LUCIO EMAS, PLAINTIFF AND APPELLE, VS. ANTONIO DE ZUZUARREGUI AND FAUSTINO AGUILAR, DEFENDANTS AND APPELLANTS.

This action was instituted in the Court of First Instance of the
Province of Tarlac by Lucio Emas against Antonio de Zuzuarregui and
Faustino Aguilar, to obtain a decree of nullity with respect to
transfer certificate of title No. 1024, purporting to show that De
Zuzuarregui is the owner of the parcel of land described in said
certificate, with the building thereon, in so far as affects an
undivided half interest in said parcel claimed by the plaintiff, and to
obtain an order for the cancellation of said certificate. The defendant
Aguilar appears to be mortgagee of the whole parcel by contract of
mortgage executed in his favor by De Zuzuarregui and noted in the
certificate. The plaintiff therefore also seeks to obtain the annulment
of said mortgage, in so far as affects the undivided half of the
property claimed by the plaintiff.

Upon hearing the cause the trial court found that the plaintiff is
the owner of the undivided half interest claimed by him in the parcel
covered by the certificate in question and ordered that the duplicate
of the transfer certificate No. 1024 be surrendered and that the
certificate be cancelled, not only as to the title but as to the
mortgage in favor of Aguilar, in so far as affects the plaintiff’s half
of the property, with costs against De Zuzuarregui and in favor of the
plaintiff Lucio Emas. This decision was, however, made without
prejudice to the right of Aguilar, as mortgage creditor of De
Zuzuarregui, to enforce his rights under the mortgage against the half
of the property pertaining to his mortgagor, De Zuzuarregui. From this
judgment the defendants, De Zuzuarregui and Faustino Aguilar, appealed.

The property with which this action is concerned consists of lot No.
1147 of the cadastral of La Paz, Province of Tarlac, containing an area
of 1,846,932 square meters and covered by original certificate of title
No. 3271, issued on June 5, 1922. From this certificate it appears that
on the date stated three undivided interests in said parcel were vested
as follows, namely, an undivided half in Lucio Emas, an undivided
fourth in Gregoria Salas, and an undivided fourth in Ignacio Salas. The
two undivided fourths belonging respectively to Gregoria Salas and
Ignacio Salas subsequently passed by transfer to Antonio de
Zuzuarregui; and by this means the plaintiff, Lucio Emas, and the
defendant Antonio de Zuzuarregui came to be co-owners, to the extent of
one-half each, of the property covered by the certificate above
mentioned.

The plaintiff Emas is a resident of La Paz, Tarlac, while Antonio de
Zuzuarregui is a resident of the City of Manila; and it appears that,
prior to the occurrence which gave rise to this litigation, they were
not personally known to each other. It further appears that De
Zuzuarregui, having acquired an undivided half in the property referred
to, was desirous of acquiring the other half also, and to this end he
entered into negotiations with one Victor Ortega, who represented
himself to be an intermediary of Lucio Emas, for the purpose of
effecting the sale of Emas’s half to De Zuzuarregui. This
representation on the part of Ortega was entirely false, since he did
not have any authority from Lucio Emas to negotiate a sale of the
latter’s share in the property; and, on the contrary, Ortega well knew
that Emas was not at all desirous of parting with his interest in the
property. Nevertheless, Ortega procured a stranger, whose identity is
so far unknown, to personate Lucio Emas in the execution of a forged
deed (Exhibit A), bearing date of October 2, 1925, which purports to
convey to De Zuzuarregui, for the sum of P5,000, the undivided half
pertaining to Emas in the property in question. In the consummation of
this fraud one Simon Zapata acted as one of the witnesses to this
instrument, while Ortega himself served as the other.

Victor Ortega and Simon Zapata were subsequently prosecuted in the
Court of First Instance of the City of Manila for the falsification of
a public document, effected by them in conspiracy with the unknown
personator of Lucio Emas. As a result of this prosecution Victor Ortega
was convicted and sentenced, in the Court of First Instance, to undergo
imprisonment for four years, nine months and eleven days, prision correccional,
with the accessories prescribed by law, and to pay a fine of 250
pesetas, with subsidiary imprisonment in case of insolvency, with
costs. Upon appeal to the Supreme Court this judgment was modified and
the penalty of imprisonment increased to five years, seven months and
four days, prision correccional.^[1] The accused was
also further sentenced, in the last named court, to pay a fine of
Pl,000 and to indemnify De Zuzuarregui in the amount of P2,500, with
subsidiary imprisonment in case of insolvency, and with costs.

Directing attention again to the forgery of the deed, the following
facts may be noted as pertinent to the present controversy: Said deed
was executed before Hipolito de Jesus, attorney and notary public, with
office at 520 Rizal Avenue, Manila. This attorney was an acquaintance
of De Zuzuarregui and was employed by the latter to draw up the papers
incident to the transfer. De Jesus says that, for some time prior to
October 2,1925, De Zuzuarregui had been discussing the purchase of the
property with Ortega, who had informed De Zuzuarregui that the owner
would sell (thei undivided half which De Zuzuarregui wished to acquire
for the sum of P5,000. On October 1, 1925, Ortega brought to the office
of De Jesus an individual who was introduced to De Jesus as Lucio Emas.
Upon being informed that Emas had come for the purpose of consummating
the sale, De Jesus called De Zuzuarregui by telephone. When De
Zuzuarregui arrived the conditions of the sale were discussed. In the
course of this conversation De Zuzuarregui apparently divined that he
might obtain a considerable concession in the matter of the price, and
believing that De Jesus might be of assistance in effecting such
reduction, De Zuzuarregui called De Jesus aside and told him that he
(De Zuzuarregui) would give De Jesus the sum of P700 if the latter
could prevail upon Emas to sell his interest for P2,000, At the same
time De Zuzuarregui informed De Jesus that he would give Ortega the sum
of P400 if the purchase could be consummated for the price of P2,000.
Upon this Ortega was also called aside and secretly informed of the
offer; and after some dickering an agreement was reached by which the
supposed vendor undertook to sell the property to De Zuzuarregui for
the sum of P2,000. For this amount De Zuzuarregui gave his check to the
supposed vendor; and in addition to this, De Zuzuarregui appears to
have paid some P40 to cover expenses incident to the transaction. As a
consequence De Zuzuarregui, after compensating De Jesus in the amount
of P700 and Ortega in the amount of P400, was at a total expense of
P3,140 upon account of the deal.

It appears that, in the course of the conversation above mentioned, the suspicion of De Jesus was aroused with respect to the bona fides
of the transaction, and he took the precaution to have an affidavit
made to the effect that the person acting as Lucio Emas was really that
individual. De Jesus says also that when be observed the ease with
which the supposed owner yielded to the request of the purchaser for a
reduction of the price, he feared that the “old man” was being
defrauded.

After the document of transfer had been delivered to De Zuzuarregui
and the check of P2,000 for the purchase money had been placed in the
hands of Hipolito de Jesus, De Zuzuarregui was informed that the vendor
had no duplicate of the Torrens Certificate of Title such as is issued
to the owner1. For this reason De Zuzuarregui told De Jesus not to
present the check for payment until a certificate should be obtained;
and in order to procure the certificate, De Jesus, representing the
vendor (the supposed Lucio Emas), made a trip to the Province of Tarlac
and filed a motion in the Court of First Instance in the name of Lucio
Emas (the impostor), stating that he was the registered owner of an
undivided half interest in the parcel in question and that his owner’s
duplicate had been accidentally destroyed by fire. He therefore asked
that a new duplicate should be issued to him. Upon the faith of this
representation the court made the necessary order, on October 13, 1925;
and by means of this new and fraudulent duplicate, transfer certificate
No. 1024 was issued by the register of deeds in favor of De Zuzuarregui
on October 21, 1925. As De Zuzuarregui was already the owner of an
undivided half in the property covered by this certificate, and as he
had now apparently acquired the other half from Lucio Emas, the
certificate No. 1024 shows De Zuzuarregui to be the registered owner of
the entire interest in the parcel covered by the certificate. A few
months thereafter, or on March 5,1926, De Zuzuarregui mortgaged the
entire property to Faustino Aguilar to secure a loan of P11,500, at
twelve months, with interest at 9 per cent per annum. The existence of
this mortgage is proved only by the register’s annotation, dated March
11, 1926, on the back of certificate No. 1024, since Faustino Aguilar
did not introduce the mortgage in evidence, nor submit any proof
whatever to demonstrate the validity of his lien.

The proof adduced before the trial court shows, we think, beyond any
doubt, that the deed, original of Exhibit A, which purports to show a
conveyance of the property in question from the plaintiff, Lucio Emas,
to the defendant De Zuzuarregui, is a forgery, and that the fraud was
consummated substantially in the manner above described. The plaintiff
in this action (the real Lucio Emas) testified unequivocally that he
had never taken any part in the creation of the deed in question, and
his testimony, in our opinion, leaves no room to doubt that he was
speaking the truth. As evidence of the crime of forgery, the
plaintiff’s attorney submitted in the trial court certified copies of
the judgments entered in the Court of First Instance of Manila and
afterwards in the Supreme Court in the criminal case convicting Ortega
of the crime of estafa by falsification of a public document. These
certified copies were admitted by the trial court as competent proof,
and the attorney for the defendants objected on the ground that said
judgments are inadmissible in this civil action, being res inter alios
acta. As an abstract point of law the assignment of error based on this
exception is perhaps well taken; but we are of the opinion that, apart
from said certified judgments, the record contains ample evidence to
support the finding of the trial court that the original of the Exhibit
A is a forged document, and that the present plaintiff, Lucio Emas, was
not a party thereto.

It appears from the proof that since the year 1926 the entire parcel
covered by certificate No. 1024 has been assessed for the purposes of
taxation in the amount of P30,095, and the trial judge stated the
conclusion that two-thirds of the property is low ground, with a value
of about one hundred pesos per hectare, while the other third is more
elevated, having a value from two hundred to three hundred pesos per
hectare. We see no reason to doubt that the entire property has a value
at least equal to the amount for which it is assessed, notwithstanding
the fact that prior to 1926 the assessed value was at P13,620. In any
view that can be taken of the matter it is evident that, at the time
the forgery was committed, the value of one-half of the property was
greatly in excess of the amount paid by De Zuzuarregui to the impostor.

Upon general principles of jurisprudence it is self-evident that the
defendant De Zuzuarregui acquired no right whatever in the property in
question by virtue of the forged deed (original of Exhibit A); but it
is contended, upon the authority of De la Cruz vs. Fabie (35
Phil., 144), that he acquired the undivided half interest which was the
subject of conveyance in said deed by virtue of the issuance to him of
the transfer certificate No. 1024. We are of the opinion, however,
that, upon the facts before us, De Zuzuarregui is not in a position to
assert the rights of an innocent purchaser for value and the
acquisition of the Torrens certificate by him did not cure the defect
in his title.. In this connection it appears that Hipolito de Jesus,
who was acting as attorney for De Zuzuarregui, suspected that the sale
was a dishonest transaction; and the ease with which De Zuzuarregui
obtained a reduction of more than one-half from the asking price and
the resulting inadequacy of the consideration were circumstances
sufficient to admonish any reasonable person that the sale was not
being made in good faith by the seller. .A person cannot claim the
rights of an innocent purchaser who wilfully closes his eyes to facts
which would be sufficient to arouse the suspicion of a reasonable
person; and knowledge of what might have been revealed by proper
inquiry is imputable to the purchaser. De Zuzuarregui therefore is in
no position to resist this action by the true owner to set aside the
forged deed and the transfer certificate based thereon.

With respect to the alleged rights of the defendant Faustino Aguilar
based upon the mortgage executed in his favor by De Zuzuarregui, we
note that reliance is placed by this appellant exclusively on the
annotation appearing on the back of transfer certificate No. 1024,
showing that the property had been mortgaged by De Zuzuarregui to
Aguilar, as already stated in this opinion. But the mortgage itself was
not introduced in evidence, and no proof was submitted on the part of
Aguilar tending to show that he had advanced the money mentioned in the
annotation upon the faith of the mortgage. In National Bank vs.
Tan Ong Zse (51 Phil., 317), it was held that, although an annotation
of this character on a Torrens certificate is effective notice of the
execution of the document, such annotation nevertheless does not supply
original proof of the terms of the contract. Moreover, Aguilar’s title
is derived from a contaminated source, and it was incumbent upon him to
prove that he is. in fact, to the extent of his mortgage credit, an
innocent purchaser of the property in good faith. In the absence of
such proof, no error was committed on the part of the trial court in
ignoring his alleged rights.

From what has been said it follows that there is no error in the
appealed decision, and the judgment will be affirmed. So ordered, with
costs against the appellants.

Johnson, Johns, Romualdez, and Villa-Real, JJ., concur.

Malcolm, and Ostrand, JJ.,
also voted for affirmance, but their names are not signed to the
opinion owing to their absence on leave at the time of promulgation.

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^[1] People vs. Ortega, G. R. No. 26368, promulgated March 23, 1927, not reported.