CUSI VS DOMINGO

Principle: A purchaser of property, without taking the ordinary precautions of honest persons doing business and examining the records
of the proper RD, cannot be in good faith where the title thereof shows that it was reconstituted or reissued owner’s copy of certificate
of title.

Facts: The property in dispute was a vacant unfenced lot situated in 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.

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.

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 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.

SABERON VS VENTANILLA

Principle: Registration is the operative act that conveys ownership or affects the land insofar as third persons are concerned.
Registration is constructive notice to third persons.

Facts: On March 3, 1970, Manila Remnant Co., Inc. (MRCI) and A.U. Valencia & Co. Inc. (AUVC) executed two (2) contractsto sell in
favor of Oscar C. Ventanilla, Jr. and Carmen GloriaD. Ventanilla (Ventanillas).

MRCI resold the same property to Carlos Crisostomo (Crisostomo).

Aggrieved, the Ventanillas commenced an action for specific performance, annulment of deeds and damages against MRCI, AUVC, and
Crisostomo with the Court of First Instance. The CFI Quezon City rendered a decision in favor of the Ventanillas. The CA
sustained the CFI Quezon City’s decision in toto. The Ventanillas moved for the issuance of a writ of execution. The writ was issued
and served upon MRCI. However, MRCI alleged that the subject properties could no longer be delivered to the Ventanillas
because they hadalready been sold to Samuel Marquez (Marquez).

The case was elevated to this Court where MRCI argued that the sale of the properties to Marquez was valid because at the time of
the sale, the issue of the validity of the sale to the Ventanillas had not yet been resolved. Further, there was no specific injunction
against re-selling the property.

As a buyer in good faith, Marquez had a right to rely on the recitals in the certificate of title. The subject matter of the controversy
having been passed to an innocent purchaser for value, the execution of the absolute deed of sale in favor of the Ventanillas
could not be ordered by the trial court. Yet the court ruled in favor of the Vetanillas.

As it turned out, the execution of the judgment in favor of the Ventanillas was yet far from fruition. Samuel Cleofe, Register of
Deeds for Quezon City (ROD Cleofe) revealed to them, that on March 11, 1992, MRCI registered a deed of absolute sale to Marquez
who eventually sold the same property to the Saberons, which conveyance was registered in July 1992. ROD Cleofe opined that a
judicial order for the cancellation of the titles in the name of the Saberons was essential before he complied with the writ of execution
in Civil Case No. 26411.

Apparently, the notice of levy, through inadvertence, was not carried over to the title issued to Marquez, the same being a
junior encumbrance which was entered after the contract to sell to Marquez had already been annotated. Once again, the Ventanillas
were constrained to go to court to seek the annulment of the deed of sale executed between MRCI and Marquez as well as the
deed of sale between Marquez and the Saberons, as the fruits of void conveyances. RTC ruled in favor of the Ventanillas.

Meanwhile, the Saberons filed a case in the CA relying on one central argument—that they were purchasers in good faith, having
relied on the correctness of the certificates of title covering the lots in question; and therefore, holders of a valid and indefeasible
title.

CA ruled in favor of the Ventanillas.

The Saberons filed the present petition.

Unknown to the Saberons, the former owner of the properties had entered into contracts to sell with the Ventanillas, wayback in
1970. It was only upon receipt of the summons in the case filed by the Ventanillas with the RTC that they learned of the present
controversy.

With the RTC and the CA rulings against their title over the properties, the Saberons now come to the Court with their vehement
insistence that they were purchasers in good faith and for value. Before purchasing the lots, they exercised due diligence and found
no encumbrance or annotations on the titles. At the same time, the Ventanillas also failed to rebut the presumption of their good faith
as there was no showing that they confederated with MRCI and its officers to deprive the Ventanillas of their right over the subject
properties. According to the Saberons, the CA likewise erred in ruling that there was no constructive notice of the levy made upon the
subject lands.

Issue: Whether or not there was constructive notice of levy as an encumbrance prior to the sale to the Saberons.

Ruling: the Court is beckoned to rule on two conflicting rights over the subject properties: the right of the Ventanillas to acquire the
title to the registered land from the moment of inscription of the notice of levy on the day book (or entry book), on one hand; and the
right of the Saberons to rely on what appears on the certificate of title for purposes of voluntary dealings with the same parcel of land,
on the other.

The Saberons could not be said to have authored the entanglement they found themselves in. No fault can be
attributed to them for relying on the face of the title presented by Marquez. In ultimately ruling for the Ventanillas, the courts a quo
focused on the superiority of their notice of levy and the constructive notice against the whole world which it had produced and
which effectively bound third person sincluding the Saberons. This complex situation could have been avoided if it were not for
the failure of ROD Cleofe to carry over the notice of levy to Marquez’s title, serving as a senior encumbrance that might have dissuaded
the Saberons from purchasing the properties. It is undeniable, therefore, that no title was transferred to Marquez upon the
annotation of the contract to sell on MRCI’s title. As correctly found by the trial court, the contract to sell cannot be substituted by
the Deed of Absolute Sale as a "mere conclusion" of the previous contract since the owners of the properties under the two
instruments are different. Considering that the deed of sale in favor of Marquez was of later registration, the notice of levy should
have been carried over to the title as a senior encumbrance.

The fact that the notice of levy on attachment was not annotated on the original title on file in the Registry of Deeds, which
resulted in its non-annotation on the title TCT No. PT-94912, should not prejudice petitioner. As long as the requisites required
by law in order to effect attachment are complied with and the appropriate fees duly paid, attachment is duly perfected. The
attachment already binds the land. This is because what remains to be done lies not within the petitioner’s power to
perform but is a duty incumbent solely on the Register of Deeds.

In the case at bench, the notice of levy covering the subject property was annotated in the entry book of the ROD QC prior to the
issuance of a TCT in the name of the Saberons. Clearly, the Ventanillas’ levy was placed on record prior to the sale. This shows the
superiority and preference in rights of the Ventanillas over the property as against the Saberons.

HOME BANKERS VS CA

Principle: The one who mortgaged the property must be the absolute owner of the property. With respect to banks, they have to go
beyond the title and exercise extraordinary diligence.

Facts: Each of private respondents entered into separate contracts to sell with TransAmerican through the latter's Owner/General
Manager, Engr. Jesus Garcia, involving certain portions of land. On May 30, 1989, Engr. Garcia and his wife obtained a loan from
petitioner Home Bankers without the prior approval of the HLURB and mortgaged eight lots as collateral. Home Bankers registered its
mortgage on these titles without any other encumbrance or lien annotated therein. However, five out of these eight titles turned out
to be private respondents' townhouses subject of the contracts to sell with TransAmerican. Home Bankers eventually foreclosed the
mortgage, and a sheriff’s certificate of sale in its favor was annotated on the titles of the subject lots.

Issue: Whether the mortgage was valid and enforceable against respondents.

Ruling: No, the mortgage was null and void. Garcia was not the absolute owner of the subject parcels. Moreover, Home Bankers
cannot be innocent purchasers because judicial notice can be taken of the uniform practice of banks to investigate, examine and assess
the real estate offered as security for the application of a loan. We cannot overemphasize the fact that the Bank cannot barefacedly
argue that simply because the title or titles offered as security were clean of any encumbrances or lien, that it was thereby relieved of
taking any other step to verify the over-reaching implications should the subdivision be auctioned on foreclosure.