Titan Construction Corp. v Sps, Manuel David Sr.

and Martha David

GR No. 169548 | March 15, 2010

FACTS:

 Manuel and Martha David were married and sometime in 1970, the spouses acquired a 602
sq.m. lot located in White Plains Quezon City. Such was registered in the name of Martha David
(the wife). In 1976, the spouses separated de facto and no longer communicated with each
other. In 1995, Manuel discovered that Martha previously sold the property to Titan
Construction Corp. (Titan) for P 1,500,000 through Deed of Sale and the TCT before had been
cancelled and replaced by a new TCT in the name of Titan.
 Manuel then filed a Complaint for Annulment of Contract and Reconveyance against Titan
before the RTC of Quezon City. Manuel alleges that the sale by Martha was without his
knowledge and consent and thus, void. He prays for the Deed of Sale and TCT be invalidated, for
the property to be reconveyed to the spouses and a new title be issued in their names.
 In an Answer with Counterclaim, Titan said that it was a buyer in good faith and for value,
relying on a Special Power of Attorney (SPA) signed by Manuel, authorizing Martha to dispose
of the property on behalf of the spouses. Titan prays for the Dismissal of the complaint.
 In his Reply, Manuel says that the SPA was spurious and his purported signature was a forgery.
Manuel then filed a Motion for Leave to File Amended Complaint (granted).
 Manuel filed an Amended Complaint, impleading Martha as co defendant. However, despite
personal service of summons, Martha failed to file an answer thus being in default.
 RTC: ruled in favor of Manuel stating that since the spouses purchased the property with
conjugal funds during their marriage, the property is conjugal by nature and even if the title
was registered in the name of Martha, it didn’t negate that the property is conjugal. Titan also
failed to rebut the expert’s testimony stating that the signature was not genuine and that even
though SPA was notarized it was doubtful for it didn’t contain Manuel’s residence certificate
and not presented for registration with the QC Register of Deeds in violation of Sec 64 of P.D.
No. 1529. Lastly, the RTC noted that Titan should have put on notice the SPA’s doubtful veracity
with its transaction with Martha.
 RTC: invalidated the Deed of Sale and the TCT; ordered Titan to reconvey the property to the
Spouses Manuel and Martha; directed the Register of Deeds to issue new title to the spouses
and ordered Titan to pay 200k + atty’s fees + costs of suit.
 CA: affirmed RTC but deleted the atty’s fees and costs of suit.

ISSUE/s:
1. WON the property was Martha’s exclusive property? NO
2. WON the Deed of Sale is valid without Manuel’s consent? NO
3. WON the Special Power of Attorney (SPA) allegedly signed by Manuel is spurious and void?
YES
4. WON the failure of Manuel to specifically deny the genuineness and due execution of the
notarized SPA served as his implied agreement to the veracity of the document? NO
5. WON Titan can claim belatedly that the RTC should have ordered Martha to reimburse? NO
HELD:
1. NO. The property is NOT the exclusive property of Martha alone but part of the conjugal
partnership property of the spouses.
Their marriage (in 1957) is governed by the Civil Code of the Philippines which provides in Art.
160 that “All property of the marriage is presumed to belong to the conjugal partnership, unless it
be proved that it pertains exclusively to the husband or to the wife” and in Art. 153 which defines
a conjugal property to be those that are “acquired by onerous title during the marriage at the
expense of the common fund, whether the acquisition be for the partnership, or for only one of the
spouses.” Article 116 of the Family Code even states that “all property acquired during the
marriage, whether the acquisition appears to have been made, contracted or registered in the
name of one or both spouses, is presumed to be conjugal unless the contrary is proved.”

Hence, even if Manuel failed to present any proof of his income in 1970, assuming that Manuel
could not have the financial capacity to contribute to the purchase as claimed by Titan, the court
ruled that Manuel was not required to prove that the said property was acquired with conjugal
funds (Sps. Castro v. Miat). Since the spouses bought the property during their marriage, the
presumption can be applied to the case that if said property, when purchased during the
marriage, was part of a conjugal partnership as provided by Art. 160 and 153. Titan failed to
overturn the presumption that the property was part of the conjugal partnership. Therefore, the
property was owned not only by Martha but the property was also owned by her husband,
Manuel.

2. NO. The Deed of Sale is VOID without Manuel’s consent.

Since the property is part of the spouses’ conjugal property, the Deed of Sale required both the
consent of the spouses. The Civil Code provides in Art. 165, husband is the administrator of the
conjugal partnership and also in Art. 172 provides that the wife cannot bind the conjugal
partnership without the husband’s consent, except in cases provided by law. Also, Article 124
of the Family Code requires that any disposition or encumbrance of conjugal property must
have the written consent of the other spouse, otherwise, such disposition is void.

Thus, the Deed of Sale required also the consent of Manuel not only Martha’s.

3. YES. The Special Power of Attorney allegedly signed by Manuel was spurious and void.
Titan claimed that the RTC gave an undue weight to the testimony of Manuel’s witness, Atty.
Desiderio Paqui, which states that the signature found on the SPA was not genuine. The Court,
however, ruled that the ruling of the RTC was not only based on the testimony of the expert
witness of Manuel but also Manuel’s categorical denial of signing the SPA. The Court concur to
the findings of the RTC that said SPA was dubious for the SPA does not contain the Residence
Certificate of Manuel and not presented for registration with the QC Register of Deeds violating
the Sec. 64 of P.D. No. 1592. It is also noted by the Court that Titan withdrew its Motion for Re-
examination of Another Document/ Handwriting Expert because the PNP and NBI might come
out with two conflicting opinions and conclusions and may cause a waste of time and resources.
However, the Court ruled that factual findings of the trial court when affirmed by CA are
binding and conclusive and will not be reviewed on appeal and that only errors of law are
reviewable by the SC and not errors of fact. Hence, the Court will not depart on the rulings of
the RTC as affirmed by the CA.
4. NO. The failure of Manuel to specifically deny the genuineness and due execution of the
notarized SPA is NOT an implied agreement to the veracity of the document.

Although, Manuel failed to specifically deny the genuineness and due execution of the notarized
SPA in his Reply and not made under oath, his Complaint, under oath, that a contract of a Deed
of Sale between Martha and Titan executed without his consent, and approval , express or
implied, amounts great weight. The Court concurred with the ruling of the CA that as Titan did
not object to the presentation of Manuel’s witness, Atty. Paqui, nor object to the introduction
and admission of evidence questioning the genuineness and due execution of the document,
Titan had been deemed to waived its protection provided by Rule 8, Sec. 7 and 8 of the Rules of
Court. In addition, although, a notarized document has a prima facie presumption of
authenticity and due execution unless with clear and convincing evidence that will prove
otherwise, in this case, where Manuel’s Community Tax Certificate was absent while Martha’s
are complete, supports Manuel’s claim that the signature purportedly his is a forgery, therefore,
the Court concludes that this notarization has defects.

5. NO. Titan CANNOT claim belatedly that the RTC should have ordered Martha to reimburse.
The Court ruled that it cannot order the return of the amounts paid by Titan to Martha for
ordering such would deny due process to Martha. The party must be duly apprised of a claim
against her before judgment maybe rendered. If the Court ruled to hold Martha liable to Titan
for the reimbursement of money paid for the property, without any claim being filed against her
by Titan, would violate her right to due process. However, The Court is not prohibiting Titan to
file an appropriate case against Martha before the proper court.

Petition DENIED. The Decision of the RTC as affirmed by the CA with modification and its
Resolution to deny Motion for Reconsideration are AFFIRMED.

OTHERS:
Here are some instances that mitigate the chance of Titan being a buyer in Good Faith:
1. The Deed of Sale failed to indicate Martha’s civil status. And it is quite peculiar that an SPA
would have even been necessary, considering that the SPA itself indicated that Martha and
Manuel lived on the same street
2. Also, Titan’s witness (real estate agent of the sale between Martha and Titan) even inquired
why Manuel’s name wasn’t in the Deed of Sale. Thus, showing that they were aware that
Manuel’s consent may be necessary.
3. Titan’s witness also said that during the first meeting between Martha and Titan’s VP for
Operations, Martha said that the property was mortgaged to a casino. Without seeing the
property, original title, or the SPA, and without securing an acknowledgement receipt from
Martha, Titan gave Martha money so she could redeem the property from the casino. Such
acts are not typical of a prudent buyer.