Ching vs. Goyanko

A sale of property by a husband to his common-law wife is null and void, the prohibition against conveyances between spouses under Article 1490 of the Civil Code applying equally to common-law relationships, and such contract being inexistent and void from the beginning under Articles 1352 and 1409 for being contrary to morals and public policy.

Joseph Goyanko and Epifania dela Cruz were married on December 30, 1947, and had seven children — the herein respondents. At some point, Goyanko lived with petitioner Maria B. Ching as his common-law wife while his marriage to Epifania remained subsisting, no judicial decree of dissolution of the marriage or the conjugal partnership ever having been obtained. In 1961, respondents' parents allegedly acquired a 661-square-meter property in Cebu City but, being Chinese citizens at the time, registered it in the name of their aunt, Sulpicia Ventura. The property was eventually transferred from Sulpicia to Goyanko and then from Goyanko to petitioner.

Joseph Goyanko and Epifania dela Cruz were married on December 30, 1947, and out of their union were born seven children: Joseph Jr., Evelyn, Jerry, Imelda, Julius, Mary Ellen, and Jess, all surnamed Goyanko. At some point, Goyanko began living with petitioner Maria B. Ching as his common-law wife, while his marriage to Epifania remained subsisting and no judicial decree of dissolution was ever obtained.

Respondents claimed that in 1961, their parents acquired a 661-square-meter property located at 29 F. Cabahug St., Cebu City, but because both parents were Chinese citizens at the time, the property was registered in the name of their aunt, Sulpicia Ventura. On May 1, 1993, Sulpicia executed a deed of sale over the property in favor of Goyanko. On October 12, 1993, Goyanko in turn executed a deed of sale over the same property in favor of petitioner, and Transfer Certificate of Title No. 138405 was issued in her name.

After Goyanko's death on March 11, 1996, respondents discovered that ownership of the property had already been transferred to petitioner. They had their father's purported signature in the deed of sale verified by the Philippine National Police Crime Laboratory, which found the same to be a forgery. Respondents thereupon filed with the Regional Trial Court of Cebu City a complaint for recovery of property and damages against petitioner, praying for the nullification of the deed of sale and of TCT No. 138405 and the issuance of a new title in favor of their father.

In defense, petitioner claimed that she was the actual owner of the property, it being she who provided its purchase price. To disprove that Goyanko's signature in the questioned deed of sale was a forgery, she presented as witness the notary public, Atty. Salvador Barrameda, who testified that Goyanko appeared and signed the document in his presence. The trial court found the signature genuine, credited the notary public's testimony over the conflicting findings of the two document examiners, and held the property to be petitioner's exclusive acquisition, invoking the indefeasibility of the Torrens title. The Court of Appeals reversed, finding the property conjugal and the sale void for being contrary to morals and public policy, as it was made by Goyanko in favor of his common-law wife during the subsistence of his marriage to Epifania.

• Inapplicability of the prohibition on conveyances: Petitioner argued that the appellate court gravely erred in applying the state policy on prohibition against conveyances between spouses, the trial court having found the property to be her exclusive property, never part of the conjugal property of the marriage between Goyanko and Epifania, nor the exclusive or capital property of Goyanko at any time before it was validly acquired by petitioner.
• Existence of an implied trust: Petitioner maintained that a juridical relation of trust as provided under Articles 1448 and 1450 of the Civil Code can validly exist between common-law spouses, with Goyanko as trustee and petitioner as beneficiary.
• Trustee conveyance not violative of prohibition: Petitioner argued that a conveyance over property made by a trustee who became such in contemplation of law, and who happens to be the common-law husband of the beneficiary, is not a violation of the prohibition against conveyances between spouses.
• Improper change of theory: Petitioner contended that respondents improperly abandoned their original theory of forgery during appeal, shifting to a theory of sale contrary to public policy.

• Subsisting marriage and conjugality: Respondents argued that the trial court erred in sustaining the sale despite the fact that the marriage of Joseph Sr. and Epifania was still subsisting, rendering the subject property conjugal property of the spouses.
• Common-law relationship: Respondents argued that the trial court erred in sustaining the sale despite admissions by both parties that petitioner was the "mistress" or "common-law wife" of Joseph Sr.
• Forgery and notary's credibility: Respondents argued that the trial court erred in dismissing the complaint despite clear findings of forgery and the non-credible testimony of the notary public.

• Applicability of prohibition on conveyances: Whether the prohibition against conveyances of property between spouses under Article 1490 of the Civil Code applies to a sale by a husband in favor of his common-law wife.
• Existence of implied trust: Whether an implied trust under Articles 1448 and 1450 of the Civil Code was created between Goyanko as trustee and petitioner as beneficiary.
• Change of theory on appeal: Whether respondents improperly changed their theory of the case from forgery to sale contrary to public policy during appeal.

• Applicability of prohibition on conveyances: Yes. The proscription against sale of property between spouses under Article 1490 applies even to common-law relationships, and the sale was null and void for being contrary to morals and public policy under Articles 1352 and 1409.
• Existence of implied trust: No. Petitioner's testimony that she provided the purchase price was uncorroborated, and the fact that she may have been the breadwinner did not conclusively establish her claim.
• Change of theory on appeal: No. The nullification of the sale was anchored on its illegality per se, and petitioner was not put to undue disadvantage or denied the opportunity to refute the allegations against her.

• Applicability of prohibition on conveyances: The Court applied Article 1490 of the Civil Code, which prohibits a husband and wife from selling property to each other, and relied on Calimlim-Canullas vs. Hon. Fortun to establish that this proscription applies equally to common-law relationships. The rationale is that allowing transfers between common-law spouses would destroy the conjugal partnership system, permit undue influence, and undermine the institution of marriage and the family; otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal union." The Court found that the property was acquired during the subsistence of Goyanko's valid marriage to Epifania and was thus presumed conjugal, with no judicial decree of dissolution ever obtained and no clear and convincing evidence to rebut the presumption. Even assuming the property was not conjugal, the sale was void for being contrary to morals and public policy under Articles 1352 and 1409, as it was made by Goyanko in favor of his concubine, subversive of the stability of the family — a basic social institution which public policy vigilantly protects.
• Existence of implied trust: The Court rejected petitioner's reliance on Articles 1448 and 1450, which provide for implied trusts when property is sold and the legal estate is granted to one party but the price is paid by another for the purpose of having the beneficial interest. Petitioner's testimony that she provided the purchase price was uncorroborated. That she may have been considered the breadwinner of the family and that there was proof she earned a living did not conclusively clinch her claim that she paid the purchase price.
• Change of theory on appeal: While a party is generally not permitted to freely and substantially change the theory of his case on appeal — so as not to put the other party to undue disadvantage and to ensure the opportunity to refute all allegations — the Court found no prejudice to petitioner. The nullification of the sale was anchored on its illegality per se, being violative of Articles 1352, 1409, and 1490 of the Civil Code. Since the contract's nullity arises from the law itself, petitioner could not be said to have been put to undue disadvantage or denied the chance to refute the allegations against her.

• Prohibition against conveyances between spouses extends to common-law relationships — The proscription in Article 1490 of the Civil Code against sales of property between husband and wife applies equally to couples living as husband and wife without benefit of marriage. The rationale is threefold: (1) to prevent the destruction of the conjugal partnership system, a basic policy in civil law; (2) to guard against the exercise of undue influence by one spouse over the other; and (3) to protect the institution of marriage as the cornerstone of family law. Otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal union." The Court applied this doctrine to nullify the sale by Goyanko to his common-law wife, petitioner Ching.
• Contracts contrary to morals and public policy are inexistent and void from the beginning — Under Articles 1352 and 1409 of the Civil Code, contracts whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy are inexistent and void from the beginning and cannot be ratified. A sale made by a husband in favor of his concubine after abandoning his family is subversive of the stability of the family and thus void. The Court applied this to declare the deed of sale between Goyanko and petitioner null and void.
• Presumption of conjugality — Property acquired during the existence of a valid marriage is presumed to belong to the conjugal partnership. This presumption is rebuttable with clear and convincing proof to the contrary. The Court found no evidence on record to rebut the presumption, as no judicial decree of dissolution of the marriage or the conjugal partnership had ever been obtained.

• "The proscription against sale of property between spouses applies even to common law relationships." — This sentence states the controlling rule of the case: that Article 1490's prohibition extends to common-law partners, not just legally married spouses.
• "The prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise, 'the condition of those who incurred guilt would turn out to be better than those in legal union.'" — This passage articulates the policy rationale for extending the prohibition to common-law relationships, ensuring that those who live together outside marriage do not enjoy greater property rights than those in lawful unions.
• "For the nullification of the sale is anchored on its illegality per se, it being violative of the above-cited Articles 1352, 1409 and 1490 of the Civil Code." — This passage explains why the respondents' change of theory on appeal did not prejudice the petitioner: the nullity arises from the law itself, not from a factual theory requiring rebuttal.

• Calimlim-Canullas vs. Hon. Fortun, etc., et al., 214 Phil. 593 (1984) — Controlling precedent followed. The Court relied on this case to establish that the prohibition against sale of property between spouses applies to common-law relationships, and that a sale made by a husband in favor of his concubine is null and void for being contrary to morals and public policy.
• Olympia Housing, Inc. vs. Panasiatic Travel Corp., 443 Phil. 385, 399-400 (2003) — Cited for the procedural principle that a party is generally not permitted to freely and substantially change the theory of his case on appeal, so as not to put the opposing party to undue disadvantage.

• Article 1352, Civil Code — Provides that contracts without cause, or with unlawful cause, produce no effect whatsoever, and that the cause is unlawful if contrary to law, morals, good customs, public order, or public policy. Applied to nullify the sale as contrary to morals and public policy.
• Article 1409, Civil Code — Enumerates contracts that are inexistent and void from the beginning, including those whose cause, object, or purpose is contrary to law, morals, good customs, public order, or public policy. Applied to declare the sale void and inexistent.
• Article 1490, Civil Code — Prohibits a husband and wife from selling property to each other, except when separation of property was agreed upon in marriage settlements or judicially decreed. Applied to prohibit the sale between Goyanko and his common-law wife, the prohibition extending to common-law relationships.
• Articles 1448 and 1450, Civil Code — Provisions on implied trust, invoked by petitioner to claim a trust relationship existed between Goyanko as trustee and herself as beneficiary. The Court rejected the claim for lack of corroborating evidence that petitioner provided the purchase price.

Leonardo A. Quisumbing (Chairperson), Antonio T. Carpio, Dante O. Tinga (on leave), and Presbitero J. Velasco, Jr.