Mila Sales Llanto v. Ernesto Alzona

Summary

This case involves a dispute over a property mortgage allegedly executed by Maria Sales (already deceased) and Bernardo Sales in favor of the Alzona brothers. Eleven heirs of the Sales spouses challenged the validity of the mortgage and subsequent foreclosure sale, claiming fraud since Maria was dead when the mortgage was executed. The Supreme Court applied the doctrine of 'mortgagee in good faith' under Article 2085 of the Civil Code, ruling that the Alzona brothers exercised due diligence by conducting credit investigation, verifying the property through neighbors, meeting with family members present at the property, and examining the certificate of title. The Court held that mortgagees dealing with Torrens titles are not required to investigate beyond what appears on the certificate absent suspicious circumstances. The fraud was perpetrated by Estela Sales Pelongco and persons who impersonated the deceased Maria Sales and Bernardo Sales. The decision affirmed protection for good faith mortgagees in the Philippine lending and real estate system.