a. Forged document can be a source of a valid title 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 . 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.(Sps. Villamil vs. Velasco, G. . !o. "##"$#, %&&'( b. )irror doctrine General ule* ". +onsistently, this +ourt has ruled that 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. ,here 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 e-plore 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. (+hua vs. Soriano, G.R. NO. 15 !!" # $% %. Time and again, this +ourt has ruled that a person dealing with the owner of registered land is not bound to go beyond the certificate of title as he is charged with notice of burdens on the property which are noted on the face of the register or on the certificate of title. (San .orenzo /evt +orp vs. +0, G. . !o. "%1%1%, %&&2( 3-ception4s* ". 5owever, when a person who deals with registered land through someone who is not the registered owner" he is e&pected to loo' behind the certificate of title and e&amine all the factual circumstances" in order to determine if the vendor has the capacity to transfer any interest in the land. 5e has the duty to ascertain the identity of the person with whom he is dealing and the latter6s legal authority to convey. The law 7requires a higher degree of prudence from one who buys from a person who is not the registered owner, although the land ob8ect of the

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 e-ecution. (his principle does not apply when the party has actual 'nowledge of facts and circumstances that would impel a reasonably cautious man to ma'e such in)uiry or when the purchaser has 'nowledge of a defect or the lac' of title in his vendor or of sufficient facts to induce a reasonably prudent man to in)uire into the status of the title of the property in litigation.R.e li9ewise find petitioner negligent in failing to even ascertain from Garcia if there are buyers of the lots who turned out to be private respondents. .f the proof of capacity consists of a special power of attorney duly notarized. . 15 !!" # $% #.f no such special power of attorney is provided or there is one but there appear flaws in its notarial ac9nowledgment. to mortgage the sub/ect lots. .hile the cases cited by petitioner held that the mortgagee is not under obligation to loo9 beyond the certificate of title when on its face. or in his capacity to transfer the land. . . 0etitioner failed to do so. it undertoo9 a thorough chec9 on the property and found the titles free from liens and encumbrances would not suffice. %&&'( >. one who buys from one who is not the registered owner is e-pected to e-amine not only the certificate of title but all factual circumstances necessary for him to determine if there are any flaws in the title of the transferor. G. Soriano. . Villamil vs.transaction is registered. =ne who falls within the e-ception can neither be denominated an innocent purchaser for value nor a purchaser in good faith. G. it was free from lien or encumbrances. mere inspection of the face of such public document already constitutes sufficient inquiry. . the mortgagees therein were considered in good faith as they were totally innocent and free from negligence or wrongdoing in the transaction. !o. Aetitioner6s insistence that prior to the approval of the loan. Aetitioner6s want of 9nowledge due to its negligence ta9es the place of registration.n case of ban9ing institutions?. "##"$#.hile one who buys from the registered owner does not need to loo9 behind the certificate of title. thus it is presumed to 9now the .n this case. . (Sps. Velasco. (+hua vs. NO..-R.: The strength of buyer6s inquiry on the seller6s capacity or legal authority to sell depends on the proof of capacity of the seller. petitioner 9new that the loan it was e-tending to Garcia4Trans0merican was for the purpose of the development of the eight@unit townhouses. *t was incumbent upon petitioner to in)uire into the status of the lots which includes verification on whether Garcia had secured the authority from the +.

%&&"( 2. . G. Budicial notice can be ta9en of the uniform practice of ban9s to investigate. !either will the conversion set aside the consequence of its negligence as a mortgagee.n its answer to the complaint filed with the trial court. the S+ had the occasion to give a precaution to prospective buyers of titled lands. !o. Eulueta and Soledad C. amos owned the 0ntonio Subdivision when they mortgaged the same with GS.n the case of /omingo ealty vs. to wit* . .t might be an interior lot without convenient access. that it was thereby relieved of ta9ing any other step to verify the over@reaching implications should the subdivision be auctioned on foreclosure.e cannot overemphasize the fact that the Can9 cannot barefacedly argue that simply because the title or titles offered as security were clean of any encumbrances or lien. Intermediate Appellate Court . G.S admitted 9nowledge that the spouses Bose +.rights of respondents over the lot. 1e presume it is e&perienced in its business. . . %&&2( 1. . . dela )erced. These and other similar factors determine the value of the property and so should be of practical concern to the petitioner. Ascertainment of the status and condition of properties offered to it as security for the loans it e&tends must be a standard and indispensable part of its operations. (5omeban9ers Saving D Trust +o.S is admittedly a financing institution. vs.S.n the case at bar. . (GS. There might be squatters on it.t might be easily inundated. Further* !evertheless. .S vs. +0. GS. we have to deviate from the general rule because of the failure of petitioner in this case to ta9e the necessary precautions to ascertain if there was any flaw in the title of the !olascos and to e-amine the condition of the property they sought to mortgage. (he petitioner is an investment and financing corporation. +0 (%&&#(.n Sunshine Finance and Investment Corp. The land might be in a depressed area. . we held that when the purchaser or mortgagee is a financing institution" the general rule that a purchaser or mortgagee of land is not re)uired to loo' further than what appears on the face of the title does not apply. GS. "%$>21. v. The conversion of the status of petitioner from mortgagee to buyer@owner will not lessen the importance of such 9nowledge. Surely it cannot simply rely on an e-amination of a Torrens certificate to determine what the sub8ect property loo9s li9e as its condition is not apparent in the document. e-amine and assess the real estate offered as security for the application of a loan. "1&>'$. !o.n case of financing institutions? .

ureau4 26% conduct an actual ocular inspection of the lot4 27% in)uire from the owners and possessors of ad/oining lots with respect to the true and legal ownership of the lot in )uestion4 25% put up signs that said lot is being purchased" leased" or encumbered4 and 2!% underta'e such other measures to ma'e the general public aware that said lot will be sub/ect to alienation" lease" or encumbrance by the parties. "211.and Registration Authority4 2#% engage the services of a competent and reliable geodetic engineer to verify the boundary" metes" and bounds of the lot sub/ect of said title based on the technical description in the said title and the approved survey plan in the . c. 0rt. "%1%1%. 0urchaser in good faith . 8erily" the act of registration must be coupled with good faith9 that is" the registrant must have no 'nowledge of the defect or lac' of title of his vendor or must not have been aware of facts which should have put him upon such in)uiry and investigation as might be necessary to ac)uaint him with the defects in the title of his vendor. Should it be immovable property.(San . %&&2( d.5opefully this case will serve as a precaution to prospective parties to a contract involving titled lands for them to e-ercise the diligence of a reasonably prudent person by underta9ing measures to ensure the legality of the title and the accurate metes and bounds of the lot embraced in the title. .and 5anagement .f the same thing should have been sold to different vendees. ". to the person who presents the oldest title.orenzo /evt +orp vs. !o. . the ownership shall belong to the person acquiring it who in good faith first recorded it in the egistry of Aroperty. in the absence thereof. G. . Should there be no inscription. the ownership shall pertain to the person who in good faith was first in the possession< and. ules applicable in /ouble Sale* +ivil +ode. stronger in right( gains greater significance in case of double sale of immovable property. the ownership shall be transferred to the person who may have first ta9en possession thereof in good faith. potior jure (first in time. if it should be movable property. 1hen the thing sold twice is an immovable" the one who ac)uires it and first records it in the Registry of 0roperty" both made in good faith" shall be deemed the owner. +0. The principle of primus tempore.t is advisable that such parties21% verify the origin" history" authenticity" and validity of the title with the Office of the Register of 3eeds and the . provided there is good faith.

NO. G. 15 !!" # $% %. 0 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. NO.R. its due e-ecution and authenticity.". (+hua vs. the reliance by the +huas on the notarial ac9nowledgment found in the duly notarized SA0 presented by +elestino is sufficient evidence of good faith. Soriano.R. G. The +huas need not prove anything more for it is already the function of the notarial ac9nowledgment to establish the appearance of the parties to the document. Thus. 15 !!" # $% . (+hua vs. Soriano.