Sarili v. Lagrosa
REITERATIONFacts
The Antecedents: Respondent Pedro F. Lagrosa (Lagrosa), represented by his attorney-in-fact Lourdes Labios Mojica, filed a complaint against Spouses Victorino and Isabel Sarili (Sps. Sarili) and the Register of Deeds of Caloocan City. Lagrosa alleged he was the owner of a parcel of land covered by TCT No. 55979, acquired on November 29, 1974, and had been paying taxes thereon. He discovered that a new title, TCT No. 262218, was issued in the name of Victorino Sarili, married to Isabel Amparo, through a falsified Deed of Absolute Sale dated February 16, 1978, purportedly executed by Lagrosa and his wife, Amelia U. Lagrosa. Lagrosa claimed this was a result of fraudulent acts by Sps. Sarili and the Register of Deeds. He prayed for the annulment of TCT No. 262218, delivery of possession, or payment of ₱1,000,000.00 plus damages and attorney's fees. Procedural History: Sps. Sarili claimed they were innocent purchasers for value, having bought the property from Ramon B. Rodriguez (Ramon) via a Deed of Absolute Sale dated November 20, 1992, based on a Special Power of Attorney (SPA) from Lagrosa. They denied involvement in the February 16, 1978 deed of sale, attributing it to a "fixer." The Regional Trial Court (RTC) ruled in favor of Sps. Sarili, finding Lagrosa's signature on the SPA to be genuine and declaring the November 20, 1992 deed of sale valid. The RTC found Lagrosa acted in bad faith. On appeal, the Court of Appeals (CA) reversed the RTC, finding that the November 20, 1992 deed of sale was not the source of TCT No. 262218, but rather the falsified February 16, 1978 deed of sale. The CA found Lagrosa's and his wife's signatures on the February 16, 1978 deed of sale to be forged, and that the subject SPA also contained forged signatures. The CA declared the deeds of sale and the SPA void, ordered the cancellation of TCT No. 262218, reinstatement of TCT No. 55979, and awarded damages and attorney's fees to Lagrosa. The CA denied Sps. Sarili's motion for reconsideration. The Petition: Petitioners, the heirs of Victorino Sarili, argued that even if the February 16, 1978 deed of sale was fictitious, there was still a valid conveyance to Sps. Sarili based on the subject SPA and the November 20, 1992 deed of sale.
Issue(s)
Whether there was a valid conveyance of the subject property to Sps. Sarili. Whether TCT No. 262218 in the name of Victorino married to Isabel should be annulled and TCT No. 55979 in respondent's name should be reinstated. What are the rights and obligations of the parties concerning the house built by Sps. Sarili, and whether the award of damages and attorney's fees was proper.
Ruling
The petition is denied. The Decision of the Court of Appeals is affirmed. The case is remanded to the court a quo for the proper application of Articles 449, 450, 451, 452, and the first paragraph of Article 546 of the Civil Code regarding the house built by Sps. Sarili on the subject property.
Ratio Decidendi
On the validity of the conveyance to Sps. Sarili: The Court held that the petition lacks merit. Petitioners argued that a valid conveyance existed through the November 20, 1992 deed of sale, relying on the subject SPA. However, the Court found that the subject SPA had flaws in its notarial acknowledgment, specifically the omission of Lagrosa's community tax certificate number, which is required under Section 163(a) of RA 7160. Despite this irregularity, Sps. Sarili failed to show they conducted an investigation beyond the SPA into the circumstances of its execution, thus they could not be considered innocent purchasers for value. Furthermore, the defective notarization stripped the SPA of its public character, reducing it to a private document requiring proof of authenticity by preponderance of evidence under Section 20, Rule 132 of the Rules of Court. The Court agreed with the CA that the signatures on the subject SPA were not similar to Lagrosa's genuine signature and that Lagrosa's testimony denying its authenticity was unrebutted. The notary public also failed to justify the omission of the CTC and his failure to personally know Lagrosa. Consequently, the due execution and authenticity of the subject SPA were not sufficiently established, rendering the November 20, 1992 sale void. On the annulment of TCT No. 262218 and reinstatement of TCT No. 55979: The Court affirmed the CA's finding that the February 16, 1978 deed of sale, which was the actual source of TCT No. 262218, was also a forgery. Since Sps. Sarili's claim was based on forged documents, no valid title was transferred to them or their heirs. The Court reiterated the principle that when an instrument is forged, even if accompanied by the owner's duplicate certificate of title, the registered owner does not lose title, and the assignee in the forged deed acquires no right or title. Therefore, TCT No. 262218 in the name of Victorino married to Isabel was correctly annulled, and TCT No. 55979 in the name of Lagrosa was correctly reinstated. On the house built by Sps. Sarili and the award of damages and attorney's fees: The Court found it necessary to remand the case to determine the rights and obligations of the parties concerning the house built by Sps. Sarili on the subject property. The Court concluded that Sps. Sarili built in bad faith because they knew or should have known of a flaw in their title or mode of acquisition due to the palpable irregularity in the SPA's acknowledgment and proceeded with the purchase and construction without further investigation. They were aware of a defect in their title or mode of acquisition, thus falling under the legal definition of builders in bad faith. The Court sustained the CA's award of moral damages, finding that the dispute caused Lagrosa serious anxiety, mental anguish, and sleepless nights. The award of attorney's fees and litigation expenses was also upheld, as Lagrosa was compelled to engage legal counsel to protect his interests.
Main Doctrine
A defective notarization strips a document of its public character, reducing it to a private instrument requiring proof of authenticity by preponderance of evidence. A sale of land through an agent requires the agent's authority to be in writing; otherwise, the sale is void. A buyer from a non-registered owner must exercise a higher degree of prudence, examining not only the certificate of title but also the factual circumstances and the seller's authority to sell.