Veloso v. CA

G.R. No. 102737 (August 21, 1996)

Facts:

Petitioner Francisco A. Veloso was the registered owner of a parcel of land in Tondo, Manila, covered by Transfer Certificate of Title No. 49138, issued on October 4, 1957. The title was later canceled, and a new title, Transfer Certificate of Title No. 180685, was issued in the name of Aglaloma B. Escario on May 24, 1988. Veloso filed an action for annulment of documents, reconveyance of property, and damages after discovering that his title had been canceled while he was in possession of the property. He alleged that his wife, Irma Veloso, executed a General Power of Attorney on November 29, 1985, and a Deed of Absolute Sale on November 2, 1987, without his authorization, and that his signature on these documents was forged.

In his complaint, Veloso claimed he had never authorized anyone, including his wife, to sell the property. He discovered the cancellation of his title only after his wife left for abroad and he found his copy of the title missing. The transfer of the property was contested on the grounds of lack of authority and forgery. Aglaloma Escario, the defendant, argued that she was a buyer in good faith, relying on the General Power of Attorney, which she claimed was valid and duly notarized.

During the trial, Veloso testified about the acquisition of the property and denied signing the power of attorney. He presented evidence, including bank checks, to support his claim of forgery. The trial court found in favor of Escario, ruling that she was an innocent purchaser for value and that the power of attorney was valid.

Legal Issues:

1. Was there a valid sale of the property despite the allegations of forgery and lack of authority?
2. Did the trial court err in applying the principle of equitable estoppel?
3. Was Aglaloma Escario a buyer in good faith?

Arguments:

• Petitioner (Veloso):

  • Claimed that he never authorized his wife to sell the property and that his signature on the power of attorney was forged.
  • Argued that the trial court misapplied the principle of equitable estoppel and failed to recognize the lack of due diligence in safeguarding his title.

• Respondent (Escario):

  • Asserted that she was a buyer in good faith, relying on the notarized General Power of Attorney.
  • Contended that Veloso's wife was the real party in interest and should have been included in the case.
  • Argued that the power of attorney was valid and sufficient for the sale of the property.

Court's Decision and Legal Reasoning:

The court affirmed the trial court's decision, holding that the General Power of Attorney was valid and sufficient for the sale of the property. The court noted that the power of attorney explicitly granted the authority to sell the property, negating the need for a separate special power of attorney. The court emphasized that the notarization of the documents carried a presumption of validity.

The court found that Veloso failed to provide adequate proof of forgery, as mere differences in signatures were insufficient to establish that the signature was falsified. The court also ruled that Escario was an innocent purchaser for value, having no knowledge of any irregularities and relying on the authority of Veloso's wife, who possessed the title.

The application of equitable estoppel was upheld, with the court stating that Veloso, having allowed his wife access to the title and documents, could not claim ignorance of her actions. The court reiterated that the loss should fall on the party whose conduct made the loss possible.

Significant Legal Principles Established:

1. A General Power of Attorney can include specific powers, such as the authority to sell property, negating the need for a separate special power of attorney.
2. The presumption of validity applies to notarized documents, which carry evidentiary weight regarding their due execution.
3. The principle of equitable estoppel applies when one party's conduct leads another to reasonably rely on that conduct, resulting in a loss that must be borne by the party whose actions created the situation.