Photo credit: SC

In a decision that reaffirms the importance of rightful ownership in land transactions, the Supreme Court (SC) has nullified a property sale after finding that the buyer knew the seller was not the true owner.

The SC’s Third Division, through a ruling penned by Associate Justice Maria Filomena D. Singh, canceled the sale of two parcels of land in Tacloban City made by Bayani S. Cerilla to Edward C. Ciacho. The Court held that Ciacho was fully aware the properties did not belong to Cerilla and, therefore, could not claim to be an innocent buyer.

The properties in question originally belonged to Adolfo T. De Guia, who had inherited them. When De Guia was at risk of losing the properties to foreclosure due to unpaid debts, he turned to Cerilla for financial assistance. To secure the needed funds, they signed a deed of sale that temporarily transferred the land titles to Cerilla.

Shortly after, however, they executed a separate agreement allowing De Guia to repurchase the properties. To protect this arrangement, De Guia even filed an adverse claim on the titles—an annotation meant to inform third parties of his legal interest in the land.

Later, another agreement followed, under which Cerilla would buy the properties outright for PHP 15 million—but only after De Guia managed to clear them of illegal settlers. Cerilla made an initial payment of PHP 1.675 million but the condition was never fulfilled.

As the situation dragged on, Cerilla sought a loan from Ciacho, using the properties as collateral. When Cerilla couldn’t repay the loan, Ciacho requested that he sign a deed of sale. Cerilla complied—but with a clear request: the titles should not be transferred to Ciacho’s name.

That request was ignored. Ciacho registered the properties under his name anyway. Upon learning this, De Guia filed a case before the Regional Trial Court (RTC), seeking to invalidate the sale. Both the RTC and later the Court of Appeals sided with De Guia, recognizing that Cerilla never had authority to sell the land and that Ciacho was not a buyer in good faith.

The Supreme Court upheld these rulings.

According to the Civil Code, a valid sale requires not only consent between parties but also authority from the seller—either as the true owner or as someone lawfully empowered to make the sale. In this case, the Court found no real intent to transfer ownership from De Guia to Cerilla. Instead, Cerilla merely acted as an “accommodation party”—someone who took legal title only to assist with a transaction, not to acquire ownership.

The SC also emphasized that Ciacho could not be considered an innocent purchaser for value. He had ample reason to doubt Cerilla’s ownership. The previous agreement between Cerilla and De Guia, along with the adverse claim annotated on the land titles, should have raised red flags. Despite this, Ciacho proceeded with the sale and later registered the properties under his name—against Cerilla’s own instructions.

The Court stressed: “To be considered an innocent purchaser for value, the buyer must not have notice of any defect in the seller’s title. If there’s anything on the certificate of title that creates doubt about the seller’s right or raises suspicion, the buyer is expected to inquire. Failure to do so removes that presumption of good faith.”

In a separate opinion, Associate Justice Alfredo Benjamin S. Caguioa suggested that De Guia consider filing a separate claim for damages against Cerilla. He explained that their arrangement amounted to an “implied trust”—a setup where one person holds title not for themselves alone, but on behalf of others. In this context, Cerilla, though named on the title, merely held it for De Guia’s benefit.

This ruling not only resolves the dispute but also serves as a reminder: the rightful ownership of property, especially when clearly documented, cannot be sidestepped by informal arrangements or ignored by buyers who choose not to ask questions.