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May 19, 2015

Domingo vs. Reed

Facts:
  • Respondent Guillermo Reed was an overseas contract worker from 1978 to 1986. 
  • He purchased from the GSIS on installment basis a 166 sq. m. property located at MRR Road, Mangahan, Pasig. 
  • Because he was working abroad, it was his wife, Lolita Reed, who paid the consideration to the GSIS. 
  • On July 9, 1986, TCT No. 58195 covering said property was issued by the Registry of Deeds for the Province of Rizal, Metro Manila in the name of Lolita Reed, married to Guillermo Reed.
  • Guillermo Reed had allowed his brother, Dominador, and the latter’s wife, Luz, to stay in the house constructed on his property. 
  • In December, 1991, Dominador and Luz Reed were summoned to the barangay in connection with the complaint for ejectment filed against them by Eduardo Quiteves, who claimed to be the owner of the lot where their house stands.
  • Guillermo denied having sold his property.
  • In view of the claims of Eduardo Quiteves and Alberta Domingo that they bought the subject property, Guillermo Reed made a verification with the Register of Deeds of Pasig. 
  • Guillermo discovered that his title over the subject property had been cancelled.
  • On March 8, 1994, Guillermo Reed filed a complaint for reconveyance of property against alleging that his wife, Lolita Reed, from whom he had been estranged, conspiring with the other [petitioners], except the Register of Deeds of Pasig.
  • Guillermo alleged that the SPA was a forgery, that he did not sign the SPA nor appear before the notary public because he was working abroad and that spouses Villanera and Domingo and Eduardo Quiteves are purchasers in bad faith because they knew, at the time they transacted with Lolita Reed, that he was working abroad and estranged from the latter.
  • The alleged purchasers said that Guillermo reed gave a written consent for the sale of the properties.
  • RTC ruled in favor of petitioners. CA reversed the RTC ruling.
  • CA said that  CA held that the vendees were not purchasers for value in good faith. 
  • As for Eduardo Quiteves, he was faulted by the CA for not having inquired into and investigated the authenticity and validity of the SPA shown to him by Lolita, evidencing her husband’s alleged consent to the sale of their conjugal property. 
  • CA declared the Deeds of Sale executed by Lolita in favor of Spouses Danilo and Alberta Domingo and Eduardo Quiteves null and void. 
  • It also ordered the cancellation of the TCTS issued in their favor; and the reinstatement of TCT No. 58195 in the name of Lolita Reed, married to Guillermo Reed, insofar as it covered the portions of the property sold to petitioners.



Issues:
1. WON the Special Power of Attorney is authentic. Authentic
2. WON Lolita Reed was justified for selling the subject property. No.
3. Whether petitioners are buyers in good faith. No.

Held:

1. The SPA is not authentic.
Prior to determining whether petitioners are buyers in good faith, the essential question to be answered is whether the SPA relied upon by the parties was indeed authentic. 

Lolita cannot insist that the SPA was valid (circumstances show that the SPA was fake and the signature was forged)
Most telling is the admission of Lolita that she merely sent an already typewritten SPA to her husband, who was then working in the Middle East. She further admits that when it was brought back by her brother-in-law, it had already been signed by Guillermo. Thus, it is clear that she never saw him sign it. 

In this case, the SPA was notarized but it was not shown that Guillermo appeared to the Notary Public. 
A document should not be notarized unless the persons who are executing it are the very same ones who are personally appearing before the notary public. Notaries public are enjoined from notarizing a fictitious or spurious document. In fact, it is their duty to demand that the document presented to them for notarization be signed in their presence. Their function is, among others, to guard against illegal deeds.

2. The sale made by Lolita was not justified.

Even if the SPA was a forgery, Lolita’s act of selling the property was unjustified
In addition to the fact that her rights over the property were merely inchoate prior to the liquidation of the conjugal partnership, there was absolutely no proof to her allegations that she used the proceeds of the sale to purchase necessities for the maintenance and support of the family. Having failed to establish any of these circumstances, she may not unilaterally bind the conjugal assets.

3. No, they are not purchasers in good faith

Who is a buyer in good faith
An innocent purchaser for value is one who buys the property of another without notice that some other person has a right to or interest in that same property, and who pays a full and fair price at the time of the purchase or before receiving any notice of another person’s claim.

Comment of Justice Panganiban re: Dealing with Registered Lands
W hen dealing with registered land, prospective buyers are normally not required by law to inquire further than what appears on the face of the Torrens certificate of title on file with the Register of Deeds. Equally settled is the principle, however, that purchasers cannot close their eyes to known facts that should put a reasonable person on guard; they cannot subsequently claim to have acted in good faith, in the belief that there was no defect in the vendor’s certificate of title. 

Their mere refusal to face up to that possibility will not make them innocent purchasers for value, if it later becomes apparent that the title was indeed defective, and that they would have discovered the fact, had they acted with the measure of precaution required of a prudent person in a like situation.

When something arouses suspicion, one must investigate on the title
Thus, the presence of anything that excites or arouses suspicion should then prompt the vendee to look beyond the vendor’s certificate and investigate the title appearing on the face of that certificate.  A vendee who does not do so cannot be denominated either as an innocent purchaser for value or as a purchaser in good faith and, hence, does not merit the protection of the law.

Why the spouses Domingo are not purchasers in good faith
The Deed of Sale executed between the Domingo spouses and Lolita Reed clearly stated that what was being sold was her share in the conjugal property.  Despite their knowledge of this fact, the couple did not inquire about her authority to sell any portion of the property.  

The Quiteves should have inquired into Lolita’s authority to sell the property
Lolita’s authority to sell the subject property and to bind respondent was not questioned by Petitioner Quiteves, although he claimed to be close to respondent, who was a classmate’s father.

Considering that the special power of attorney is dated July 8, 1986 and it was only two years later that the subject property was offered to him by Lolita Reed, Eduardo should have taken steps to verify the whereabouts of Guillermo Reed and inquire as to whether the special power of attorney was still valid. Had Eduardo made the necessary verification from the daughter of Guillermo Reed, he could have been informed that Guillermo Reed was estranged from Lolita Reed, that Guillermo Reed returned home in 1986 and where the latter was staying. Eduardo could [have then] contacted Guillermo Reed and inquired from the latter about the authenticity of the special power of attorney.

Indeed, Quiteves should not have closed his eyes to these facts that should have made him even more vigilant, as any other reasonable person would have been.

Petitioners finally argue that, on the assumption that the Special Power of Attorney was forged, there was still no proof that the forgery had resulted from a conspiracy between them and Lolita. Thus, they conclude that the titles issued in their favor cannot be revoked. We disagree. Petitioner’s argument would stand if only they have been found to be innocent purchasers for value.


Reference:
G.R. No. 157701 
December 9, 2005
Spouses DANILO and ALBERTA DOMINGO, and EDUARDO QUITEVES, Present: Petitioners, Panganiban, J., Chairman, Sandoval-Gutierrez, - versus - Carpio Morales, Corona, and Garcia, JJ GUILLERMO REED, Promulgated: Respondent. 

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