G.R. No.

165803

September 1, 2010

SPOUSES REX AND CONCEPCION AGGABAO, Petitioners, vs. DIONISIO . PARU!AN, "R. #$% &A. E!ENA PARU!AN, Respondents. BERSA&IN, J.: FACTS: Subject of this case are 2 parcels of land located, BF o!es, Para"a#ue Cit$ and re%istered under TCT &o. '(()'( and TCT &o. '(())* in the na!e of respondents Spouses +aria ,lena A. Parulan -+a. ,lena. and /ionisio 0. Parulan, 1r. -/ionisio., 2ho have been estran%ed fro! one another. Real estate bro3er +arta 4. Atanacio -Atanacio. offered the propert$ to the petitioners, 2ho initiall$ did not sho2 interest due to the rundo2n condition of the i!prove!ents, but Atanacio5s persistence prevailed. 6n Februar$ 2, 7887, the$ and Atanacio !et 2ith +a. ,lena at the site of the propert$ thelatter sho2ed to the! the follo2in% docu!ents: -a. the o2ner5s ori%inal cop$ of TCT &o. '(()'9 -b. a certified true cop$ of TCT &o. '(())9 -c. three ta: declarations9 and -d. a cop$ of the SPA dated 1anuar$ ), 7887 e:ecuted b$ /ionisio authori;in% +a. ,lena to sell the propert$.6n the sa!e da$, the$ paid P2<,<<<.<< as earnest !one$, +a. ,lena then e:ecuted a hand2ritten Receipt of ,arnest +one$, and stipulated that: -a. the$ 2ould pa$ an additional pa$!ent of P7(<,<<<.<< on Februar$ *, 78879 -b. the$ 2ould pa$ the balance of the ban3 loan of the respondents a!ountin% to P'=<,<<<.<< on or before Februar$ 7=, 78879 and -c. the$ 2ould !a3e the final pa$!ent of P)<<,<<<.<< once +a. ,lena turned over the propert$ on +arch (7, 7887. 6n Februar$ *, 7887, the petitioners 2ent to the 6ffice of the Re%ister of /eeds and the Assessor5s 6ffice to verif$ the TCTs in the co!pan$ of Atanacio and her husband -also a licensed bro3er.. There, the$ discovered that the lot under TCT &o. '(()' had been encu!bered to Banco Filipino in 78>( or 78>*, but that the encu!brance had alread$ been cancelled due to the full pa$!ent of the obli%ation. The$ noticed that the Banco Filipino loan had been effected throu%h an SPA e:ecuted b$ /ionisio in favor of +a. ,lena. The$ found on TCT &o. '(()) the annotation of an e:istin% !ort%a%e in favor of the ?os Ba"os Rural Ban3, also effected throu%h an SPA e:ecuted b$ /ionisio in favor of +a. ,lena, coupled 2ith a cop$ of a court order authori;in% +a. ,lena to !ort%a%e the lot to secure a loan of P=<<,<<<.<<. The petitioners and Atanacio ne:t in#uired about the !ort%a%e and the court order annotated on TCT &o. '(()) at the ?os Ba"os Rural Ban3. There, the$ !et 2ith Att$. &oel 0arate, the ban35s le%al counsel, 2ho related that the ban3 had as3ed for the court order because the lot involved 2as conju%al propert$. Follo2in% their verification, the petitioners delivered P7(<,<<<.<< as additional do2n pa$!ent on Februar$ *, 78879 and P'=<,<<<.<< to the ?os Ba"os Rural Ban3 on Februar$ 72, 7887, 2hich then released the o2ner5s duplicate cop$ of TCT &o. '(()) to the!. 6n +arch 7>, 7887, the petitioners delivered the final a!ount of P)<<,<<<.<< to +a. ,lena, 2ho e:ecuted a deed of absolute sale in their favor. o2ever, +a. ,lena did not turn over the o2ner5s duplicate cop$ of TCT &o. '(()', clai!in% that said cop$ 2as in the possession of a relative 2ho 2as then in on%3on%. She assured the! that the o2ner5s duplicate cop$ of TCT &o. '(()' 2ould be turned over after a 2ee3. 6n +arch 78, 7887, TCT &o. '(()) 2as cancelled and a ne2 one 2as issued in the na!e of the petitioners. +a. ,lena did not turn over the duplicate o2ner5s cop$ of TCT &o. '(()' as pro!ised. @n due ti!e, the petitioners learned that the duplicate o2ner5s cop$ of TCT &o. '(()' had been all alon% in the custod$ of

Att$. 1ere!$ 0. Parulan, 2ho appeared to hold an SPA e:ecuted b$ his brother /ionisio authori;in% hi! to sell both lots. At Atanacio5s instance, the petitioners !et on +arch 2=, 7887 2ith Att$. Parulan, the$ 2ere also acco!panied b$ one Att$. 6landesca. The$ recalled that Att$. Parulan As!u%l$ de!anded P><<,<<<.<<B in e:chan%e for the duplicate o2ner5s cop$ of TCT &o. '(()', because Att$. Parulan represented the current value of the propert$ to be P7.= !illion. As a counterCoffer, ho2ever, the$ tendered P2=<,<<<.<<, 2hich Att$. Parulan declined, %ivin% the! onl$ until April =, 7887 to decide. earin% nothin% !ore fro! the petitioners, Att$. Parulan decided to call the! on April =, 7887, but the$ infor!ed hi! that the$ had alread$ full$ paid to +a. ,lena. Thus, on April 7=, 7887, /ionisio, throu%h Att$. Parulan, co!!enced an action pra$in% for the declaration of the nullit$ of the deed of absolute sale e:ecuted b$ +a. ,lena, and the cancellation of the title issued to the petitioners b$ virtue thereof.@n turn, the petitioners filed on 1ul$ 72, 7887 their o2n action for specific perfor!ance 2ith da!a%es a%ainst the respondents.Both cases 2ere consolidated for trial and jud%!ent in the RTC. RTC ruled in favour of Plaintiff Parulan and declared the sale covered b$ TCT '(()' and '(()) as null and void. RTC declared that the SPA in the hands of +a. ,lena 2as a for%er$, based on its findin% that /ionisio had been out of the countr$ at the ti!e of the e:ecution of the SPA9 that &B@ Sr. /ocu!ent ,:a!iner Rhoda B. Flores had certified that the si%nature appearin% on the SPA purportin% to be that of /ionisio and the set of standard sa!ple si%natures of /ionisio had not been 2ritten b$ one and the sa!e person922 and that Record 6fficer @@@ ,liseo 6. Terenco and Cler3 of Court 1esus P. +anin%as of the +anila RTC had issued a certification to the effect that Att$. Alfred /atin%alin%, the &otar$ Public 2ho had notari;ed the SPA, had not been included in the list of &otaries Public in +anila for the $ear 788<C7887. CA affir!ed the decision of the RTC. ence, the instant petition. @ssues 7. Dhich bet2een Article 7)( of the Civil Code and Article 72* of the Fa!il$ Code should appl$ to the sale of the conju%al propert$ e:ecuted 2ithout the consent of /ionisioE 2. 2hether or not the$ had dili%entl$ in#uired into the authorit$ of +a. ,lena to conve$ the propert$, not 2hether or not the TCT had been valid and authentic, as to 2hich there 2as no doubt. eld: The petition has no !erit. De sustain the CA. Art'()e 12*, +#m'), Co%e, #pp)'e- to -#)e o. (o$/01#) propert'e- m#%e #.ter t2e e..e(t'3't, o. t2e +#m'), Co%e The sale 2as !ade on +arch 7>, 7887, or after Au%ust (, 78>>, the effectivit$ of the Fa!il$ Code. The proper la2 to appl$ is, therefore, Article 72* of the Fa!il$ Code, for it is settled that an$ alienation or encu!brance of conju%al propert$ !ade durin% the effectivit$ of the Fa!il$ Code is %overned b$ Article 72* of the Fa!il$ Code. Article 72* of the Fa!il$ Code provides: Article 72*. The ad!inistration and enjo$!ent of the conju%al partnership propert$ shall belon% to both spouses jointl$. @n case of disa%ree!ent, the husband5s decision shall prevail, subject to recourse to the court b$ the 2ife for proper re!ed$, 2hich !ust be availed of 2ithin five $ears fro! the date of the contract i!ple!entin% such decision.

I$ t2e e3e$t t2#t o$e -po0-e '- '$(#p#('t#te% or ot2er4'-e 0$#b)e to p#rt'('p#te '$ t2e #%m'$'-tr#t'o$ o. t2e (o$/01#) propert'e-, t2e ot2er -po0-e m#, #--0me -o)e po4er- o. #%m'$'-tr#t'o$. 52e-e po4er- %o $ot '$()0%e %'-po-'t'o$ or e$(0mbr#$(e 4't2o0t #0t2or't, o. t2e (o0rt or t2e 4r'tte$ (o$-e$t o. t2e ot2er -po0-e. @n the absence of such authorit$ or consent, the disposition or encu!brance shall be void. o2ever, the transaction shall be construed as a continuin% offer on the part of the consentin% spouse and the third person, and !a$ be perfected as a bindin% contract upon the acceptance b$ the other spouse or authori;ation b$ the court before the offer is 2ithdra2n b$ either or both offerors. The po2er of ad!inistration does not include acts of disposition or encu!brance, 2hich are acts of strict o2nership. As such, an authorit$ to dispose cannot proceed fro! an authorit$ to ad!inister, and vice versa, for the t2o po2ers !a$ onl$ be e:ercised b$ an a%ent b$ follo2in% the provisions on a%enc$ of the Civil Code -fro! Article 7>)' to Article 7>)>.. Specificall$, the apparent authorit$ of Att$. Parulan, bein% a special a%enc$, 2as li!ited to the sale of the propert$ in #uestion, and did not include or e:tend to the po2er to ad!inister the propert$. The petitioners5 insistence that Att$. Parulan5s !a3in% of a counterCoffer durin% the +arch 2=, 7887 !eetin% ratified the sale !erits no consideration. Fnder Article 72* of the Fa!il$ Code, the transaction e:ecuted sans the 2ritten consent of /ionisio or the proper court order 2as void9 hence, ratification did not occur, for a void contract could not be ratified. The void sale 2as a continuin% offer fro! the petitioners and +a. ,lena that /ionisio had the option of acceptin% or rejectin% before the offer 2as 2ithdra2n b$ either or both +a. ,lena and the petitioners. The last sentence of the second para%raph of Article 72* of the Fa!il$ Code !a3es this clear, statin% that in the absence of the other spouse5s consent, the transaction should be construed as a continuin% offer on the part of the consentin% spouse and the third person, and !a$ be perfected as a bindin% contract upon the acceptance b$ the other spouse or upon authori;ation b$ the court before the offer is 2ithdra2n b$ either or both offerors. D0e %')'1e$(e re60're% '$ 3er'.,'$1 $ot o$), 3e$%or7t't)e, b0t #)-o #1e$t7- #0t2or't, to -e)) t2e propert, Article 72* of the Fa!il$ Code cate%oricall$ re#uires the consent of both spouses before the conju%al propert$ !a$ be disposed of b$ sale, !ort%a%e, or other !odes of disposition. @n Bautista v. Silva,the Court erected a standard to deter!ine the %ood faith of the bu$ers dealin% 2ith A seller 2ho had title to and possession of the land but 2hose capacit$ to sell 2as restricted, in that the consent of the other spouse 2as re#uired before the conve$ance, declarin% that in order to prove %ood faith in such a situation, the bu$ers !ust sho2 that the$ in#uired not onl$ into the title of the seller but also into the seller5s capacit$ to sell. Thus, the bu$ers of conju%al propert$ !ust observe t2o 3inds of re#uisite dili%ence, na!el$: -a. the dili%ence in verif$in% the validit$ of the title coverin% the propert$9 and -b. the dili%ence in in#uirin% into the authorit$ of the transactin% spouse to sell conju%al propert$ in behalf of the other spouse. @t is true that a bu$er of re%istered land needs onl$ to sho2 that he has relied on the face of the certificate of title to the propert$, for he is not re#uired to e:plore be$ond 2hat the certificate indicates on its face.@n this respect, the petitioners sufficientl$ proved that the$ had chec3ed on the authenticit$ of TCT &o. '(()' and TCT &o. '(()) 2ith the 6ffice of the Re%ister of /eeds in Pasa$ Cit$ as the custodian of the land records9 and that the$ had also %one to the ?os Ba"os Rural Ban3 to in#uire about the !ort%a%e annotated on TCT &o. '(()). Thereb$, the petitioners observed the re#uisite dili%ence in e:a!inin% the validit$ of the TCTs concerned. Get, it ou%ht to be plain enou%h to the petitioners that the issue 2as 2hether or not the$ had dili%entl$ in#uired into the authorit$ of +a. ,lena to conve$ the propert$, not 2hether or not the TCT had been valid and authentic, as to 2hich there 2as no doubt. Thus, 2e cannot side 2ith the!.

Firstl$, the petitioners 3ne2 full$ 2ell that the la2 de!anded the 2ritten consent of /ionisio to the sale, but $et the$ did not present evidence to sho2 that the$ had !ade in#uiries into the circu!stances behind the e:ecution of the SPA purportedl$ e:ecuted b$ /ionisio in favor of +a. ,lena. ad the$ !ade the appropriate in#uiries, and not si!pl$ accepted the SPA for 2hat it represented on its face, the$ 2ould have uncovered soon enou%h that the respondents had been estran%ed fro! each other and 2ere under de facto separation, and that the$ probabl$ held conflictin% interests that 2ould ne%ate the e:istence of an a%enc$ bet2een the!. To lift this doubt, the$ !ust, of necessit$, further in#uire into the SPA of +a. ,lena. @ndeed, an un#uestionin% reliance b$ the petitioners on +a. ,lena5s SPA 2ithout first ta3in% precautions to verif$ its authenticit$ 2as not a prudent bu$er5s !ove. *< The$ should have done ever$thin% 2ithin

their !eans and po2er to ascertain 2hether the SPA had been %enuine and authentic. @f the$ did not investi%ate on the relations of the respondents visCHCvis each other, the$ could have done other thin%s to2ards the sa!e end, li3e atte!ptin% to locate the notar$ public 2ho had notari;ed the SPA, or chec3ed 2ith the RTC in +anila to confir! the authorit$ of &otar$ Public Att$. /atin%alin%. @t turned out that Att$. /atin%alin% 2as not authori;ed to act as a &otar$ Public for +anila durin% the period 788<C7887, 2hich 2as a fact that the$ could easil$ discover 2ith a !odicu! of ;eal. Secondl$, the final pa$!ent of P)<<,<<<.<< even 2ithout the o2ner5s duplicate cop$ of the TCT &o. '(()' bein% handed to the! b$ +a. ,lena indicated a revealin% lac3 of precaution on the part of the petitioners. @t is true that she pro!ised to produce and deliver the o2ner5s cop$ 2ithin a 2ee3 because her relative havin% custod$ of it had %one to on%3on%, but their passivit$ in such an essential !atter 2as pu;;lin% li%ht of their earlier alacrit$ in i!!ediatel$ and dili%entl$ validatin% the TCTs to the e:tent of in#uirin% at the ?os Ba"os Rural Ban3 about the annotated !ort%a%e. Get, the$ could have ri%htl$ 2ithheld the final pa$!ent of the balance. That the$ did not do so reflected their lac3 of due care in dealin% 2ith +a. ,lena. ?astl$, another reason rendered the petitioners5 %ood faith incredible. The$ did not ta3e i!!ediate action a%ainst +a. ,lena upon discoverin% that the o2ner5s ori%inal cop$ of TCT &o. '(()' 2as in the possession of Att$. Parulan, contrar$ to ,lena5s representation. u!an e:perience 2ould have i!pelled the! to e:ert ever$ effort to proceed a%ainst +a. ,lena, includin% de!andin% the return of the substantial a!ounts paid to her. But the$ see!ed not to !ind her inabilit$ to produce the TCT, and, instead, the$ contented the!selves 2ith !eetin% 2ith Att$. Parulan to ne%otiate for the possible turnover of the TCT to the!.