G.R. No. L-75336 October 18, 1988
SPOUSES ANTONIO BORNALES and FLORENDA DIAZ BORNALES, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and ISABEL MARQUEZ DUMOLONG, respondents.

FACTS

The controversy involves Lot 1318, originally registered under Original Certificate of Title No. 6161 in the name of Sixto Dumolong, married to Isabel Marquez Dumolong. The spouses lived separately since 1920, and Sixto later cohabited with Placida Dumolong, with whom he had children, including Renito. In 1977, Placida successfully petitioned for the reconstitution of the title. Subsequently, a “Deed of Extrajudicial Adjudication and Sale of Real Property” was executed in March 1978, purportedly by Isabel and Renito, adjudicating and selling the lot to third-party spouses for P6,000.00. This deed was registered, and a transfer certificate of title was issued. In February 1979, these vendees sold the lot to petitioner-spouses Antonio and Florenda Bornales for P40,000.00, who then obtained a transfer certificate of title in their names.

ISSUE

Whether the petitioners are purchasers in good faith, entitled to the protection of the Torrens system, despite the forged deed in their chain of title.

RULING

The Supreme Court denied the petition and affirmed the appellate court’s decision, ruling that the petitioners were purchasers in bad faith. The legal logic centers on the principle that the indefeasibility of a Torrens title does not protect a transferee who acquires property with knowledge of a defect in the vendor’s title. The Court found that the petitioners, having been tenants of the land even during Sixto Dumolong’s lifetime, could not have been unaware of the rightful interest of the legal wife, Isabel. The trial court conclusively found that the petitioners themselves approached Isabel in 1980 to secure her signature, demonstrating their prior knowledge of her claim and the flaw in the title acquired through a forged deed. The rapid sequence of transactions—the sale to the petitioners merely three months after the void deed and the gross disparity in consideration (from P6,000.00 to P40,000.00)—further indicated a scheme of dispossession of which the petitioners were a part. Registration must be made in good faith to be effective. Since the petitioners purchased the property with full knowledge of the defect, they only acquired whatever rights their vendors had, which were void due to the forgery. Consequently, they cannot invoke the sanctity of the certificate of title against the true owner, Isabel Marquez Dumolong, who was declared the lawful owner of a pro-indiviso one-half share as an heir.