G.R. No. L-28194 November 24, 1972
PHILIPPINE COMMERCIAL & INDUSTRIAL BANK, Administrator of the Testate Estate of Charles Newton Hodges, petitioner, vs. NUMERIANO VILLALVA, DAVID LOZADA, and THE HONORABLE COURT OF APPEALS, respondents.

FACTS

The dispute involves Lot No. 409 in Talisay, Negros Occidental, originally owned by Natividad Vda. de Allic. In 1932, Allic sold the lot with right to repurchase to Enrique Vicente. The core factual conflict is whether Allic validly repurchased the property. Respondent Numeriano Villalva claims he purchased the lot from Allic in 1938 and has been in open, continuous possession since, asserting that Allic had redeemed the property from Vicente before the repurchase period lapsed, but Vicente fraudulently withheld the title. In contrast, petitioner’s predecessor, C.N. Hodges, traces his title to a 1958 sale from Vicente, who had consolidated ownership and obtained a Torrens title after alleging Allic failed to repurchase. Hodges then entered into a “Contract to Sell” the same lot to respondent David Lozada.

ISSUE

Whether the Torrens title issued to Enrique Vicente, and subsequently transferred to Hodges, is indefeasible and conclusive despite allegations of fraud in its procurement.

RULING

The Supreme Court affirmed the Court of Appeals, ruling that the Torrens title is not inviolable when obtained through fraud. The legal logic is anchored on the principle that the conclusiveness of a Torrens certificate cannot shield or legitimize fraudulent transactions. The Court found the factual findings of the lower courts persuasive, detailing how Vicente surreptitiously obtained a reconstituted title in Allic’s name after she had already repurchased and sold the land to Villalva, and then fraudulently executed an affidavit of consolidation to secure a clean title in his own name. This title was the source of Hodges’s derivative claim.
The Court emphasized that the Torrens system is designed to guarantee title, not to be an instrument for the perpetration of fraud. Where a certificate of title is procured through misrepresentation or fraud, as conclusively established in this case, it may be annulled. The subsequent sale to Hodges, who was a purchaser in good faith, was deemed ineffective because his vendor, Vicente, had no valid title to convey—the principle of nemo dat quod non habet (no one can give what one does not have) applies. Therefore, all subsequent documents, including Hodges’s title and his contract with Lozada, were declared null and void. The Register of Deeds was ordered to cancel the fraudulent titles and reinstate Allic’s original title, with a reconveyance to Villalva. The decision underscores that fairness and the prevention of duplicity are paramount, even against the backdrop of the Torrens system’s objectives.