Legal consequences of forged Deed of Sale

One of the initial steps in purchasing a property is the execution of a Deed of Sale. But what happens if the seller's signature in the Deed of Sale is forged?

Under the law, forging the signature of the seller constitutes a crime of falsification punishable under Article 172 of the Revised Penal Code, to wit:
Article 172. Falsification by private individuals and use of falsified documents. — x x x:

1. Any private individual who shall commit any of the falsifications enumerated in the next preceding article in any public or official document or letter of exchange or any other kind of commercial document; x x x

The elements of the said crime are as follows: (a) the offender is a private individual; (b) the offender committed any of the acts of falsification enumerated in Article 171; and (c) the falsification was committed on a public document. While the Revised Penal Code does not define what a public document is, the 2019 Revised Rules on Evidence clearly provides that documents acknowledged before a notary public, except last will and testaments, are considered public documents.

In addition, the sale of the property to third parties based on a forged Deed of Sale is null and void. This is in accordance with the Supreme Court ruling in Rufloe v. Burgos, G.R. 143573, 30 January 2009, which held that a forged Deed of Sale is null and void and conveys no title. Consequently, all transactions after a falsified sale are null and void.

However, in Spouses Peralta v. Heirs of Abalon, G.R. 183448, 30 June 2014, the Supreme Court resolved the issue of whether a forged instrument may become the root of a valid title in the hands of an innocent purchaser for value, even if the true owner thereof has been in possession of the genuine title, which is valid and has not been canceled.

In ruling for the affirmative, the Court, in this case, explained that even though the Deed of Sale in favor of one party was fraudulent, the party could still get a registered title to the house and lot. This title was then transferred to the other party-buyers. Although the general rule is that a forged or fraudulent deed is null and void and does not convey any title, in this case, the forged instrument became the root of a valid title.

This is because the other party-buyers were innocent purchasers for value, meaning they did not know or have any reason to believe that the person they were transacting was not the real property owner.

Buying land is a significant investment, and doing your due diligence before entering into a transaction is important. This means carefully researching the property and the seller to ensure that you are getting a good deal and that there are no hidden problems.

By conducting your due diligence, you can minimize the risks of buying land and ensure you make a sound investment.