Title
Heirs of Gregorio Lopez vs. Development Bank of the Philippines
Case
G.R. No. 193551
Decision Date
Nov 19, 2014
Heirs challenged Enrique’s false self-adjudication and sale of inherited land; SC ruled affidavit, sale, and mortgage invalid, granting reconveyance of their rightful share.
sale and mortgage
reconveyance
redemption
A

Case Summary (G.R. No. 193551)

Core factual findings

Gregoria Lopez died in 1922 survived by three sons (Teodoro, Francisco, Carlos). Title records and succession established co-ownership among heirs and, ultimately, co-heirs Gregorio, Enrique, Simplicio, and Severino (each entitled to an undivided one-fourth share). Enrique executed, in 1990, an affidavit of self-adjudication declaring himself the sole surviving heir and conveyed the whole parcel to Marietta, who later mortgaged the property to DBP after obtaining a loan. At the time of sale and mortgage, the property was largely unregistered and reflected only in tax declarations; an original certificate of title in Marietta’s name issued later (July 26, 1993). Petitioners filed suit; RTC found Enrique could not validly convey co-heirs’ shares and that neither Marietta nor DBP could claim protection as innocent purchaser/mortgagee.

Ownership principles and succession law applied

The Court reiterated Nemo dat quod non habet: a seller can transfer only what the seller owns or is authorized to transfer. Under Civil Code provisions on sale and succession, heirs acquire rights at the decedent’s death and remain co-owners until partition. In this matter Enrique’s legal right was limited to his undivided one-fourth share; he lacked authority to alienate the other three-fourths belonging to his co-heirs. Any purported transfer of those undivided shares by Enrique was void as to the interests of the non-consenting co-heirs.

Invalidity of the affidavit of self-adjudication and its legal effect

The Supreme Court found Enrique’s affidavit of self-adjudication to be false and ineffective because his siblings and their heirs were still entitled to three-fourths of the property at the time of execution. The affidavit did not vest title on Enrique and could not supply authority for him to transfer co-heirs’ shares. The issuance of an original certificate of title in Marietta’s name did not cure Enrique’s lack of title or authority; the physical certificate is evidentiary, not dispositive of ownership for purposes of validating an otherwise void conveyance of co-heirs’ interests derived from an invalid self-adjudication.

Innocent purchaser doctrine and application to Marietta

The Court analyzed the doctrine that protects an innocent purchaser for value who relies on the apparent title of a registered owner. That protection presupposes registered land and reliance on the face of a Torrens certificate. At the time of the sale from Enrique to Marietta the land was unregistered and only covered by a tax declaration in the name of the heirs. The decision stressed that the innocent purchaser defense does not apply to transfers of unregistered land; the unregistered status should have prompted inquiry. Because Marietta bought in the absence of a certificate of title and did not investigate Enrique’s claimed title, she could not be considered an innocent purchaser for value and acquired only whatever right Enrique actually held (i.e., at best his one-quarter share).

Legal requisites for a valid mortgage and application to DBP

Article 2085 (Civil Code) requires that the mortgagor be the absolute owner of the thing mortgaged. Having concluded Marietta had no valid title to the three-fourths of the property she purported to convey, the Court held that no valid mortgage over those undivided portions existed. Consequently, foreclosure and any transfer derived from that mortgage could not vest title in DBP as to the petitioners’ shares.

Mortgagee-in-good-faith exception and bank diligence

The Court acknowledged the jurisprudential exception that a mortgagee in good faith dealing with registered land may rely on a Torrens certificate and be protected despite mortgagor’s lack of title. That exception, however, applies only where the mortgaged property is already registered in the mortgagor’s name at the time of the mortgage. In this case the mortgage took place before issuance of a certificate of title in Marietta’s name; DBP instead relied on a tax declaration. The Court emphasized that banks must exercise a higher degree of diligence and cannot rely solely on apparent possession or later issuance of a certificate to cure prior defects. DBP’s acceptance of an unregistered property as security without further inquiry, despite circumstances that should have raised suspicio

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