Case Summary (G.R. No. 143826)
Applicable Law
Primary statutory provisions applied: Civil Code Arts. 166 and 173 (governing the era when the challenged sale occurred). Noted transitional rule: dispositions of conjugal property after the Family Code’s effectivity (Aug. 3, 1988) are governed by Family Code Art. 124 (which treats dispositions without the other spouse’s written consent or court authority as void). The applicable constitutional framework is the 1987 Philippine Constitution, consistent with the case decision rendered after 1990.
Procedural History
Ignacia filed a complaint for annulment of sale (challenging the March 1, 1983 Deed) before her death; she was later substituted by her heirs. The Regional Trial Court (RTC), Branch 101, Quezon City, initially rendered a decision (Feb. 15, 1990) and then modified its ruling (May 31, 1990) to declare the sale null and void ab initio for lack of the wife’s consent, ordering cancellation of the purchasers’ title and reimbursement to the respondent spouses; a June 29, 1990 order corrected typographical errors and reconfirmed relief. The Court of Appeals reversed and set aside the RTC, holding the Deed valid in favor of the respondent spouses as purchasers in good faith (Jan. 26, 2000 decision with a June 19, 2000 resolution denying reconsideration). The petitioners sought review by the Supreme Court.
Issues Presented
The Supreme Court framed three issues: (1) the legal status of the sale of Lot No. 4349‑B‑2 to the respondent spouses; (2) if the sale is annulable, whether annulment should affect the entire transaction or only the wife’s share; and (3) whether the respondent spouses were purchasers in good faith.
Legal Principles Applied: Voidable vs. Void; Wife’s Remedy
Under Civil Code Art. 166 the husband cannot alienate or encumber conjugal real property without the wife’s consent; absent such consent the transaction is voidable (not void) under the Civil Code regime, and Art. 173 gives the wife the remedy to seek annulment during the marriage and within ten years from the transaction. The Court reaffirmed jurisprudence treating alienations by the husband without the wife’s consent as voidable (citing prior decisions), and recognized that the Family Code (effective Aug. 3, 1988) later changed the rule for post‑Family Code transactions to treat such dispositions as void if done without consent. The Court applied the Civil Code regime because the challenged transaction predated the Family Code.
Determination that the Lot Was Conjugal Property and the Sale Was Voidable
The Court found that Lot No. 4349‑B‑2 and the apartments thereon were conjugal property (acquired with conjugal funds). Vicente’s sale of the lot without Ignacia’s consent rendered the sale voidable under Articles 166 and 173. Ignacia’s annulment action (filed during the marriage and within ten years from the questioned transaction as considered by the Court) was therefore timely and sufficient to invoke Article 173’s remedy.
Annulment of the Entire Transaction (Not Merely Wife’s Share)
Applying precedent (notably Bucoy v. Paulino), the Court held that when the husband executes a contract without the wife’s consent, the wife may annul the contract in its entirety—not merely as to her one‑half interest. The Court reasoned that the annulment power granted by Article 173 is unconditional as to scope and that policy considerations (conjugal liabilities, protection of the conjugal partnership and the indispensable nature of the wife’s consent under Art. 166) support annulling the whole transaction.
Findings on Purchasers’ Good Faith
The Court concluded the respondent spouses were not purchasers in good faith. It applied the standard definition: a purchaser in good faith buys without notice of another’s right or interest and pays full and fair value. The Court identified circumstances that should have put the buyer on inquiry: manifest anomalies in the death certificate of Ignacia (inconsistent dates and issuance timing), Florentina Mijares’ own admission that she sought the death certificate because she suspected Ignacia was alive, the existence of earlier agreements and memoranda (1978, 1979, 1981) showing the transaction predated the alleged death and post‑sale court proceedings, and the involvement of the buyers’ lawyer in the special proceedings. These facts, the Court held, charged the buyers with constructive knowledge and negated good faith.
Evidentiary Findings on Consideration and Timing
The Court accepted documentary evidence demonstrating that the total consideration for the lot was P110,000 (not P40,000 as later stated in a 1983 deed): the 1978 Agreement, the 1979 and 1981 memoranda, and a receipt signed by Vicente acknowledging P110,000. The Court also found that the sale effectively occurred prior to the special proceedings that the buyers later relied on for color of title, undermining the buyers’ claim that the court orders validated the sale.
Restitution, Interest, and Damages
Because the voidable sale was annulled, equitable restitution was required. The Court sustained the trial court’s order that Vicente reimburse the respondent spouses the purchase price of P110,000.00, but corrected the interest computation: interest at 6% per annum runs from the filing of the complaint (June 4, 1986, as used by the Court) until finality of the decision; thereafter, if unpaid, the principal and interest shall bear 12% per annum until satisfied. The Court denied petitioners’ claim for rentals for
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Citation and Court
- Reported at 457 Phil. 120, First Division, G.R. No. 143826, decided August 28, 2003.
- Decision penned by Justice Ynares‑Santiago.
- Case presented as a petition for review on certiorari from the Court of Appeals decision in CA‑G.R. No. 28464 and the Court of Appeals resolution referenced in the record.
Parties
- Petitioners: Heirs of Ignacia Aguilar‑Reyes (substituted after the death of Ignacia Aguilar‑Reyes).
- Respondents: Spouses Cipriano Mijares and Florentina Mijares; Vicente Reyes (initial defendant and later among heirs/substitutes).
- Named family members: Vicente and Ignacia Reyes (original owners of the conjugal property); five minor children of Vicente (Dominador, Agripino, Antonio, Ana Marie, and Jose Reyes) later substituted for Ignacia; ages at relevant time listed as 12, 13, 14, 17 and 19 respectively.
Subject Property (Lot No. 4349‑B‑2)
- Parcel: Lot No. 4349‑B‑2 of subdivision plan (LRC) Psd‑64445, being portion of Lot 4349‑B, Psd‑37979, LRC (GLRO) Rec. No. 4429.
- Location: District of Balintawak, Quezon City.
- Boundaries and survey particulars are set out in the Transfer Certificate of Title.
- Area: Approximately THREE HUNDRED NINETY‑SIX SQUARE AND TWENTY SQUARE DECIMETERS (396.20) more or less.
- Titles and registration: Previously covered by TCT No. 205445 (canceled); TCT No. 306087 was subsequently issued in the names of spouses Cipriano and Florentina Mijares (the trial court initially referenced a typographical TCT No. 306083, later corrected to 306087).
- Character of ownership: The lot and apartments built thereon were part of the conjugal properties of Vicente and Ignacia Reyes, having been purchased using conjugal funds from their garments business.
Material Factual Background and Chronology
- Marriage and separation:
- Vicente and Ignacia Reyes married in 1960.
- They were separated de facto since 1974.
- Alleged sale(s) and payment history:
- An “Agreement” dated November 25, 1978, evidences a sale by Vicente to Cipriano Mijares for P110,000.00 on an installment basis; the first installment due on or before July 31, 1979.
- A “Memorandum of Understanding” dated July 30, 1979 acknowledges receipt by Cipriano of Vicente’s down payment of P50,000.00 and authorizes Florentina to collect rentals.
- A “Memorandum of Agreement” dated July 14, 1981 indicated a remaining balance of P19,000.00 of the P110,000.00 purchase price.
- A Deed of Absolute Sale dated March 1, 1983 recorded a purported sale of Lot No. 4349‑B‑2 to spouses Cipriano and Florentina Mijares for an indicated price of P40,000.00 (the trial court found the real consideration to be P110,000.00).
- Receipts and instruments in the record show acknowledgment by Vicente of P110,000.00 received from respondent spouses.
- Alleged misrepresentation of death and special proceedings:
- Vicente filed a petition for administration and appointment of guardian with the Metropolitan Trial Court of Quezon City, Branch XXI (or Branch XXI/XXXI as reflected in the record), alleging that Ignacia died on March 22, 1982 and representing that he and their five minor children were her only heirs.
- Orders were issued appointing Vicente guardian of the minor children (September 29, 1983) and authorizing him to sell the estate of Ignacia (October 14, 1983).
- The Certificate of Death of Ignacia presented in the record shows internal inconsistencies: it purports that Ignacia died on March 22, 1982 but reflects issuance by the Office of the Civil Registrar of Lubao, Pampanga on March 10, 1982; reporting of the alleged death on March 4, 1982; and burial/cremation set for March 8, 1982.
- Discovery and demand:
- Sometime in 1984, Ignacia learned of the March 1, 1983 deed and the change in title, and on August 9, 1984, through counsel, sent a demand letter to respondent spouses demanding return of her one‑half share in the lot.
- Civil action:
- Ignacia filed a complaint for annulment of sale against spouses Mijares; the complaint was later amended to include Vicente Reyes.
- The record contains divergent references to the date of filing of the annulment complaint: the record at one point states the complaint was filed on June 4, 1996, while the Supreme Court’s analysis references filing on June 4, 1986 in addressing prescription.
- Trial evidence and testimony:
- Vicente denied representing his wife as dead at the time of the special proceedings; he claimed he sold only his share and testified that respondents and their counsel took advantage of his illiteracy.
- Respondent Florentina Mijares admitted in cross‑examination that she requested Ignacia’s death certificate because she suspected Ignacia might still be alive.
- Evidence in the record includes the 1978 agreement and later memoranda showing the payment scheme and the authorization to collect rentals.
Procedural History (Trial Court, Court of Appeals, Supreme Court)
- Regional Trial Court, Quezon City, Branch 101:
- February 15, 1990 decision: Declared the Deed of Absolute Sale dated March 1, 1983 NULL AND VOID WITH RESPECT TO ONE‑HALF (1/2) OF THE SAID PROPERTY; ordered cancellation of TCT in names of spouses Mijares and issuance of new title for one‑half in favor of Ignacia; ordered Vicente to reimburse P55,000.00 (one‑half of actual purchase price) to spouses Mijares; awarded P50,000.00 as moral and exemplary damages plus costs.
- Ignacia moved for modification to declare the sale void in its entirety and to order reimbursement of rentals.
- May 31, 1990 modified decision: declared the Deed NULL AND VOID AB INITIO (in view of absence of wife’s conformity); ordered cancellation of TCT No. 306087 and issuance of new TCT in the names of Ignacia and Vicente as co‑owners; ordered Vicente to pay the full purchase price of P110,000.00 with legal interest at 12% per annum from March 1, 1983; ordered payment of P50,000.00 by way of moral and exemplary damages plus costs.
- June 29, 1990 order: corrected typographical errors (correct TCT No. 306087) and specified that Vicente should pay Ignacia P50,000.00 as moral and exemplary damages.
- Appeals:
- Both Ignacia and respondent spouses appealed; Vicente filed a notice of appeal but did not pursue it to the Court of Appeals.
- Pending appeal, Ignacia died; she was substituted by her compulsory heirs (which included Vicente and the five children).
- Court of Appeals:
- January 26, 2000 decision: Reversed and set aside the trial court’s decision and the May 31 and June 29, 1990 orders; ruled the Deed of Absolute Sale dated March 1, 1983 valid and lawful in favor of spouses Cipriano and Florentina Mijares on the ground that they were innocent purchasers for value; ordered Vicente to pay spouses Mijares P30,000.00 as attorney’s fees and legal expenses and P50,000.00 as moral damages; no pronouncement as to costs.
- The record references a Court of Appeals resolution dated June 19, 2000 (and elsewhere a June 19, 2002 reference appears in the record) denying reconsideration.
- Supreme Court:
- Petitioners filed a petition for review on certiorari challenging the Court of Appeals’ reversal.
- The Supreme Court, by the decision under review dated August 28, 2003, partially granted the petition, reversed and set aside the Court of Appeals’ January 26, 2000 decision and the Court of Appeals resolution; reinstated the trial court’s May 31, 1990 Order annulling the March 1, 1983 deed ab initio, with specified modifications and further orders.
Issues Presented for Resolution
- The Court identified and addressed three principal issues:
- What is the legal status of the sale of Lot No. 4349‑B‑2 to respondents?
- If the sale is annulable, should annulment be in its entirety or only insofar as the share of Ignacia?
- Are respon