The Supreme Court, in Heirs of Sarili v. Lagrosa, affirmed that a forged deed, even if it leads to the issuance of a new Transfer Certificate of Title (TCT), cannot transfer ownership of land. The registered owner does not lose their title, and the person who acquired the land through the forged document does not gain any rights to it. This ruling protects registered landowners from losing their property due to fraud and clarifies the responsibilities of buyers dealing with individuals who are not the registered owners of the property.

Can a Forged Signature Steal Your Land? The Case of the Disputed Caloocan Property

This case revolves around a parcel of land in Caloocan City, originally owned by Pedro F. Lagrosa. While Lagrosa was residing in the United States, a new TCT was issued in the name of Victorino Sarili based on a falsified Deed of Absolute Sale. Lagrosa, upon discovering this, filed a complaint to annul the new title and recover his property, sparking a legal battle that reached the Supreme Court. The central question is: Can a forged document, even if it results in a new land title, legally transfer ownership of a property?

The facts reveal a complex web of deceit. Lagrosa claimed that his signature on the deed was forged and that he never authorized the sale of his property to Sarili. Sarili, on the other hand, argued that he purchased the property in good faith from a certain Ramon B. Rodriguez, who presented a Special Power of Attorney (SPA) purportedly authorizing him to sell the land. The Regional Trial Court (RTC) initially sided with Sarili, finding that the SPA appeared genuine. However, the Court of Appeals (CA) reversed this decision, declaring the deeds of sale and the SPA void due to forgery.

The Supreme Court upheld the CA’s decision, emphasizing the importance of due diligence when purchasing land from someone who is not the registered owner. The Court reiterated the principle that, while a person dealing with registered land generally does not need to go beyond the certificate of title, a higher degree of prudence is required when the seller is not the registered owner. In such cases, the buyer must investigate the seller’s authority and the circumstances surrounding the sale.

Specifically, the Court pointed out that the SPA presented by Rodriguez had a flawed notarial acknowledgment because it lacked Lagrosa’s Community Tax Certificate (CTC) number, indicating the need for further inquiry into the document’s authenticity. The failure of the Sarilis to conduct this further investigation meant that they could not be considered innocent purchasers for value. An innocent purchaser for value is one who buys property without any knowledge of defects in the seller’s title. The Court emphasized that:

If the proof of capacity consists of a special power of attorney duly notarized, mere inspection of the face of such public document already constitutes sufficient inquiry. If no such special power of attorney is provided or there is one but there appears to be flaws in its notarial acknowledgment, mere inspection of the document will not do; the buyer must show that his investigation went beyond the document and into the circumstances of its execution.

Furthermore, the Court found that the Sarilis’ claim was based on a forged document. Even if a buyer possesses a Certificate of Title (COT), the registered owner does not lose rights to their title if the instrument presented is forged. Thus, the registration stemming from that document will not stand.

In this case, Lagrosa’s signature on the SPA was proven to be different from his genuine signature, and he testified that he and his wife had been living in the United States since 1968 and could not have signed the document. The notary public also admitted that he did not require the presentation of Lagrosa’s CTC or other valid proof of identity and relied on the representations of the person who appeared before him. The Court stated:

When the instrument presented is forged, even if accompanied by the owner’s duplicate certificate of title, the registered owner does not thereby lose his title, and neither does the assignee in the forged deed acquire any right or title to the property.

The Court upheld the award of moral damages and attorney’s fees to Lagrosa, recognizing the anxiety and suffering he endured due to the fraudulent attempt to take his property. However, the Court remanded the case to the lower court to determine the rights and obligations of the parties concerning the house that the Sarilis had built on the property in bad faith. Given that the Sarilis were aware of the irregularities surrounding the SPA, they could not be considered builders in good faith. This ruling is based on Article 449 in relation to Articles 450, 451, 452, and the first paragraph of Article 546 of the Civil Code.

These articles grant the landowner (Lagrosa) the right to demand the demolition of the building or to compel the builder (Sarilis) to pay the price of the land. Additionally, the landowner is entitled to damages, while the builder is entitled only to reimbursement for necessary expenses for the preservation of the land.

FAQs

What was the key issue in this case?	The key issue was whether a forged deed of sale could validly transfer ownership of a property, even if a new Transfer Certificate of Title (TCT) was issued based on that forged document.
What is a Special Power of Attorney (SPA)?	A Special Power of Attorney (SPA) is a legal document that authorizes a person (the agent) to act on behalf of another person (the principal) in specific matters, such as selling a property. The agent’s authority must be in writing, as required by Article 1874 of the Civil Code.
What does it mean to be an “innocent purchaser for value”?	An innocent purchaser for value is someone who buys property without knowledge of any defects or irregularities in the seller’s title. They rely on the correctness of the certificate of title and pay a fair price for the property.
What is the significance of notarization in a SPA?	Notarization gives a document a public character and makes it admissible in court without further proof of its execution. However, if the notarization is defective, the document is considered a private one, and its validity must be proven by preponderance of evidence.
What duty does a buyer have when purchasing property from someone who is not the registered owner?	A buyer must exercise a higher degree of prudence, examining not only the certificate of title but also the circumstances of the sale and the seller’s authority to sell. This includes verifying the authenticity of the SPA and the identity of the person they are dealing with.
What happens if a buyer builds on land in bad faith?	If a buyer builds on land in bad faith, knowing there are defects in their title, they lose what they built without the right to indemnity. The landowner can demand demolition or compel the builder to pay for the land, and is entitled to damages from the builder.
What is the basis for awarding moral damages in this case?	Moral damages were awarded because the fraudulent attempt to take Lagrosa’s property caused him serious anxiety, mental anguish, and sleepless nights. These damages are intended to compensate him for the emotional distress he suffered.
What is the role of the Community Tax Certificate (CTC) in notarization?	Under the Local Government Code of 1991, a notary public must require an individual acknowledging a document to present their Community Tax Certificate (CTC) to verify their identity. Failure to do so indicates flawed notarization.

The Heirs of Sarili v. Lagrosa serves as a crucial reminder of the importance of verifying the authenticity of documents and exercising due diligence when purchasing property. It underscores the principle that a forged document cannot transfer ownership, protecting registered landowners from fraudulent schemes. Buyers must be vigilant and conduct thorough investigations, especially when dealing with sellers who are not the registered owners of the property.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: THE HEIRS OF VICTORINO SARILI, NAMELY: ISABEL A. SARILI, ET AL. VS. PEDRO F. LAGROSA, G.R. No. 193517, January 15, 2014