G.R. No. 104223 . July 12, 2001.
TIBURCIO SAMONTE, petitioner, vs. COURT OF APPEALS, EUGENIA DANGO GADIANO, TEOFILO GADIANO, PETRONILO DANGO, FELICIANA DANGO, NONILO MARAVE and GERONIMO DANGO, respondents.

FACTS

The case involves a parcel of land, Lot No. 216, in Nasipit, Agusan del Norte, originally covered by Original Certificate of Title (OCT) No. RO-238(555) issued in the names of Apolonia Abao and her daughter Irenea Tolero, pro indiviso. The respondents are the surviving heirs of Apolonia Abao and Irenea Tolero. They filed Civil Case No. 1816, an action for quieting of title and recovery of possession of the entire Lot 216, seeking the annulment of several certificates of title derived from the OCT and the reinstatement of OCT No. RO-238(555). The defendants included Nicolas Jadol, Beatriz Jadol, Jacobo Tagorda, Henry Jadol, Aurelio Rotor, and petitioner Tiburcio Samonte. The undisputed facts show that OCT No. RO-238(555) was cancelled based on an Affidavit of Extrajudicial Settlement and Confirmation of Sale executed by Ignacio Atupan, who fraudulently misrepresented himself as the sole heir of Apolonia Abao. This led to the issuance of TCT No. RT-476 in the names of Irenea Tolero (1/2 share) and Nicolas Jadol (1/2 share). Subsequent subdivisions and transfers resulted in TCT No. RT-553 being issued in the name of petitioner Samonte for a portion of the lot. Samonte claimed he bought portions of the land in good faith, relying on the documents of his vendors, and had been in possession for over 20 years. The trial court ruled in favor of the respondents, declaring them co-owners, ordering the reinstatement of the OCT, cancelling all subsequent titles, and ordering the defendants to vacate. The Court of Appeals affirmed the trial court’s decision.

ISSUE

1. Whether the Court of Appeals erred in not applying the doctrine that the discovery of fraud is deemed to have taken place at the time of registration.
2. Whether the Court of Appeals erred in not holding that petitioner Samonte was a buyer in good faith and for value, entitled to protection under the law.

RULING

The Supreme Court denied the petition and affirmed the Court of Appeals’ decision.
1. The Court held that the doctrine cited by petitioner (that discovery of fraud is deemed at the time of registration) was not applicable. The respondents’ action was not one for reconveyance based on implied trust, which prescribes in ten years from the issuance of the title. Instead, it was an action to quiet title, which is imprescriptible when the plaintiff is in possession of the property. Since the respondents, as heirs, were deemed in constructive possession, their action did not prescribe.
2. The Court ruled that petitioner Samonte was not a buyer in good faith. The defense of indefeasibility of a Torrens title does not extend to a transferee who takes the certificate of title with notice of a flaw. The Court found that Samonte had knowledge of facts and circumstances that should have prompted him to investigate the title’s validity, such as the absence of the heirs’ signatures on the subdivision plan and the dubious nature of the documents presented by his vendors. His failure to exercise due diligence made him a holder in bad faith, not entitled to the protection of the law. The Court upheld the findings of the trial court, as affirmed by the Court of Appeals, that the series of title cancellations originated from a fraudulent affidavit, rendering all subsequent titles null and void.