G.R. No. 175485 ; July 27, 2011
CASIMIRO DEVELOPMENT CORPORATION, Petitioner, vs. RENATO L. MATEO, Respondent.

FACTS

The subject is a parcel of land in Las Piñas City originally owned by Isaias Lara. Upon his death in 1930, it passed to his heirs. In 1962, the co-heirs transferred full ownership to Felicidad Lara-Mateo. With family agreement, a deed of sale was executed in favor of Felicidad’s daughter, Laura Mateo de Castro, who obtained Original Certificate of Title (OCT) No. 6386 in 1967. Laura used the property as collateral for loans, leading to a series of transfers and mortgages involving Bacoor Rural Bank, Parmenas Perez, Rodolfo Pe, and China Banking Corporation (China Bank). China Bank foreclosed the mortgage, consolidated ownership in 1985, and was issued a TCT. In 1988, petitioner Casimiro Development Corporation (CDC) negotiated with China Bank, executing a deed of conditional sale and later a deed of absolute sale on March 4, 1993. CDC was issued TCT No. T-34640 on March 29, 1993. Meanwhile, Felicidad died intestate on February 28, 1991. On June 6, 1991, CDC filed an unlawful detainer case against respondent Renato L. Mateo’s siblings, which eventually reached the Supreme Court ( G.R. No. 128392 ), where CDC’s title was upheld and the decision became final. Nonetheless, on June 29, 1994, respondent filed an action for quieting of title and reconveyance against CDC and Laura, claiming ownership on behalf of himself and his three brothers as co-owners. The Regional Trial Court (RTC) dismissed the complaint, upholding CDC’s title and finding CDC a buyer in good faith and the action time-barred. The Court of Appeals (CA) reversed the RTC, declaring respondent and his brothers (including Laura) as rightful owners and ordering the cancellation of CDC’s TCT, finding CDC not a buyer in good faith due to notice of defects in the title. CDC appealed to the Supreme Court.

ISSUE

Whether the Court of Appeals erred in reversing the Regional Trial Court and declaring respondent and his co-heirs as the rightful owners, thereby ordering the cancellation of petitioner’s Torrens title, based on the finding that petitioner was not a buyer in good faith.

RULING

The Supreme Court REVERSED the decision of the Court of Appeals and REINSTATED the decision of the Regional Trial Court, thereby upholding the validity of CDC’s Transfer Certificate of Title No. T-34640. The Court held that CDC was an innocent purchaser for value. At the time of CDC’s purchase from China Bank in 1993, China Bank’s title was clean and free from any lien or encumbrance. The series of transactions from Laura to China Bank were all registered and involved valuable consideration. CDC had the right to rely on the face of China Bank’s certificate of title. The alleged trust or co-ownership claimed by respondent, arising from the 1962 family agreement, was not noted on any of the titles in the chain. Such an unregistered claim cannot prevail over the rights of a transferee who relied on the clean title. The Court emphasized the principle of indefeasibility of a Torrens title and that a purchaser in good faith and for value is not required to explore beyond the four corners of the title. The action for reconveyance based on an implied trust had also prescribed, as more than ten years had lapsed from the issuance of the original title in Laura’s name in 1967.