CORAZON CH. VELOSO Y RICABLANCA AND ROBUSTIANO M. ROSALES, PLAINTIFFS AND APPELLEES, VS. LA URBANA, MUTUAL BUILDING AND LOAN ASSOCIATION, AND JOSE MARIA DEL MAR, DEFENDANTS. LA …

The
plaintiffs herein brought this action to annul certain mortgages
constituted by Jose Maria del Mar in the name of the plaintiff, Corazon
Ch. Veloso in favor of the defendant corporation, and recover damages
amounting to P2,000 from the defendants.

La Urbana, one of
the defendants herein, appealed from the judgment rendered in this
case, the dispositive part of which reads as follows:

“For
the reasons above stated, the deeds of mortgage executed by Jose del
Mar in the name of Corazon Ch. Veloso in favor of La Urbana are
declared null and void in so far as they purport to bind the plaintiffs
or their property; the sale of the said property to La Urbana by virtue
of these mortgages is also hereby declared null and void; and it is
further ordered and adjudged that the registration of the said deeds in
the office of the register of deeds of Manila be cancelled, and that La
Urbana and Jose del Mar pay the costs of this suit.

“This
decision is without prejudice to any right of action which La Urbana
may have against Jose Maria del Mar or the Insular Treasurer, or both,
under the provisions of sections 99 to 107 of Act No. 496. So ordered.”

The plaintiff Corazon Ch. Veloso was the owner of certain undivided
portions of the five parcels of land in question together with the
improvements thereon, situated in the City of Manila, and described in
certificates of title Nos. 5767 and 33360. In the month of May, 1929,
the defendant herein Jose Maria del Mar, plaintiff’s brother-in-law,
forged two powers of attorney purporting to have been executed by the
plaintiffs, as husband and wife, conferring upon him ample authority to
mortgage the plaintiff’s participation in the aforementioned properties
described in said certificates of title. These powers of attorney were
duly registered in the office of the register of deeds. Acting under
these powers of attorney, Del Mar succeeded in mortgaging the
plaintiff’s participations to La Previsora Filipina. On February 6,
1929, he cancelled said mortgage and transferred it to the defendant La
Urbana which granted him a loan of P10,600. Upon mortgaging the said
participations of the plaintiff to the aforesaid defendant, Del Mar
delivered to the mortgage creditor the owner’s duplicates of the
certificates of title whereon the mortgage in question was noted. On
November 14 of the same year, Del Mar obtained from the same defendant
an additional loan of P2,875 and executing another mortgage deed which
was likewise noted on the aforesaid duplicates of the certificates of
title. Del Mar later violated the conditions of the mortgages whereupon
La Urbana foreclosed them and purchased the said properties at public
auction for the sum of P10,051.82 which was the total amount of Del
Mar’s indebtedness at that time. The plaintiffs’ herein learned of Del
Mar’s fraudulent transactions from the advertisement of the sale
thereof, and in addition to this civil action, they instituted criminal
proceedings against him resulting in his conviction of the crime of
falsification and the imposition upon him of a sentence of two (2)
years, four (4) months and one (1) day of prision correccional.

In view of the foregoing facts, the court held that pursuant to article
1714 of the Civil Code and under the Torrens Act in force in this
jurisdiction, the forged powers of attorney prepared by Del Mar were
without force and effect and that the registration of the mortgages
constituted by virtue thereof were likewise null and void and without
force and effect, and that, they could not in any way prejudice the
rights of the plaintiff as the registered owner of her participations
in the properties in question.

The defendant-appellant
herein assigns various alleged errors in its brief which we have found
to be groundless after a careful consideration thereof. Inasmuch as Del
Mar is not the registered owner of the mortgaged properties and
inasmuch as the appellant was fully aware of the fact that it was
dealing with him on the strength of the alleged powers of attorney
purporting to have been conferred upon him by the plaintiff, it was its
duty to ascertain the genuineness of said instruments and not rely
absolutely and exclusively upon the fact that the said powers of
attorney appeared to have been registered. In view of its failure to
proceed in this manner, it acted negligently and should suffer the
consequences and damages resulting from such transactions.

“Every
person dealing with an agent is put upon inquiry, and must discover
upon his peril the authority of the agent, and this is specially true
where the act of the agent is of an unusual nature.

“If a
person makes no inquiry, he is chargeable with knowledge of the agent’s
authority, and his ignorance of that authority will not be any excuse.”
(Deen vs. Pacific Commercial Co., 42 Phil., 738.)

“Persons
dealing with an assumed agent, whether the assumed agency be a general
or special one, are bound at their peril, if they would hold the
principal, to ascertain not only the fact of the agency but the nature
and extent of the authority, and in case either is controverted, the
burden of proof is upon them to establish it.” (Harry E. Keeler
Electric Co. vs. Rodriguez, 44 Phil., 19.)

As has been noted at the beginning, the court reserved to the appellant
any right of action it might have against Del Mar and the Insular
Treasurer under the provisions of sections 99 to 107 of Act No. 496. We
deem it unnecessary to repeat such reservation in this decision. At all
events, the appellant may exercise such right of action without the
necessity of such reservation if the facts of the case so warrant.

Wherefore, the judgment appealed from is hereby affirmed, with the costs against the appellant. So ordered.

Malcolm, Villa-Real, Hull, and Butte, JJ., concur.