Prohibited generosity

Donation between spouses during the marriage shall be void except moderate gifts which the spouses may give each other on the occasion of any family rejoicing (Article 87 Family Code). But is this also applicable to common law relationship? This is the main issue resolved in this case of Teddy and Dely.

Teddy and Dely are married and have two children, Abby and Don. They are the registered owners of a parcel of land with an area of 350 square meters located in a progressive city and covered by a Transfer Certificate of Title (TCT). Before he married Dely, Teddy was a widower who had a grandson, Teddy, the son of one of his children.

After about 20 years of marriage, Dely executed a sworn statement renouncing and waiving her rights over said parcel of land in favor of her husband Teddy, which was inscribed in the TCT. Then nine years later, Teddy donated said parcel of land to Nandy, without the consent of Dely. Subsequently Nandy mortgaged said land to Ramon.

Then after 30 years of marriage, Teddy filed a petition before the Regional Trial Court (RTC) for declaration of nullity of his marriage to Dely on the ground of psychological incapacity. After four months of trial, the RTC rendered a decision declaring the marriage between Teddy and Dely void ab initio. This decision became final and executory and an entry of judgment was issued in connection therewith.

Three years later, Teddy died and an extrajudicial settlement with waiver was executed by his legitimate and compulsory heirs covering his estate. Two years after Teddy’s death, his daughter Abby brought an action against Nandy before the RTC for the annulment of donation and title with a prayer for temporary restraining order.

She alleged that she is one of the children of Dely and the late Teddy, and that the deed of donation (DoD) executed by Teddy in favor of Nandy on the basis of the renunciation and waiver of rights (RWR) by her mother are clearly prejudicial to her interest, as it affected her future inheritance or legitime. Thus said documents should be annulled.

Nandy denied Abby’s allegation that her mother Dely is part owner of the subject property together with the late Teddy. And even if Dely is a part owner, she has no more right thereon when she executed the RWR.

He also claimed that the DoD was voluntarily executed by Teddy as an act of pure liberality and generosity in exchange for his years of faithful and honest service to Teddy, his grandfather.

In reply, Abby contended that her mother Dely was a part owner of the subject property, considering that the RWR she executed was null and void as it was not supported by any valid consideration and that Nandy exerted undue influence on her late father Teddy in the execution of the DoD.

After trial, the RTC rendered a decision annulling the RWR and the DoD as well as the TCT issued in the name of Nandy. The RTC also ordered that another title over the said property be issued in the name of Teddy.

The RTC took into consideration the fact that the decision of the other RTC branch declaring the nullity of the marriage between Teddy and Dely became final and executory only after Teddy’s death and that their marriage was still valid and subsisting until Teddy’s death. So their property relation was still the absolute community of property (ACP). This decision was affirmed by the Court of Appeals (CA). Were the RTC and the CA correct?

The Supreme Court said that the RTC and the CA erred in their factual finding that the marriage between Teddy and Dely remained valid and subsisting until Teddy’s death. Records of the other RTC branch that rendered the nullity decision show that an entry of judgment was already issued three years before Teddy’s death, making said decision final and executory.

So, the RTC and the CA committed a patent error in finding that the said marriage remained valid and subsisting until Teddy’s death because said marriage was void from the beginning pursuant to Article 36 of the Family Code.

Since said marriage was judicially decreed void from the beginning, the RTC and the CA clearly erred in their ruling that the ACP regime governed their property relations. Pursuant to Article 87 of the FC, every donation or grant of gratuitous advantage… between persons living together as husband and wife without a valid marriage shall be void, except moderate gifts which they may give each other on the occasion of family rejoicing. This is to avoid possible transfer of property from one spouse to another due to passion or avarice.

Undoubtedly, the RWR executed by Dely which was the basis of the DoD made by Teddy to Nandy was without valuable and material consideration as found by the RTC and affirmed by the CA. In fact, even if the marriage between Teddy and Dely was valid and subsisting and RWR was executed by Dely for a valuable consideration, it would still be void pursuant to Article 1490 of the Civil Code which provides that “the husband and wife cannot sell property to each other except when separation of property was agreed upon in the marriage settlement; or when there has been a judicial separation of property under Article 191.”

Given the nullity of the RWR, the DoD executed by Teddy in favor of his grandson Nandy is void.

The ruling in this case is similar to the ruling in the case of Perez, Jr. vs. Perez-Senerpida etc. (G.R. 233365, March 24, 2021)

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