Cusi vs Domingo (G.R. No. 195825 February 27, 2013)

Spouses Cusi vs Domingo
G.R. No. 195825 February 27, 2013

Facts: The property in dispute was a vacant unfenced lot situated in White Plains, Quezon City and covered by Transfer Certificate of Title (TCT) No. N-165606 issued in the name of respondent Lilia V. Domingo by the Registry of Deeds of Quezon City. It had an area of 658 square meters. In July 1999, Domingo learned that construction activities were being undertaken on her property without her consent. She soon unearthed the series of anomalous transactions affecting her property. On July 18, 1997, one Radelia Sy (Sy), representing herself as the owner of the property, petitioned the RTC for the issuance of a new owner’s copy of Domingo’s TCT No. N-165606, appending to her petition a deed of absolute sale dated July 14, 1997 purportedly executed in her favor by Domingo; and an affidavit of loss dated July 17, 1997, whereby she claimed that her bag containing the owner’s copy of TCT No. N-165606 had been snatched from her on July 13, 1997 while she was at the SM City in North EDSA, Quezon City.  The RTC granted Sy’s petition on August 26, 1997. The Registry of Deeds of Quezon City then issued a new owner’s duplicate copy of TCT No. N-165606, which was later cancelled by virtue of the deed of absolute sale dated July 14, 1997, and in its stead the Registry of Deeds of Quezon City issued TCT No. 186142 in Sy’s name. Sy subsequently subdivided the property into two, and sold each half  by way of contract to sell to Spouses Edgardo and Ramona Liza De Vera and to Spouses Alfonso and Maria Angeles Cusi. The existence of the individual contracts to sell was annotated on the dorsal portion of Sy’s TCT No. 186142 as Entry No. PE8907/N-186142, stating that the consideration of the sale was P1,000,000.00 for each set of buyers, or for a total of P2,000,000.00 for the entire property that had an actual worth of not less than P14,000,000.00. TCT No. 186142 in the name of Sy was then cancelled by virtue of the deeds of sale executed between Sy and Spouses De Vera, and between Sy and Spouses Cusi, to whom were respectively issued TCT No. 189568 and TCT No. 189569. All the while, the transactions between Sy and the De Vera’s, and between Sy and the Cusi’s were unknown to Domingo, whose TCT No. N-165606 remained in her undisturbed possession. It turned out that the construction activities taking place on the property that Domingo learned about were upon the initiative of the De Veras in the exercise of their dominical and possessory rights. Domingo commenced this action against Sy and her spouse, the De Vera’s and the Cusi’s in the RTC, the complaint being docketed as Civil Case No. Q-99-39312 and entitled Lilia V. Domingo v. Spouses Radelia and Alfred Sy, Spouses Alfonso G. and Maria Angeles S. Cusi, Spouses Edgardo M. and Ramona Liza L. De Vera, BPI Family Savings Bank and The Register of Deeds of Quezon City, seeking the annulment or cancellation of titles, injunction and damages.

Issue: Whether or not the petitioners are considered purchasers in good faith and for value thus protected for their rights over the subject land.

Held: No. One of the guiding tenets underlying the Torrens system is the curtain principle, in that one does not need to go behind the certificate of title because it contains all the information about the title of its holder. This principle dispenses with the need of proving ownership by long complicated documents kept by the registered owner, which may be necessary under a private conveyancing system, and assures that all the necessary information regarding ownership is on the certificate of title. Consequently, the avowed objective of the Torrens system is to obviate possible conflicts of title by giving the public the right to rely upon the face of the Torrens certificate and, as a rule, to dispense with the necessity of inquiring further; on the part of the registered owner, the system gives him complete peace of mind that he would be secured in his ownership as long as he has not voluntarily disposed of any right over the covered land.

The Philippines adopted the Torrens system through Act No. 496, also known as the Land Registration Act, which was approved on November 6, 1902 and took effect on February 1, 1903.  In this jurisdiction, therefore, “a person dealing in registered land has the right to rely on the Torrens certificate of title and to dispense with the need of inquiring further, except when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry”.

The records also show that the forged deed of sale from Domingo to Sy appeared to be executed on July 14, 1997; that the affidavit of loss by which Sy would later on support her petition for the issuance of the duplicate owner’s copy of Domingo’s TCT No. 165606 was executed on July 17, 1997, the very same day in which Sy registered the affidavit of loss in the Registry of Deeds of Quezon City; that Sy filed the petition for the issuance of the duplicate owner’s copy of Domingo’s TCT No. 165606; that the RTC granted her petition on August 26, 1997; and that on October 31, 1997, a real estate mortgage was executed in favor of one Emma Turingan, with the mortgage being annotated on TCT No. 165606 on November 10, 1997.

Being the buyers of the registered realty, the Cusi’s and the De Vera’s were aware of the aforementioned several almost simultaneous transactions affecting the property. Their awareness, if it was not actual, was at least presumed, and ought to have put them on their guard, for, as the CA pointed out, the RTC observed that “[t]hese almost simultaneous transactions, particularly the date of the alleged loss of the TCT No. 165606 and the purported Deed of Sale, suffice[d] to arouse suspicion on [the part of] any person dealing with the subject property.” Simple prudence would then have impelled them as honest persons to make deeper inquiries to clear the suspiciousness haunting Sy’s title. But they still went on with their respective purchase of the property without making the deeper inquiries. In that regard, they were not acting in good faith.

Another circumstance indicating that the Cusis and the De Veras were not innocent purchasers for value was the gross undervaluation of the property in the deeds of sale at the measly price of P1,000,000.00 for each half when the true market value was then in the aggregate of at least P14,000,000.00 for the entire property. Even if the undervaluation was to accommodate the request of Sy to enable her to minimize her liabilities for the capital gains tax, their acquiescence to the fraud perpetrated against the Government, no less, still rendered them as parties to the wrongdoing. They were not any less guilty at all. In the ultimate analysis, their supposed passivity respecting the arrangement to perpetrate the fraud was not even plausible, because they knew as the buyers that they were not personally liable for the capital gains taxes and thus had nothing to gain by their acquiescence. There was simply no acceptable reason for them to have acquiesced to the fraud, or for them not to have rightfully insisted on the declaration of the full value of the realty in their deeds of sale. By letting their respective deeds of sale reflect the grossly inadequate price, they should suffer the consequences, including the inference of their bad faith in transacting the sales in their favor.


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