CONSORCIA TENIO-OBSEQUIO, ORLANDO OBSEQUIO, and MANUEL, REGINA, TUNAY and MELITON, all surnamed OBSEQUIO, vs. COURT OF APPEALS, EUFRONIO ALIMPOOS, and PONCIANA ALIMPOOS.
- G.R. Number: G.R. No. 107967
- Promulgated: 1994-03-01
- Ponente: Regalado, J.
Doctrine
Torrens certificates are meant to be relied upon; courts should not cancel certificates when innocent third persons have acquired rights by relying on them, absent actual knowledge that would prompt inquiry.
When entrustment of a certificate of title to another makes possible a fraud, the entrusting party — not the innocent purchaser — must bear the loss.
The remedy for one prejudiced by fraudulently transferred title is an action for damages against those responsible and, if necessary, recovery from the Treasurer under the Assurance Fund; reconveyance claims must be brought within ten years from issuance of the title.
Facts
Under the Torrens system, the public may rely on the face of a Torrens certificate of title and generally need not inquire further absent actual knowledge of facts that would prompt inquiry.
Respondents entrusted their certificate of title to a third party, Eduardo Deguro, an act the Court says made possible the alleged fraud committed against them.
An innocent purchaser for value who relied on the certificate of title acquired rights that the court cannot disregard even if the seller's title was obtained by fraud.
Respondents filed their complaint 22 years after the execution of the allegedly forged deed and 16 years after transfer of title; reconveyance actions must be filed within ten years from issuance because issuance is constructive notice.
Issues
Whether the Torrens certificate of title can be summarily cancelled despite the rights of an innocent purchaser for value who relied on the certificate.
Whether the party who entrusted the certificate of title to a third person should bear the loss when that entrustment makes possible a fraud.
Whether the action for reconveyance was barred by delay given the issuance of the title operates as constructive notice and the ten-year prescriptive period.
Ruling
The Court reversed the decision and resolution of the respondent court and reinstated the decision of the court a quo.
The certificate of title cannot be totally cancelled where innocent third persons acquired rights by relying on the Torrens certificate; remedies lie in actions for damages and, if appropriate, recovery from the Assurance Fund.
As between two innocent persons where entrustment enabled the fraud, the one who entrusted the title must bear the loss; reconveyance was also time-barred as it was filed beyond the ten-year period after issuance.
Keywords
G.R. No. 107967, review on certiorari, recovery of possession and ownership, mortgaged the land, original certificate of title, deed of sale, Transfer Certificate of Title No. T-1360, Transfer Certificate of Title No. T-1421, purchased the land in question from the heirs of Deguro in good faith, for valuable consideration, without knowledge of any flaw or defect whatsoever, reconveyance of the land, original owner, forged deed of absolute sale, Section 55 the Land Registration Act, as amended by Section 53 of Presidential Decree No. 1529, annulment of a transfer thereof on the ground of fraud, innocent holder for value with a certificate of title, purchaser in good faith and for value, negligence, tax declaration