G.R. No. 165853 - Erena vs. Querrer-Kauffman

Vida Dana Querrer-Kauffman (respondent) is the owner of a residential lot with a house located at Block 3, Lot 13, Marcillo corner Planza Streets, BF Resort Village, Talon, Las Piñas City.
The property is covered by Transfer Certificate of Title (TCT) No. T-48521, with her owner’s duplicate title and tax declarations kept in a safety deposit box in the house.
Rosana EreAa (petitioner) is the mortgagee who later acquired a mortgage on this property.

In February 1997, Kauffman left for the United States, entrusting her minor daughter to Eduardo Victor and giving Victor the key to her house.
Victor later also left for the U.S., entrusting the house key to his sister, Mira Bernal.
On October 25, 1997, Kauffman asked her sister Evelyn Pares to take possession of the house from Bernal to facilitate sale.
When Pares attempted to open the safety deposit box, the owner’s duplicate title, tax declarations, and some jewelry were discovered missing.
Kauffman returned to the Philippines November 9, 1997, and upon inquiry at the Register of Deeds, learned the property was mortgaged to EreAa on August 1, 1997.
The mortgage deed was apparently signed by a "Vida Dana F. Querrer" as owner-mortgagor and Jennifer V. Ramirez (Victor’s daughter) as attorney-in-fact.

Mira Bernal admitted that Jennifer Ramirez stole the contents of the safety deposit box and requested time to return the items.
Kauffman filed a civil complaint on March 12, 1998, against EreAa, Bernal, and Ramirez for nullification of the mortgage deed and damages, alleging forged signatures and fraudulent mortgage contract.
Bernal and Ramirez were declared in default for failing to appear at trial.

Rosana EreAa claimed she was a mortgagee in good faith.
EreAa presented evidence of due diligence: requiring owner’s duplicate of TCT, making personal inquiries, inspecting the property, and verifying ownership with public documents and appearances.
A woman impersonating Vida Dana Querrer signed the mortgage deed and the Special Power of Attorney before Notary Public Alfredo M. Mendoza.
The mortgage for P250,000 was registered and annotated on TCT No. T-48521.

The RTC dismissed Kauffman’s complaint, holding that EreAa was a mortgagee in good faith relying on the title and public documents despite forged signatures.
Kauffman’s motion for reconsideration was denied.
The Court of Appeals reversed the RTC, ruling the mortgage deed null and void because:

The mortgagor must be the absolute owner of the property to validly mortgage it (Art. 2085, Civil Code).
The signature on the mortgage deed was forged; hence, no valid mortgage existed.
The doctrine of mortgagee in good faith does not apply in cases of forged instruments by impostors.

EreAa argued that the mortgagee-in-good-faith doctrine applies since she exercised due diligence and relied on the title and documents presented.
Kauffman maintained she is the lawful owner, supported by evidence including immigration entries, juxtaposed signatures, and Bernal’s admission of theft and forgery.
The Court found that:

Kauffman is the registered owner as evidenced by TCT No. T-48521 and related documents.
The signatures on the mortgage deed and special power of attorney were forged by impostors.
The mortgage deed is therefore null and void.
The “mortgagee in good faith” doctrine does not apply when the mortgagee relies on a forged instrument executed by impostors who are not registered owners.

Whether respondent Kauffman is the lawful owner of the property mortgaged to petitioner EreAa.
Whether the Real Estate Mortgage contract executed on August 1, 1997, is a forged deed without substantial evidence to prove forgery.
Whether petitioner EreAa qualifies as a mortgagee in good faith entitled to protection despite the forged mortgage deed.
Whether the doctrine of mortgagee in good faith applies to a mortgage arising from a forged instrument executed by impostors, and the consequent validity of the mortgage and its registration.