GR 157701; (December, 2005) (Digest)
G.R. No. 157701 . December 9, 2005.
Spouses Danilo and Alberta Domingo, and Eduardo Quiteves, Petitioners, vs. Guillermo Reed, Respondent.
FACTS
Respondent Guillermo Reed, an overseas worker, purchased a property with his wife Lolita. The title, TCT No. 58195, was issued in the name of “Lolita Reed, married to Guillermo Reed.” During Guillermo’s absences, Lolita, using a forged Special Power of Attorney (SPA), sold portions of the land to petitioners Spouses Domingo and Eduardo Quiteves. New titles were issued to the petitioners. Upon discovering the sales when his relatives were sued for ejectment, Guillermo filed a complaint for reconveyance, asserting the SPA was forged and the buyers acted in bad faith.
The Regional Trial Court dismissed the complaint, upholding the sales. It gave weight to a letter allegedly from Guillermo consenting to a sale and found the petitioners to be innocent purchasers for value who relied on the notarized SPA and the clean title. Guillermo appealed, arguing the SPA was fraudulent and the buyers failed to exercise due diligence.
ISSUE
Whether petitioners are buyers in good faith entitled to protection under the Torrens system.
RULING
No. The Supreme Court affirmed the Court of Appeals’ reversal, declaring the sales null and void. The Court ruled that while the Torrens system protects innocent purchasers for value, this protection is not absolute. A purchaser cannot close their eyes to facts that should put a reasonable person on guard. Here, petitioners failed to exercise the requisite diligence.
The circumstances were suspicious and should have prompted further inquiry. The seller was the wife of the registered owner, who was known to be working abroad. The sales documents, including the SPA, were executed during his absence. Most critically, the property was conjugal, yet the sales were made piecemeal without the husband’s apparent participation. A prudent buyer should have verified the authenticity of the SPA directly with Guillermo, especially given the unusual nature of selling portions of a family home. Their mere reliance on the face of the title and the notarized document, despite these glaring red flags, constituted bad faith. Consequently, they cannot be considered innocent purchasers for value entitled to the indefeasibility of a Torrens title. The Court ordered the cancellation of the petitioners’ titles and the reinstatement of Guillermo Reed’s original title.