Conflicting claims

This is a case about a property which was sold and encumbered twice to different persons. The main issue answered and explained here is the authenticity and genuineness of the different documents evidencing the transfer of the property to different persons.

The property involved here is situated in the City of Manila and covered by Transfer Certificate of Title (TCT) No. 196082 in the name of the brothers Larry and Andy. It was being rented by Ramon who was interested in buying it. So, in order to sell said property, the brothers executed a Deed of Absolute Sale in favor of Diego and Delia, the parents of Ramon, who paid its purchase price. Then Ramon asks Minda to facilitate the transfer of title in his name. Thereafter Minda was able to obtain the Certificate of Title in the name of Ramon (TCT No. 271840) after payment of the corresponding registration fees and transfer taxes. Thus she gave the title to Ramon.

About a year later, a group of people, armed with an Owner’s duplicate Certificate of Title of TCT No. 196082 annotated with a Special Power of Attorney (SPA) and Real Estate Mortgage (REM), conducted an ocular inspection of the property. Alarmed, Ramon verified with the Register of Deeds the title given to him by Minda. It turned that said title was fake. On further verification, Ramon found out that an SPA was allegedly executed by the brothers Larry and Andy in favor of a person named Linda, who supposedly borrowed the sum of P800,000 for and in behalf of said brothers from Nancy. To secure said loan, Linda also supposedly executed a REM in favor of Nancy. When the supposed loan was not paid, the REM was foreclosed by Nancy.

To protect his rights, Ramon sued Nancy for the annulment of the SPA and the REM and to surrender the original TCT 196082, claiming that the brothers did not execute any SPA in favor of Linda. To support his claim during the trial, Ramon presented the brothers Larry and Andy, who testified that they did not execute any SPA. Even Linda herself testified that no SPA was executed by the brothers in her favor.

But the trial court dismissed the complaint of Ramon. The court ruled that the claim of forgery was not established by clear and convincing evidence and that Nancy was a mortgagee in good faith as she had no notice of any lien encumbrance on the title. This ruling was affirmed by the Court of Appeals (CA). Were the RTC and CA correct?

The Supreme Court (SC) declared that the RTC and the CA rulings are based on misapprehension of facts and its findings are contradicted by the facts on record. So the SC ruled that it can still examine the records and facts of the case. And in its perusal of the records of the case, the SC saw that based on the Deed of Absolute Sale in favor of Ramon’s parents and the affidavits signed by the brothers, their signatures were really different from those appearing on the SPA and the REM. This difference was confirmed by Larry, Andy and Linda when they testified in Court. The RTC and the CA erred in ruling that there are no comparative signatures showing the genuine signatures of the brothers and of Linda where it can examine the genuine and the forged signatures. The presentation of handwriting experts to prove forgery is therefore not necessary.

Nancy is not also a mortgagee in good faith.  She did not directly deal with the registered owner so it is incumbent upon her to exercise greater care and higher degree of prudence in dealing with the mortgagor. She did not personally investigate the identity of the property, despite the presence of Ramon in the property. Nancy failed to inquire as to the nature of Ramon’s possession. A simple investigation would have revealed that the property was previously sold to Ramon’s parents by the registered owners. In fact, the brothers testified that the original owner’s certificate was already given to Ramon after payment of the purchase price.

So the decision of the RTC and the CA should be reversed and set aside and the Register of Deeds is directed to cancel the annotation in the title pertaining to the annotation of the SPA and REM, while Nancy is directed to turn over the Owner’s duplicate copy of the TCT No. 196082. This is the ruling in Yabut et.al. etc. vs Nachbaur, G.R. 243470, Jan. 12, 2021.