GR 213286; (August, 2015) (Digest)
G.R. No. 213286 , August 26, 2015
Mamerta Lopez Claudio, Eduardo L. Claudio, Asuncion Claudio-Contegino, Ana Claudio-Isulat, Dolores Claudio-Mabini, and Fermin L. Claudio, Petitioners, vs. Spouses Federico and Norma Saraza, Respondents.
FACTS
Petitioners filed a complaint for annulment of sale, power of attorney, and mortgage against Florentino Claudio and respondent Spouses Saraza. They alleged that Florentino forged the signatures of his parents, Porfirio (deceased) and Mamerta (abroad), on a Deed of Absolute Sale dated October 2003, covering a parcel of land in Pasay City (TCT No. 142989), and that the sale was without consideration. Florentino then used the property to secure a loan from Spouses Saraza via a Real Estate Mortgage executed on June 22, 2004. TCT No. 142989 was cancelled and TCT No. 145979 was issued in Florentino’s name only on June 28, 2004. After Florentino failed to redeem the property, it was consolidated in favor of Spouses Saraza. Petitioners claimed Spouses Saraza were mortgagees in bad faith as they knew Florentino could not have validly acquired the property and failed to conduct a credit investigation. After petitioners presented their evidence, Spouses Saraza filed a Demurrer to Evidence, which the Regional Trial Court (RTC) granted, dismissing the complaint against them. The Court of Appeals (CA) affirmed the RTC, holding that Spouses Saraza were mortgagees in good faith who could rely on TCT No. 145979 issued in Florentino’s name.
ISSUE
Whether the Court of Appeals erred in affirming the RTC’s grant of the Demurrer to Evidence and in ruling that respondent Spouses Saraza were mortgagees in good faith.
RULING
Yes. The Supreme Court granted the petition, reversed the CA decision, and reinstated the civil case against Spouses Saraza. The Court held that the doctrine of a mortgagee in good faith, which allows reliance on the face of a Torrens certificate of title, presupposes that the mortgagor is already the registered owner at the time the mortgage is constituted. The evidence clearly showed that the Real Estate Mortgage was executed on June 22, 2004, while TCT No. 145979 in Florentino’s name was issued only on June 28, 2004. Therefore, at the time of the mortgage, Florentino was not yet the registered owner, and Spouses Saraza could not claim to be mortgagees in good faith entitled to rely on a certificate of title not yet in existence. Their failure to verify Florentino’s ownership and authority at the time of the transaction negated good faith. The petitioners’ evidence, if uncontroverted, was sufficient to warrant a judgment in their favor. The case was remanded to the RTC for further proceedings.