Ruiz v. Dimailig
REITERATIONFacts
The Antecedents: Respondent Bernardo F. Dimailig (Bernardo) was the registered owner of a parcel of land covered by TCT No. T-361747. He entrusted the owner's copy of the TCT to his brother, Jovannie, for the intended sale of the property. Jovannie gave the title to Editha Sanggalang, a broker. In January 1998, the property was mortgaged to petitioner Evelyn V. Ruiz (Evelyn) via a Deed of Real Estate Mortgage (REM) without Bernardo's knowledge and consent. Bernardo alleged that his signature on the REM was forged as he was abroad at the time of its execution. Evelyn claimed she was a mortgagee in good faith and for value, having met Jovannie who assured her of Bernardo's ownership and the genuineness of the title. Procedural History: Bernardo filed a suit for annulment of the Deed of REM. The RTC dismissed Bernardo's complaint, holding Evelyn as a mortgagee in good faith. The CA reversed the RTC's decision, declaring the Deed of REM void and ordering the return of the owner's duplicate copy of the title to Bernardo. The CA found that Evelyn failed to verify the identity of the person who mortgaged the property and that the Deed of REM was forged. The Petition: Evelyn filed a Petition for Review on Certiorari, assailing the CA's decision and arguing that she is a mortgagee in good faith.
Issue(s)
Whether petitioner Evelyn V. Ruiz is a mortgagee in good faith. Whether the Deed of Real Estate Mortgage is void.
Ruling
The petition is without merit. The Court affirmed the Decision of the Court of Appeals, declaring the Deed of Real Estate Mortgage void and ordering the return of the owner's duplicate copy of TCT No. T-361747 to Bernardo F. Dimailig.
Ratio Decidendi
On the issue of whether petitioner Evelyn V. Ruiz is a mortgagee in good faith: The Court held that Evelyn failed to discharge the burden of proving her status as a mortgagee in good faith. Firstly, the Deed of REM was established as a forged instrument because Bernardo was abroad at the time of its execution, and his signature was demonstrably different from his genuine signature. The parties stipulated that Bernardo was not the one who signed as mortgagor. Secondly, Evelyn could not invoke the protection of a mortgagee in good faith because the title to the property remained registered in Bernardo's name and was not transferred to the impostor's name. The doctrine of mortgagee in good faith presupposes that the title has been transferred or registered in the name of the impostor. Thirdly, even if the property had been titled in the impostor's name, Evelyn failed to exercise the necessary diligence. She did not verify the identity of the person introduced as "Bernardo," who only presented a community tax certificate and a picture, and failed to present any identification card. She also ignored that "Bernardo" did not participate in negotiations, with Editha transacting on his behalf without a power of attorney. Furthermore, Evelyn remained in her vehicle during the ocular inspection and did not inquire from neighbors about the property's occupant or owner. Finally, Evelyn acted with haste in granting the loan and entering into the mortgage contract, a day after the supposed ocular inspection, without verifying the mortgagor's right over the property. On the issue of whether the Deed of Real Estate Mortgage is void: The Court affirmed the CA's ruling that the Deed of REM is a nullity and conveys no title because it was a forged instrument. A valid mortgage cannot arise unless the mortgagor has a valid title or ownership over the mortgaged property. Since the signature on the Deed of REM was forged and the mortgagor was an impostor without title, the mortgage is void. The principle of mortgagee in good faith does not apply when the mortgagor is an impostor who has not succeeded in obtaining a Torrens title in his name, and the title remains in the name of the rightful owner. Consequently, Bernardo, the registered owner, did not lose his title to the property.
Main Doctrine
A forged deed of real estate mortgage is a nullity and conveys no title. A mortgagee cannot invoke the protection of a mortgagee in good faith if the mortgagor is an impostor who has not succeeded in obtaining a Torrens title in his name, and if the mortgagee failed to exercise the diligence required to ascertain the identity of the mortgagor and the veracity of his title.