Bar Q and A #41

Macario is preferred since the registration of his adverse claim was made ahead of the notice of levy and writ of execution in favor of Alex. Macario’s adverse claim, coupled with the fact that he was in possession of the disputed property, are circumstances which should have put Alex on constructive notice that the property being offered to him had already been sold to another. (Ching v. Enrile, G.R. No. 156076 [2008]) The contention that the adverse claim is effective only for 30 years is puerile. In Sajonas v. Court of Appeals, 258 SCRA 79, (1996), the Court held that the adverse claim does not ipso facto lose its validity since an independent action is still necessary to render it ineffective. Until then, the adverse claim shall continue as a prior lien on the property.

The suit will prosper. While an adverse claim duly annotated at the back of a title under Sec. 7O of P.D. 1529 is good only for 30 days, cancellation thereof is still necessary to render it ineffective, otherwise, the inscription thereof will remain annotated as a lien on the property. While the life of adverse claim is 3O days under P.D. 1529, it continuous to be effective until it is cancelled by formal petition filed with the Register of Deeds. The cancellation of the notice of levy is justified under Sec. 108 of P.D.1529 considering that the levy on execution cannot be enforced against the buyer whose adverse claim against the registered owner was recorded ahead of the notice of levy on execution.

The notice of lis pendens is not proper for the reason that the case filed by Mario against Carmen is only for collection, damages, and attorney's fees. Annotation of a lis pendens can only be done in cases involving recovery of possession of real property, or to quiet title or to remove cloud thereon, or for partition or any other proceeding affecting title to the land or the use or occupation thereof. The action filed by Mario does not fall on anyone of these.

An action for the annulment of Jorge's Original Certificate of Title will prosper on the following grounds:

1. Under Chapter IX of C.A., No. 141, otherwise known as the Public Land Act, foreshore lands are disposable for residential, commercial, industrial, or similar productive purposes, and only by lease when not needed by the government for public service.

2. If the land is suited or actually used for fishpond or aquaculture purposes, it comes under the Jurisdiction of the Bureau of Fisheries and Aquatic Resources (BFAR) and can only be acquired by lease. (P.D. 705)

3. Free Patent is a mode of concession under Section 41, Chapter VII of the Public Land Act, which is applicable only for agricultural lands.

4. The certificate of the district forester that the land is already "alienable and disposable" simply means that the land is no longer needed for forest purposes, but the Bureau of Lands could no longer dispose of it by free patent because it is already covered by a lease contract between BFAR and Regina. That contract must be respected.

5. The free patent of Jorge is highly irregular and void ab initio, not only because the Bureau has no statutory authority to issue a free patent over a foreshore area, but also because of the false statements made in his sworn application that he has occupied and cultivated the land since July 4, 1945, as required by the free patent law. Under Section 91 of the Public Land Act, any patent concession or title obtained thru false representation is void ab initio. In cases of this nature, it is the government that shall institute annulment proceedings considering that the suit carries with it a prayer for the reversion of the land to the estate. However, Regina is a party in interest and the case will prosper because she has a lease contract for the same land with the government.

The motion of Nestor to dismiss the complaint for annulment of O.C.T. No. 375 and
T.C.T. No. 4576 should be denied for the following reasons:

1. Eddie cannot claim protection as an innocent purchaser for value nor can he interpose the defense of indefeasibility of his title, because his TCT is rooted on a void title. Under Section 91 of CA No. 141, as amended, otherwise known as the Public Land Act, statements of material facts in the applications for public land must be under oath. Section 91 of the same act provides that such statements shall be considered as essential conditions and parts of the concession, title, or permit issued any false statement therein, or omission of facts shall ipso facto produce the cancellation of the concession. The patent issued to Nestor in this case is void ab initio not only because it was obtained by fraud but also because it covers 30 hectares which is far beyond the maximum of 24 hectares provided by the free patent law.

2. The government can seek annulment of the original and transfer certificates of title and the reversion of the land to the state. Eddie's defense is untenable. The protection afforded by the Torrens System to an innocent purchaser for value can be availed of only if the land has been titled thru judicial proceedings where the issue of fraud becomes academic after the lapse of one year from the issuance of the decree of registration. In public land grants, the action of the government to annul a title fraudulently obtained does not prescribe such action and will not be barred by the transfer of the title to an innocent purchaser for value.

1. No, Rod did not acquire title to the land. The inscription in the registry, to be effective, must be made in good faith. The defense of indefeasibility of a Torrens Title does not extend to a transferee who takes the certificate of title with notice of a flaw. A holder in bad faith of a certificate of title is not entitled to the protection of the law, for the law cannot be used as a shield for frauds. (Samonte v. Court of Appeals, G.R. No. 104223, July 12, 2001) In the case at bar, Rod only forged Cesar's signature on the Deed of Sale. It is very apparent that there was bad faith on the part of Rod from the very beginning. As such, he is not entitled to the protection of the Land Registration Act.

2. It is a well-known rule in this jurisdiction that persons dealing with registered land have the legal right to rely on the face of the Torrens Certificate of Title and to dispense with the need to inquire further, except when the party concerned has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry. (Naawan Community Rural Bank v. Court of Appeals, G.R. No. 128573, January 13, 2003) In the given problem, the property was already registered in the name of Rod when he bought the same from the latter. Thus, Don could be considered as a buyer in good faith and for value. However, since Rod did not actually sell any property to him, Don has no right to retain ownership over the property. He has only the right to recover the purchase price plus damages.

The sale of the land by A to B 3 years after issuance of the homestead patent, being in violation of Sec. 118 of the Public Land Act, is void from its inception. The action filed by the heirs of B to declare the nullity or inexistence of the contract and to recover the land should be given due course. B's defense of prescription is untenable because an action which seeks to declare the nullity or inexistence of A contract does not prescribe. On the other hand,  B's defense of in pari delicto is equally untenable. While as a rule, parties who are in pari delicto have no recourse against each other on the principle that a transgressor cannot profit from his own wrongdoing, such rule does not apply to violations of Sec. 118 of the Public Land Act because of the underlying public policy in the said Act "to conserve the land which a homesteader has acquired by gratuitous grant from the government for himself and his family".

In keeping with this policy, it has been held that one who purchases a homestead within the five-year prohibitory period can only recover the price which he has paid by filing a claim against the estate of the deceased seller (Labrador v. Delos Santos, G.R. No. 44947, November 26, 1938) under the principle that no one shall enrich himself at the expense of another. Applying the pari delicto rule to violation of Section 118 of the Public Land Act, the Court of Appeals has ruled that "the homesteader suffers the loss of the fruits realized by the vendee who in turn forfeits the improvement that he has introduced into the land". (Obot v. Sandadiuas, 69 OG, April 35, 1966)

Metrobank's defense is untenable. As a rule, an innocent purchaser for value acquires a good and a clean title to the property. However, it is settled that one who closes his eyes to facts that should put a reasonable man on guard is not an innocent purchaser for value. In the present problem the bank is expected, as a matter of standard operating procedure, to have conducted an ocular inspection, of the promises before granting any loan. Apparently, Metrobank did not follow this procedure. Otherwise, it should have discovered that the condominium unit in question was occupied by Cesar and that fact should have led it to make further inquiry. Under the circumstances, Metrobank cannot be considered a mortgagee and buyer in good faith.

1. No, the appeal is not meritorious. The trial court ruled correctly in granting defendant's motion to dismiss for the following reasons:

a) While there is the possibility that F, a former lessee of the land was aware of the fact that C was the bona fide occupant thereof and for this reason his transfer certificate of title may be vulnerable, the transfer of the same land and the issuance of new TCTs to X and Y who are innocent purchasers for value render the latter's titles indefeasible. A person dealing with registered land may safely rely on the correctness of the certificate of title and the law will not in any way oblige him to go behind the certificate to determine the condition of the property in search for any hidden defect or inchoate right which may later invalidate or diminish the right to the land. This is the mirror principle of the Torrens System of land registration.

b) The action to annul the sale was instituted in 1977 or more than (10) years from the date of execution thereof in 1957, hence, it has long prescribed.

c) Under Sec 45 of Act 496, “the entry of a certificate of title shall be regarded as an agreement running with the land, and binding upon the applicant and all his successors in title that the land shall be and always remain registered land. A title under Act 496 is indefeasible and to preserve that character, the title is cleansed anew with every transfer for value. (De Jesus v. City of Manila,
G.R. No. 9337, December 24, 1914; Laperal v. City of Manila, G.R. No. L-42792, October 23, 1935; Penullar v. PNB, G.R. No. L-32762, January 27, 1983)

2. Even if the government joins C, this will not alter the outcome of the case so much because of estoppel as an express provision in Sec. 45 of Act 496 and Sec. 31 of PD 1529 that a decree of registration and the certificate of title issued in pursuance thereof “shall be conclusive upon and against all persons, including the national government and all branches thereof, whether mentioned by name in the application or not.”

The action of   X   and   Y   against   B   for reconveyance of the land will not prosper because  B  has acquired a  clean title to the property being an innocent purchaser for value. A forged deed is an absolute nullity and conveys no title.  The fact that the forged deed was registered and a certificate of title was issued in his name,  did not operate to vest upon an ownership over the property of  X  and  Y.  The registration of the forged deed will not cure the infirmity. However, once the title to the land is registered in the name of the forger and title to the land thereafter falls into the hands of an innocent purchaser for value, the latter acquires a clean title thereto. A buyer of a registered land is not required to explore beyond what the record in the registry indicates on its face inquest for any hidden defectorinchoate right which may subsequently defeat his right thereto. This is the "mirror principle” of the Torrens system which makes it possible for a forged deed to be the root of a good title. Besides, it appears that spouses  X  and  Y  are guilty of contributory negligence when they delivered this OCT to the mortgagee without annotating the mortgage thereon.    Between them and the innocent purchaser for value, they should bear the loss.