Facts:
Melinda M. Malabanan (Melinda) and her late husband, Jose Malabanan, acquired a 310-square meter property in Barangay Amaya, Tanza, Cavite, covered by TCT No. T-188590. They took possession in 1984, and TCT No. T-188590 was issued in both their names. Melinda left for Libya in October 1984, returning only sporadically after José’s murder in 1985.
Upon discovery, Melinda found that the property had been resold multiple times, eventually registered in the name of Spouses Dominador III and Guia Montano. This chain of sales began with Francisco Malabanan, Jr. (Francisco), who, armed with a forged Special Power of Attorney allegedly executed jointly by Jose and Melinda, sold the property to meanwhile, Benjamin Lopez, then repurchased it, and finally involved in transactions leading to the Montano Spouses’ ownership.
Melinda filed a complaint for annulment of title with damages against Francisco and others, challenging this sequence of transactions on grounds of forgery and invalid sale, given her absence and lack of participation. She claimed the property, part of the conjugal estate, was wrongfully disposed of.
The Regional Trial Court (RTC) found in Melinda’s favor, nullifying all transfers based on the fraud perpetrated by Francisco. The Court of Appeals (CA), however, overturned the RTC, viewing the property as an advancement on Jose’s legitime and thus his separate property.
Issues:
1. Whether the property was conjugal and if so, whether it was illegally disposed of without Melinda’s consent.
2. Whether the forged Special Power of Attorney used to initiate the sale chain nullifies subsequent transactions.
3. Whether the Montano Spouses were bona fide purchasers for value.
Court’s Decision:
1. **Conjugal Ownership**: The Supreme Court affirmed the property’s conjugal nature, dismissing Francisco’s claims as speculative and contrary to on-record transactions showing it was acquired during the marriage, with title indicating ownership by Jose and “Melinda married to Jose”. The CA’s reliance on purported claims was unwarranted.
2. **Nullification of Transactions**: The Supreme Court nullified all transactions rooted in the Special Power of Attorney due to its forged nature. Francisco failed to provide satisfactory evidence or logical coherence in his narrative. The signature was proved forged via NBI testimony, and he was presumed the forger, having benefited from the document.
3. **Bad Faith Purchasers**: The Montano Spouses were found to be not bona fide purchasers for value as they did not perform due diligence, missing visible signs of the property being used by someone else, which a prudent purchaser ought to investigate.
Doctrine:
When property is acquired during marriage, it is presumed to belong to the conjugal partnership unless proven otherwise. A spouse cannot alienate or encumber conjugal property without the other’s consent, rendering such unauthorized sales void. Significantly, forged documents cannot serve as a basis for lawfully transferring property.
Class Notes:
– The conjugal partnership of gains under the Civil Code presumes property acquired during marriage belongs to both spouses unless contrary evidence is presented (Article 160, Civil Code).
– The nullity of unauthorized contracts under Article 166 of the Civil Code if entered without the consent of both partners.
– Doctrine of buyer in bad faith: Buyers are expected to examine beyond title, considering actual possession and potential claims over property.
Historical Background:
This case roots itself in the Philippine context of property rules during the conjugal partnerships era under the Civil Code, predating the Family Code. This jurisprudence clarifies conjugal relations and strict requirements against unlawful alienation, critical during the time when properties were vulnerable to fraudulent transactions by influential family members.
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