Misapprehension of facts

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 Romy and Gary. It was being rented by Berto, who was interested in buying it. So, in order to sell said property, the brothers executed a Deed of Absolute Sale in favor of Danny and Mila, the parents of Berto, who paid its purchase price. Then Berto asked Linda to facilitate the transfer of title in his name. Thereafter Linda was able to obtain the Certificate of Title in the name of Berto (TCT No. 271840) after payment of the corresponding registration fees and transfer taxes. Thus, she gave the title to Berto.

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, Berto verified with the Register of Deeds the title given to him by Linda. It turned out that said title was fake.

On further verification, Berto found out that an SPA was allegedly executed by the brothers Romy and Gary in favor of a person named Mila, who supposedly borrowed the sum of P800,000 for and in behalf of said brothers from Nita. To secure said loan, Mila also supposedly executed an REM in favor of Nita. When the supposed loan was not paid, the REM was foreclosed by Nita.

To protect his rights, Romy sued Nita 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 Mila. To support his claim during the trial, Berto presented the brothers Romy and Gary, who testified that they did not execute any SPA. Even Mila herself testified that no SPA was executed by the brothers in her favor.

But the Regional Trial Court (RTC) dismissed the complaint of Berto. The court ruled that the claim of forgery was not established by clear and convincing evidence and that Nita was a mortgagee in good faith as she had no notice of any lien or 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 their 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 Berto’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 Romy, Gary and Mila 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 Mila where it can examine the genuine and the forged signatures. The presentation of handwriting experts to prove forgery is therefore not necessary.

Nita is also not 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 Berto in the property, Nita failed to inquire on the nature of Berto’s possession. A simple investigation would have revealed that the property was previously sold to Berto’s parents by the registered owners. In fact, the brothers testified that the original owner’s certificate was already given to Berto 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 SPA and REM while Nita 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.)