Ko vs. Aramburo

Under the Old Civil Code, a husband’s sale of conjugal real property without the wife’s consent is merely voidable, not void, and the wife’s action to annul it must be brought within ten years from the transaction; if not, she or her heirs may only demand the value of the property. A sale by a co-owner of a portion he does not own is void, and the action to declare its inexistence is imprescriptible under Article 1410 of the New Civil Code.

Virginia Dy Aramburo is the sister-in-law of Corazon Aramburo Ko, being the wife of Corazon’s brother Simeon Aramburo. Corazon and Simeon had another sibling, Augusto Aramburo, who predeceased them; Virginia’s co-respondents are Augusto’s heirs, while petitioners are Corazon’s heirs. The controversy involves seven parcels of land in Tabaco City, Albay, and because the operative conveyances occurred before the Family Code took effect on August 3, 1988, the Old Civil Code governs the conjugal-property issues.

Virginia Dy Aramburo is the sister-in-law of Corazon Aramburo Ko, being the wife of Corazon’s brother Simeon Aramburo. Corazon and Simeon had another sibling, Augusto Aramburo, who predeceased them. Virginia’s co-respondents are Augusto’s heirs, while petitioners are Corazon’s heirs, who substituted her after she died while the case was pending before the Court of Appeals. On November 26, 1993, Virginia, together with her co-respondents, filed a Complaint for Recovery of Ownership with Declaration of Nullity and/or Alternatively Reconveyance and Damages with Preliminary Injunction against Corazon, docketed as Civil Case No. T-1693. The subject of the case is seven parcels of land in Tabaco City, Albay, covered by TCT No. T-41187 with an area of 176,549 square meters, more or less; TCT No. T-41183 with an area of 217,732 square meters, more or less; TCT No. T-41184 with an area of 39,674 square meters, more or less; TCT No. T-28161 with an area of 86,585 square meters, more or less; TCT No. T-41186 with an area of 4,325 square meters, more or less; TCT No. 49818 with an area of 27,281 square meters, more or less; and TCT No. 49819 with an area of 35,760 square meters, more or less. All these properties are now under Corazon’s name.

The complaint alleged that Virginia and her husband Simeon, together with Corazon and her husband Felix, acquired the subject properties from Spouses Eusebio and Epifania Casaul through a Deed of Cession dated April 10, 1970. On April 13, 1970, Spouses Simeon and Virginia and Spouses Felix and Corazon executed a Deed of Cession in favor of Augusto’s heirs covering the one-third pro-indiviso portion of the subject properties. According to the complaint, Corazon, allegedly with the use of falsified documents, was able to have the entire subject properties transferred exclusively to her name, depriving her co-owners Virginia and Augusto’s heirs of their pro-indiviso shares, as well as the produce of the same.

Corazon admitted having acquired the subject properties through cession from their uncle and auntie, Spouses Eusebio and Epifania. She claimed, however, that although the properties were previously registered under Spouses Eusebio and Epifania’s names, they were in truth owned by their parents, Spouses Juan and Juliana Aramburo. When their parents died, Spouses Eusebio and Epifania merely returned the properties to Spouses Juan and Juliana by ceding the same to their children, Corazon and Simeon. She averred that the properties were ceded only to her and Simeon, and that her husband Felix’s name and Virginia’s name appearing in the Deed were merely descriptive of her and Simeon’s civil status, being married to Felix and Virginia, respectively. Corazon alleged that she and Simeon thought of sharing a third of the subject properties with the heirs of their brother Augusto, hence they executed the April 13, 1970 Deed of Cession, but later decided to recall and not implement it. She insisted that only she and Simeon share one-half portion each of the subject properties. Corazon further alleged that on December 14, 1974, Simeon sold and conveyed his entire one-half share in the co-owned properties in her favor, making her the sole owner and allowing her to transfer the titles to her name. She argued that the subject properties belonged to Simeon’s exclusive property, so Virginia’s conformity to the sale was not necessary. Corazon also raised in her Answer that respondents’ action was barred by prescription.

During trial, it was established that Simeon and Virginia’s marriage had been on bad terms. Since February 4, 1973, Simeon and Virginia had lived separately. Simeon lived with his sister Corazon in Tabaco City, Albay, while Virginia and their children lived in Paco, Manila. From these circumstances, the trial court deduced that it was highly suspicious that Virginia would sign a deed of sale consenting to her husband’s decision to sell their conjugal assets to Corazon. Virginia vehemently disowned the signature appearing in the December 14, 1974 Deed of Absolute Sale. The National Bureau of Investigation examination report concluded that the questioned signature and the specimen signatures of Virginia were not written by one and the same person, and thus the former was a forgery. Without Virginia’s conformity, the trial court held that Simeon could not alienate or encumber any real property of the conjugal partnership. The trial court concluded that the December 14, 1974 Deed of Absolute Sale, being falsified, was not a valid instrument to transfer the one-third share of the subject properties. The trial court also did not accept Corazon’s allegation that the April 13, 1970 Deed of Cession in favor of Augusto’s heirs as to the other one-third portion was cancelled and not implemented. It noted Corazon’s testimony during trial that she was merely administering the said portion for Augusto’s heirs, her nephews and nieces, who were still minors at that time.

The trial court found that the April 13, 1970 Deed of Cession in favor of Augusto’s heirs was in fact implemented, as shown by Corazon’s testimony that she merely administered that portion for Augusto’s heirs. It also found that Virginia’s signature on the December 14, 1974 Deed of Absolute Sale was a forgery, as concluded by the NBI, and that without her conformity Simeon could not alienate conjugal real property. The Court of Appeals affirmed these findings.

• Conjugal Character: Petitioners maintained that the subject properties were not part of Spouses Simeon and Virginia’s conjugal properties, citing the absence of the properties from the dissolution of conjugal partnership case docketed as Special Proceeding No. 67 and the separation of properties case docketed as Civil Case No. T-1032 between Simeon and Virginia.
• Recall of April 13, 1970 Deed of Cession: Petitioners argued that the April 13, 1970 Deed of Cession in favor of Augusto’s heirs was never given effect because it was recalled by the spouses.
• Exclusive Ownership of Corazon and Simeon: Petitioners maintained that the properties were ceded exclusively to Corazon and Simeon; Felix’s name and Virginia’s name in the April 10, 1970 Deed of Cession were merely descriptive of their civil status, so Simeon’s one-half share was his exclusive property and Virginia’s conformity to its sale was unnecessary.
• Inheritance from Parents: Petitioners alleged that the subject properties actually came from the estate of Simeon and Corazon’s parents and were inherited by them, hence exclusive.
• Prescription: Corazon raised in her Answer that respondents’ action was barred by prescription.

• Conjugal Ownership: Virginia insisted that only a one-third portion of the subject properties was owned by Simeon and that it was conjugally owned by her and Simeon because it was acquired during their marriage.
• Invalidity and Forgery: Respondents argued that Simeon’s disposition of the one-half portion to Corazon was not only void but fictitious because Simeon did not own that one-half portion and because Virginia’s purported signature in the December 14, 1974 Deed of Absolute Sale as the vendor’s wife was a forgery, as found by the NBI and upheld by the trial court.
• Augusto’s Heirs’ Share: Respondents’ claim to one-third of the subject properties was anchored on the April 13, 1970 Deed of Cession executed in favor of Augusto’s children.
• Separation Cases: Respondents alleged in their Comment that the case for separation of properties between Simeon and Virginia was not resolved on the merits because Simeon died during its pendency and there was a disagreement as to the inventory of properties included, which could mean other properties may be part of the conjugal properties and were not included.

• Ownership and Co-Ownership: Whether the Court of Appeals correctly sustained the RTC decision declaring the parties as co-owners of the subject properties.
• Cancellation and Transfer of Titles: Whether, if the parties are co-owners, the subject titles may be nullified and transferred to the parties as to their respective portions.
• Validity of Simeon’s Sale: Whether the December 14, 1974 Deed of Absolute Sale executed by Simeon in favor of Corazon validly transferred any share in the subject properties.
• Prescription: Whether the action to nullify the sale of Augusto’s heirs’ share and Virginia’s conjugal share is imprescriptible or subject to prescription.

• Ownership and Co-Ownership: Yes. The parties are co-owners pro-indiviso in equal one-third shares; Augusto’s heirs under the April 13, 1970 Deed of Cession, and Simeon’s heirs, including Virginia, under the April 10, 1970 Deed of Cession and the Old Civil Code presumption of conjugality.
• Cancellation and Transfer of Titles: Partly. Titles may be cancelled only as to Augusto’s heirs’ one-third share; as to Virginia’s one-third conjugal share, the action has prescribed, so she may only demand its value in a proper case.
• Validity of Simeon’s Sale: The sale is void as to Augusto’s heirs’ one-third share because Simeon did not own it, but merely voidable as to the conjugal one-third share because it was executed without Virginia’s consent under Article 166 of the Old Civil Code.
• Prescription: The action to nullify the sale of Augusto’s heirs’ share is imprescriptible under Article 1410 of the New Civil Code because the sale is void; the action as to Virginia’s conjugal share is subject to the ten-year period under Article 173 of the Old Civil Code and was filed beyond that period.

• Ownership and Co-Ownership: The Court applied the Old Civil Code because all circumstances occurred before the Family Code took effect on August 3, 1988. Augusto’s heirs’ one-third claim rests on the April 13, 1970 Deed of Cession executed by Spouses Felix and Corazon and Spouses Simeon and Virginia in favor of Augusto’s children. Petitioners claimed recall, but the courts a quo found the deed implemented, as shown by Corazon’s testimony that she merely administered the portion for Augusto’s heirs, who were minors. Factual findings of the trial court, affirmed by the Court of Appeals, bind the Supreme Court absent abuse, arbitrariness, or capriciousness; Corazon’s bare assertion of cancellation was insufficient. As to Virginia’s one-third claim, the properties were originally registered in Spouses Eusebio and Epifania’s names and were ceded through the April 10, 1970 Deed of Cession to Spouses Felix and Corazon and Spouses Simeon and Virginia during Simeon and Virginia’s marriage. Under Article 160 of the Old Civil Code, all property of the marriage is presumed conjugal unless proved to pertain exclusively to one spouse. The presumption is rebuttable only by strong, clear, and convincing evidence, with the burden on the party asserting exclusive ownership. Petitioners failed to show exclusive ownership; the argument that Virginia’s name was merely descriptive was untenable; registration in one spouse’s name does not destroy conjugal nature, and the material fact is the time of acquisition. The bare claim that the properties came from the parents’ estate was unsupported. The omission of the properties from the separation-of-properties cases did not constitute strong, clear, and convincing proof of exclusive ownership, especially since respondents alleged that the separation case was not resolved on the merits due to Simeon’s death and a disagreement over the inventory, an allegation not denied. Thus, the one-third portion is part of Simeon and Virginia’s conjugal properties.
• Cancellation and Transfer of Titles: The Court upheld the co-ownership finding but reversed the cancellation of titles over the entire properties and the transfer of two-thirds to respondents. Augusto’s heirs are entitled to recover their one-third share, and the titles over the subject properties are ordered cancelled insofar as Augusto’s heirs’ share is concerned. Virginia, however, is not entitled to recover her one-third share in kind because her action to annul the sale of the conjugal share was filed beyond the ten-year period under Article 173 of the Old Civil Code; her recourse is to demand the value of that share in a proper case. Therefore, the titles cannot be cancelled and transferred to Virginia as to her share.
• Validity of Simeon’s Sale: The December 14, 1974 Deed of Absolute Sale executed by Simeon in favor of Corazon covered one-half of the subject properties, which Simeon purported to own. As to the one-third portion belonging to Augusto’s heirs, the sale is void because Simeon did not own that portion; the object of a valid sales contract must be owned by the seller, and under the maxim nemo dat quod non habet, one cannot give what one does not have. As to the one-third portion commonly owned by Spouses Simeon and Virginia, Article 166 of the Old Civil Code requires the wife’s consent before the husband may alienate or encumber any real property of the conjugal partnership, except in cases of incapacity, civil interdiction, or similar situations. Virginia denied consent, and the NBI examination, upheld by the trial court, concluded that her signature on the deed was a forgery. The circumstances—strained marital relations, separate residence since February 4, 1973, and Simeon living with Corazon in Tabaco while Virginia and the children lived in Paco—supported the finding of forgery. Without Virginia’s conformity, the sale of the conjugal share is merely voidable, not void, under the Old Civil Code.
• Prescription: The Court qualified the Court of Appeals’ ruling that the action to nullify the deed was imprescriptible because the contract was void. For Augusto’s heirs’ share, the sale is void because the object did not exist as to the seller at the time of the transaction; under Article 1409 of the New Civil Code, such a contract is inexistent and void from the beginning, and under Article 1410, the action or defense for the declaration of its inexistence does not prescribe. For Virginia’s conjugal share, however, the Old Civil Code governs. Under Article 173, the wife may, during the marriage and within ten years from the transaction, ask for annulment of any contract of the husband entered into without her consent; if she fails to exercise this right, she or her heirs may, after dissolution of the marriage, demand only the value of the property fraudulently alienated by the husband. The sale was executed on December 14, 1974, while the action was filed in 1993, clearly beyond the ten-year period. The Court of Appeals therefore erred in applying Article 1410 of the New Civil Code to Virginia’s share and in treating the sale as void; since the sale was merely voidable under the Old Civil Code, the imprescriptibility rule did not apply. Virginia’s recourse is only to demand the value of the one-third portion invalidly sold without her conformity.

• Presumption of Conjugality Under Article 160 of the Old Civil Code — All property of the marriage is presumed to belong to the conjugal partnership unless it is proved that it pertains exclusively to the husband or to the wife. The presumption is rebuttable only by strong, clear, and convincing evidence, and the burden of proof rests on the party asserting exclusive ownership. The Court applied this to the subject properties, which were ceded during Simeon and Virginia’s marriage; petitioners’ bare claims of exclusive ownership and inheritance were insufficient, and registration in one spouse’s name did not destroy the conjugal character.
• Nemo Dat Quod Non Habet — One cannot give what one does not have. A valid sales contract requires that the object be owned by the seller. The Court applied this to Simeon’s sale of Augusto’s heirs’ one-third share, which Simeon did not own; the sale of that portion was void.
• Void vs. Voidable Sale of Conjugal Real Property Under the Old Civil Code — Under Article 166 of the Old Civil Code, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife’s consent, except when the wife is incapacitated, under civil interdiction, or in like situations. A sale made without the wife’s consent is not void but merely voidable. The Court applied this to Simeon’s sale of the conjugal one-third share after finding Virginia’s signature forged; the sale was voidable, not void.
• Ten-Year Prescriptive Period Under Article 173 of the Old Civil Code — The wife may, during the marriage and within ten years from the transaction, ask for annulment of any contract of the husband entered into without her consent. If she fails to exercise this right, she or her heirs may, after dissolution of the marriage, demand only the value of the property fraudulently alienated by the husband. The Court applied this to Virginia’s share; because the sale occurred in 1974 and the action was filed in 1993, the ten-year period had lapsed, leaving Virginia with only a claim for value.
• Imprescriptibility of Action to Declare Inexistence of a Void Contract — Under Article 1410 of the New Civil Code, the action or defense for the declaration of the inexistence of a contract does not prescribe. This applies to contracts that are void from the beginning, such as those whose object did not exist at the time of the transaction under Article 1409. The Court applied this to the sale of Augusto’s heirs’ share, which was void because Simeon did not own it; the action to impugn that sale was imprescriptible.
• Binding Effect of Trial Court’s Factual Findings — Factual findings of the trial court, especially when affirmed by the appellate court, are binding and conclusive upon the Supreme Court absent a clear showing of abuse, arbitrariness, or capriciousness. The Court applied this to the findings that the April 13, 1970 Deed of Cession was implemented and that Virginia’s signature on the 1974 deed was forged.
• Forgery Finding Not Dependent Solely on Handwriting Experts — A finding of forgery does not depend entirely on the testimonies of handwriting experts; the Court may conduct an independent examination of the questioned signature. In this case, however, the questioned deed was not available in the records, so the Court was constrained to rely on the trial court’s factual findings, affirmed by the Court of Appeals.

• "Article 160 of the Old Civil Code, which is the applicable provision since the property was acquired prior to the enactment of the Family Code as stated above, provides that 'all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife.'" — This passage states the controlling presumption of conjugality and identifies the Old Civil Code as the governing law because the property was acquired before the Family Code.
• "However, as to the one-third portion commonly-owned by Spouses Simeon and Virginia, Simeon's alienation of the same through sale without Virginia's conformity is merely voidable." — This is the Court’s ratio on the conjugal share, distinguishing it from the void sale of Augusto’s heirs’ share and rejecting the lower courts’ treatment of the entire sale as void.
• "As for the share of Augusto's heirs sold by Simeon in the December 14, 1974 Deed of Absolute Sale, the sale of the same is void as the object of such sale, not being owned by the seller, did not exist at the time of the transaction." — This passage applies the rule that a seller must own the object of a sale and supports the imprescriptibility of the action as to Augusto’s heirs’ share.
• "Here, the invalid sale was executed on December 14, 1974 while the action questioning the same was filed in 1993, which is clearly way beyond the 10-year period prescribed under Article 173 of the Old Civil Code. Virginia's recourse is, therefore, to demand only the value of the property, i.e., the one-third portion of the subject properties invalidly sold by Simeon without Virginia's conformity pursuant to the same provision." — This passage explains why Virginia may no longer recover her share in kind and is limited to a claim for value.

• Uybuco vs. People of the Philippines, 749 Phil. 987, 992 (2014) — Cited for the rule that factual findings of the trial court, especially if affirmed by the appellate court, are binding and conclusive upon the Supreme Court absent a clear showing of abuse, arbitrariness, or capriciousness.
• Francisco vs. CA, 359 Phil. 519, 526 (1998) — Cited in support of the rebuttable presumption of conjugality under Article 160 of the Old Civil Code.
• Spouses Tarrosa vs. De Leon, et al., 611 Phil. 384, 395 (2009) — Cited for the burden of proof on the party asserting exclusive ownership and for the rule that registration of property in the name of one spouse does not destroy its conjugal nature; what matters is the time of acquisition.
• Cabrera vs. Ysaac, 747 Phil. 187, 206 (2014) — Cited for the requirement that the object of a valid sales contract must be owned by the seller.
• Cavite Development Bank vs. Spouses Lim, 381 Phil. 355, 365 (2000) — Cited for the maxim nemo dat quod non habet.
• Fuentes, et al. vs. Roca, et al., 633 Phil. 9, 18 (2010) — Cited for the rule that under the Old Civil Code, a husband’s sale of conjugal property without the wife’s consent is merely voidable; also cited at page 20 for the application of the New Civil Code provisions on void contracts and Article 1410.

• Article 160, Old Civil Code — Provides that all property of the marriage is presumed to belong to the conjugal partnership unless proved to pertain exclusively to the husband or wife. Applied to hold that the subject properties, acquired during Simeon and Virginia’s marriage, are presumed conjugal.
• Article 166, Old Civil Code — Provides that the husband cannot alienate or encumber any real property of the conjugal partnership without the wife’s consent, except when the wife is incapacitated, under civil interdiction, or in like situations. Applied to Simeon’s sale of the conjugal share without Virginia’s consent.
• Article 173, Old Civil Code — Allows the wife, during the marriage and within ten years from the transaction, to ask for annulment of any contract of the husband entered into without her consent; if she fails, she or her heirs may, after dissolution of the marriage, demand the value of the property fraudulently alienated. Applied to bar Virginia’s action for annulment and limit her to a claim for value.
• Article 1409, New Civil Code — Declares contracts inexistent and void from the beginning when, among others, their cause or object did not exist at the time of the transaction. Applied to the sale of Augusto’s heirs’ share, which Simeon did not own.
• Article 1410, New Civil Code — Provides that the action or defense for the declaration of the inexistence of a contract does not prescribe. Applied to Augusto’s heirs’ action to impugn the void sale of their share.
• Article 124, Family Code — Provides that in the absence of the other spouse’s written consent or court authority, the disposition or encumbrance of conjugal property is void. Mentioned only as a contrast; the Court held that the Old Civil Code, not the Family Code, governs the case.

Velasco, Jr. (Chairperson), Peralta, Bersamin, and Jardeleza, JJ., concur. Peralta was designated additional Member per Raffle dated August 7, 2017 vice Associate Justice Andres B. Reyes, Jr.