Jimenez v. Jimenez, Jr. [G.R. No. 228011, February 10, 2021]

 CASE DIGEST

Jimenez v. Jimenez, Jr.

G.R. No. 228011, February 10, 2021

SECOND DIVISION, LOPEZ, M.V

 

Mortgagee in good faith; Purchaser in good faith; Notice of Lis Pendens

The protection granted to mortgagees in good faith extends even if they have knowledge of adverse claims or ongoing litigation related to the property. And the foreclosure sale retroacts to the mortgage's registration date, making the sale superior to the subsequent adverse claim.

 

Corona F. Jimenez owned a property covered by TCT No. RT-122097. Her children discovered a Deed of Donation allegedly forged in favor of Damian F. Jimenez, Jr. This deed led to the issuance of a new title, TCT No. N-217728, in Damian's name. Damian then mortgaged the property to Arturo S. Calubad and Antonio Keh for a P7,000,000.00 loan. The mortgage was registered. The Jimenez siblings, however, filed a case to annul the forged Deed of Donation and the new title along with the mortgage.

Despite their efforts, the foreclosure auction proceeded, and Calubad and Keh emerged as the highest bidders, leading to the issuance of new titles in their names. The RTC and CA both ruled that the Deed of Donation was forged but upheld Calubad and Keh's rights as innocent mortgagees for value and good faith. Danilo, one of the Jimenez siblings, appealed, arguing that Calubad and Keh were not purchasers in good faith because they were aware of the adverse claim before the public auction.

 

Whether the highest bidders could be considered mortgagees in good faith despite having notice of an adverse claim.

 

YES. The mortgagee in good faith is based on the rule that all persons dealing with property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears on the face of the title. SC clarified that even if a mortgagee has notice of an adverse claim, their rights can still be protected if they satisfy the requirements of being mortgagees in good faith. 

In this case, Calubad and Keh met the requisites of being mortgagees in good faith. They relied on the title's face value, conducted an ocular inspection that confirms Damian’s possession and occupation, found nothing on TCT No. N-217728 that would have notified them of Damian's invalid title or reason to inquire further into Damian's title's status. 

The adverse claim could not affect the rights of the mortgagee. The Court emphasized that the foreclosure sale retroacts to the date of the mortgage's registration, making it prior in time to any subsequent liens or claims. The fact that the adverse claim was recorded after the mortgage did not affect the rights of Calubad and Keh as innocent mortgagees. Thus, their rights as innocent mortgagees were upheld.

 

CLICK TO READ FULL TEXT