G.R. No. 179543 ; October 6, 2010
CAMPER REALTY CORP., Petitioner, vs. MARIA NENA PAJO-REYES represented by her Attorney-in-Fact Eliseo B. Ballao, AUGUSTO P. BAJADO, RODOLFO PAJO and GODOFREDO PAJO, JR., Respondents.

FACTS

Rodolfo Pajo caused the notarization of a Special Power of Attorney (SPA) in 1974, purportedly executed by him and his four siblings, authorizing him to sell their co-owned land. The day after notarization, Rodolfo sold the property to Ligaya Vda. De Bajado. The notary public, Atty. Camilo Naraval, discovered two days later that all signatures except Rodolfo’s were forged and notified the co-owners. Ligaya’s title was later transferred to her son, respondent Augusto Bajado, via a Partition Agreement. In 1992, Augusto sold a portion of the land to petitioner Camper Realty Corporation. In 1993, nineteen years after the forgery was discovered, respondent Maria Nena Pajo-Reyes, a co-owner, filed a complaint for declaration of nullity of contracts and cancellation of title against Augusto, Rodolfo, and others.
The Regional Trial Court dismissed the complaint, finding the SPA forged but ruling that Nena was guilty of laches for her long inaction. It upheld the validity of the subsequent transfers to Augusto and Camper. The Court of Appeals reversed, declaring all transfers void from the forged SPA onward, ruling that Augusto acquired no rights from his mother and thus could transmit none to Camper.

ISSUE

Whether petitioner Camper Realty Corporation is a purchaser in good faith and for value, such that its title should be protected despite the forged Special Power of Attorney in its chain of title.

RULING

The Supreme Court granted the petition in part, upholding Camper’s title. The Court applied the principle of indefeasibility of a Torrens title and the rules on innocent purchasers for value. It reiterated that a forged deed can be the root of a valid title if the property has already been transferred to an innocent purchaser for value. The Court found that Augusto Bajado’s title, derived from judicial partition, was regular on its face. More critically, Camper purchased the property from Augusto in 1992 relying on his clean certificate of title, TCT No. 185958. There was no evidence that Camper participated in the forgery or had knowledge of any defect in Augusto’s title at the time of the sale. Therefore, Camper was an innocent purchaser for value in good faith, and its title, TCT No. 195213, is valid and indefeasible.
However, the Court declared the original 1974 sale by Rodolfo to Ligaya null and void due to the forged SPA. Consequently, Augusto, who merely stepped into the shoes of his mother, acquired no rightful ownership. The Court ordered Augusto to return the purchase price he received from Camper to the rightful co-owners, Nena and Godofredo Pajo, Jr., with legal interest. The portion of the land retained by Augusto was ordered to be titled in the names of the rightful co-owners. The ruling balances the protection of an innocent purchaser (Camper) with the redress due to the defrauded co-owners, with the liability for damages falling on the forger, Rodolfo Pajo.