The Supreme Court has affirmed that the sale of conjugal property without the husband’s written consent is void, not merely voidable, under Article 124 of the Family Code. This ruling emphasizes the importance of spousal consent in transactions involving conjugal assets, protecting the rights of both parties in a marriage. Moreover, the Court found that the buyers were not in good faith because they failed to diligently inquire into the wife’s authority to sell the property, especially when the presented Special Power of Attorney (SPA) was later proven to be a forgery.

Forged Authority: Can a Defective SPA Validate a Conjugal Property Sale?

This case revolves around a property dispute involving Spouses Rex and Concepcion Aggabao (petitioners) and Spouses Dionisio and Ma. Elena Parulan (respondents). The heart of the matter is the sale of two parcels of land, registered under the names of Dionisio and Ma. Elena, to the Aggabao spouses. The sale was facilitated by Ma. Elena, who presented a Special Power of Attorney (SPA) purportedly signed by her husband, Dionisio, authorizing her to sell the property. However, Dionisio contested the validity of the sale, claiming that his signature on the SPA was forged and that he was out of the country when it was supposedly executed.

The Regional Trial Court (RTC) initially annulled the deed of absolute sale, a decision later affirmed by the Court of Appeals (CA). The Aggabao spouses then appealed to the Supreme Court, arguing that they were buyers in good faith and that the sale should be considered valid. They also contended that Article 173 of the Civil Code, not Article 124 of the Family Code, should apply, and that even if the SPA was forged, the doctrine of innocent purchaser for value should protect their rights.

The Supreme Court squarely addressed whether the sale of conjugal property, executed by the wife based on a forged SPA, is valid against the husband. In resolving this issue, the Court considered the applicability of Article 124 of the Family Code, which requires the consent of both spouses for the disposition of conjugal property. The Court also assessed the Aggabao spouses’ claim of being buyers in good faith, which would have shielded them from the consequences of a defective title.

The Court firmly rejected the petitioners’ arguments. It emphasized that the sale occurred after the effectivity of the Family Code, making Article 124 applicable. The Court elucidated on the legal framework surrounding conjugal property rights, underscoring that the administration and enjoyment of conjugal partnership property belong to both spouses jointly. The Family Code explicitly states:

Article 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.

Building on this principle, the Court clarified that the absence of the husband’s written consent rendered the sale void. This is because the disposition or encumbrance of conjugal property without the consent of both spouses is explicitly prohibited by the Family Code. The Court distinguished between void and voidable contracts, emphasizing that a void contract is inexistent from the beginning and cannot be ratified. In contrast, a voidable contract is valid until annulled and can be ratified.

Moreover, the Court held that the Aggabao spouses were not buyers in good faith. The Court emphasized that buyers of conjugal property must exercise due diligence, including inquiring into the authority of the transacting spouse to sell on behalf of the other spouse. In this case, the Aggabao spouses failed to adequately verify the authenticity of the SPA and the circumstances surrounding its execution. Their reliance on the SPA without further inquiry did not meet the standard of a prudent buyer.

The Court explained that the concept of a purchaser in good faith requires that the buyer had no notice that some other person has a right to, or interest in, such property, and pays the full and fair price for it at the time of such purchase or before he has notice of the claim or interest of some other persons in the property. He buys the property with the belief that the person from whom he receives the thing was the owner and could convey title to the property. He cannot close his eyes to facts that should put a reasonable man on his guard and still claim he acted in good faith.

Furthermore, the Court differentiated the present case from Veloso v. Court of Appeals, which the petitioners cited to support their claim of being innocent purchasers for value. The Court clarified that Veloso involved property exclusively owned by the petitioner, not conjugal property. Therefore, Article 124 of the Family Code did not apply. In contrast, the property in the present case was conjugal, and the lack of the husband’s written consent rendered the sale void under Article 124.

The Supreme Court’s decision underscores the importance of spousal consent in transactions involving conjugal property. It also sets a high standard of diligence for buyers, requiring them to inquire not only into the validity of the title but also into the authority of the seller to convey the property. The ruling provides clarity on the application of Article 124 of the Family Code and its implications for property rights in the Philippines.

FAQs

What was the key issue in this case?	The central issue was whether the sale of conjugal property by the wife, based on a forged Special Power of Attorney (SPA) from the husband, was valid. The court also examined whether the buyers acted in good faith.
What is conjugal property?	Conjugal property refers to properties acquired by the husband and wife during their marriage under the regime of conjugal partnership of gains. These properties are owned jointly by both spouses.
What does Article 124 of the Family Code say about selling conjugal property?	Article 124 requires the written consent of both spouses for any disposition or encumbrance of conjugal property. Without such consent, the transaction is void.
What does it mean to be a buyer in good faith?	A buyer in good faith is someone who purchases property without notice that another person has a right to or interest in the property. They pay the full and fair price, believing the seller has the right to convey the title.
Why were the Aggabao spouses not considered buyers in good faith?	The Aggabao spouses failed to diligently inquire into the authenticity of the SPA and the circumstances surrounding its execution. Their unquestioning reliance on the SPA, without further investigation, did not meet the standard of a prudent buyer.
What is a Special Power of Attorney (SPA)?	An SPA is a legal document authorizing a person (agent) to act on behalf of another person (principal) in specific transactions. It must be duly executed and comply with legal requirements to be valid.
What was the significance of the SPA being forged in this case?	The forged SPA meant that the wife, Ma. Elena, did not have the legal authority to sell the property on behalf of her husband, Dionisio. This lack of authority made the sale void.
Can a void sale be ratified?	No, a void contract, such as the sale in this case, is considered inexistent from the beginning and cannot be ratified. Ratification only applies to voidable contracts.
What diligence is required when buying property from a married person?	Buyers must inquire into the validity of the title and also the authority of the transacting spouse to sell conjugal property on behalf of the other spouse.
What was the final ruling of the Supreme Court?	The Supreme Court affirmed the lower courts’ decisions, declaring the sale void and ruling that the Aggabao spouses were not buyers in good faith. This emphasized the necessity of spousal consent in property transactions.

In conclusion, the Supreme Court’s decision in Spouses Rex and Concepcion Aggabao vs. Dionisio Z. Parulan, Jr. and Ma. Elena Parulan reinforces the importance of complying with the requirements of the Family Code when dealing with conjugal property. It serves as a reminder to exercise due diligence and verify the authority of the transacting party, especially when dealing with married individuals.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Spouses Rex and Concepcion Aggabao vs. Dionisio Z. Parulan, Jr. and Ma. Elena Parulan, G.R. No. 165803, September 01, 2010