Abalon v. Andal Case Digest

G.R. No. 183448

June 30, 2014

Facts:

• A parcel of land was registered under the name of Bernardina Abalon.
• It was fraudulently transferred to Restituto Rellama.
  • Rellama subdivided the property and sold it to the following:
    • Spouses Peralta
    • Marissa, Leonil, and Arnel Andal
  • Both Spouses Peralta and the Andals registered their portions of the land under their names.
• Now, the heirs of Bernardina Abalon were claiming back the land, alleging it was sold under fraudulent circumstances.
• RTC and CA have the same findings of fact, but differ in their legal conclusions.
• The land was originally covered by OCT 16 and registered under Abalon’s name.
• A deed of absolute sale was executed over the property in favor of Rellama on June 10, 1975.
  • OCT 16 was then cancelled and a TCT was issued in the name of Rellama.
  • The subject property was then subdivided into three:
    • Lot A – sold to Spouses Peralt
    • Lot B – sold to Lotivio who transferred his ownership to Marissa, Leonil, and Arnel Andal through a deed of absolute sale
    • Lot C – also acquired by the Andals
• The Andals claimed that Abalon died without issue, and that they are the nephew and niece of Abalon.
  • They claimed that they acquired the property through succession.
• The Andals alleged that Rellama derived his title upon presentation of a Xerox copy of the alleged forged absolute sale.
• Rellama said that the owner’s duplicate copy was got lost in 1976 after the same was delivered to him.
  • But the Andals insisted that the owner’s duplicate remaind with Abalon and upon her death, it was delivered to the Andals.
• During trial, Rellama passed away.

Issue:

Can a forged instrument become the root of a valid title in the hands of an innocent purchaser for value, even if the true owner thereof has been in possession of the genuine title, which is valid and has not been cancelled?

Ruling:

The Torrens system cannot be used for the perpetration of fraud against the real owner of the registered land.

It is well-established that a person who is dealing with a registered parcel of land need not go beyond the face of the title. However, this rule has exceptions, including:

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

One who falls within the exception can neither be denominated as an innocent purchaser for value nor a purchaser in good faith. Hence, he does not merit the protection of the law.

Who is an innocent purchaser for value?

• One who buys the property of another without notice that some other person has a right to or interest therein and who then pays a full and fair price for it at the time of the purchase or before receiving a notice of the claim or interest of some other persons in the property.

However, there are times when a fraudulent or forged document can give rise to a valid title.

• Ex: When the certificate of title was already transferred from the name of the true owner to the forger, and while it remained that way, the land was subsequently sold to an innocent purchaser. For then, the vendee had the right to rely upon what appeared in the certificate.
• The qualifying point here is that there must be a complete chain of registered titles.
  • In the instant case, there is no evidence that the chain of registered titles was broken in the case of the Andals.

The Spouses Perlata were buyers in bad faith.

• This was the finding of both RTC and CA and because the issue of WON someone is a buyer in bad faith is a factual one, the SC upheld that finding.

Did the Abalons have a legal standing?

• Yes. The CA ruled that they had legal standing, but it was because of ordinary prescription. The Supreme Court this was wrong. Their legal standing stems from succession.
• Reason why it cannot be because of ordinary prescription: The subject land is a titled property and so acquisitive prescription is not applicable.