The Mirror Doctrine
The general rule is that a purchaser may be considered a purchaser in good faith when he has examined the latest certificate of title. An exception to this rule is when there exist important facts that would create suspicion in an otherwise reasonable man to go beyond the present title and to investigate those that preceded it. Thus, it has been said that a person who deliberately ignores a significant fact which would create suspicion in an otherwise reasonable man is not an innocent purchaser for value. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor as has been held in other cases, if the buyer fails to take the ordinary precautions which a prudent man would have taken under the circumstances, specially in buying a piece of land in the actual, visible and public possession of another person, other than the vendor, constitutes gross negligence amounting to bad faith.
In this connection, it has been held that where, the land sold is in the possession of a person other than the vendor, the purchaser is required to go beyond the certificate of title to make inquiries concerning the rights of the actual possessor. Failure to do so would make him purchaser in bad faith.
One who purchases real property which is in the actual possession of another should, at least make some inquiry concerning the right of those in possession. The actual possession by a person other than the vendor should, at least put the purchaser upon inquiry. He can scarcely, in the absence of such inquiry, be regarded as a bona fide purchaser as against such possessors. (Lucena vs. CA, G.R. No. 77468, August 25, 1999).
Being a corporation engaged in the business of buying and selling real estate, it was gross negligence on its part to merely rely on the seller’s assurance that the occupants of the property were mere squatters considering that it had the means and the opportunity to investigate for itself the accuracy of such information. (Amancio, et al. vs. CA, et al., G.R. No. 152627, September 16, 2005).