Tino and Carmen used to own a property in Quiapo, Manila.
Out of the goodness of their hearts, the couple allowed Lena, Tino’s sister-in-law, to live in the property rental-free for over two decades until the building they lived in was razed by fire. They then constructed makeshift houses, and the rental-free arrangement continued.
Tino and Carmen then immigrated to the United States and eventually had their marriage dissolved in one of the fifty states. A provision in their marital settlement agreement states that Tino shall convey and quitclaim all of his right, title and interest in the Quiapo property.
Noticeably, a handwritten note was inserted on one of the pages of the agreement, purporting to be a footnote remark, which reads that “Neither party shall evict or charge rent to relatives of the parties, or convey title, until it has been established that Tino has clear title to the Malabon property. Clear title to be established by the attorneys for the parties or the ruling of a court of competent jurisdiction. In the event Tino does not obtain clear title, this court reserves jurisdiction to reapportion the properties or their values to effect a 50-50 division of the value of the 2 remaining Philippine properties.”
Years later, Carmen sold the land to Ena. In lieu of Tino’s signature of conformity in the deed of absolute sale, Carmen presented to Ena and his father, witness Ernest, a waiver of interest notarized in the United States. In this waiver, Tino reiterated his quitclaim over his right, title and interest to the land. Consequently, the land’s title, covered by TCT No. 1234, was transferred to Ena’s name.
Meanwhile, Ena was aware of Tino’s relatives staying in the makeshift houses on the land. Carmen assured her that her nieces and nephews would move out, but demands to vacate were unheeded.
As expected, Ena filed a complaint for recovery of possession against Lena and the other relatives of Tino and Carmen. Ena’s complaint alleged that in 1995 after the fire had razed the building on the land, Lena erected makeshift houses on the land without Carmen’s knowledge or consent.
In response, Lena fired back. She claimed that Ena’s title is legally infirm for lack of Tino’s conformity to its sale. She also argued that Carmen’s noncompliance with the proviso in the property agreement—that the Quiapo property “may not be alienated without Tino first obtaining a clean title over the Malabon property”— annulled the transfer to Ena.
The complaint stirred the hornet’s nest. Tino thereafter filed a complaint for declaration of nullity of contract, title and damages against Carmen, Ena, and the Manila Register of Deeds, alleging that the sale was without his consent. The two cases were consolidated.
Q: What is the value of placing the property under the Torrens system?
A: The Torrens system was adopted 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.” One need not inquire beyond the four corners of the certificate of title when dealing with registered property.
Q: Who is an innocent purchaser for value?
A: An innocent purchaser for value refers to someone who “buys the property of another without notice that some other person has a right to or interest in it, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim.” One claiming to be an innocent purchaser for value has the burden of proving such status.
Q: Why does the law protect innocent purchasers in good faith for value?
A: Between the third party and the owner, the latter would be more familiar with the history and status of the titled property. Consequently, an owner would incur less costs to discover alleged invalidities relating to the property compared to a third party. Such costs are, thus, better borne by the owner to mitigate costs for the economy, lessen delays in transactions, and achieve a less optimal welfare level for the entire society.
Q: Is Ena an innocent purchaser in good faith for value?
A: Yes, Ena is an innocent for value. Ena is an innocent purchaser because (a) she, together with her father, verified the authenticity of Carmen’s land title at the Registry of Deeds of Manila and (b) was able to establish that there was no annotation on the same thus deemed a clean title. Also, Ena relied on the duly executed and notarized Certificate of Authority and Certificate of Authentication issued by the Consul of the Republic of the Philippines in support to the Waiver of Interest incorporated in the Deed of Absolute Sale presented to her by Carmen. Examination of the assailed Certificate of Authority shows that it is valid and regular on its face. It even contains a notarial seal.
The assailed Certificate of Authority is a notarized document and therefore, presumed to be valid and duly executed. Thus, Ena’s reliance on the notarial acknowledgment found in the duly notarized Certificate of Authority presented by Carmen is sufficient evidence of good faith.
Q: Who has a better right, Ena or Lena?
A: Ena is an innocent purchaser in good faith and for value with title in her name, has a better right to the property than Lena. Lena’s possession was neither adverse to nor in the concept of owner. Article 428 of the Civil Code provides:
Art. 428. The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law. The owner has also a right of action against the holder and possessor of the thing in order to recover it.
(Source: Spouses Leong vs. See, G.R. No. 194077, December 3, 2014)
Ma. Soledad Deriquito-Mawis, dean, Lyceum of the Philippines University; trustee, Board of Trustees, Philippine Association of Law Schools; Mawis Law Office