AGGABAO RESEARCH

Balatbat vs. Court of Appeals, et al. (G.R. No. 109410; Aug. 28, 1996)

Evidently, petitioner cannot be considered as a buyer in good faith. In the complaint for
rescission filed by vendor Aurelio Roque on August 20, 1980, herein petitioner filed a
motion for intervention on May 20, 1982 but did not file her complaint in intervention,
hence, the decision was rendered adversely against her. If petitioner did investigate before
buying the land on February 4, 1982, she should have known that there was a pending
case and an annotation of adverse claim was made in the title of the property before the
Register of Deeds and she could have discovered that the subject property was already
sold to the private respondents. It is incumbent upon the vendee of the property to ask for
the delivery of the owner's duplicate copy of the title from the vendor. A purchaser of a
valued piece of property cannot just close his eyes to facts which should put a reasonable
man upon his guard and then claim that he acted in good faith and under the belief that
there were no defect in the title of the vendor (De la Cruz vs. Intermediate Appellate
Court, G.R. 72981, Jan. 29, 1988). One who purchases real estate with knowledge of a
defect or lack of title in his vendor cannot claim that he has acquired title thereto in good
faith as against the true owner of the land or of an interest therein; and the same rule must
be applied to one who has knowledge of facts which should have put him upon such
inquiry and investigation as might be necessary to acquaint him with the defects in the
title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be
seen or touched, but rather a state or condition of mind which can only be judged of by
actual or fancied tokens or signs (Bautista vs. Court of Appeals, G.R. 106042, Feb. 28,
1994)

Veloso vs. C.A. (G.R. No. 102737; 21 Aug. 1996)

Petitioner contends that his signature on the power of attorney was falsified. He
also alleges that the same was not duly notarized for as testified by Atty. Tubig himself,
he did not sign thereon nor was it ever recorded in his notarial register. To bolster his
argument, petitioner had presented checks, marriage certificate and his residence
certificate to prove his alleged genuine signature which when compared to the signature
in the power of attorney, showed some difference.

We found, however, that the basis presented by the petitioner was inadequate to sustain
his allegation of forgery. Mere variance of the signatures cannot be considered as
conclusive proof that the same were forged. Forgery cannot be presumed (Tenio-
Obsequio vs. Court of Appeals, G. R. 107967, March 1, 1994) Petitioner, however,
failed to prove his allegation and simply relied on the apparent difference of the
signatures. His denial had not established that the signature on the power of attorney was
not his.

We agree with the conclusion of the lower court that private respondent was an innocent
purchaser for value. Respondent Aglaloma relied on the power of attorney presented by
petitioner's wife, Irma. Being the wife of the owner and having with her the title of the
property, there was no reason for the private respondent not to believe, in her authority.
Moreover, the power of attorney was notarized and as such, carried with it the
presumption of its due execution. Thus, having had no inkling on any irregularity and
having no participation thereof, private respondent was a buyer in good faith. It has been
consistently held that 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 such purchase, or before he has notice of
the claim or interest of some other person in the property (Bautista, et. al. vs. Court of
Appeals, G.R. 106042, Feb. 28, 1994).

Documents acknowledged before a notary public have the evidentiary weight with
respect to their due execution. The questioned power of attorney and deed of sale, were
notarized and therefore, presumed to be valid and duly executed. Atty. Tubig denied
having notarized the said documents and alleged that his signature had also been falsified.
He presented samples of his signature to prove his contention. Forgery should be proved
by clear and convincing evidence and whoever alleges it has the burden of proving the
same. Just like the petitioner, witness Atty. Tubig merely pointed out that his signature
was different from that in the power of attorney and deed of sale. There had never been
an accurate examination of the signature, even that of the petitioner. To determine
forgery, it was held in Cesar vs. Sandiganbayan, G.R. Nos. 54719-50, 17 January 1985
(quoting Osborn, The Problem of Proof) that:

"The process of identification, therefore, must include the determination of

the extent, kind, and significance of this resemblance as well as of the
variation. It then becomes necessary to determine whether the variation is
due to the operation of a different personality, or is only the expected and
inevitable variation found in the genuine writing of the same writer. It is
also necessary to decide whether the resemblance is the result of a more or
less skillful imitation, or is the habitual and characteristic resemblance
which naturally appears in a genuine writing. When these two questions
are correctly answered the whole problem of identification is solved."

Even granting for the sake of argument, that the petitioner's signature was falsified and
consequently, the power of attorney and the deed of sale were null and void, such fact
would not revoke the title subsequently issued in favor of private respondent Aglaloma.
In Tenio-Obsequio vs. Court of Appeals, G.R. 109767, March 1, 1994, it was held, viz:

"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."
 Finally, the trial court did not err in applying equitable estoppel in this case. 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. From the evidence
adduced, it should be the petitioner who should bear the loss. As the court a quo found:
"Besides, the records of this case disclosed that the plaintiff is not entirely free from
blame. He admitted that he is the sole person who has access to TCT No. 49138 and other
documents appertaining thereto (TSN, May 23, 1989, pp. 7-12). However, the fact
remains that the Certificate of Title, as well as other documents necessary for the transfer
of title were in the possession of plaintiff's wife, Irma L. Veloso, consequently leaving no
doubt or any suspicion on the part of the defendant as to her authority. Under Section 55
of Act 496, as amended, Irma's possession and production of the Certificate of Title to
defendant operated as "conclusive authority from the plaintiff to the Register of Deeds to
enter a new certificate." 21

Cruz vs. C.A. et al. (G.R. No. 120122; 06 Nov. 1997)

The real purpose of the Torrens system of registration is to quiet title to land and
to put a stop to any question of legality of the title except claims which have been
recorded in the certificate of title at the time of registration or which may arise
subsequent thereto (Republic v. Umali, G.R. No. 80687, 10 April 1989, 171 SCRA 647).
Every registered owner and every subsequent purchaser for value in good faith holds the
title to the property free from all encumbrances except those noted in the certificate.
Hence, a purchaser is not required to explore further what the Torrens title on its face
indicates in quest for any hidden defect or inchoate right that may subsequently defeat his
right thereto (PNB v. Intermediate Appellate Court, G.R. No. 71753, 25 August 1989,
176 SCRA 736).

Where innocent third persons, relying on the correctness of the certificate of title
thus issued, acquire rights over the property the court cannot disregard such rights and
order the total cancellation of the certificate (Pino v. Court of Appeals, G.R. No. 94114,
19 June 1991, 198 SCRA 434). The effect of such an outright cancellation would be to
impair public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance whether the
title has been regularly or irregularly issued. This is contrary to the evident purpose of the
law (Sec. 39, Act 496, The Land Registration Act). Every person dealing with registered
land may safely rely on the correctness of the certificate of title issued therefor and the
law will in no way oblige him to go behind the certificate to determine the condition of
the property (Lopez v. Court of Appeals, No. L-49739, 20 January 1989, 169 SCRA 271)
Even if a decree in a registration proceeding is infected with nullity, still an innocent
purchaser for value relying on a Torrens title issued in pursuance thereof is protected. A
purchaser in good faith is one who buys the 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 such purchase or before he has notice of the claim of another
person.

xxx

We cannot grant petitioner's prayer to have respondent Vizconde's certificate of

title declared null and void. Neither can we order the reconveyance of the property to
petitioner. Vizconde being a purchaser of registered land for value in good faith holds an
indefeasible title to the land. This is without prejudice however to any appropriate
remedy petitioner may take against her erstwhile common-law husband, respondent
Suzara.

Legarda vs. C.A. (G.R. No. 94457; Oct. 16, 1997)

We do not have to belabor the fact that all the successors-in-interest of Cabrera to the
subject lot were transferees for value and in good faith, having relied as they did on the
clean titled of their predecessors. The successive owners were each armed with their own
indefeasible titles which automatically brought them under the aegis of the Torrens
System. As the Court declared in Sandoval v. Court of Appeals [260 SCRA 283 (1996)]
"(i)t is settled doctrine that one who deals with property registered under the Torrens
system need not go beyond the same, but only has to rely on the title. He is charged with
notice only of such burdens and claims as are annotated on the title." [citing Santos v.
Court of Appeals, 189 SCRA 550 (1990); Unchuan v. Court of Appeals, 161 SCRA 710
(1988); Bailon-Casilao v. Court of Appeals, 160 SCRA 738 (1988); Director of Lands v.
Abad, 61 Phil. 479; Agricultural and Home Extension Development Group v. Court of
Appeals, 213 SCRA 563 (1992)] In the case at bar, it is not disputed that no notice of lis
pendens was ever annotated on any of the titles of the subsequent owners. And even if
there were such a notice, it would not have created a lien over the property because the
main office of a lien is to warn prospective buyers that the property they intend to
purchase is the subject of a pending litigation. Therefore, since the property is already in
the hands of Luminlun, an innocent purchaser for value, it can no longer be returned to its
original owner by Cabrera, much less by Cathay itself.

FRANCISCO A. VELOSO vs. COURT OF APPEALS, ET AL., [G.R. No. 102737.

August 21, 1996.]

FRANCISCO A. VELOSO, petitioner, vs. COURT OF APPEALS, AGLALOMA B.

ESCARIO, assisted by her husband GREGORIO L. ESCARIO, the REGISTER OF
DEEDS FOR THE CITY OF MANILA, respondents.

Petitioner Francisco Veloso was the owner of a parcel of land situated in the
district of Tondo, Manila, with an area of one hundred seventy seven (177) square meters
and covered by Transfer Certificate of title No. 49138 issued by the Registry of Deeds of
Manila. 2 The title was registered in the name of Francisco A. Veloso, single, 3 on
October 4, 1957. 4 The said title was subsequently cancelled and a new one, Transfer
Certificate of Title No. 180685, was issued in the name of Aglaloma B. Escario, married
to Gregorio L. Escario, on May 24, 1988. 5

On August 24, 1988, petitioner Veloso filed an action for annulment of

documents, reconveyance of property with damages and preliminary injunction and/or
restraining order. The complaint, docketed as Civil Case no. 88-45926, was raffled to the
Regional Trial Court, Branch 45, Manila. Petitioner alleged therein that he was the
absolute owner of the subject property and he never authorized anybody, not even his
wife, to sell it. He alleged that he was in possession of the title but when his wife, Irma,
left for abroad, he found out that his copy was missing. He then verified with the Registry
of Deeds of Manila and there he discovered that his title was already canceled in favor of
defendant Aglaloma Escario. The transfer of property was supported by a General Power
of Attorney 6 dated November 29, 1985 and Deed of Absolute Sale, dated November 2,
1987, executed by Irma Veloso, wife of the petitioner and appearing as his attorney-in-
fact, and defendant Aglaloma Escario. 7 Petitioner Veloso, however, denied having
executed the power of attorney and alleged that his signature was falsified. He also
denied having seen or even known Rosemarie Reyes and Imelda Santos, the supposed
witnesses in the execution of the power of attorney. He vehemently denied having met or
transacted with the defendant. Thus, he contended that the sale of the property, and the
subsequent transfer thereof, were null and void. Petitioner Veloso, therefore, prayed that a
temporary restraining order be issued to prevent the transfer of the subject property; that
the General Power of Attorney, the Deed of Absolute Sale and the Transfer Certificate of
Title No. 180685 be annulled; and the subject property be reconveyed to him.

Defendant Aglaloma Escario in her answer alleged that she was a buyer in good
faith and denied any knowledge of the alleged irregularity. She allegedly relied on the
general power of attorney of Irma Veloso which was sufficient in form and substance and
was duly notarized. She contended that plaintiff (herein petitioner), had no cause of
action against her. In seeking for the declaration of nullity of the documents, the real
party in interest was Irma Veloso, the wife of the plaintiff. She should have been
impleaded in the case. In fact, Plaintiff's cause of action should have been against his
wife, Irma. Consequently, defendant Escario prayed for the dismissal of the complaint
and the payment to her of damages. 8

Pre-trial was conducted. The sole issue to be resolved by the trial court was
whether or not there was a valid sale of the subject property. 9

During the trial, plaintiff (herein petitioner) Francisco Veloso testified that he
acquired the subject property from the Philippine Building Corporation, as evidenced by
a Deed of Sale dated October 1, 1957. 10 He married Irma Lazatin on January 20, 1962.
11 Hence, the property did not belong to their conjugal partnership. Plaintiff further
asserted that he did not sign the power of attorney and as proof that his signature was
falsified, he presented Allied Bank Checks Nos. 16634640, 16634641 and 16634643,
which allegedly bore is genuine signature.
 Witness for the plaintiff Atty. Julian G. Tubig denied any participation in the
execution of the general power of attorney. He attested that he did not sign thereon, and
the same was never entered in his Notarial Register on November 29, 1985.

In the decision of the trial court dated March 9, 1990, 12 defendant Aglaloma
Escario was adjudged the lawful owner of the property as she was deemed an innocent
purchaser for value. The assailed general power of attorney was held to be valid and
sufficient for the purpose. The trial court ruled that there was no need for a special power
of attorney when the special power was already mentioned in the general one. It also
declared that plaintiff failed to substantiate his allegation of fraud. The court also stressed
that plaintiff was not entirely blameless for although he admitted to be the only person
who had access to the title and other important documents, his wife was still able to
posses the copy. Citing Section 55 of Act 496, the court held that Irma's possession and
production of the certificate of title was deemed a conclusive authority from the plaintiff
to the Register of Deeds to enter a new certificate. Then applying the principle of
equitable estoppel, plaintiff was held to bear the loss of it was he who made the wrong
possible. Thus:

"WHEREFORE, the Court finds for the defendants and against plaintiff
a. declaring that there was a valid sale of the subject property in favor of the
defendant;

b. denying all other claims of the parties for want of legal and factual basis.
Without pronouncement as to costs.

SO ORDERED."

I The Court of Appeals committed a grave error in not finding that the forgery of
the power of attorney (Exh. "C") had been adequately proven, despite the preponderant
evidence, and in doing so, it has so far departed from the applicable provisions of law and
the decisions of this Honorable Court, as to warrant the grant of this petition for review
on certiorari.

II There are principles of justice and equity that warrant a review of the decision.

III The Court of Appeals erred in affirming the decision of the trial court which
misapplied the principle of equitable estoppel since the petitioner did not fail in his duty
of observing due diligence in the safekeeping of the title to the property.

We find petitioner's contentions not meritorious.

An examination of the records showed that the assailed power of attorney was
valid and regular on its face. It was notarized and as such, it carries the evidentiary
weight conferred upon it with respect to its due execution. While it is true that it was
denominated as a general power of attorney, a perusal thereof revealed that it stated an
authority to sell, to wit:

"2. 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 and under such covenants as my said attorney
shall deem fit and proper." 16

Thus, there was no need to execute a separate and special power of attorney since
the general power of attorney had expressly authorized the agent or attorney in fact the
power to sell the subject property. The special power of attorney can be included in the
general power when it is specified therein the act or transaction for which the special
power is required.

The general power of attorney was accepted by the Register of Deeds when the
title to the subject property was cancelled and transferred in the name of private
respondent. In LRC Consulta No. 123, Register of Deeds of Albay, Nov. 10, 1956, it
stated that:

"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. An instrument may be captioned as
"special power of attorney" but if the powers granted are couched in general terms
without mentioning any specific power to sell or mortgage or to do other specific acts of
strict dominion, then in that case only acts of administration may be deemed conferred."

Petitioner contends that his signature on the power of attorney was falsified. He
also alleges that the same was not duly notarized for as testified by Atty. Tubig himself,
he did not sign thereon nor was it ever recorded in his notarial register. To bolster his
argument, petitioner had presented checks, marriage certificate and his residence
certificate to prove his alleged genuine signature which when compared to the signature
in the power of attorney, showed some difference.

We found, however, that the basis presented by the petitioner was inadequate to
sustain his allegation of forgery. Mere variance of the signatures cannot be considered as
conclusive proof that the same were forged. Forgery cannot be presumed (Tenio-
Obsequio vs. Court of Appeals, G. R. 107967, March 1, 1994). Petitioner, however,
failed to prove his allegation and simply relied on the apparent difference of the
signatures. His denial had not established that the signature on the power of attorney was
not his.
 We agree with the conclusion of the lower court that private respondent was an
innocent purchaser for value. Respondent Aglaloma relied on the power of attorney
presented by petitioner's wife, Irma. Being the wife of the owner and having with her the
title of the property, there was no reason for the private respondent not to believe, in her
authority. Moreover, the power of attorney was notarized and as such, carried with it the
presumption of its due execution. Thus, having had no inkling on any irregularity and
having no participation thereof, private respondent was a buyer in good faith. It has been
consistently held that 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 such purchase, or before he has notice of
the claim or interest of some other person in the property (Bautista, et. al. vs. Court of
Appeals, G.R. 106042, Feb. 28, 1994).

Documents acknowledged before a notary public have the evidentiary weight with
respect to their due execution. The questioned power of attorney and deed of sale, were
notarized and therefore, presumed to be valid and duly executed. Atty. Tubig denied
having notarized the said documents and alleged that his signature had also been falsified.
He presented samples of his signature to prove his contention. Forgery should be proved
by clear and convincing evidence and whoever alleges it has the burden of proving the
same. Just like the petitioner, witness Atty. Tubig merely pointed out that his signature
was different from that in the power of attorney and deed of sale. There had never been
an accurate examination of the signature, even that of the petitioner. To determine
forgery, it was held in Cesar vs. Sandiganbayan, G.R. Nos. 54719-50, 17 January 1985,
(quoting Osborn, The Problem of Proof) that:

"The process of identification, therefore, must include the determination of the extent,
kind, and significance of this resemblance as well as of the variation. It then becomes
necessary to determine whether the variation is due to the operation of a different
personality, or is only the expected and inevitable variation found in the genuine writing
of the same writer. It is also necessary to decide whether the resemblance is the result of a
more or less skillful imitation, or is the habitual and characteristic resemblance which
naturally appears in a genuine writing. When these two questions are correctly answered
the whole problem of identification is solved."

Even granting for the sake of argument, that the petitioner's signature was falsified and
consequently, the power of attorney and the deed of sale were null and void, such fact
would not revoke the title subsequently issued in favor of private respondent Aglaloma.
In Tenio-Obsequio vs. Court of Appeals, (G.R. 109767, March 1, 1994) it was held, viz:

"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."
 Finally, the trial court did not err in applying equitable estoppel in this case. 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. From the evidence
adduced, it should be the petitioner who should bear the loss. As the court a quo found:

"Besides, the records of this case disclosed that the plaintiff is not entirely free from
blame. He admitted that he is the sole person who has access to TCT No. 49138 and other
documents appertaining thereto (TSN, May 23, 1989, pp. 7-12). However, the fact
remains that the Certificate of Title, as well as other documents necessary for the transfer
of title were in the possession of plaintiff's wife, Irma L. Veloso, consequently leaving no
doubt or any suspicion on the part of the defendant as to her authority. Under Section 55
of Act 496, as amended, Irma's possession and production of the Certificate of Title to
defendant operated as "conclusive authority from the plaintiff to the Register of Deeds to
enter a new certificate." 21

CONSORCIA TENIO-OBSEQUIO, ORLANDO OBSEQUIO, and MANUEL,

REGINA, TUNAY and MELITON, all surnamed OBSEQUIO, petitioners, vs. COURT
OF APPEALS, EUFRONIO ALIMPOOS, and PONCIANA ALIMPOOS, respondents.
[G.R. No. 107967. March 1, 1994.]

SYLLABUS

1. CIVIL LAW; LAND REGISTRATION ACT; RIGHT OF ORIGINAL

OWNER TO SEEK ANNULMENT OF TRANSFER, SUBJECT TO RIGHTS OF
INNOCENT HOLDER FOR VALUE. Under Section 55 of the Land Registration Act,
as amended by Section 53 of Presidential Decree No. 1529, an original owner of
registered land may seek the annulment of a transfer thereof on the ground of fraud.
However, such a remedy is without prejudice to the rights of any innocent holder for
value with a certificate of title.

2. ID.; ID.; TORRENS TITLE; PURCHASER IN GOOD FAITH AND FOR

VALUE, DEFINED. Under Section 55 of the Land Registration Act, as amended by
Section 53 of Presidential Decree No. 1529, an original owner of registered land may
seek the annulment of a transfer thereof on the ground of fraud. However, such a remedy
is without prejudice to the rights of any innocent holder for value with a certificate of
title.

3. ID.; ID.; ID.; ID.; PETITIONER IN CASE AT BAR, A PURCHASER IN

GOOD FAITH. In consonance with this accepted legal definition, petitioner Consorcia
Tenio-Obsequio is a purchaser in good faith. There is no showing whatsover nor even an
allegation that herein petitioner had any participation, voluntarily or otherwise, in the
alleged forgery. Nor can we charge said petitioner with negligence since, at the time of
the sale to her, the land was already registered in the name of Eduardo Deguro and the tax
declaration was also issued in the latter's name. It was also clearly indicated at the back of
the original certificate of title that Eduardo Deguro acquired ownership over the said land
by virtue of the deed of sale executed in his favor. In fact, it is not disputed that one of his
heirs was actually residing therein. There is no annotation, defect or flaw in the title that
would have aroused any suspicion as to its authenticity. Such being the case, petitioner
has the right to rely on what appears on the face of the certificate of title.

4. ID.; ID.; TORRENS SYSTEM OF LAND REGISTRATION; MAIN

PURPOSE. The main purpose of the Torrens system is to avoid possible conflicts of
title to real estate and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens certificate of title and to dispense with the need of
inquiring further, except when the party concerned has actual knowledge of facts and
circumstances that should impel a reasonable cautious man to make such further inquiry.

5. ID.; ID.; ID.; EVERY PERSON DEALING WITH REGISTERED LAND

MAY SAFELY RELY ON THE CORRECTNESS OF THE CERTIFICATE OF TITLE.
Where innocent third persons, relying on the correctness of the certificate of title thus
issued, acquire rights over the property, the court cannot disregard such rights and order
the total cancellation of the certificate. The effect of such an outright cancellation would
be to impair public confidence in the certificate of title, for everyone dealing with
property registered under the Torrens system would have to inquire in every instance as
to whether the title has been regularly or irregularly issued by the court. Every person
dealing with registered land may safely rely on the correctness of the certificate of title
issued therefor and the law will in no way oblige him to go beyond the certificate to
determine the condition of the property.
6. ID.; ID.; ID.; ID.; GOVERNMENT SHOULD BE FIRST TO ACCEPT
VALIDITY OF TITLES ISSUED THEREUNDER. The Government, recognizing the
worthy purposes of the Torrens system, should be the first to accept the validity of titles
issued thereunder once the conditions laid down by the law are satisfied.

7. REMEDIAL LAW; EVIDENCE; AUTHENTICITY OF CONTRACT OF

SALE, BOLSTERED BY APPROVAL THEREOF BY GOVERNMENT AGENCY.
There is no reason to doubt the authenticity of the deed of sale which constituted the basis
for the issuance of the transfer certificate of title in the name of Eduardo Deguro,
considering that not only was the contract notarized but that it was also approved by the
Secretary of Agriculture and Natural Resources in compliance with Section 118 of the
Public Land Act.

8. ID.; ID.; NOTARIAL DOCUMENT; PRESUMED ISSUED

REGULARLY. There is no indubitable, legal and convincing reason for nullifying the
deed of sale. Herein private respondents have not presented any cogent, complete and
convincing proof to override the evidentiary value of the duly notarized deed of sale. A
notarial document is evidence of the facts in the clear unequivocal manner therein
expressed. It has in its favor the presumption of regularity. To contradict all these, there
must be evidence that is clear, convincing and more than merely preponderant.
 9. ID.; ID.; FORGERY CANNOT BE PRESUMED; MUST BE PROVED
BY CLEAR AND CONVINCING EVIDENCE. Forgery cannot be presumed; it must
be proved by clear, positive and convincing evidence. Those who make the allegation of
forgery have the burden of proving it since a mere allegation is not evidence. Private
respondents in this case ruefully failed to substantiate with sufficient evidence their claim
that their signatures appearing on the deed of sale were forged.

10. CIVIL LAW; LAND REGISTRATION ACT; TORRENS SYSTEM OF

LAND REGISTRATION; A FORGED DEED CAN BE A BASIS OF A VALID TITLE.
It has been consistently ruled that a forged deed can legally be the root of a valid title
when an innocent purchaser for value intervenes. A deed of sale executed by an impostor
without the authority of the owner of the land sold is a nullity, and registration will not
validate what otherwise is an invalid document. However, where the certificate of title
was already transferred from the name of the true owner of the forger and, while it
remained that way, the land was subsequently sold to an innocent purchaser, the vendee
had the right to rely upon what appeared in the certificate and, in the absence of anything
to excite suspicion, was under no obligation to look beyond the certificate and investigate
the title of the vendor appearing on the face of said certificate.

11. ID.; ID.; ID.; SAFEGUARD IN PREVENTING A FORGED TRANSFER

FROM BEING REGISTERED. The Torrens Act, in order to prevent a forged transfer
from being registered, erects a safeguard by requiring that no transfer shall be registered
unless the owner's certificate of title is produced along with the instrument of transfer.

12. ID.; ID.; ID.; AUTHORIZED HOLDER OF A DOCUMENT OF

TRANSFER, AUTHORIZED TO DEAL WITH THE LAND. An executed document
of transfer of registered land placed by the registered owner thereof in the hands of
another operates as a representation to a third party that the holder of the document of
transfer is authorized to deal with the land. In the case at bar, it was even private
respondents who made the allegation that they further delivered their certificate of title to
Eduardo Deguro, allegedly to secure the loan extended to them. Consequently, petitioner
cannot be faulted and, as a matter of fact, she is vested with the right to rely on the title of
Eduardo Deguro.

13. ID.; ID.; ID.; RULE THAT AS BETWEEN TWO INNOCENT PERSONS
ONE OF WHOM MUST SUFFER THE LOSS, THE ONE WHO MADE IT POSSIBLE
MUST BEAR THE LOSS. Furthermore, it was the very act of the respondent
Alimpoos spouses in entrusting their certificate of title to Eduardo Deguro that made it
possible for the commission of the alleged fraud, if indeed there was such a fraudulent
conduct as imputed to the latter. Hence, the rule of law and justice that should apply in
this case is that as between two innocent persons, one of whom must suffer the
consequences of a breach of trust, the one who made it possible by his act of confidence
must bear the loss.

14. ID.; ID.; ID.; RIGHT OF INNOCENT PURCHASER FOR VALUE

MUST BE PROTECTED; REMEDY AVAILABLE TO PERSON PREJUDICED.
The right of the 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.

15. CIVIL LAW; PRESCRIPTION OF ACTIONS; ACTION FOR

RECONVEYANCE MUST BE FILED WITHIN TEN (10) YEARS FROM ISSUANCE
OF TITLE; ACTION IN CASE AT BAR HAS PRESCRIBED. It is also significant
and worth noting that herein respondents filed the instant complaint only after twenty-two
years from the execution of the supposedly forged deed of absolute sale, and after sixteen
years from the date the title was transferred in the name of herein petitioner. An action for
reconveyance is a legal remedy granted to a landowner whose property has been
wrongfully or erroneously registered in another's name, but then the action must be filed
within ten years from the issuance of the title since such issuance operates as a
constructive notice.

DECISION

REGALADO, J:

This petition for review on certiorari seeks to annul and set aside the decision of
the Court of Appeals in CA-G.R. CV No. 22990, dated July 9, 1992, which reversed the
judgment of the trial court, as well as its resolution of November 6, 1992 denying the
motion for reconsideration of its aforesaid decision.

The subject matter of the present decision is a parcel of land, designated as Lot
No. 846, Pls-225 located at Andanan, Bayugan, Agusan del Sur. This lot was previously
covered by Original Certificate of Title No. P-1181 registered in the name of herein
respondent Eufronio Alimpoos and which he acquired through a homestead application.
1 The said land is now registered in the name of herein petitioner, Consorcia Tenio-
Obsequio, as evidenced by Transfer Certificate of Title No. T-1421. 2

On September 10, 1986, private respondents filed a complaint in the court a quo
against herein petitioners Consorcia Tenio and her husband, Orlando Obsequio, and the
heirs of Eduardo Deguro for recovery of possession and ownership, alleging that
sometime in 1964, they mortgaged the land to Eduardo Deguro for P10,000,00; that to
guaranty the loan they delivered to the latter the original certificate of title to the land;
that in the meantime, they continued to cultivate the same and, at the end of the harvest
season, they gave two-thirds (2/3) of the harvest to Eduardo Deguro; that on June 25,
1965, Eduardo Deguro and his wife, without the knowledge and consent of herein private
respondents, prepared a document of sale and through misrepresentation and other
manipulations made it appear that private respondents sold the land to them.
This deed of sale was annotated at the back of the said certificate of title as Entry
No. 16007. By virtue thereof, Original Certificate of Title No. P-1181 in the name of
Eufronio Alimpoos was cancelled and Transfer Certificate of Title No. T-1360 was
correspondingly issued in favor of Eduardo Deguro. After the death of Eduardo Deguro,
his heirs sold the land to Consoria Tenio-Obsequio. On September 22, 1970, Transfer
Certificate of Title No. T-1421 was issued in her name. It was allegedly only in 1982,
when Eufronio Alimpoos received a Certificate of Agricultural Leasehold of his land
from the Department of Agrarian Reform (DAR), that he learned that the land was
already titled in the name of another.

In their answer, the heirs of Eduardo Deguro claimed that respondent Alimpoos
spouses sold the land to their late parents on June 25, 1965 for a consideration of
P10,000.00, as evidenced by the deed of absolute sale; that as a result thereof, Transfer
Certificate of Title No. T-1360 was issued in favor of their parents; that on April 23,
1970, after the death of their parents, they sold the said land to Consorcia Tenio-
Obsequio; that on September 22, 1970, a new Transfer Certificate of Title No. T-1421
was issued in the name of another.

In their answer, the heirs of Eduardo Deguro claimed that respondent Alimpoos
spouses sold the land to their late parents on June 25, 1965 for a consideration of
P10,000.00, as evidenced by the deed of absolute sale; that as a result thereof, Transfer
Certificate of Title No. T-1360 was issued in favor of their parents; that on April 23,
1970, after the death of their parents, they sold the said land to Consorcia Tenio-
Obsequio; that on September 22, 1970, a new Transfer Certificate of Title No. T-1421
was issued in the name of the latter. Consorcia Tenio-Obsequio, on the other hand,
maintains that she purchased the land in question from the heirs of Deguro in good faith,
for valuable consideration and without knowledge of any flaw or defect whatsoever.

The trial court, giving credence to the evidence presented by herein petitioners,
defendants therein, ruled in their favor and rendered judgment disposing as follows:
"1) dismissing the herein complaint;
2) declaring defendant Consorcia Tenio Obsequio as the true and absolute owner of
the land in litis;
3) ordering plaintiffs to pay P10,000.00 by way of moral damages;
4) ordering plaintiffs to pay P10,000.00 by way of exemplary damages;
5) ordering plaintiffs to pay the expenses of litigation in the amount of P5,000.00;
6) ordering the plaintiffs to pay (a)ttorney's fees in the amount of P5,000.00; and
7) to pay the costs.

In like manner, the money deposited in the Municipal Treasurer's Office of

Bayugan in the amounts of P2,724.95 covered by Official Receipt No. 0442623 dated
September 7, 1988 and P1,658.10 covered by Official Receipt No. 5497715 dated
September 14, 1988, as well as the sum of P3,927.00 deposited in Court pursuant to the
Court's Orders of January 16, 1987 and March 13, 1987, consisting of the proceeds from
the sale of the harvest taken from the area involved, is awarded to defendant Consorcia
Tenio Obsequio, as owner thereof after deducting the necessary expenses and Clerk of
Court'(s) commission fee." 3
 On appeal, respondent Court of Appeals reversed the decision of the lower court
and rendered judgment:
"1) Declaring the plaintiff Eufronio Alimpoos as the true and legal owner of the
property subject of this case;
2) Declaring null and void the Deed of Absolute Sale marked as Annex 'C' or Exhibit
'D' and ordering the cancellation of TCT Nos. T-1360 and T-1421 in the names of
Eduardo Deguro and Consorcia Tenio Obsequio, respectively;
3) Ordering the heirs of Eduardo Deguro and Laureana Rabuya, namely, Gonzalo
Deguro, Manuel Deguro, Tunay Deguro and Regina Deguro to reconvey the said property
to the plaintiffs;
4) Ordering the Register of Deeds to cancel the annotation of the Deed of Absolute
Sale at the back of TCT P-1181 in favor of Consorcia Tenio Obsequio and to clear said
TCT of all encumbrances executed by Eduardo Deguro and/or his heirs.
In addition, the defendants are ordered to pay the plaintiffs, jointly and severally, the sum
of P50,000.00 by way of moral damages; P30,000.00 by way of compensatory damages
and P5,000.00 by way of attorney's fees and costs of litigation." 4
Petitioners then filed a motion for reconsideration of the said decision which was denied
by the Court of Appeals in its resolution dated November 6, 1992, 5 hence the instant
recourse by petitioners.

After a careful review of the records of this case and the legal considerations
applicable to the proven facts thereof, we find the petition at bar to be meritorious.
Reconveyance of the land in question to the original owner is not in order.

Herein respondent Alimpoos, as the original owner of the said land, is

assailing the title of petitioner on the ground that their original certificate of title
over the said land was cancelled by virtue of a forged deed of absolute sale.

Under Section 55 of the Land Registration Act, as amended by Section 53 of

Presidential Decree No. 1529, an original owner of registered land may seek the
annulment of a transfer thereof on the ground of fraud. However, such a remedy is
without prejudice to the rights of any innocent holder for value with a certificate of
title.

A purchaser in good faith and for value is one who buys the 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 such purchase or
before he has notice of the claim or interest of some other person in the property.
(De Santos vs. Intermediate Appellate Court, et al., G.R. No. L-69591, January 25,
1988, 157 SCRA 295; Co, et al. vs. Court of Appeals, et al., G.R No. 93687, May 6,
1991, 196 SCRA 705; Casupit, et al. vs. Court of Appeals, et al., G.R. No. 96829,
December 9, 1991, 204 SCRA 684) In consonance with this accepted legal definition,
petitioner Consorcia Tenio-Obsequio is a purchaser in good faith. There is no
showing whatsover nor even an allegation that herein petitioner had any
participation, voluntarily or otherwise, in the alleged forgery.
 Nor can we charge said petitioner with negligence since, at the time of the sale to
her, the land was already registered in the name of Eduardo Deguro 7 and the tax
declaration was also issued in the latter's name. 8 It was also clearly indicated at the back
of the original certificate of title that Eduardo Deguro acquired ownership over the said
land by virtue of the deed of sale executed in his favor. 9 In fact, it is not disputed that
one of his heirs was actually residing therein. 10 There is no annotation, defect or flaw in
the title that would have aroused any suspicion as to its authenticity. Such being the case,
petitioner has the right to rely on what appears on the face of the certificate of title.

The main purpose of the Torrens system is to avoid possible conflicts of title
to real estate and to facilitate transactions relative thereto by giving the public the
right to rely upon the face of a Torrens certificate of title and to dispense with the
need of inquiring further, except when the party concerned has actual knowledge of
facts and circumstances that should impel a reasonable cautious man to make such
further inquiry (Gonzales vs. Intermediate Appellate Court, et al., G.R No. L-69622,
January 29, 1988, 157 SCRA 587; Rural Bank of Sariaya, Inc. vs. Yacon, et al., G.R.
No. 78011, July 5, 1989, 175 SCRA 62; Fernandez, et al. vs. Court of Appeals, et. al.,
G.R. No. 83141, September 21, 1990, 189 SCRA 780) Where innocent third persons,
relying on the correctness of the certificate of title thus issued, acquire rights over
the property, the court cannot disregard such rights and order the total cancellation
of the certificate. The effect of such an outright cancellation would be to impair
public confidence in the certificate of title, for everyone dealing with property
registered under the Torrens system would have to inquire in every instance as to
whether the title has been regularly or irregularly issued by the court. Every person
dealing with registered land may safely rely on the correctness of the certificate of
title issued therefor and the law will in no way oblige him to go beyond the
certificate to determine the condition of the property (Director of Lands vs. Abache,
et al., 73 Phil. 606 (1942); Lopez, et al. vs. Court of Appeals, et al., G.R. No. L-49739,
January 20, 1989, 169 SCRA 271).

The Torrens system was adopted in this country because it was believed to be
the most effective measure to guarantee the integrity of land titles and to protect
their indefeasibility once the claim of ownership is established and recognized. If a
person purchases a piece of land on the assurance that the seller's title thereto is
valid, he should not run the risk of being told later that his acquisition was
ineffectual after all. This would not only be unfair to him. What is worse is that if
this were permitted, public confidence in the system would be eroded and land
transactions would have to be attended by complicated and not necessarily
conclusive investigations and proof of ownership. The further consequence would be
that land conflicts could be even more numerous and complex than they are now
and possibly also more abrasive, if not even violent. The Government, recognizing
the worthy purposes of the Torrens system, should be the first to accept the validity
of titles issued thereunder once the conditions laid down by the law are satisfied
(Republic, et al. vs. Umali, et al., G.R. No. 80687, April 10, 1989, 171 SCRA 647).
 Moreover, there is no reason to doubt the authenticity of the deed of sale which
constituted the basis for the issuance of the transfer certificate of title in the name of
Eduardo Deguro, considering that not only was the contract notarized but that it was also
approved by the Secretary of Agriculture and Natural Resources in compliance with
Section 118 of the Public Land Act. 14

There is no indubitable, legal and convincing reason for nullifying the deed of
sale. Herein private respondents have not presented any cogent, complete and
convincing proof to override the evidentiary value of the duly notarized deed of sale.
A notarial document is evidence of the facts in the clear unequivocal manner therein
expressed. It has in its favor the presumption of regularity. To contradict all these,
there must be evidence that is clear, convincing and more than merely preponderant
(Yturralde vs. Azurin, et al., G.R. No. L-22158, May 30, 1969, 28 SCRA 407; Cabrera
vs. Villanueva, et al., G.R. No. 75069, April 15, 1988, 160 SCRA 672; Almendra, et al.
vs. Intermediate Appellate Court, et al., G.R. No. 75111, November 21, 1991, 204
SCRA 142).

The fact alone that the signature of private respondent Eufronio Alimpoos
appearing on the deed of sale to Deguro differs in certain points from his signature
appearing in the "Kasabutan sa Prenda" is not enough to warrant the conclusion that the
signature in said deed of sale is not genuine. The records show that the signatures of
private respondent Eufronio Alimpoos in one of the cash advance receipts 16 and in the
notice of the trial court's order dated March 4, 1988 17 are similar to the signature
appearing in the deed of sale. It is, therefore, not improbable that, as claimed by herein
petitioners, private respondents could have deliberately and purposely altered their
signatures on the mortgage contract to thereafter make it appear that a discrepancy
actually exists. Cdpr

Forgery cannot be presumed; it must be proved by clear, positive and

convincing evidence. Those who make the allegation of forgery have the burden of
proving it since a mere allegation is not evidence (Melleza vs. Philippine National
Bank, G.R. No. 83103, October 19, 1988, Third Division, Minute Resolution; Gevero,
et al. vs. Intermediate Appellate Court, et al., G.R. No. 77029, August 30, 1990, 189
SCRA 201). Private respondents in this case ruefully failed to substantiate with
sufficient evidence their claim that their signatures appearing on the deed of sale
were forged.

At any rate, there are several reasons to doubt the authenticity of the "Kasabutan
sa Prenda." Firstly, it has not been sufficiently explained why, although it should
normally be with the mortgagee, the original mortgage contract remained in the
possession of the mortgagor and it was only after the death of the alleged mortgagee that
the same was presented, which was more than twenty years from the date of its alleged
execution. Secondly, the consideration of P10,000.00 for a mortgage in 1964 of a piece of
rural land consisting of only 81,822 square meters, with the mortgagee paying the taxes
thereon, is too high or excessive, considering that the same piece of land was
coetaneously mortgaged with the Development Bank of the Philippines for only
P1,900.00. 19 Thirdly, the texture of the paper on which it was written and the clarity of
the writing show that the document, supposedly executed on July 25, 1964, is of recent
vintage and could not be more than twenty years old, even as of this late date. 20

Yet, even on the implausible assumption, ex gratia argumenti, that the deed of
sale in favor of Eduardo Deguro was forged and is, therefore, null and void, such
fact cannot be successfully invoked to invalidate the title subsequently issued to
herein petitioner who, as earlier stated, is an innocent purchaser for value and in
good faith.

It has been consistently ruled that a forged deed can legally be the root of a valid
title when an innocent purchaser for value intervenes (Mallorca, et al. vs. De
Ocampo, et al., G.R. No. L-26852, March 25, 1970, 32 SCRA 48; Torres vs. Court of
Appelas, et al., G.R. No. 63046, June 21, 1990, 186 SCRA 672; Philippine National
Bank vs. Court of Appeals, et al., G.R. No. 43972, July 24, 1990, 187 SCRA 735). A
deed of sale executed by an impostor without the authority of the owner of the land
sold is a nullity, and registration will not validate what otherwise is an invalid
document. However, where the certificate of title was already transferred from the
name of the true owner of the forger and, while it remained that way, the land was
subsequently sold to an innocent purchaser, the vendee had the right to rely upon
what appeared in the certificate and, in the absence of anything to excite suspicion,
was under no obligation to look beyond the certificate and investigate the title of the
vendor appearing on the face of said certificate (De Lara, et al., vs. Ayroso, 95 Phil.
185 (1954); Duran, et al. vs. Intermediate Appellate Court, et al., G.R. No. 64159,
September 10, 1985, 138 SCRA 489) .

The Torrens Act, in order to prevent a forged transfer from being registered,
erects a safeguard by requiring that no transfer shall be registered unless the
owner's certificate of title is produced along with the instrument of transfer.
However, an executed document of transfer of registered land placed by the
registered owner thereof in the hands of another operates as a representation to a
third party that the holder of the document of transfer is authorized to deal with the
land (Blondeau, et al. v. Nano, et al., 6 Phil. 625 (1935), citing 53 C.J. 1141; Act No.
496, as amended, Secs. 47, 51, 55). In the case at bar, it was even private respondents
who made the allegation that they further delivered their certificate of title to
Eduardo Deguro, allegedly to secure the loan extended to them. Consequently,
petitioner cannot be faulted and, as a matter of fact, she is vested with the right to
rely on the title of Eduardo Deguro.

Furthermore, it was the very act of the respondent Alimpoos spouses in

entrusting their certificate of title to Eduardo Deguro that made it possible for the
commission of the alleged fraud, if indeed there was such a fraudulent conduct as
imputed to the latter. Hence, the rule of law and justice that should apply in this
case is that as between two innocent persons, one of whom must suffer the
consequences of a breach of trust, the one who made it possible by his act of
confidence must bear the loss [De Lara vs. Ayroso, supra.; Manila Surety & Fidelity
Co. vs. Luna, 107 Phil. 281 (1960)].

The right of the 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
(Blanco, et al. vs. Esquierdo, et al., 110 Phil. 494 (1960); Torres vs. Court of Appeals, et
al., supra.; Philippine National Bank vs. Court of Appeals, et al., supra.).