Buyers better beware when dealing with real property that’s conjugally owned. Not only should a buyer inquire into the title of vendor-spouses, he should also inquire into the authority to sell the property if only one of the spouses is transacting the same with the use of a special power of attorney (“SPA”).
In Spouses Aggabao vs. Parulan, et al. G.R. No. 165803, 1 September 2010, the buyers sought to purchase 2 lots which was owned by estranged spouses. The wife presented a purported SPA from her husband.
The buyers allege that they acted in good faith in relying on the SPA. They inquired with the Register of Deeds on the status of the properties and found that it had been encumbered on at least 2 occasions by the wife utilizing SPAs executed by her husband.
The buyers proceeded to buy the properties. They were able to secure 1 TCT and transferred the title in their name. Subsequently, they learned that the other TCT was with a brother of the husband. This brother sought to negotiate a sale of the property separately. The property was offered for P800,000 but the buyers made a counter-offer of P250,000 which was declined. The buyers would later on insist that the sale had already been consummated with the wife.
The husband then brought suit against the buyers to annul the sale of both properties while the buyers sought specific performance.
The court ruled against the buyers.
The court relied on the provisions of the Family Code when it invalidated the sale entered into by the wife with a forged SPA. The buyers were obliged to “exercise the necessary prudence to inquire into the wife’s authority to sell and that “the sale of conjugal property without the consent of the husband was not merely voidable but void; hence, it could not be ratified.”
The court further stated that a “purchaser in good faith is one who buys the property of another, without 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. The status of a buyer in good faith is never presumed but must be proven by the person invoking it.” And that diligence extends not only to verifying the status of the title but also to the authority of the transacting spouse.
The buyers’ insistence that they performed due diligence in verifying the status of the TCTs is unavailing. Article 124 of the Family Code ”requires the consent of both spouses before the conjugal property may be disposed of by sale, mortgage, or other modes of disposition. In Bautista v. Silva, the Court erected a standard to determine the good faith of the buyers dealing with a seller who had title to and possession of the land but whose capacity to sell was restricted, in that the consent of the other spouse was required before the conveyance, declaring that in order to prove good faith in such a situation, the buyers must show that they inquired not only into the title of the seller but also into the seller’s capacity to sell. Thus, the buyers of conjugal property must observe two kinds of requisite diligence, 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 buyers, knowing the requirements of the law, should have inquired into the SPA purportedly executed by the husband. They would have discovered that the spouses had “been estranged from each other and were under de facto separation, and that they probably held conflicting interests that would negate the existence of an agency between them. To lift this doubt, they must, of necessity, further inquire into the SPA of Ma. Elena. The omission to inquire indicated their not being buyers in good faith xxx.”
The “unquestioning reliance” on the SPA “without first taking precautions to verify its authenticity was not a prudent buyer’s move.” The court found that the notary of the document was not even authorized to act as such for the period in question.
Moreover, making payment despite the absence of one TCT shows a “lack of precaution.” The court noted their “passivity” in not insisting on a copy of the title which “reflected their lack of due care.”
Their good faith is also called into question by their failing to take immediate action against the seller when they found one of the titles to be in the possession of another. Instead, they even met with this third party in order to negotiate. In this case, it was further established that the signature of the husband had been forged, since he was out of the country at the time and the notary was not authorized.
Apart from checking the title with the Register of Deeds, a buyer should now also check the authenticity of an SPA - or better yet get both spouses to sign the deed of sale - including the credentials of the notary public in order to prove good faith and the exercise of due diligence, specially when dealing with spouses. It is only what the spouses have sold together that the courts will not put asunder.
2 comments:
isn't the sale of the half portion of the wife valid?
That could have been an argument. However, the court relied on the specific wordings of Article 124 of the Family Code where a disposition of conjugal property must be by order of the court or with the written consent of the other spouse. It held that without the foregoing, the sale was void and “a void contract could not be ratified.”
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