Published — April 4, 2018
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of your own lawyer to address your legal concerns, if any.
Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
Related Topic: Basics of Land Titles, Transactions, and Real Property Registration
Land ownership disputes are fairly common. This is especially true since land is among the most valuable assets one can have, as land appreciates over time, and is an extremely limited resource. No wonder why many would go to great lengths just to be able to acquire land, and protect their ownership rights over it. This brings about the establishment of the Torrens system of registration, where the government is required to issue a certificate of title stating that the person named in such title is the owner of the property described therein, subject to liens and encumbrances annotated on the title or reserved by law [See: G.R. No. 171209].
Certificate of title as best proof of ownership
A fundamental principle in land registration under the Torrens system is that a certificate of title serves as evidence of an indefeasible and incontrovertible title to the property in favor of the person whose name appears therein. The certificate of title thus becomes the best proof of ownership of a parcel of land; hence, anyone who deals with property registered under the Torrens system may rely on the title and need not go beyond the title. This reliance on the certificate of title rests on the doctrine of indefeasibility of the land title, which has long been well-settled in this jurisdiction. It is only when the acquisition of the title is attended with fraud or bad faith that the doctrine of indefeasibility finds no application [See: G.R. No. 155830].
Therefore, tax declarations and tax receipts presented as evidence of ownership cannot prevail over a certificate of title which, to reiterate, is an incontrovertible proof of ownership. It should be stressed that tax declarations and receipts do not by themselves conclusively prove title to the land. They only constitute positive and strong indication that the taxpayer concerned has made a claim either to the title or to the possession of the property for which taxes have been paid [See: G.R. No. 123713].
Registration attended by fraud or bad faith
When the registration of the property and the consequent acquisition of title are attended by fraud, the registrant shall not be protected by the doctrine of indefeasibility of title. Thus, if the buyer in a sale forges the seller’s signature in the deed of sale, the title that the forger may have acquired through that spurious deed may still be questioned and voided. His title shall not be indefeasible.
The same is true for registrations made in bad faith. Thus, if the forger sells the property to someone who is aware of such forgery, the latter shall be considered to have acquired the property in bad faith because of his actual knowledge of the seller’s defective title. Such bad faith registrant, though not the one who actually committed the forgery, still cannot be protected by the doctrine of indefeasibility of Torrens title, as such protection does not extend to a transferee who takes it with notice of a flaw in the title of his transferor. To be effective, the inscription in the registry must have been made in good faith. 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 fraud [See: G.R. No. 143573].
Innocent purchaser in good faith and for value
A purchaser in good faith is one who buys the property of another without any 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 [See: G.R. No. 175291].
It is well-settled that even if the procurement of a certificate of title was tainted with fraud and misrepresentation, such defective title may be the source of a completely legal and valid title in the hands of an innocent purchaser for value. Thus, where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property, their rights cannot be disregarded and our courts cannot order the total cancellation of the certificate of title. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. Every person dealing with the 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 behind the certificate to determine the condition of the property [Ibid].
Doctrine of caveat emptor (let the buyer beware)
Although it is a recognized principle that a person dealing on a registered land need not go beyond its certificate of title, it is also a firmly settled rule that where there are circumstances which would put a party on guard and prompt him to investigate or inspect the property being sold to him, such as the presence of occupants thereon, it is, of course, expected from the purchaser of a valued piece of land to inquire first into the status or nature of possession of the occupants, i.e., whether or not the occupants possess the land in concept of owner. As is the common practice in the real estate industry, an ocular inspection of the premises involved is a safeguard a cautious and prudent purchaser usually takes. Should he find out that the land he intends to buy is occupied by anybody else other than the seller who is not in actual possession, it would then be incumbent upon the purchaser to verify the extent of the occupant’s possessory rights. The failure of a prospective buyer to take such precautionary steps would mean negligence on his part and would thereby preclude him from claiming or invoking the rights of a “purchaser in good faith” [See: G.R. No. 132161].
In the absence of fraud or bad faith in the registration process, or of any circumstance that would reasonably put someone on guard as to possible claims of other persons over a piece of real property, the certificate of title is clearly the best evidence that one can have to establish ownership. This is something that landowners, or anyone dealing with real property should always remember, in order to know what matters most in considering the claims of all who may be involved.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding land titles and property registration, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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