The case involved a 2,660 square meters parcel of land situated in Matandang Balara, Quezon City and known as lot 23. Two different persons with exactly the same name, i.e. Victor Gregorio, each claimed ownership of lot 23 by virtue of an owner’s duplicate certificate each of them possessed. Victor Gregorio with address at Angono Rizal (VG I) held TCT 9780 of the Manila Registry because Matandang Balara was then part of Manila. Victor Gregorio from Cebu (VG II) had TCT No. 9780 (693) of the Quezon City Registry because the creation of Quezon City found lot 23 within its borders thus transferring the property records to this new political unit. The technical description of the land in one title corresponds exactly with that of the other. The date "June 14, 1944" appears on the face of both titles as a common date of entry.
On April 17, 1979, VG II executed a deed of sale over the lot described in TCT 9780(693) in favor of his nephew Lito. The sale notwithstanding, the owner’s duplicate remained for sometime with VG II.
On February 11, 1986, VG I sold the same property described in TCT 9780 to Berto, Rodolfo and Mando. To assure himself of the genuineness of VG I’s title, Berto went to Quezon City to compare the copy with the original on file with the registry and discovered that the only difference was that the original had "9780 (693)" typewritten on a straight line. VG I told Berto that "693" was not affixed on his title because he never presented the same to the QC Registry for affixture of said number. Before concluding the sale, Berto asked for identity of VG I and together with him proceeded to the land site where residents/ caretaker of the place assured him that VG I was actually the land owner.
On June 11, 1988 fire gutted a portion of QC hall and destroyed in the process the original of TCT 9780 (693). Barely a month later, Lito assisted by a certain engineer filed an application for reconstitution signed by VG II of the burned original on the basis of the latter’s duplicate certificate. After due proceedings and follow up by a personnel in the Land Registration Authority, TCT 9780 (693) was reconstituted as TCT RT-1764.
On May 26, 1989, the Deed of Sale executed by VG II in favor of Lito was registered and a new TCT (No. 12183) was issued in Lito’s name. Thereafter, lot 23 was subdivided into three lots 23 A, B, and C, with TCT Nos. 14414, 14415 and 14416 respectively. Each of the new title bears the annotation that it was administratively reconstituted. Lito posthaste sold lot 23-A to Remy who, pursuant to a contract to sell dated March 23, 1990, undertook to pay Lito the P.5 million balance of the P2.5 million purchase price once she is placed in possession of the fenced off property. This contract to sell was not registered or annotated at the back of the Title.
But when Lito’s hired hands tried to fence the property sometime in May 1990, Berto and his agents forcibly prevented them. Berto, Rodolfo and Mando also caused the annotation of their adverse claims on Lito’s TCT Nos. 14414, 14415, and 14416. Then they filed with the RTC of Quezon City a suit for quieting of title and annulment of Lito’s fake titles. Remy intervened in the suit and claimed that she was a purchaser in good faith and for value of lot 23-A. She claimed that she bought the property without notice that Berto, Rodolfo and Mando have a right to or interest in the property at the time of the purchase or before she had notice of their claim or interest. Was Remy correct?
No. TCT 14414 covering lot 23-A that Remy contracted to buy from Lito carried an annotation that it was administratively reconstituted. Remy also knew that at the time of the sale Lito did not have possession of the lot inasmuch as she agreed to pay the balance of the purchase price as soon as Lito can fence off the property and surrender physical possession thereof to her. Even for these two reasons alone, which should have placed Remy on guard respecting Lito’s title, her claim of being a purchaser in good faith and for value must fail. A purchaser of a property cannot be in good faith where the title thereof shows that it was reconstituted (Republic vs. Court of Appeals 94 SCRA 865). Furthermore, the "contract to sell" in favor of Remy is unregistered and not annotated at the back of the title of the property. Hence it cannot adversely affect Berto, Mando and Rodolfo for the reason that under Section 51 of the Property Registration Act (PD 1529) the act of registration shall be the operative act to convey or affect the land in so far as third parties are concerned. So Rodolfo, Berto and Mando are indeed the rightful owners and possessors of the land described in TCT 9780 and TCT 14414, 14415, and 14416 in the name of Lito are null and void and should be stricken out of the Registry of Deeds (Premiere Development Bank vs. Court of Appeals et. al. G.R. 128122, March 18, 2005. 453 SCRA 630).