493 Phil. 119
GARCIA, J.:
From the pleadings on record, the annexes thereto and the memoranda filed by the parties, the Court gathers the following factual antecedents:
- Decision dated 10 August 2001,[1] reversing and setting aside an earlier decision of the Regional Trial Court at Legaspi City, Branch 2, in Civil Case No. 9170, an action for annulment of title and/or recovery of possession, thereat commenced by the herein respondents against the petitioners; and
- Resolution dated 15 November 2001,[2] denying petitioners’ motion for reconsideration.
“WHEREFORE, the appealed decision dated January 21, 1997 is hereby reversed and SET ASIDE and another one entered, as follows:In time, petitioners filed a motion for reconsideration but the same was denied by the appellate court in its equally challenged Resolution of 15 November 2001.
(1) The transfer certificate of title (TCT) No. (P) 914 issued in the name of defendants-appellees [referring to herein petitioners] and the deed of sale executed by Gregorio [sic] Yaptengco Keh covering the said property are hereby declared null and void;
(2) The defendants-appellees are hereby directed to reconvey said property to the plaintiffs-appellants [referring to herein respondents];
(3) The Register of Deeds is ordered to cancel the registration of said property in the name of defendants-appellees and to issue a new one in the name of herein plaintiffs-appellants.
SO ORDERED.”
THE DECISION OF THE HONORABLE COURT OF APPEALS PROMULGATED ON AUGUST 10, 2001 REVERSING AND SETTING ASIDE THE EARLIER DECISION OF THE TRIAL COURT IN CIVIL CASE NO. 9170, AND ITS SUBSEQUENT RESOLUTION DATED NOVEMBER 15, 2001, DENYING THE MOTION FOR RECONSIDERATION FILED BY HEREIN PETITIONERS, ARE CONTRARY TO LAW AND JURISPRUDENCE.The petition is impressed with merit.
We believe that, with the documentary evidence and testimonies of plaintiffs-appellants (referring to herein respondents) and their witnesses, defendant appelee (sic) Lorena P. Clemente, in her capacity as the natural guardian and mother of her co-defendants, minors Ken Marten Clemente and Charlie Clemente, did not diligently exercise and act in a manner expected of a cautious and reasonably prudent woman in consummating a contract of sale with Gregoria Yaptengco Keh on the basis of Transfer Certificate of Title No. (P) 911 in the latter’s name, and on her verification in the Office of the Register of Deeds as to the status of the land, and on the mere assurance of the Register of Deeds that the title to the land was clear, clean and free from any encumbrance. Had she not relied, and had she gone further to the source or origin of TCT No. (P) 911, she would have easily discovered that the transfer and cancellation of Original Certificate of Title No. 30, and the consequent issuance of Transfer Certificate of Title No. (P) 911, in the name of Gregorio (sic) Yaptengco Keh, were irregular, defective and flawed, (Emphasis supplied),and went further by saying -
From the aforesaid finding, it could be readily deduced that there was indeed an irregularity in the cancellation of O.C.T. No. 30 in the name of Antonia Alaurin and its transfer in the name of Gregoria Yaptengco [K]eh under Transfer Certificate of Title No. (P) 911. For, how can an affidavit of Adelina Alaurin (alleged daughter of Antonia) dated January 15, 1992 and designated as Doc. 103, Page No. 21, Book No. 91, Series of 1992 of the notarial register of Atty. Pedro C. Lelis confirm a later [D]eed of Absolute Sale (dated February 6, 1992) allegedly executed by her deceased parent Antonia Alaurin and Tomas Adamos and designated as Doc. No. 103, Page No. 92, Book No. 92, Series of 1992, of the same Notary Public, Atty. Pedro C. Lelis. This evident discrepancy and anomaly appearing on the face of the reconstituted owner’s copy of O.C.T. No. 30, although not reflected and shown on the face of Transfer Certificate of Title No. (P) 911 in the name of Gregoria Yaptengco Keh should have put defendants on guard and cautioned them as to the status of the latter’s title, (Emphasis supplied).In short, the Court of Appeals faulted herein petitioners for not going beyond what appears on the face of the vendor’s TCT No. (P) 911. To said court, petitioners should have likewise scrutinized OCT No. 30, which is the source or origin of TCT No. (P) 911.
Persons dealing with property covered by a torrens certificate of title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. The public interest in upholding the indefeasibility of torrens titles, as evidence of the lawful ownership of the land or of any encumbrance thereon, protects buyers and mortgagees who, in good faith, rely upon what appears on the face of the certificate of title.Any buyer or mortgagee of realty covered by a Torrens certificate of title, in the absence of any suspicion, is not obligated to look beyond the certificate to investigate the titles of the seller appearing on the face of the certificate.[7] And, he is charged with notice only of such burdens and claims as are annotated on the title.[8]
The aforesaid principle admits of an unchallenged exception: that a person dealing with registered land has a right to rely on the Torrens certificate of title and to dispense with the need of inquiring further except when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith; and hence does not merit the protection of the law.In the present case, however, we note that there is nothing in the assailed decision of the Court of Appeals which mentions of any circumstance which should have aroused the petitioners’ suspicion other than the irregularity appearing on the face of OCT No. 30 – the source or origin of the vendor’s TCT No. (P) 911. We must reiterate that petitioners have the right to rely merely on what appears on the face of TCT No. (P) 911 and need not delve into or scrutinize OCT No. 30 because at the time the subject land was sold to them, the same was already covered by TCT No. (P) 911. OCT No. 30 was then already inexistent. And, there was no finding by the two (2) courts below that petitioners had actual knowledge of any irregularity in the issuance of TCT No. (P) 911 or its mother title, OCT No. 30.
Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.For sure, our resolution of the issue before us is very much consistent with Presidential Decree No. 1529, otherwise known as the Property Registration Decree, Section 53 of which reads in part:
SECTION 53. Presentation of the owner’s duplicate upon entry of new certificates. – No voluntary instrument shall be registered by the Register of Deeds, unless the owner’s duplicate certificate is presented with such instrument, except in cases expressly provided for in this Decree or upon order of the court, for causes shown.FOR ALL THE FOREGOING, the Court resolves to GRANT, as it hereby GRANTS, the instant petition. Accordingly, the assailed Decision and Resolution of the Court of Appeals, are hereby REVERSED and SET ASIDE and the decision dated 21 January 1997 of the Regional Trial Court, Legazpi City, Branch 2, REINSTATED.
The production of the owner’s duplicate certificate, whenever any voluntary instrument is presented for registration, shall be conclusive authority from the registered owner to the Register of Deeds to enter a new certificate or to make a memorandum of registration in accordance with such instrument, and the new certificate or memorandum shall be binding upon the registered owner and upon all persons claiming under him, in favor of every purchaser for value and in good faith (Emphasis supplied).