Jurado vs. Spouses Chai

A purchaser of land covered by an administratively reconstituted certificate of title is charged with notice of the title's non-indefeasible character and must conduct an inquiry into defects in the vendor's title; reliance on a mere photocopy and a defective certification does not make one a purchaser in good faith, especially where the source title is shown to be inexistent. A title derived from an inexistent or void title is itself void, and ownership may be proven by an LRA-certified owner's duplicate certificate and ancient documents showing acts of dominion.

Petitioners are the Zamora heirs, claiming Lot 4900 by inheritance from Dominador Zamora, who held it under TCT No. T-2291 derived from OCT No. 6142. Respondents Spouses Chai trace their claim to an Extrajudicial Settlement of Estate with Simultaneous Sale executed by the Heirs of Spouses Pariñas and to Pariñas OCT 3429, which had undergone judicial and administrative reconstitution under Republic Act No. 26. The dispute concerns the effect of administrative reconstitution on the indefeasibility of a certificate of title and the status of a purchaser relying on such reconstituted title.

Petitioners Asuncion Z. Jurado, Catalina Z. Aliling, and the Heirs of Fernando M. Zamora claimed to be the registered owners, together with their deceased brother Fernando, of Lot 4900, a 7,086-square-meter parcel in Santiago City, Isabela, covered by TCT No. T-65150, which they inherited from their father Dominador Zamora. Dominador held the land under TCT No. T-2291 after acquiring it from the original owners, Spouses Antonio Pariñas and Maura Balbin. The title was traced to OCT No. 6142 issued pursuant to Decree No. 689655 in LRC Cadastral Record No. 1496, originally registered on February 11, 1939.

In 1997, petitioners discovered that respondents had caused Lot 4900 to be subdivided into four derivative titles: TCT No. T-194346 in the name of Vicente Chai, married to Carmen T. Chai; TCT No. T-194347 in the name of Spouses Eduardo and Josefina Sarmiento; TCT No. T-194348 in the name of Anastacio Palermo; and TCT No. T-194349 in the names of Leonora and Margarita Pariñas. Petitioners filed an annulment case, later amended to include Petron as lessee, alleging that these titles proceeded from a fake OCT No. 3429 that had been judicially and administratively reconstituted without notice to all concerned and without following prescribed procedure. They presented, among others, the owner's duplicate of TCT No. T-65150 in Judicial Form No. 109-D with serial number 2273614, an LRA certification dated February 16, 2004 that the form was issued to RD-Ilagan on January 18, 1972, the extrajudicial settlement of the estates of Spouses Dominador Zamora and Victoria Mistica, OR No. 482515 dated August 25, 1947 for docket fees for the owner's duplicate of TCT No. T-2291, a certified microfilm copy of Decree No. 689655, TD No. 5746 dated October 12, 1949 in Dominador's name, Tax No. 16978 in Antonio Pariñas's name, RPT receipts in Antonio's name for 1942 to 1944 and in Dominador's name for 1949 to 1974, OR No. 0811990 dated May 2, 1944 for Cadastral Title No. 6142, owner's duplicates of TCT Nos. T-65146 to T-65149 and T-65151, and a certified copy of OCT No. O-3429 over Lot 7069 in the names of Spouses Jose Calma and Crisanta Tumacder pursuant to Decree No. N-167495.

Respondents denied the allegations and claimed that a portion of Lot 4900, originally registered under Pariñas OCT 3429 in the names of Spouses Pariñas, was transferred to them on October 19, 1990 through an Extrajudicial Settlement of Estate with Simultaneous Sale executed by the Heirs of Spouses Pariñas, who gave them a photocopy of Pariñas OCT 3429. They alleged that they inspected Lot 4900, inquired from adjoining owners who said Spouses Pariñas owned it, and instructed Teresita Masa to verify the existence and genuineness of Pariñas OCT 3429 with RD-Ilagan. RD-Ilagan issued a certification dated March 21, 1990 stating that the 7,086-square-meter Lot 4900 covered by Pariñas OCT 3429 was free from liens and encumbrances except Section 7 of RA 26 inscribed at the back. Masa also went to the Municipal Assessor and found the land declared for taxation in Spouses Pariñas's names. Respondents then purchased the land. They presented Masa's affidavit dated September 13, 2012, the RD-Ilagan certification, the extrajudicial settlement with sale, TD No. 89-11075-R in Spouses Pariñas's names effective 1990, TCT No. T-194346, and RPT receipts for 1991 to 2012.

Defendant Leonora Pariñas-Dela Peña maintained that OCT No. 3429 had primacy over OCT No. 6142 because it was issued earlier, but she was declared in default for failure to appear at pre-trial. Spouses Sarmiento were declared in default for failure to file an answer, while the cases against Anastacio and Margarita Pariñas and her husband Melecio Pinto were dropped. Petron averred that before entering a 20-year Lease Agreement over a 2,000-square-meter portion of Lot 4900, it conducted due diligence and confirmed the authenticity of TCT No. T-194346, and claimed to be an innocent lessee for value.

During the RTC proceedings, petitioners filed a Request for Admission dated June 4, 2007, seeking admission from RD-Santiago that there was no record or entry of Pariñas OCT 3429 and that the OCT No. 3429 on file was OCT No. O-3429 over Lot 7069 in the names of Spouses Calma. RD-Santiago replied, admitting those facts with the qualification that OCT No. O-3429 was transmitted to it by RD-Ilagan. Petitioners then moved for summary judgment, citing admissions that the heirs of Spouses Pariñas did not participate in the reconstitution, that Leonora had nothing to do with Pariñas OCT 3429, that RD-Santiago had no record of it, that respondents admitted the derivative titles originated from Pariñas OCT 3429, and that Spouses Sarmiento admitted petitioners' ownership. The RTC later found the judicial reconstitution of Pariñas OCT 3429 irregular because the order granting it was issued only 28 days from filing, contrary to RA 26, and found respondents were not purchasers in good faith because the reconstituted title should have prompted an investigation. The CA, on the other hand, found respondents were purchasers in good faith and that petitioners failed to prove ownership because TCT No. T-65150 was not on file with RD-Ilagan, TCT No. T-2291 was defective, there was a discrepancy in dates, and petitioners did not possess or pay taxes starting 1975.

• Good Faith of Respondents: Petitioners maintained that the CA erred in holding respondents purchasers in good faith, because Pariñas OCT 3429 was administratively reconstituted and its reconstitution was irregular; respondents relied only on a photocopy and an RD-Ilagan certification that lacked the seal of office and proof of documentary stamp and certification fee payments.
• Ownership over Lot 4900: Petitioners argued that they proved ownership over Lot 4900 through the LRA-certified owner's duplicate of TCT No. T-65150 and ancient documents showing acts of dominion by Antonio Pariñas and Dominador Zamora.
• Admissions: Petitioners contended that RD-Santiago's admission that no Pariñas OCT 3429 existed on file and that the OCT on file was Calma OCT, together with other defendants' admissions, established that respondents' derivative titles were void.

• Good Faith Purchase: Respondents countered that they were purchasers in good faith because they inspected the land, inquired from adjoining owners, had Masa verify Pariñas OCT 3429 with RD-Ilagan, and relied on the RD-Ilagan certification and tax declaration in Spouses Pariñas's names.
• Reconstituted Title Validity: Respondents argued that reconstituted certificates of title have the same validity and legal effect as originals, so they could rely on Pariñas OCT 3429.
• Petitioners' Failure to Prove Ownership: Respondents maintained that petitioners failed to prove ownership because TCT No. T-65150 was not on file with RD-Ilagan, TCT No. T-2291 was defective, there was a discrepancy in the dates of issuance and registration, and petitioners did not possess the land or pay taxes starting 1975.

• Purchaser in Good Faith: Whether the CA erred in declaring respondents purchasers in good faith despite the administrative reconstitution of Pariñas OCT 3429 and the circumstances of their purchase.
• Proof of Ownership: Whether the CA erred in declaring petitioners failed to prove ownership over Lot 4900.

• Purchaser in Good Faith: No. Respondents were not purchasers in good faith because Pariñas OCT 3429 was administratively reconstituted and shown to be inexistent; they relied on a mere photocopy and defective certification without sufficient inquiry.
• Proof of Ownership: Yes. Petitioners proved ownership through the LRA-certified owner's duplicate of TCT No. T-65150 and ancient documents showing acts of dominion over Lot 4900, which prevailed over respondents' void derivative title.

• Purchaser in Good Faith: The CA's ruling rested on the premise that reconstituted titles have the same validity and legal effect as originals. That premise is qualified: reconstituted titles have the same effect unless the reconstitution was extrajudicial or administrative. Administrative reconstitution is ex-parte and without notice; an administratively reconstituted title does not share the indefeasible character of the original and puts anyone dealing with it on notice to be extra-careful. Pariñas OCT 3429 was judicially reconstituted on February 28, 1974, but after the fire that razed RD-Ilagan on December 4, 1976, it was administratively reconstituted on June 2, 1977. Respondents nevertheless relied on a mere photocopy when they purchased Lot 4900. They did not secure a certified true copy; they relied on the RD-Ilagan Certification dated March 21, 1990, which did not bear the seal of office and did not indicate that the required documentary stamp and certification fee had been paid. RD-Santiago later expressly admitted that no Pariñas OCT 3429 was on file and that what was transmitted by RD-Ilagan and on file was Calma OCT over Lot 7069 in San Mateo, Isabela, issued under Decree No. N-167495. That admission from the government office responsible for safeguarding titles prevailed over the defective RD-Ilagan certification. Further, Pariñas OCT 3429 showed transcription in the Registration Book on February 19, 1937, more than a year before Decree No. 689655 was issued on November 17, 1938; an original certificate of title cannot be transcribed before the decree authorizing registration. Thus Pariñas OCT 3429 was inexistent. Administrative reconstitution merely restores or replaces a lost or destroyed title in its original form; it vests no new rights, determines no ownership issues, and is without prejudice under Section 7 of RA 26. Consequently, respondents were not innocent purchasers for value and acquired no better title than their predecessors. The derivative titles also reflected the issuance date as February 19, 1930, and neither the reconstituted Pariñas OCT 3429 nor the derivative titles contained the required annotation of the two-year lien under Section 4, Rule 74.
• Proof of Ownership: The CA erred in holding petitioners failed to prove ownership. Petitioners possessed the owner's duplicate of TCT No. T-65150 in genuine Judicial Form No. 109-D with serial number 2273614, duly certified by the LRA. Although the original was not on file with RD-Santiago, the title traced its origin to OCT No. 6142 issued under Decree No. 689655 in Cadastral Record No. 1496, originally registered on February 11, 1939. The CA's reliance on the discrepancy between the November 17, 1938 issuance date of the decree and the date in TCT No. T-65150 was misplaced: the date and time of issuance of the decree of registration is not the date of the title; it is merely the date of entry and filing in the LRA. The OCT takes effect when the original and duplicate copies are entered by the Register of Deeds in the record book, with the corresponding number, date, seal, and signature reflected on the certificates upon receipt from the LRA Administrator. Petitioners also possessed ancient documents showing acts of dominion by Antonio Pariñas and Dominador Zamora over Lot 4900 before respondents' supposed acquisition. These included Dominador's August 25, 1947 petition for issuance of the owner's duplicate of TCT No. T-2291; his October 12, 1949 TD No. 5746 and payment of realty taxes starting from 1945; the coincidence of the area and boundaries in TD No. 5746 with Lot 4900 in Decree No. 689655; TD No. 5746's cancellation of Tax No. 16978 in Antonio's name over property in Dubinan, Santiago, Isabela; petitioners' possession of Tax No. 16978 and RPT receipts under Tax No. 12937 in Antonio's name for 1942 to 1944; payment of realty taxes in Dominador's name from 1945 to 1969 even after his death on January 21, 1966 and under other declarations until 1974 by his son Fernando; and OR No. 0811990 dated May 2, 1944 for Cadastral Title No. 6142 in Antonio's name. These ancient documents convincingly proved petitioners' claim, which prevailed over respondents' title shown to have emanated from an inexistent and void title. Any title tracing its source to a void title is also void; no one can transfer more rights than he has. TCT No. T-194346 in Vicente Chai's name was therefore void. As to the scope of relief, because the cases against Anastacio and Spouses Pinto were dropped for inability to serve summons, the RTC could proceed despite their non-inclusion as necessary parties, but the judgment was without prejudice to their rights; the RTC had no jurisdiction to annul TCT No. T-194348 in Anastacio's name or TCT No. T-194349 as to Margarita Pariñas's share.

• Administrative Reconstitution of Torrens Titles — Reconstituted titles have the same validity and legal effect as the originals unless the reconstitution was extrajudicial or administrative. Administrative reconstitution is ex-parte and without notice; an administratively reconstituted title does not share the original's indefeasible character. Anyone dealing with such a title is on notice and must exercise extra care. Applied: Pariñas OCT 3429 was administratively reconstituted after the 1976 fire, so respondents were charged with notice and should have investigated its defects.
• Purchaser in Good Faith and Due Diligence — A purchaser in good faith must conduct an inquiry sufficient to acquaint himself with defects in the vendor's title. Reliance on a mere photocopy, a certification lacking the seal of office and proof of documentary stamp and certification fee payments, and no certified true copy does not satisfy due diligence. Applied: respondents were not innocent purchasers for value.
• Reconstitution Vests No New Rights — Administrative reconstitution merely restores or replaces a lost or destroyed title in its original form; it vests no new rights and determines no ownership issues. Under Section 7 of RA 26, it is without prejudice to parties whose rights were noted in the original but not on the reconstituted title. Applied: reconstitution did not validate Pariñas OCT 3429 or create rights in respondents.
• Void Source Title (Nemo Potest Plus Juris ad Alium Transferre Quam Ipse Habet) — Any title that traces its source to a void title is also void; no one can transfer more rights than he possesses. Applied: TCT No. T-194346, derived from the inexistent Pariñas OCT 3429, was void.
• Date of Decree of Registration vs. Date of Certificate of Title — The date and time of issuance of the decree of registration is not the date of the title; it is merely the date of entry and filing in the LRA. The OCT takes effect when the original and duplicate copies are entered by the Register of Deeds in the record book, with the corresponding number, date, seal, and signature. Applied: the CA's discrepancy argument against petitioners' title was rejected.
• Proof of Ownership by Owner's Duplicate and Ancient Documents — Ownership may be established by an owner's duplicate certificate certified by the LRA and by ancient documents showing acts of dominion. Applied: petitioners' LRA-certified owner's duplicate of TCT No. T-65150 and tax records, receipts, and decree documents proved ownership over Lot 4900.
• Necessary Parties and Scope of Judgment — A trial court may proceed despite the non-inclusion of necessary parties, but the judgment is without prejudice to their rights; it cannot annul titles of parties dropped from the case. Applied: RTC lacked jurisdiction to annul TCT No. T-194348 and TCT No. T-194349 as to Margarita Pariñas's share.

• "Case law states that reconstituted titles shall have the same validity and legal effect as to the originals thereof unless the reconstitution was made extrajudicially, or administratively. This is because administrative reconstitution is essentially ex-parte and without notice, and thus, administratively reconstituted titles do not share the same indefeasible character of the original certificates of title. Anyone dealing with such copies are put on notice of such fact and warned to be extra-careful." — This states the ratio for why respondents were charged with notice and were not good-faith purchasers.
• "The issuance of a reconstituted title vests no new rights and determines no ownership issues, and shall always be without prejudice to any party whose right or interest in the property was duly noted in the original, at the time it was lost or destroyed, but entry or notation of which has not been made on the reconstituted certificate of title, as expressly provided under Section 7 of RA 26, which was duly noted on the reconstituted Pariñas OCT 3429." — This defines the limited effect of administrative reconstitution and supports the holding that Pariñas OCT 3429 did not validate respondents' title.
• "Jurisprudence states that any title that traces its source to a void title, as respondents' in this case, is also void since the spring cannot rise higher than its source. Nemo potest plus juris ad alium transferre quam ipse habet." — This is the canonical rule applied to void TCT No. T-194346.
• "The date and time of the issuance of the decree of registration cannot be considered as the date of the title. It is simply the date of its entry and filing in the LRA. The OCT shall take effect on the date and time the original and duplicate copies thereof were entered by the Register of Deeds in his record book, and the corresponding number, date, seal of office, and his signature are reflected on said certificates of title upon receipt thereof from the LRA Administrator." — This rejects the CA's discrepancy argument and explains when an OCT takes effect.

• Barstowe Philippines Corporation vs. Republic of the Philippines, 548 Phil. 86, 123 (2007) — Cited for the rule that persons dealing with administratively reconstituted titles must conduct an inquiry into defects because such titles do not share the indefeasible character of originals.
• Chan vs. Court of Appeals, 359 Phil. 242, 257 (1998) — Cited for the proposition that the mere fact that the Register of Deeds does not have the original of a certificate of title does not necessarily mean that the title never existed.
• Escobar vs. Luna, 547 Phil. 661, 672 (2007) — Cited in weighing the RD-Santiago's express admission against the RD-Ilagan certification, supporting the conclusion that the admission of the government office responsible for safeguarding titles should prevail.
• Vda. de Anciano vs. Caballes, 93 Phil. 875, 876 (1953) and Bunagan vs. Branch VI, Court of First Instance of Cebu, 186 Phil. 31, 35 (1980) — Cited for the rule that administrative reconstitution merely restores or replaces a lost or destroyed title in its original form.
• Serra Serra vs. Court of Appeals, 272-A Phil. 467, 478 (1991) — Cited for the rule that the issuance of a reconstituted title vests no new rights and determines no ownership issues.
• CLT Realty Development Corporation vs. Hi-Grade Feeds Corporation, 768 Phil. 149, 172 (2015) — Cited for the rule that any title tracing its source to a void title is also void, under the maxim that no one can transfer more rights than he has.

• Section 7, Republic Act No. 26 — Provides that reconstituted certificates of title have the same validity and legal effect as originals, but those reconstituted extrajudicially or administratively are without prejudice to parties whose rights were noted in the original but not on the reconstituted title; the reservation must be noted as an encumbrance. Applied: administrative reconstitution of Pariñas OCT 3429 did not validate it and preserved rights.
• Section 13, Republic Act No. 26 — Requires publication, posting, and notice at least 30 days prior to hearing for judicial reconstitution. The RTC found the reconstitution irregular because the order was issued only 28 days from filing, contrary to this section.
• Section 4, Rule 74, Rules of Court — Establishes the two-year lien on distributed estate property; Section 86 of PD 1529 requires annotation on the proper title. The reconstituted Pariñas OCT 3429 and derivative titles did not contain the required annotation.
• Section 21, Rule 132, Rules of Court — Provides that a private document more than 30 years old, produced from proper custody, and unblemished by alterations or suspicious circumstances requires no other evidence of authenticity. Applied: petitioners' ancient documents were considered in proving ownership.
• Sections 31, 39, and 40, Presidential Decree No. 1529 — Govern the issuance of the decree of registration and the original certificate of title, and provide that the OCT takes effect when the original and duplicate copies are entered by the Register of Deeds in the record book. Applied: the date of the decree was not the date of the title, defeating the CA's discrepancy argument.
• Section 86, Presidential Decree No. 1529 — Requires annotation of the two-year lien under Section 4, Rule 74 when an extrajudicial settlement is registered. Applied: the absence of the annotation was an additional defect.
• Section 188, National Internal Revenue Code; Section 111(C)(20), Presidential Decree No. 1529 — Require documentary stamp tax and certification fees for certificates issued by public offices. Applied: the RD-Ilagan certification did not indicate payment of the required documentary stamp and certification fee, weakening it against RD-Santiago's admission.
• Sections 8 and 9, Rule 3, Rules of Court — Define a necessary party and allow the trial court to proceed despite non-inclusion of necessary parties, but the judgment is without prejudice to their rights. Applied: the RTC could proceed without Anastacio and Spouses Pinto, but could not annul their titles.

Carpio (Chairperson), Caguioa, J. Reyes, Jr., and Lazaro-Javier, JJ., concur.