In a dispute over land ownership, the Supreme Court affirmed that a forged deed of sale is invalid and conveys no title. The Court emphasized that the principle of double sale, outlined in Article 1544 of the Civil Code, applies only when the same property is validly sold to different buyers. The ruling reinforces the importance of due diligence in property transactions, and highlights that registration of a forged document does not validate an otherwise void contract. This decision underscores the necessity of verifying the authenticity of documents and the consent of all parties involved in real estate dealings.

Forged Signatures and Land Rights: Cattleya Land vs. Fudot

This case revolves around a parcel of land in Doljo, Panglao, Bohol, and the conflicting claims of ownership between Carmelita Fudot and Cattleya Land, Inc. Cattleya Land, Inc. (respondent) purchased nine lots, including the subject land, from the spouses Troadio and Asuncion Tecson. Subsequently, Carmelita Fudot (petitioner) presented a deed of sale, purportedly executed by the Tecsons in her favor, for registration. The central legal issue is to determine which party has a better right over the land, considering the circumstances of the two sales and the validity of the documents presented.

The factual backdrop reveals that Cattleya Land conducted a title check before purchasing the nine lots from the Tecsons and registered both a Deed of Conditional Sale and a Deed of Absolute Sale. However, the registration was initially hindered by a notice of attachment. On the other hand, Carmelita Fudot presented a deed of sale purportedly executed in 1986. Asuncion Tecson intervened, claiming her signature on Fudot’s deed of sale was forged and that she never consented to the sale. This claim of forgery became a pivotal point in the case.

The trial court ruled in favor of Cattleya Land, quieting the title in its name and declaring the deed of sale between Fudot and the Tecsons invalid. The court’s decision was influenced by the fact that Cattleya Land had recorded its deed of sale in good faith ahead of Fudot. Furthermore, the trial court found Asuncion Tecson’s testimony regarding the forgery convincing and unrebutted. Fudot appealed, arguing that the rule on double sale should apply. However, the Court of Appeals dismissed her appeal, affirming the trial court’s decision that the sale to Fudot was null and void due to the forged signature.

The Court of Appeals emphasized that even if there was a double sale, Cattleya Land’s claim would still prevail because it had registered the second sale in good faith. The appellate court highlighted that Cattleya Land made inquiries before purchasing the lots and was informed that the titles were free from encumbrances, except for the attachment. The Supreme Court then took up the case to resolve the issues presented by Fudot, focusing on the rights of the buyers and the applicable law.

One of the main arguments of Fudot was that she was the first buyer in good faith and possessed the owner’s copy of the title. She insisted that the presentation of the deed of sale and the owner’s copy implied the conclusive authority of Asuncion Tecson. However, the Supreme Court was not persuaded by this argument. The Court emphasized that the validity of the sale to Fudot was in question due to the alleged forgery of Asuncion’s signature. The respondent, Cattleya Land, argued that Fudot’s claim was based on a null and void deed of sale, and that Cattleya Land had established its status as a buyer in good faith.

The Supreme Court noted that the principle of double sale, as outlined in Article 1544 of the Civil Code, applies only when the same property is validly sold to different vendees. In this case, the Court found that there was only one valid sale—that between the spouses Tecson and Cattleya Land. The Court cited previous rulings to support this view. For example, in Remalante v. Tibe, the Court ruled that the Civil Law provision on double sale is not applicable where there is only one valid sale, the previous sale having been found to be fraudulent.

Similarly, in Espiritu and Apostol v. Valerio, the Court held that Article 1544 of the Civil Code would not apply where one deed of sale is found to be a forgery. The finding by the trial court that the sale between the Tecsons and Fudot was invalid due to Asuncion’s forged signature was upheld by the Court of Appeals. The Supreme Court acknowledged the lower courts’ findings, stating that they found no reason to disturb them. Furthermore, the Court reiterated the established principle that a forged deed is a nullity and conveys no title.

The Court addressed Fudot’s argument that she had a better right as the holder and first presenter of the owner’s copy of the title. The Court clarified that the act of registration does not validate an otherwise void contract. Registration is a ministerial act and does not convert an invalid instrument into a valid one. This is a critical distinction, as it underscores that registration does not cure fundamental defects in a contract. The Court quoted Pascua v. Court of Appeals to support this view, emphasizing that registration operates as a notice but does not add to the validity of the deed.

Even assuming there was a double sale, the Court reasoned that Cattleya Land would still prevail. Article 1544 of the Civil Code states that ownership belongs to the person who in good faith first recorded it in the Registry of Property. The Court referred to the principle of primus tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale does not defeat the first buyer’s rights, unless the second buyer registers in good faith ahead of the first. However, knowledge gained by the second buyer of the first sale defeats his rights, even if he is the first to register, as such knowledge taints his prior registration with bad faith.

The Court agreed with the trial court and the Court of Appeals that Cattleya Land was a buyer in good faith. Cattleya Land purchased the lots without notice of a previous sale and even took steps to clear the title by persuading the parties in the attachment case to settle. This proactive approach demonstrated their commitment to ensuring the integrity of the transaction. The Court emphasized the importance of good faith in these transactions, stating that it is essential for a second realty buyer to act in good faith to merit the protection of Article 1544.

The Court cited Sections 51 and 52 of Presidential Decree No. 1529, also known as the Property Registration Decree, to further support its decision. Section 51 states that the act of registration is the operative act to convey or affect the land insofar as third persons are concerned. Section 52 states that registration serves as constructive notice to all persons. These provisions highlight the importance of registration in establishing rights to registered land. In this case, Cattleya Land registered its purchase ahead of Fudot and thus acquired a better title to the property.

Finally, the Court addressed Fudot’s claim that P.D. No. 1529 applies to registered lands, while Art. 1544 of the Civil Code applies only to immovable property not covered by the Torrens System. The Court referred to an explanation by Justice Jose Vitug, stating that the registration contemplated under Art. 1544 refers to registration under P.D. No. 1529. This clarification reinforces the integration of the Civil Code and the Property Registration Decree in resolving disputes over registered land.

FAQs

What was the key issue in this case?	The key issue was to determine who had the better right over a parcel of land, given two competing claims: one based on a deed of sale alleged to be forged and the other based on a subsequent purchase registered in good faith.
What is the double sale doctrine?	The double sale doctrine, as outlined in Article 1544 of the Civil Code, applies when the same property is validly sold to multiple buyers. It prioritizes ownership based on good faith possession, registration, or the oldest title.
What happens if a deed of sale is forged?	A forged deed of sale is considered a nullity and conveys no title to the buyer. The courts will not recognize any rights arising from a forged document.
What does it mean to be a buyer in good faith?	A buyer in good faith is someone who purchases property without knowledge of any defect in the seller’s title or any prior claims on the property. They must conduct due diligence and make reasonable inquiries to verify the title’s validity.
Does registration of a deed guarantee its validity?	No, registration of a deed is a ministerial act and does not automatically validate the document. If the deed is found to be invalid (e.g., due to forgery), registration will not cure the defect.
What is the significance of P.D. No. 1529 (Property Registration Decree)?	P.D. No. 1529 governs the registration of land titles in the Philippines. It provides that the act of registration is the operative act to convey or affect registered land insofar as third persons are concerned.
What is the principle of primus tempore, potior jure?	Primus tempore, potior jure means “first in time, stronger in right.” This principle is relevant in double sale cases and generally gives preference to the party who first acquired the right, provided they acted in good faith.
How does knowledge of a prior sale affect a buyer’s rights?	If a buyer knows about a prior sale, their subsequent registration will be considered in bad faith, negating their claim under Article 1544 of the Civil Code. Good faith is essential for the protection of a buyer’s rights in a double sale situation.
What is the effect of a wife’s lack of consent to the sale of conjugal property?	Under Article 166 of the Civil Code (applicable at the time), the husband could not alienate conjugal property without the wife’s consent. A sale without such consent could be annulled by the wife within a specified period.

This case serves as a reminder of the importance of conducting thorough due diligence in property transactions and verifying the authenticity of all related documents. It also underscores the principle that registration alone does not validate a void contract. Land disputes can be complex, requiring careful consideration of the facts and applicable laws.

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: Carmelita Fudot vs. Cattleya Land, Inc., G.R. No. 171008, September 13, 2007