Duran v IAC

Doctrine: The fraudulent and forged document of sale may become the root of a valid title if the certificate has already been transferred from the name of the true owner to the name indicated by the forger.

Facts:

Circe Duran owned 2 parcels of land in Caloocan City which she had purchased form the Moja Estate. She left the Philippines in June 1854.  A Deed of Sale of the 2 lots was made in favor of Circe’s mother, Fe. In December 1965, Fe mortgaged the same property to Erlinda Marcelo-Tiangco. When Circe came to know about the mortgage, she wrote to the Register of Deeds (RD) of Caloocan informing that she had not given her mother any authority to sell or mortgage any of her properties. She failed to get an answer from the RD. So she returned to the Philippines in May 1966.

Meanwhile, Fe failed to redeem the mortgaged properties and foreclosure proceedings were initiated by Marcelo- Tiangco. 

Circe claims that the sale in favor of her mother is a forgery saying that at the time of its execution in 1963, she was in the US. Fe alleges that the signatures of Circe in the Deed are genuine and the mortgage made by Fe is valid.

Issue:

1.       Whether or not the mortgage is valid

2.       Whether or not Marcelo-Tiangco was a buyer in good faith and for value

Held:

1.       Yes, the mortgage is valid with respect to the mortgagees. There is a presumption of regularity in the case of a public document. The fraudulent and forged document of sale may become the root of a valid title if the certificate has already been transferred from the name of the true owner to the name indicated by the forger. Insofar as innocent 3^rd persons are concerned, the owner was already Fe inasmuch as she had become the registered owner (caused by the sale of Circe to Fe). The mortgagee had the right to rely upon what appeared in the cert. of title and did not have to inquire further.

2.       Good faith consists of the possessor’s belief that the person from whom he received the thing was the owner of the same and could convey his title. In the case, Marcelo-Tiangco in good faith relied on the cert. of title in the name of Fe.

*Circe was also guilty of estoppels by laches. Antero (husband of Circe) was in the Philippines in 1964 to construct an apartment on the disputed lots. He could have discovered the deed of sale sought to be set aside. They could also have intervened in the foreclosure suit but they did not.