petition.
1.
Indefeasibility of title in
the name of Laura
As basis for recovering the possession of the property, the
respondent has assailed the title of Laura.
We cannot sustain the respondent.
There is no doubt that the land in question, although once a part
of the public domain, has already been placed under the Torrens
system of land registration. The Government is required under the
Torrens system of registration to issue an official certificate of title
to attest to the fact that the person named in the certificate is the
owner of the property therein described, subject to such liens and
encumbrances as thereon
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686 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
noted or what the law warrants or reserves.11 The objective is to
obviate possible conflicts of title by giving the public the right to
rely upon the face of the Torrens certificate and to dispense, as a
rule, with the necessity of inquiring further. The Torrens system
gives the registered owner complete peace of mind, in order that he
will be secured in his ownership as long as he has not voluntarily
disposed of any right over the covered land.12
The Government has adopted the Torrens system due to its being
the most effective measure to guarantee the integrity of land titles
and to protect their indefeasibility once the claim of ownership is
established and recognized. If a person purchases a piece of land on
the assurance that the seller’s title thereto is valid, he should not run
the risk of being told later that his acquisition was ineffectual after
all, which will not only be unfair to him as the purchaser, but will
also erode public confidence in the system and will force land
transactions to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further
consequence will be that land conflicts can be even more abrasive, if
not even violent. The Government, recognizing the worthy purposes
of the Torrens system, should be the first to accept the validity of
titles issued thereunder once the conditions laid down by the law are
satisfied.13
Yet, registration under the Torrens system, not being a mode of
acquiring ownership, does not create or vest title.14 The Torrens
certificate of title is merely an evidence of owner-
_______________
11 Republic v. Guerrero, G.R. No. 133168, March 28, 2006, 485 SCRA 424; citing
Noblejas, Land Titles and Deeds, 1986 ed., p. 32.
12 Republic v. Court of Appeals, G.R. Nos. L-46626-27, December 27, 1979, 94
SCRA 865, 874.
13 Tenio-Obsequio v. Court of Appeals, G.R. No. 107967, March 1, 1997, 230
SCRA 550.
14 Heirs of Teodoro Dela Cruz v. Court of Appeals, G.R. No. 117384, October 21,
1998, 298 SCRA 172, 180.
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Casimiro Development Corporation vs. Mateo
ship or title in the particular property described therein.15 In that
sense, the issuance of the certificate of title to a particular person
does not preclude the possibility that persons not named in the
certificate may be co-owners of the real property therein described
with the person named therein, or that the registered owner may be
holding the property in trust for another person.16
Nonetheless, it is essential that title registered under the Torrens
system becomes indefeasible and incontrovertible.17
The land in question has been covered by a Torrens certificate of
title (OCT No. 6386 in the name of Laura, and its derivative
certificates) before CDC became the registered owner by purchase
from China Bank. In all that time, neither the respondent nor his
siblings opposed the transactions causing the various transfers. In
fact, the respondent admitted in his complaint that the registration of
the land in the name of Laura alone had been with the knowledge
and upon the agreement of the entire Lara-Mateo family. It is
unthinkable, therefore, that the respondent, fully aware of the
exclusive registration in her sister Laura’s name, allowed more than
20 years to pass before asserting his claim of ownership for the first
time through this case in mid-1994. Making it worse for him is that
he did so only after CDC had commenced the ejectment case against
his own siblings.
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15 Development Bank of the Philippines v. Court of Appeals, G.R. No. 129471,
April 28, 2000, 331 SCRA 267; Garcia v. Court of Appeals, G.R. No. 133140, August
10, 1999, 312 SCRA 180, 190; Rosario v. Court of Appeals, G.R. No. 127005, July
19, 1999, 310 SCRA 464; Republic of the Philippines v. Court of Appeals, G.R. No.
11611, January 21, 1999, 301 SCRA 366; Strait Times, Inc. v. Court of Appeals, G.R.
No. 126673, August 28, 1998, 294 SCRA 714, 726.
16 Heirs of Clemente Ermac v. Heirs of Vicente Ermac, G.R. No. 149679, May 30,
2003, 403 SCRA 291, 298; citing Lee Tek Sheng v. Court of Appeals, G.R. 115402,
July 15, 1998, 292 SCRA 544, 548.
17 Natalia Realty Corporation v. Vallez, G.R. Nos. 78290-94, May 23, 1989, 173
SCRA 534, 542.
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688 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
Worthy of mention is that Candido, Jr., Leonardo, and Cesar’s
defense in the ejectment case brought by CDC against them was not
predicated on a claim of their ownership of the property, but on their
being agricultural lessees or tenants of CDC. Even that defense was
ultimately rejected by this Court by observing in G.R. No. 128392 as
follows:
“With regard to the first element, the petitioners have tried to prove that
they are tenants or agricultural lessees of the respondent corporation, CDC,
by showing that the land was originally owned by their grandfather, Isaias
Lara, who gave them permission to work the land, and that CDC is merely a
successor-in-interest of their grandfather. It must be noted that the
petitioners failed to adequately prove their grandfather’s ownership of the
land. They merely showed six tax declarations. It has been held by this
Court that, as against a transfer certificate of title, tax declarations or
receipts are not adequate proofs of ownership. Granting arguendo that the
land was really owned by the petitioners’ grandfather, petitioners did not
even attempt to show how the land went from the patrimony of their
grandfather to that of CDC. Furthermore, petitioners did not prove, but
relied on mere allegation, that they indeed had an agreement with their
grandfather to use the land.
As for the third element, there is apparently no consent between the
parties. Petitioners were unable to show any proof of consent from CDC to
work the land. For the sake of argument, if petitioners were able to prove
that their grandfather owned the land, they nonetheless failed to show any
proof of consent from their grandfather to work the land. Since the third
element was not proven, the fourth element cannot be present since there
can be no purpose to a relationship to which the parties have not
consented.”18
The respondent’s attack against the title of CDC is likewise
anchored on his assertion that the only purpose for having OCT No.
6386 issued in the sole name of Laura was for Laura to hold the title
in trust for their mother. This assertion cannot stand, however,
inasmuch as Laura’s title had long ago become indefeasible.
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18 Mateo v. Court of Appeals, supra note 3, p. 560.
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Moreover, the respondent’s suit is exposed as being, in reality, a
collateral attack on the title in the name of Laura, and for that reason
should not prosper. Registration of land under the Torrens System,
aside from perfecting the title and rendering it indefeasible after the
lapse of the period allowed by law, also renders the title immune
from collateral attack.19 A collateral attack occurs when, in another
action to obtain a different relief and as an incident of the present
action, an attack is made against the judgment granting the title. This
manner of attack is to be distinguished from a direct attack against a
judgment granting the title, through an action whose main objective
is to annul, set aside, or enjoin the enforcement of such judgment if
not yet implemented, or to seek recovery if the property titled under
the judgment had been disposed of.20
2.
CDC was an innocent purchaser for value
The CA found that CDC acquired the property in bad faith
because CDC had knowledge of defects in the title of China Bank,
including the adverse possession of the respondent’s siblings and the
supposed failure of China Bank to warrant its title by inserting an
as-is, where-is clause in its contract of sale with CDC.
The CA plainly erred in so finding against CDC.
To start with, one who deals with property registered under the
Torrens system need not go beyond the certificate of title, but only
has to rely on the certificate of title.21 He is
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19 Madrid v. Mapoy, G.R. No. 150887, August 14, 2009, 596 SCRA 14, 26.
20 Madrid v. Mapoy, supra.
21 Sandoval v. Court of Appeals, G.R. No. 106657, August 1, 1996, 260 SCRA
283; Santos v. Court of Appeals, G.R. No. 90380, September 13, 1990, 189 SCRA
550; Unchuan v. Court of Appeals, G.R. No. L-78775, May 31, 1988, 161 SCRA 710;
Bailon-Casilao v.
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690 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
charged with notice only of such burdens and claims as are
annotated on the title.22 The pertinent law on the matter of burdens
and claims is Section 44 of the Property Registration Decree,23
which provides:
“Section 44. Statutory liens affecting title.—Every registered owner
receiving a certificate of title in pursuance of a decree of registration,
and every subsequent purchaser of registered land taking a certificate
of title for value and in good faith, shall hold the same free from all
encumbrances except those noted on said certificate and any of the
following encumbrances which may be subsisting, namely:
First. Liens, claims or rights arising or existing under the laws and
Constitution of the Philippines which are not by law required to appear of
record in the Registry of Deeds in order to be valid against subsequent
purchasers or encumbrances of record.
Second. Unpaid real estate taxes levied and assessed within two years
immediately preceding the acquisition of any right over the land by an
innocent purchaser for value, without prejudice to the right of the
government to collect taxes payable before that period from the delinquent
taxpayer alone.
Third. Any public highway or private way established or recognized by
law, or any government irrigation canal or lateral thereof, if the certificate of
title does not state that the boundaries of such highway or irrigation canal or
lateral thereof have been determined.
Fourth. Any disposition of the property or limitation on the use
thereof by virtue of, or pursuant to, Presidential Decree No. 27 or any other
law or regulations on agrarian reform.”
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Court of Appeals, G.R. No. L-78178, April 15, 1988, 160 SCRA 738; Director of
Lands v. Abad, 61 Phil. 479, 487 (1935); Quimson v. Suarez, 45 Phil. 901, 906 (1924).
22 Agricultural and Home Extension Development Group v. Court of Appeals,
G.R. No. 92310, September 3, 1992, 213 SCRA 563; Unchuan v. Court of Appeals,
supra.
23 Presidential Decree No. 1529 entitled Amending and Codifying the Laws
Relative to Registration of Property and for Other Purposes.
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In short, considering that China Bank’s TCT No. 99527 was a
clean title, that is, it was free from any lien or encumbrance, CDC
had the right to rely, when it purchased the property, solely upon the
face of the certificate of title in the name of China Bank.24
The CA’s ascribing of bad faith to CDC based on its knowledge
of the adverse possession of the respondent’s siblings at the time it
acquired the property from China Bank was absolutely unfounded
and unwarranted. That possession did not translate to an adverse
claim of ownership that should have put CDC on actual notice of a
defect or flaw in the China Bank’s title, for the respondent’s siblings
themselves, far from asserting ownership in their own right, even
characterized their possession only as that of mere agricultural
tenants. Under no law was possession grounded on tenancy a status
that might create a defect or inflict a flaw in the title of the owner.
Consequently, due to his own admission in his complaint that the
respondent’s own possession was not any different from that of his
siblings, there was really nothing—factually or legally speaking—
that ought to have alerted CDC or, for that matter, China Bank and
its predecessors-in-interest, about any defect or flaw in the title.
The vendee’s notice of a defect or flaw in the title of the vendor,
in order for it to amount to bad faith, should encompass facts and
circumstances that would impel a reasonably cautious person to
make further inquiry into the vendor’s title,25 or facts and
circumstances that would induce a reasonably prudent man to
inquire into the status of the title of the property in litigation.26 In
other words, the presence of
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24 Seno v. Mangubat, G.R. No. L-44339, December 2, 1987, 156 SCRA 113, 128.
25 Santos v. Court of Appeals, supra, note 21; Gonzales v. Intermediate Appellate
Court, G.R. No. L-69622, January 29, 1988, 157 SCRA 587.
26 State Investment House, Inc. v. Court of Appeals, G.R. No. 115548, March 5,
1996, 254 SCRA 368; Capitol Subdivision v. Prov-
692
692 SUPREME COURT REPORTS ANNOTATED
Casimiro Development Corporation vs. Mateo
anything that excites or arouses suspicion should then prompt the
vendee to look beyond the certificate and to investigate the title of
the vendor appearing on the face of said certificate.27
And, secondly, the CA grossly erred in construing the as-is,
where-is clause contained in the deed of sale between CDC (as
vendee) and China Bank (as vendor) as proof or manifestation of
any bad faith on the part of CDC. On the contrary, the as-is, where-is
clause did not affect the title of China Bank because it related only
to the physical condition of the property upon its purchase by CDC.
The clause only placed on CDC the burden of having the occupants
removed from the property. In a sale made on an as-is, where-is
basis, the buyer agrees to take possession of the things sold “in the
condition where they are found and from the place where they are
located,” because the phrase as-is, where-is pertains solely “to the
physical condition of the thing sold, not to its legal situation” and is
“merely descriptive of the state of the thing sold” without altering
the seller’s responsibility to deliver the property sold to the buyer.28
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ince of Negros Occidental, G.R. No. L-16257, January 31, 1963, 7 SCRA 60, 70,
Mañacop, Jr. v. Cansino, G.R. No. L-13971, February 27, 1961, 1 SCRA 572, Leung
Yee v. F.L. Strong Machinery Co. & Williamson, 37 Phil. 644 (1918), Philippine
National Bank v. Court of Appeals, G.R. No. L-57757, August 31, 1987, 153 SCRA
435, 442; Gonzales v. Intermediate Appellate Court, G.R. No. 69622, January 29,
1988, 157 SCRA 587, 595.
27 Sandoval v. Court of Appeals, supra, note 21; Pino v. Court of Appeals, G.R.
No. 94114, June 19, 1991, 198 SCRA 434; Centeno v. Court of Appeals, G.R. No. L-
40105, November 11, 1985, 139 SCRA 545, 555; Fule v. Legare, G.R. No. L-17951,
February 28, 1963, 7 SCRA 351; William H. Anderson and Co., v. Garcia, 64 Phil.
506 (1937).
28 Asset Privatization Trust v. T.J. Enterprises, G.R. No. 167195, May 8, 2009,
587 SCRA 481, 487-488; National Development Company v. Madrigal Wan Hai
Lines Corporation, G.R. No. 148332, September 30, 2003, 412 SCRA 375, 387.
693
VOL. 654, JULY 27, 2011 693
Casimiro Development Corporation vs. Mateo
What the foregoing circumstances ineluctably indicate is that
CDC, having paid the full and fair price of the land, was an innocent
purchaser for value, for, according to Sandoval v. Court of
Appeals:29
“A purchaser in good faith is one who buys property of another, without
notice that some other person has a right to, or interest in, such property and
pays a full and fair price for the same, at the time of such purchase, or
before he has notice of the claim or interest of some other persons in the
property. He buys the property with the belief that the person from whom he
receives the thing was the owner and could convey title to the property. A
purchaser cannot close his eyes to facts which should put a reasonable man
on his guard and still claim he acted in good faith.”
WHEREFORE, we grant the petition for review on certiorari; set
aside the decision of the Court of Appeals in CA-GR. CV No.
71696; dismiss the complaint in Civil Case No. 94-2045; and
declare Transfer Certificate of Title No. T-34640 in the name of
Casimiro Development Corporation valid and subsisting.
The respondent shall pay the costs of suit.
SO ORDERED.
Corona (C.J., Chairperson), Leonardo-De Castro, Del Castillo
and Villarama, Jr., JJ., concur.
Petition granted, judgment set aside.
Note.—A title issued to an innocent purchaser and for value
cannot be revoked on the basis that the deed of sale was falsified, if
he had no knowledge of the fraud committed. (Heirs of Julian Tiro
vs. Philippine Estates Corporation, 563 SCRA 309 [2008])
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29 Supra, note 21, pp. 296-297.
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