G.R. No. 164961; June 30, 2014
HECTOR L. UY, Petitioner, vs. VIRGINIA G. FULE; HEIRS OF THE LATE AMADO A. GARCIA, namely: AIDA C. GARCIA, LOURDES G. SANTAYANA, AMANDO C. GARCIA, JR., MANUEL C. GARCIA, CARLOS C. GARCIA, and CRISTINA G. MARALIT; HEIRS OF THE LATE GLORIA GARCIA ENCARNACION, namely: MARVIC G. ENCARNACION, IBARRA G. ENCARNACION, MORETO G. ENCARNACION, JR., and CARINA G. ENCARNACION; HEIRS OF THE LATE PABLO GARCIA, namely: BERMEDIO GARCIA, CRISTETA GARCIA, HONORATO GARCIA, VICENTE GARCIA, PABLO GARCIA, JR., and TERESITA GARCIA; HEIRS OF THE LATE ELISA G. HEMEDES, namely: ROEL G. HEMEDES, ELISA G. HEMEDES, ROGELIO G. HEMEDES, ANDORA G. HEMEDES, and FLORA G. HEMEDES, Respondents.

FACTS

The case involves a parcel of land in San Agustin, Pili, Camarines Sur, originally part of a vast tract registered under TCT No. 1128 in the name of the late Conrado Garcia, derived from OCT No. 854. Upon Conrado Garcia’s death, his heirs extrajudicially settled his estate, and the land was registered under TCT No. RT-8922 (16498). In 1985, the Department of Agrarian Reform (DAR) engaged a surveyor who, based on a joint certification with DAR personnel and a certification from the Register of Deeds, erroneously declared the land as “untitled.” Consequently, the land was included in the Operation Land Transfer (OLT) program under P.D. No. 27. Emancipation Patents (EPs) and Original Certificates of Title (OCTs) were issued to farmer-beneficiaries. One beneficiary, Mariano Ronda, sold his portion to Chisan Uy. Later, the heirs of Mariano Ronda sold their land to petitioner Hector Uy for ₱10 million, and he registered his titles (TCT Nos. 31436 and 31437). Meanwhile, the heirs of Conrado Garcia caused the partition of TCT No. RT-8922, resulting in TCT No. 30111 being issued in their names, covering the disputed land. In 1998, the respondents (heirs of Conrado Garcia) filed a complaint for cancellation of titles, quieting of title, recovery of possession, and damages against DAR officials and the farmer-beneficiaries (including their purchasers Chisan Uy and Hector Uy), alleging denial of due process and that the defendants’ titles clouded their own. The Regional Trial Court (RTC) ruled in favor of the respondents, declaring their title valid and ordering the cancellation of all OCTs and TCTs derived from the erroneous EPs, and the surrender of possession. The Court of Appeals (CA) affirmed the RTC decision. Petitioner Hector Uy appealed, claiming he was an innocent purchaser for value.

ISSUE

Whether or not the petitioner, Hector L. Uy, was a purchaser in good faith of the property in dispute.

RULING

No, the petitioner was not a purchaser in good faith. The Supreme Court affirmed the decisions of the lower courts. The standard for a purchaser in good faith requires that he buys the property without notice that some other person has a right to or interest in it, pays a full and fair price at the time of purchase or before notice of another’s claim, and believes that the seller is the owner and can convey title. A purchaser cannot close his eyes to facts that should put a reasonable man on his guard. In this case, the land was already registered under the respondents’ name (TCT No. 30111) at the time of the petitioner’s purchase. The DAR’s inclusion of the land in the OLT program was based on an erroneous finding that it was “untitled,” and the required notice to the registered owners under P.D. No. 266 was not given. The emancipation patents and subsequent titles issued to the farmer-beneficiaries were void because a land already covered by an existing indefeasible title cannot be the subject of another registration proceeding unless the existing title is first nullified. Since the farmer-beneficiaries had no valid title to convey, the petitioner acquired no better right. Furthermore, the law (P.D. No. 27 and later R.A. No. 6657) prohibits the transfer of lands acquired under agrarian reform except by hereditary succession or to the government for a period of ten years. The sales by the farmer-beneficiaries to Chisan Uy and later to Hector Uy violated this prohibition, making the transfers void. Therefore, the petitioner could not be considered a purchaser in good faith. The Supreme Court denied the petition and affirmed the CA decision upholding the RTC’s order to cancel the defendants’ titles and restore possession to the respondents.