Manila: The Supreme Court (SC) has ruled that the sale of land is invalid if the buyer knew that the seller was not the real owner.
According to Philippines News Agency, in a decision made public on Wednesday, the SC's Third Division cancelled the sale made by Bayani Cerilla to Edward Ciacho after it found that Ciacho knew the sold properties did not belong to Cerilla. The case involves two parcels of land in Tacloban City inherited by Adolfo de Guia.
When the properties were about to be foreclosed due to unpaid debt, de Guia asked Cerilla to help by paying off the mortgage. They signed a deed of sale, and the land titles were transferred to Cerilla's name. They later signed another agreement to resell the land to de Guia. To protect his rights under this new agreement, de Guia filed an adverse claim on the titles.
Later, they entered into another agreement where Cerilla would buy the properties from de Guia for PHP15 million but only after de Guia removed the illegal settlers from the properties. Cerilla gave de Guia PHP1.675 million as partial payment. When de Guia failed to remove the illegal settlers, Cerilla asked Ciacho for a loan, using the properties as collateral. However, Cerilla could not pay back the loan, so Ciacho asked Cerilla to sign a deed of sale on the properties. Cerilla agreed, but asked Ciacho not to transfer the properties under his name.
Despite this, Ciacho registered the lands under his name. When de Guia found out, he filed a case with the Regional Trial Court (RTC) to invalidate the sale. The RTC and the Court of Appeals ruled in de Guia's favor. They held that Cerilla had no authority to sell the properties as he was just an 'accommodation party,' or someone who helped with the paperwork but was not the real owner. They also said that Ciacho was not an innocent buyer because he knew de Guia had a legal claim on the properties. The SC upheld their rulings.
"Under the Civil Code, for a sale to be valid, the parties must clearly agree to the sale. The parties' actions during and after the agreement can serve as basis to determine their intent. The seller must also be the owner of the property or have authority to sell it," the SC said.
"In this case, there was no real intention to transfer ownership from de Guia to Cerilla. Even after the land titles were transferred under his name, Cerilla did not act as if he owned the lands. He was just helping with the paperwork to facilitate the sale of the properties. This was supported by the fact that the properties were quickly re-sold to de Guia."
Further, Cerilla asked Ciacho not to register the properties under his name, which shows that de Guia remained the true owner. "Clearly, Cerilla did not have authority to sell the properties to Ciacho. De Guia, on the other hand, could not have approved the sale since he filed a case to cancel the deed of sale between Cerilla and Ciacho," the SC said.
The SC added that Ciacho cannot claim to be an innocent buyer because he was aware of facts that should have raised doubts about Cerilla's ownership of the properties. He knew about the earlier sale between Cerilla and de Guia and should have questioned the resale. Ciacho also knew about de Guia's legal claim as annotated on the titles.
"Generally, to be considered an innocent purchaser for value, the buyer does not have any notice of defect or irregularity as to the right or interest of the seller, and the buyer is without notice that a third party has a claim to the subject property. Thus, if there is anything on the certificate of title that leads to suspicion or raises any cloud on the title, right or ownership of the subject property, the buyer cannot be deemed as an innocent purchaser for value," the SC said.
