G.R. No. 236516. March 25, 2019.
ASUNCION Z. JURADO, JOINED BY HER HUSBAND REX A. JURADO, ET AL., PETITIONERS, V. SPOUSES VICENTE AND CARMEN CHAI, RESPONDENTS.

FACTS

Petitioners, the heirs of Dominador Zamora, claimed ownership of a 7,086-square meter parcel of land (Lot 4900) in Santiago City, Isabela, covered by Transfer Certificate of Title (TCT) No. T-65150. They alleged they inherited the land from their father, who acquired it from the original owners, Spouses Pariñas. In 1997, they discovered that respondents, Spouses Chai, and other defendants had caused the subdivision of Lot 4900 and obtained several derivative titles. Petitioners filed an action for annulment of titles, contending that the respondents’ titles originated from a fake Original Certificate of Title (OCT) No. 3429, which was reconstituted without proper notice and procedure. They presented evidence including their owner’s duplicate of TCT No. T-65150, tax declarations, and receipts to support their claim of an unbroken chain of title from OCT No. 6142.
Respondents claimed they were purchasers in good faith. They asserted they acquired a portion of the land in 1990 through an Extrajudicial Settlement with Sale from the Heirs of Spouses Pariñas, who provided a copy of OCT No. 3429. Prior to the purchase, they conducted due diligence by inspecting the property, inquiring with adjoining owners, and verifying the title’s status with the Registry of Deeds, which issued a certification that the lot was free from liens. They argued they had no knowledge of any defect in their vendors’ title.

ISSUE

Whether the Court of Appeals erred in dismissing the complaint for annulment of title and in ruling that respondents were purchasers in good faith and for value.

RULING

The Supreme Court reversed the Court of Appeals and reinstated the Regional Trial Court’s decision, declaring the respondents’ titles null and void. The legal logic centered on the conclusive nature of the Torrens title held by petitioners and the failure of respondents to establish good faith.
First, the Court upheld the validity of petitioners’ TCT No. T-65150. The title, being over thirty years old and produced from natural custody without signs of alteration, was accorded the presumption of authenticity under the Rules of Court. The supporting documents, including tax receipts and a land registration decree, established a clear chain of title from the original owners, the Spouses Pariñas, through Dominador Zamora, to the petitioners. This evidence substantiated that their title was derived from OCT No. 6142.
Second, the Court ruled that respondents could not be considered purchasers in good faith. Good faith requires the purchaser to exercise the diligence of a prudent man in verifying the vendor’s title. Respondents relied solely on a certification from the Registry of Deeds and a photocopy of OCT No. 3429. The Court found this diligence insufficient. A mere certification does not guarantee the validity of the title or the vendor’s ownership; it only confirms the absence of liens on record. Crucially, respondents failed to investigate the origin of OCT No. 3429 or verify its authenticity against the primary registration book. Their failure to ascertain why the land was registered under a different OCT number (3429 versus the petitioners’ 6142) constituted a lack of due diligence. Since respondents were not in good faith, they could not invoke the protection afforded to innocent purchasers for value. Consequently, the derivative titles emanating from the fake OCT No. 3429 were declared void.