April 28, 2000
Ponente: Mendoza, J.
FACTS:
The land in dispute consisting of 19.4 hectares was originally owned by Ulpiano Mumar, whose ownership since 1917 was evidenced by Tax Declaration. Mumar sold the land to private respondent who was issued Tax Declaration. Private respondent occupied and cultivated the said land , planting cassava and camote in certain portions of the land. In 1969 , unknown to private respondent, Jose Alvarez succeeded in obtaining the registration of a parcel of land in his name for which he was issued OCT No. 546.
The parcel of land included the 19.4 hectares occupied by private respondent. Alvarez never occupied nor introduced improvements on said land. In 1972, Alvarez sold the land to the spouses Beduya. That same year Beduya obtained a loan from petitioner DBP and as security, mortgaged the land to the bank. Beduya failed to pay the loan, as a result of which, the mortgage on the property was foreclosed.
In the foreclosure sale, petitioner was the highest bidder. As the spouses failed to redeem, petitioner consolidated its ownership. More than a year after the foreclosure sale, a re-appraisal of the property was conducted by petitioner’s representatives. It was then discovered that private respondent was occupying a portion of the land. Upon refusal to vacate on the part of the private respondent, petitioner filed a complaint for recovery of possession with damages.
RULING:
Is DBP an innocent mortgagee for value of the land in question as to warrant reconveyance? - NO.
Petitioner failed to exercise due care and diligence in establishing the condition of the land as regards its actual owners and possessors before it entered into the mortgage contract in 1972 with the Beduyas. Had it done so, it would not have failed to discover that private respondent was occupying the disputed portion of 19.4 hectares. For this reason, petitioner cannot be considered an innocent purchaser for value when it bought the land at the foreclosure sale. Evidence also shows that petitioner was already aware that a person other than the registered owner was in actual possession of the land when it bought the land. A person who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an innocent purchaser for value.
