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THIRD DIVISION

G.R. No. 75336 October 18, 1988

SPOUSES ANTONIO BORNALES and FLORENDA DIAZ BORNALES, Petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and ISABEL MARQUEZ DUMOLONG, Respondents.

Rodriguez D. Dadivas and Fredicindo A. Talabucon for petitioners.chanrobles virtual law library

Stephen C. Arcelio for private respondent.

CORTES, J.:

The subject matter of this controversy is a parcel of land (Lot 1318) situated in Barrio Indayagan Pontevedra (Maayon), Capiz with an area of 74,397 square meters. The land was originally awarded by Decree No. 29015 dated September 21, 1927 in the name of Sixto Dumolong, married to Isabel Marquez, to whom Original Certificate of Title No. 6161 was issued.chanroblesvirtualawlibrary chanrobles virtual law library

Sixto and Isabel whose marriage was not blessed with any child lived separately since 1920. Subsequently, Sixto cohabited extramaritally with Placida Dumolong with whom he had a son by the name of Renito Dumolong and other children.chanroblesvirtualawlibrary chanrobles virtual law library

Sometime in November, 1977, representing herself as having hereditary interest in Lot 1318, Placida filed with the Court of First Instance of Capiz a petition for reconstitution of title over said lot. Reconstitution was granted in a decision dated November 18, 1977 and Original Certificate of Title No. RO-6161 was issued in the name of "Sixto Dumolong married to Isabel Marquez".chanroblesvirtualawlibrary chanrobles virtual law library

On March 15, 1978, a "Deed of Extrajudicial Adjudication and Sale of Real Property", which was purportedly a settlement of the conjugal estate of Sixto Dumolong and Isabel Marquez Dumolong, involving Lot 1318, and the sale of said lot for P6,000.00 to spouses Carlito Patanao and Minda Dumolong and to spouses Bernardo Decrepito and Loreta Dumolong, was executed by Renito Dumolong and by Isabel Marquez Dumolong whose supposed thumbmark appeared in the document.chanroblesvirtualawlibrary chanrobles virtual law library

The deed was registered on November 10, 1978, and pursuant thereto, Transfer Certificate of Title No. T-15856 was issued the abovenamed spouses on the same date. About three months later, or on February 21, 1979, the spouses sold Lot 1318 for P40,000.00 to petitioner-spouses Antonio Bornales and Florenda Diaz Bornales through a Deed of Absolute Sale [Petition, Annex "C", Rollo, p. 15.] Petitioners eventually secured Transfer Certificate of Title No. 15596 for Lot 1318 in their names.chanroblesvirtualawlibrary chanrobles virtual law library

Alleging forgery of the "Deed of Extrajudicial Adjudication and Sale of Real Property", private respondent Isabel Marquez filed on March 11, 1980 an action for reconveyance and damages against Placida Dumolong, Renito Dumolong, spouses Carlito Patanao and Minda Dumolong, spouses Bernardo Decrepito and Loreto Dumolong, and spouses Antonio Bornales and Florenda Diaz. The case was docketed as Civil Case No. V-4366 in the Court of First Instance of Capiz. Only the spouses Bornales answered; the other defendants were declared in default.chanroblesvirtualawlibrary chanrobles virtual law library

After trial on the merits, the lower court rendered judgment in Civil Case No.
V-4366 in favor of plaintiff and against all the defendants including the petitioners herein who were expressly declared purchasers in bad faith. The subject land was held to be the conjugal property of Sixto Dumolong and plaintiff Isabel Marquez and that the Deed of Extrajudicial Adjudication and Sale of Real Property was a forgery through the machinations of the defaulted defendants.chanroblesvirtualawlibrary chanrobles virtual law library

The spouses Bornales timely filed their appeal with the respondent court, which appeal was docketed as AC-G.R. CV No. 05578. On April 1, 1986, the appellate court affirmed the appealed decision in favor of private respondent and against the petitioners but with modifications for the appellate court found that the land was the exclusive property of S Dumolong who had other illegitimate children surviving with Renito Dumolong. The dispositive portion of the decision reads:

WHEREFORE, another judgment is entered-chanrobles virtual law library

(1) declaring the Deed of Extrajudicial Adjudication dated March 15, 1978 null and void; chanrobles virtual law library

(2) cancelling Transfer Certificate of Titles Nos. T-15856 and 15996; chanrobles virtual law library

(3) declaring Isabel Marquez Dumolong the true and lawful owner of pro-indiviso one-half of the land described in said titles as her intestate inheritance from Sixto Dumolong; chanrobles virtual law library

(4) declaring the other half of said titles as the intestate inherit instance of the illegitimate children of Sixto Dumolong to be divided by them in equal shares; chanrobles virtual law library

(5) ordering the appellants and all defaulted defendants, jointly and severally, to pay the appellee the sum of P5,000.00 as moral damages with interest of 14% per annum from April 16, 1980, the date the complaint was filed, until full payment; chanrobles virtual law library

(6) ordering appellants and all defaulted defendants, jointly and severally, to pay the appellee the sum of P5,000.00 as exemplary damages, with interest of 14% per annum from April 16, 1980, the date the complaint was filed, until full payment; chanrobles virtual law library

(7) ordering the appellants and all defaulted defendants to pay the appellee the sum of P5,000.00 as attorney's fees; and chanrobles virtual law library

(8) order cross-defendants Carlito Patanao, Minda Dumolong, Bernardo Decrepito and Loreta Dumolong, jointly and severally, to reimburse to the appellants the sum of P40,000.00 with its interests of 14% per annum from May 8, 1980, the date of the filing of the answer with cross-claim, until full payment and the sum of P5,000.00 as attorney's fees.chanroblesvirtualawlibrary chanrobles virtual law library

Costs against the appellants.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.chanroblesvirtualawlibrary chanrobles virtual law library

[Petition, Annex "D", Rollo, pp. 24-26.]

Petitioner's motion for reconsideration filed on April 19, 1986 was denied in a resolution of respondent court dated June 17, 1986.chanroblesvirtualawlibrary chanrobles virtual law library

The present petition raises questions of fact. To justify therefore a review by this Court of the decision of the respondent appellate court, the following reasons are adduced by the petitioners:

(1) The conclusion of respondent court that herein petitioners are purchasers in bad faith is a finding grounded entirely on speculation, surmises and conjecture; and chanrobles virtual law library

(2) The inference made by the respondent court that herein petitioners have knowledge that the person who sold them the property in question have acquired the same through forged documents is manifestly mistaken, absurd and impossible. [Petition, p. 5; Rollo, p. 7]

The petitioners assail the finding of the respondent appellate court that they are purchasers in bad faith on the ground that such is based on a misapprehension of facts.chanroblesvirtualawlibrary chanrobles virtual law library

There is no merit to this allegation. The chain of events starting from the reconstitution of the original certificates of title to the execution of the deed of absolute sale in favor of the petitioners reveals a clear scheme to dispossess the private respondent of her share in the property subject of this controversy.chanroblesvirtualawlibrary chanrobles virtual law library

The finding of the Court of Appeals that the land was sold barely three (3) months after the execution of the deed of extra-judicial settlement and the deed of sale is supported by evidence on record. The date appearing on the deed of sale (March 15, 1978) indicates a time span of eight (8) months to the subsequent execution of the deed of absolute sale in favor of the petitioners. However, when the time is reckoned from the date of registration of the deed with the Register of Deeds, it appears that only three (3) months had lapsed when the sale of the subject land to the petitioners took place. The land was registered in the names of the spouses Carlito Patanao and Minda Dumolong and spouses Bernardo Decrepito and Loreta Dumolong on November 10, 1978 [See Annex "B", Petition; Rollo, p. 14.] Three (3) months later or on February 21, 1979, the spouses sold the land to the petitioners [See Annex "C", Petition; Rollo, p. 15.] chanrobles virtual law library

Petitioners also deny having knowledge of the abnormal increase in the consideration of the sale from P6,000.00 to P40,000.00. They claim that contrary to the findings of the Court of Appeals, the transfer certificate of title which their lawyer examined contained no annotation of the P6,000.00 purchase price. The fact, however, that petitioners have been the tenants/lessees of the land even during Sixto Dumolong's lifetime belies any alleged lack of knowledge. Having been the cultivators of the land, it is unimaginable that the petitioners would have been unaware of the transactions affecting the land. It appears that petitioners were aware that the private respondent was the legal wife of Sixto Dumolong and was a rightful heir to the properties of the latter. In fact, the trial court conclusively found that the petitioners themselves went to see the private respondent sometime in 1980 to secure her signature and conformity to the Extra-Judicial Adjudication and Sale of Real Property.chanroblesvirtualawlibrary chanrobles virtual law library

Thus, even without the circumstances enumerated by the Court of Appeals to demonstrate the petitioners' lack of good faith, the fact alone that they purchased the property with full knowledge of the flaws and defect in the title of their vendors is enough proof of their bad faith. In the case of Gatioan v. Gaffud [G.R. No. L-21953, March 28, 1979, 27 SCRA 706] this Court held that one who purchases real property with knowledge of a defect in the title of his vendor cannot claim that he acquired title thereto in good faith as against the owner or of an interest therein.chanroblesvirtualawlibrarychanrobles virtual law library

The petitioners claim that they were not aware of any defect in the title of their vendors because the certificate of title in the name of their predecessors-in-interest which their lawyer examined contained nothing to put them on guard. The fact however remains that the petitioners knew and were parties to the fraud committed against the private respondent. Having bought the land registered under the Torrens system from their vendors who procured title thereto by means of fraud, petitioners cannot invoke the indefeasibility of a certificate of title against the private respondent to the extent of her interest therein. The Torrens system of land registration should not be used as a means to perpetrate fraud against the rightful owner of real property. Registration, to be effective, must be made in good faith. [Palanca v. Director of Lands, 43 Phil. 149 (1922).] Thus, it is a settled rule that the defense of indefeasibility of a certificate of title does not extend to a transferee who takes it with notice of the flaws in his transferor's title. If at all, the petitioners only acquire the right which their vendors then had. [Ramos, et al, v. Dueno, et al., 50 Phil. 786 (1927).] chanrobles virtual law library

WHEREFORE, finding no reversible error in the appealed decision, the Court Resolved to DENY the petition for review for lack of merit and AFFIRM the Court of Appeals Decision dated April 1, 1986.chanroblesvirtualawlibrary chanrobles virtual law library

SO ORDERED.

Fernan, C.J., Gutierrez, Jr., Feliciano and Bidin, JJ., concur.