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SPS. REX v. DIONISIO Z. PARULAN

FACTS:

This case involves two parcels of land located in Parañaque City, registered under the names of respondents Spouses Maria Elena A. Parulan (Ma. Elena) and Dionisio Z. Parulan, Jr. (Dionisio), who are estranged from each other. In February 1991, the petitioners expressed interest in purchasing the property after being convinced by real estate broker Marta Atanacio. During their meeting with Ma. Elena, she presented the necessary documents, including a special power of attorney (SPA) executed by Dionisio authorizing her to sell the property. The petitioners paid an earnest money of P20,000 and agreed to make additional payments. They also verified the TCTs and discovered that the property had been encumbered and mortgaged through an SPA executed by Dionisio. The petitioners made further payments and received TCT No. 63377. However, Ma. Elena did not turn over the owner's duplicate copy of TCT No. 63376 as promised. It was later discovered that the duplicate owner's copy has been in the custody of Atty. Jeremy Parulan, brother of Dionisio, who held an SPA authorizing him to sell the property. Negotiations occurred, but the parties failed to reach an agreement. Dionisio then filed a case to annul the sale of the property executed in favor of the petitioners for want of his written consent. The RTC annulled the deed of sale, which was affirmed by the CA. The petitioners appeal to reverse the decision, arguing that the sale of the conjugal property was validly made despite Dionisio claiming that his signature on the SPA was forged and that it was executed during his absence from the country.

Dionisio, through his attorney-in-fact, filed a case for the nullity of a deed of absolute sale and cancellation of title executed by Ma. Elena in favor of the petitioners. In response, the petitioners filed their own action for specific performance with damages against the respondents. Both cases were consolidated for trial in the RTC. The RTC declared the deed of absolute sale null and void, ruling that the special power of attorney (SPA) in Ma. Elena's hands was a forgery. The RTC also rejected the petitioners' defense of being buyers in good faith. The CA affirmed the RTC's ruling, applying Article 124 of the Family Code and finding the SPA to be a forgery. The petitioners now raise two arguments: (1) they were buyers in good faith; and (2) the CA erred in applying Article 124 of the Family Code.

ISSUES:

  1. Whether Article 124 of the Family Code or Article 173 of the Civil Code applies to the property relations of the parties.

  2. Whether the sale of the conjugal property is valid despite the finding of forgery of the Special Power of Attorney (SPA).

  3. Whether the petitioners exercised due diligence in verifying the seller's capacity to sell the conjugal property.

  4. Whether the petitioners acted in good faith in relying on the Special Power of Attorney (SPA) executed by one spouse without the consent of the other spouse.

  5. Whether the petitioners acted prudently in not verifying the authenticity of the SPA and in not withholding payment until the owner's duplicate copy of the title was delivered.

  6. Whether or not the sale of the conjugal property is valid despite the lack of written consent from the husband.

  7. Whether or not the petitioners acted in good faith in the sale transaction.

RULING:

  1. Article 124 of the Family Code applies to the property relations of the parties. Article 254 of the Family Code expressly repealed several titles, including the provisions on property relations between husband and wife found in Article 173 of the Civil Code. The sale was made after the effectivity of the Family Code, therefore, Article 124 of the Family Code governs.

  2. The sale of the conjugal property is void due to the forgery of the SPA. Even though the other spouse held the administration of the conjugal property, the power of administration does not include acts of disposition or encumbrance without the authority of the court or the written consent of the other spouse. The petitioner failed to substantiate their claim that the administration of the property was delegated to the brother and did not provide a valid SPA. Therefore, the sale cannot be ratified and is void.

  3. The Court held that the petitioners did not act in good faith and did not exercise due diligence in verifying the seller's capacity to sell the conjugal property. The Court explained that buyers of conjugal property must observe two kinds of diligent inquiry, namely: (a) the diligence in verifying the validity of the title covering the property; and (b) the diligence in inquiring into the authority of the transacting spouse to sell conjugal property in behalf of the other spouse. The Court found that while the petitioners verified the validity of the title, they failed to inquire into the circumstances behind the execution of the SPA and the consent of the other spouse. The Court emphasized that an unquestioning reliance on the SPA without first taking precautions to verify its authenticity was not a prudent buyer's move. The Court also noted the petitioners' lack of due care in not withholding payment until the owner's duplicate copy of the title was delivered.

  4. The sale of the conjugal property is void due to the lack of written consent from the husband. Article 124 of the Family Code provides that the sale or disposition of conjugal property requires the written consent of both spouses, and the absence of such consent renders the sale void.

  5. The petitioners did not act in good faith in the sale transaction. They were aware of the irregularities surrounding the sale, such as the forgery of the husband's signature and the absence of the owner's copy of the transfer certificate of title (TCT). Despite this knowledge, they did not take immediate action against the buyer and instead negotiated with the person who had possession of the TCT. Their lack of due care in dealing with the situation renders their claimed good faith incredible.

PRINCIPLES:

  • The provisions of the Family Code may apply retroactively if there are no vested or acquired rights that would be impaired.

  • The power of administration over conjugal property does not include acts of disposition or encumbrance unless authorized by the court or the written consent of the other spouse.

  • A void contract cannot be ratified.

  • A purchaser in good faith is one who buys the property without notice of any claim or interest by another party and pays the full and fair price.

  • A buyer of conjugal property must not only verify the validity of the title but also inquire into the authority of the transacting spouse to sell conjugal property in behalf of the other spouse.

  • Good faith of a buyer is not presumed but must be proven by the person invoking it.

  • A buyer of registered land is not required to explore beyond what the certificate of title indicates on its face.

  • A buyer must act with the diligence of a prudent person and make inquiries to acquaint themselves with possible defects in the seller's title.

  • The sale or disposition of conjugal property requires the written consent of both spouses; the absence of such consent renders the sale void (Article 124 of the Family Code).

  • A sale effected without the consent of one of the spouses is only voidable, not void, if it was made prior to the effectivity of the Family Code (Article 173 of the Civil Code).

  • The burden of proving forgery rests on the party alleging it; mere allegation is not sufficient without clear and convincing proof (Veloso v. Court of Appeals).