Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. L-24765             August 29, 1969

PHILIPPINE NATIONAL BANK, plaintiff-appellee,

vs.
MAXIMO STA. MARIA, ET AL., defendant,
VALERIANA, EMETERIA, TEOFILO, QUINTIN, ROSARIO and LEONILA, all
surnamed STA. MARIA, defendants-appellants.

Tomas Besa and Jose B. Galang for plaintiff-appellee.

G.P. Nuguid, Jr. for defendants-appellants.

TEEHANKEE, J.:

In this appeal certified to this Court by the Court of Appeals as involving purely legal
issues, we hold that a special power of attorney to mortgage real estate is limited to such
authority to mortgage and does not bind the grantor personally to other obligations
contracted by the grantee, in the absence of any ratification or other similar act that
would estop the grantor from questioning or disowning such other obligations
contracted by the grantee.

Plaintiff bank filed this action on February 10, 1961 against defendant Maximo Sta.
Maria and his six brothers and sisters, defendants-appellants, Valeriana, Emeteria,
Teofilo, Quintin, Rosario and Leonila, all surnamed Sta. Maria, and the Associated
Insurance & Surety Co., Inc. as surety, for the collection of certain amounts representing
unpaid balances on two agricultural sugar crop loans due allegedly from defendants.  1

The said sugar crop loans were obtained by defendant Maximo Sta. Maria from plaintiff
bank under a special power of attorney, executed in his favor by his six brothers and
sisters, defendants-appellants herein, to mortgage a 16-odd hectare parcel of land,
jointly owned by all of them, the pertinent portion of which reads as follows:

That we, VALERIANA, EMETERIA, TEOFILO, QUINTIN, ROSARIO and

LEONILA all surnamed STA. MARIA, sole heirs of our deceased parents
CANDIDO STA. MARIA and FRANCISCA DE LOS REYES, all of legal age,
Filipinos, and residents of Dinalupihan, Bataan, do hereby name, constitute and
appoint Dr. MAXIMO STA. MARIA, of legal age, married, and residing at
Dinalupihan, Bataan to be our true and lawful attorney of and in our place, name
and stead to mortgage, or convey as security to any bank, company or to any
natural or juridical person, our undivided shares over a certain parcel of land
together the improvements thereon which parcel of land is more particularly
described as follows, to wit:
 "Situated in the Barrio of Pinulot, Municipality of Dinalupihan, Bataan,
containing an area of 16.7249 hectares and bounded as follows to wit:
North by property of Alejandro Benito; on the Northeast, by public land
and property of Tomas Tulop; on the southeast, by property of Ramindo
Agustin; on the southwest, by properties of Jose V. Reyes and Emilio
Reyes; and on the northwest, by excluded portion claimed by Emilio
Reyes."

of which parcel of land aforementioned we are together with our said attorney
who is our brother, the owners in equal undivided shares as evidenced by
Transfer Certificate of Title No. T-2785 of the Registry of Deeds of Bataan dated
Feb. 26th 1951. (Exh. E)2

In addition, Valeriana Sta. Maria alone also executed in favor of her brother, Maximo, a
special power of attorney to borrow money and mortgage any real estate owned by her,
granting him the following authority:

For me and in my name to borrow money and make, execute, sign and deliver
mortgages of real estate now owned by me standing in my name and to make,
execute, sign and deliver any and all promissory notes necessary in the
premises. (Exh. E-I)3

By virtue of the two above powers, Maximo Sta. Maria applied for two separate crop
loans, for the 1952-1953 and 1953-1954 crop years, with plaintiff bank, one in the
amount of P15,000.00, of which only the sum of P13,216.11 was actually extended by
plaintiff, and the other in the amount of P23,000.00, of which only the sum of
P12,427.57 was actually extended by plaintiff. As security for the two loans, Maximo Sta.
Maria executed in his own name in favor of plaintiff bank two chattel mortgages on the
standing crops, guaranteed by surety bonds for the full authorized amounts of the loans
executed by the Associated Insurance & Surety Co., Inc. as surety with Maximo Sta.
Maria as principal. The records of the crop loan application further disclose that among
the securities given by Maximo for the loans were a "2nd mortgage on 25.3023 Has. of
sugarland, including sugar quota rights therein" including, the parcel of land jointly
owned by Maximo and his six brothers and sisters herein for the 1952-1953 crop loan,
with the notation that the bank already held a first mortgage on the same properties for
the 1951-1952 crop loan of Maximo, 4 and a 3rd mortgage on the same properties for the
1953-1954 crop loan. 5

The trial court rendered judgment in favor of plaintiff and against defendants
thus:1äwphï1.ñët

WHEREFORE premises considered, judgment is hereby rendered condemning

the defendant Maximo R. Sta. Maria and his co-defendants Valeriana, Quintin,
Rosario, Emeteria, Teofilo, and Leonila all surnamed Sta. Maria and the
Associated Insurance and Surety Company, Inc., jointly and severally, to pay the
plaintiff, the Philippine National Bank, Del Carmen Branch, as follows:
 1. On the first cause of action, the sum of P8,500.72 with a daily interest of P0.83
on P6,100.00 at 6% per annum beginning August 21, 1963 until fully paid;

2. On the second cause of action, the sum of P14,299.79 with a daily interest of
P1.53 on P9,346.44 at 6% per annum until fully paid; and

3. On both causes of action the further sum equivalent to 10% of the total amount
due as attorney's fee as of the date of the execution of this decision, and the
costs.6

Defendant Maximo Sta. Maria and his surety, defendant Associated Insurance & Surety
Co., Inc. who did not resist the action, did not appeal the judgment. This appeals been
taken by his six brothers and sisters, defendants-appellants who reiterate in their brief
their main contention in their answer to the complaint that under this special power of
attorney, Exh. E, they had not given their brother, Maximo, the authority to borrow
money but only to mortgage the real estate jointly owned by them; and that if they are
liable at all, their liability should not go beyond the value of the property which they had
authorized to be given as security for the loans obtained by Maximo. In their answer,
defendants-appellants had further contended that they did not benefit whatsoever from
the loans, and that the plaintiff bank's only recourse against them is to foreclose on the
property which they had authorized Maximo to mortgage.

We find the appeal of defendants-appellants, except for defendant Valeriana Sta. Maria
who had executed another special power of attorney, Exh. E-1, expressly authorizing
Maximo to borrow money on her behalf, to be well taken.

1. Plaintiff bank has not made out a cause of action against defendants-appellants
(except Valeriana), so as to hold them liable for the unpaid balances of the loans
obtained by Maximo under the chattel mortgages executed by him in his own
name alone. In the early case of Bank of P.I. vs. De Coster, this Court, in holding
that the broad power of attorney given by the wife to the husband to look after
and protect the wife's interests and to transact her business did not authorize him
to make her liable as a surety for the payment of the pre-existing debt of a third
person, cited the fundamental construction rule that "where in an instrument
powers and duties are specified and defined, that all of such powers and duties
are limited andconfined to those which are specified and defined, and all other
powers and duties are excluded." 7 This is but in accord with the disinclination of
courts to enlarge an authority granted beyond the powers expressly given and
those which incidentally flow or derive therefrom as being usual or reasonably
necessary and proper for the performance of such express powers. Even before
the filing of the present action, this Court in the similar case of De Villa vs.
Fabricante 8 had already ruled that where the power of attorney given to the
husband by the wife was limited to a grant of authority to mortgage a parcel of
land titled in the wife's name, the wife may not be held liable for the payment of
the mortgage debt contracted by the husband, as the authority to mortgage does
not carry with it the authority to contract obligation. This Court thus held in the
said case:
 Appellant claims that the trial court erred in holding that only Cesario A.
Fabricante is liable to pay the mortgage debt and not his wife who is
exempt from liability. The trial court said: "Only the defendant Cesario A.
Fabricante is liable for the payment of this amount because it does not
appear that the other defendant Maria G. de Fabricante had authorized
Cesario A. Fabricante to contract the debt also in her name. The power of
attorney was not presented and it is to be presumed that the power (of
attorney) was limited to a grant of authority to Cesario A. Fabricante to
mortgage the parcel of land covered by Transfer Certificate of Title in the
name of Maria G. de Fabricante.

We went over the contents of the deed of mortgage executed by Cesario

Fabricante in favor of Appellant on April 18, 1944, and there is really
nothing therein from which we may infer that Cesario was authorized by
his wife to construct the obligation in her name. The deed shows that the
authority was limited to the execution of the mortgage insofar as the
property of the wife is concerned. There is a difference between authority
to mortgage and authority to contract obligation. Since the power of
attorney was not presented as evidence, the trial court was correct in
presuming that the power was merely limited to a grant of authority to
mortgage unless the contrary is shown.9

2. The authority granted by defendants-appellants (except Valeriana) unto their

brother, Maximo, was merely to mortgage the property jointly owned by them.
They did not grant Maximo any authority to contract for any loans in their names
and behalf. Maximo alone, with Valeriana who authorized him to borrow money,
must answer for said loans and the other defendants-appellants' only liability is
that the real estate authorized by them to be mortgaged would be subject to
foreclosure and sale to respond for the obligations contracted by Maximo. But
they cannot be held personally liable for the payment of such obligations, as
erroneously held by the trial court.

3. The fact that Maximo presented to the plaintiff bank Valeriana's additional
special power of attorney expressly authorizing him to borrow money, Exh. E-1,
aside from the authority to mortgage executed by Valeriana together with the
other defendants-appellants also in Maximo's favor, lends support to our view
that the bank was not satisfied with the authority to mortgage alone. For
otherwise, such authority to borrow would have been deemed unnecessary and a
surplusage. And having failed to require that Maximo submit a similar authority
to borrow, from the other defendants-appellants, plaintiff, which apparently was
satisfied with the surety bond for repayment put up by Maximo, cannot now seek
to hold said defendants-appellants similarly liable for the unpaid loans. Plaintiff's
argument that "a mortgage is simply an accessory contract, and that to effect the
mortgage, a loan has to be secured" 10 falls, far short of the mark. Maximo had
indeed, secured the loan on his own account and the defendants-appellants had
authorized him to mortgage their respective undivided shares of the real property
jointly owned by them as security for the loan. But that was the extent of their
authority land consequent liability, to have the real property answer for the loan
in case of non-payment. It is not unusual in family and business circles that one
would allow his property or an undivided share in real estate to be mortgaged by
another as security, either as an accommodation or for valuable consideration,
but the grant of such authority does not extend to assuming personal liability,
much less solidary liability, for any loan secured by the grantee in the absence of
express authority so given by the grantor.

4. The outcome might be different if there had been an express ratification of the
loans by defendants-appellants or if it had been shown that they had been
benefited by the crop loans so as to put them in estoppel. But the burden of
establishing such ratification or estoppel falls squarely upon plaintiff bank. It has
not only failed to discharge this burden, but the record stands undisputed that
defendant-appellant Quintin Sta. Maria testified that he and his co-defendants
executed the authority to mortgage "to accommodate (my) brother Dr. Maximo
Sta. Maria ... and because he is my brother, I signed it to accommodate him as
security for whatever he may apply as loan. Only for that land, we gave him as,
security" and that "we brothers did not receive any centavo as benefit." 11 The
record further shows plaintiff bank itself admitted during the trial that
defendants-appellants "did not profit from the loan" and that they "did not
receive any money (the loan proceeds) from (Maximo)." 12 No estoppel, therefore,
can be claimed by plaintiff as against defendants-appellants.

5. Now, as to the extent of defendant Valeriana Sta. Maria's liability to plaintiff.

As already stated above, Valeriana stands liable not merely on the mortgage of
her share in the property, but also for the loans which Maximo had obtained from
plaintiff bank, since she had expressly granted Maximo the authority to incur
such loans. (Exh. E-1.) Although the question has not been raised in appellants'
brief, we hold that Valeriana's liability for the loans secured by Maximo is
not joint and several or solidary as adjudged by the trial court, but only joint,
pursuant to the provisions of Article 1207 of the Civil Code that "the
concurrence ... of two or more debtors in one and the same obligation does not
imply that ... each one of the (debtors) is bound to render entire compliance with
the prestation. There is a solidary liability only when the obligation expressly so
states, or when the law or the nature of the obligation requires solidarity." It
should be noted that in the additional special power of attorney, Exh. E-1,
executed by Valeriana, she did not grant Maximo the authority to bind her
solidarity with him on any loans he might secure thereunder.

6. Finally, as to the 10% award of attorney's fees, this Court believes that
considering the resources of plaintiff bank and the fact that the principal debtor,
Maximo Sta. Maria, had not contested the suit, an award of five (5%) per cent of
the balance due on the principal, exclusive of interests, i.e., a balance of
P6,100.00 on the first cause of action and a balance of P9,346.44 on the second
cause of action, per the bank's statements of August 20, 1963, (Exhs. Q-1 and BB-
1, respectively) should be sufficient.
WHEREFORE, the judgment of the trial court against defendants-appellants Emeteria,
Teofilo, Quintin, Rosario and Leonila, all surnamed Sta. Maria is hereby reversed and
set aside, with costs in both instances against plaintiff. The judgment against defendant-
appellant Valeriana Sta. Maria is modified in that her liability is held to be joint and not
solidary, and the award of attorney's fees is reduced as set forth in the preceding
paragraph, without costs in this instance.
Insular Drug Co. vs. Phil. National Bank (PNB), G.R. No. 38816, 58 Phil.
684, November 03, 1933

G.R. No. L-38816 November 3, 1933

INSULAR DRUG CO., INC., plaintiff-appellee,
vs.
THE PHILIPPINE NATIONAL BANK, ET AL., defendants.
THE PHILIPPINE NATIONAL BANK, appellant.
Camus and Delgado for appellant.
Franco and Reinoso for appellee.

MALCOLM, J.:

          This is an appeal taken by Philippine National Bank from a judgment of the Court
of First Instance of Manila requiring bank to pay to the Insular Drug Co., Inc., the sum
of P18,285.92 with legal interest and costs.
  
    The record consists of the testimony of Alfred Von Arend, President and Manager of
the Insular Drug Co., Inc., and of exhibits obtained from the Philippine National Bank
showing transactions of U.E. Foerster with the bank. The Philippine National Bank was
content to submit the case without presenting evidence in its behalf. The meagre record
and the statement of facts agreed upon by the attorneys for the contending parties
disclose the following facts:

          The Insular Drug Co., Inc., is a Philippine corporation with offices in the City of
Manila. U.E. Foerster was formerly a salesman of drug company for the Islands of Panay
and Negros. Foerster also acted as a collector for the company. He was instructed to take
the checks which came to his hands for the drug company to the Iloilo branch of the
Chartered Bank of India, Australia and China and deposit the amounts to the credit of
the drug company. Instead, Foerster deposited checks, including those of Juan Llorente,
Dolores Salcedo, Estanislao Salcedo, and a fourth party, with the Iloilo branch of the
Philippine National Bank. The checks were in that bank placed in the personal account
of Foerster. Some of the checks were drawn against the Bank of Philippine National
Bank. After the indorsement on the checks was written "Received payment prior
indorsement guaranteed by Philippine National bank, Iloilo Branch, Angel Padilla,
Manager." The indorsement on the checks took various forms, some being "Insular Drug
Company, Inc., By: (Sgd.) U. Foerster, Agent. (Sgd.) U. Foerster" other being "Insular
Drug Co., Inc., By: (Sgd.) Carmen E. de Foerster, Agent (Sgd.) Carmen E. de Foerster";
others "Insular Drug Co., Inc., By: (Sgd.) Carmen E. de Foerster, Carmen E. de Froster";
others "(Sgd.) Carmen E. de Foerster, (Sgd.) Carmen E. de Foerster"; one (Sgd.) U.
Foerster. (Sgd.) U. Foerster"; others; "Insular Drug Co., Inc., Carmen E. de Foerster, By:
(Sgd.) V. Bacaldo," etc. In this connection it should be explained that Carmen E. de
Foerster was his stenographer. As a consequence of the indorsements on checks the
amounts therein stated were subsequently withdrawn by U. E., Foerster and Carmen E.
de Foerster.
          Eventually the Manila office of the drug company investigated the transactions of
Foerster. Upon the discovery of anomalies, Foerster committed suicide. But there is no
evidence showing that the bank knew that Foerster was misappropriating the funds of
his principal. The Insular Drug Company claims that it never received the face value of
132 checks here in the question covering a total of P18,285.92.

          There is no Philippine authority which directly fits the proven facts. The case of
Fulton Iron Works Co., vs. China Banking Corporation ([1930], 55 Phil., 208),
mentioned by both parties rest on a different states of facts. However, there are
elementary principles governing the relationship between a bank and its customers
which are controlling.

          In first place, the bank argues that the drug company was never defrauded at all.
While the evidence on the extent of the loss suffered by the drug company is not nearly
as clear as it should be, it is a sufficient answer to state that no such special defense was
relied upon by the bank in the trial court. The drug company saw fit to stand on the
proposition that checks drawn in its favor were improperly and illegally cashed by the
bank for Foerster and placed in his personal account, thus making it possible for
Foerster to defraud the drug company, and the bank did not try to go back of this
proposition.

          The next point relied upon by the bank, to the effect that Foerster had implied
authority to indorse all checks made out in the name of the Insular Drug Co., Inc., has
even less force. Not only did the bank permit Foerster to indorse checks and then place
them to his personal account, but it went farther and permitted Foerster's wife and clerk
to indorse the checks. The right of an agent to indorse commercial paper is a very
responsible power and will not be lightly inferred. A salesman with authority to collect
money belonging to his principal does not have the implied authority to indorse checks
received in payment. Any person taking checks made payable to a corporation, which
can act only by agent does so at his peril, and must same by the consequences if the
agent who indorses the same is without authority. (Arcade Realty Co. vs. Bank of
Commerce [1919], 180 Cal., 318; Standard Steam Specialty Co., vs. Corn Exchange Bank
[1917], 220 N.Y., 278; People vs. Bank of North America [1879], 75 N.Y., 547;
Graham vs. United States Savings Institution [1870], 46 Mo., 186.) Further speaking to
the errors specified by the bank, it is sufficient to state that no trust fund was involved;
that the fact that bank acted in good faith does not relieve it from responsibility; that no
proof was adduced, admitting that Foerster had right to indorse the checks, indicative of
right of his wife and clerk to do the same , and that the checks drawn on the Bank of the
Philippine Islands can not be differentiated from those drawn on the Philippine
National Bank because of the endorsement by the latter.

          In brief, this is a case where 132 checks made out in the name of the Insular Drug
Co., Inc., were brought to the branch office of the Philippine National Bank in Iloilo by
Foerster, a salesman of the drug company, Foerster's wife, and Foerster's clerk. The
bank could tell by the checks themselves that the money belonged to the Insular Drug
Co., Inc., and not to Foerster or his wife or his clerk. When the bank credited those
checks to the personal account of Foerster and permitted Foerster and his wife to make
withdrawals without there being made authority from the drug company to do so, the
bank made itself responsible to the drug company for the amounts represented by the
checks. The bank could relieve itself from responsibility by pleading and proving that
after the money was withdrawn from the bank it passed to the drug company which thus
suffered no loss, but the bank has not done so. Much more could be said about this case,
but it suffices to state in conclusion that bank will have to stand the loss occasioned by
the negligence of its agents.

          Overruling the errors assigned, judgment of the trial court will be affirmed, the
costs of this instance to be paid by appellant.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 102737 August 21, 1996

FRANCISCO A. VELOSO, petitioner,
vs.
COURT OF APPEALS, AGLALOMA B. ESCARIO, assisted by her husband GREGORIO L.
ESCARIO, the REGISTER OF DEEDS FOR THE CITY OF MANILA, respondents.

TORRES, JR., J.:p

This petition for review assails the decision of the Court of Appeals, dated July
29, 1991, the dispositive portion of which reads:

WHEREFORE, the decision appealed from is hereby AFFIRMED IN

TOTO. Costs against appellant.1

The following are the antecedent facts:

Petitioner Francisco Veloso was the owner of a parcel of land situated in the
district of Tondo, Manila, with an area of one hundred seventy seven (177)
square meters and covered by Transfer Certificate of Title No. 49138 issued by
the Registry of Deeds of Manila. 2 The title was registered in the name of
Francisco A. Veloso, single,3 on October 4, 1957.4 The said title was
subsequently cancelled and a new one, Transfer Certificate of Title No. 180685,
was issued in the name of Aglaloma B. Escario, married to Gregorio L. Escario,
on May 24, 1988.5

On August 24, 1988, petitioner Veloso filed an action for annulment of

documents, reconveyance of property with damages and preliminary injunction
and/or restraining order. The complaint, docketed as Civil Case No. 88-45926,
was raffled to the Regional Trial Court, Branch 45, Manila. Petitioner alleged
therein that he was the absolute owner of the subject property and he never
authorized anybody, not even his wife, to sell it. He alleged that he was in
possession of the title but when his wife, Irma, left for abroad, he found out that
his copy was missing. He then verified with the Registry of Deeds of Manila and
there he discovered that his title was already cancelled in favor of defendant
Aglaloma Escario. The transfer of property was supported by a General Power of
Attorney6 dated November 29, 1985 and Deed of Absolute Sale, dated
November 2, 1987, executed by Irma Veloso, wife of the petitioner and appearing
as his attorney-in-fact, and defendant Aglaloma Escario. 7 Petitioner Veloso,
however, denied having executed the power of attorney and alleged that his
signature was falsified. He also denied having seen or even known Rosemarie
Reyes and Imelda Santos, the supposed witnesses in the execution of the power
of attorney. He vehemently denied having met or transacted with the defendant.
Thus, he contended that the sale of the property, and the subsequent transfer
thereof, were null and void. Petitioner Veloso, therefore, prayed that a temporary
restraining order be issued to prevent the transfer of the subject property; that the
General Power of Attorney, the Deed of Absolute Sale and the Transfer
Certificate of Title No. 180685 be annulled; and the subject property be
reconveyed to him.

Defendant Aglaloma Escario in her answer alleged that she was a buyer in good
faith and denied any knowledge of the alleged irregularity. She allegedly relied on
the general power of attorney of Irma Veloso which was sufficient in form and
substance and was duly notarized. She contended that plaintiff (herein
petitioner), had no cause of action against her. In seeking for the declaration of
nullity of the documents, the real party in interest was Irma Veloso, the wife of the
plaintiff. She should have been impleaded in the case. In fact, Plaintiff's cause of
action should have been against his wife, Irma. Consequently, defendant Escario
prayed for the dismissal of the complaint and the payment to her of damages. 8

Pre-trial was conducted. The sole issue to be resolved by the trial court was
whether or not there was a valid sale of the subject property. 9

During the trial, plaintiff (herein petitioner) Francisco Veloso testified that he
acquired the subject property from the Philippine Building Corporation, as
evidenced by a Deed of Sale dated October 1, 1957. 10 He married Irma Lazatin
on January 20, 1962.11 Hence, the property did not belong to their conjugal
partnership. Plaintiff further asserted that he did not sign the power of attorney
and as proof that his signature was falsified, he presented Allied Bank Checks
Nos. 16634640, 16634641 and 16634643, which allegedly bore his genuine
signature.

Witness for the plaintiff Atty. Julian G. Tubig denied any participation in the
execution of the general power of attorney. He attested that he did not sign
thereon, and the same was never entered in his Notarial Register on November
29, 1985.

In the decision of the trial court dated March 9, 1990, 12 defendant Aglaloma
Escario was adjudged the lawful owner of the property as she was deemed an
innocent purchaser for value. The assailed general power of attorney was held to
be valid and sufficient for the purpose. The trial court ruled that there was no
need for a special power of attorney when the special power was already
mentioned in the general one. It also declared that plaintiff failed to substantiate
his allegation of fraud. The court also stressed that plaintiff was not entirely
blameless for although he admitted to be the only person who had access to the
title and other important documents, his wife was still able to possess the copy.
Citing Section 55 of Act 496, the court held that Irma's possession and
production of the certificate of title was deemed a conclusive authority from the
plaintiff to the Register of Deeds to enter a new certificate. Then applying the
principle of equitable estoppel, plaintiff was held to bear the loss for it was he
who made the wrong possible. Thus:

WHEREFORE, the Court finds for the defendants and against plaintiff —

a. declaring that there was a valid sale of the subject

property in favor of the defendant;

b. denying all other claims of the parties for want of legal and
factual basis.

Without pronouncement as to costs.

SO ORDERED.

Not satisfied with the decision, petitioner Veloso filed his appeal with the Court of
Appeals. The respondent court affirmed in toto the findings of the trial court.

Hence, this petition for review before Us.

This petition for review was initially dismissed for failure to submit an affidavit of
service of a copy of the petition on the counsel for private respondent. 13 A motion
for reconsideration of the resolution was filed but it was denied in are resolution
dated March 30, 1992.14 A second motion for reconsideration was filed and in a
resolution dated Aug. 3, 1992, the motion was granted and the petition for review
was reinstated.15

A supplemental petition was filed on October 9, 1992 with the following

assignment of errors:

The Court of Appeals committed a grave error in not finding that the
forgery of the power of attorney (Exh . "C") had been adequately proven,
despite the preponderant evidence, and in doing so, it has so far departed
from the applicable provisions of law and the decisions of this Honorable
Court, as to warrant the grant of this petition for review on certiorari.

II
 There are principles of justice and equity that warrant a review of the
decision.

III

The Court of Appeals erred in affirming the decision of the trial court which
misapplied the principle of equitable estoppel since the petitioner did not
fail in his duty of observing due diligence in the safekeeping of the title to
the property.

We find petitioner's contentions not meritorious.

An examination of the records showed that the assailed power of attorney was
valid and regular on its face. It was notarized and as such, it carries the
evidentiary weight conferred upon it with respect to its due execution. While it is
true that it was denominated as a general power of attorney, a perusal thereof
revealed that it stated an authority to sell, to wit:

2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands,

tenements and hereditaments or other forms of real property, more
specifically TCT No. 49138, upon such terms and conditions and under
such covenants as my said attorney shall deem fit and proper. 16

Thus, there was no need to execute a separate and special power of attorney
since the general power of attorney had expressly authorized the agent or
attorney in fact the power to sell the subject property. The special power of
attorney can be included in the general power when it is specified therein the act
or transaction for which the special power is required.

The general power of attorney was accepted by the Register of Deeds when the
title to the subject property was cancelled and transferred in the name of private
respondent. In LRC Consulta No. 123, Register of Deeds of Albay, Nov. 10,
1956, it stated that:

Whether the instrument be denominated as "general power of attorney" or

"special power of attorney", what matters is the extent of the power or
powers contemplated upon the agent or attorney in fact. If the power is
couched in general terms, then such power cannot go beyond acts of
administration. However, where the power to sell is specific, it not being
merely implied, much less couched in general terms, there can not be any
doubt that the attorney in fact may execute a valid sale. An instrument
may be captioned as "special power of attorney" but if the powers granted
are couched in general terms without mentioning any specific power to sell
or mortgage or to do other specific acts of strict dominion, then in that
case only acts of administration may be deemed conferred.
Petitioner contends that his signature on the power of attorney was falsified. He
also alleges that the same was not duly notarized for as testified by Atty. Tubig
himself, he did not sign thereon nor was it ever recorded in his notarial register.
To bolster his argument, petitioner had presented checks, marriage certificate
and his residence certificate to prove his alleged genuine signature which when
compared to the signature in the power of attorney, showed some difference.

We found, however, that the basis presented by the petitioner was inadequate to
sustain his allegation of forgery. Mere variance of the signatures cannot be
considered as conclusive proof that the same were forged. Forgery cannot be
presumed17 Petitioner, however, failed to prove his allegation and simply relied
on the apparent difference of the signatures. His denial had not established that
the signature on the power of attorney was not his.

We agree with the conclusion of the lower court that private respondent was an
innocent purchaser for value. Respondent Aglaloma relied on the power of
attorney presented by petitioner's wife, Irma. Being the wife of the owner and
having with her the title of the property, there was no reason for the private
respondent not to believe in her authority. Moreover, the power of attorney was
notarized and as such, carried with it the presumption of its due execution. Thus,
having had no inkling on any irregularity and having no participation thereof,
private respondent was a buyer in good faith. It has been consistently held that a
purchaser in good faith is one who buys property of another, without notice that
some other person has a right to, or interest in such property and pays a full and
fair price for the same, at the time of such purchase, or before he has notice of
the claim or interest of some other person in the property. 18

Documents acknowledged before a notary public have the evidentiary weight

with respect to their due execution. The questioned power of attorney and deed
of sale, were notarized and therefore, presumed to be valid and duly executed.
Atty. Tubig denied having notarized the said documents and alleged that his
signature had also been falsified. He presented samples of his signature to prove
his contention. Forgery should be proved by clear and convincing evidence and
whoever alleges it has the burden of proving the same. Just like the petitioner,
witness Atty. Tubig merely pointed out that his signature was different from that
in the power of attorney and deed of sale. There had never been an accurate
examination of the signature, even that of the petitioner. To determine forgery, it
was held in Cesar vs. Sandiganbayan19 (quoting Osborn, The Problem of Proof)
that:

The process of identification, therefore, must include the determination of

the extent, kind, and significance of this resemblance as well as of the
variation. It then becomes necessary to determine whether the variation is
due to the operation of a different personality, or is only the expected and
inevitable variation found in the genuine writing of the same writer. It is
also necessary to decide whether the resemblance is the result of a more
 or less skillful imitation, or is the habitual and characteristic resemblance
which naturally appears in a genuine writing. When these two questions
are correctly answered the whole problem of identification is solved.

Even granting for the sake of argument, that the petitioner's signature was
falsified and consequently, the power of attorney and the deed of sale were null
and void, such fact would not revoke the title subsequently issued in favor of
private respondent Aglaloma. In Tenio-Obsequio vs. Court of Appeals,20 it was
held, viz:

The right of an innocent purchaser for value must be respected and

protected, even if the seller obtained his title through fraud. The remedy of
the person prejudiced is to bring an action for damages against those who
caused or employed the fraud, and if the latter are insolvent, an action
against the Treasurer of the Philippines may be filed for recovery of
damages against the Assurance Fund.

Finally; the trial court did not err in applying equitable estoppel in this case. The
principle of equitable estoppel states that where one or two innocent persons
must suffer a loss, he who by his conduct made the loss possible must bear it.
From the evidence adduced, it should be the petitioner who should bear the loss.
As the court a quo found:

Besides, the records of this case disclosed that the plaintiff is not entirely
free from blame. He admitted that he is the sole person who has access to
TCT No. 49138 and other documents appertaining thereto (TSN, May 23,
1989, pp. 7-12) However, the fact remains that the Certificate of Title, as
well as other documents necessary for the transfer of title were in the
possession of plaintiff's wife, Irma L. Veloso, consequently leaving no
doubt or any suspicion on the part of the defendant as to her authority.
Under Section 55 of Act 496, as amended, Irma's possession and
production of the Certificate of Title to defendant operated as "conclusive
authority from the plaintiff to the Register of Deeds to enter a new
certificate."21

Considering the foregoing premises, we found no error in the appreciation of

facts and application of law by the lower court which will warrant the reversal or
modification of the appealed decision.

ACCORDINGLY, the petition for review is hereby DENIED for lack of merit.

SO ORDERED.