Heirs of Caburnay vs. Heirs of Sison

A sale of conjugal property by a surviving spouse without liquidation of the prior marriage's conjugal partnership and without the second spouse's consent is not totally void but valid only to the extent of the selling spouse's undivided share, pursuant to Article 493 of the Civil Code and Article 145 of the Family Code; the buyer acquires the seller's abstract quota in the co-ownership, subject to the outcome of partition, and becomes a trustee for the benefit of the other co-heirs regarding the unsold portions.

Teodulo Sison and Perpetua Sison were married during the effectivity of the Civil Code, establishing a conjugal partnership of gains. They had seven legitimate children. Perpetua died on July 19, 1989, dissolving the conjugal partnership, but no liquidation was effected within the one-year period prescribed by law. In 1992, Teodulo remarried Perla Sison. During this subsequent marriage, in 1994, Teodulo entered into a contract of sale with Apolinario Caburnay over a parcel of land (7,768 square meters) covered by TCT No. 8791, which was acquired during Teodulo's first marriage. Apolinario paid P120,000.00 of the P150,000.00 purchase price and occupied the property. Teodulo died in 2000 before the balance was paid and before transferring the title. Apolinario died in 2005. Thereafter, Teodulo's heirs executed an extrajudicial settlement of the estates of Teodulo and Perpetua, adjudicating the subject property to respondent Jesus Sison and causing the cancellation of TCT No. 8791 and issuance of TCT No. 22388 in his name.

The Marriage and Property Regime of the First Spouses: Teodulo Sison and Perpetua Sison were married during the effectivity of the Civil Code, establishing a conjugal partnership of gains under Article 105 of the Family Code. They had seven legitimate children: respondents Teodulo, Jr., Rosario, Ofelia, Blesilda, Armida, Jesus, and Cynthia, all surnamed Sison. Perpetua died on July 19, 1989, dissolving the conjugal partnership pursuant to Article 126(1) of the Family Code (formerly Article 175(1) of the Civil Code). No judicial or extrajudicial liquidation of the conjugal partnership was effected within one year from Perpetua's death.

The Subsequent Marriage: In 1992, Teodulo married Perla Sison. This marriage was celebrated during the effectivity of the Family Code. No liquidation having been made of the conjugal partnership with Perpetua, the subsequent marriage triggered the mandatory regime of complete separation of property under the third paragraph of Article 130 of the Family Code.

The Sale to Apolinario Caburnay: On September 23, 1994, Teodulo sold to Apolinario Caburnay a parcel of land with an area of approximately 7,768 square meters (covered by TCT No. 8791) for P150,000.00. The property was acquired during Teodulo's first marriage and constituted conjugal property. The parties agreed that Apolinario would pay P40,000.00 as initial payment, with the balance payable in installments. Apolinario paid the initial amount on September 23, 1994, the second installment of P40,000.00 on August 14, 1996, and the third installment of P40,000.00 on October 20, 1999. The October 20, 1999 receipt stated that upon payment of the remaining P30,000.00 balance, Teodulo would cause the transfer of the title to Apolinario. Apolinario's family occupied the property following the initial payment. Perpetua was already deceased at the time of the sale, and Perla did not give her consent thereto.

Deaths of the Parties and Extrajudicial Settlement: Teodulo died on December 22, 2000, before the balance of the purchase price could be paid. Apolinario died in April 2005. Following Teodulo's death, respondents executed an Extrajudicial Settlement of the Estates of Teodulo and Perpetua, which included the subject property and adjudicated it to respondent Jesus Sison. Consequently, Jesus caused the cancellation of TCT No. 8791 and the issuance of TCT No. 22388 in his favor.

The Complaint: Upon Apolinario's death, his heirs (petitioners) discovered the extrajudicial settlement and the transfer of title to Jesus. They attempted to pay the remaining balance, but Jesus rejected the payment. Petitioners then filed the complaint for specific performance, declaration of nullity of the extrajudicial settlement and TCT No. 22388, and damages.

• Application of Article 92: Petitioners argued that under Article 92(3) of the Family Code, property acquired before the marriage by either spouse who has legitimate descendants by a former marriage is excluded from the absolute community property. Thus, the subject property should be excluded from the community property of Teodulo and Perla as Teodulo's separate property.

• Mandatory Complete Separation of Property: Petitioners maintained that pursuant to Article 103 of the Family Code (applicable by analogy to conjugal partnership under Article 130), the subsequent marriage of Teodulo without liquidation of the prior marriage's conjugal property mandated a regime of complete separation of property.

• Right of Disposition Without Consent: Petitioners contended that under Article 145 of the Family Code, each spouse under the regime of separation of property may dispose of his or her separate estate without the consent of the other. Consequently, Teodulo could validly dispose of his share in the property without Perla's consent.

• Extent of Valid Sale: Petitioners claimed entitlement to one-half of the property (Teodulo's conjugal share) plus one-fifth of the other half (Teodulo's share in Perpetua's estate), erroneously computing Teodulo's total share as 1/2 plus 1/5 of 1/2.

• Absolute Community Property Regime: Respondents countered that the property regime governing Teodulo and Perla was absolute community, having been married during the effectivity of the Family Code, and that Article 92 did not apply because Perla recognized the co-ownership between Teodulo and his children from the first marriage.

• Inapplicability of Article 103: Respondents argued that Article 103 applies only to absolute community property regimes, whereas the first marriage was governed by conjugal partnership of gains. They further contended that Article 103 applies only where disposition is made after the death of a spouse, which was not the case here as both Teodulo and Perla were alive during the sale.

• Void Sale for Lack of Consent: Respondents maintained that under Article 130 of the Family Code, any disposition involving the conjugal partnership property without liquidation is void. They cited Nobleza v. Nuega to assert that the sale by a husband of community property without the wife's consent is void.

• Prescription and Lack of Document: Respondents argued that the action was barred by prescription and that the receipts merely evidenced a contract to sell, not a contract of sale, as no deed of sale was registered.

• Property Regime and Liquidation: Whether the Court of Appeals erred in ruling that the property regime between Teodulo and Perla was absolute community and in misapplying Article 92 of the Family Code regarding the sale of property acquired during the first marriage.

• Validity of Disposition: Whether the Court of Appeals erred in ignoring Articles 92, 103, and 145 of the Family Code regarding the surviving spouse's authority to dispose of his share in the conjugal property of the first marriage without the second spouse's consent.

• Property Regime of the First Marriage: The property regime between Teodulo and Perpetua was conjugal partnership of gains under the Civil Code, not absolute community. Upon Perpetua's death in 1989, the conjugal partnership terminated pursuant to Article 126(1) of the Family Code. No liquidation having been made within one year, an implied ordinary co-ownership ensued among Teodulo and the seven children of Perpetua. Teodulo's share consisted of his one-half conjugal share plus his one-eighth share as heir in Perpetua's conjugal half, totaling 9/16 undivided interest.

• Mandatory Complete Separation of Property: Because Teodulo contracted a subsequent marriage without complying with the liquidation requirements of Article 130, a mandatory regime of complete separation of property governed the property relations of the subsequent marriage pursuant to the third paragraph of Article 130. Consequently, Teodulo's 9/16 undivided interest in the subject property remained his separate property under Article 145 of the Family Code, which he could dispose of without Perla's consent.

• Validity of the Sale: The sale by Teodulo to Apolinario was a contract of sale, not merely a contract to sell, as there was no stipulation reserving ownership until full payment. Pursuant to Article 493 of the Civil Code and the doctrine in Heirs of Protacio Go, Sr. v. Servacio, Domingo v. Molina, and Uy v. Estate of Vipa Fernandez, the sale of the entire co-owned property by one co-owner without the consent of the others is not totally void. The sale is valid to the extent of the selling co-owner's undivided share. Thus, the sale transferred Teodulo's 9/16 interest to Apolinario, making Apolinario a co-owner to that extent and a trustee for the benefit of Teodulo's other heirs (the seven children) regarding the remaining 7/16 interest.

• Computation of Shares: The Court rejected petitioners' erroneous computation of Teodulo's share as 1/2 plus 1/5 of the other half. With seven children and Teodulo as heirs of Perpetua, Teodulo inherited 1/8 of Perpetua's 1/2 share (or 1/16), making his total share 9/16 (8/16 + 1/16).

• Effect of Payment: Apolinario had paid P120,000.00 (80% of the price), which the Court deemed sufficient consideration for the 9/16 share (56.25% of the property). Given the time elapsed and equities, the purchase price was deemed fully discharged for the 9/16 portion.

• Effect of Non-Liquidation of Conjugal Partnership (Article 130, Family Code) — Upon the death of a spouse, the conjugal partnership terminates. If no liquidation is effected within one year from death, any disposition or encumbrance involving the conjugal partnership property is not necessarily void ab initio. The disposition is valid to the extent of the undivided share of the disposing surviving spouse (consisting of his one-half conjugal share plus his inheritance from the deceased spouse), but void as to the share of the other heirs. The buyer acquires the seller's undivided interest and becomes a co-owner to that extent, and a trustee for the benefit of the other co-heirs regarding the unsold portions.

• Mandatory Complete Separation of Property — Should the surviving spouse contract a subsequent marriage without liquidating the conjugal partnership property of the terminated marriage within one year from the death of the deceased spouse, a mandatory regime of complete separation of property shall govern the subsequent marriage. Under this regime, property brought by either spouse to the marriage or acquired during the marriage by onerous title remains separate property, and each spouse may dispose of his or her separate estate without the other's consent.

• Rights of Co-owners (Article 493, Civil Code) — Each co-owner has full ownership of his part and may alienate, assign, or mortgage it. The effect of such alienation is limited to the portion which may be allotted to him in the division upon termination of the co-ownership. A sale of the entire property by one co-owner transfers only his undivided share, making the buyer a co-owner to that extent, regardless of whether the seller purported to sell a specific portion or the whole property.

• "The disposition or encumbrance is valid only to the extent of the share or interest of the surviving spouse in the terminated marriage property, and cannot in no way bind the shares or interests therein of the other heirs of the deceased spouse."

• "Quando res non valet ut ago, valeat quantum valere potest." (When a thing is of no force as I do it, it shall have as much force as it can have.) — Applied to validate the sale to the extent of the seller's undivided interest.

• "The sale by Teodulo of the subject property to Apolinario was not necessarily or totally or entirely void, for his right as a co-owner to the extent of 9/16 thereof was effectively transferred, making the buyer, Apolinario, a co-owner of the subject property to that extent and a trustee for the benefit of the co-heirs of Teodulo, his seven children, in respect of their combined 7/16 interest therein that was not validly sold to Apolinario."

• Heirs of Protacio Go, Sr. and Marta Barola v. Servacio, G.R. No. 157537, September 7, 2011 — Controlling precedent establishing that the sale by a surviving spouse of his undivided interest in unliquidated conjugal property is not entirely void but transfers his rights to the buyer, making the latter a co-owner to that extent.

• Domingo v. Molina, G.R. No. 200274, April 20, 2016 — Followed the formulation in Heirs of Go, holding that a co-owner may sell his undivided share and the buyer steps into the shoes of the vendor as co-owner.

• Uy v. Estate of Vipa Fernandez, G.R. No. 200612, April 5, 2017 — Applied Article 130 of the Family Code and recognized that disposition by a surviving spouse of his undivided share is not necessarily void despite lack of liquidation.

• Lopez v. Vda. de Cuaycong, 74 Phil. 601 (1944) — Historical precedent establishing that a co-owner may alienate his undivided share without the consent of other co-owners, and that the sale of a concrete portion by a co-owner does not render the contract void but subjects it to the result of partition.

• Nobleza v. Nuega, G.R. No. 193038, March 11, 2015 — Distinguished by the Court of Appeals; the Supreme Court noted that it involved community property where the spouse was still alive, unlike the present case involving conjugal property of a terminated marriage.

• Article 130, Family Code — Governs the liquidation of conjugal partnership upon termination by death and provides for the mandatory regime of complete separation of property if the surviving spouse remarries without compliance with liquidation requirements. The provision voids dispositions of conjugal property only to the extent of the share of the deceased spouse, not the surviving spouse's share.

• Article 145, Family Code — Provides that under the regime of complete separation of property, each spouse may own, dispose of, possess, administer, and enjoy his or her own separate estate without need of the other's consent.

• Article 493, Civil Code — Grants each co-owner full ownership of his part and the right to alienate it, with the effect limited to the portion allotted to him upon division.

• Article 777, Civil Code — Transmission of successional rights from the moment of death of the decedent.

• Article 996, Civil Code — Intestate succession providing that if a widow or widower and legitimate children are left, the surviving spouse has the same share as each child.

• Article 129, Family Code — Governs the liquidation of the conjugal partnership and division of the net remainder between the spouses or their heirs.

Peralta, C.J. (Chairperson), Carandang, Zalameda, and Gaerlan, JJ.