Dy vs. Aldea, GR No. 219500, August 9, 2017

Dy vs. Aldea, GR No. 219500, August 9, 2017 , citing Locsin vs. Hizon, GR No. 204369, September 17, 2014 

Digested by MLP

FACTS: Dy is the owner of Lot 5158 with an area of 6,738 square meters, and covered by TCT No. T-24849. In June 2005, Mamerto agreed to sell the subject land to his brothers Nelson Dy ad Sancho Dy, Jr. After asking copies of the tax declarations of the subject land from the Municipal Assessor’s Office, Nelson found out that the subject land had gone through a series of anomalous transactions. The owner’s duplicate copy of the same TCT was declared lost. As a result, a new owner’s duplicate copy of the same TCT was issued and the subject land was subsequently mortgaged. Later, it was found out that the said lot was sold to Lourdes by an impostor Mamerto. Issue: WON Lourdes is an innocent purchaser for value.

title was issued pursuant thereto. On the other hand, Francisco Bombast likewise filed a petition for reconstitution with CFI Rizal covering Lot No. 918 and the same was also granted. Bombast sold Lot No. 918 to Deo and the latter sold the lot to A & A Torrijos Engineering Corporation. On May 25 and 26, 1970, the State filed two petitions for the cancellation and annulment of the reconstituted titles and titles issued subsequent thereto. 

Issue: 

WHETHER LOURDES IS AN INNOCENT PURCHASER FOR VALUE WHO IS ENTITLED TO THE APPLICATION OF THE MIRROR DOCTRINE.

Ruling: 

No. Only an innocent purchaser for value may invoke the mirror doctrine. 

The real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto. As a consequence, the mirror doctrine provides that every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and is in no way obliged to go beyond the certificate to determine the condition of the property.

Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate. As such, a defective title, or one the procurement of which is tainted with fraud and misrepresentation — may be the source of a completely legal and valid title, provided that the buyer is an innocent third person who, in good faith, relied on the correctness of the certificate of title, or an innocent purchaser for value.

Thus, in order to resolve whether Lourdes holds an indefeasible title to the subject land, it becomes necessary to determine whether she is an innocent purchaser for value.

Lourdes cannot be considered a purchaser in good faith. In Nobleza v. Nuega,²² the Court defined an innocent purchaser for value, to wit:

An innocent purchaser for value is one who buys the property of another, without notice that some other person has a right or interest in the property, for which a full and fair price is paid by the buyer at the time of the purchase or before receipt of any notice of claims or interest of some other person in the property. It is the party who claims to be an innocent purchaser for value who has the burden of proving such assertion, and it is not enough to invoke the ordinary presumption of good faith. To successfully invoke and be considered as a buyer in good faith, the presumption is that first and foremost, the "buyer in good faith" must have shown prudence and due diligence in the exercise of his/her rights. It presupposes that the buyer did everything that an ordinary person would do for the protection and defense of his/her rights and interests against prejudicial or injurious concerns when placed in such a situation. The prudence required of a buyer in good faith is not that of a person with training in law, but rather that of an average man who 'weighs facts and circumstances without resorting to the calibration of our technical rules of evidence of which his knowledge is nil.' A buyer in good faith does his homework and verifies that the particulars are in order — such as the title, the parties, the mode of transfer and the provisions in the deed/contract of sale, to name a few. To be more specific, such prudence can be shown by making an ocular inspection of the property, checking the title/ownership with the proper Register of Deeds alongside the payment of taxes therefor, or inquiring into the minutiae such as the parameters or lot area, the type of ownership, and the capacity of the seller to dispose of the property, which capacity necessarily includes an inquiry into the civil status of the seller to ensure that if married, marital consent is secured when necessary. In fine, for a purchaser of a property in the possession of another to be in good faith, he must exercise due diligence, conduct an investigation, and weigh the surrounding facts and circumstances like what any prudent man in a similar situation would do.²³ [Emphases supplied and citations omitted]

In the case at bench, Lourdes was deficient in her vigilance as buyer of the subject land.

 Lourdes admitted that she did not conduct a thorough investigation and that she merely instructed her uncle to check with the Register of Deeds whether the subject land is free from any encumbrance.²⁴ Further, it must be noted that Lourdes met the seller only during the signing of the two deeds of sale.²⁵ Yet, she did not call into question why the seller refused to see her during the negotiation. For sure, an ordinary prudent buyer of real property who would be relinquishing a significant amount of money would want to meet the seller of the property and would exhaust all means to ensure that the seller is the real owner thereof.

Indeed, Lourdes conducted an ocular inspection of the subject land. When she asked Engracia Mondrel, the overseer, if she knows the owner, Engracia affirmed that the property is owned by a person named "Mamerto Dy." Noteworthy, however, is Lourdes' admission that the seller was not present when she talked to Engracia such that there was no way for the latter to ascertain whether she and Lourdes were talking about the same Mamerto Dy.²⁶

Another circumstance indicating that Lourdes was not an innocent purchaser for value was the gross undervaluation of the property in the deeds of sale at the measly price of P1,684,500.00 when the true market value was at least P5,390,400.00 for the entire property. Moreover, Lourdes initially decided to buy only half of the subject land or 3,369 square meters. When the impostor, however, insisted that she should buy the remaining half just because it would be difficult to divide the subject land, Lourdes readily acceded without questioning why the seller was willing to sell at P200.00 per square meter