LOPEZ, M., J.:
It is well-settled that contracts are presumed to be valid until annulled by a court of competent jurisdiction. In the present case, the plaintiffs essentially claimed that the subject deed of waiver is null and void because of the ground stated above. However, plaintiffs not (sic) filed any action seeking the cancellation or annulment of the questioned deed of waiver after its execution. The plaintiffs come to court to annul the same more than seven (7) years after its execution and after the properties subject of the said deed of waiver were sold by Reygan Escalona to Belinda Alexander. Defendant Reygan Escalona also failed to support such claim of the plaintiffs. As such, the validity and regularity of the Waiver and Quitclaim dated June 16, 1998 (Exhibit "E") remains and should be upheld.Spouses Escalona moved for reconsideration, but was denied in an Order[17] dated August 22, 2017.
x x x x
The claim of the plaintiffs, particularly Jorge Escalona, that he had (sic) different intention other than that provided in the subject Waiver and Quitclaim dated June 16, 1998 (Exhibit "E") cannot prosper. The allegation of the said plaintiff cannot change or alter the clear provision in the said deed. Unsubstantiated testimony, offered as proof of verbal agreements which tends to vary the terms of a written agreement, is inadmissible under the parol evidence rule x x x
x x x x
The action to annul said document is also barred by the statute of limitations since this case was filed more than seven (7) years from 1998, the year when the plaintiff Jorge Escalona caused the transfer of ownership of the subject properties in the name of his illegitimate son Reygan. Article 1391 of the Civil Code provides:[Article] 1391. The action for annulment shall be brought within four years.x x x x
This period shall begin:
In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.
In case of mistake or fraud, from the time of the discovery of the same.
And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases.
IN VIEW OF THE FOREGOING, judgment is hereby rendered as follows:1. DISMISSING the complaint filed by the plaintiff spouses Jorge and Hilaria Escalona against defendants Belinda Alexander and Reygan Escalona for lack of merit;SO ORDERED.[16] (Emphases supplied)
2. ORDERING the plaintiff spouses Jorge and Hilaria Escalona to vacate the properties subject of this case located at Brgy. Sta. Rita, Olongapo City consisting of 10.3 hectares, more or less, and SURRENDER its effective possession and control to defendant Belinda Alexander;
3. ORDERING plaintiff spouses Jorge and Hilaria Escalona to pay defendant Belinda Alexander the sum of [P]100,000.00 as moral damages;
4. ORDERING plaintiff spouses Jorge and Hilaria Escalona to pay defendant Belinda Alexander the sum of [P]100,000.00 as attorney's fees;
5. DISMISSING the cross-claim filed by defendant Belinda Alexander against Reygan Escalona for lack of merit; and
6. DISMISSING the third-party complaint filed by Belinda Alexander for lack of merit.
Any disposition or encumbrance of a conjugal property by one spouse must be consented to by the other; otherwise, it is void.Belinda moved for a reconsideration,[22] but was denied in a Resolution[23] dated March 5, 2021. Hence, this recourse. Belinda maintains that Lot Nos. 1 and 2 belonged exclusively to Jorge and that the contracts over these lots are valid. She echoes that the action to annul the transactions had prescribed and that she is a buyer in good faith entitled to the ownership and possession of the lots. Lastly, she claims that she is allowed to reimburse the purchase price if the contracts are void.[24]
In Guiang v. Court of Appeals, it was held that the sale of a conjugal property requires the consent of both the husband and wife. In applying Article 124 of the Family Code, the Supreme Court declared that the absence of the consent of one renders the entire sale null and void, including the portion of the conjugal property pertaining to the husband who contracted the sale.
In the instant case, Jorge executed a Waiver and Quitclaim in favor of Reygan over lot 1 including all its improvements without the written consent of Hilaria. Although the said waiver was not a sale of lot 1, it is akin to a sale or disposition as Jorge renounced and waived all his rights and interests over lot 1 in favor of Reygan. By express provision of Article 124 of the Family Code, in the absence of (court) authority or written consent of Hilaria in the said waiver executed by Jorge in favor of Reygan, any disposition or encumbrance covering lot 1 including its improvements, which is a conjugal property of appellants, shall be void.
x x x x
The Waiver and Quitclaim dated 16 June 1998 being void in the absence of Hilaria's consent, it follows that the Deed of Waiver and Quitclaim dated 28 July 2005 over lot 1 and all its improvements executed by Reygan in favor of Belinda is also void.
The same is true with respect to the Deed of Renunciation and Quitclaim dated 8 August 2005 executed by Reygan in favor of Belinda covering lot 2. Indeed, Reygan had no authority or right to renounce rights and interests over lot 2 since he is not the owner thereof, as lot 2 clearly belongs to appellants' conjugal partnership. Assuming for the sake of argument that the waiver executed by Jorge is valid, still, the Deed of Renunciation and Quitclaim is void as the waiver executed by Jorge covered only lot 1 and not lot 2 which has an area of 52,300 square meters.
Thus, the subsequent Deed of Absolute Sale dated 10 August 2005 Reygan executed in favor of Belinda covering lots 1 and 2 for a consideration of [P] 1,600,000.00 is void as he is not the owner of both properties. This is consistent with the rule that "a person can sell only what he owns or is authorized to sell; the buyer can as a consequence, acquire no more than what the seller can legally transfer." No one can give what he does not have — nemo dat quod non habet.
x x x x
To reiterate, the Waiver and Quitclaim dated 16 June 1998 executed by Jorge in favor of Reygan is void. Under Article 1410 of the Civil Code, an action or defense for the declaration of the inexistence of a contract does not prescribe.
x x x x
Here, Belinda insists that she is a buyer in good faith and for value. The Supreme Court has held that "the rule in land registration law that the issue of whether the buyer of realty is in good or bad faith is relevant only where the subject of the sale is registered land and the purchase was made from the registered owner whose title to the land is clean." This good faith argument cannot be considered as this case undisputedly involves lots 1 and 2 which are both unregistered lands.
Further, there existed a circumstance that should have placed Belinda on guard. This is so because the Waiver and Quitclaim dated 16 June 1998 described Jorge as "married" but the conformity of his wife to the said document did not appear in the deed. Thus, it was incumbent on Belinda to, at least, inquire whether Jorge was still married and if he still was, if Jorge's wife had consented to the document Jorge had executed.
WHEREFORE, premises considered, the instant Appeal is GRANTED and the 20 February 2017 Decision of the Regional Trial Court, Olongapo City, Branch 72 in Civil Case No. 342-0-2005 is REVERSED and SET ASIDE.
A new judgment is hereby rendered declaring void the following: (a) Waiver and Quitclaim dated 16 June 1998; (b) Waiver and Quitclaim dated 28 July 2005; (c) Deed of Renunciation and Quitclaim dated 8 August 2005 and (d) Deed of Absolute Sale dated 10 August 2005. This is however without prejudice to any action that may be filed by Belinda Alexander against Reygan Escalona for the amounts she paid him for the purchase of lots 1 and 2.
SO ORDERED.[21] (Emphases supplied and citations omitted)
The alienation of Lot No. 1 is void under Article 124 of the Family Code because it was made without Hilaria's consent. However, the action to nullify the transaction is not imprescriptible under Article 1410 of the Civil Code. |
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 a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.In this case, the contract is void notwithstanding the fact that Spouses Escalona were married during the effectivity of the Civil Code. The Family Code expressly repealed Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife. The Family Code has retroactive effect to existing conjugal partnerships without prejudice to vested rights. Articles 105, 254, 255, and 256 of the Family Code are clear on these matters, to wit:
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. (Emphasis supplied)
Article 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.In Spouses Cueno v. Spouses Bautista[30] (Cueno), the Court En Banc held that the sale of conjugal property without the consent of the wife is merely voidable. In that case, the marriage of the spouses and the alienations of their conjugal property transpired before the effectivity of the Family Code. The applicable laws are Articles 165 and 166 in relation to Article 173.of the Civil Code, viz.:
The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 255.
x x x x
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.
Article 255. If any provision of this Code is held invalid, all the other provisions not affected thereby shall remain valid.
Article 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws. (Emphases supplied)
Article 165. The husband is the administrator of the conjugal partnership.The Court in Cueno observed the conflict of characterizations as regards the status of alienations or encumbrances that fail to comply with Article 166 of the Civil Code, thus:
Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction, or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same.
This article shall not apply to property acquired by the conjugal partnership before the effective date of this Code.
x x x x
Article 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband. (Emphases supplied)
x x x The first view treats such contracts as void 1) on the basis of lack of consent of an indispensable party and/or 2) because such transactions contravene mandatory provisions of law. On the other hand, the second view holds that although Article 166 requires the consent of the wife, the absence of such consent does not render the entire transaction void but merely voidable in accordance with Article 173 of the Civil Code.[31] (Emphases supplied)To end the conflict on the proper characterization of the transaction, the Court in Cueno adopted the second view as the correct rule and abandoned all contrary cases. Thus, a sale that fails to comply with Article 166 is not "void" but merely "voidable" in accordance with Article 173 of the Civil Code. The ruling in Cueno cited the following cases which espoused the second view, namely, Villocino v. Doyon,[32] Roxas v. CA,[33] Heirs of Aguilar-Reyes v. Spouses Mijares,[34] Villaranda v. Spouses Villaranda[35] (Villaranda), Spouses Vera Cruz v. Calderon,[36] Vda. De Ramones v. Agbayani[37] (Vda. De Ramones), Bravo-Guerrero v. Bravo,[38] Heirs of Hernandez, Sr. v. Mingoa, Sr.,[39] Ros v. Philippine National Bank - Laoag Brunch,[40] and Mendoza v. Fermin.[41] On the other hand, the Court overturned the following cases which espoused the first view, namely, Tolentino v. Cardenas,[42] Bucoy v. Paulino,[43] Nicolas v. CA,[44] Garcia v. CA,[45] Malabanan v. Malabanan, Jr.,[46] and Spouses Tarrosa v. De Leon,[47] wherein contracts that fail to comply with Article 166 of the Civil Code are void either for lack of consent of an indispensable party or for being executed against mandatory provisions of law.
Hence, Aggabao can hardly fall within the statement in Cueno where the Court "adopts the second view x x x as the prevailing and correct rule" and "abandons all cases contrary thereto."[55] The ruling in Aggabao is not inconsistent with the pronouncement in Cueno where a sale that fails to comply with Article 166 is not "void" but merely "voidable" in accordance with Article 173 of the Civil Code. The Aggabao case happened in a diverse factual background where the applicable law is Article 124 of the Family Code, and not Article 173 of the Civil Code. More telling is that Aggabao and the analogous cases of Philippine National Bank v. Reyes[56] (PNB), Boston Equity Resources, Inc. v. Del Rosario[57] (Boston Equity), Homeowners Savings & Loan Bank v. Dailo[58] (Homeowners Savings), Spouses Alinas v. Spouses Alinas[59] (Alinas), Titan Construction Corporation v. Spouses David[60] (Titan Construction), and Strong Fort Warehousing Corporation v. Banta[61] (Strong Fort), were never discussed or mentioned in Cueno. Notably, these cases declared void the alienations of conjugal properties made after the effectivity of the Family Code notwithstanding that the spouses were married under the Civil Code.Article 124, Family Code, applies to sale of conjugal properties made after the effectivity of the Family Code
The petitioners submit that Article 173 of the Civil Code, not Article 124 of the Family Code, governed the property relations of the respondents because they had been married prior to the effectivity of the Family Code; and that the second paragraph of Article 124 of the Family Code should not apply because the other spouse held the administration over the conjugal property. They argue that notwithstanding his absence from the country Dionisio still held the administration of the conjugal property by virtue of his execution of the SPA in favor of his brother; and that even assuming that Article 124 of the Family Code properly applied, Dionisio ratified the sale through Atty. Parulan's counter-offer during the March 25, 1991 meeting.
We do not subscribe to the petitioners' submissions.
To start with, Article 254 of the Family Code has expressly 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, are found.
Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the effectivity of the Family Code. The proper law to apply is, therefore, Article 124 of the Family 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.
x x x x
Thirdly, according to Article 256 of the Family Code, the provisions of the Family Code may apply retroactively provided no vested rights are impaired. In Tumlos v. Fernandez, the Court rejected the petitioner's argument that the Family Code did not apply because the acquisition of 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 application would not prejudice vested or acquired rights existing before the effectivity of the Family Code. Herein, however, the petitioners did not show any vested right in the property acquired prior to August 3, 1988 that exempted their situation from the retroactive application of the Family Code.[54] (Emphases supplied and citations omitted)
Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses on January 11, 1989, a few months after the Family Code took effect on August 3, 1988.In the subsequent case of Esteban v. Campano[68] (Esteban) the Court observed that the provisions of the Civil Code govern the couple's property relations because they were married before the effectivity of the Family Code. The Court discussed Cueno although the alienations of conjugal properties were made after the effectivity of the Family Code. Yet, Esteban explicitly held that Articles 166 and 173 of the Civil Code do not apply so as to characterize the transactions as voidable. In that case, the Court held that the transactions lack considerations and are void for being sham transfers, viz.:
x x x x
But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife. Further, the Family Code provisions were also made to apply to already existing conjugal partnerships without prejudice to vested rights. x x x
x x x x
In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period within which the wife who gave no consent may assail her husband's sale of the real property. It simply provides that without the other spouse's written consent or a court order allowing the sale, the same would be void. x x x
x x x x
Under the provisions of the Civil Cock governing contracts, a void or inexistent contract has no force and effect from the very beginning. And this rule applies to contracts that are declared void by positive provision of law, as in the case of a sale of conjugal property without the other spouse's written consent. A void contract is equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by ratification or prescription.[67] (Emphases supplied and citations omitted)
Elpidio and Maryline were married on January 30, 1988, hence, the provisions of the Civil Code govern the couple's property relations. Under Article 119 thereof, the property relations of Elpidio and Mary line is conjugal partnership of gains. Considering that the properties were acquired during the subsistence of their marriage, these are conjugal in nature.However, Esteban's sheer discussion of Cueno cannot be construed as an abandonment of the En Banc decision in Fuentes and the allied cases of Guiang, Aggabao, PNB, Boston Equity, Homeowners Savings, Alinas, Titan Construction, and Strong Fort. This holds even if the facts in Esteban show that the spouses were married under the Civil Code but the alienation of the conjugal property transpired after the effectivity of the Family Code.
Maryline asserts that the three agreements are void for the transfers were executed without her consent, citing Articles 96 and 124 of the Family Code and Article 1409 of the Civil Code.
Since the Civil Code provisions govern the property relations of Elpidio and Maryline, Articles 166 and 173 should be applied to determine whether the transfer of the properties without the consent of the wife is void, and not the Family Code provisions.
In the very recent case of [Cueno], decided by the Court En Banc under the ponencia of Justice [Alfredo Benjamin S. Caguioa (Justice Caguioa)], the Court settled the recurring conflict on the proper characterization of a transfer of conjugal property entered into without a wife's consent as merely voidable and not void. The Court abandoned all cases contrary thereto and held that the prevailing and correct rule is that "a sale that fails to comply with Article 166 is not [']void['] but merely [']voidable['] in accordance with Article 173 of the Civil Code." Unlike void contracts, voidable or annullable contracts, before they are set aside, are existent, valid, binding and are effective and are obligatory between the parties. They may be ratified and the action to annul the same may be barred by prescription.
The Court further explained in [Cueno] that Article 173 is explicit that the action for the annulment of a contract involving conjugal real property entered into by a husband without the wife's consent must be brought (1) by the wife (2) during the marriage, and (3) within ten years from the questioned transaction.
After a judicious examination of three Kasulatan dated December 4, 2004, March 30, 2005, and April 10, 2005, the Court finds that Articles 166 and 173 of the Civil Code do not apply so as to characterize these three (3) Kasulatan as voidable. From the cases cited in [Cueno], it can be inferred that the conveyances executed without the consent of the wife were "real transfers of properties with consideration[,"] such that without the consent of the wife, these transfers are only voidable consistent with Article 173 of the Civil Code.
In this case, the Court holds that the three Kasulatan are null and void for being sham transfers done by Elpidio in anticipation of the annulment of his marriage with Maryline. A notarized Kasunduan dated December 9, 2004 (Exh. "K") between Elpidio and Campano was offered by Maryline to prove that Campano is receiving a monthly compensation as caretaker of the properties in the meantime that Elpidio and Maryline have disagreements as to the settlement of their conjugal properties. It was also stated in the Kasunduan that Campano agreed not to adjudicate the properties to himself considering that the intended beneficiaries are the children of Elpidio and Maryline. Campano did not even refute his signature therein. Regardless of the date when this Kasunduan was executed, whether before or after the filing of the annulment case, as assailed by Campano, the Kasunduan established the nature of Campano's possession of the properties. This shows that the three Kasulatan were not intended to transfer the properties in favor of Campano.
In addition, these agreements to transfer the properties in favor of Campano were without any consideration. The three Kasulatan stated no consideration at all. When a contract of conveyance lacks consideration, it is null and void ab initio.[69] (Emphases supplied and citations omitted)
Since petitioners have not presented strong, clear, convincing evidence that the subject property was exclusive property of Juan, its alienation to them required the consent of Juliana to be valid pursuant to Article 124 of the Family Code, which provides in part:Thus, it is an opportune time for the Court to clarify any confusion besetting the applicable laws and jurisprudence in transactions involving alienation or encumbrance of conjugal properties, without consent of the other spouse, which is determinative of the remedies available to the aggrieved parties and the prescriptive period of actions. At this juncture, the Court holds that more than the date of the marriage of the spouses, the applicable law must be reckoned on the date of the alienation or encumbrance of the conjugal property made without the consent of the other spouse, to wit:[Article] 124. x x xUnder Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. When Juan died on August 26, 2006, the continuing offer contemplated under Article 124 of the Family Code became ineffective and could not have materialized into a binding contract. It must be remembered that Juliana even died earlier on August 17, 2006 and there is no evidence that she consented to the sale of the subject property by Juan in favor of petitioners.[72] (Emphases supplied)
x x x These powers [of administration] 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. x x x
1. The alienation or encumbrance of the conjugal property, without the wife's consent, made before the effectivity of the Family Code, is not void but merely voidable. The applicable laws are Articles 166 and 173 of the Civil Code. The wife may file an action for annulment of contract within 10 years from the transaction; and
2. The alienation or encumbrance of the conjugal property, without the authority of the court or the written consent of the other spouse, made after the effectivity of the Family Code is void. The applicable law is Article 124 of the Family Code without prejudice to vested rights in the property acquired before August 3, 1988. Unless the transaction is accepted by the non-consenting spouse or is authorized by the court, an action for declaration of nullity of the contract may be filed before the continuing offer on the part of the consenting spouse and the third person becomes ineffective.
Reygan and Belinda did not acquire a vested right over Lot No. 1 before the Family Code took effect on August 3, 1988. Moreover, Belinda is not a buyer in good faith. |
A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency. The term "vested right" expresses the concept of present fixed interest which, in right reason and natural justice, should be protected against arbitrary State action, or an innately just and imperative right which enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny.[73] (Emphases supplied)Significantly, a vested right is exempted from new obligations created after it is acquired. A new law cannot be invoked to prejudice or affect a right which has become vested or accrued while the old law was still in force,[74] thus:
The concept of "vested right" is a consequence of the constitutional guaranty of due process that expresses a present fixed interest which in right reason and natural justice is protected against arbitrary state action; it includes not only legal or equitable title to the enforcement of a demand but also exemptions from new obligations created after the right has become vested. Rights are considered vested when the right to enjoyment is a present interest, absolute, unconditional, and perfect or fixed and irrefutable.[75] (Emphasis supplied and citations omitted)Here, Reygan and Belinda did not show any vested right over Lot No. 1 acquired before August 3, 1988 that exempted their situation from the retroactive application of the Family Code. The transactions over Lot No. 1 in favor of Reygan and Belinda happened in 1998 and 2005, respectively, or after the effectivity of the Family Code. It is also undisputed that Hilaria did not give her written consent to these contracts. Hence, the applicable law is Article 124 of the Family Code, not the Civil Code, which renders void any alienation or encumbrance of the conjugal property without the consent of the other spouse.
The alienation of Lot No. 2 is inexistent under Article 1318 of the Civil Code because it was made without Spouses Escalona's consent. The action to nullify the transaction is imprescriptible pursuant to Article 1410 of the Civil Code. |
Belinda is entitled to reimburse from Reygan the purchase price for the sale of Lot Nos. 1 and 2. |
Thus, it is an opportune time for the Court to clarify any confusion besetting the applicable laws and jurisprudence in transactions involving alienation or encumbrance of conjugal properties, without consent of the other spouse, which is determinative of the remedies available to the aggrieved parties and the prescriptive period of actions. At this juncture, the Court holds that more than the date of the marriage of the spouses, the applicable law must be reckoned on the date of the alienation or encumbrance of the conjugal property made without the consent of the other spouse, to wit:I fully concur.1. The alienation or encumbrance of the conjugal property, without the wife's consent, made before the effectivity of the Family Code, is not void but merely voidable. The applicable laws are Articles 166 and 173 of the New Civil Code. The wife may file an action for annulment of contract within ten (10) years from the transaction; and
2. The alienation or encumbrance of the conjugal property, without the authority of the court or the written consent of the other spouse, made after the effectivity of the Family Code is void. The applicable law is Article 124 of the Family Code without prejudice to vested rights in the property acquired before August 3, 1988. Unless the transaction is accepted by the non-consenting spouse or is authorized by the court, an action for declaration of nullity of the contract may be filed before the continuing offer on the part of the consenting spouse and the third person becomes ineffective.[2]
Applicability of the Family Code and its retroactive application |
Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same.Drawing from recognized civil law authorities on the provisions, the Court, in Cueno, pointed out:
This article shall not apply to property acquired by the conjugal partnership before the effective date of this Code.
Recognized Civil Law Commentator, former CA Justice Eduardo P. Caguioa, explained:Sifting through the authorities, the Court, in Cueno, made the pronouncement that dispositions in violation of Article 166 of the Civil Code renders the sale voidable, not void.Under the [Spanish] Civil Code the husband had full authority to alienate or encumber the conjugal partnership property without the consent of the wife. This rule has been changed in view of the new position of the wife under the [Civil] Code and for the purpose of protecting the wife against illegal or unlawful alienations made by the husband. In line with this purpose[,] alienations made by the husband of real properties cannot now be made without the consent of the wife except in cases provided for by law.
x x x Under our present Code all dispositions, alienations or encumbrances of conjugal real property acquired after the effectivity of the new Civil Code needs the consent of the wife. Also, all donations of real or personal property require the consent of the wife except those to the common children for securing their future or finishing a career, and moderate donations for charity. But should the wife refuse unreasonably to give her consent, the court may compel her to grant the same.[7] (Citation omitted)
To put an end to this recurring conflict on the proper characterization of such transactions, the Court now hereby adopts the second view espoused in Villocino, Roxas, and Aguilar-Reyes as the prevailing and correct rule, abandons all cases contrary thereto, and holds that a sale that fails to comply with Article 166 is not "void" but merely "voidable" in accordance with Article 173 of the Civil Code.The Court, in Cueno, clarified that for dispositions that fail to comply with Article 166 of the Civil Code due to lack of the wife's consent, the contracts are merely voidable. As a remedy for this non-compliance, Article 173 of the Civil Code "unequivocally states that the action to annul the same must be brought 1) by the wife, 2) during the marriage, and 3) within ten (10) years from the questioned transaction."[9] The logical extension of the precedent set by Cueno is that for Articles 166 and 173 of the Civil Code to apply, the disposition must have occurred when these provisions were in force, i.e., prior to the effectivity of the Family Code.
x x x x
Article 173 is unambiguous that the failure to secure the wife's consent, when such consent is required, does not render the contract void. Contrary to the nature of void contracts, transactions that fail to comply with Article 166 produce effects. The time-bound nature of the remedy provided under Article 173, in contrast to the imprescriptible nature of void contracts, demonstrates the voidable character of such contracts since the failure to bring the action within the period provided renders the contract between the husband and the third-person perfectly valid and binding. Vda. De Ramones v. Agbayani already held that "the wife's failure to file with the courts an action for annulment of the contract during the marriage and within ten (10) years from the transaction shall render the sale valid." Indeed, even the right to demand the value of the property should the wife fail to exercise her right to annul confirms this voidable nature. If said transaction were void, the remedy would have been mutual restitution. Further, unlike void contracts that are subject to collateral attack by any interested party, the remedies available under Article 173 are expressly limited to the wife and, in proper cases, her heirs.[8] (Citations omitted)
Finally, it bears reiterating that unlike Articles 166 and 173 of the Civil Code, the Family Code now expressly declares that alienations or encumbrances of community or conjugal property without the consent of the other spouse are null and void x x x[.]In the instant case, the spouses were married during the effectivity of the Civil Code but the husband's sale of conjugal property challenged for lack of the wife's consent was made during the effectivity of the Family Code. As pointed out by the ponente, Associate Justice Mario V. Lopez, the instant case presents "a different factual milieu,"[11] and therefore calls for a separate rule to address the issue, as well as adds to the clarificatory precedent of the Cueno decision.
x x x x
In Guiang v. Court of Appeals (Guiang), the Court affirmed the observation of the RTC that the remedies afforded by Article 173 were not carried over to the Family Code, which thus signified the change in status of such transactions from the Civil Code to the Family Code. The Court agrees with the rationale in Guiang that the evident revisions under the Family Code are deliberate and confirm the legislative intent to change the status of such transactions from voidable under the Civil Code to void under the Family Code. However, the Court notes the special nature of these void transactions even under the Family Code, which can become binding contracts upon the acceptance by the other spouse or authorization by the court before the continuing offers are withdrawn by either or both spouses.[10] (Citations omitted)
ART. 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.Pursuant to this clarification, the Court effectively notes in the case at bar that, while both Articles 105 and 256 of the Family Code contain an express limitation on its retroactive effect by providing that it must not prejudice or impair vested or acquired right, such limitation finds no relevance in this case since here, no vested right is involved. A vested right is some right or interest in property that had become fixed and established and is no longer open to doubt or controversy.[12] Rights are vested when the right to enjoyment, present or prospective, has become the property of some person as a person in interest.[13] Likewise unyielding is the general rule that a person has no vested right in any particular remedy.[14] Hence, a right should only be considered acquired or vested if its holder can actually exercise or make use of it at the time of the change in law. Otherwise, the concept of vested rights runs the risk of dilution and its protection ultimately impeded.
The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. (n)
x x x x
ART. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws.
Under the new law, an action for the recognition of an illegitimate child must be brought within the lifetime of the alleged parent. The Family Code makes no distinction on whether the former was still a minor when the latter died. Thus, the putative parent is given by the new Code a chance to dispute the claim, considering that "illegitimate children are usually begotten and raised in secrecy and without the legitimate family being aware of their existence. x x x The putative parent should thus be given the opportunity to affirm or deny the child's filiation, and this, he or she cannot do if he or she is already dead.As unequivocally held in Bernabe, "[t]he right to seek [compulsory] recognition granted by the Civil Code to illegitimate children who were still minors at the time the Family Code took effect cannot be impaired or taken away."[17] In contrast, in the instant case, the right to challenge the void disposition had not vested since there was no void disposition to speak of at the time of the enactment of the Family Code.
Nonetheless, the Family Code provides the caveat that rights that have already vested prior to its enactment should not be prejudiced or impaired as follows:"ART. 255. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws."The crucial issue to be resolved therefore is whether Adrian's right to an action for recognition, which was granted by Article 285 of the Civil Code, had already vested prior to the enactment of the Family Code. Our answer is affirmative.
A vested right is defined as "one which is absolute, complete and unconditional, to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency x x x." Respondent however contends that the filing of an action for recognition is procedural in nature and that "as a general rule, no vested right may attach to [or] arise from procedural laws."
Bustos v. Lucero distinguished substantive from procedural law in these words:"x x x Substantive law creates substantive rights and the two terms in this respect may be said to be synonymous. ["]Substantive rights["] is a term which includes those rights which one enjoys under the legal system prior to the disturbance of normal relations. Substantive law is that part of the law which creates, defines and regulates rights, or which regulates the rights and duties which give rise to a cause of action; that part of the law which courts are established to administer; as opposed to adjective or remedial law, which prescribes the method of enforcing rights or obtains redress for their invasion." x x xRecently, in Fabian v. Desierto, the Court laid down the test for determining whether a rule is procedural or substantive:"[I]n determining whether a rule prescribed by the Supreme Court, for the practice and procedure of the lower courts, abridges, enlarges, or modifies any substantive right, the test is whether the rule really regulates procedure, that is, the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for a disregard or infraction of them. If the rule takes away a vested right, it is not procedural. If the rule creates a right such as the right to appeal, it may be classified as a substantive matter; but if it operates as a means of implementing an existing right then the rule deals merely with procedure."Applying the foregoing jurisprudence, we hold that Article 285 of the Civil Code is a substantive law, as it gives Adrian the right to file his petition for recognition within four years from attaining majority age. Therefore, the Family Code cannot impair or take Adrian's right to file an action for recognition, because that right had already vested prior to its enactment.[16] (Citations omitted, emphasis supplied)
Under the Civil Code, the husband was the administrator of the conjugal partnership. The present article makes the husband and wife joint administrators. The provisions of this article are the same as those of Article 96 on the administration of the absolute community property. The sale of property of the conjugal partnership is void ab initio due to the absence of the wife's consent, there being no showing that she is incapacitated. Being merely aware of a transaction is not consent.[19]As further echoed by Justice Alicia V. Sempio-Diy, citing Justice J.B.L. Reyes, in her own annotation on the provision:
The Family Code is primarily intended to reform the family law so as to emancipate the wife from the exclusive control of the husband and to place her at parity with him insofar as the family is concerned. The wife and the husband are now placed on equal standing by the Code. They are now joint administrators of the family properties of their children. This means a dual authority in the family. The husband will no longer prevail over the wife but she has to agree on all matters concerning the family.[20]In other words, there can be no impairment in the right to remedy against a void disposition of the conjugal property precisely because the new provision of Article 124 of the Family Code exactly responds to the unequal footing between the husband and the wife in matters of administration, with the said provision now making the remedy available to any non-consenting spouse. Under the Family Code, only the non-consenting spouse, to the exclusion of all others, may accept or reject the continuing offer of the void disposition.
"Void" under Article 124 of the Family Code versus "void" under obligations and contracts |
2. The alienation or encumbrance of the conjugal property, without the authority of the court or the written consent of the other spouse, made after the effectivity of the Family Code is void. The applicable law is Article 124 of the Family Code without prejudice to vested rights in the property acquired before August 3, 1988. Unless the transaction is accepted by the non-consenting spouse or is authorized by the court, an action for declaration of nullity of the contract may be filed before the continuing offer on the part of the consenting spouse and the third person becomes ineffective.[21]I agree.
x x x The following contracts are inexistent and void from the beginning:In contrast, void dispositions under Article 124 of the Family Code, while also dubbed "void," are expressly deemed as a continuing offer which may be perfected and accepted either by consent of the previously non-consenting spouse or by confirmation of the court, viz.:(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;These contracts cannot be ratified. Neither can the right to set up the defense or illegality be waived. (Emphasis supplied)
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
ART. 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 a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.The nature of the "void" contract as a continuing offer susceptible of perfection through acceptance contemplated in Article 124 of the Family Code, is distinct from void contracts under Article 1409 of the Civil Code, with such difference further illustrated when the continuing offer is rendered impossible due to the death of the non-consenting spouse or offeree, as the Court resolved in the case of Spouses Anastacio, Sr. v. Heirs of Coloma,[22] viz.:
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. (Emphasis supplied)
Since petitioners have not presented strong, clear, convincing evidence that the subject property was exclusive property of Juan, its alienation to them required the consent of Juliana to be valid pursuant to Article 124 of the Family Code, which provides in part:Even more tellingly, a previous draft Article 126 of the Family Code, which provided for a period within which the non-consenting spouse may question the void transaction, was deleted during the deliberations for the reason that the present Article 124 already covered such a scenario, thus:ART. 124. x x xUnder Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. When Juan died on August 26, 2006, the continuing offer contemplated under Article 124 of the Family Code became ineffective and could not have materialized into a binding contract. It must be remembered that Juliana even died earlier on August 17, 2006 and there is no evidence that she consented to the sale of the subject property by Juan in favor of petitioners.[23]
x x x These powers [of administration] 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. x x x
B. Article (126). –Clearly, therefore, while the action to impugn void contracts under Article 1409 of the Civil Code does not prescribe, the same may not be said of void contracts as contemplated under Article 124 of the Family Code. The former considers contracts that are not hemmed in by the particular restrictions and rationale of the latter, which exist against the backdrop of a body of legal provisions that specifically apply to marriages.
Either spouse may, during the marriage, and within four years from discovery of the questioned transaction, ask the courts for the declaration of nullity of any contract of one spouse entered into without the other's consent, when such consent is required.
Whenever any act or contract of one spouse tends to defraud or impair the other's interest in the conjugal partnership, the defrauded spouse or his or her heirs, after the dissolution of the marriage, may demand the return of the value of the property fraudulently alienated for purposes of liquidation.
Justice Caguioa remarked that the above Article may be deleted in view of the new Article 124 with which the other members agreed.[24] (Emphasis supplied)
ART. 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 a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.[5] ARTICLE 1409. The following contracts are inexistent and void from the beginning:
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.
(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
ART. 96. The administration and enjoyment of the community 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 a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.[19] Arturo M. Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES VOLUME ONE WITH THE FAMILY CODE OF THE PHILIPPINES, p. 461.
In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance without the 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 offerers.
ARTICLE 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.For these vested rights to be exempt from the retroactive application of the Family Code, the same should have already been acquired prior to the effectivity of the Family Code on August 3, 1988.[12] For instance, in Tayag v. Court of Appeals,[13] we found that a right of action filed under the regime of the Civil Code and prior to the effectivity of the Family Code constituted a vested right that should not be impaired by the retroactive application of the Family Code. Too, the failure of a petitioner to show any vested right in a property acquired prior to August 3, 1988 means that his or her situation is not exempt from the retroactive application of the Family Code.[14]
The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256.
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.It is undisputed that Jorge waived his right over Lot No. 1 in favor of Reygan without Hilaria's consent. Therefore, the conveyance of Lot No. 1 by Jorge to Reygan (and the subsequent transfer to Belinda) is void.
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. (Emphases supplied)
Evidently, the remedies and limitations provided under Article 173 in transactions covered by Article 166 are completely inconsistent with the nature of void contracts, which are subject to collateral attacks by interested parties, do not prescribe and have no force and effect. Categorizing dispositions and encumbrances under Article 166 as void and thus imprescriptible would not only nullify Article 173 of the Civil Code but also render the limitations provided therein inutile.Notably, Cueno made no definite ruling that Article 173 of the Civil Code applies even to alienation of conjugal property after the Family Code took effect, as long as the spouses were married during the effectivity of the Civil Code. Neither can this be implied from Cueno's discussion of the issues. Hence, Cueno finds no application in the present case.
At this juncture, the Court finds it proper to correct its ruling in Bucoy that contracts disposing of conjugal property without the wife's consent are "void for lack of consent of an indispensable party under Article 166." This is not accurate.
It is not a matter of "lack of consent," which gives rise to a "no contract" situation under Article 1318 of the Civil Code. Neither can the contract be considered "void" because it does not fall under any of those expressly mentioned in Article 1409 of the Civil Code. Rather, Article 166 demonstrates that the husband has no legal capacity to alienate or encumber conjugal real property without his wife's consent. This is akin to an incapacity to give consent under Article 1390 of the Civil Code, which renders the contract merely voidable x x x. (Emphasis supplied; citations omitted)