Exceptions on IPV

No.6 LEPANTO CONSOLIDATED MINING COMPANY, petitioner, vs. MANUEL DUMYUNG, THE REGISTER
OF DEEDS OF BAGUIO CITY, and the COURT OF FIRST INSTANCE OF BAGUIO CITY (BRANCH I),
respondents.

Facts:

The Republic of the Philippines, represented by the Director of Lands commenced City Civil
Cases on the ground of misrepresentation and false data and informations furnished by the defendants
The lands embraced situated in the Benguet, Mountain Province. Lepanto Consolidated Mining
Company, intervened alleging that a portion of the titled lands in question is within the intervenor's
ordinary timber license and another portion of said lands is embraced in its mineral claims.

For the plaintiff and the intervenor, the lands covered by the patents and certificates of title are timber
lands and mineral lands and therefore not alienable. Before the hearing on the merits of the 3 civil
cases, Republic (as represented by Director of Lands), filed in the CFI of Baguio City 3 criminal cases for
falsification of public documents against the private defendants. Because of insufficiency of evidence,
trial court sustained the theory of defense to dismiss the criminal cases. Defendants then filed a motion
to dismiss the civil cases on the grounds that (a) extinction of the penal action carries with it the
extinction of the civil action when the extinction proceeds from a declaration that the fact from which
the civil liability might arise did not exist (b) trial court’s decision to acquit the defendant renders the
civil cases moot and academic (c)trial court has no jurisdiction to order cancellation of the patents
issued by the Director of Lands, etc. CFI of Baguio dismissed the 3 civil cases for the reasons that: a.
issuance of said Free patents were duly registered with the office of the Register of Deeds of Baguio and
Benguet, pursuant to pertinent provisions of Act 496, as amended and consequently, these properties
became the private properties of the defendants pursuant to same act. b. such titles enjoy the same
privileges and safeguards as Torrens titles. c. OCT belonging to defendants are now indefeasible which
the court has no power to disturb. d. defendants are ignorant natives of Benguet Province and are
members of the so called Cultural Minorities of Mountain Province, who are the same persons accused
in the dismissed criminal case, based on the same grounds.

Issue:

Whether or not the original certificate of title of private respondents were “indefeasible” as they were
issued pursuant to the registration of free patents of the Private Respondents.

Ruling:

No. In actions in which the validity of free patents issued to the respondents is being questioned on the
grounds that they cover mineral lands and falsification by respondents of their qualification to obtain
said patents over the lands in question it is error for the trial court to conclude, without receiving
evidence, that the titles issued to respondents are already indefeasible. a certificate of title is void when
it covers property of public domain classified as forest or timber and mineral lands, Any title issued on
non-disposable lots even in the hands of alleged innocent purchaser for value, shall be cancelled.

Timber and mineral lands are not alienable or disposable. Pertinent provisions of the Public Land Act
(Commonwealth Act No. 141), provides: “timber and mineral lands shall be governed by special laws;
nothing in this Act shall be construed to change or modify the administration and disposition of the
lands commonly called “friar lands” and those which, being privately owned, have reverted to or
become the property of the Commonwealth of the Philippines, which administration and disposition
shall be governed by the laws at present in force or which hereafter be enacted”. “President, upon the
recommendation of the Secretary of Agriculture and Commerce, shall from time to time classify the
lands of the public domain into…” a. Alieable or disposable b. Timber c. Mineral Lands and may at any
time and in a like manner transfer such lands from one class to another, for the purposes of their
administration and disposition.”

By provision of RA 3872, and in addition to Act. No. 141, it provides: “A member of the national cultural
minorities who has continuously occupied and cultivated , either by himself or through his predecessors-
in –interest, a tract/s of land, whether disposable or not since July 4, 1955, shall be entitled to the right
granted…Provided, that at the time he files his free patent applications he is not the owner of any real
property secured or disposable under this provision of the Public Land Law.”

In this case, there is no evidence that the private respondents are members of the National Cultural
Minorities; that they have continuously occupied and cultivated either by themselves or through their
predecessors-ininterest the land in question since July 4, 1955; and that they are not the owner of any
land secured or disposable under the Public Land Act at the time they filed the free patent applications.
The intervenor claims that it was in possession of the lands in question when private respondents
applied for free patents thereon. It is premature for the trial court to rule as to the indefeasibility of the
subject certificate of title. It is well settled that a certificate of title is void when it covers property of
public domain classified as forest or timber and mineral lands. Any title issued on non-disposable lots
even in the hands of alleged innocent purchaser for value shall be cancelled.
SPOUSES AMANCIO AND LUISA SARMIENTO AND PEDRO OGSINER v. COURT OF APPEALS, ET. AL.

G.R. No. 152627, September 16, 2005

Facts:

In August 1972, petitioner Spouses Sarmiento mortgaged a land to Carlos Sison for security of a loan
obtained by the former to the latter. Upon failure to pay the loan, Sison initiated the extra-judicial
foreclosure of the mortgaged property through the Sheriff of Rizal. Accordingly, a certificate of sale was
issued in favor of Sison and caused the same to be annotated on the title of the Sarmientos. In a public
auction conducted by the Municipal Treasurer of Marikina in August 1982, Mr. Puzon purchased the
same property and later on caused a certificate of sale to be registered in the Registry of Deeds. No
redemption was made by the Sarmientos.

In August 1986, Puzon sold the property to respondent RRC, which later assured that the former shall
take care of the “squatters” in the subject property by filing an ejectment case against them. However,
Puzon failed to comply.

In December 1986, RRC filed a complaint for recovery of possession against the Sarmientos and Pedro
Ogsiner, the spouses’ caretaker of the subject property who refused to vacate the property. In January
1987, the Sarmientos filed a third-party complaint alleging among others that they did not receive any
notice of tax sale from the Municipal Treasurer of Marikina. The trial court rendered its decision in favor
of RRC on the ground that they were given proper notice by the Municipal Treasurer who sent the same
in their last known address. On appeal, the petition of the Sarmientos was also dismissed.

Bold:

Whether or not RRC is can be considered an innocent purchaser for value.

Ruling:

No. The Court ruled against claim of RRC. First, the evident does not support the conclusion that a notice
of tax sale was sent to the Sarmientos. What was clear is that the notice sent to them was the Notice of
Sold Properties based on the testimony of Natividad Cabalquito as Municipal Treasurer of Marikina who
swore that neither notice of tax delinquency nor notice of tax sale was sent to the Sarmientos. Her
testimony was considered by the Court as sufficient proof of lack of notice in the absence of contrary
proof coming from Puzon and RRC. Because of Puzon’s failure to prove notice of tax sale, the sale
between Puzon and RRC is null and void.

Second, although the general rule provides that purchase may be considered in good faith when has
examined the title, an exception provides that purchaser cannot close his eyes to important facts that
would create suspicion in an otherwise reasonable man to investigate the title and those preceded it.
The fact that RRC did not investigate the Sarmientos claim over the subject property despite its
knowledge that Ogsiner, the latter’s overseer, was in actual possession means that it was not an
innocent purchaser for value. It was grossly negligent for RRC to merely rely on Puzon’s assurance that
the occupants of the property were mere squatters considering that information it acquired from
Ogsiner and that it had means and opportunity to investigate the information. Since they deliberately
ignored this fact, RRC cannot be considered as an innocent purchaser for value.

Ruling of CA is set aside. Public auction sale is void.

RENATO S. SANCHEZ, petitioner, vs. RODOLFO M. QUINIO and ISMAEL M. QUINIO, respondents

Facts:

The case involves a parcel of land located in Parañaque City, originally owned by Celia P. Santiago and
registered under TCT No. 391688. Santiago sold the land to respondents Rodolfo M. Quinio and Ismael
M. Quinio, who immediately registered the sale and obtained TCT No. S-89991. Thirteen years later,
Renato Sanding claimed to have purchased the same land from Santiago through a deed of absolute sale
executed on February 22, 1993. Sanding was issued TCT No. 70372, which he subsequently sold to
Romeo Abel, resulting in the issuance of TCT No. 72406 in Abel's name. Abel then sold the land to
petitioner Renato Sanchez, who obtained TCT No. 81125 in his name. The Quinios, upon discovering the
multiple transactions involving their property, filed a complaint for quieting of title and cancellation of
titles against Sanchez and the Abels. The trial court initially dismissed the complaint, ruling that Sanchez
was an innocent purchaser for value. On appeal, the Court of Appeals reversed the decision and ordered
the cancellation of TCT No. 72406 and TCT No. 81125.

Sanchez filed a petition for review on certiorari to challenge the decision of the Court of Appeals.

Issue:

Who between petitioner Renato Sanchez and respondents Rodolfo and Ismael Quinio is entitled to the
subject land?

Ruling:

The Supreme Court affirmed the decision of the Court of Appeals, ruling in favor of the respondents. The
respondents acquired the land in July 1979 and immediately registered the sale, obtaining TCT No. S-
89991. From that time on, ownership and other rights over the land belonged to the respondents.
Santiago, the original owner, no longer had transmissible rights over the property when she executed a
deed of sale in favor of Renato Sanding in February 1993. Even if Sanding and petitioner Sanchez were
innocent purchasers for value, the superior right of the respondents must be recognized. The law
protects and prefers the lawful holder of a registered title over the transferee of a vendor without
transmissible rights. The principle of indefeasibility of a Torrens title has exceptions. If a previous valid
title to the same parcel of land exists, the holder of the valid title has superior rights over a subsequent
purchaser in good faith and for value.

The existence of an outstanding valid certificate of title in the name of the respondents, who never
relinquished it, prevails over the title acquired by Sanding and subsequently transferred to Sanchez.
Petitioner Sanchez cannot have better rights than his predecessors-in-interest since no one can acquire
a greater right than what the transferor himself has.

Spouses Abrigo v. Romana De Vera Case Digest

G.R. No. 154409

Facts

This case involves a double sale. On May 27, 1993, Gloria Villafania first sold the disputed property to
Rosenda Tigno-Salazar and Rosita Cave-Go. Subsequently, Tigno-Salazar and Cave-Go sold the subject lot
to petitioners on October 16, 1997. Hence, herein petitioners, in turn, derived their right from the first
sale.

However, Gloria Villafania executed a second sale on the same property to respondent on October 23,
1997. Respondent registered the sale and as a consequence, TCT No. 22515 was issued in her name.
Thereafter, respondent filed a forcible entry case against petitioners. The RTC and the CA ruled in favor
of the petitioners. In its decision, the CA initially held that the second sail is void since Gloria Villafania
had already transferred ownership to Tigno-Salazar and Cave-Go. However, upon Motion for
Reconsideration, the CA ruled that respondent is a purchaser in good faith and for value whose right
must be protected. Hence, this petition.

Issue: Whether or not respondent was an innocent purchaser for value

Held

Yes. The respondent has the better right to the property in question.

Article 1544 of the Civil Code provides that a double sale of immovables transfers ownership to (1) the
first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in
good faith presents the oldest title. This principle is in full accord with Section 51 of PD 1529 which
provides that unregistered sales is binding only between the seller and the buyer but it does not affect
innocent third persons.

However, the priority in time principle or the rule that the first one who registers has better rights is not
always applicable. This is because the registration must also be done in the proper registry in order to
bind the land. If the land is registered under the Land Registration Act (and has therefore a Torrens
Title), and it is sold but the subsequent sale is registered not under the Land Registration Act but under
Act 3344, as amended, such sale is not considered REGISTERED.

In this case, petitioners registered their sale under Act 3344 while respondent registered it under the
Torrens System. Since the subject property is under the Torrens System, respondent acquired better
right since she was the one who registered the sale under the Torrens System. Hence, the respondent’s
registration under the Torrens system should prevail over that of petitioners.
Moreover, Article 1544 provides that for a second buyer to acquire better right, the latter must acquire
the immovable in good faith and to register it in good faith. Mere registration of title is not enough;
good faith must concur with the registration. In this case, respondent was an innocent purchaser for
value since the factual findings of the case revealed that Respondent De Vera was in good faith.
Therefore, respondent’s right must be protected.

David Sia Tio and Robert Sia Tio v Lorenzo Abayata

Facts:

The successors in interest of Celedonio Abayata filed an action for annulment of mortgage sale,
a subsequent sale and certificate of title with the RTC claiming that they are absolute owners of the
property in dispute. Respondents allege that through machinatios, defendant Benjamin Lasola was able
register the property in his name. In turn, the rural bank foreclosed the mortgage and sold the property
to petitioners who registered the property under TCT no. 20006. Petitioners and the rural bank filed
their respective answers claiming that they were innocent purchasers. For value and in good faith.
Defendant were declared in default. RTC rendered decision in favor of respondents. Rural bank appeal
but CA dismissed. Petitioners filed motion for reconsideration but was denied. Hence the present
petition.

Issue:

Whether or not petitioners are innocent purchasers for value and in good faith.

Ruling:

Yes. The subject property was acquired by the Rural Bank in a foreclosure proceeding as the
highest bidder for which a Certificate of Sale and "Definite Deed of Sale" were issued by the Sheriff in its
favor; and was subsequently sold by the Rural Bank to petitioners who, as borne out by evidence, are
purchasers in good faith.

The doctrine that a fraudulent title may be the root of a valid title in the name of an innocent buyer for
value and in good faith applies to petitioners.

A purchaser in good faith is one who buys the 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 of another person. The sources of notice are the title,
the recordings on the title and the land itself.

The rule has always been that 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 beyond
the certificate to determine the condition of the property. Where there is nothing in the certificate of
title to indicate any cloud or vice in the ownership of the property, or any encumbrance thereon, the
purchaser is not required to explore further than what the Torrens Title upon its face indicates in quest
for any hidden defects or inchoate right that may subsequently defeat his right thereto.26 However,
where the land sold is in the possession of a person other than the vendor, the purchaser must go
beyond the certificate of title and make inquiries concerning the actual possessor. A buyer of real
property which is in possession of another must be wary and investigate the rights of the latter.
Otherwise, without such inquiry, the buyer cannot be said to be in good faith and cannot have any right
over the property.

Petitioners bought the property in 1989 from the Rural Bank. While at the time of the sale, title to the
property still remained in the name of Lasola, the Rural Bank had documents showing that it bought the
property in a valid foreclosure proceeding. Notices of extra-judicial sale were published.28 An auction
sale was held with the Rural Bank as the lone and highest bidder. A Certificate of Sale was issued by the
Deputy Provincial Sheriff in favor of the Rural Bank. After the lapse of the one-year redemption period, a
Definite Deed of Sale was executed by the RTC-Cebu Sheriff in favor of the Rural Bank. The Certificate of
Sale and the Definite Deed of Sale, including the Real Estate Mortgage between Lasola and the Rural
Bank, were inscribed on Lasola's title. What's more, petitioners even went beyond the Rural Bank's
documents and together with a Rural Bank representative, inspected the property. When confronted
with the presence of houses on the property, they were led to believe by the Rural Bank's
representative that the occupants were merely squatters whose occupation was being tolerated by the
Rural Bank.

It should be emphasized that the prudence required of petitioners is not that of a person with training in
law, but rather that of an average man who "weighs facts and circumstances without resorting to the
calibration of our technical rules of evidence of which his knowledge is nil." Rather, he relies on the
calculus of common sense of which all reasonable men have an abundance. And, "by law and
jurisprudence, a mistake upon a doubtful or difficult question of law may properly be the basis of good
faith."

Thus, since petitioners were without actual notice of respondents' claim of ownership over the property,
and which claim was not discoverable by them after examining the title, the annotations on the title,
and an observation of the property, then they are entitled to a good faith status.
Torres y Chavarria v. Court of Appeals

G.R. No. 63046

Facts:

Mariano Torres is the owner of a parcel of land and a building known as "M. Torres Building" as
evidenced by Transfer Certificate of Title No. 53628-Manila issued in his name. Francisco Fernandez,
Torres' brother-in-law, filed a petition misrepresenting himself as Torres' attorney-in-fact and falsely
alleging that the owners' duplicate copy of TCT No. 53628 was lost. Fernandez obtained a court order for
the issuance of another copy of the certificate and forged a simulated deed of sale of the realties in his
favor. TCT No. 53628 in the name of Torres was cancelled and TCT No. 86018 was issued in Fernandez'
name. Fernandez mortgaged the realties to Rosario Mota and Angela Fermin, who later assigned her
credit to the spouses Cue. Torres discovered the fraud and filed a notice of adverse claim on Fernandez'
TCT. Torres filed a case to annul TCT No. 86018 and the proceedings in LRC GLRO Cad. Rec. No. 133.
Fernandez failed to pay his loans, prompting the Cues to institute an extra judicial foreclosure of the
mortgage. Fernandez filed a case to annul the mortgage with the Cues. An amicable settlement was
reached, but before Fernandez could pay his obligation, a decision was rendered in Torres' case
declaring TCT No. 86018 void and TCT No. 53628 as the true evidence of ownership.

The Court of Appeals affirmed the decision, which became final and executory. The Cues applied for a
writ of execution and the subject realties were sold at public auction, with Mota as the highest bidder.
Mota was issued the Sheriff's Deed of Sale and TCT No. 105953 was issued in her name. Torres filed a
complaint to declare it void.

The trial court declared TCT No. 105953 null and void, but the Court of Appeals reversed the decision.

Issue:

Whether or not

Ruling:

There is nothing on the records which shows that Torres performed any act or omission which could
have jeopardized his peaceful dominion over his realties. The decision under review, however, in
considering Mota an innocent mortgagee protected under Section 55 of the Land Registration Law, held
that Torres was bound by the mortgage. Inevitably, it pronounced that the foreclosure sale, where Mota
was the highest bidder, also bound Torres and concluded that the certificate of title issued in the name
of Mota prevails over that of Torres'. As correctly pointed out by Torres, however, his properties were
sold on execution, and not on foreclosure sale, and hence, the purchaser thereof was bound by his
notice of adverse claim and lis pendens annotated at the back of Fernandez' TCT. Moreover, even if We
grant Mota the status of an innocent mortgagee, the doctrine relied upon by the appellate court that a
forged instrument may become the root of a valid title, cannot be applied where the owner still holds a
valid and existing certificate of title covering the same interest in a realty. The doctrine would apply
rather when, as in the cases for example of De la Cruz v. Fable, 35 Phil. 144 [1916], Fule v. De Legare, No.
L-17951, February 28, 1963, 7 SCRA 351, and Republic v. Umali, G.R. No. 80687, April 10, 1989, the
forger thru insidious means obtains the owner's duplicate certificate of title, converts it in his name, and
subsequently sells or otherwise encumbers it to an innocent holder for value, for in such a case the new
certificate is binding upon the owner (Sec. 55, Act 496; Sec. 53, P.D. No. 1529). But if the owner holds a
valid and existing certificate of title, his would be indefeasible as against the whole world, and not that
of the innocent holder's. "Prior tempore potior jure" as We have said in Register of Deeds v. Philippine
National Bank, No. L-17641, January 30, 1965, 13 SCRA 46 , citing Bank, No. L Legarda v. Saleeby, 31 Phil.
590, Roman Catholic Bishop v. Philippine Railway, 49 Phil. 546, Reyes v. Borbon, 50 Phil. 791. in C.N.
Hodges v. Dy Buncio & Co., Inc., No. L-16096, October 30, 1962, 6 SCRA 287, 292, We laid down the
doctrine that:

The claim of indefeasibility of the petitioner's title under the Torrens land title system would be correct
if previous valid title to the same parcel of land did not exist. The respondent had a valid title ... It never
parted with it; it never handed or delivered to anyone its owner's duplicate of the transfer certificate of
title, it could not be charged with negligence in the keeping of its duplicate certificate of title or with any
act which could have brought about the issuance of another certificate upon which a purchaser in good
faith and for value could rely. If the petitioner's contention as to indefeasibility of his title should be
upheld, then registered owners without the least fault on their part could be divested of their title and
deprived of their property. Such disastrous results which would shake and destroy the stability of land
titles had not been foreseen by those who had endowed with indefeasibility land titles issued under the
Torrens system. Veronica Bareza perpetrated the fraud by making false representations in her petition
and the title issued to her being the product of fraud could not vest in her valid and legal title to the
parcel of land in litigation. As she had no title to the parcel of land, in the same way that a thief does not
own or have title to the stolen goods, she could not transmit title which she did not have nor possess.

Applying this doctrine in the case of the Register of Deeds v. P.N.B., supra, where We noted that said
ruling is "a mere affirmation of the recognized principle that a certificate is not conclusive evidence of
title if it is shown that the same land had already been registered and an earlier certificate for the same
land is in existence." Again in the case of Baltazar v. Court of Appeals, G.R. No. 78728, December 8,
1988, 168 SCRA 354, We held that as between two persons both of whom are in good faith and both
innocent of any negligence, the law must protect and prefer the lawful holder of registered title over the
transfer of a vendor bereft of any transmissible rights.

In view of the foregoing, to hold, for the purpose of enforcing the mortgage, that Mota was an innocent
mortgagee would be futile because, as above shown, no certificate of title covering the subject realties
in derogation of Torres' certificate of title may validly be issued. Then it becomes evident that the
remaining possible remedies of the Cues are to go against Fernandez or the Assurance Fund, as they in
fact had done in the lower court by filing a cross claim and third party complaint. The lower court
dismissed the Cues' cross-claim against Fernandez reasoning out that their remedy is to cause the final
judgment (compromise agreement) in Civil Case No. 75643 executed. This, of course, is correct since the
rights and obligations of both parties had been determined in that case.

The trial court also dismissed the Cues' third party complaint against the Treasurer of the Philippines as
custodian of the Assurance Fund after finding them negligent in protecting their interest. The trial court
recognized the principle that a person dealing with registered lands need not go beyond the certificate
of title but nevertheless pointed out that there are circumstances in this case which should have put the
Cues on guard and prompted them to investigate the property being mortgaged to them, thus:

The property in question is a very valuable property, in fact accepted by defendants Mota and Medina
Cue as collateral for more than half a million pesos in loans granted by them to Fernandez. Its value lies
principally in its income potential, in the form of substantial monthly rentals. Certainly, the registered
title does not yield any information as to the amount of rentals due from the building, much less on who
is collecting them, or who is recognized by the tenants as their landlord. Any prospective buyer or
mortgagee of such a property, if prudent and in good faith, is normally expected to inquire into all these
and related facts and circumstances.

Besides, by the course of visible dimensions of the M. Torres Building, it should be readily obvious to any
one that the area of the two lots covered by TCT No. 86018 cannot accommodate the building, as in fact
it also rests upon a lot covered by TCT No. 56387, and partly upon a lot leased by (Torres) from the City
of Manila. Had (the Cues) known of this fact would they have accepted the mortgage alone over TCT No.
86018? The answer is obvious. And yet, to all indications, they never bothered to look into this fact
about the M. Torres Building.

We likewise take note of the manifestation of the Office of the Solicitor General that the Cues failed to
contest the ruling of the trial court negating the liability of the Assurance Fund. For these reasons, it was
also held that the Cues' remedy merely is to go against Francisco Fernandez or rather his estate since
record shows that he died sometime in 1983.

ACCORDINGLY, the decision and resolution under review are REVERSED and the decision of the then
Court of First Instance, Branch 7, Manila in Civil Case No. 85753 is REINSTATED.

SO ORDERED.