G.R. No. 157537

Republic of the Philippines

Supreme Court

Manila

FIRST DIVISION

THE HEIRS OF PROTACIO GO, SR. and MARTA BAROLA, namely: LEONOR, SIMPLICIO, PROTACIO, JR., ANTONIO, BEVERLY ANN LORRAINNE, TITA, CONSOLACION, LEONORA and ASUNCION, all surnamed GO, represented by

LEONORA B. GO,

Petitioners,

-versus -

ESTER L. SERVACIO and RITO B. GO,

Respondents.

G.R. No. 157537

Present:

CORONA, C.J., Chairperson,

LEONARDO-DE CASTRO,

BERSAMIN,

DEL CASTILLO, and

VILLARAMA, JR., JJ.

Promulgated:

September 7, 2011

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D E C I S I O N

BERSAMIN, J.:

The disposition by sale of a portion of the conjugal property by the surviving spouse without the prior liquidation mandated by Article 130 of the Family Code is not necessarily void if said portion has not yet been allocated by judicial or extrajudicial partition to another heir of the deceased spouse. At any rate, the requirement of prior liquidation does not prejudice vested rights.

Antecedents

On February 22, 1976, Jesus B. Gaviola sold two parcels of land with a total area of 17,140 square meters situated in Southern Leyte to Protacio B. Go, Jr. (Protacio, Jr.). Twenty three years later, or on March 29, 1999, Protacio, Jr. executed an Affidavit of Renunciation and Waiver,[1] whereby he affirmed under oath that it was his father, Protacio Go, Sr. (Protacio, Sr.), not he, who had purchased the two parcels of land (the property).

On November 25, 1987, Marta Barola Go died. She was the wife of Protacio, Sr. and mother of the petitioners.[2] On December 28, 1999, Protacio, Sr. and his son Rito B. Go (joined by Ritos wife Dina B. Go) sold a portion of the property with an area of 5,560 square meters to Ester L. Servacio (Servacio) for ₱5,686,768.00.[3] On March 2, 2001, the petitioners demanded the return of the property,[4] but Servacio refused to heed their demand. After barangay proceedings failed to resolve the dispute,[5] they sued Servacio and Rito in the Regional Trial Court in Maasin City, Southern Leyte (RTC) for the annulment of the sale of the property.

The petitioners averred that following Protacio, Jr.s renunciation, the property became conjugal property; and that the sale of the property to Servacio without the prior liquidation of the community property between Protacio, Sr. and Marta was null and void.[6]

Servacio and Rito countered that Protacio, Sr. had exclusively owned the property because he had purchased it with his own money.[7]

On October 3, 2002,[8] the RTC declared that the property was the conjugal property of Protacio, Sr. and Marta, not the exclusive property of Protacio, Sr., because there were three vendors in the sale to Servacio (namely: Protacio, Sr., Rito, and Dina); that the participation of Rito and Dina as vendors had been by virtue of their being heirs of the late Marta; that under Article 160 of the Civil Code, the law in effect when the property was acquired, all property acquired by either spouse during the marriage was conjugal unless there was proof that the property thus acquired pertained exclusively to the husband or to the wife; and that Protacio, Jr.s renunciation was grossly insufficient to rebut the legal presumption.[9]

Nonetheless, the RTC affirmed the validity of the sale of the property, holding that: xxx As long as the portion sold, alienated or encumbered will not be allotted to the other heirs in the final partition of the property, or to state it plainly, as long as the portion sold does not encroach upon the legitimate (sic) of other heirs, it is valid.[10] Quoting Tolentinos commentary on the matter as authority,[11] the RTC opined:

In his comment on Article 175 of the New Civil Code regarding the dissolution of the conjugal partnership, Senator Arturo Tolentino, says [sic]

Alienation by the survivor. After the death of one of the spouses, in case it is necessary to sell any portion of the community property in order to pay outstanding obligation of the partnership, such sale must be made in the manner and with the formalities established by the Rules of Court for the sale of the property of the deceased persons. Any sale, transfer, alienation or disposition of said property affected without said formalities shall be null and void, except as regards the portion that belongs to the vendor as determined in the liquidation and partition. Pending the liquidation, the disposition must be considered as limited only to the contingent share or interest of the vendor in the particular property involved, but not to the corpus of the property.

This rule applies not only to sale but also to mortgages. The alienation, mortgage or disposal of the conjugal property without the required formality, is not however, null ab initio, for the law recognizes their validity so long as they do not exceed the portion which, after liquidation and partition, should pertain to the surviving spouse who made the contract. [underlining supplied]

It seems clear from these comments of Senator Arturo Tolentino on the provisions of the New Civil Code and the Family Code on the alienation by the surviving spouse of the community property that jurisprudence remains the same - that the alienation made by the surviving spouse of a portion of the community property is not wholly void ab initio despite Article 103 of the Family Code, and shall be valid to the extent of what will be allotted, in the final partition, to the vendor. And rightly so, because why invalidate the sale by the surviving spouse of a portion of the community property that will eventually be his/her share in the final partition? Practically there is no reason for that view and it would be absurd.

Now here, in the instant case, the 5,560 square meter portion of the 17,140 square-meter conjugal lot is certainly mush (sic) less than what vendors Protacio Go and his son Rito B. Go will eventually get as their share in the final partition of the property. So the sale is still valid.

WHEREFORE, premises considered, complaint is hereby DISMISSED without pronouncement as to cost and damages.

SO ORDERED.[12]

The RTCs denial of their motion for reconsideration[13] prompted the petitioners to appeal directly to the Court on a pure question of law.

Issue

The petitioners claim that Article 130 of the Family Code is the applicable law; and that the sale by Protacio, Sr., et al. to Servacio was void for being made without prior liquidation.

In contrast, although they have filed separate comments, Servacio and Rito both argue that Article 130 of the Family Code was inapplicable; that the want of the liquidation prior to the sale did not render the sale invalid, because the sale was valid to the extent of the portion that was finally allotted to the vendors as his share; and that the sale did not also prejudice any rights of the petitioners as heirs, considering that what the sale disposed of was within the aliquot portion of the property that the vendors were entitled to as heirs.[14]

Ruling

The appeal lacks merit.

Article 130 of the Family Code reads:

Article 130. Upon the termination of the marriage by death, the conjugal partnership property shall be liquidated in the same proceeding for the settlement of the estate of the deceased.

If no judicial settlement proceeding is instituted, the surviving spouse shall liquidate the conjugal partnership property either judicially or extra-judicially within one year from the death of the deceased spouse. If upon the lapse of the six month period no liquidation is made, any disposition or encumbrance involving the conjugal partnership property of the terminated marriage shall be void.

Should the surviving spouse contract a subsequent marriage without compliance with the foregoing requirements, a mandatory regime of complete separation of property shall govern the property relations of the subsequent marriage.

Article 130 is to be read in consonance with Article 105 of the Family Code, viz:

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.

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) [emphasis supplied]

It is clear that conjugal partnership of gains established before and after the effectivity of the Family Code are governed by the rules found in Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property Relations Between Husband And Wife) of the Family Code. Hence, any disposition of the conjugal property after the dissolution of the conjugal partnership must be made only after the liquidation; otherwise, the disposition is void.

Before applying such rules, however, the conjugal partnership of gains must be subsisting at the time of the effectivity of the Family Code. There being no dispute that Protacio, Sr. and Marta were married prior to the effectivity of the Family Code on August 3, 1988, their property relation was properly characterized as one of conjugal partnership governed by the Civil Code. Upon Martas death in 1987, the conjugal partnership was dissolved, pursuant to Article 175 (1) of the Civil Code,[15] and an implied ordinary co-ownership ensued among Protacio, Sr. and the other heirs of Marta with respect to her share in the assets of the conjugal partnership pending a liquidation following its liquidation.[16] The ensuing implied ordinary co-ownership was governed by Article 493 of the Civil Code,[17] to wit:

Article 493. Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person in its enjoyment, except when personal rights are involved. But the effect of the alienation or the mortgage, with respect to the co-owners, shall be limited to the portion which may be allotted to him in the division upon the termination of the co-ownership. (399)

Protacio, Sr., although becoming a co-owner with his children in respect of Martas share in the conjugal partnership, could not yet assert or claim title to any specific portion of Martas share without an actual partition of the property being first done either by agreement or by judicial decree. Until then, all that he had was an ideal or abstract quota in Martas share.[18] Nonetheless, a co-owner could sell his undivided share; hence, Protacio, Sr. had the right to freely sell and dispose of his undivided interest, but not the interest of his co-owners.[19] Consequently, the sale by Protacio, Sr. and Rito as co-owners without the consent of the other co-owners was not necessarily void, for the rights of the selling co-owners were thereby effectively transferred, making the buyer (Servacio) a co-owner of Martas share.[20] This result conforms to the well-established principle that the binding force of a contract must be recognized as far as it is legally possible to do so (quando res non valet ut ago, valeat quantum valere potest).[21]

Article 105 of the Family Code, supra, expressly provides that the applicability of the rules on dissolution of the conjugal partnership is without prejudice to vested rights already acquired in accordance with the Civil Code or other laws. This provision gives another reason not to declare the sale as entirely void. Indeed, such a declaration prejudices the rights of Servacio who had already acquired the shares of Protacio, Sr. and Rito in the property subject of the sale.

In their separate comments,[22] the respondents aver that each of the heirs had already received a certain allotted portion at the time of the sale, and that Protacio, Sr. and Rito sold only the portions adjudicated to and owned by them. However, they did not present any public document on the allocation among her heirs, including themselves, of specific shares in Martas estate. Neither did they aver that the conjugal properties had already been liquidated and partitioned. Accordingly, pending a partition among the heirs of Marta, the efficacy of the sale, and whether the extent of the property sold adversely affected the interests of the petitioners might not yet be properly decided with finality. The appropriate recourse to bring that about is to commence an action for judicial partition, as instructed in Bailon-Casilao v. Court of Appeals,[23] to wit:

From the foregoing, it may be deduced that since a co-owner is entitled to sell his undivided share, a sale of the entire property by one

co-owner without the consent of the other co-owners is not null and void. However, only the rights of the co-owner-seller are transferred, thereby making the buyer a co-owner of the property.

The proper action in cases like this is not for the nullification of the sale or for the recovery of possession of the thing owned in common from the third person who substituted the co-owner or co-owners who alienated their shares, but the DIVISION of the common property as if it continued to remain in the possession of the co-owners who possessed and administered it [Mainit v. Bandoy, supra].

Thus, it is now settled that the appropriate recourse of co-owners in cases where their consent were not secured in a sale of the entire property as well as in a sale merely of the undivided shares of some of the co-owners is an action for PARTITION under Rule 69 of the Revised Rules of Court. xxx[24]

In the meanwhile, Servacio would be a trustee for the benefit of the co-heirs of her vendors in respect of any portion that might not be validly sold to her. The following observations of Justice Paras are explanatory of this result, viz:

xxx [I]f it turns out that the property alienated or mortgaged really would pertain to the share of the surviving spouse, then said transaction is valid. If it turns out that there really would be, after liquidation, no more conjugal assets then the whole transaction is null and void. But if it turns out that half of the property thus alienated or mortgaged belongs to the husband as his share in the conjugal partnership, and half should go to the estate of the wife, then that corresponding to the husband is valid, and that corresponding to the other is not. Since all these can be determined only at the time the liquidation is over, it follows logically that a disposal made by the surviving spouse is not void ab initio. Thus, it has been held that the sale of conjugal properties cannot be made by the surviving spouse without the legal requirements. The sale is void as to the share of the deceased spouse (except of course as to that portion of the husbands share inherited by her as the surviving spouse). The buyers of the property that could not be validly sold become trustees of said portion for the benefit of the husbands other heirs, the cestui que trust ent. Said heirs shall not be barred by prescription or by laches (See Cuison, et al. v. Fernandez, et al.,L-11764, Jan.31, 1959.)[25]

WHEREFORE, we DENY the petition for review on certiorari; and AFFIRM the decision of the Regional Trial Court.

The petitioners shall pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

Chairperson

TERESITA J. LEONARDO-DE CASTRO MARIANO C. DEL CASTILLO

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA

Chief Justice

[3] Id., pp. 22-24 (the contract was denominated as Deed of Absolute Sale of a Portion of Real Property).

[15] Article 175. The conjugal partnership of gains terminates:

1. Upon the death of either spouse.

xxx

[16] Dael v. Intermediate Appellate Court, G.R. No. 68873, March 31, 1989, 171 SCRA 524, 532-533.

[17] Metropolitan Bank and Trust Co. v. Pascual, G.R. No. 163744, February 29, 2008, 547 SCRA 246.

[18] Acabal v. Acabal, G.R. No. 148376, March 31, 2005, 454 SCRA 555, 581.

[20] Aguirre v. Court of Appeals, G.R. No. 122249. January 29, 2004, 421 SCRA 310, 324, citing Fernandez v. Fernandez,G.R. No. 143256, August 28, 2001, 363 SCRA 811, 829.

[21] Metrobank v. Pascual, supra, note 17, at p. 260, quoting from Aromin v. Floresca, G.R. No. 160994, July 27, 2006, 496 SCRA 785, 815.

[23] No. L-78178, April 15, 1988, 160 SCRA 738.

[25] I Paras , Civil Code of the Philippines Annotated, Sixteenth Ed., p. 592.