CIVIL LAW-Innocent Purchaser In Good Faith and For Value, Presidential Decree (P.D.
)
1529
Heirs of Macalalad v. Rural Bank of Pola, Inc. and Register of Deeds of Oriental Mindoro
G.R. No. 200899, June 20, 2018
FACTS:
Paz Macalalad filed a Complaint for “Declaration of Nullity of TCT No. T-117484” alleging that she
is the sole surviving legal heir of one Leopoldo Constantino, Jr., who owned a parcel of land,
registered under TCT No. RT-124 (T-45233).
After the death of Leopoldo, it was made to appear that the latter sold the subject lot to the
Spouses Pimentel, in whose names a new TCT (No. T-96953) was issued; thereafter, the Spouses
Pimentel obtained a loan from herein respondent Rural Bank of Pola, Inc. and gave the subject
parcel of land as collateral for the said loan.
She also alleged that respondent bank, acting in bad faith, in utter disregard of its duty to
investigate the validity of the title of the Spouses Pimentel and without verifying the location of
the lot, accepted the same as collateral for the Spouses Pimentel’s loan, and then the Spouses
Pimentel failed to pay their loan, respondent bank foreclosed the mortgage over the subject
property where it (respondent bank) emerged as the highest bidder.
Consequently, respondent bank obtained ownership of the disputed lot and the TCT in the name
of the Spouses Pimentel was cancelled and a new one (TCT No. T-117484) was issued in
respondent bank’s name.
Paz contended that respondent bank be made to suffer the ill effects of its negligent acts by
praying that TCT No. T-117484 be cancelled and a new one be issued in the name of Leopoldo, the
original owner.
In its Answer, respondent bank denied the material averments in Paz’s complaint and claimed, in
its affirmative defense, that it is a mortgagee and purchaser in good faith, and it gave full faith and
credit to the duly registered TCT given by the Spouses Pimentel as evidence of their ownership of
the mortgaged property.
Respondent bank also argued that a title procured through fraud and misrepresentation can still
be the source of a completely valid and legal title if the same is in the hands of an innocent
purchaser for value.
The RTC dismissed the complaint for lack of merit.
On appeal, the CA affirmed the Decision of the RTC.
Petitioners’ Motion for Reconsideration was denied.
Hence, this petition.
ISSUE:
Whether or not the respondent bank is an Innocent Mortgagee for Value.
RULING:
The petition lacks merit.
This Court reiterates the settled principle that no one can give what one does not have.
1
Nemo dat quod non habet.
Stated differently, no one can transfer a right to another greater than what he himself has.
Applying this principle to the instant case, granting that the deed of sale in favor of the Spouses
Pimentel was forged, then, as discussed above, they could not have acquired ownership as well as
legal title over the same. Hence, they cannot give the subject property as collateral in the
mortgage contract they entered into with respondent bank.
However, there is an exception to the rule that a forged deed cannot be the root of a valid title –
that is when an innocent purchaser for value intervenes. Indeed, a forged deed can legally be the
root of a valid title when an innocent purchaser for value intervenes.
A purchaser in good faith and for value is one who buys the property of another without notice
that some other person has a right to or interest in such property and pays a full and fair price for
the same, at the time of such purchase, or before he has notice of the claims or interest of some
other person in the property. Under Section 32 of Presidential Decree (P.D.) 1529, the definition of
an innocent purchaser for value has been expanded to include an innocent lessee, mortgagee, or
other encumbrancer for value.
In the present case, even assuming that the deed of sale between Leopoldo and the Spouses
Pimentel was indeed forged, the same may, nonetheless, give rise to a valid title in favor of
respondent bank if it is shown that the latter is a mortgagee in good faith. Such good faith will
entitle respondent bank to protection such that its mortgage contract with the Spouses Pimentel,
as well as respondent bank’s consequent purchase of the subject lot, may no longer be nullified.
The settled rule is that the burden of proving the status of a purchaser in good faith lies upon one
who asserts that status, and this onus probandi cannot be discharged by mere invocation of the
legal presumption of good faith.
A purchaser in good faith is one who buys property without notice that some other person has a
right to or interest in such property and pays its fair price before he or she has notice of the
adverse claims and interest of another person in the same property.
The honesty of intention which constitutes good faith implies a freedom from knowledge of
circumstances which ought to put a person on inquiry.
It is, likewise, settled that every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige him to go
beyond the certificate to determine the condition of the property.
Where there is nothing in the certificate of title to indicate any cloud or vice in the ownership of
the property, or any encumbrance thereon, the purchaser is not required to explore further than
what the Torrens Title upon its face indicates in quest for any hidden defects or inchoate right
that may subsequently defeat his right thereto.
However, this rule shall not apply when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious person to make such inquiry or when the
purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to
induce a reasonably prudent person to inquire into the status of the title of the property in
litigation.
This Court finds no sufficient evidence to reverse the findings of both the RTC and the CA that
respondent bank indeed sent a representative to inspect the subject lot.
Thus, respondent bank is justified in believing that the title of the Spouses Pimentel is neither
invalid nor defective.
