Hanopol Cannot Have A Better Right Than Appellee Pilapil Who, According To The Trial Court, "Was Not Shown To Be A Purchaser in Bad Faith"

HANOPOL
In the case at bar, there appears to be no clear evidence of

Hanopol's possession of the land in controversy. In fact, in his
complaint against the vendors, Hanopol alleged that the
Siapos took possession of the same land under claim of
ownership in 1945 and continued and were in such
possession at the time of the filing of the complaint against
them in 1948. Consequently, since the Siapos were in actual
occupancy of the property under claim of ownership, when
they sold the said land to appellee Pilapil on December 3,
1945, such possession was transmitted to the latter, at least
constructively, with the execution of the notarial deed of
sale, if not actually and physically as claimed by Pilapil in his
answer filed in the present case. Thus, even on this score,
Hanopol cannot have a better right than appellee Pilapil
who, according to the trial court, "was not shown to be a
purchaser in bad faith".

NATIONAL GRAINS
Thus, it has been invariably restated by this Court, that "The
real purpose of the Torrens System is to quiet title to land
and to stop forever any question as to its legality. "Once a
title is registered, the owner may rest secure, without the
necessity of waiting in the portals of the court, or sitting on
the "mirador su casato," avoid the possibility of losing his
land." "An indirect or collateral attack on a Torrens Title is not
allowed (Dominga vs. Santos, 55 Phil. 361; Singian vs. Manila
Railroad, 62 Phil. 467)."
The only exception to this rule is where a person obtains a
certificate of title to a land belonging to another and he has
full knowledge of the rights of the true owner. He is then
considered as guilty of fraud and he may be compelled to
transfer the land to the defrauded owner so long as the
property has not passed to the hands of an innocent
purchaser for value (Angeles vs. Sania, 66 Phil. 444 [1938],
emphasis supplied).
It will be noted that the spouses Vivas and Lizardo never
committed any fraud in procuring the registration of the
property in question. On the contrary, their application for
registration which resulted in the issuance of OCT No. 1728
was with complete knowledge and implied authority of
private respondents who retained a portion of the
consideration until the issuance to said spouses of a
certificate of title applied for under the Torrens Act and the
corresponding delivery of said title to them. The question
therefore, is not about the validity of OCT No. 1728 but in the
breach of contract between private respondents and the
Vivas spouses. Petitioner NGA was never a privy to this
transaction. Neither was it shown that it had any knowledge
at the time of the execution of the mortgage, of the existence
of the suspensive condition in the deed of absolute sale much
less of its violation. Nothing appeared to excite suspicion. The
Special Power of Attorney was regular on its face; the OCT
was in the name of the mortgagor and the NGA was the
highest bidder in the public auction. Unquestionably,
therefore, the NGA is an innocent purchaser for value, first as
an innocent mortgagee under Section 32 of P.D. 1529 and
later as innocent purchaser for value in the public auction
sale.
Private respondents claim that NGA did not even field any
representative to the land which was not even in the
possession of the supposed mortgagors, nor present any
witness to prove its allegations in the ANSWER nor submit its
DEED OF MORTGAGE to show its being a mortgages in good
faith and for value (Rollo, p. 110).
Such contention is, however, untenable. Well settled is the
rule that all persons dealing with property covered by a
torrens certificate of title are not required to go beyond what
appears on the face of the title. When there is nothing on the
certificate of title to indicate any cloud or vice in the
ownership of the property, or any encumbrance thereon, the
purchaser is not required to explore further than what the
torrens title upon its face indicates in quest for any hidden
defect or inchoate right that may subsequently defeat his
right thereto (Centeno vs. Court of Appeals, 139 SCRA 545
[1985]).
More specifically, the Court has ruled that a bank is not
required before accepting a mortgage to make an
investigation of the title of the property being given as
security (Phil. National Cooperative Bank vs. Carandang
Villalon, 139 SCRA 570 [1985]), and where innocent third
persons like mortgagee relying on the certificate of title
acquire rights over the property, their rights cannot be
disregarded (Duran vs. IAC, 138 SCRA 489 [1985]).
Under the circumstances, the Regional Trial Court could not
have erred in ruling that plaintiffs (private respondents
herein) complaint insofar as it prays that they be declared
owners of the land in question can not prosper in view of the
doctrine of indefeasibility of title under the Torrens System,
because it is an established principle that a petition for
review of the decree of registration will not prosper even if
filed within one year from the entry of the decree if the title
has passed into the hands of an innocent purchaser for value
(Pres. Decree No. 1529, Sec. 32). The setting aside of the
decree of registration issued in land registration proceedings
is operative only between the parties to the fraud and the
parties defrauded and their privies, but not against acquirers
in good faith and for value and the successors in interest of
the latter; as to them the decree shall remain in full force and
effect forever (Domingo vs. The Mayon Realty Corp. et al.,
102 Phil. 32 [19571). Assuming, therefore, that there was
fraud committed by the sellers against the buyers in the
instant case, petitioner NGA who was not privy therein
cannot be made to suffer the consequences thereof As
correctly declared by the trial court, the National Grains
Authority is the lawful owner of the property in question by
virtue of its indefeasible title.
As to private respondents' alternative prayer that the
declared owner be ordered to reconvey or transfer the
ownership of the property in their favor, it is clear that there
is absolutely no reason why petitioner, an innocent purchaser
for value, should reconvey the land to the private
respondents.
PREMISES CONSIDERED, the decision of the Court of Appeals
is REVERSED and SET ASIDE, and the decision of the Court of
First Instance of Laguna and San Pablo City, now Regional
Trial Court, is REINSTATED.

Hanopol Cannot Have A Better Right Than Appellee Pilapil Who, According To The Trial Court, "Was Not Shown To Be A Purchaser in Bad Faith"

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Hanopol Cannot Have A Better Right Than Appellee Pilapil Who, According To The Trial Court, "Was Not Shown To Be A Purchaser in Bad Faith"

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HANOPOL

In the case at bar, there appears to be no clear evidence of

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