Innocents’ fault

Entrusting rights to property on other people oftentimes end up in regrettable legal consequences. This is what happened to Lando and Linda, younger brother and sister of Leo.

Leo was an industrious farmer tilling a large tract of land in their province. He was not married but living-in with Marta in his large farmhouse together with Lando and Linda. To register the land in his name, Leo filed an application for a free patent. But before the corresponding patent could be issued in his favor, Leo died. Following his death, Marta, Lando and Linda took joint possession of the land in question.

Thereafter, Leo’s free patent application was granted and title over the land was finally issued and registered in the name of the “Heirs of Leo de la Paz.” But Lando and Linda took no steps to settle and divide Leo’s estate particularly the land in question. They were content with having possession of the property jointly with Marta. In fact they even entrusted to Marta the owner’s certificate of title.

As time went by, Marta’s relationship with Lando and Linda took a turn for the worse especially because of the interferences of other parties particularly Marta’s smart nephew Fredo. And so after more than 20 years of joint possession, Marta succumbed to the inducement of Fredo and executed an “Affidavit of Adjudication” of the entire land in her favor, claiming that she was Leo’s widow and sole heir. Through this false representation, she was able to obtain title to the land in her name and mortgaged it in favor of a bank.

When Lando and Linda learned about what Marta did over the land, they sued her and the bank praying for the cancellation of the title and the mortgage. The bank however contended that it was a mortgagee in good faith, so the annotation of the mortgage at the back of the title should not be cancelled, whoever may be adjudged as the true owner thereof. Was the bank correct?

Yes. When the title was mortgaged in the bank’s favor, it was already in the name of Marta, the mortgagor. Such being the case, the bank as mortgagee had the right to rely on what appeared in the certificate of title. And in the absence of anything to excite suspicion, it was under no obligation to look beyond the title. Being an innocent mortgagee for value, its right or lien on the land mortgaged must be respected even if the mortgagor obtained her title through fraud.

While Lando and Linda were also innocent, they made it possible for Marta to perpetrate the fraud by entrusting the title to her. As between two innocent persons, the ones who made it possible by their act of trust must suffer the consequences of the breach of trust and bear the loss (Blanco vs. Esquerdo, 110 Phil. 494).

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Note: Books containing compilation of my articles on Labor Law and Criminal Law Vols I and II, now available at 403 Sunrise Condo, 226 ortigas Avenue, Greenhills S.J., tel. 7249445.

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