Chua v. Marilao

 

Chua v. Marilao

G.R. No. 226886 (Notice)

April 26, 2022

 

FACTS:

After the death of Jorge Marilao in 1975, respondent Romulo Marilao and his family continued to reside in one of the apartments of the subject property and kept custody. In 2005, Romulo claimed that his mother, Salvacion, who was then living in Cubao with his sister, Mary, took the TCT to claim Jorge’s veteran benefits, but was never returned to him. He alleged that Salvacion and Mary, met with petitioner to borrow P600,000, using the same TCT and an unnotarized deed of absolute sale, which appeared to have been executed to secure the loan. After paying the loan, Mary borrowed again from Desiree which was secured with another Deed of Real Estate Mortgage on the same property. In August 2006, Romulo found that the TCT had already been cancelled and a new one was issued to Mary through a deed of absolute sale. Consequently, he registered a Notice of Adverse Claim. When Mary failed to pay the second loan, Desiree foreclosed the subject property and was the highest bidder in the foreclosure sale. Before the expiration of the one-year redemption period, Romulo filed a complaint with prayer for TRO / WPI before the RTC, to which the latter granted a 20-day TRO and enjoined the defendant-appellants to cease and desist from consolidating the new TCT in favor of Desiree. But before it was issued, Desiree was able to issue a new TCT under her name. A writ of possession and notice to vacate was implemented against Romulo, who was ejected from the subject property. Romulo filed an amended complaint before the RTC praying for the nullification of the sale between Mary and Desiree for being fraudulent and for the cancellation of the new TCT. The RTC declared the mortgage contract valid with respect to the proportionate share of Mary in the co-owned property and held that Desiree became a co-owner of the subject property by virtue of the sale through public auction. The CA ruled that Desiree is not a mortgagee or purchaser in good faith.

ISSUE:

Whether Desiree is a mortgagee and purchaser in good faith and for value as to enable her to have acquired a valid title over the whole subject property

HELD:

No. For the doctrine of mortgagee in good faith to apply, the following requisites must concur: (a) the mortgagor is not the rightful owner, or does not have a valid title to the property; (b) the mortgagor succeeded in obtaining a torrens title over the property; (c) the mortgagor succeeded in mortgaging the property to another person; (d) the mortgagee relied on what appears on the title and there exist no facts and circumstances and would compel a reasonably cautious man to inquire into the statues of the property; and (e) that the mortgage contract was registered. Here, the first requisite was absent. Mary could not have acquired ownership over the whole subject property since the lower court found that the deed of absolute sale was forged. As to the fourth requisite, even prior to the foreclosure of the mortgage and public auction, Desiree had been duly notified of Romulo’s adverse claim. Considering that Desiree is neither a mortgagee nor a purchaser in good faith for value, she cannot validly source her right to the subject property based on the forged deed of sale.