Well founded belief

A LAW EACH DAY (Keeps Trouble Away) By Jose C. Sison | Updated May 12, 2009 - 12:00am
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A forged or fraudulent document may become the root of a valid title if the property has already been
transferred from the name of the owner to that of the forger and it was subsequently sold to a
purchaser in good faith and for value. This is illustrated in the case of spouses Juan and Lina.

The case involved a parcel of land registered in the name of Juan and Lina under TCT No. 22361 with
an unfinished structure. On July 16, 1979, a Deed of Absolute Sale of said property was purportedly
executed by the spouses in favor of Pedro and a new TCT No. 351553 was issued in Pedro’s name.
Later on the said TCT No. 351553 was also cancelled and a new one was issued in the name of the
spouses Mat and Pura under TCT No. 351673 by virtue of a Deed of Assignment executed by Pedro in
their favor. Mat and Pura obtained a loan from a financing company to which the land was mortgaged
in-order to pay Pedro the consideration for the Deed of Assignment.

Three months later Mat and Pura advertized the sale of the said land covered by TCT 351673.
Responding to the said Ad Larry contacted the number specified therein and was able to talk to a
certain lady by the name of Annie who introduced him to Mat. Larry also visited the site together with
Mat who told him that the unfinished structure thereon belonged to the previous owner and he (Mat)
lost interest in finishing the construction for lack of money and due to old age. Larry was then given a
copy of TCT 351673 and went to the Register of Deeds to verify its authenticity as well as the
mortgage made in favor of the financing company. Larry found out that the mortgage was under the
name of Mat’s employer. Having been satisfied about the authenticity and genuineness of the title,
Larry agreed to buy the land for P276,000 and redeemed the title from the financing company. He
then secured the transfer of title in his name by virtue of a Deed of Absolute Sale executed by Mat and
Pura sometime in 1987.

During all this time Juan and Lina were paying the real estate taxes on the land and they were still in
possession of their TCT 22361. It was only in first week of May 1987 when they visited the property
that they discovered a residential house was being constructed on their property. And when they
proceeded to the Register of Deeds they discovered that their title has already been cancelled by virtue
of the alleged Deed of Sale in favor of Pedro to which they did not even participate. It also turned out
that Pedro was a fictitious person so his supposed Deed of Sale in favor of the spouses Mat and Pura
was also falsified. Then the deed of sale by Mat and Pura in favor of Larry was also legally defective
as the notary public had no commission for 1987.

So Juan and Lina filed a suit before the Regional Trial Court (RTC) for annulment of title, recovery of
possession, re-conveyance, damages and injunction against Mat and Pura, Larry and the Register of
Deeds.

After trial the RTC rendered judgment in favor of Juan and Lina. It found that the Deed of Sale
executed by Juan and Lina in favor of Pedro was fake; that Pedro was a fictitious person and that both
the spouses Mat and Pura and Larry were buyers in bad faith. On appeal, the Court of Appeals (CA)
ruled that while the acquisition of the subject land by Mat and Pura does not appear to be above board,
the circumstances surrounding Larry’s acquisition on the other hand indicated that he is a purchaser
for value and in good faith.

Opinion ( Article MRec ), pagematch: 1, sectionmatch: 1

Was the CA correct?
 Yes. An innocent purchaser for value is one who buys the property of another without notice that
some other person has a right to or interest in that same property, and who pays a full and fair price at
the time of the purchase and before receiving any notice of another person’s claim.

The honesty of intention that constitutes good faith implies freedom from knowledge of circumstances
that ought to put a prudent person on inquiry. Good faith consists in the belief of the possessors that
the persons from whom they received the thing are the rightful owners who could convey their title.
The burden of proving the status of purchaser in good faith lies on the one who asserts that status.

In this case Larry had successfully discharged such burden. There were no traces of bad faith on
Larry’s part in acquiring such property by purchase. He merely responded to an Ad for the sale of said
land and performed every act that a reasonable cautious man would do under the circumstances. Every
person dealing with a registered land may safely rely on the correctness of the certificate of title issued
therefore and the law will in no way oblige him to go beyond the certificate to determine the condition
of the property (Spouses Villamil etc. vs. Villarosa, G.R. 177187, April 7, 2009).

***

E-mail at: jcson@pldtdsl.net

Opinion ( Article MRec ), pagematch: 1, sectionmatch: 1

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