Veloso vs. Court of Appeals

A notarized general power of attorney that expressly includes the power to sell a specifically identified property sufficiently authorizes the attorney-in-fact to execute a valid sale, and a purchaser who relies on such notarized instrument together with the seller's wife's possession of the certificate of title is an innocent purchaser for value whose title is protected even if the power of attorney was forged.

Petitioner Francisco A. Veloso was the registered owner of a 177-square-meter parcel of land in Tondo, Manila, covered by Transfer Certificate of Title No. 49138, issued in his name as a single person on October 4, 1957. He married Irma Lazatin on January 20, 1962, making the property his exclusive property outside the conjugal partnership. Private respondent Aglaloma B. Escario was the purchaser who acquired the property through a deed of absolute sale executed by Irma Veloso acting as petitioner's attorney-in-fact under a general power of attorney. The dispute arose within the framework of the Torrens system of land registration under Act 496 (the Land Registration Act), which governs the issuance and cancellation of certificates of title and the authority conferred by possession of a certificate of title.

Petitioner Francisco A. Veloso was the registered owner of a 177-square-meter parcel of land in Tondo, Manila, covered by Transfer Certificate of Title No. 49138, issued by the Registry of Deeds of Manila in his name as a single person on October 4, 1957. He acquired the property from the Philippine Building Corporation by virtue of a Deed of Sale dated October 1, 1957. On January 20, 1962, he married Irma Lazatin; because the property was acquired before the marriage, it did not form part of the conjugal partnership.

On May 24, 1988, TCT No. 49138 was cancelled and a new title, TCT No. 180685, was issued in the name of Aglaloma B. Escario, married to Gregorio L. Escario. The transfer was supported by a General Power of Attorney dated November 29, 1985, and a Deed of Absolute Sale dated November 2, 1987, both executed by Irma Veloso, the petitioner's wife, acting as his attorney-in-fact, in favor of defendant Escario. The general power of attorney expressly authorized the attorney-in-fact to "buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and hereditaments or other forms of real property, more specifically TCT No. 49138," upon such terms and conditions as the attorney-in-fact deemed fit and proper.

On August 24, 1988, petitioner Veloso filed an action for annulment of documents, reconveyance of property with damages and preliminary injunction before the RTC, Branch 45, Manila. He alleged that he was the absolute owner of the subject property and never authorized anybody, not even his wife, to sell it. He testified that he was in possession of the title but when his wife left for abroad, he discovered his copy was missing. Upon verifying with the Registry of Deeds, he learned his title had already been cancelled in favor of Escario. He denied having executed the power of attorney and alleged that his signature was falsified. He also denied knowing Rosemarie Reyes and Imelda Santos, the supposed witnesses to the execution of the power of attorney, and denied ever meeting or transacting with Escario. To prove forgery, he presented Allied Bank checks and other documents bearing his genuine signature, which he claimed differed from the signature on the power of attorney. His witness, Atty. Julian G. Tubig, the notary public before whom the power of attorney purportedly appeared, denied having signed or notarized the document and testified that it was never entered in his Notarial Register for November 29, 1985.

Defendant Escario countered that she was a buyer in good faith who relied on the notarized general power of attorney presented by Irma Veloso, who was the petitioner's wife and who possessed the certificate of title. She argued that she had no knowledge of any irregularity and that the power of attorney was sufficient in form and substance. She also contended that the real party in interest was Irma Veloso, who should have been impleaded, and that the petitioner's cause of action should have been against his wife.

The trial court found for Escario, declaring her the lawful owner as an innocent purchaser for value. It held the general power of attorney valid and sufficient, noting that no separate special power of attorney was needed because the power to sell was expressly stated therein. It found that petitioner failed to substantiate his allegation of fraud and stressed that he was not entirely blameless, as he admitted being the sole person with access to the title and other documents, yet his wife was still able to possess the copy. Citing Section 55 of Act 496, the court held that Irma's possession and production of the certificate of title operated as conclusive authority from the petitioner to the Register of Deeds to enter a new certificate, and applied equitable estoppel, holding that the petitioner bore the loss because he made the wrong possible. The Court of Appeals affirmed this decision in toto.

• Forgery of the Power of Attorney: Petitioner contended that the forgery of the power of attorney had been adequately proven by preponderant evidence, citing the variance between his genuine signatures on checks, marriage certificate, and residence certificate and the signature appearing on the power of attorney, as well as the testimony of Atty. Tubig denying having notarized the document.
• Equitable Estoppel Misapplied: Petitioner argued that the trial court misapplied the principle of equitable estoppel because he did not fail in his duty of observing due diligence in the safekeeping of the title to the property.
• Principles of Justice and Equity: Petitioner maintained that principles of justice and equity warranted a review of the decision, given that the property was his exclusive property acquired before marriage and he never authorized its sale.

• Buyer in Good Faith: Respondent countered that she was a buyer in good faith who relied on the notarized general power of attorney presented by Irma Veloso, the petitioner's wife, who also possessed the certificate of title, giving respondent no reason to doubt her authority.
• Sufficiency of the Power of Attorney: Respondent argued that the general power of attorney was sufficient in form and substance and was duly notarized, carrying the presumption of due execution, and that no separate special power of attorney was required since the power to sell the specific property was expressly stated therein.
• Improper Party / Cause of Action: Respondent contended that the petitioner had no cause of action against her, that the real party in interest was Irma Veloso who should have been impleaded, and that the petitioner's cause of action should have been directed against his wife.

• Validity of the Power of Attorney: Whether the general power of attorney was valid and sufficient to authorize the sale of the subject property, notwithstanding that it was denominated as a general power of attorney.
• Proof of Forgery: Whether the petitioner adequately proved that his signature on the power of attorney was forged.
• Innocent Purchaser for Value: Whether private respondent Aglaloma Escario was a buyer in good faith whose title should be protected.
• Equitable Estoppel: Whether the trial court correctly applied the principle of equitable estoppel against the petitioner.

• Validity of the Power of Attorney: Yes. The notarized general power of attorney expressly included the power to sell the specifically identified property (TCT No. 49138), making a separate special power of attorney unnecessary. The denomination of the instrument is immaterial; what matters is the extent of the powers conferred.
• Proof of Forgery: No. Mere variance of signatures cannot be considered conclusive proof of forgery, which cannot be presumed and must be proved by clear and convincing evidence. Petitioner relied solely on apparent differences in signatures without an accurate examination.
• Innocent Purchaser for Value: Yes. Respondent relied on the notarized power of attorney presented by the petitioner's wife, who also possessed the certificate of title, giving respondent no reason to suspect any irregularity. Her title is protected even if the seller obtained authority through fraud.
• Equitable Estoppel: Yes. The petitioner, as the sole person with access to the title, made the loss possible by allowing his wife to possess the certificate of title and other documents necessary for transfer. Under Section 55 of Act 496, the wife's possession and production of the title operated as conclusive authority to the Register of Deeds.

• Validity of the Power of Attorney: The Court examined the text of the power of attorney and found that it expressly stated an authority to sell the subject property, specifically identifying TCT No. 49138. Citing LRC Consulta No. 123, the Court reiterated that whether an instrument is denominated as a "general" or "special" power of attorney is immaterial; what matters is the extent of the powers conferred. Where the power to sell is specific and not merely implied or couched in general terms, the attorney-in-fact may execute a valid sale. Since the power to sell the identified property was expressly granted, no separate special power of attorney was required.
• Proof of Forgery: The Court found the petitioner's evidence inadequate. Mere variance of signatures is not conclusive proof of forgery, which cannot be presumed and must be established by clear and convincing evidence. Petitioner presented checks, a marriage certificate, and a residence certificate bearing his genuine signature and pointed to differences, but no accurate or scientific examination of the signatures was conducted. Atty. Tubig similarly merely pointed out differences between his signature and that on the document. Citing Cesar vs. Sandiganbayan, the Court explained that the process of identification requires determining whether variations are due to a different personality or are inevitable variations in genuine writing, and whether resemblances result from imitation or habitual characteristics — none of which was undertaken here. The notarized documents carried the presumption of due execution, which the petitioner failed to overcome.
• Innocent Purchaser for Value: The Court agreed with the lower courts that respondent was an innocent purchaser for value. Respondent relied on the notarized power of attorney presented by Irma Veloso, who was the petitioner's wife and who possessed the certificate of title. Being the wife of the owner and having the title in her possession, there was no reason for respondent to doubt her authority. The notarized power of attorney carried the presumption of due execution. A purchaser in good faith is one who buys property without notice of another's right or interest and pays a full and fair price. Citing Tenio-Obsequio vs. Court of Appeals, the Court held that the right of an innocent purchaser for value must be respected and protected even if the seller obtained title through fraud; the prejudiced party's remedy is an action for damages against those who caused the fraud.
• Equitable Estoppel: The Court found no error in the trial court's application of equitable estoppel. The principle provides that where one of two innocent persons must suffer a loss, he who by his conduct made the loss possible must bear it. The petitioner admitted he was the sole person with access to TCT No. 49138 and related documents, yet his wife was able to possess the certificate of title and the documents necessary for transfer. Under Section 55 of Act 496, Irma's possession and production of the certificate of title operated as conclusive authority from the petitioner to the Register of Deeds to enter a new certificate. The petitioner's negligence in allowing his wife access to the title made the fraudulent transfer possible, and he must therefore bear the resulting loss rather than the innocent purchaser.

• Innocent Purchaser for Value — A purchaser in good faith is one who buys property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of purchase or before notice of the claim of another. The right of an innocent purchaser for value must be respected and protected even if the seller obtained title through fraud; the remedy of the prejudiced party is an action for damages against those who caused the fraud. The Court applied this doctrine to protect respondent Escario, who relied on the notarized power of attorney and the wife's possession of the title.
• Equitable Estoppel in Property Transactions — Where one of two innocent persons must suffer a loss, he who by his conduct made the loss possible must bear it. The Court applied this principle because the petitioner, despite being the sole person with access to the title, allowed his wife to possess the certificate of title and transfer documents, thereby making the fraudulent sale possible.
• Presumption of Due Execution of Notarized Documents — Documents acknowledged before a notary public carry the evidentiary weight of presumed due execution and validity. The burden of proving forgery or irregularity rests on the party alleging it, and must be discharged by clear and convincing evidence. The Court relied on this presumption in upholding the validity of the power of attorney and deed of sale, as the petitioner failed to overcome the presumption with adequate proof.
• Sufficiency of General Power of Attorney for Acts of Strict Dominion — A general power of attorney that expressly and specifically includes the power to sell an identified property sufficiently authorizes the attorney-in-fact to execute a valid sale, and no separate special power of attorney is required. The denomination of the instrument is immaterial; what matters is the extent of the powers actually conferred.
• Conclusive Authority from Possession of Certificate of Title (Section 55, Act 496) — Under Section 55 of Act 496, the possession and production of a certificate of title by a person operates as conclusive authority from the registered owner to the Register of Deeds to enter a new certificate. The Court applied this provision because Irma Veloso possessed and produced the certificate of title, giving the Register of Deeds conclusive authority to cancel the old title and issue a new one in respondent's name.

• "Whether the instrument be denominated as 'general power of attorney' or 'special power of attorney', what matters is the extent of the power or powers contemplated upon the agent or attorney in fact. If the power is couched in general terms, then such power cannot go beyond acts of administration. However, where the power to sell is specific, it not being merely implied, much less couched in general terms, there can not be any doubt that the attorney in fact may execute a valid sale." — This passage, quoted from LRC Consulta No. 123, articulates the controlling rule on the sufficiency of powers of attorney and is central to the Court's holding that the general power of attorney validly authorized the sale.
• "The right of an innocent purchaser for value must be respected and protected, even if the seller obtained his title through fraud. The remedy of the person prejudiced is to bring an action for damages against those who caused or employed the fraud, and if the latter are insolvent, an action against the Treasurer of the Philippines may be filed for recovery of damages against the Assurance Fund." — Quoted from Tenio-Obsequio vs. Court of Appeals, this passage states the doctrine protecting innocent purchasers for value and defines the remedy available to the defrauded owner, forming a key pillar of the ruling.
• "The principle of equitable estoppel states that where one or two innocent persons must suffer a loss, he who by his conduct made the loss possible must bear it." — This formulation of equitable estoppel was applied to hold the petitioner liable for the loss resulting from his negligence in allowing his wife access to the title despite being the sole person with access to it.

• Tenio-Obsequio vs. Court of Appeals, G.R. No. 107967, March 1, 1994 — Controlling precedent on the protection of innocent purchasers for value. The Court quoted this case for the proposition that the right of an innocent purchaser for value must be respected even if the seller obtained title through fraud, and that the prejudiced party's remedy is an action for damages against those who caused the fraud.
• Cesar vs. Sandiganbayan, G.R. Nos. 54719-50, January 17, 1985 — Cited for the standard of proving forgery through the process of identification, requiring determination of whether variations are due to a different personality or are inevitable variations in genuine writing. The Court relied on this case to reject the petitioner's insufficient proof of forgery.
• Bautista, et al. vs. Court of Appeals, G.R. No. 106042, February 28, 1994 — Cited for the definition of a purchaser in good faith as one who buys property without notice of another's right or interest and pays a full and fair price.
• _LRC Consulta No. 123, Register of Deeds of Albay, November 10, 1956 — Cited as authority for the rule that the denomination of a power of attorney as "general" or "special" is immaterial; what matters is the extent of the powers conferred. The Court applied this principle to uphold the validity of the general power of attorney.

• Section 55, Act 496 (Land Registration Act) — Provides that the possession and production of a certificate of title by a person operates as conclusive authority from the registered owner to the Register of Deeds to enter a new certificate. The Court applied this provision to hold that Irma Veloso's possession and production of TCT No. 49138 gave the Register of Deeds conclusive authority to cancel the old title and issue a new one in respondent's name.
• Rules on Agency (Civil Code provisions on powers of attorney, as applied) — The Court applied the principle that a special power of attorney can be included in a general power of attorney when the specific act or transaction for which the special power is required is expressly stated therein, particularly the power to sell an identified property.

Regalado, Romero, Puno, and Mendoza, JJ., concurred.