AUSTINE M.

CAMPOS

JD2 – Lands, Titles and Deeds

Year 1991

Topic: Forged Deed

BAR QUESTION

Bruce is the registered owner, of a parcel of land with a building thereon

and is in peaceful possession thereof. He pays the real estate taxes and collects
the rentals therefrom. Later, Catalino, the only brother of Bruce, filed a
petition where he, misrepresenting to be the attorney-in-fact of Bruce and
falsely alleging that the certificate of title was lost, succeeded in obtaining a
second owner's duplicate copy of the title and then had the same transferred in
his name through a simulated deed of sale in his favor. Catalino then mortgaged
the property to Desiderio who had the mortgage annotated on the title. Upon
learning of the fraudulent transaction, Bruce filed a complaint against Catalino
and Desiderio to have the title of Catalino and the mortgage in favor of Desiderio
declared null and void.

Will the complaint prosper, or will the title of Catalino and the
mortgage to Desiderio be sustained?

ANSWER

The complaint for the annulment of Catalino's Title will prosper. In the
first place, the second owner's copy of the title secured by him from the
Land Registration Court is void ab initio, the owner's copy thereof having never
been lost, let alone the fact that said second owner's copy of the title was
fraudulently procured and improvidently issued by the Court. In the second place,
the Transfer Certificate of Title procured by Catalino is equally null and
void, it having been issued on the basis of a simulated or forged Deed of
Sale. A forged deed is an absolute nullity and conveys no title.

The mortgage in favor of Desiderio is likewise null and void because

the mortgagor is not the owner of the mortgaged property. While it may
be true that under the "Mirror Principle" of the Torrens System of Land
Registration, a buyer or mortgagee has the right to rely on what appears on the
Certificate of Title, and in the absence of anything to excite suspicion, is
under no obligation to look beyond the certificate and investigate the
mortgagor's title, this rule does not find application in the case at hand
because here. Catalino's title suffers from two fatal infirmities, namely:

1. The fact that it emanated from a forged deed of a simulated sale;

 2. The fact that it was derived from a fraudulently procured or improvidently
issued second owner's copy, the real owner's copy being still intact
and in the possession of the true owner, Bruce.

The mortgage to Desiderio should be cancelled without prejudice to his

right to go after Catalino and/or the government for compensation from the
assurance fund.

Related Jurisprudence

Mariano Torres Y Chavarria, petitioner.

vs.

The Honoroble Court of Appeals, Francisco E. Fernandez and Fe Fernandez,

Rosario Mota Cue, Ernesto Medina Cue and the National Treasurer, as
Custodian of the Assurance Fund, respondents.

Facts:

The subject property of this case was covered by TCT No. 53628
registered in the name of Mariano Torres. He religiously pays the real estate
taxes due and collects rentals from his tenants occupying building erected
thereon known as “M. Torres Building”.

Sometime in 1966 his brother-in-law, Francisco Fernandez filed a petition with

the Court of First Instance of Manila where he, misrepresenting to be the
attorney-in-fact of Torres and falsely alleging that the owners’ duplicate was lost
succeeded in obtaining a court Order for the issuance of another copy of TCT
No. 53628.

He then forged a simulated deed of sale purportedly showing that Torres

had sold the property to him and caused the cancellation of TCT No. 53628, as
well as the issuance of TCT No. 86018 in his name. Soon, Fernandez mortgaged
the property to Mota. Upon learning of the fraud committed by Fernandez, Torres
caused the annotation of an adverse claim on the former’s copy and succeeded
in having Fernandez’s title declared null and void. Meanwhile, Mota was able to
foreclose on Fernandez’s real estate mortgage, as well as to cause the
cancellation of TCT No. 86018 and the issuance of a new one in her name.

Issues:

1. Whether or not Mota can be considered an innocent mortgagee for

value; and
2. Whether or not Mota’s title over the said land can be deemed valid
Held:

For both issues raised, the Supreme Court ruled in the negative.

There is nothing on the records which shows that Torres performed any
act or omission which could have jeopardized his peaceful dominion over his
realties. The decision under review, however, in considering Mota an innocent
mortgagee protected under Section 65 of the Land Registration Law, held that
Torres was bound by the mortgage. Inevitably, it pronounced that the foreclosure
sale, where Mota was the highest bidder, also bound Torres and concluded that
the certificate of title issued in the name of Mota prevails over that of Torres’.

As correctly pointed out by Torres, however, his properties were sold on

execution, and not on foreclosure sale, and hence, the purchaser thereof was
bound by his notice of adverse claim and lis pendens annotated at the back of
Fernandez’ TCT. Moreover, even if We grant Mota the status of an innocent
mortgagee, the doctrine relied upon by the appellate court that a forged
instrument may become the root of a valid title, cannot be applied where the
owner still holds a valid and existing certificate of title covering the same interest
in a realty.

The doctrine would apply rather when the forger thru insidious means
obtains the owner’s duplicate certificate of title, converts it in his name, and
subsequently sells or otherwise encumbers it to an innocent holder for value, for
in such a case the new certificate is binding upon the owner. But if the owner
holds a valid and existing certificate of title, his would be indefeasible as against
the whole world, and not that of the innocent holder’s.

A certificate is not conclusive evidence of title if it is shown that the same

land had already been registered and an earlier certificate for the same land is in
existence. As between two persons both of whom are in good faith and both
innocent of any negligence, the law must protect and prefer the lawful holder of
registered title over the transfer of a vendor bereft of any transmissible rights

In view of the foregoing, to hold, for the purpose of enforcing the mortgage,
that Mota was an innocent mortgagee would be futile because, as above shown,
no certificate of title covering the subject realties in derogation of Torres’
certificate of title may validly be issued. Then it becomes evident that the
remaining possible remedies of the Cues are to go against Fernandez or the
Assurance Fund.