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PFR REVIEW CASES FOR 2ND EXAM On 8 September 2004, petitioner filed a Complaint for Sum

of Money with Damages against respondents. It was raffled


to Branch 42 (RTC, Branch 42) of the Regional Trial Court of
G.R. No. 183984               April 13, 2011 Manila, and docketed as Civil Case No. 04-110858.

ARTURO SARTE FLORES, Petitioner, Respondents filed their Answer with Affirmative Defenses
vs. and Counterclaims where they admitted the loan but stated
SPOUSES ENRICO L. LINDO, JR. and EDNA C. that it only amounted to ₱340,000. Respondents further
LINDO, Respondents. alleged that Enrico was not a party to the loan because it
was contracted by Edna without Enrico’s signature.
DECISION Respondents prayed for the dismissal of the case on the
grounds of improper venue, res judicata and forum-
shopping, invoking the Decision of the RTC, Branch 33. On 7
CARPIO, J.: March 2005, respondents also filed a Motion to Dismiss on
the grounds of res judicata and lack of cause of action.
The Case
The Decision of the Trial Court
Before the Court is a petition for review1 assailing the 30 May
2008 Decision2 and the 4 August 2008 Resolution3 of the On 22 July 2005, the RTC, Branch 42 issued an
Court of Appeals in CA-G.R. SP No. 94003. Order8 denying the motion to dismiss. The RTC, Branch 42
ruled that res judicata will not apply to rights, claims or
The Antecedent Facts demands which, although growing out of the same subject
matter, constitute separate or distinct causes of action and
were not put in issue in the former action. Respondents filed
The facts, as gleaned from the Court of Appeals’ Decision, a motion for reconsideration. In its Order9 dated 8 February
are as follows: 2006, the RTC, Branch 42 denied respondents’ motion. The
RTC, Branch 42 ruled that the RTC, Branch 33 expressly
On 31 October 1995, Edna Lindo (Edna) obtained a loan stated that its decision did not mean that petitioner could no
from Arturo Flores (petitioner) amounting to ₱400,000 longer recover the loan petitioner extended to Edna.
payable on 1 December 1995 with 3% compounded monthly
interest and 3% surcharge in case of late payment. To Respondents filed a Petition for Certiorari and Mandamus
secure the loan, Edna executed a Deed of Real Estate with Prayer for a Writ of Preliminary Injunction and/or
Mortgage4 (the Deed) covering a property in the name of Temporary Restraining Order before the Court of Appeals.
Edna and her husband Enrico (Enrico) Lindo, Jr.
(collectively, respondents). Edna also signed a Promissory
Note5 and the Deed for herself and for Enrico as his The Decision of the Court of Appeals
attorney-in-fact.
In its 30 May 2008 Decision, the Court of Appeals set aside
Edna issued three checks as partial payments for the loan. the 22 July 2005 and 8 February 2006 Orders of the RTC,
All checks were dishonored for insufficiency of funds, Branch 42 for having been issued with grave abuse of
prompting petitioner to file a Complaint for Foreclosure of discretion.
Mortgage with Damages against respondents. The case was
raffled to the Regional Trial Court of Manila, Branch 33 The Court of Appeals ruled that while the general rule is that
(RTC, Branch 33) and docketed as Civil Case No. 00-97942. a motion to dismiss is interlocutory and not appealable, the
rule admits of exceptions. The Court of Appeals ruled that
In its 30 September 2003 Decision,6 the RTC, Branch 33 the RTC, Branch 42 acted with grave abuse of discretion in
ruled that petitioner was not entitled to judicial foreclosure of denying respondents’ motion to dismiss.
the mortgage. The RTC, Branch 33 found that the Deed was
executed by Edna without the consent and authority of
Enrico. The RTC, Branch 33 noted that the Deed was
executed on 31 October 1995 while the Special Power of
Attorney (SPA) executed by Enrico was only dated 4
November 1995.

The RTC, Branch 33 further ruled that petitioner was not


precluded from recovering the loan from Edna as he could
file a personal action against her. However, the RTC, Branch
33 ruled that it had no jurisdiction over the personal action
which should be filed in the place where the plaintiff or the
defendant resides in accordance with Section 2, Rule 4 of
the Revised Rules on Civil Procedure.

Petitioner filed a motion for reconsideration. In its


Order7 dated 8 January 2004, the RTC, Branch 33 denied
the motion for lack of merit.
The Court of Appeals ruled that under Section 3, Rule 2 of him the right to sue for deficiency judgment, in which case,
the 1997 Rules of Civil Procedure, a party may not institute all the properties of the defendant, other than the mortgaged
more than one suit for a single cause of action. If two or property, are again open to him for the satisfaction of the
more suits are instituted on the basis of the same cause of deficiency. In either case, his remedy is complete, his cause
action, the filing of one on a judgment upon the merits in any of action undiminished, and any advantages attendant to the
one is available ground for the dismissal of the others. The pursuit of one or the other remedy are purely accidental and
Court of Appeals ruled that on a nonpayment of a note are all under his right of election. On the other hand, a rule
secured by a mortgage, the creditor has a single cause of that would authorize the plaintiff to bring a personal action
action against the debtor, that is recovery of the credit with against the debtor and simultaneously or successively
execution of the suit. Thus, the creditor may institute two another action against the mortgaged property, would result
alternative remedies: either a personal action for the not only in multiplicity of suits so offensive to justice (Soriano
collection of debt or a real action to foreclose the mortgage, v. Enriques, 24 Phil. 584) and obnoxious to law and equity
but not both. The Court of Appeals ruled that petitioner had (Osorio v. San Agustin, 25 Phil. 404), but also in subjecting
only one cause of action against Edna for her failure to pay the defendant to the vexation of being sued in the place of
her obligation and he could not split the single cause of his residence or of the residence of the plaintiff, and then
action by filing separately a foreclosure proceeding and a again in the place where the property lies.15
collection case. By filing a petition for foreclosure of the real
estate mortgage, the Court of Appeals held that petitioner
The Court has ruled that if a creditor is allowed to file his
had already waived his personal action to recover the
separate complaints simultaneously or successively, one to
amount covered by the promissory note.
recover his credit and another to foreclose his mortgage, he
will, in effect, be authorized plural redress for a single breach
Petitioner filed a motion for reconsideration. In its 4 August of contract at so much costs to the court and with so much
2008 Resolution, the Court of Appeals denied the motion. vexation and oppressiveness to the debtor.16

Hence, the petition before this Court. In this case, however, there are circumstances that the Court
takes into consideration.
The Issue
Petitioner filed an action for foreclosure of mortgage. The
RTC, Branch 33 ruled that petitioner was not entitled to
The sole issue in this case is whether the Court of Appeals
judicial foreclosure because the Deed of Real Estate
committed a reversible error in dismissing the complaint for
Mortgage was executed without Enrico’s consent. The RTC,
collection of sum of money on the ground of multiplicity of
Branch 33 stated:
suits.

All these circumstances certainly conspired against the


The Ruling of this Court
plaintiff who has the burden of proving his cause of action.
On the other hand, said circumstances tend to support the
The petition has merit. claim of defendant Edna Lindo that her husband did not
consent to the mortgage of their conjugal property and that
the loan application was her personal decision.
The rule is that a mortgage-creditor has a single cause of
action against a mortgagor-debtor, that is, to recover the
debt.10 The mortgage-creditor has the option of either filing a Accordingly, since the Deed of Real Estate Mortgage was
personal action for collection of sum of money or instituting a executed by defendant Edna Lindo lacks the consent or
real action to foreclose on the mortgage security.11 An authority of her husband Enrico Lindo, the Deed of Real
election of the first bars recourse to the second, otherwise Estate Mortgage is void pursuant to Article 96 of the Family
there would be multiplicity of suits in which the debtor would Code.
be tossed from one venue to another depending on the
location of the mortgaged properties and the residence of the
This does not mean, however, that the plaintiff cannot
parties.12
recover the ₱400,000 loan plus interest which he extended
to defendant Edna Lindo. He can institute a personal action
The two remedies are alternative and each remedy is against the defendant for the amount due which should be
complete by itself.13 If the mortgagee opts to foreclose the filed in the place where the plaintiff resides, or where the
real estate mortgage, he waives the action for the collection defendant or any of the principal defendants resides at the
of the debt, and vice versa.14 The Court explained: election of the plaintiff in accordance with Section 2, Rule 4
of the Revised Rules on Civil Procedure. This Court has no
jurisdiction to try such personal action.17
x x x in the absence of express statutory provisions, a
mortgage creditor may institute against the mortgage debtor
either a personal action for debt or a real action to foreclose Edna did not deny before the RTC, Branch 33 that she
the mortgage. In other words, he may pursue either of the obtained the loan. She claimed, however, that her husband
two remedies, but not both. By such election, his cause of did not give his consent and that he was not aware of the
action can by no means be impaired, for each of the two transaction.18 Hence, the RTC, Branch 33 held that petitioner
remedies is complete in itself. Thus, an election to bring a could still recover the amount due from Edna through a
personal action will leave open to him all the properties of personal action over which it had no jurisdiction.
the debtor for attachment and execution, even including the
mortgaged property itself. And, if he waives such personal
Edna also filed an action for declaratory relief before the
action and pursues his remedy against the mortgaged
RTC, Branch 93 of San Pedro Laguna (RTC, Branch 93),
property, an unsatisfied judgment thereon would still give
which ruled:
At issue in this case is the validity of the promissory note and Article 124 of the Family Code of which applies to conjugal
the Real Estate Mortgage executed by Edna Lindo without partnership property, is a reproduction of Article 96 of the
the consent of her husband. Family Code which applies to community property.

The real estate mortgage executed by petition Edna Lindo Both Article 96 and Article 127 of the Family Code provide
over their conjugal property is undoubtedly an act of strict that the powers do not include disposition or encumbrance
dominion and must be consented to by her husband to be without the written consent of the other spouse. Any
effective. In the instant case, the real estate mortgage, disposition or encumbrance without the written consent shall
absent the authority or consent of the husband, is be void. However, both provisions also state that "the
necessarily void. Indeed, the real estate mortgage is this transaction shall be construed as a continuing offer on the
case was executed on October 31, 1995 and the subsequent part of the consenting spouse and the third person, and may
special power of attorney dated November 4, 1995 cannot be perfected as a binding contract upon the acceptance
be made to retroact to October 31, 1995 to validate the by the other spouse x x x before the offer is withdrawn by
mortgage previously made by petitioner. either or both offerors."

The liability of Edna Lindo on the principal contract of the In this case, the Promissory Note and the Deed of Real
loan however subsists notwithstanding the illegality of the Estate Mortgage were executed on 31 October 1995. The
mortgage. Indeed, where a mortgage is not valid, the Special Power of Attorney was executed on 4 November
principal obligation which it guarantees is not thereby 1995. The execution of the SPA is the acceptance by the
rendered null and void. That obligation matures and other spouse that perfected the continuing offer as a
becomes demandable in accordance with the stipulation binding contract between the parties, making the Deed
pertaining to it. Under the foregoing circumstances, what is of Real Estate Mortgage a valid contract.
lost is merely the right to foreclose the mortgage as a special
remedy for satisfying or settling the indebtedness which is
However, as the Court of Appeals noted, petitioner allowed
the principal obligation. In case of nullity, the mortgage deed
the decisions of the RTC, Branch 33 and the RTC, Branch
remains as evidence or proof of a personal obligation of the
93 to become final and executory without asking the courts
debtor and the amount due to the creditor may be enforced
for an alternative relief. The Court of Appeals stated that
in an ordinary action.
petitioner merely relied on the declarations of these courts
that he could file a separate personal action and thus failed
In view of the foregoing, judgment is hereby rendered to observe the rules and settled jurisprudence on multiplicity
declaring the deed of real estate mortgage as void in the of suits, closing petitioner’s avenue for recovery of the loan.
absence of the authority or consent of petitioner’s spouse
therein. The liability of petitioner on the principal contract of
Nevertheless, petitioner still has a remedy under the law.
loan however subsists notwithstanding the illegality of the
real estate mortgage.19
In Chieng v. Santos,20 this Court ruled that a mortgage-
creditor may institute against the mortgage-debtor either a
The RTC, Branch 93 also ruled that Edna’s liability is not
personal action for debt or a real action to foreclose the
affected by the illegality of the real estate mortgage.
mortgage. The Court ruled that the remedies are alternative
and not cumulative and held that the filing of a criminal
Both the RTC, Branch 33 and the RTC, Branch 93 action for violation of Batas Pambansa Blg. 22 was in effect
misapplied the rules. a collection suit or a suit for the recovery of the mortgage-
debt.21 In that case, however, this Court pro hac vice, ruled
that respondents could still be held liable for the balance of
Article 124 of the Family Code provides:
the loan, applying the principle that no person may unjustly
enrich himself at the expense of another.22
Art. 124. The administration and enjoyment of the conjugal
partnership property shall belong to both spouses jointly. In
The principle of unjust enrichment is provided under Article
case of disagreement, the husband’s decision shall prevail,
22 of the Civil Code which provides:
subject to recourse to the court by the wife for proper
remedy, which must be availed of within five years from the
date of contract implementing such decision. Art. 22. Every person who through an act of performance by
another, or any other means, acquires or comes into
possession of something at the expense of the latter without
In the event that one spouse is incapacitated or otherwise
just or legal ground, shall return the same to him.
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 There is unjust enrichment "when a person unjustly retains a
encumbrance without authority of the court or the written benefit to the loss of another, or when a person retains
consent of the other spouse. In the absence of such money or property of another against the fundamental
authority or consent the disposition or encumbrance shall be principles of justice, equity and good conscience."23 The
void. However, the transaction shall be construed as a principle of unjust enrichment requires two conditions: (1)
continuing offer on the part of the consenting spouse that a person is benefited without a valid basis or
and the third person, and may be perfected as a binding justification, and (2) that such benefit is derived at the
contract upon the acceptance by the other spouse or expense of another.241avvphi1
authorization by the court before the offer is withdrawn
by either or both offerors. (Emphasis supplied)
The main objective of the principle against unjust enrichment
is to prevent one from enriching himself at the expense of
another without just cause or consideration.25 The principle is consultation before the case was assigned to the writer of
applicable in this case considering that Edna admitted the opinion of the Court’s Division.
obtaining a loan from petitioners, and the same has not been
fully paid without just cause. The Deed was declared void
RENATO C. CORONA
erroneously at the instance of Edna, first when she raised it
Chief Justice
as a defense before the RTC, Branch 33 and second, when
she filed an action for declaratory relief before the RTC,
Branch 93. Petitioner could not be expected to ask the RTC,
Branch 33 for an alternative remedy, as what the Court of
Appeals ruled that he should have done, because the RTC,
Branch 33 already stated that it had no jurisdiction over any
personal action that petitioner might have against Edna. Footnotes

Considering the circumstances of this case, the principle 1


 Under Rule 45 of the 1997 Rules of Civil
against unjust enrichment, being a substantive law, should Procedure.
prevail over the procedural rule on multiplicity of suits. The
Court of Appeals, in the assailed decision, found that Edna 2
 Rollo, pp. 7-16. Penned by Associate Justice
admitted the loan, except that she claimed it only amounted
Noel G. Tijam with Associate Justices Martin S.
to ₱340,000. Edna should not be allowed to unjustly enrich
Villarama, Jr. (now Supreme Court Justice) and
herself because of the erroneous decisions of the two trial
Andres B. Reyes, Jr., concurring.
courts when she questioned the validity of the Deed.
Moreover, Edna still has an opportunity to submit her
defenses before the RTC, Branch 42 on her claim as to the 3
 Id. at 18-20.
amount of her indebtedness.
4
 Id. at 53-60.
WHEREFORE, the 30 May 2008 Decision and the 4 August
2008 Resolution of the Court of Appeals in CA-G.R. SP No. 5
94003 are SET ASIDE. The Regional Trial Court of Manila,  Id. at 52.
Branch 42 is directed to proceed with the trial of Civil Case
No. 04-110858. 6
 Id. at 84-88. Penned by Judge Reynaldo G. Ros.

SO ORDERED. 7
 Id. at 89-90.

ANTONIO T. CARPIO 8
 Id. at 48-50. Penned by Judge Guillermo G.
Associate Justice Purganan.

WE CONCUR: 9
 Id. at 51. Penned by Judge Vedasto R. Marco.

ANTONIO EDUARDO B. NACHURA 10


 Tanchan v. Allied Banking Corporation, G.R. No.
Associate Justice 164510, 25 November 2008, 571 SCRA 512.

DIOSDADO M. PERALTA ROBERTO A. ABAD 11


 Id.
Associate Justice Associate Justice
12
 Id.
JOSE C. MENDOZA
Associate Justice 13
 BPI Family Savings Bank, Inc. v. Vda. De
Coscolluela, G.R. No. 167724, 27 June 2006, 493
ATTESTATION SCRA 472.

14
I attest that the conclusions in the above Decision had been  Id.
reached in consultation before the case was assigned to the
writer of the opinion of the Court’s Division. 15
 Id. at 493 citing Bachrach Motor Co., Inc. v.
Esteban Icarañgal and Oriental Commercial Co.,
ANTONIO T. CARPIO Inc., 68 Phil. 287 (1939).
Associate Justice
Chairperson 16
 Id.

CERTIFICATION 17
 Rollo, pp. 87-88.

Pursuant to Section 13, Article VIII of the Constitution, and 18


 Id. at 86.
the Division Chairperson’s Attestation, I certify that the
conclusions in the above Decision had been reached in
19
 Id. at 81-82.
20
 G.R. No. 169647, 31 August 2007, 531 SCRA Involved in this action are two parcels of land and their
730. improvements (property) located at No. 49 Miguel Cuaderno
Street, Executive Village, BF Homes, Parañaque City and
21 registered under Transfer Certificate of Title (TCT) No.
 Id.
633762 and TCT No. 633773 in the name of respondents
Spouses Maria Elena A. Parulan (Ma. Elena) and Dionisio Z.
22
 Id. Parulan, Jr. (Dionisio), who have been estranged from one
another.
23
 Republic v. Court of Appeals, G.R. No. 160379,
14 August 2009, 596 SCRA 57 citing Benguet In January 1991, real estate broker Marta K. Atanacio
Corporation v. Department of Environment and (Atanacio) offered the property to the petitioners, who initially
Natural Resources-Mines Adjudication Board, did not show interest due to the rundown condition of the
G.R. No. 163101, 13 February 2008, 545 SCRA improvements. But Atanacio’s persistence prevailed upon
196 and Cool Car Philippines, Inc. v. Ushio Realty them, so that on February 2, 1991, they and Atanacio met
and Development Corporation, G.R. No. 138088, with Ma. Elena at the site of the property. During their
23 Janaury 2006, 479 SCRA 404. meeting, Ma. Elena showed to them the following
documents, namely: (a) the owner’s original copy of TCT No.
24 63376; (b) a certified true copy of TCT No. 63377; (c) three
 Republic v. Court of Appeals, supra. tax declarations; and (d) a copy of the special power of
attorney (SPA) dated January 7, 1991 executed by Dionisio
25
 P.C. Javier & Sons, Inc. v. Court of Appeals, 500 authorizing Ma. Elena to sell the property.4 Before the
Phil. 419 (2005). meeting ended, they paid ₱20,000.00 as earnest money, for
which Ma. Elena executed a handwritten Receipt of Earnest
Money, whereby the parties stipulated that: (a) they would
G.R. No. 165803               September 1, 2010 pay an additional payment of ₱130,000.00 on February 4,
1991; (b) they would pay the balance of the bank loan of the
SPOUSES REX AND CONCEPCION respondents amounting to ₱650,000.00 on or before
AGGABAO, Petitioners, February 15, 1991; and (c) they would make the final
vs. payment of ₱700,000.00 once Ma. Elena turned over the
DIONISIO Z. PARULAN, JR. and MA. ELENA property on March 31, 1991.5
PARULAN, Respondents.
On February 4, 1991, the petitioners went to the Office of the
DECISION Register of Deeds and the Assessor’s Office of Parañaque
City to verify the TCTs shown by Ma. Elena in the company
of Atanacio and her husband (also a licensed
BERSAMIN, J.: broker).6 There, they discovered that the lot under TCT No.
63376 had been encumbered to Banco Filipino in 1983 or
On July 26, 2000, the Regional Trial Court (RTC), Branch 1984, but that the encumbrance had already been cancelled
136, in Makati City annulled the deed of absolute sale due to the full payment of the obligation.7 They noticed that
executed in favor of the petitioners covering two parcels of the Banco Filipino loan had been effected through an SPA
registered land the respondents owned for want of the executed by Dionisio in favor of Ma. Elena.8 They found on
written consent of respondent husband Dionisio Parulan, Jr. TCT No. 63377 the annotation of an existing mortgage in
On July 2, 2004, in C.A.-G.R. CV No. 69044,1 the Court of favor of the Los Baños Rural Bank, also effected through an
Appeals (CA) affirmed the RTC decision. SPA executed by Dionisio in favor of Ma. Elena, coupled
with a copy of a court order authorizing Ma. Elena to
mortgage the lot to secure a loan of ₱500,000.00.9
Hence, the petitioners appeal by petition for review on
certiorari, seeking to reverse the decision of the CA. They
present as the main issue whether the sale of conjugal The petitioners and Atanacio next inquired about the
property made by respondent wife by presenting a special mortgage and the court order annotated on TCT No. 63377
power of attorney to sell (SPA) purportedly executed by at the Los Baños Rural Bank. There, they met with Atty. Noel
respondent husband in her favor was validly made to the Zarate, the bank’s legal counsel, who related that the bank
vendees, who allegedly acted in good faith and paid the full had asked for the court order because the lot involved was
purchase price, despite the showing by the husband that his conjugal property.10
signature on the SPA had been forged and that the SPA had
been executed during his absence from the country. Following their verification, the petitioners delivered
₱130,000.00 as additional down payment on February 4,
We resolve the main issue against the vendees and sustain 1991; and ₱650,000.00 to the Los Baños Rural Bank on
the CA’s finding that the vendees were not buyers in good February 12, 1991, which then released the owner’s
faith, because they did not exercise the necessary prudence duplicate copy of TCT No. 63377 to them.11
to inquire into the wife’s authority to sell. We hold that the
sale of conjugal property without the consent of the husband
was not merely voidable but void; hence, it could not be
ratified.

Antecedents
On March 18, 1991, the petitioners delivered the final M. Cuaderno St., Executive Village, BF Homes,
amount of ₱700,000.00 to Ma. Elena, who executed a deed Parañaque, Metro Manila, and covered by TCT
of absolute sale in their favor. However, Ma. Elena did not Nos. 63376 and 63377 is declared null and void.
turn over the owner’s duplicate copy of TCT No. 63376,
claiming that said copy was in the possession of a relative
2. Defendant Mrs. Elena Parulan is directed to pay
who was then in Hongkong.12 She assured them that the
litigation expenses amounting to ₱50,000.00 and
owner’s duplicate copy of TCT No. 63376 would be turned
the costs of the suit.
over after a week.

SO ORDERED.19
On March 19, 1991, TCT No. 63377 was cancelled and a
new one was issued in the name of the petitioners.
The RTC declared that the SPA in the hands of Ma. Elena
was a forgery, based on its finding that Dionisio had been
Ma. Elena did not turn over the duplicate owner’s copy of
out of the country at the time of the execution of the
TCT No. 63376 as promised. In due time, the petitioners
SPA;20 that NBI Sr. Document Examiner Rhoda B. Flores
learned that the duplicate owner’s copy of TCT No. 63376
had certified that the signature appearing on the SPA
had been all along in the custody of Atty. Jeremy Z. Parulan,
purporting to be that of Dionisio and the set of standard
who appeared to hold an SPA executed by his brother
sample signatures of Dionisio had not been written by one
Dionisio authorizing him to sell both lots.13
and the same person;21 and that Record Officer III Eliseo O.
Terenco and Clerk of Court Jesus P. Maningas of the Manila
At Atanacio’s instance, the petitioners met on March 25, RTC had issued a certification to the effect that Atty. Alfred
1991 with Atty. Parulan at the Manila Peninsula.14 For that Datingaling, the Notary Public who had notarized the SPA,
meeting, they were accompanied by one Atty. had not been included in the list of Notaries Public in Manila
Olandesca.15 They recalled that Atty. Parulan "smugly for the year 1990-1991.22
demanded ₱800,000.00" in exchange for the duplicate
owner’s copy of TCT No. 63376, because Atty. Parulan
The RTC rejected the petitioners’ defense of being buyers in
represented the current value of the property to be ₱1.5
good faith because of their failure to exercise ordinary
million. As a counter-offer, however, they tendered
prudence, including demanding from Ma. Elena a court order
₱250,000.00, which Atty. Parulan declined,16 giving them
authorizing her to sell the properties similar to the order that
only until April 5, 1991 to decide.
the Los Baños Rural Bank had required before accepting the
mortgage of the property.23 It observed that they had
Hearing nothing more from the petitioners, Atty. Parulan appeared to be in a hurry to consummate the transaction
decided to call them on April 5, 1991, but they informed him despite Atanacio’s advice that they first consult a lawyer
that they had already fully paid to Ma. Elena.17 before buying the property; that with ordinary prudence, they
should first have obtained the owner’s duplicate copies of the
TCTs before paying the full amount of the consideration; and
Thus, on April 15, 1991, Dionisio, through Atty. Parulan,
that the sale was void pursuant to Article 124 of the Family
commenced an action (Civil Case No. 91-
Code.24
1005 entitled Dionisio Z. Parulan, Jr., represented by
Jeremy Z. Parulan, as attorney in fact, v. Ma. Elena Parulan,
Sps. Rex and Coney Aggabao), praying for the declaration of Ruling of the CA
the nullity of the deed of absolute sale executed by Ma.
Elena, and the cancellation of the title issued to the
As stated, the CA affirmed the RTC, opining that Article 124
petitioners by virtue thereof.
of the Family Code applied because Dionisio had not
consented to the sale of the conjugal property by Ma. Elena;
In turn, the petitioners filed on July 12, 1991 their own action and that the RTC correctly found the SPA to be a forgery.
for specific performance with damages against the
respondents.
The CA denied the petitioners’ motion for reconsideration.25

Both cases were consolidated for trial and judgment in the


Issues
RTC.18

The petitioners now make two arguments: (1) they were


Ruling of the RTC
buyers in good faith; and (2) the CA erred in affirming the
RTC’s finding that the sale between Mrs. Elena and the
After trial, the RTC rendered judgment, as follows: petitioners had been a nullity under Article 124 of the Family
Code.
WHEREFORE, and in consideration of the foregoing,
judgment is hereby rendered in favor of plaintiff Dionisio A. The petitioners impute error to the CA for not applying the
Parulan, Jr. and against defendants Ma. Elena Parulan and "ordinary prudent man’s standard" in determining their status
the Sps. Rex and Concepcion Aggabao, without prejudice to as buyers in good faith. They contend that the more
any action that may be filed by the Sps. Aggabao against co- appropriate law to apply was Article 173 of the Civil Code,
defendant Ma. Elena Parulan for the amounts they paid her not Article 124 of the Family Code; and that even if the SPA
for the purchase of the subject lots, as follows: held by Ma. Elena was a forgery, the ruling in Veloso v.
Court of Appeals26 warranted a judgment in their favor.
1. The Deed of Absolute Sale dated March 18,
1991 covering the sale of the lot located at No. 49
Restated, the issues for consideration and resolution are as In the event that one spouse is incapacitated or
follows: otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume
sole powers of administration. These powers do not
1) Which between Article 173 of the Civil Code
include disposition or encumbrance without authority of
and Article 124 of the Family Code should apply to
the court or the written consent of the other spouse. In
the sale of the conjugal property executed without
the absence of such authority or consent, the disposition or
the consent of Dionisio?
encumbrance shall be void. However, the transaction shall
be construed as a continuing offer on the part of the
2) Might the petitioners be considered in good faith consenting spouse and the third person, and may be
at the time of their purchase of the property? 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.
3) Might the ruling in Veloso v. Court of
Appeals be applied in favor of the petitioners
despite the finding of forgery of the SPA? Thirdly, according to Article 25629 of the Family Code, the
provisions of the Family Code may apply retroactively
provided no vested rights are impaired. In Tumlos v.
Ruling Fernandez,30 the Court rejected the petitioner’s argument
that the Family Code did not apply because the acquisition of
The petition has no merit. We sustain the CA. the contested property had occurred prior to the effectivity of
the Family Code, and pointed out that Article 256 provided
that the Family Code could apply retroactively if the
1. application would not prejudice vested or acquired rights
existing before the effectivity of the Family Code. Herein,
Article 124, Family Code, applies to sale of conjugal however, the petitioners did not show any vested right in the
properties made after the effectivity of the Family Code property acquired prior to August 3, 1988 that exempted their
situation from the retroactive application of the Family Code.
The petitioners submit that Article 173 of the Civil Code, not
Article 124 of the Family Code, governed the property Fourthly, the petitioners failed to substantiate their contention
relations of the respondents because they had been married that Dionisio, while holding the administration over the
prior to the effectivity of the Family Code; and that the property, had delegated to his brother, Atty. Parulan, the
second paragraph of Article 124 of the Family Code should administration of the property, considering that they did not
not apply because the other spouse held the administration present in court the SPA granting to Atty. Parulan the
over the conjugal property. They argue that notwithstanding authority for the administration.
his absence from the country Dionisio still held the
administration of the conjugal property by virtue of his Nonetheless, we stress that the power of administration does
execution of the SPA in favor of his brother; and that even not include acts of disposition or encumbrance, which are
assuming that Article 124 of the Family Code properly acts of strict ownership. As such, an authority to dispose
applied, Dionisio ratified the sale through Atty. Parulan’s cannot proceed from an authority to administer, and vice
counter-offer during the March 25, 1991 meeting. versa, for the two powers may only be exercised by an agent
by following the provisions on agency of the Civil Code (from
We do not subscribe to the petitioners’ submissions. Article 1876 to Article 1878). Specifically, the apparent
authority of Atty. Parulan, being a special agency, was
limited to the sale of the property in question, and did not
To start with, Article 25427 the Family Code has expressly include or extend to the power to administer the property.31
repealed several titles under the Civil Code, among them the
entire Title VI in which the provisions on the property
relations between husband and wife, Article 173 included, Lastly, the petitioners’ insistence that Atty. Parulan’s making
are found. of a counter-offer during the March 25, 1991 meeting ratified
the sale merits no consideration. Under Article 124 of the
Family Code, the transaction executed sans the written
Secondly, the sale was made on March 18, 1991, or after consent of Dionisio or the proper court order was void;
August 3, 1988, the effectivity of the Family Code. The hence, ratification did not occur, for a void contract could not
proper law to apply is, therefore, Article 124 of the Family be ratified.32
Code, for it is settled that any alienation or encumbrance of
conjugal property made during the effectivity of the Family
Code is governed by Article 124 of the Family Code.28 On the other hand, we agree with Dionisio that the void sale
was a continuing offer from the petitioners and Ma. Elena
that Dionisio had the option of accepting or rejecting before
Article 124 of the Family Code provides: the offer was withdrawn by either or both Ma. Elena and the
petitioners. The last sentence of the second paragraph of
Article 124. The administration and enjoyment of the Article 124 of the Family Code makes this clear, stating that
conjugal partnership property shall belong to both spouses in the absence of the other spouse’s consent, the transaction
jointly. In case of disagreement, the husband’s decision shall should be construed as a continuing offer on the part of the
prevail, subject to recourse to the court by the wife for proper consenting spouse and the third person, and may be
remedy, which must be availed of within five years from the perfected as a binding contract upon the acceptance by the
date of the contract implementing such decision. other spouse or upon authorization by the court before the
offer is withdrawn by either or both offerors.
2. authority of Ma. Elena to convey the property, not whether or
not the TCT had been valid and authentic, as to which there
was no doubt. Thus, we cannot side with them.
Due diligence required in verifying not only vendor’s
title,
but also agent’s authority to sell the property Firstly, the petitioners knew fully well that the law demanded
the written consent of Dionisio to the sale, but yet they did
not present evidence to show that they had made inquiries
A purchaser in good faith is one who buys the property of
into the circumstances behind the execution of the SPA
another, without notice that some other person has a right to,
purportedly executed by Dionisio in favor of Ma. Elena. Had
or interest in, such property, and pays the full and fair price
they made the appropriate inquiries, and not simply accepted
for it at the time of such purchase or before he has notice of
the SPA for what it represented on its face, they would have
the claim or interest of some other persons in the property.
uncovered soon enough that the respondents had been
He buys the property with the belief that the person from
estranged from each other and were under de
whom he receives the thing was the owner and could convey
facto separation, and that they probably held conflicting
title to the property. He cannot close his eyes to facts that
interests that would negate the existence of an agency
should put a reasonable man on his guard and still claim he
between them. To lift this doubt, they must, of necessity,
acted in good faith.33 The status of a buyer in good faith is
further inquire into the SPA of Ma. Elena. The omission to
never presumed but must be proven by the person invoking
inquire indicated their not being buyers in good faith, for, as
it.34
fittingly observed in Domingo v. Reed:381avvphi1

Here, the petitioners disagree with the CA for not applying


What was required of them by the appellate court, which we
the "ordinary prudent man’s standard" in determining their
affirm, was merely to investigate – as any prudent vendee
status as buyers in good faith. They insist that they exercised
should – the authority of Lolita to sell the property and to
due diligence by verifying the status of the TCTs, as well as
bind the partnership. They had knowledge of facts that
by inquiring about the details surrounding the mortgage
should have led them to inquire and to investigate, in order
extended by the Los Baños Rural Bank. They lament the
to acquaint themselves with possible defects in her title. The
holding of the CA that they should have been put on their
law requires them to act with the diligence of a prudent
guard when they learned that the Los Baños Rural Bank had
person; in this case, their only prudent course of action was
first required a court order before granting the loan to the
to investigate whether respondent had indeed given his
respondents secured by their mortgage of the property.
consent to the sale and authorized his wife to sell the
property.39
The petitioners miss the whole point.
Indeed, an unquestioning reliance by the petitioners on Ma.
Article 124 of the Family Code categorically requires the Elena’s SPA without first taking precautions to verify its
consent of both spouses before the conjugal property may authenticity was not a prudent buyer’s move.40 They should
be disposed of by sale, mortgage, or other modes of have done everything within their means and power to
disposition. In Bautista v. Silva,35 the Court erected a ascertain whether the SPA had been genuine and authentic.
standard to determine the good faith of the buyers dealing If they did not investigate on the relations of the respondents
with vis-à-vis each other, they could have done other things
towards the same end, like attempting to locate the notary
public who had notarized the SPA, or checked with the RTC
a seller who had title to and possession of the land but in Manila to confirm the authority of Notary Public Atty.
whose capacity to sell was restricted, in that the consent of Datingaling. It turned out that Atty. Datingaling was not
the other spouse was required before the conveyance, authorized to act as a Notary Public for Manila during the
declaring that in order to prove good faith in such a situation, period 1990-1991, which was a fact that they could easily
the buyers must show that they inquired not only into the title discover with a modicum of zeal.
of the seller but also into the seller’s capacity to sell.36 Thus,
the buyers of conjugal property must observe two kinds of
requisite diligence, namely: (a) the diligence in verifying the Secondly, the final payment of ₱700,000.00 even without the
validity of the title covering the property; and (b) the diligence owner’s duplicate copy of the TCT No. 63376 being handed
in inquiring into the authority of the transacting spouse to sell to them by Ma. Elena indicated a revealing lack of precaution
conjugal property in behalf of the other spouse. on the part of the petitioners. It is true that she promised to
produce and deliver the owner’s copy within a week because
her relative having custody of it had gone to Hongkong, but
It is true that a buyer of registered land needs only to show their passivity in such an essential matter was puzzling light
that he has relied on the face of the certificate of title to the of their earlier alacrity in immediately and diligently validating
property, for he is not required to explore beyond what the the TCTs to the extent of inquiring at the Los Baños Rural
certificate indicates on its face.37 In this respect, the Bank about the annotated mortgage. Yet, they could have
petitioners sufficiently proved that they had checked on the rightly withheld the final payment of the balance. That they
authenticity of TCT No. 63376 and TCT No. 63377 with the did not do so reflected their lack of due care in dealing with
Office of the Register of Deeds in Pasay City as the Ma. Elena.
custodian of the land records; and that they had also gone to
the Los Baños Rural Bank to inquire about the mortgage
annotated on TCT No. 63377. Thereby, the petitioners Lastly, another reason rendered the petitioners’ good faith
observed the requisite diligence in examining the validity of incredible. They did not take immediate action against Ma.
the TCTs concerned. Elena upon discovering that the owner’s original copy of TCT
No. 63376 was in the possession of Atty. Parulan, contrary
to Elena’s representation. Human experience would have
Yet, it ought to be plain enough to the petitioners that the impelled them to exert every effort to proceed against Ma.
issue was whether or not they had diligently inquired into the
Elena, including demanding the return of the substantial LUCAS P. BERSAMIN
amounts paid to her. But they seemed not to mind her Associate Justice
inability to produce the TCT, and, instead, they contented
themselves with meeting with Atty. Parulan to negotiate for
WE CONCUR:
the possible turnover of the TCT to them.

CONCHITA CARPIO MORALES


3.
Associate Justice
Chairperson
Veloso v. Court of Appeals cannot help petitioners
MARIANO C. DEL MARTIN S. VILLARAMA,
The petitioners contend that the forgery of the SPA CASTILLO* JR.
notwithstanding, the CA could still have decided in their favor Associate Justice Associate Justice
conformably with Veloso v. Court of Appeals,41 a case where
the petitioner husband claimed that his signature and that of
the notary public who had notarized the SPA the petitioner MARIA LOURDES P. A. SERENO
supposedly executed to authorize his wife to sell the property Associate Justice
had been forged. In denying relief, the Court upheld the right
of the vendee as an innocent purchaser for value. ATTESTATION

Veloso is inapplicable, however, because the contested I attest that the conclusions in the above Decision had been
property therein was exclusively owned by the petitioner and reached in consultation before the case was assigned to the
did not belong to the conjugal regime. Veloso being upon writer of the opinion of the Court’s Division.
conjugal property, Article 124 of the Family Code did not
apply.
CONCHITA CARPIO MORALES
Associate Justice
In contrast, the property involved herein pertained to the Chairperson
conjugal regime, and, consequently, the lack of the written
consent of the husband rendered the sale void pursuant to
Article 124 of the Family Code. Moreover, even assuming CERTIFICATION
that the property involved in Veloso was conjugal, its sale
was made on November 2, 1987, or prior to the effectivity of Pursuant to Section 13, Article VIII of the Constitution, and
the Family Code; hence, the sale was still properly covered the Division Chairperson’s Attestation, I certify that the
by Article 173 of the Civil Code, which provides that a sale conclusions in the above Decision had been reached in
effected without the consent of one of the spouses is only consultation before the case was assigned to the writer of
voidable, not void. However, the sale herein was made the opinion of the Court’s Division.
already during the effectivity of the Family Code, rendering
the application of Article 124 of the Family Code clear and
indubitable. RENATO C. CORONA
Chief Justice

The fault of the petitioner in Veloso was that he did not


adduce sufficient evidence to prove that his signature and
that of the notary public on the SPA had been forged. The
Court pointed out that his mere allegation that the signatures
had been forged could not be sustained without clear and
convincing proof to substantiate the allegation. Herein, Footnotes
however, both the RTC and the CA found from the
testimonies and evidence presented by Dionisio that his * Additional member per Special Order No. 879
signature had been definitely forged, as borne out by the dated August 13, 2010
entries in his passport showing that he was out of the
country at the time of the execution of the questioned SPA;
1
and that the alleged notary public, Atty. Datingaling, had no  Rollo, pp. 55-66; penned by Associate Justice
authority to act as a Notary Public for Manila during the Jose C. Mendoza (now a Member of this Court),
period of 1990-1991. with Associate Justice Eugenio S. Labitoria
(retired) and Associate Justice Edgardo P. Cruz
(retired) concurring.
WHEREFORE, we deny the petition for review on certiorari,
and affirm the decision dated July 2, 2004 rendered by the
2
Court of Appeals in C.A.-G.R. CV No. 69044 entitled  Id., pp. 174-175.
"Dionisio Z. Parulan, Jr. vs. Ma. Elena Parulan and Sps. Rex
and Concepcion Aggabao" and "Sps. Rex and Concepcion 3
 Id., pp. 176-178.
Aggabao vs. Dionisio Z. Parulan, Jr. and Ma. Elena
Parulan."
4
 Id., p. 23.
Costs of suit to be paid by the petitioners.
5
 Id., p. 123.
SO ORDERED.
6
 Id., p. 23. Appeals, G.R. No. 125172, June 26, 1998, 291
SCRA 372.
7
 Id, pp. 23-24.
29
 Article 256. This Code shall have retroactive
8 effect insofar as it does not prejudice or impair
 Id., p. 23.
vested or acquired rights in accordance with the
Civil Code or other laws.
9
 Id., p. 23-24.
30
 G.R. No. 137650, April 12, 2000, 330 SCRA
10
 Id. 718.

31
11
 Id., pp. 24-25.  Under Article 1876, Civil Code, a general
agency comprises all the business of the principal,
12 but a special agency comprises one or more
 Id., p. 57. specific transactions.

13
 Id., p. 110. 32
 Article 1409, Civil Code.

14
 Id., p. 26. 33
 Heirs of Ignacia Aguilar-Reyes v. Mijares, G.R.
No. 143826, August 28, 2003, 410 SCRA 97, 107
15
 Id., p. 110.
34
 Bautista v. Silva, G.R. No. 157434, September
16
 Id., p. 26. 19, 2006, 502 SCRA 334, 346; Aguirre v. Court of
Appeals, G.R. No. 122249, January 29, 2004, 421
17
SCRA 310, 321.
 Id., p. 105.
35
18
 Id, p. 348.
 Id., pp. 14-15.
36
19
 Id, p. 348.
 Id., p. 56.
37
20
 Abad v. Guimba, G.R. No. 157002, July 29,
 Id., p. 58. 2005, 465 SCRA 356, 366-367.

21
 Id., p. 59. 38
 G.R. No. 157701, December 9, 2005, 477 SCRA
227.
22
 Id., pp. 58-59.
39
 Id., p. 244.
23
 Id., pp. 59-60.
40
 Bautista v. Silva, note 34.
24
 Id., p. 60.
41
 Supra, note 26.
25
 Supra, at note 3.

26
 G.R. No. 102737, August 21, 1996, 260 SCRA
593.

27
 Article 254. Titles III, IV, V, VI, VII, VIII, IX, XI
and XV of Book I of Republic Act No. 386,
otherwise known as the Civil Code of the
Philippines, as amended, and Articles 17, 18, 19,
27, 28, 29, 30, 31, 39, 40, 41 and 42 of
Presidential Decree No. 603, otherwise known as
the Child and Youth Welfare Code, as amended,
and all laws, decrees, executive orders,
proclamations, rules and regulations, or parts
thereof, inconsistent herewith are hereby repealed.

28
 Alfredo v. Borras, G.R. No. 144225, June 17,
2003, 404 SCRA 145; Heirs of Ignacia Aguilar-
Reyes v. Mijares, G.R. No. 143826, August 28,
2003, 410 SCRA 97; Sps. Guiang v. Court of

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