As Filipinos, we know all too well the significance of land and real property ownership. This goes beyond mere legal possession, as land ownership is deeply ingrained in our cultural, social, and economic fabric. Rooted in history, tradition, and practicality, Filipinos attach immense importance to their land and real property.
Land and property ownership is often viewed as a means of economic empowerment and security. It can provide a stable foundation for families, offering a source of income through agriculture, rental properties, or potential development.
Since Filipinos value family closeness and relations, land ownership is also seen as a form of tangible wealth that can be passed on to future generations, ensuring their financial stability and opportunities for growth. This is why our Real Estate brokers often include in their sales pitch that buying an expensive property would be well worth it because it would be a “legacy” that the buyer can leave for their children and loved ones.
Unfortunately, there is no shortage of tricksters, fraudsters, and forgers that plot and attempt to take our property from us. These people may not think twice about forging signatures and consents in deeds of sales, in order to take and/or transfer properties from legitimate owners to themselves.
In this article, we shall discuss why property owners must ensure the safekeeping of their certificates of title, because if this should fall into the wrong hands, they could lose their property and even be barred from recovering it, regardless of the fact that they never consented to its sale or transfer, and notwithstanding that they were the victims of forgery or fraud committed by others.
A forged deed is void and transfers no title
A forged deed of sale is null and void and conveys no title, for it is a well-settled principle that no one can give what one does not have. This means that one can sell only what one owns or is authorized to sell, and the buyer can acquire no more right than what the seller can transfer legally. (Tolentino v. Latagan, G.R. no. 179874, June 22, 2015)
The Supreme Court has declared that all subsequent certificates of title arising from the forged deed of sale are also void because of the legal truism that the spring cannot rise higher than its source. (Heirs of Arao, et al. vs. heirs of Eclipse, et. al., G.R. No. 211425, Nov 19, 2018)
Exception
Notwithstanding the foregoing, the Supreme Court has ruled that as an exception, the law protects the innocent purchaser who acquires the property from the forger in good faith and for valuable consideration.
Where innocent third parties, relying on the correctness of the certificate of title, acquires the rights over the property – the courts cannot disregard such rights and order the total cancellation of the certificate. An outright cancellation would impair the public confidence in the certificate of title and would in effect require anyone dealing with property registered under the Torrens system to inquire in every instance whether the title has been regularly or irregularly issued. And this would be contrary to the very purpose of the law.
Therefore, an innocent purchaser in good faith and for value of registered land, holds an indefeasible title under the Torrens system. (Aguirre vs. Bombaes, G.R. No. 233681,
Feb 3, 2023)
The remedy of the victim-owner
This does not mean, however, that the victim-landowner is without any recourse, as public policy dictates that those unjustly deprived of their rights over real property must be afforded legal remedies. The victim-landowner may opt to file an action for compensation from the Assurance Fund under Presidential Decree No. 1529, or the Property Registration Decree.
Note that it does not give the property back to the original victim-owner, but only allows the
victimized owner to file a claim with the Assurance Fund as provided for under PD 1529. The
victim-landowner may also file a case to claim damages against the forger or the person whose
fraudulent act resulted in the loss of the property.
What is an innocent purchaser for value
Notably, 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 it, and who pays a full and fair price for the property. On the other hand, a buyer is not an innocent purchaser if it has actual knowledge of a defect or lack of title of the seller of the property, which would reasonably give rise to suspicion, or one who fails to inquire or take the necessary steps to ensure that there was no cloud on the title, right or ownership of the property. (Aguirre vs. Bombaes, G.R. No. 233681, Feb 3, 2023)
The certificate of title
Given that an innocent purchaser in good faith and for value of a property may rely on the face of the certificate of title without inquiring further, it is important to emphasize the importance and significance of a certificate of title.
As it is settled that every person dealing with registered land may safely rely on the correctness of the certificate of title, when a certificate of title is clean and free from any defect, encumbrance or claim, a potential buyer has every right to rely on the correctness of the certificate in making its purchase of real property. (Aguirre vs. Bombaes, G.R. No. 233681, Feb 3, 2023)
This very same certificate of title is also a critical and essential document that would allow the forger of the deed of sale to transfer the property to their name, as the presentation and submission of the owner’s duplicate original transfer certificate of title is necessary to transfer title over a property to another.
It is important for property owners to know that the Property Registration Decree provides that no voluntary instrument, such as a deed of donation or deed of absolute sale, shall be registered by the Register of Deeds, unless the owner’s duplicate certificate is presented with such instrument.
The production of the owner’s duplicate certificate, whenever any voluntary instrument is presented for registration, shall be taken as 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. The result is that a new certificate or memorandum issued by the Register of Deeds shall be binding upon the registered owner and upon all persons claiming under them, in favor of every purchaser for value and in good faith.
The Supreme Court reiterated that failure to comply with the registration requirements of the Torrens system, for example the presentation of the owner’s original certificate of title, averts the registration process. This failure to present and surrender the certificate of title effectively prevents the transaction from affecting the land subject of the registration.
More importantly, a certificate of title issued by the Register of Deeds without the prior presentation
and cancellation of the existing owner’s duplicate title does not bind the property to which it
pertains and the title issued does not produce the effects of a valid title. It is literally a scrap of
paper. (Gatmaytan, et al. v. Misibis Land, Inc., G.R. No. 222166, June 10, 2020)
This is why I urge all property owners to diligently secure the certificates of title to their properties, keeping them safely in your possession or, if needed, entrusting them only to someone who is truly deserving your trust and confidence.
(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco
Siao Bello & Associates Law Offices, an Arbitrator of the Construction Industry Arbitration
Commission of the Philippines, and teaches law at the De La Salle University Tañada-Diokno
School of Law. He may be contacted at jcs@tiongcosiaobellolaw.com. The views expressed in
this article belong to the author alone.)