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Mirror Doctrine

General Rule: every person dealing with registered land may safely rely on the
correctness of the certificate of title issued therefor and the law will in no way oblige
him to go beyond the certificate to determine the condition of the property.
Exceptions:
1. When a person who deals with registered land through someone who is not
the registered owner, he is expected to look behind the certificate of title and
examine all the factual circumstances, in order to determine if the vendor has
the capacity to transfer any interest in the land. He has the duty to ascertain
the identity of the person with whom he is dealing and the latters legal
authority to convey
The law requires a higher degree of prudence from one who buys from
a person who is not the registered owner, although the land object of
the transaction is registered. While one who buys from the registered
owner does not need to look behind the certificate of title, one who
buys from one who is not the registered owner is expected to examine
not only the certificate of title but all factual circumstances necessary
for him to determine if there are any flaws in the title of the transferor,
or in his capacity to transfer the land. The strength of buyers inquiry
on the sellers capacity or legal authority to sell depends on the proof
of capacity of the seller. If the proof of capacity consists of a special
power of attorney duly notarized, mere inspection of the face of such
public document already constitutes sufficient inquiry. If no such
special power of attorney is provided or there is one but there appear
flaws in its notarial acknowledgment, mere inspection of the document
will not do; the buyer must show that his investigation went beyond
the document and into the circumstances of its execution. (Chua vs.
Soriano, G.R. NO. 150066, 2007)
2. This principle does not apply when the party has actual knowledge of facts
and circumstances that would impel a reasonably cautious man to make such
inquiry or when the purchaser has knowledge of a defect or the lack of title in
his vendor or of sufficient facts to induce a reasonably prudent man to inquire
into the status of the title of the property in litigation.
One who falls within the exception can neither be denominated an
innocent purchaser for value nor a purchaser in good faith. (Sps.
Villamil vs. Velasco, G.R. No. 177187, 2009)
3. In case of Banking institutions, banks should to investigate, examine and
assess the real estate offered as security for the application of a loan.
We cannot overemphasize the fact that the Bank cannot barefacedly
argue that simply because the title or titles offered as security were
clean of any encumbrances or lien, that it was thereby relieved of
taking any other step to verify the over-reaching implications should
the subdivision be auctioned on foreclosure. (Homebankers Saving &
Trust Co. vs. CA, G.R. No. 128354, 2005)
4. In case of Financing institutions, when the purchaser or mortgagee is a
financing institution, the general rule that a purchaser or mortgagee of land is

not required to look further than what appears on the face of the title does
not apply. It is presume that it is experienced in its business. Ascertainment
of the status and condition of properties offered to it as security for the loans
it extends must be a standard and indispensable part of its operations.
SORIANO v CHUA
Soriano owned a 1,600 square meter parcel of land located in Quezon City,
covered by Transfer Certificate of Title (TCT). Sometime in the early months of 1988,
Sorianos first cousin and godson, Emmanuel C. Celestino, Sr. asked Soriano to lend
him TCT No. 363471 as a security for a loan to be used in the business operation of
Celestino. Acceding to Celestinos request, Soriano executed on March 29, 1988 a
Special Power of Attorney (SPA) authorizing Celestino to mortgage said property.
In June 1988 the Quezon City Hall was on fire and destroyed in the process
the original copies land titles on file with the Registry of Deeds of Quezon City,
including that of Sorianos TCT.
A Special Power of Attorney was executed that reconstituted the title.
Soriano eventually found out that the land property was sold by Celestino to
the Chua spouses. Claiming that his signature in the SPA is a forgery, Soriano filed
on August 20, 1990 a complaint against Celestino and the Chuas for annulment of
deed of sale and special power of attorney, cancellation of title and reconveyance
with damages.
The defense of Celestino is that he was duly authorized to sell the property
while the Chuas contend that they are purchasers in good faith since they bought
the property from Celestino by virtue of a SPA which was duly inscribed and
annotated on the owner's duplicate of the TCT and the tax declaration and that they
have duly inspected the property before purchasing it.
ISSUE:
Whether or not the Chua spouses are purchasers in good faith
HELD:
The SC granted the petition and declared the Chua spouses as purchasers in
good faith. Being purchasers in good faith, the Chua spouses already acquired a
valid title to the property. The reliance by the Chuas on the notarial
acknowledgment found in the duly notarized SPA presented by Celestino is sufficient
evidence of good faith. The Chuas need not prove anything more for it is already the
function of the notarial acknowledgment to establish the appearance of the parties
to the document, its due execution and authenticity.

San Lorenzo Development Corporation vs. CA

FACTS:

The Spouses Lu allegedly sold the two parcels of land to respondent


Babasanta. Babasanta made a down payment of P50,000 as evidenced by a
memorandum receipt issued by Pacita Lu of the same date. Several other payments
totaling two hundred thousand pesos (P200,000.00) were made by Babasanta.
Sometime in May 1989, Babasanta wrote a letter to Pacita Lu to demand the
execution of a final deed of sale in his favor so that he could effect full payment of
the purchase price. In the same letter, Babasanta notified the spouses about having
received information that the spouses sold the same property to another without his
knowledge and consent. He demanded that the second sale be cancelled and that a
final deed of sale be issued in his favor.
In response, Pacita Lu wrote a letter to Babasanta wherein she acknowledged
having agreed to sell the property to him at P15.00 per square meter. She, however,
reminded Babasanta that when the balance of the purchase price became due, he
requested for a reduction of the price and when she refused, Babasanta backed out
of the sale. Pacita added that she returned the sum of fifty thousand pesos
(P50,000.00) to Babasanta through Eugenio Oya.
Babasanta filed Complaint for Specific Performance and Damages. Petitioner
San SLDC filed a
Motion for Intervention. SLDC alleged that it had legal interest in the subject matter
under litigation because the two parcels of land involved had been sold to it in a
Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in good faith and
for value and therefore it had a better right over the property in litigation.
Issues:
(1) Whether or not there was a transfer of ownership through the issuance of
memorandum receipt.
(2) Whether or not the petitioner has a better right over the parcels of land in the
case of double sale

Held:
(1) No. Respondent Babasanta did not acquire ownership by the mere execution of
the receipt by PacitaLu acknowledging receipt of partial payment for the property.
For one, the agreement between Babasanta and the Spouses Lu, though valid, was
not embodied in a public instrument. Hence, no constructive delivery of the lands
could have been effected. For another, Babasanta had not taken possession of the
property at any time after the perfection of the sale in his favor or exercised acts of
dominion over it despite his assertions that he was the rightful owner of the lands.
Simply stated, there was no delivery to Babasanta, whether actual or constructive,
which is essential to transfer ownership of the property. Thus, even on the
assumption that the perfected contract between the parties was a sale, ownership
could not have passed to Babasanta in the absence of delivery, since in a contract
of sale ownership is transferred to the vendee only upon the delivery of the thing
sold.

(2) Yes. As stated in Article 1544, if the same thing should have been sold to
different vendees, the ownership shall belong to the person acquiring it who in good
faith first recorded it in the Registry of Property. The principle of primus tempore,
potior jure (first in time, stronger in right) gains greater significance in case of
double sale of immovable property. When the thing sold twice is an immovable, the
one who acquires it and first records it in the Registry of Property, both made in
good faith, shall be deemed the owner. Verily, the act of registration must be
coupled with good faith that is, the registrant must have no knowledge of the
defect or lack of title of his vendor or must not have been aware of facts which
should have put him upon such inquiry and investigation as might be necessary to
acquaint him with the defects in the title of his vendor. It must be stressed that as
early as 11 February 1989, the Spouses Lu executed the Option to Buy in favor of
SLDC upon receiving P316,160.00 as option money from SLDC. After SLDC had paid
more than one half of the agreed purchase price of P1,264,640.00, the Spouses Lu
subsequently executed on 3 May 1989 a Deed of Absolute Sale in favor or SLDC. At
the time both deeds were executed, SLDC had no the time of execution of the first
deed up to the moment of transfer and delivery of possession of the lands to SLDC,
it had acted in good faith and the subsequent annotation of lis pendens has no
effect at all on the consummated sale between SLDC and the Spouses Lu. The law
speaks not only of one criterion. The first criterion is priority of entry in the registry
of property; there being no priority of such entry, the second is priority of
possession; and, in the absence of the two priorities, the third priority is of the date
of title, with good faith as the common critical element. Since SLDC acquired
possession of the property in good faith in contrast to Babasanta, who neither
registered nor possessed the property at any time, SLDC's right is definitely superior
to that of Babasanta's. At any rate, the above discussion on the rules on double sale
would be purely academic for as earlier stated in this decision, the contract between
Babasanta and the Spouses Lu is not a contract of sale but merely a contract to sell.

SPOUSES VILLAMIL v VELASCO


Spouses Juanito and Lydia Villamil represented by their son and attorney-infact, Winfred Villamil, filed a complaint for annulment of title, recovery of
possession, reconveyance, damages, and injunction against the Spouses Mateo and
Purificacion Tolentino (Spouses Tolentino), Lazaro Villarosa (Villarosa) and the
Register of Deeds of Quezon City before the RTC of Quezon City. The complaint
alleged that petitioners were the registered owners of a parcel of land situated at
Siska Subdivision, Tandang Sora, Quezon City, covered by Transfer Certificate of
Title (TCT) ; that Juanito Villamil Jr. asked permission from his parents, petitioners
herein, to construct a residential house on the subject lot in April 1986; that in the
first week of May 1987, petitioners visited the lot and found that a residential house
was being constructed by a certain Villarosa; that petitioners proceeded to the
Office of the Register of Deeds to verify their title; that they discovered a Deed of
Sale dated 16 July 1979 which they purportedly executed in favor of Cipriano
Paterno (Paterno) as the vendee; that they later found out that the TCT in their
names was cancelled and a new one, TCT No. 351553, was issued in the name of

Paterno; that a Deed of Assignment was likewise executed by Paterno in favor of the
Spouses Tolentino, and; that on the basis of said document, TCT No. 351553 was
cancelled and in its place TCT No. was issued in the name of the Spouses Tolentino.
Spouses Villamil asserted that the Deed of Sale in favor of Paterno is a
falsified document because they did not participate in its execution and
notarization. They also assailed the Deed of Assignment in favor of the Spouses
Tolentino as having been falsified because the alleged assignor is a fictitious person.
Finally, they averred that the Deed of Sale between Spouses Tolentino and Villarosa
is void considering that the former did not have any right to sell the subject
property.

In their Answer, the Spouses Tolentino alleged that Paterno had offered the
property for sale and presented to him TCT No. 351553 registered in his (Paternos)
name. Since they did not have sufficient funds then, the Spouses Tolentino
negotiated with and obtained from Express Credit Financing a loan, the proceeds of
which they used in paying the agreed consideration. They paid Paterno
P180,000.00, but upon the latters request, a deed of assignment was issued,
instead of a deed of sale, to avoid payment of capital gains tax. Express Credit
Financing held their title as security for the loan. The Spouses Tolentino thereafter
decided to sell the property to Villarosa to pay their obligation to Express Credit
Financing.
Villarosa, for his part, claimed in his Answer that he is a purchaser in good
faith and for value, having paid P276,000.00 as consideration for the purchase of
the land and the payment having been received and acknowledged by Mateo
Tolentino.
In their Reply, petitioners insisted that the deed of absolute sale executed by
the Spouses Tolentino in favor of Villarosa is legally defective, having been notarized
by one Atty. Juanito Andrade, who was not a duly commissioned notary public for
the year 1987, as evidenced by a certification of the Clerk of Court of the RTC of
Quezon City.

Petitioner also alleged that Paterno is a fictitious person. [16]


During the pre-trial, the parties agreed to limit the issues to the following:
1.
whether the Deed of Absolute Sale executed by Villamil in favor of Paterno is
fake;
2.

Whether Paterno is a fictitious person;

3.

Whether the Spouses Tolentino are buyers in good faith;

4. Whether Villarosa, the present registered owner, is a buyer in good faith.[17]

The trial court also found that the Deed of Absolute Sale executed by the Spouses
Villamil in favor of Paterno is fake; that Paterno is a fictitious person; and that
Spouses Tolentino and Villarosa are both buyers in bad faith.
On 12 September 2006, the Court of Appeals reversed the trial court and declared
void the title of the Spouses Tolentino and Paterno but upheld the validity of the title
of Villarosa. The dispositive portion of the appellate courts decision reads, thus:

WHEREFORE, the appeal is GRANTED and the trial courts June 12, 2003 Decision is
REVERSED and SET ASIDE with respect to appellant. In lieu thereof, another is
entered as follows: (a) ordering the dissolution of the injunction issued by the trial
court; (b) declaring Transfer Certificate of Title No. 354675 in the name of appellant
valid; (c) affirming appellants ownership of the subject parcel as well as all existing
improvements thereon; and (d) absolving appellant of liability for all monetary
awards adjudicated by the trial court.[19]

The appellate court ruled that while the Spouses Tolentinos acquisition of the
subject land does not appear to be above board,[20] the circumstances surrounding
Villarosas acquisition, on the other hand, indicate that he is a purchaser for value
and in good faith.[21]
On 23 March 2007, the appellate court denied petitioners motion for
reconsideration. Hence, this petition.
It should be noted that Paterno was not made a defendant in the complaint before
the trial court and that the decision of the Court of Appeals insofar as it nullified the
title in the name of the Spouses Tolentino was not appealed to this Court. Thus, the
petition before this Court centers on the validity of Villarosas title only. The
resolution of this issue devolves on whether Villarosa is a purchaser in good faith.
The Spouses Villamil maintains that Villarosa is not a purchaser in good faith
considering that he has knowledge of the circumstances that should have
forewarned him to make further inquiry beyond the face of the title.[22]
Villarosa counters that he is a purchaser in good faith because before buying the
property, he went to the Register of Deeds of Quezon City to verify the authenticity
of Spouses Tolentinos title, as well as to the Express Credit Financing Corporation to
check whether Spouses Tolentino had indeed mortgaged the subject property.
Having been assured of the authenticity and genuineness of its title, he proceeded
to purchase the property.[23]

The determination of whether Villarosa is a purchaser in good faith is a factual issue


which is generally outside the province of this Court to determine in a petition for
review. Indeed, this Court is not a trier of facts, and the factual findings of the Court
of Appeals are binding and conclusive upon this Court.[24] However, the rule has its
recognized exceptions,[25] one of which obtains in this case, i.e., there is a conflict
between the findings of fact of the Court of Appeals and those of the trial court.
*************
In the case at bar, the courts below arrived at the same findings concerning the
circumstances related to the transfer of titles in favor of Paterno and the Spouses
Tolentino and on that basis declared both their titles spurious. But they differ with
respect to the title of Villarosa. The trial court held that Villarosa knew of the
circumstances of Spouses Tolentinos acquisition of the subject property, thus
making him (Villarosa) a purchaser in bad faith. To the contrary, the Court of
Appeals, upon review of the records, found that Villarosa is a purchaser in good
faith.
The burden of proving the status of a purchaser in good faith lies upon one who
asserts that status.[26]
An innocent purchaser for value is one who buys the property of another without
notice that some other person has a right to or interest in that same property, and
who pays a full and fair price at the time of the purchase or before receiving any
notice of another persons claim.[27]
The honesty of intention that constitutes good faith implies freedom from
knowledge of circumstances that ought to put a prudent person on inquiry. Good
faith consists in the belief of the possessors that the persons from whom they
received the thing are its rightful owners who could convey their title. Good faith,
while always presumed in the absence of proof to the contrary, requires this wellfounded belief.[28]
Indeed, we found that Villarosa had successfully discharged this burden. In the
instant case, there were no traces of bad faith on Villarosas part in acquiring the
subject property by purchase. Villarosa merely responded to a newspaper
advertisement for the sale of a parcel of land with an unfinished structure located in
Tierra Pura, Tandang Sora, Quezon City.[29] He contacted the number specified in
the advertisement and was able to talk to a certain lady named Annabelle[30] who
introduced him to the owner, Mateo Tolentino.[31] When he visited the site, he
inquired from Mateo Tolentino about the unfinished structure and was informed that
the latter allegedly ran out of money and eventually lost interest in pursuing the
construction because of his old age.[32] Villarosa was then given a copy of the title.
[33] He went to the Register of Deeds and was able to verify the authenticity of the
title.[34] He also found out that the property was mortgaged under the name of
Mario Villamor, who turned out to be the employer of Tolentino. Upon reaching an
agreement on the price of P276,000.00, Villarosa redeemed the title from Express
Financing Company.[35] Thereafter, the property was released from mortgage and a
deed of sale was executed.[36] Villarosa then secured the transfer of title in his
name.

Well-settled is the rule that every person dealing with a registered land may safely
rely on the correctness of the certificate of title issued therefor and the law will in no
way oblige him to go beyond the certificate to determine the condition of the
property. Where there is nothing in the certificate of title to indicate any cloud or
vice in the ownership of the property, or any encumbrance thereon, the purchaser is
not required to explore further than what the Torrens Title upon its face indicates in
quest for any hidden defects or inchoate right that may subsequently defeat his
right thereto.[38]
This principle does not apply when the party has actual knowledge of facts and
circumstances that would impel a reasonably cautious man to make such inquiry or
when the purchaser has knowledge of a defect or the lack of title in his vendor or of
sufficient facts to induce a reasonably prudent man to inquire into the status of the
title of the property in litigation. One who falls within the exception can neither be
denominated an innocent purchaser for value nor a purchaser in good faith.[39]
We do not agree.
A forged or fraudulent document may become the root of a valid title if the property
has already been transferred from the name of the owner to that of the forger.[42]
This doctrine serves to emphasize that a person who deals with registered property
in good faith will acquire good title from a forger and be absolutely protected by a
Torrens title.[43]
Having made the necessary inquiries and having found the title to be authentic,
Villarosa need not go beyond the certificate of title. When dealing with land that is
registered and titled, as in this case, buyers are not required by the law to inquire
further than what the Torrens certificate of title indicates on its face.[44] He
examined the transferors title, which was then under the name of Spouses
Tolentino. He did not have to scrutinize each and every title and previous owners of
the property preceding Tolentino.

In sum, Villarosa was able to establish good faith when he bought the subject
property. Therefore, TCT No. 354675 issued in his name is declared valid.
Homebankers Saving & Trust Co. vs. CA, G.R. No. 128354, 2005

PURCHASER IN GOOD FAITH


In Chua v Soriano
A purchaser in good faith is one who buys property without notice that some
other person has a right to or interest in such property and pays its fair price before
he has notice of the adverse claims and interest of another person in the same
property. The honesty of intention which constitutes good faith implies a freedom
from knowledge of circumstances which ought to put a person on inquiry.30 As the
Court enunciated in Lim v. Chuatoco:31

x x x good faith consists in the possessors belief that the person from whom he
received the thing was the owner of the same and could convey his title. Good faith,
while it is always to be presumed in the absence of proof to the contrary, requires a
well founded belief that the person from whom title was received was himself the
owner of the land, with the right to convey it. There is good faith where there is an
honest intention to abstain from taking any unconscientious advantage from
another. Otherwise stated, good faith is the opposite of fraud and it refers to the
state of mind which is manifested by the acts of the individual concerned.32