Villaranda vs. Villaranda

Under the Civil Code, a husband’s alienation or encumbrance of conjugal real property without the wife’s consent is not void but merely voidable; the wife must seek annulment within ten years from the transaction, and a third party cannot invoke that remedy. An argument that the Deed of Exchange was not perfected because its object was indeterminate, raised for the first time on appeal, is barred absent any of the recognized exceptions.

Vicente and Honorio were brothers. Honorio was married to Ana Maria, and the Macasandig property involved in the exchange was part of their conjugal properties. The Family Code took effect only on August 3, 1998, so the applicability of the Civil Code to a 1976 transaction was a central statutory backdrop.

Vicente G. Villaranda and Honorio G. Villaranda were brothers. A 471-square-meter parcel of land in Divisoria, Cagayan de Oro City was left to them and their eight other siblings by their parents. Estate Administrator Bebiano Luminarias leased 124 square meters of the property to Honorio from May 1, 1976 to May 31, 1986, while Vicente inherited 64.22 square meters of the property that had not been leased to Honorio.

On July 6, 1976, the two brothers executed the assailed Deed of Exchange. Under this instrument, Vicente agreed to convey his 64.22-square-meter portion to Honorio, in exchange for a 500-square-meter property in Macasandig, Cagayan de Oro City, which was covered by Transfer Certificate of Title (TCT) No. 2138. After the execution of the Deed, Honorio took possession of the 64.22-square-meter lot and constructed a building thereon.

Years later, on April 6, 1992, a subdivision plan for Lot 448-B was completed, in pursuit of which TCT No. T-65893 for the 64.22-square-meter share of Vicente was issued in his name and designated as Lot 448-B-7. The other heirs were issued their own TCTs for their respective shares.

Honorio and his wife, Respondent Ana Maria Y. Villaranda, then brought an action for specific performance before the RTC of Cagayan de Oro City, Branch 24, to compel Vicente to comply with his obligations under the Deed of Exchange. The spouses alleged that they could not fully use or dispose of their Macasandig property because Vicente had yet to identify and delineate his undivided 500-square-meter portion of the property. They asked the court to compel him to do so, as well as to convey to them the 64.22-square-meter Divisoria lot, in compliance with his obligations under the Deed. During the pendency of the case, Honorio conditionally sold the Divisoria lot to Colorhouse Laboratories, Inc., which, by virtue thereof, intervened in the civil case.

Vicente did not deny that he had entered into the Deed of Exchange with Honorio. The former, however, averred that he was not bound thereby, contending that because the property had not been delivered, the Deed had not been consummated. Moreover, he claimed that the Deed had already been revoked by both parties. According to him, he, together with his co-heirs, requested Honorio to agree to its rescission because the considerations therein were iniquitous. Honorio agreed, provided certain conditions he had disclosed were met. Vicente contended that he had complied with those conditions and that, therefore, he and respondent spouses had already revoked the Deed of Exchange.

During pretrial, the parties stipulated the following facts: (a) the existence and due execution of the Deed of Exchange; (b) the identity of the parties; (c) the existence of TCT No. T-65893, which had been registered in the Registry of Deeds of Cagayan de Oro City in the name of petitioner; and (d) the physical possession by Colorhouse, through Honorio, of the 64.22-square-meter Divisoria lot.

The CA found that Ana was aware of the execution of the Deed and brought no action for its annulment within ten years from its execution; her omission or refusal to rescind, as well as her joining her husband in the specific performance case, indicated assent. The CA also found that the spouses’ cause of action accrued only when Vicente refused to cause the transfer of his title to Honorio, some two months before the filing of the case. It further found that Honorio acquired American citizenship only in September 1992, years after the Deed, and that the consideration was not altogether unconscionable as to warrant voiding the contract.

• Perfection and Consummation: Petitioner argued that the Deed of Exchange was not perfected or consummated because its object was not determinate or at least determinable without a new agreement between the parties under the law on sales; he had to make an ocular inspection, the particular 500-square-meter portion still had to be identified and delineated, the finally determined portion was still subject to acceptance and agreement, and absent delineation no delivery essential to perfection was possible. At best, he gave a qualified acceptance amounting to a counter-offer contingent on final delineation and acceptance.
• Absence of Spouse’s Signature: Petitioner contended that the Deed of Exchange was null and void because the signature of Honorio’s wife, Ana, did not appear on the instrument; he invoked the Family Code and Garcia vs. Court of Appeals and Nicolas vs. Court of Appeals, where deeds of sale were declared void for absence of the wives’ conformity to the disposition of conjugal properties.
• Revocation: Petitioner claimed that the Deed had already been revoked by both parties after he and his co-heirs requested rescission because the considerations were iniquitous, and Honorio agreed subject to conditions that petitioner complied with.

• New Theory on Appeal: Respondent spouses argued that petitioner should not be allowed to adopt a new theory by impugning the validity of the Deed on a ground not alleged in the pleadings or raised before the lower and appellate courts.
• Essential Elements and Nature of Deed: Respondent spouses contended that the Deed contains all essential elements of a contract — consent, object, and consideration; what needs to be executed is not another contract to give effect to the original agreements but one in the nature of a partition agreement; the Deed is akin to a contract of co-ownership because it involves conveyance of an undivided interest over land, and further agreement is necessary only to effect partition and terminate the existing co-ownership.
• Wife’s Consent: Respondent spouses argued that the absence of Ana’s signature does not prove lack of consent because a contract may validly exist even if the parties have not reduced their stipulations to writing; assuming her consent was lacking, that fact would not render the agreement void but merely voidable.
• Estoppel (Colorhouse): Respondent Colorhouse raised the same issues as respondent spouses and added that when petitioner asked that the agreement be revoked, he was estopped from claiming its non-perfection because revocation presupposes the existence of a valid contract.

• Perfection and Consummation of the Deed of Exchange: Whether petitioner may raise for the first time on appeal the argument that the Deed of Exchange was not perfected or consummated because its object was not determinate or determinable without a new agreement, and that there was no acceptance and actual delivery of the 500-square-meter lot.
• Absence of Spouse’s Signature: Whether the Deed of Exchange is valid and enforceable despite the absence of the signature of Honorio’s wife, Ana Maria.

• Perfection and Consummation of the Deed of Exchange: No. The argument was raised for the first time on appeal and does not fall under any recognized exception, so the SC did not pass upon its merits.
• Absence of Spouse’s Signature: Yes. Under the Civil Code, the husband’s alienation of conjugal real property without the wife’s consent is voidable, not void; Ana did not seek annulment within ten years, and Vicente is not the proper party to invoke Article 173.

• Perfection and Consummation of the Deed of Exchange: The SC applied the settled rule that points of law, theories, issues, and arguments not brought to the attention of the lower court need not and ordinarily will not be considered by a reviewing court, because they cannot be raised for the first time at that late stage. Basic rules of fair play, justice, and due process impel the rule, and any issue raised for the first time on appeal is barred by estoppel. The recognized exceptions are lack of jurisdiction over the subject matter, plain error, jurisprudential developments affecting the issues, and matters of public policy. Petitioner’s argument that the Deed was null and void because its object was not determinate or determinable did not fall under any exception, so the SC found no cogent reason to pass upon it.
• Absence of Spouse’s Signature: The Deed was entered into on July 6, 1976, while the Family Code took effect only on August 3, 1998. Laws apply prospectively unless a legislative intent to give them retroactive effect is expressly declared or necessarily implied, so the Civil Code governed. The Macasandig lot was part of Honorio and Ana’s conjugal properties. Civil Code Article 166 provides that the husband cannot alienate or encumber any real property of the conjugal partnership without the wife’s consent, except in the cases stated. Article 173 allows the wife, during the marriage and within ten years from the transaction questioned, to ask the courts for annulment of any contract of the husband entered into without her consent when required, or any act or contract tending to defraud her or impair her interest in the conjugal partnership property; if she fails, she or her heirs after dissolution may demand the value of the property fraudulently alienated. Reading Article 166 with Article 173, the lack of the wife’s consent does not make the husband’s alienation or encumbrance void but merely voidable; the Deed is valid until and unless annulled. The records showed no evidence that Ana brought an action to annul the transfer within ten years from the transaction questioned, so her right prescribed and the Deed remained valid and enforceable. Papa vs. Montenegro explained that the legal prohibition against disposition of conjugal property by one spouse without the other’s consent was established for the benefit, not of third persons, but only of the other spouse, to save the conjugal partnership from damages; Vicente, not being the proper party, could not avail himself of Article 173. Garcia vs. Court of Appeals and Nicolas vs. Court of Appeals were misplaced because they involved a petition by one of the spouses for annulment of contracts entered into by the other spouse, and the contracts there were not void ab initio but merely voidable.

• Voidable alienation of conjugal property without wife’s consent under the Civil Code — Under Civil Code Article 166, the husband cannot alienate or encumber conjugal real property without the wife’s consent; read with Article 173, the lack of consent makes the alienation voidable, not void, and the wife has ten years from the transaction to seek annulment. Applied: Ana did not annul within ten years, so the Deed remained valid.
• Proper party to invoke Article 173 — The prohibition is for the benefit of the other spouse, not third persons; a third party cannot invoke the lack of consent to invalidate the alienation. Applied: Vicente cannot avail himself of Ana’s remedy.
• Prospective application of laws — Laws apply prospectively unless retroactive effect is expressly declared or necessarily implied. Applied: the Family Code took effect on August 3, 1998, so the 1976 Deed was governed by the Civil Code.
• Issues not raised below barred on appeal — Points of law, theories, issues, and arguments not brought to the lower court ordinarily will not be considered; the exceptions are lack of jurisdiction over the subject matter, plain error, jurisprudential developments affecting the issues, and matters of public policy. Applied: the non-perfection argument was raised for the first time on appeal and was barred.

• "Without the wife’s consent, the husband’s alienation or encumbrance of conjugal property prior to the effectivity of the Family Code is not void, but merely voidable." — States the core ratio on the wife’s consent under the Civil Code.
• "Videlicet, the lack of consent on her part will not make the husband’s alienation or encumbrance of real property of the conjugal partnership void, but merely voidable." — Explains the effect of reading Article 166 with Article 173 of the Civil Code.
• "Not being the proper party, Vicente cannot avail himself of the remedy prescribed by Article 173." — Holds that a third party cannot invoke the wife’s remedy to annul the husband’s alienation.
• "It is well-settled that points of law, theories, issues and arguments not brought to the attention of the lower court need not be -- and ordinarily will not be -- considered by a reviewing court, as they cannot be raised for the first time at that late stage." — Supports the procedural bar on petitioner’s new non-perfection theory.

• Papa vs. Montenegro, 54 Phil. 331, 341, January 30, 1930 — Relied on; explained that the prohibition against disposition of conjugal property without consent is for the benefit of the other spouse, not third persons.
• Garcia vs. Court of Appeals, 215 SCRA 380, July 16, 1984 — Distinguished; involved a petition by one spouse for annulment of contracts entered into by the other spouse, and the contracts were voidable, not void ab initio.
• Nicolas vs. Court of Appeals, 154 SCRA 635, 643, October 12, 1987 — Distinguished on the same ground.

• Article 166, Civil Code — The husband cannot alienate or encumber conjugal partnership real property without the wife’s consent, except in specified cases; applied to the Macasandig conjugal lot.
• Article 173, Civil Code — The wife may seek annulment during the marriage and within ten years from the transaction questioned; failure prescribes the remedy, and the remedy belongs to the wife, not a third party; applied to Ana and Vicente.
• Article 4, Civil Code — Laws are prospective unless retroactive effect is expressly declared or necessarily implied; applied to hold the Family Code inapplicable to the 1976 Deed.
• Family Code, Article 124 — Quoted in the text as the Family Code provision on disposition or encumbrance without consent; not applied because the Family Code took effect only on August 3, 1998.
• Rule 45, Rules of Court — Governed Vicente’s Petition for Review before the SC.
• Section 15, Rule 44 and Section 8, Rule 51, 1997 Rules of Civil Procedure — Cited in the footnotes on questions that may be raised on appeal; support the rule that only issues raised below may be included, save plain or clerical errors.