REPUBLIC OF THE PHILIPPINES, represented by the Director of Lands, Petitioner, v. HONORABLE COURT OF APPEALS, CONRADO DE LARA, THE SISTERS OF ST. JOHN DE BAPTIST, INC., Respondents.
D E C I S I O N
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court to review and set aside the 21 February 1991 Decision1 of the Court of Appeals,2 affirming the Decision of the Regional Trial Court, Branch 18, Tagaytay City, in Civil Case No. TG-1012, and the 7 May 1991 Resolution, denying petitioners motion for reconsideration, on the ground that the said Decision and Resolution are contrary to law and jurisprudence.
The antecedent facts that matter can be culled as follows:
On April 25, 1988, the petitioner, Republic of the Philippines filed an Amended Complaint3 with the Regional Trial Court, Branch 18, Tagaytay City, alleging inter alia, that:
x x x
5. On July 6, 1979, Conrado de Lara filed with the then District Land Office in Noveleta, Cavite, Free Patent Application No. (V-2) 11319 covering a parcel of land identified as Lot No. 4184, (Ap-04-0016) Cad-355, containing an area of 17,266 square meters, located at Iruhin, Tagaytay City.
6. On May 27, 1981, the then District Land Officer in Noveleta, Cavite approved Conrado de Laras Free Patent Application and issued in his favor Free Patent No. 016937.
7. Said Patent No. 016937 was thereafter transmitted to the Register of Deeds in Tagaytay City, who registered the same and issued the corresponding Original Certificate of Tile No. Op-578 in the name of Conrado F. de Lara on June 2, 1981.
8. On June 11, 1986, defendant Conrado de Lara conveyed the said property, by way of a deed of sale with mortgage, in favor of defendant Sisters of St. John the Baptist, Inc. By virtue of the said deed of sale with mortgage, Original Certificate of Title No. Op-578 in the name of defendant Conrado de Lara was cancelled by the Register of Deeds of Tagaytay City, and in lieu thereof, Transfer Certificate of Tile No. P-265 was issued in favor of defendant Sisters of St. John the Baptist, Inc.
9. On September 8, 1982, Florosa A. Bautista filed an affidavit-complaint (protest) against the patent and title of Conrado F. de Lara alleging, among others, that she is the owner-possessor of a parcel of land located at Iruhin, Tagaytay City and is identified as Lot No. 4184, Cad-355, Tagaytay Cadastre; that she had declared the same for taxation purposes and paid the real estate taxes due thereon since 1937 up to the present; that Conrado F. de Lara, through stealth, deceit, fraud and unlawful manipulations and in connivance with some employees of the Bureau of Lands at the District Land Office in Cavite, was able to secure the issuance of a free patent title covering the said lot; and that the documents presented by the said Conrado F. de Lara in support of his free patent application were all fraudulent and a complete misrepresentation of facts.
10. Upon investigation conducted by the Bureau of Lands, it has been ascertained that Free Patent No. 016937, and its corresponding original certificate of title, were erroneously and fraudulently issued to Conrado F. de Lara through misrepresentation of facts by stating in his application that the land applied for is not claimed or occupied by any other person but is a public land when in truth and in fact said parcel is claimed by and covered by survey plan Psu-104879 in the name of Roberto Bautista. Furthermore, it appears that Conrado de Lara made a request to amend the survey claimant of Lot No. 4184 from Conrado Laurel to Conrado de Lara, it does not appear that the said request was granted or that the claim of Roberto Bautista was formally dismissed by the Bureau of Lands.
11. On the basis of the foregoing findings, the Officer-in-Charge of the Legal Division, in his memorandum dated October 9, 1986 to the Deputy Minister and Officer-in-Charge, Bureau of Lands, recommended that proper court action be instituted for the cancellation of Free Patent No. 016937 and Original Certificate of Title No. Op-578 in the name of Conrado de Lara. The Deputy Minister and Officer-in-Charge of the Bureau of Lands approved the aforesaid recommendation. [Underscoring, supplied]
x x x
On June 21, 1988, Conrado de Lara sent in his Answer.4
On July 4, 1988, the Sisters of St. John the Baptist, Inc. (Sisters, for brevity) interposed a Motion to Dismiss5 on the grounds, among others, that the amended complaint does not state a cause of action, and herein defendant-movant is an innocent purchaser for value and in goodfaith and as such it has acquired a title over the property in question which is perfectly valid and legally unassailable and indefeasible xxx.6
On July 22, 1988, for failure of the Sisters to pursue the said Motion to Dismiss, Presiding Judge Julieto P. Tabiolo "dismissed" the same.7
Jurisprudence is replete with Supreme Court decisions to the effect that actions to cancel or nullify or to declare void, Certificates of Title which have acquired indefeasibility, (for the reason that the same were attained or procured through fraud) like the Certificate of Title of defendant Conrado T. (sic) de Lara, as alleged by the Solicitor General in his complaint, can only be maintained when the subject property has not passed to an innocent third person for value. Yet, this is the case of defendant Sisters of St. John the Baptist, Inc. The Court feels that in the hands of the latter, its title over the property in question is indeafisible (sic), and can no longer be annulled. Hence, an action of this kind will no longer lie against the said defendant. As against the latter, this case is, therefore, ordered DISMISSED.
In view of the fact that the Certificate of title appears to be clear of any encumbrance or infirmities as of June 11, 1986 when the Sisters of St. John the Baptist, Inc. purchased the same in good faith and for value, a new Transfer Certificate of Title No. T-265 issued to it is valid and should be given full faith and recognition by the Court and the government pursuant to Sec. 39 of Act 49.
On the second pending issue which is the Motion to Amend Complaint12 dated November 17, 1988 and filed on November 23, 1988 ..., the same is hereby DENIED as defendant Sisters of St. John the Baptist, Inc. are fully protected in its ownership and possession of the property covered by TCT No. T-265, for being a purchaser in good faith and for value and for the reason likewise, that the amendment sought by the plaintiff as incorporated in its motion, is similar to the previous amendment contained in the first amended complaint dated April 12, 1988 x x x.
WHEREFORE, plaintiff's motions are hereby DENIED.
On February 26, 1991, the Court of Appeals affirmed order of dismissal appealed from,13 disposing as follows:
The setting of the case at bar presents a situation where the original patentee is alleged to have procured his title through fraud, but said property was subsequently sold to an apparently innocent purchaser for value as there was no blemish whatsoever on the certificate of title of the patentee upon which the purchaser has a right to rely upon. We thus agree with the trial court, that upon such circumstances the alleged flawed title -
... may be the source of a completely legal and valid title in the hands of the buyer in good faith and for value....
x x x
In the instant case, plaintiff has not shown any evidence that on June 11, 1986 or prior thereto, it has given sufficient warning to the public that OCT No. OP-578 in the name of Conrado F. de Lara is highly questionable by having annotated therein an adverse claim showing that said title was fraudulently obtained and, therefore, null and void. x x x
x x x
'We find that the private respondents are transferees in good faith and for value of the subject property and that the original acquisition thereof, although fraudulent, did not affect their own titles. These are valid against the whole world, including the government. xxx'
WHEREFORE, the order dismissing the case against the Sisters of St. John the Baptist, Inc. is hereby affirmed.
With the denial of its Motion for Reconsideration,14 the petitioner found its way to this Court via the present Petition, posing as issues:
WHETHER OR NOT A FREE PATENT TITLE PROCURED THROUGH FRAUD, AND HENCE, VOID AB INITIO, MAY BE CANCELLED EVEN IN THE HANDS OF A BUYER WHO CLAIMS TO BE A BUYER IN GOOD FAITH;
WHETHER OR NOT THE TRIAL COURT ERRED WHEN IT DENIED PETITIONERS MOTION TO AMEND COMPLAINT, DATED NOVEMBER 11 (SIC), 1988, WHILE THE CASE WAS STILL PENDING BEFORE THE TRIAL COURT.
theorize that they are buyers in good faith and for value, stressing that Free
Patent No. 016937 and OCT No. OP-578 of Conrado F. de Lara were free from any
infirmity, and "since there was nothing in the title which would indicate
the presence of any defect in the issuance thereof and neither was there any
adverse claim over said property registered with the Register of Deeds of
Tagaytay City or annotated at the back of the title, nor was there any adverse
information whatsoever regarding the authenticity and/or genuiness (sic) of the
vendor's title, the herein defendant-movant acquired the said property in
utmost goodfaith (sic) and for the toovaluable (sic) consideration of two
P2,0000,000.00) pesos, Philippine currency."15
An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right to, or interest in, such property and pays a full and fair price for the same at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.16
After a careful study and examination of the pleadings and supporting documents on hand, the court is of the opinion, and so holds, that the Sisters truly acted in good faith because when they (Sisters) purchased the land involved, its OCT No. OP-578 was clean and free from any encumbrance. There was no blemish whatsoever on the said certificate of title of the patentee and vendor, Conrado de Lara, upon which title the Sisters, as purchasers, had every right to rely.
Petitioner's contention that the vendor, Conrado F. de Lara, acquired his free patent through misrepresentation and fraudulent means, is untenable, as against the Sisters, for the simple reason that the petitioner did not cause the annotation at the back of OCT No. OP-578, of the supposed infirmity thereof. As aptly found by the Court of Appeals:
"In the instant case, plaintiff has not shown any evidence that on June 11, 1986 or prior thereto, it has given sufficient warning to the public that OCT No. OP-578 in the name of Conrado F. de Lara is highly questionable by having annotated therein an adverse claim showing that said title was fraudulently obtained and, therefore, null and void." xxx17cräläwvirtualibräry
Furthermore, even assuming arguendo that the procurement of the Free Patent and Original Certificate of Title of the vendor, Conrado F. de Lara, was tainted with fraud and misrepresentation, a defective title may be the source of a completely legal and valid title in the hands of an innocent purchaser for value. In Gloria R. Cruz vs. Court of Appeals, 281 SCRA 492 , the Court held:
"Where innocent third persons, relying on the correctness of the certificate of title thus issued, acquire rights over the property the court cannot disregard such rights and order the total cancellation of the certificate. The effect of such an outright cancellation would be to impair public confidence in the certificate of title, for everyone dealing with property registered under the Torrens system would have to inquire in every instance whether the title has been regularly or irregularly issued. This is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property. xxx"
The Sisters of St. John the Baptist, Inc. being innocent purchasers for value of the registered land litigated upon, and as the Amended Complaint at bar states no cause of action against them, the court a quo erred not in granting their motion to dismiss. Verily, the averments of subject Amended Complaint do not warrant further proceedings against the Sisters.
WHEREFORE, for want of merit, the Petition is DENIED; and the Decision of the Court of Appeals in CA-GR CV No. 24666 AFFIRMED in toto. No pronouncement as to costs.
Romero (Chairman), Vitug, Panganiban, and Gonzaga-Reyes, JJ., concur.
1 Annex J, Petition; Rollo pp. 56-64.
2 Second Division, Penned and Chaired by Justice Jose A.R. Melo; Justices Antonio M. Martinez and Fermin A. Martin, Jr., as Members.
3 Annex A, Petition; Rollo, pp. 24-33.
4 Annex B, Petition; Rollo, pp. 30-33.
5 Annex C, Petition; Rollo, pp. 34-37
6 Ibid., p. 35.
7 Annex D, Petition ; Rollo, p. 38.
8 Annex E, Petition; Rollo, pp. 39-41.
9 Annex F, Petition; Rollo, p. 42.
10 Annex G, Petition; Rollo, pp. 43-48.
11 Annex H, Petition; Rollo, pp. 49-51.
12 Annex I, Petition; Rollo, pp. 52-53
13 Annex J, Petition; Rollo, pp. 56-64.
14 Annex K, Petition; Rollo, pp. 65-73.
15 Sisters of St. John the Baptists Motion to Dismiss, Rollo, p. 35.
16 Sandoval vs. Court of Appeals, 260 SCRA 283 
17 CA Decision, p. 7; Rollo, p. 62.