Corazon Ch. Veloso y Ricablanca v. La Urbana

Summary

This case involved fraudulent mortgages created when Jose Maria del Mar forged powers of attorney to mortgage his sister-in-law Corazon Veloso's property participations to La Urbana building and loan association. Del Mar used the forged documents to secure loans totaling over P13,000, but when he defaulted, La Urbana foreclosed and bought the properties. The Supreme Court affirmed the nullification of the mortgages and sale, ruling that the forged powers of attorney were void under the Civil Code and Torrens Act. The Court emphasized that La Urbana acted negligently by failing to verify the authenticity of the powers of attorney, holding that parties dealing with agents must ascertain their authority at their peril. This case establishes important precedent regarding the duty of diligence required when dealing with agents and the protection of registered property owners against fraudulent transactions under the Torrens system.