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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
A buyer of registered and titled land MUST explore beyond the four corners of the title if ANY of the following conditions are present:
- the seller is not the registered owner of the land;
- the seller is not in possession thereof; and
- at the time of the sale, the buyer was aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property.
Failure to exercise such degree of precaution makes him a buyer in bad faith. Trifonia D. Gabutan, et al. v. Dante D. Nacalaban, et al.(G.R. Nos. 185857-58, June 29, 2016)
A purchaser in good faith and for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same, at the time of such purchase, or before he has notice of the claims or interest of some other person in the property.
Under Section 32 of Presidential Decree (P.D.) 1529, the definition of an innocent purchaser for value has been expanded to include an innocent lessee, mortgagee, or other encumbrancer for value.
He buys the property with the well-founded belief that the person from whom he receives the thing had title to the property and capacity to convey it.
Jurisprudence provides that, in order to prove good faith, a buyer of registered and titled land need only show that he relied on the face of the title to the property. He need not prove that he made further inquiry for he is not obliged to explore beyond the four corners of the title. Such degree of proof of good faith, however, is sufficient only when the following conditions concur:
first, the seller is the registered owner of the land;
second, the latter is in possession thereof; and
third, at the time of the sale, the buyer was not aware of any claim or interest of some other person in the property, or of any defect or restriction in the title of the seller or in his capacity to convey title to the property.
Absent one or two of the foregoing conditions, then the law itself puts the buyer on notice and obliges the latter to exercise a higher degree of diligence by scrutinizing the certificate of title and examining all factual circumstances in order to determine the seller’s title and capacity to transfer any interest in the property. Under such circumstance, it is no longer sufficient for said buyer to merely show that he relied on the face of the title; he must now also show that he exercised reasonable precaution by inquiring beyond the title. Failure to exercise such degree of precaution makes him a buyer in bad faith.
Trifonia D. Gabutan, et al. v. Dante D. Nacalaban, et al.(G.R. Nos. 185857-58, June 29, 2016)
Read also: Who is a purchaser in good faith and how are they protected by law?
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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