Prohibited disposition

This is a case about the prohibition on the gratuitous disposition by the husband or wife of the property acquired during their marriage. The question arising in this case is whether such prohibition is applicable to properties acquired during a common law relationship or during cohabitation of a man and woman without a valid marriage or under a void marriage.

The property involved here is a 350 square meter lot covered by Transfer Certificate of Title (TCT) No. 7594 registered in the name of Lito and Lita who have two children, Dina and Dino. Prior to his marriage to Lita, Lito was married and had several children, one of whom was Sonny who sired a son Jun.

Twenty years after Lito and Lita got married, Lita executed a Renunciation and Waiver of Rights (RAWR) in favor of her husband Lito covering the said lot which was inscribed in the TCT. Then Lito donated said parcel of land to Jun without the conformity of Lita. So TCT No. 7594 was cancelled and a new TCT No. 128 59 was issued in the name of Jun. Subsequently, Jun mortgaged said land in favor of Roly. Later on, Lito obtained a decision from the Regional Trial Court declaring his marriage to Lita void ab initio which became final and executory. Then Lito died. So, an Extrajudicial Settlement of Estate with Waiver was executed and signed by his legitimate and compulsory heirs.

Thereafter, Dina filed before the RTC an action for Annulment of the Deed of Donation and Title of Jun, alleging that she is one of the children of the late Lito and Lita and that the said deed was executed solely by Lito on the basis of the RWR executed by her mother Lita, both of which are clearly prejudicial to her interest because it affected her future inheritance or legitime.

In reply, Jun denied that Lito’s wife Lita is still part owner of the property and that even if she is part owner she has no more right thereon when she executed the RWR. Jun also denied that undue influence was exerted upon Lito when the latter signed the Deed of Donation. He also claimed that the RWR and the Deed of Donation do not violate the ban on the gratuitous disposition of the property between husband and wife, as the marriage between Lito and Lita has already been declared void.

The RTC, however, ruled in favor of Dina and annulled both the Renunciation and Waiver of Rights and the Deed of Donation. This decision was affirmed by the Court of Appeals (CA) which ruled that every donation or grant of gratuitous advantage between the spouses during the marriage shall be void. Jun, however, appealed said ruling and contended that the lower courts erred in applying Article 89 of the Family Code (FC) which provides in part that “No waiver of rights, interests, shares and effects of the absolute community of property during the marriage can be made except in case of judicial separation of property.” He contended that this Article 89 cannot justify the nullification of Lita’s RWR and Deed of Donation since Lita and Lito were not validly married.

Jun cited Article 147 of the FC as the applicable provision, and the rules on co-ownership govern the property acquired during cohabitation or “common law” marriage of Lito and Lita. So, Jun argued that the subject property is presumed to have been obtained by their joint efforts, work or industry and was owned by them in equal shares pursuant to Article 147 of the FC. Thus, Jun contended that the RWR is valid because Lito and Lita are mere co-owners of the property, so either of them could donate or waive their respective shares therein as long as the consent of either partner was obtained.

The Supreme Court, however, ruled that Jun is not correct in this regard. According to the SC, while both the CA and the RTC correctly ruled that the RWR is void based on Article 87 of the FC, their reliance on the provision of the Article that “every donation or grant of gratuitous advantage, direct or indirect, between the spouses during the marriage shall be void” is incorrect because they erroneously believed that the marriage between Lito and Lita was valid and subsisting until Lito’s death. In this case, the marriage between Lito and Lita was judicially declared void ab initio, pursuant to Article 36 of the FC. So it is not correct to rule that said marriage is valid and subsisting until Lito’s death, because it is void from the beginning.Thus the provision of Article 87 that squarely applies to this case is that which says that “the prohibition shall apply to persons living together as husband and wife without a valid marriage.” Given this express prohibition under Article 87 of the FC, the RWR executed by Lita in favor of Lito in respect of the subject property is void.

Even assuming that the marriage between Lito and Lita was valid at the time the RWR was executed and it had valuable and material consideration, it will still be void because the sale between the spouses during their marriage is proscribed by Article 1490 of the Civil Code, which provides that “the husband and wife cannot sell property to each other except: (1) when a separation of property was agreed upon; or (2) when there has been judicial separation of property under Article 191.

To conclude therefore, while the Court finds merit in Jun’s contention that the lower courts in the present case erred in finding that the property regime between Lito and Lita was governed by the Absolute Community Property as their marriage subsisted until Lito died, the Deed of Donation to him of the subject property is nonetheless void as this is prohibited by Article 147 of the Family Code. So the nullification of the RWR, the Deed of Donation and the new title in the name of Jun are affirmed (Perez, Jr. vs Perez-Senerpida etc, G.R. 233365, March 24, 2021).

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