Samonte vs. Court of Appeals

The prescriptive period for an action for reconveyance based on implied trust is reckoned from the actual discovery of the fraud, not the date of registration, where the fraudulent registration was achieved through clandestine misrepresentations.

Lot 216 in Nasipit, Agusan del Norte, was originally covered by Original Certificate of Title (OCT) No. RO-238(555) in the names of Apolonia Abao and her daughter Irenea Tolero in equal undivided shares. Following their deaths, Ignacio Atupan executed an Affidavit of Extrajudicial Settlement and Confirmation of Sale, falsely representing himself as the sole heir of Abao and confirming the sale of her half to the Jadol spouses. This affidavit caused the cancellation of the OCT and the issuance of Transfer Certificate of Title (TCT) No. RT-476 in the names of Tolero and the Jadol spouses. The property was subsequently subdivided, and portions were sold to Jacobo Tagorda and herein petitioner Tiburcio Samonte.

• Original Ownership: Lot 216 was registered under OCT No. RO-238(555) in the names of Apolonia Abao and Irenea Tolero in equal undivided shares.
• Fraudulent Registration: Ignacio Atupan, who merely grew up with Abao and was not her heir, executed an Affidavit of Extrajudicial Settlement and Confirmation of Sale, claiming to be the sole heir. The Jadol spouses, despite knowing Atupan was not an heir, presented this affidavit to the Register of Deeds, resulting in the cancellation of the OCT and the issuance of TCT No. RT-476 in their names for Abao's share.
• Subsequent Transfers: The lot was subdivided. Lot 216-A was sold to Samonte. Lot 216-B was further subdivided; a portion was sold to Tagorda, who later sold it to Samonte.
• Petitioner's Knowledge: Samonte purchased a portion from the Jadol spouses on July 20, 1957, while the property was still registered under the OCT in the names of Abao and Tolero. He knew that respondents were the only surviving heirs of Tolero. Regarding the portion bought from Tagorda, Samonte was already aware that Jadol lacked the capacity to transmit title over any part of the subject property.

• Prescription: Petitioner argued that the respondents' action for reconveyance had prescribed, invoking the doctrine that the discovery of fraud is deemed to have taken place at the time of registration. Because eighteen years had lapsed since the issuance of TCT No. RT-476 in 1957, the action filed in 1975 was time-barred.
• Good Faith: Petitioner maintained that he was a buyer in good faith for value, having bought portions of the lot under the belief that the vendors' papers were in order, and thus entitled to the protection of the law.

• Prescription: Whether the action for reconveyance had prescribed based on the rule that discovery of fraud is deemed to occur upon registration of the title.
• Good Faith: Whether petitioner was a buyer in good faith entitled to the protection of the Torrens system.

• Prescription: The action had not prescribed. The general rule that discovery of fraud is deemed to occur upon registration does not apply where the fraudulent registration was achieved through clandestine misrepresentations. Following Adille v. Court of Appeals, the prescriptive period for an action based on implied trust is reckoned from the time the true owners actually discovered the fraud, which in this case was only during the trial of Civil Case No. 1672.
• Good Faith: Petitioner was a buyer in bad faith. One who buys from a person who is not the registered owner is not a purchaser in good faith. Petitioner bought a portion from the Jadol spouses while the property was still registered under the original owners' OCT, with knowledge that respondents were the true heirs. Regarding the portion bought from Tagorda, petitioner was already charged with knowledge of Jadol's lack of capacity to transmit title, precluding a claim of good faith. The defense of indefeasibility of a Torrens title does not extend to a transferee who takes the certificate of title with notice of a flaw.

• Implied Trust (Article 1456, Civil Code) — Property acquired through fraud creates an implied trust for the benefit of the person from whom the property comes. The person obtaining the property by fraud is considered a trustee. An action to enforce an implied trust prescribes in ten years.
• Exception to Constructive Notice Rule (Actual Discovery of Fraud) — While registration under the Torrens system is constructive notice of title, the prescriptive period for reconveyance based on implied trust is reckoned from the actual discovery of the fraud, not the date of registration, where the fraudulent registration was clandestine (e.g., a false affidavit of extrajudicial settlement).
• Buyer in Good Faith Exceptions — A person dealing with registered land has a right to rely on the Torrens certificate of title. However, this rule admits exceptions: when the purchaser has actual knowledge of facts that would impel a reasonably cautious person to inquire, or when the purchaser has knowledge of a defect or lack of title in the vendor. One who falls within these exceptions is not an innocent purchaser for value.

• "It is true that registration under the Torrens system is constructive notice of title, but it has likewise been our holding that the Torrens title does not furnish a shield for fraud... Accordingly, we hold that the right of the private respondents commenced from the time they actually discovered the petitioner's act of defraudation."
• "The defense of indefeasibility of a Torrens Title does not extend to a transferee who takes the certificate of title with notice of a flaw. A holder in bad faith of a certificate of title is not entitled to the protection of the law, for the law cannot be used as a shield for frauds."

• Adille v. Court of Appeals, 157 SCRA 455 (1988) — Followed. Applied the ruling that where fraud is clandestine, the prescriptive period for an action for reconveyance based on implied trust is reckoned from the actual discovery of the fraud, not the date of registration.
• Carantes v. Court of Appeals, 76 SCRA 514 — Distinguished. Cited by petitioner for the general rule that discovery of fraud is deemed at registration, which the Court declined to apply due to the clandestine nature of the fraud.
• Sandoval v. Court of Appeals, 260 SCRA 283 (1996) — Followed. Cited for the exceptions to the rule that a person dealing with registered land may rely on the Torrens title.
• Inquimboy v. Vda. De Cruz, 108 Phil. 1054 — Followed. Cited for the principle that one who buys from a person who is not the registered owner is not a purchaser in good faith.

• Article 1456, Civil Code — Provides that if property is acquired through mistake or fraud, the person obtaining it is considered a trustee of an implied trust for the benefit of the person from whom the property comes. Applied to establish that the Jadol spouses held the fraudulently registered portion in trust for the true heirs.
• Section 52, P.D. No. 1529 (amending Sec. 51 of Act No. 496) — Provides that registration operates as a constructive notice to all persons. Cited in relation to the general rule on constructive notice of fraud, which was not applied in this case.

Davide, Jr., C.J., Puno, Pardo, and Ynares-Santiago, JJ.