obli4th my digest

8/12/2019 Obli4th My Digest

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Domingo v. CAIssue:

Did private respondents establish the existence anddue execution of the deed of sale? Our finding is in thenegative.

Held:

First , note that private respondents as plaintiffs belowpresented only a carbon copy of this deed. When theRegister of Deeds was subpoenaed to produce the deed,no original typewritten deed but only a carbon copy waspresented to the trial court. Although the Court of Appealscalls it a duplicate original, the deed contained filled inblanks and alterations. None of the witnesses directlytestified to prove positively and convincingly Paulinasexecution of the original deed of sale. The carbon copy didnot bear her signature, but only her allegedthumbprint. Juan Franco testified during the directexamination that he was an instrumental witness to thedeed. However, when cross-examined and shown a copyof the subject deed, he retracted and said that said deed ofsale was not the document he signed as witness.[13]Hedeclared categorically he knew nothing about it.[14]

We note that another witness, Efren Sibucao, whosetestimony should have corroborated Atty. Tagatags, wasnot presented and his affidavit was withdrawn from thecourt,[15] leaving only Atty.Tagatags testimony, whichaside from being uncorroborated, was self-serving.

Secondly , we agree with the trial court thatirregularities abound regarding the execution andregistration of the alleged deed of sale. On record, Atty.Tagatag testified that he himself registered the originaldeed with the Register of Deeds.[16] Yet, the original wasnowhere to be found and none could be presented at thetrial. Also, the carbon copy on file, which is allegedly aduplicate original, shows intercalations and discrepancieswhen compared to purported copies in existence. Theintercalations were allegedly due to blanks left unfilled by Atty. Tagatag at the time of the deeds registration. Theblanks were allegedly filled in much later by arepresentative of the Register of Deeds. In addition, thealleged other copies of the document bore different datesof entry: May 16, 1966, 10:20 A.M.[17] and June 10, 1966,3:16 P.M.,[18] and different entry numbers: 66246,74389[19] and 64369.[20] The deed was apparentlyregistered long after its alleged date of execution and afterPaulinas death on March 20, 1966.[21] Admittedly, thealleged vendor Paulina Rigonan was not given a copy.[22]

Furthermore, it appears that the alleged vendor wasnever asked to vacate the premises she had purportedlysold. Felipe testified that he had agreed to let Paulina stayin the house until her death.[23] In Alcos v. IAC , 162 SCRA823 (1988), the buyers immediate possession and

occupation of the property was deemed corroborative ofthe truthfulness and authenticity of the deed of sale.Thealleged vendors continued possession of the propertyin this case throws an inverse implication, a seriousdoubt on the due execution of the deed ofsale. Noteworthy, the same parcels of land involved in thealleged sale were still included in the will subsequentlyexecuted by Paulina and notarized by the same notarypublic, Atty. Tagatag.[24] These circumstances, takentogether, militate against unguarded acceptance of the dueexecution and genuineness of the alleged deed of sale.

Thirdly , we have to take into account the element ofconsideration for the sale. The price allegedly paid byprivate respondents for nine (9) parcels, including the threeparcels in dispute, a house and a warehouse, raises furtherquestions. Consideration is the why of a contract, theessential reason which moves the contracting partiesto enter into the contract .[25] On record, there isunrebutted testimony that Paulina as landowner was

financially well off. She loaned money to severalpeople .[26] We see no apparent and compelling reasonfor her to sell the subject parcels of land with a houseand warehouse at a meager price of P850 only.

In Rongavilla vs. CA, 294 SCRA 289 (1998), privaterespondents were in their advanced years, and were not indire need of money, except for a small amount of P2,000which they said were loaned by petitioners for the repair oftheir houses roof. We ruled against petitioners, anddeclared that there was no valid sale because of lack ofconsideration.

In the present case, at the time of the execution of

the alleged contract, Paulina Rigonan was already ofadvanced age and senile. She died an octogenarian onMarch 20, 1966, barely over a year when the deed wasallegedly executed on January 28, 1965, but before copiesof the deed were entered in the registry allegedly on May16 and June 10, 1966. The general rule is thata person isnot incompetent to contract merely because ofadvanced years or by reason of physicalinfirmities.[27] However, when such age or infirmitieshave impaired the mental faculties so as to prevent theperson from properly, intelligently, and firmlyprotecting her property rights then she is undeniablyincapacitated. The unrebutted testimony of ZosimaDomingo shows thatat the time of the alleged executionof the deed, Paulina was already incapacitatedphysically and mentally. She narrated that Paulinaplayed with her waste and urinated in bed. Giventhese circumstances, there is in our view sufficientreason to seriously doubt that she consented to thesale of and the price for her parcels of land. Moreover,there is no receipt to show that said price was paid toand received by her. Thus, we are in agreement with thetrial courts finding and conclusion on the matter:
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The whole evidence on record does not show clearly thatthe fictitious P850.00 consideration was ever delivered tothe vendor. Undisputably, the P850.00 consideration forthe nine (9) parcels of land including the house and bodegais grossly and shockingly inadequate, and the sale is nulland void ab initio.[28]

WHEREFORE,the petition is GRANTED. Thedecision and resolution of the Court of Appeals dated August 29, 1996 and December 11, 1996, respectively, areREVERSED and SET ASIDE. The decision of theRegional Trial Court of Batac, Ilocos Norte, Branch 17,dated March 23, 1994, is REINSTATED.

Bautista v. Silva

To establish his status as a buyer for value in good faith, a person dealing with land registered in the name of andoccupied by the seller need only show that he relied on theface of the seller's certificate of title.1 But for a persondealing with land registered in the name of and occupiedby the seller whosecapacity to sell is restricted , such asby Articles 16 6 2 and 17 33 of the Civil Code or Article12 44 of the Family Code, he must showthat he inquiredinto the latter's capacity to sell in order to establishhimself as a buyer for value in good faith .5 The extent ofhis inquiry depends on the proof of capacity of the seller. Ifthe proof of capacity consists of a special power ofattorney duly notarized , mere inspection of the face ofsuch public document already constitutes sufficient inquiry.If no such special power of attorney is provided or there isone but there appear flaws in its notarial

acknowledgment mere inspection of the document will notdo; the buyer must show that his investigation went beyondthe document and into the circumstances of its execution.

The petition fails for lack of merit.

As to the first ground, petitioners argue that for lack ofauthority of Dorado to represent respondent, the latter'sComplaint failed to state a cause of action and should havebeen dismissed.17

The argument holds no water.

True, there was no written authority for Dorado to representrespondent in the filing of her Complaint.However, nowritten authorization of Dorado was needed becausethe Complaint was actually filed by respondent, andnot merely through Dorado as her attorney-in-fact. Ascorrectly observed by the CA, respondent herself signedthe verification attached to the Complaint.18 She statedtherein that she is the plaintiff in Civil Case No. 3091-V-89and that she caused the preparation of the

Complaint.19 Respondent also personally testified on thefacts alleged in her Complaint.20 In reality, respondentacted for and by herself, and not through anyrepresentative, when she filed the Complaint. Therefore, respondent being the real party in interest, byvirtue of the then prevailing Articles 16621 and 17322 of theCivil Code, the Complaint she filed sufficiently stated acause of action. The sufficiency of the Complaint was notaffected by the inclusion of Dorado as party representativefor this was an obvious error which, under Section 11 ofRule 3,23 is not a ground for dismissal, as it may becorrected by the court, on its own initiative and at any stageof the action, by dropping such party from the complaint.24

Anent the second ground, there is no merit to petitioners'claim that they are purchasers in good faith.

That the SPA is a forgery is a finding of the RTC andthe CA on a question of fact .25 The same is conclusive

upon the Court, 26

especially as it is based on theexpert opinion of the NBI which constitutes more thanclear, positive and convincing evidence thatrespondent did not sign the SPA, and on theuncontroverted Certification of Dorado that respondentwas in Germany working as a nurse when the SPA waspurportedly executed in 1987.

The SPA being a forgery, it did not vest in Pedro anyauthority to alienate the subject property without theconsent of respondent. Absent such marital consent,the deed of sale was a nullity .27

But then petitioners disclaim any participation in the forgeryof the SPA or in the unauthorized sale of the subjectproperty. They are adamant that even with their knowledgethat respondent was in Germany at the time of the sale,they acted in good faith when they bought the subjectproperty from Pedro alone because the latter was equippedwith a SPA which contains a notarial acknowledgment thatthe same is valid and authentic.28 They invoke the status ofbuyers in good faith whose registered title in the property isalready indefeasible and against which the remedy ofreconveyance is no longer available.29 In the alternative,petitioners offer that should respondent be declaredentitled to reconveyance, let it affect her portion only butnot that of Pedro.30

Whether or not petitioners are buyers for value in goodfaith is a question of fact not cognizable by us in apetition for review.31 We resolve only questions of law;we do not try facts nor examine testimonial ordocumentary evidence on record. We leave these tothe trial and appellate courts to whose findings andconclusions we accord great weight and respect,especially when their findings concur .32 We may have
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at times reversed their findings and conclusions butwe resort to this only under exceptional circumstancesas when it is shown that said courts failed to take intoaccount certain relevant facts which, if properlyconsidered, would justify a different conclusion .33 Nosuch exceptional circumstance obtains in the presentcase for we find the conclusions of the RTC and CAsupported by the established facts and applicable law.However, we do not fully subscribe to some of theirviews on why petitioners cannot be considered ingood faith, as we will discuss below.

A holder of registered title may invoke the status of abuyer for value in good faith as a defense against anyaction questioning his title .34 Such status, however, isnever presumed but must be proven by the personinvoking it.35

A buyer for value in good faith is one who buys property of

another, without notice that some other person has a rightto, or interest in, such property and pays full and fair pricefor the same, at the time of such purchase, or before hehas notice of the claim or interest of some other persons inthe property.He buys the property with the well- founded belief that the person from whom he receivesthe thing had title to the property and capacity toconvey it .36

To prove good faith, a buyer of registered and titled landneed only show that he relied on the face of the title to theproperty. He need not prove that he made further inquiryfor he is not obliged to explore beyond the four corners ofthe title.37 Such degree of proof of good faith, however, issufficient only when the following conditions concur: first,the seller is the registered owner of the land; 38 second, thelatter is in possession thereof ;39 and third, at the time of thesale, the buyer was not aware of any claim or interest ofsome other person in the property,40 or of any defect orrestriction in the title of the seller or in his capacity toconvey title to the property.41

Absent one or two of the foregoing conditions, then the lawitself puts the buyer on notice and obliges the latter toexercise a higher degree of diligence by scrutinizing thecertificate of title and examining all factual circumstances inorder to determine the seller's title and capacity to transferany interest in the property.42 Under such circumstance, itis no longer sufficient for said buyer to merely show that herelied on the face of the title; he must now also show thathe exercised reasonable precaution by inquiring beyondthe title.43 Failure to exercise such degree of precautionmakes him a buyer in bad faith.44

In the present case, petitioners were dealing with a seller(Pedro) who had title to and possession of the land but, as

indicated on the face of his title, whose capacity to sell wasrestricted, in that the marital consent of respondent isrequired before he could convey the property. To provegood faith then, petitioners must show that they inquirednot only into the title of Pedro but also into his capacity tosell.

According to petitioners, to determine Pedro's capacity tosell, they conducted the following forms of inquiry: first,they inspected the photocopy of the SPA presented tothem by Pedro;45 second, they brought said copy to Atty.Lorenzo Lucero (the notary public who prepared the deedof sale) and asked whether it was genuine;46 and third, theyinspected the original copy of the SPA after they advancedpayment of Php55,000.00 to Pedro.47 Essentially,petitioners relied on the SPA, specifically on its notarialacknowledgment which states that respondent appearedbefore the notary public and acknowledged havingexecuted the SPA in favor of Pedro.

The RTC and CA, however, found such inquiry superficial.They expected of petitioners an investigation not only intothe whereabouts of respondent at the time of the executionof the SP A48 but also into the genuineness of the signatureappearing on it.49

We find such requirements of the RTC and CA toostringent that to adopt them would be to throw commerceinto madness where buyers run around to probe thecircumstances surrounding each piece of sales documentwhile sellers scramble to produce evidence of its goodorder. Remember that it is not just any scrap of paper thatis under scrutiny but a SPA, the execution and attestationof which a notary public has intervened.

To what extent, therefore, should an inquiry into anotarized special power of attorney go in order for one toqualify as a buyer for value in good faith?

We agree with one author who said:

x x x To speak of "notice", as applied to thegrantee, is to follow the language of the Statue ofElizabeth. Its proviso protects the man whopurchases "upon good consideration and

bona fide * * * not having at the time * * * anymanner of notice or knowledge ." The term"notice", however, is really but an approach to thetest of good faith, and all modern legislationtends toward that point.

Thus, some present day statutes (outside of theUniform Law) may speak of notice, actual andconstructive, and define both terms, but they
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should be "liberally construed, so as to protectbona fide purchaser for value." They may requirethe grantee to have "knowledge" of the debtor'sintent, but save for technical purposes ofpleading, the term is read in the light of the ruleswe are studying. It comes always to a question ofthe grantee's good faith as distinct from merenegligence. 50

There must, indeed, be more than negligence.There must be a conscious turning away from thesubject x x x. As put by the Supreme Court, thegrantee must take the consequences if he"chooses to remain ignorant of what thenecessities of the case require him to know."The search, therefore, is described by thequestion, did the grantee make a choicebetween not knowing and finding out thetruth; or were the circumstances such that hewas not faced with that choice ? (Emphasisours)

This means that no automatic correlation exists betweenthe state of forgery of a document and the bad faith of thebuyer who relies on it. A test has to be done whether thebuyer had a choice between knowing the forgery andfinding it out, or he had no such choice at all.

When the document under scrutiny is a special power ofattorney that is duly notarized, we know it to be a publicdocument where the notarial acknowledgment is primafacie evidence of the fact of its due execution.51 A buyerpresented with such a document would have no choicebetween knowing and finding out whether a forger lurksbeneath the signature on it. The notarial acknowledgmenthas removed that choice from him and replaced it with apresumption sanctioned by law that the affiant appearedbefore the notary public and acknowledged that heexecuted the document, understood its import and signedit. In reality, he is deprived of such choice not because heis incapable of knowing and finding out but because, underour notarial system, he has been given the luxury of merelyrelying on the presumption of regularity of a duly notarizedSPA. And he cannot be faulted for that because it isprecisely that fiction of regularity which holds togethercommercial transactions across borders and time.

In sum,all things being equal , a person dealing with aseller who has possession and title to the property butwhose capacity to sell is restricted, qualifies as a buyer ingood faith if he proves that he inquired into the title of theseller as well as into the latter's capacity to sell; and that inhis inquiry, he relied on the notarial acknowledgment foundin the seller's duly notarized special power of attorney. Heneed not prove anything more for it is already the function

of the notarial acknowledgment to establish theappearance of the parties to the document, its dueexecution and authenticity.52

Note that we expressly made the foregoing rule applicableonly under the operative words "duly notarized" and "all

things being equal." Thus, said rule should not apply whenthere is an apparent flaw afflicting the notarialacknowledgment of the special power of attorney as wouldcast doubt on the due execution and authenticity of thedocument; or when the buyer has actual notice ofcircumstances outside the document that would rendersuspect its genuineness.

In Domingo v. Reed ,53 we found that the special power ofattorney relied upon by the buyers contained a defectivenotarial acknowledgment in that it stated there that only theagent-wife signed the document before the notary publicwhile the principal-husband did not. Such flaw rendered the

notarial acknowledgment of no effect and reduced thespecial power of attorney into a private document. Wedeclared the buyer who relied on the private special powerof attorney a buyer in bad faith.

In Lao v. Villones-Lao,54 and Estacio v. Jaranilla,55 wefound that the buyers knew of circumstances extrinsic tothe special power of attorney which put in question theactual execution of said document. InDomingo Lao, thebuyer knew that the agent-wife was estranged from theprincipal-husband but was living within the same city. IntheEstacio case, we found admissions by the buyers thatthey knew that at the time of the purported execution of thespecial power of attorney, the alleged principal was not inthe Philippines. In both cases we held that the buyers werenot in good faith, not because we found any outward defectin the notarial acknowledgment of the special powers ofattorney, but because the latter had actual notice of factsthat should have put them on deeper inquiry into thecapacity to sell of the seller.

In the present case, petitioners knew that Berlina was inGermany at the time they were buying the property and theSPA relied upon by petitioners has a defective notarialacknowledgment. The SPA was a mere photocopy56andwe are not convinced that there ever was an original copyof said SPA as it was only this photocopy that was testifiedto by petitioner Nida Bautista and offered into evidence byher counsel.57 We emphasize this fact because it wasactually this photocopy that was relied upon by petitionersbefore they entered into the deed of sale with Pedro. Asadmitted to by petitioner Nida Bautista, upon inspection ofthe photocopy of the SPA, they gave Pedro an advancedpayment of Php55,000.00; this signifies that, without furtherinvestigation on the SPA, petitioners had agreed to buy thesubject property from Pedro.
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But then said photocopy of the SPA contains no notarialseal. A notarial seal is a mark, image or impression on adocument which would indicate that the notary publichas officially signed it.58 There being no notarial seal, thesignature of the notary public on the notarial certificate wastherefore incomplete. The notarial certificate beingdeficient, it was as if the notarial acknowledgment wasunsigned. The photocopy of the SPA has no notarialacknowledgment to speak of. It was a mere privatedocument which petitioners cannot foist as a banner ofgood faith.

All told, it was not sufficient evidence of good faith thatpetitioners merely relied on the photocopy of the SPA asthis turned out to be a mere private document. They shouldhave adduced more evidence that they looked beyond it.They did not. Instead, they took no precautions at all. Theyverified with Atty. Lucero whether the SPA was authenticbut then the latter was not the notary public who preparedthe document. Worse, they purposely failed to inquire whowas the notary public who prepared the SPA. Finally,petitioners conducted the transaction in haste. It took themall but three days or from March 2 to 4, 1988 to enter intothe deed of sale, notwithstanding the restriction on thecapacity to sell of Pedro.59 In no way then may petitionersqualify as buyers for value in good faith.

That said, we come to the third issue on whetherpetitioners may retain the portion of Pedro Silva in thesubject property. Certainly not. It is well-settled that thenullity of the sale of conjugal property contracted by thehusband without the marital consent of the wife affects theentire property, not just the share of the wife.60 We see noreason to deviate from this rule.

WHEREFORE, the petition is herebyDENIED. TheDecision dated November 21, 2001 and Resolution datedFebruary 27, 2003 of the Court of Appeal areAFFIRMED.
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