Chong v CA GR 148280 (2007)

FACTS:

1.      Loreta Agustin Chong filed a Complaint for annulment of contracts and recovery of possession against respondent-spouses Pedro and Rosita de Guzman, and Fortune Development Corporation before the RTC Manila.

2.      Petitioner alleged that she is the common-law wife of Augusto Chong and that she bought a parcel of land from respondent corporation as evidenced by Contract to Sell

3.      By virtue of a SPA she executed in favor of Augusto, the latter sold the subject lot to respondent-spouses allegedly for P80,884.95 which petitioner or Augusto never received, thus, said sale is null and void for lack of consideration

4.      Despite repeated demands, respondent-spouses refused to turn over the possession of the subject lot to petitioner.

5.      Loreta denied selling the house constructed on the subject lot to respondent-spouses claiming that she could not have executed the Deed of Sale because at the time it was allegedly notarized on February 24, 1987, she was working in Hong Kong as a domestic helper. Thus, said sale is void for being a forgery.

6.      Petitioner prayed that the Transfer of Rights and Assumption of Obligation as well as the Deed of Sale be declared null and void; that respondent-spouses be ordered to turn over the possession of the houses and lots in Parañaque and Singalong to petitioner; and that respondents indemnify her for actual, moral and exemplary damages as well as attorney’s fees. – MTD (ground: failure to state a COA) – TC denied!

ISSUE: Whether the Transfer of Rights and Assumption of Obligation was void or, in the alternative, unenforceable as against petitioner.

RULING: No. The parties voluntarily executed the Transfer of Rights and Assumption of Obligation and that the same was supported by valuable consideration.

The clear and unmistakable tenor of the Special Power of Attorney reveals that petitioner specifically authorized Augusto to sell the subject lot and to settle her obligations to third persons. The Special Power of Attorney is a duly notarized document and, as such, is entitled, by law, to full faith and credit upon its face. Notarization vests upon the document the presumption of regularity unless it is impugned by strong, complete and conclusive proof. Rather than challenging its validity, petitioner admitted in open court that she signed the Special Power of Attorney with a full appreciation of its contents and without reservation.

The evidence on record sufficiently established that petitioner’s rights over the subject lot were validly transferred to respondent-spouses in consideration of the latter’s payment of petitioner’s debts to Rosario. When Augusto executed the Transfer of Rights and Assumption of Obligations on behalf of petitioner, he was acting within his powers under the Special Power of Attorney for valuable consideration. In a contract of agency, the agent acts in representation or in behalf of another with the consent of the latter, and the principal is bound by the acts of his agent for as long as the latter acts within the scope of his authority. Hence, the Transfer of Rights and Assumption of Obligations is valid and binding between the parties.

It was established that petitioner received valuable consideration for the sale of the house on the subject lot. Concededly, the notarization of the deed was defective as respondent Pedro de Guzman himself admitted that the deed was notarized only two days after petitioner had signed the deed and at which time she was already in Hong Kong. In short, petitioner did not appear before the notary public in violation of the Notarial Law which requires that the party acknowledging must appear before the notary public or any other person authorized to take acknowledgments of instruments or documents. Nevertheless, the defective notarization of the deed does not affect the validity of the sale of the house. Although Article 1358 of the Civil Code states that the sale of real property must appear in a public instrument, the formalities required by this article is not essential for the validity of the contract but is simply for its greater efficacy or convenience, or to bind third persons, and is merely a coercive means granted to the contracting parties to enable them to reciprocally compel the observance of the prescribed form. Consequently, the private conveyance of the house is valid between the parties.

Based on the foregoing, the SC was satisfied that the sale of the subject lot and the house built thereon was made for valuable consideration and with the consent of petitioner. Consequently, we affirm the findings of the lower courts which upheld the validity of the transfer of petitioner’s rights over the subject lot as well as the sale of the house built thereon in favor of respondent-spouses.