De Leon vs Calalo

Facts: Eduardo Calalo was a merchant marines and was staying abroad and he bought a land in
Olangapo City and in the Deed of Sale was made in favor of his brother Augorio Calalo. Later, Augorio
executed a Deed of Donation in favor of Eduardos minor son Julsuntie. Later, Augorio mortgage the
property to Roberto de Leon without the knowledge and consent of Eduardo.
Roberto claims to be a mortgagee in good faith having previously ascertained the ownership of
Augorio who occupied and possessed the land in question and in whose name the land was registered in
the Register of Deeds and in various other documents.
RTC ruled in favor of Roberto being a mortgagee in good faith and for value. For he has
presented preponderant evidence to support his claim.
CA reversed and stating that Roberto failed to implead Julsunthie (the son of Eduardo) and he is
an indispensable party since his interest will be affected (due to the alleged donation); since there is a
question on who truly is the owner of the land.

Issue: Was the mortgage valid?

Ruling: Yes. There is no dispute that the land subject of the mortgage is titled in the name of Augorio
Calalo. There is also no question that Roberto did not know of the claim of ownership of Eduardo Calalo
until after the present action was instituted. Roberto examined the relevant documents pertaining to
the land, consisting of the transfer certificate of title, the tax declarations in the City Assessors Office
and information on the records in the barangay, and found that the land was registered in the name of
Augorio Calalo. Upon due inspection of the property, he also found it to be occupied by Augorio
Calalo. Petitioner had no reason to believe that the land did not belong to Augorio.
Petitioner had no reason to believe that the land did not belong to Augorio. Persons dealing
with property covered by a torrens certificate of title, as buyers or mortgagees, are not required to go
beyond what appears on the face of the title.
Whether the money used in purchasing the land came from Eduardo or not or whether it was
donated later to Eduardos son or not are matters not known to Roberto. Thus he is a mortgagee in
good faith. The Court can only decide on validity of the mortgage, the right of petitioner to foreclose the
property, and the right of redemption that may be exercised by Augorio or Julsunthie Calalo. Based on
the evidence, the mortgage was valid.