Locsin v. Hizon
REITERATIONFacts
The Antecedents: Petitioner Enriqueta M. Locsin was the registered owner of a lot. She filed an ejectment case against Billy Aceron, which was settled by a compromise agreement. Locsin later discovered that her title was cancelled by Marylou Bolos, who registered a Deed of Absolute Sale allegedly executed by Locsin. Bolos then sold the property to Bernardo Hizon, who had it titled in his son Carlos Hizon's name. Bernardo Hizon filed a motion for execution of the compromise agreement between Locsin and Aceron. Subsequently, Carlos Hizon sold the property to respondents Spouses Jose Manuel and Lourdes Guevara, who obtained a new title and mortgaged the property. Locsin filed an action for reconveyance, annulment of title, cancellation of mortgage, and damages, alleging forgery of her signature in the deed of sale to Bolos. Procedural History: The Regional Trial Court (RTC) dismissed Locsin's complaint, finding insufficient evidence of forgery, upholding the presumption of regularity of the notarized deed, and concluding that the transfers were valid and the respondents were innocent purchasers in good faith. The Court of Appeals (CA) reversed the RTC's finding on forgery but affirmed the conclusion that the respondents were innocent purchasers for value, citing the mirror doctrine. The CA held that Locsin could no longer recover the property. The Petition: Petitioner Locsin filed a Petition for Review on Certiorari, arguing that Bernardo Hizon was aware of a possible defect in Bolos' title due to Aceron's possession and Bernardo's own motion to enforce the compromise agreement. She contended that Bernardo's refusal to inquire beyond the face of the title indicated a lack of prudence. She also argued that the transfer from Carlos to the Spouses Guevara was simulated.
Issue(s)
Whether respondents are innocent purchasers for value. Whether the transfer of title from Carlos Hizon to the Spouses Guevara was simulated. Whether petitioner is entitled to damages.
Ruling
The petition is meritorious. The assailed Decision and Resolution of the Court of Appeals are reversed and set aside. TCT No. N-200074 in the name of Marylou Bolos, and the titles descending therefrom, namely, TCT Nos. N-205332 and N-237083 in the name of Carlos Hizon, and the Spouses Jose Manuel & Lourdes Guevara, respectively, are declared NULL and VOID. Respondents are directed to surrender possession of the subject property to petitioner. Respondents Bernardo Hizon, Carlos Hizon, and the spouses Jose Manuel and Lourdes Guevara shall jointly and severally pay petitioner PhP 75,000 as nominal damages, PhP 75,000 as attorney's fees, and costs of suit. The Register of Deeds of Quezon City is ordered to cancel TCT No. N-237083, reinstate TCT No. RT-97467, and reissue it in favor of petitioner.
Ratio Decidendi
On the issue of whether respondents are innocent purchasers for value: The Court found that Carlos Hizon, through his agent Bernardo Hizon, was aware of facts and circumstances that should have impelled him to investigate further. Bernardo knew that Aceron was in possession of the lot and that Locsin had entered into a compromise agreement with Aceron regarding possession, despite the purported sale to Bolos years earlier. This knowledge, imputed to Carlos, meant he could not claim to be an innocent purchaser for value. The Court emphasized that the principal is bound by the knowledge of his agent. The inconsistent positions taken by Bernardo and Carlos – arguing for the validity of the sale to Bolos while simultaneously seeking enforcement of the compromise agreement involving Locsin – further demonstrated a lack of good faith. The Court noted that if Bolos owned the property, she should have been the one entering into the compromise agreement, not Locsin. On the issue of whether the transfer of title from Carlos Hizon to the Spouses Guevara was simulated: The Court found the transfer highly suspicious due to a dearth of evidence. No document, contract, or deed evidencing the sale or the payment of the purchase price was presented. The Court also highlighted the suspicious timing of the transfer, occurring only fifteen days after Locsin demanded the return of the property. Bernardo Hizon's promise of a "win-win situation" while knowing the property had already been transferred to his daughter and son-in-law was considered glaring evidence of bad faith. The familial relationship between Lourdes Guevara and Carlos Hizon, coupled with Bernardo acting as Carlos' agent, made it incredible that Lourdes had no knowledge of Locsin's claim. The spouses Guevara's lack of interest in protecting their claim and their appointment of Bernardo as their attorney-in-fact, without even presenting Jose Manuel Guevara as a witness, further indicated they were not bona fide purchasers. The Court also viewed the mortgage to Damar Credit Corporation as a ploy, given its proximity to the title's issuance and its subsequent cancellation due to non-use of the credit line. On the issue of whether petitioner is entitled to damages: The Court found that petitioner failed to specifically pray for moral damages and did not present evidence of physical suffering, mental anguish, or besmirched reputation. Therefore, moral damages could not be awarded. Similarly, exemplary damages, which are accessory to moral damages, could not be awarded. However, the Court found an award for nominal damages to be in order, recognizing that petitioner's property rights were technically violated and she was unduly deprived of ownership for almost ten years, compelling her to litigate. Despite the failure to quantify actual or compensatory damages, the unlawful invasion of her property rights entitled her to nominal damages. The Court awarded PhP 75,000.00 as nominal damages, PhP 75,000.00 as attorney's fees, and costs of suit, holding respondents jointly and severally liable.
Main Doctrine
Respondents failed to exercise the diligence of a reasonably prudent person in verifying the authenticity of the title, thus barring them from the protection accorded to innocent purchasers for value, despite the Torrens title being clean on its face. The circumstances surrounding the transfer of title, including the knowledge of possession by another and the inconsistent positions taken by the parties, should have impelled them to inquire further.