UP Law F2021 080 Bornales vs.

IAC
LTD–Certificate of Title Incontrovertible & indefeasible 1988 Cortes

SUMMARY
The subject land was part of the conjugal properties of Sixto and Isabel. The common law wife of Sixto, Placida, forged the
Deed of Extrajudicial Adjudication and Sale of Real Property and sold the land to several spouses. The latter subsequently
sold the land to petitioner spouses Bornales. Isabel sought for the reconveyance of the land, alleging forgery of the said
Deed. The spouses claimed that they were not purchasers in bad faith. The Court ruled in favor of Isabel, citing certain
circumstances which showed the knowledge of the spouses of the defect in the title of their vendors. It is a settled rule
that the defense of indefeasibility of a certificate of title does not extend to a transferee who takes it with notice of the
flaws in his transferor's title.
FACTS
 The subject land located in Capiz was originally awarded in 1927 to Sixto Dumulong, married to Isabel Marquez,
to whom OCT No. 6161 was issued. Sixto and Isabel, with no child, had lived separately since 1920. Sixto
cohabited with Placida Dumolong with whom he had a sone, Renito Dumolong.

 In 1978, Renito and Placida executed a “Deed of Extrajudicial Adjudication and Sale of Real Property,” which was
purportedly a settlement of the conjugal estate of Sixto and Isabel. Subsequently, the land was sold to spouses
Carlito Patanao and Minda Dumolong and to spouses Bernardo Decrepito and Loreta Dumolong. TCT T-15856
was issued to the spouses. Three months later, the spouses sold the subject lot to petitioner-spouses Antonio
Bornales and Florenda Diaz Bornales through a Deed of Absolute Sale. Bornales eventually secured TCT No.
15596 in their names.

 Private respondent Isabel filed in 1980 an action for reconveyance and damages against Placida, Renito, and the
spouses, including the Bornales spouses. Isabel alleged forgery in the execution of the Deed of Extrajudicial
Adjudication and Sale of Real Property. The lower court ruled in favor of Isabel and declared all the spouses
purchasers in bad faith. The appellate court affirmed the decision of the lower court but with modifications that
the land was the exclusive property of Sixto.

RATIO
W/N the petitioner spouses are purchasers in bad faith - YES
The Court adapted the findings of the CA in that the land was sold barely 3 months after the execution of the deed of
extra-judicial settlement. The land was registered in the names of the spouses Carlito and Minda and spouses
Bernardo and Loreta on November 10, 1978. On February 21, 1979, the spouses sold the land to the petitioner
Bornales on February 21, 1979.
The CA also found that petitioner spouses Bornales have been the tenants/lessees of the land even during Sixto’s
lifetime. Having been the cultivators of the land, it is unimaginable that the petitioners would have been unaware of
the transactions affecting the land. It appears that they were aware that Isabel was the legal wife of Sixto and was a
rightful heir to the properties of the latter. In fact, the petitioner spouses even went to see Isabel in 1980 to secure
her signature and conformity to the Extra-Judicial Adjudication and Sale of Real Property.
The Court held that the fact alone that they purchased the property with full knowledge of the flaws and defect in the
title of their vendors is enough proof of their bad faith. Having bought the land registered under the Torrens system
from their vendors who procured title thereto by means of fraud, petitioners cannot invoke the indefeasibility of a
certificate of title against the private respondent to the extent of her interest therein. The Torrens system of land
registration should not be used as a means to perpetrate fraud against the rightful owner of real property.
Registration, to be effective, must be made in good faith. Thus, it is a settled rule that the defense of indefeasibility
of a certificate of title does not extend to a transferee who takes it with notice of the flaws in his transferor's title. If
at all, the petitioners only acquire the right which their vendors then had.

FALLO
Wherefore, finding no reversible error in the appealed decision, the Court resolved to deny the petition for review for
lack of merit and affirm the Court of Appeals Decision dated April 1, 1986.