Torrens title; innocent purchaser; Family Code; community property


At bar is a petition for review on certiorari of the Decision[1] dated May 14, 2010 and the Resolution[2] dated July 21, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 70235, which affirmed with modification the assailed Decision[3] dated February 14, 2001 of the Regional Trial Court (RTC) of Marikina City, Branch 273, in Civil Case No. 96-274-MK.

The following facts are found by the trial court and affirmed by the appellate court:

Respondent Shirley B. Nuega (Shirley) was married to Rogelio A. Nuega (Rogelio) on September 1, 1990.[4] Sometime in 1988 when the parties were still engaged, Shirley was working as a domestic helper in Israel. Upon the request of Rogelio, Shirley sent him money[5] for the purchase of a residential lot in Marikina where they had planned to eventually build their home. Rogelio was then also working abroad as a seaman. The following year, or on September 13, 1989, Rogelio purchased the subject house and lot for One Hundred Two Thousand Pesos (P102,000.00)[6] from Rodeanna Realty Corporation. The subject property has an aggregate area of one hundred eleven square meters (111 sq. m.) covered by Transfer Certificate of Title (TCT) No. N-133844.[7] Shirley claims that upon her arrival in the Philippines sometime in 1989, she settled the balance for the equity over the subject property with the developer through SSS[8] financing. She likewise paid for the succeeding monthly amortizations. On October 19, 1989, TCT No. 171963[9] over the subject property was issued by the Registry of Deeds of Marikina, Rizal solely under the name of Rogelio.

On September 1, 1990, Shirley and Rogelio got married and lived in the subject property. The following year, Shirley returned to Israel for work. While overseas, she received information that Rogelio had brought home another woman, Monica Escobar, into the family home. She also learned, and was able to confirm upon her return to the Philippines in May 1992, that Rogelio had been introducing Escobar as his wife.

In June 1992, Shirley filed two cases against Rogelio: one for Concubinage before the Provincial Prosecution Office of Rizal, and another for Legal Separation and Liquidation of Property before the RTC of Pasig City. Shirley later withdrew the complaint for legal separation and liquidation of property, but re-filed[10] the same on January 29, 1993. In between the filing of these cases, Shirley learned that Rogelio had the intention of selling the subject property. Shirley then advised the interested buyers - one of whom was their neighbor and petitioner Josefina V. Nobleza (petitioner) - of the existence of the cases that she had filed against Rogelio and cautioned them against buying the subject property until the cases are closed and terminated. Nonetheless, under a Deed of Absolute Sale[11] dated December 29, 1992, Rogelio sold the subject property to petitioner without Shirley's consent in the amount of Three Hundred Eighty Thousand Pesos (P380,000.00), including petitioner's undertaking to assume the existing mortgage on the property with the National Home Mortgage Finance Corporation and to pay the real property taxes due thereon.

Meanwhile, in a Decision[12] dated May 16, 1994, the RTC of Pasig City, Branch 70, granted the petition for legal separation and ordered the dissolution and liquidation of the regime of absolute community of property between Shirley and Rogelio, viz.:
WHEREFORE, in view of the foregoing, the Court hereby grants the instant petition for legal separation between the subject spouses with all its legal effects as provided for in Art. 63 of the Family Code. Their community property is consequently dissolved and must be liquidated in accordance with Art. 102 of the New Family Code. The respondent is thus hereby enjoined from selling, encumbering or in any way disposing or alienating any of their community property including the subject house and lot before the required liquidation. Moreover, he, being the guilty spouse, must forfeit the net profits of the community property in favor of the petitioner who is the innocent spouse pursuant to Art. 43 of the aforesaid law. Finally, in the light of the claim of ownership by the present occupants who have not been impleaded in the instant case, a separate action must be instituted by the petitioner against the alleged buyer or buyers thereof to determine their respective rights thereon.

Let a copy of this decision be furnished the Local Civil Registrar of Manila, the Register of Deeds of Marikina, Metro Manila and the National Statistics Office (NSO), sta. Mesa, Manila.

Rogelio appealed the above-quoted ruling before the CA which denied due course and dismissed the petition. It became final and executory and a writ of execution was issued in August 1995.[14]

On August 27, 1996, Shirley instituted a Complaint[15] for Rescission of Sale and Recoveiy of Property against petitioner and Rogelio before the RTC of Marikina City, Branch 273. After trial on the merits, the trial court rendered its decision on February 14, 2001, viz.:
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of plaintiff Shirley Nuega and against defendant Josefina Nobleza, as follows:

the Deed of Absolute Sale dated December 29, 1992 insofar as the 55.05 square meters representing the one half (1/2) portion of plaintiff Shirley Nuega is concerned, is hereby ordered rescinded, the same being null and void;
defendant Josefina Nobleza is ordered to reconvey said 55.05 square meters to plaintiff Shirley Nuega, or in the alternative to pay plaintiff Shirley Nuega the present market value of said 55.05 square meters; and
to pay plaintiff Shirley Nuega attorney's fees in the sum of Twenty Thousand Pesos (P20,000.00).

For lack of merit, defendant's counterclaim is hereby DENIED.

Petitioner sought recourse with the CA, while Rogelio did not appeal the ruling of the trial court. In its assailed Decision promulgated on May 14, 2010, the appellate court affirmed with modification the trial court's ruling, viz.:
WHEREFORE, subject to the foregoing disquisition, the appeal is DENIED. The Decision dated 14 February 2001 of the Regional Trial Court of Marikina City, Branch 273 in Civil Case No. 96-274-MK is AFFIRMED with MODIFICATION in that the Deed of Absolute Sale dated 29 December 1992 is hereby declared null and void in its entirety, and defendant-appellant Josefina V. Nobleza is ordered to reconvey the entire subject property to plaintiff-appellee Shirley B. Nuega and defendant Rogelio Nuega, without prejudice to said defendant-appellant's right to recover from defendant Rogelio whatever amount she paid for the subject property. Costs against defendant-appellant Nobleza.

Petitioner moved for reconsideration. In a Resolution dated July 21, 2010, the appellate court denied the motion for lack of merit. Hence, this petition raising the following assignment of errors:
We deny the petition.

Petitioner is not a buyer in good faith.

An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right or interest in the property, for which a full and fair price is paid by the buyer at the time of the purchase or before receipt of any notice of claims or interest of some other person in the property.[19] It is the party who claims to be an innocent purchaser for value who has the burden of proving such assertion, and it is not enough to invoke the ordinary presumption of good faith.[20] To successfully invoke and be considered as a buyer in good faith, the presumption is that first and foremost, the "buyer in good faith" must have shown prudence and due diligence in the exercise of his/her rights. It presupposes that the buyer did everything that an ordinary person would do for the protection and defense of his/her rights and interests against prejudicial or injurious concerns when placed in such a situation. The prudence required of a buyer in good faith is "not that of a person with training in law, but rather that of an average man who 'weighs facts and circumstances without resorting to the calibration of our technical rules of evidence of which his knowledge is nil.'"[21] A buyer in good faith does his homework and verifies that the particulars are in order such as the title, the parties, the mode of transfer and the provisions in the deed/contract of sale, to name a few. To be more specific, such prudence can be shown by making an ocular inspection of the property, checking the title/ownership with the proper Register of Deeds alongside the payment of taxes therefor, or inquiring into the minutiae such as the parameters or lot area, the type of ownership, and the capacity of the seller to dispose of the property, which capacity necessarily includes an inquiry into the civil status of the seller to ensure that if married, marital consent is secured when necessary. In fine, for a purchaser of a property in the possession of another to be in good faith, he must exercise due diligence, conduct an investigation, and weigh the surrounding facts and circumstances like what any prudent man in a similar situation would do.[22]

In the case at bar, petitioner claims that she is a buyer in good faith of the subject property which is titled under the name of the seller Rogelio A. Nuega alone as evidenced by TCT No. 171963 and Tax Declaration Nos. D-012-04723 and D-012-04724.[23] Petitioner argues, among others, that since she has examined the TCT over the subject property and found the property to have been registered under the name of seller Rogelio alone, she is an innocent purchaser for value and "she is not required to go beyond the face of the title in verifying the status of the subject property at the time of the consummation of the sale and at the date of the sale."[24]

We disagree with petitioner.

HELD: A buyer cannot claim to be an innocent purchaser for value by merely relying on the TCT of the seller while ignoring all the other surrounding circumstances relevant to the sale.

In the case of Spouses Raymundo v. Spouses Bandong,[25] petitioners therein - as does petitioner herein - were also harping that due to the indefeasibility of a Torrens title, there was nothing in the TCT of the property in litigation that should have aroused the buyer's suspicion as to put her on guard that there was a defect in the title of therein seller. The Court held in the Spouses Raymundo case that the buyer therein could not hide behind the cloak of being an innocent purchaser for value by merely relying on the TCT which showed that the registered owner of the land purchased is the seller. The Court ruled in this case that the buyer was not an innocent purchaser for value due to the following attendant circumstances, viz.:
In the present case, we are not convinced by the petitioners' incessant assertion that Jocelyn is an innocent purchaser for value. To begin with, she is a grandniece of Eulalia and resides in the same locality where the latter lives and conducts her principal business. It is therefore impossible for her not to acquire knowledge of her grand aunt's business practice of requiring her biyaheros to surrender the titles to their properties and to sign the corresponding deeds of sale over said properties in her favor, as security. This alone should have put Jocelyn on guard for any possible abuses that Eulalia may commit with the titles and the deeds of sale in her possession.[26]
Similarly, in the case of Arrofo v. QuiƱo,[27] the Court held that while "the law does not require a person dealing with registered land to inquire further than what the Torrens Title on its face indicates," the rule is not absolute.[28] Thus, finding that the buyer therein failed to take the necessary precaution required of a prudent man, the Court held that Arrofo was not an innocent purchaser for value, viz.:
In the present case, the records show that Arrofo failed to act as a prudent buyer. True, she asked her daughter to verify from the Register of Deeds if the title to the Property is free from encumbrances. However, Arrofo admitted that the Property is within the neighborhood and that she conducted an ocular inspection of the Property. She saw the house constructed on the Property. Yet, Arrofo did not even bother to inquire about the occupants of the house. Arrofo also admitted that at the time of the sale, Myrna was occupying a room in her house as her lessee. The fact that Myrna was renting a room from Arrofo yet selling a land with a house should have put Arrofo on her guard. She knew that Myrna was not occupying the house. Hence, someone else must have been occupying the house.

Thus, Arrofo should have inquired who occupied the house, and if a lessee, who received the rentals from such lessee. Such inquiry would have led Arrofo to discover that the lessee was paying rentals to Quino, not to Renato and Myrna, who claimed to own the Property.[29]
An analogous situation obtains in the case at bar.

The TCT of the subject property states that its sole owner is the seller Rogelio himself who was therein also described as "single". However, as in the cases of Spouses Raymundo and Arrofo, there are circumstances critical to the case at bar which convince us to affirm the ruling of both the appellate and lower courts that herein petitioner is not a buyer in good faith.

First, petitioner's sister Hilda Bautista, at the time of the sale, was residing near Rogelio and Shirley's house - the subject property - in Ladislao Diwa Village, Marikina City. Had petitioner been more prudent as a buyer, she could have easily checked if Rogelio had the capacity to dispose of the subject property. Had petitioner been more vigilant, she could have inquired with such facility - considering that her sister lived in the same Ladislao Diwa Village where the property is located - if there was any person other than Rogelio who had any right or interest in the subject property.

To be sure, respondent even testified that she had warned their neighbors at Ladislao Diwa Village - including petitioner's sister - not to engage in any deal with Rogelio relative to the purchase of the subject property because of the cases she had filed against Rogelio. Petitioner denies that respondent had given such warning to her neighbors, which includes her sister, therefore arguing that such warning could not be construed as "notice" on her part that there is a person other than the seller himself who has any right or interest in the subject property. Nonetheless, despite petitioner's adamant denial, both courts a quo gave probative value to the testimony of respondent, and the instant petition failed to present any convincing evidence for this Court to reverse such factual finding. To be sure, it is not within our province to second-guess the courts a quo, and the re-determination of this factual issue is beyond the reach of a petition for review on certiorari where only questions of law may be reviewed.[30]

Second, issues surrounding the execution of the Deed of Absolute Sale also pose question on the claim of petitioner that she is a buyer in good faith. As correctly observed by both courts a quo, the Deed of Absolute Sale was executed and dated on December 29, 1992. However, the Community Tax Certificates of the witnesses therein were dated January 2 and 20, 1993.[31] While this irregularity is not a direct proof of the intent of the parties to the sale to make it appear that the Deed of Absolute Sale was executed on December 29, 1992 - or before Shirley filed the petition for legal separation on January 29, 1993 - it is circumstantial and relevant to the claim of herein petitioner as an innocent purchaser for value.

That is not all.

In the Deed of Absolute Sale dated December 29, 1992, the civil status of Rogelio as seller was not stated, while petitioner as buyer was indicated as "single," viz.:
ROGELIO A. NUEGA, of legal age, Filipino citizen and with postal address at 2-A-2 Ladislao Diwa St., Concepcion, Marikina, Metro Manila, hereinafter referred to as the VENDOR


JOSEFINA V. NOBLEZA, of legal age, Filipino citizen, single and with postal address at No. L-2-A-3 Ladislao Diwa St., Concepcion, Marikina, Metro Manila, hereinafter referred to as the VENDEE.[32]
It puzzles the Court that while petitioner has repeatedly claimed that Rogelio is "single" under TCT No. 171963 and Tax Declaration Nos. D-012-04723 and D-012-04724, his civil status as seller was not stated in the Deed of Absolute Sale - further creating a cloud on the claim of petitioner that she is an innocent purchaser for value.

As to the second issue, we rule that the appellate court did not err when it modified the decision of the trial court and declared that the Deed of Absolute Sale dated December 29, 1992 is void in its entirety.

The trial court held that while the TCT shows that the owner of the subject property is Rogelio alone, respondent was able to prove at the trial court that she contributed in the payment of the purchase price of the subject property. This fact was also settled with finality by the RTC of Pasig City, Branch 70, and affirmed by the CA, in the case for legal separation and liquidation of property docketed as JDRC Case No. 2510. The pertinent portion of the decision reads:
xxx Clearly, the house and lot jointly acquired by the parties prior to their marriage forms part of their community property regime, xxx

From the foregoing, Shirley sufficiently proved her financial contribution for the purchase of the house and lot covered by TCT 171963. Thus, the present lot which forms part of their community property should be divided equally between them upon the grant of the instant petition for legal separation. Having established by preponderance of evidence the fact of her husband's guilt in contracting a subsequent marriage xxx, Shirley alone should be entitled to the net profits earned by the absolute community property.[33]
However, the nullity of the sale made by Rogelio is not premised on proof of respondent's financial contribution in the purchase of the subject property. Actual contribution is not relevant in determining whether a piece of property is community property for the law itself defines what constitutes community property.

Article 91 of the Family Code thus provides:
Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the community property shall consist of all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter.
The only exceptions from the above rule are: (1) those excluded from the absolute community by the Family Code; and (2) those excluded by the marriage settlement.

Under the first exception are properties enumerated in Article 92 of the Family Code, which states:
Art. 92. The following shall be excluded from the community property:

(1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of the community property;

(2) Property for personal and exclusive use of either spouse; however, jewelry shall form part of the community property;

(3) Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property.
As held in Quiao v. Quiao:[34]
When a couple enters into a regime of absolute community, the husband and the wife becomes joint owners of all the properties of the marriage. Whatever property each spouse brings into the marriage, and those acquired during the marriage (except those excluded under Article 92 of the Family Code) form the common mass of the couple's properties. And when the couple's marriage or community is dissolved, that common mass is divided between the spouses, or their respective heirs, equally or in the proportion the parties have established, irrespective of the value each one may have originally owned.
Since the subject property does not fall under any of the exclusions provided in Article 92, it therefore forms part of the absolute community property of Shirley and Rogelio. Regardless of their respective contribution to its acquisition before their marriage, and despite the fact that only Rogelio's name appears in the TCT as owner, the property is owned jointly by the spouses Shirley and Rogelio.

Respondent and Rogelio were married on September 1, 1990. Rogelio, on his own and without the consent of herein respondent as his spouse, sold the subject property via a Deed of Absolute Sale dated December 29, 1992 - or during the subsistence of a valid contract of marriage. Under Article 96 of Executive Order No. 209, otherwise known as The Family Code of the Philippines, the said disposition of a communal property is voidviz.:
Art. 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance without the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.[35]
It is clear under the foregoing provision of the Family Code that Rogelio could not sell the subject property without the written consent of respondent or the authority of the court. Without such consent or authority, the entire sale is void. As correctly explained by the appellate court:
In the instant case, defendant Rogelio sold the entire subject property to defendant-appellant Josefina on 29 December 1992 or during the existence of Rogelio's marriage to plaintiff-appellee Shirley, without the consent of the latter. The subject property forms part of Rogelio and Shirley's absolute community of property. Thus, the trial court erred in declaring the deed of sale null and void only insofar as the 55.05 square meters representing the one-half (1/2) portion of plaintiff-appellee Shirley. In absolute community of property, if the husband, without knowledge and consent of the wife, sells (their) property, such sale is void. The consent of both the husband Rogelio and the wife Shirley is required and the absence of the consent of one renders the entire sale null and void including the portion of the subject property pertaining to defendant Rogelio who contracted the sale with defendant-appellant Josefina. Since the Deed of Absolute Sale x x x entered into by and between defendant-appellant Josefina and defendant Rogelio dated 29 December 1992, during the subsisting marriage between plaintiff-appellee Shirley and Rogelio, was without the written consent of Shirley, the said Deed of Absolute Sale is void in its entirety. Hence, the trial court erred in declaring the said Deed of Absolute Sale as void only insofar as the 1/2 portion pertaining to the share of Shirley is concerned.[36]
Finally, consistent with our ruling that Rogelio solely entered into the contract of sale with petitioner and acknowledged receiving the entire consideration of the contract under the Deed of Absolute Sale, Shirley could not be held accountable to petitioner for the reimbursement of her payment for the purchase of the subject property. Under Article 94 of the Family Code, the absolute community of property shall only be "liable for x x x [d]ebts and obligations contracted by either spouse without the consent of the other to the extent that the family may have been benefited x x x." As correctly stated by the appellate court, there being no evidence on record that the amount received by Rogelio redounded to the benefit of the family, respondent cannot be made to reimburse any amount to petitioner.[37]

WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed Decision and Resolution of the Court of Appeals dated May 14, 2010 and July 21, 2010, respectively, in CA-G.R. CV No. 70235 are AFFIRMED.

Costs against petitioner.


Velasco, Jr., (Chairperson), Peralta, Reyes, and Jardeleza, JJ., concur.

[1] Rollo, pp. 30-52. Penned by Associate Justice Celia C. Librea-Leagogo with Associate Justices Remedios A. Salazar-Fernando and Michael P. Elbinias concurring.

[2] Id. at 54-55. Penned by Associate Justice Celia C. Librea-Leagogo with Associate Justices Remedios A. Salazar-Fernando and Amy C. Lazaro-Javier concurring.

[3] Id. at 95-103. Penned by Judge Olga Palanca Enriquez.

[4] Folder of Exhibits, p. 1.

[5] Respondent initially sent US$3,500.00 and added P50,000.00 or a total of P150.000.00, rollo, pp. 33, 96.

[6] TSN, December 9, 1997, pp. 29 & 34.

[7] Deed of Absolute Sale, records, pp. 309 & 363.

[8] Social Security System.

[9] Records, p. 303.

[10] Docketed as JDRC Case No. 2510, Folder of Exhibits, pp. 18-20.

[11] Rollo, pp. 79-81.

[12] Rendered in JDRC Case No. 2510, Folder of Exhibits, pp. 21-24.

[13] Id. at 24.

[14] Rollo, p. 32.

[15] Entitled "Shirley B. Nuega v. Josefina V. Nobleza and Rogelio Nuega" and docketed] as Civil Case No. 96-274-MK, rollo, pp. 84-87; records, pp. 24-27.

[16] Rollo, p. 102.

[17] Id. at 49.

[18] Id. at 14.

[19] Spouses Raymundo v. Spouses Bandong, 553 Phil. 480, 495 (2007), citing Eastworld Motor Industries Corporation v. Skunac Corporation, 514 Phil. 605, 613 (2005). Emphasis supplied.

[20] Id., citing Potenciano v. Reynoso, 449 Phil. 396, 410 (2003).

[21] Sia Tio, et al. v. Abayata, et al., 578 Phil. 731, 747 (2008).

[22] PNB v. Heirs of Estanislao and Deogracias Militar, 526 Phil. 788, 796-797 (2006).

[23] Records, p. 49.

[24] Id. at 51.

[25] Supra note 19.

[26] Id. at 496.

[27] 490 Phil. 179(2005).

[28] Id. at 191.

[29] Id. at 191-192.

[30] Palon v. Nino, 405 Phil. 670, 682 (2001).

[31] Rollo, pp. 79-81.

[32] Id. at 79.

[33] Folder of Exhibits, p. 24.

[34] G.R. No. 176556, July 4, 2012, 675 SCRA 642, 667. Emphasis and underscoring omitted.

[35] Emphasis supplied.

[36] Rollo, pp. 45-46. Citations omitted. Underscoring in the original.

[37] Id. at 48-49.