Key Doctrines:

1. A buyer must investigate both intrinsic (register/title) and extrinsic (circumstantial) evidence to claim good faith. Mere reliance on a “clean” title is insufficient when defects are apparent or suspicious circumstances exist.
2. A title obtained through fraud or forgery is void ab initio and cannot serve as a valid source of title, even for a subsequent purchaser.
3. The Torrens system prioritizes the registered owner’s rights absent negligence, over a subsequent buyer with a void title.
4. Under Section 52 of PD 1529, all registered instruments bind everyone, irrebuttably presuming knowledge of the register’s contents.

Facts:

The subject properties were originally owned by Spouses Narciso and Ofelia Ferreras. A deed of sale was allegedly executed on May 11, 2009, transferring the properties to Carina Pinpin. However, at that time, Narciso and Ofelia had already passed away—Narciso in 2005 and Ofelia in 1992. Subsequently, the properties were transferred to Spouses Orencio and Eloisa Manalese, who claimed to be buyers in good faith.

The estate of the Ferreras spouses challenged the validity of these transfers, arguing that the original sale to Pinpin was fraudulent. The Regional Trial Court (RTC) ruled in favor of the estate, declaring the titles of both Pinpin and the Manaleses void due to fraud. The Court of Appeals (CA) affirmed the RTC’s ruling but deleted the awards for damages​.

Issue:

Were Spouses Manalese innocent purchasers for value and in good faith?

Ruling:

No. Under Section 52 of Presidential Decree No. 1529, every registration in the land registry constitutes constructive notice to all persons. However, in this case, the Manaleses cannot claim ignorance of flaws in Pinpin’s title since an examination of the register would have revealed them. The Manaleses failed to conduct proper due diligence, such as verifying the authenticity of the prior deed of sale or inquiring about the history of the title. The following circumstances should have aroused their suspicion:

First, the Deed of Sale from Spouses Ferreras to Pinpin was fraudulent. The primary flaw in Pinpin’s title was the forged deed of sale dated May 11, 2009, which purportedly transferred the properties from Spouses Ferreras to her. The Supreme Court emphasized that this sale was impossible because both Ferreras spouses were already deceased at the time:

• Ofelia Ferreras died in 1992, and
• Narciso Ferreras died in 2005​.

“When the deed of sale in favor of … Pinpin was purportedly executed and notarized on May 11, 2009, it is perfectly obvious that the signatures of vendors [Spouses] Narciso and Ofelia Ferreras, were forged… This makes the May 11, 2009 deed of sale void at its inception…” (Decision, p. 8)

Since the dead cannot sign contracts, the supposed sale to Pinpin was null and void ab initio. As a result, Pinpin never acquired any ownership rights over the properties, making any subsequent transfers based on this sale also void.

Second, there was “laundering” of annotations from the original titles. The properties were originally covered by TCT Nos. 69711 and 69712, registered in the name of Spouses Ferreras. These titles contained several significant annotations, including:

• An Affidavit of Loss executed by Narciso Ferreras, stating that the owner’s duplicate title was lost;
• A Decision of the RTC Branch 62 ordering the issuance of new owner’s duplicate titles; and
• A second Affidavit of Loss executed by a certain Zenaida S. Ferreras, again claiming that the owner’s duplicate certificates were lost​.

However, when TCT Nos. 69711 and 69712 were cancelled and replaced with TCT Nos. 181052 and 181053 in Pinpin’s name, these annotations were not carried over. This deliberate omission gave the false impression that Pinpin’s titles were “clean” and free from any defects.

The Supreme Court found this highly suspicious because:

• If the titles were legitimately issued, all encumbrances and annotations should have been carried over to Pinpin’s new titles under Section 59 of Presidential Decree (PD) 1529.
• The sudden disappearance of these annotations indicated an attempt to “wash” the title clean before further transferring it​.

“Given that the Pinpin TCTs which petitioners dealt with had been improperly ‘laundered’… the subsequent registrations procured by the presentation of the forged duplicate certificates of title and the forged deed of sale supposedly executed by Spouses Ferreras are likewise null and void.” (Decision, pp. 19-20)

Third, the issuance of a second owner’s duplicate title was questionable. Under Section 109 of PD 1529, an owner’s duplicate title can only be replaced if it is truly lost. However, the Supreme Court noted that:

• Danilo Ferreras, the administrator of the Ferreras estate, was in possession of the original owner’s duplicate copies of TCT Nos. 69711 and 69712.
• This meant that the claim that the titles were lost was fraudulent.
• The RTC decision ordering the issuance of a new duplicate title may have been procured by fraud, as the rightful administrator of the estate was not involved in the proceedings​.

Thus, the Supreme Court held that the issuance of the new duplicate certificates of title was void ab initio. As a result, all subsequent transactions, including the issuance of Pinpin’s TCT Nos. 181052 and 181053, were also null and void.

Fourth, the purchase price was suspiciously low. Even assuming that a valid sale took place, the sale price of PHP 250,000.00 for two lots measuring a total of 691 square meters was unrealistically low. This indicated that the sale was highly suspicious and a reasonable buyer should have been alerted to investigate further​.

“Petitioners should have become suspicious why they were being made to pay PHP 3,300,000.00 by Pinpin on September 20, 2010… less than a year after Pinpin allegedly bought them on May 11, 2009 for PHP 250,000.00 only from Spouses Ferreras.” (Decision, p. 24)

Under the doctrine of constructive notice, buyers are expected to investigate suspicious transactions, especially when the purchase price is significantly below market value. The failure to conduct such due diligence negates any claim of good faith.

Fifth, there was an absence by actual possession by Pinpin. The Supreme Court also considered the principle that possession follows ownership. Here, despite having obtained title, Pinpin never physically occupied the properties, the properties remained occupied by other individuals, and the estate of Spouses Ferreras continued to exercise control over the properties, including filing legal actions against illegal occupants​. This lack of possession cast further doubt on the legitimacy of Pinpin’s claim of ownership.

Under the Torrens system, a clean and continuous chain of title is essential to prove valid ownership. However, the chain of title in this case was broken due to:

1. The forged deed of sale from deceased persons (Spouses Ferreras to Pinpin);
2. The suspicious deletion of annotations from the original titles;
3. The fraudulent issuance of a second owner’s duplicate title; and
4. The eventual transfer of the “laundered” title to Spouses Manalese.

Since Pinpin never legally acquired ownership, she had no valid right to transfer the properties to Spouses Manalese.

Was the mirror principle applied?

No. The Supreme Court ruled that Spouses Manalese were not buyers in good faith, meaning they could not invoke the mirror principle to justify their reliance on Pinpin’s title. The Court emphasized that Spouses Manalese failed to exercise prudence in verifying the history of the property:

“Evidence on record does not show that prior to the sale, [petitioners] conducted an ocular inspection of the subject properties or verified/traced … Pinpin’s right [to] transfer. Had they been more vigilant or prudent as buyers, they could have easily checked if her title was flawed or if she had the capacity to dispose of the subject properties, or if there were any other persons with rights or interests thereon.“

Since the Manaleses failed to investigate, the Court ruled that they could not claim protection under the mirror principle.

The Court clarified that the “mirror” (register reflects all interests) and “curtain” (unregistered interests do not bind third parties) principles primarily refer to the register, not just the certificate of title. Reliance on the certificate alone is insufficient when suspicious circumstances or register records indicate defects.

“Thus, when jurisprudence states that… ‘one does not need to go behind the certificate of title because it contains all the information about the title of its holder,’ and… ‘every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond the certificate to determine the condition of the property,’… these do not negate that the principal sources of information regarding the condition of the registered property are the register and the certificate of title.” (Decision, p. 45)

Under Section 52 of PD 1529, all registered instruments are constructive notice to all persons, irrebuttably presuming knowledge of the register’s contents. Since petitioners did not inquire into the register, and even without such inquiry, they are nonetheless constructively notified of every registration affecting the said subject properties, they cannot feign ignorance of such registrations.

Disclaimer: This article may have been created with the assistance of artificial intelligence. While efforts have been made to ensure accuracy and clarity, readers are encouraged to verify information independently.