What rules shall govern the status of a contract and the prescriptive period of an action when the husband and wife were married during the effectivity of the Civil Code^[1] but the alienation or encumbrance of the conjugal property, without the other spouse's consent, transpired after the effectivity of the Family Code?^[2] Will the applicable law be reckoned from the date of marriage or the time of the transaction? These are the core issues in this Petition for Review on Certiorari^[3] assailing the Decision^[4] dated October 26, 2020 and the Resolution^[5] dated March 5, 2021 of the Court of Appeals (CA) in CA-G.R. CV No. 110958.

ANTECEDENTS

Respondents Spouses Jorge Escalona (Jorge) and Hilaria Escalona (Hilaria; collectively, Spouses Escalona) were married on November 14, 1960. Thereafter, Spouses Escalona acquired unregistered parcels of land identified as Lot Nos. 1 and 2 with a combined area of 100,375 square meters in Barangay Sta. Rita, Olongapo City. On June 16, 1998, Jorge waived his right over Lot No. 1 in favor of his illegitimate son, respondent Reygan Escalona (Reygan). On July 28, 2005, Reygan relinquished his right over Lot No. 1 to petitioner Belinda Alexander (Belinda). On August 8, 2005, Reygan likewise transferred Lot No. 2 to Belinda through a Deed of Renunciation and Quitclaim.^[6] On August 10, 2005, Reygan and Belinda entered into a Deed of Absolute Sale^[7] covering Lot Nos. 1 and 2 for P1,600,000.00.^[8]

Spouses Escalona confronted Belinda and explained that Reygan cannot validly sell the lots. However, Belinda invoked the legitimacy of her contracts with Reygan. Aggrieved, Spouses Escalona filed on September 5, 2005 a Complaint^[9] for annulment of documents with damages against Belinda and Reygan before the Regional Trial Court of Olongapo City, Branch 72 (RTC) docketed as Civil Case No. 342-0-2005. Spouses Escalona averred that they never transferred Lot No. 2 to a third person, but Reygan fraudulently sold the lot to Belinda. Also, Hilaria did not consent to the waiver of rights over Lot No. 1 and that such transaction was not meant to convey ownership to Reygan. Moreover, Spouses Escalona referred the controversy to the barangay on August 5, 2005 where they informed Belinda that Reygan had no authority to sell Lot Nos. 1 and 2, but she still pushed through with the sale.^[10]

Belinda sought to dismiss the case on the grounds of laches and prescription. Belinda likewise argued that she was a buyer in good faith and that Jorge's waiver of rights in favor of Reygan was unconditional. In any event, Reygan may have committed fraud in conspiracy with Spouses Escalona. Belinda also filed a cross-claim^[11] against Reygan and Third-Party Complaint^[12] against his mother Teodora Bognot. On the other hand, Reygan denied any deception and asserted that he is already the owner of Lot No. 1 when he transferred it to Belinda. Reygan countered that Belinda was in bad faith after she induced him to sell Lot Nos. 1 and 2 despite prior knowledge as to the nature and ownership of the properties.^[13]

In a Decision^[14] dated February 20, 2017, the RTC upheld the transactions between Belinda and Reygan and dismissed Spouses Escalona's complaint for being time-barred. The RTC ordered Spouses Escalona to vacate the premises and pay damages,^[15] thus:

It is well-settled that contracts are presumed to be valid until annulled by a court of competent jurisdiction. In the present case, the plaintiffs essentially claimed that the subject deed of waiver is null and void because of the ground stated above. However, plaintiffs not (sic) filed any action seeking the cancellation or annulment of the questioned deed of waiver after its execution. The plaintiffs come to court to annul the same more than seven (7) years after its execution and after the properties subject of the said deed of waiver were sold by Reygan Escalona to Belinda Alexander. Defendant Reygan Escalona also failed to support such claim of the plaintiffs. As such, the validity and regularity of the Waiver and Quitclaim dated June 16, 1998 (Exhibit "E") remains and should be upheld.

x x x x

The claim of the plaintiffs, particularly Jorge Escalona, that he had (sic) different intention other than that provided in the subject Waiver and Quitclaim dated June 16, 1998 (Exhibit "E") cannot prosper. The allegation of the said plaintiff cannot change or alter the clear provision in the said deed. Unsubstantiated testimony, offered as proof of verbal agreements which tends to vary the terms of a written agreement, is inadmissible under the parol evidence rule x x x

x x x x

The action to annul said document is also barred by the statute of limitations since this case was filed more than seven (7) years from 1998, the year when the plaintiff Jorge Escalona caused the transfer of ownership of the subject properties in the name of his illegitimate son Reygan. Article 1391 of the Civil Code provides:

[Article] 1391. The action for annulment shall be brought within four years.

This period shall begin:

In cases of intimidation, violence or undue influence, from the time the defect of the consent ceases.

In case of mistake or fraud, from the time of the discovery of the same.

And when the action refers to contracts entered into by minors or other incapacitated persons, from the time the guardianship ceases.

x x x x

IN VIEW OF THE FOREGOING, judgment is hereby rendered as follows:

1. DISMISSING the complaint filed by the plaintiff spouses Jorge and Hilaria Escalona against defendants Belinda Alexander and Reygan Escalona for lack of merit;

2. ORDERING the plaintiff spouses Jorge and Hilaria Escalona to vacate the properties subject of this case located at Brgy. Sta. Rita, Olongapo City consisting of 10.3 hectares, more or less, and SURRENDER its effective possession and control to defendant Belinda Alexander;

3. ORDERING plaintiff spouses Jorge and Hilaria Escalona to pay defendant Belinda Alexander the sum of [P]100,000.00 as moral damages;

4. ORDERING plaintiff spouses Jorge and Hilaria Escalona to pay defendant Belinda Alexander the sum of [P]100,000.00 as attorney's fees;

5. DISMISSING the cross-claim filed by defendant Belinda Alexander against Reygan Escalona for lack of merit; and

6. DISMISSING the third-party complaint filed by Belinda Alexander for lack of merit.

SO ORDERED.^[16] (Emphases supplied)

Spouses Escalona moved for reconsideration, but was denied in an Order^[17] dated August 22, 2017.

Dissatisfied, Spouses Escalona eievated the case to the CA docketed as CA-G.R. CV No. 110958. Spouses Escalona insisted that their action had not yet prescribed. Spouses Escalona reiterated the lack of intention to convey ownership of the properties and bad faith on the part of Belinda.^[18] In a Decision^[19] dated October 26, 2020, the CA reversed the RTC's findings. The CA ruled that Lot Nos. 1 and 2 are conjugal properties of Spouses Escalona and that the contracts over these lots are void absent Hilaria's consent. The action to nullify these transactions are imprescriptible under Article 1410 of the Civil Code. The CA rejected Belinda's theory that she is a buyer in good faith because reason exists for her to suspect that fraud attended the transfer of properties,^[20] viz.:

Any disposition or encumbrance of a conjugal property by one spouse must be consented to by the other; otherwise, it is void.

In Guiang v. Court of Appeals, it was held that the sale of a conjugal property requires the consent of both the husband and wife. In applying Article 124 of the Family Code, the Supreme Court declared that the absence of the consent of one renders the entire sale null and void, including the portion of the conjugal property pertaining to the husband who contracted the sale.

In the instant case, Jorge executed a Waiver and Quitclaim in favor of Reygan over lot 1 including all its improvements without the written consent of Hilaria. Although the said waiver was not a sale of lot 1, it is akin to a sale or disposition as Jorge renounced and waived all his rights and interests over lot 1 in favor of Reygan. By express provision of Article 124 of the Family Code, in the absence of (court) authority or written consent of Hilaria in the said waiver executed by Jorge in favor of Reygan, any disposition or encumbrance covering lot 1 including its improvements, which is a conjugal property of appellants, shall be void.

x x x x

The Waiver and Quitclaim dated 16 June 1998 being void in the absence of Hilaria's consent, it follows that the Deed of Waiver and Quitclaim dated 28 July 2005 over lot 1 and all its improvements executed by Reygan in favor of Belinda is also void.

The same is true with respect to the Deed of Renunciation and Quitclaim dated 8 August 2005 executed by Reygan in favor of Belinda covering lot 2. Indeed, Reygan had no authority or right to renounce rights and interests over lot 2 since he is not the owner thereof, as lot 2 clearly belongs to appellants' conjugal partnership. Assuming for the sake of argument that the waiver executed by Jorge is valid, still, the Deed of Renunciation and Quitclaim is void as the waiver executed by Jorge covered only lot 1 and not lot 2 which has a11 area of 52,300 square meters.

Thus, the subsequent Deed of Absolute Sale dated 10 August 2005 Reygan executed in favor of Belinda covering lots 1 and 2 for a consideration of [P] 1,600,000.00 is void as he is not the owner of both properties. This is consistent with the rule that "a person can sell only what he owns or is authorized to sell; the buyer can as a consequence, acquire no more than what the seller can legally transfer." No one can give what he does not have — nemo dat quod non habet.

x x x x

To reiterate, the Waiver and Quitclaim dated 16 June 1998 executed by Jorge in favor of Reygan is void. Under Article 1410 of the Civil Code, an action or defense for the declaration of the inexistence of a contract does not prescribe.

x x x x

Here, Belinda insists that she is a buyer in good faith and for value. The Supreme Court has held that "the rule in land registration law that the issue of whether the buyer of realty is in good or bad faith is relevant only where the subject of the sale is registered land and the purchase was made from the registered owner whose title to the land is clean." This good faith argument cannot be considered as this case undisputedly involves lots 1 and 2 which are both unregistered lands.

Further, there existed a circumstance that should have placed Belinda on guard. This is so because the Waiver and Quitclaim dated 16 June 1998 described Jorge as "married" but the conformity of his wife to the said document did not appear in the deed. Thus, it was incumbent on Belinda to, at least, inquire whether Jorge was still married and if he still was, if Jorge's wife had consented to the document Jorge had executed.

WHEREFORE, premises considered, the instant Appeal is GRANTED and the 20 February 2017 Decision of the Regional Trial Court, Olongapo City, Branch 72 in Civil Case No. 342-0-2005 is REVERSED and SET ASIDE.

A new judgment is hereby rendered declaring void the following: (a) Waiver and Quitclaim dated 16 June 1998; (b) Waiver and Quitclaim dated 28 July 2005; (c) Deed of Renunciation and Quitclaim dated 8 August 2005 and (d) Deed of Absolute Sale dated 10 August 2005. This is however without prejudice to any action that may be filed by Belinda Alexander against Reygan Escalona for the amounts she paid him for the purchase of lots 1 and 2.

SO ORDERED.^[21] (Emphases supplied and citations omitted)

Belinda moved for a reconsideration,^[22] but was denied in a Resolution^[23] dated March 5, 2021. Hence, this recourse. Belinda maintains that Lot Nos. 1 and 2 belonged exclusively to Jorge and that the contracts over these lots are valid. She echoes that the action to annul the transactions had prescribed and that she is a buyer in good faith entitled to the ownership and possession of the lots. Lastly, she claims that she is allowed to reimburse the purchase price if the contracts are void.^[24]

RULING

The issue regarding the validity of the contracts over Lot Nos. 1 and 2 hinges mainly on whether the properties are conjugal in nature. In this case, Spouses Escalona were married on November 14, 1960, or during the effectivity of the Civil Code. Article 119 of the Civil Code provides that "[t]he future spouses may in the marriage settlements agree upon absolute or relative community of property, or upon complete separation of property, or upon any other regime. In the absence of marriage settlements, or when the same are void, the system of relative community or conjugal partnership of gains x x x shall govern the property relations between husband and wife." The default property relations of Spouses Escalona is the conjugal partnership of gains absent any showing that they agreed on a particular regime.^[25]

Corollarily, Article 160 of the Civil Code is explicit that "[a]ll 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." The properties acquired during the lifetime of the husband and wife are presumed to be conjugal. The presumption may be rebutted only through clear and convincing evidence. The burden of proof rests upon the party asserting exclusive ownership of one spouse.^[26] Here, the presumption applies absent proof that Lot Nos. 1 and 2 are excluded from Spouses Escalona's conjugal partnership. Belinda did not substantiate her claim that Jorge exclusively owned the lots. Belinda failed to discharge her burden since bare assertion has no probative value and mere allegation is not evidence.

Considering the conjugal nature of Lot Nos. 1 and 2, the Court now resolves the applicable laws as to the status of the transactions over these properties and the prescriptive period of action.
 

The alienation of Lot No. 1 is void under Article 124 of the Family Code because it was made without Hilaria's consent. However, the action to nullify the transaction is not imprescriptible under Article 1410 of the Civil Code.

Significantly, any alienation or encumbrance of the conjugal property concluded after the eftectivity of the Family Code^[27] requires the other spouse's written consent or a court order allowing the transaction, otherwise, the disposition is void.^[28] This is because before the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into a title until it appears that there are assets in the community as a result of the liquidation and settlement. The interest of each spouse is limited to the net remainder resulting from the liquidation of the affairs of the partnership after its dissolution. Thus, the right of the husband or wife to one-half of the conjugal assets does not vest until the disso1ution and liquidation of the conjugal partnership, or after dissolution of the marriage, when it is finally determined that, after settlement of conjugal obligations, there are net assets left which can be divided between the spouses or their respective heirs.^[29] Apropos is Article 124 of the Family Code, thus:

Article 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to, participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (Emphasis supplied)

In this case, the contract is void notwithstanding the fact that Spouses Escalona were married during the effectivity of the Civil Code. The Family Code expressly repealed Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife. The Family Code has retroactive effect to existing conjugal partnerships without prejudice to vested rights. Articles 105, 254, 255, and 256 of the Family Code are clear on these matters, to wit:

Article 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 255.

x x x x

Article 254. Titles III, IV, V, VI, VII, VIII, IX, XI, and XV of Book I of Republic Act No. 386, otherwise known as the Civil Code of the Philippines, as amended, and Articles 17, 18, 19, 27, 28, 29, 30, 31, 39, 40, 41 and 42 of Presidential Decree No. 603, otherwise known as the Child and Youth Welfare Code, as amended, and all laws, decrees, executive orders, proclamations, rules and regulations or parts thereof inconsistent herewith are hereby repealed.

Article 255. If any provision of this Code is held invalid, all the other provisions not affected thereby shall remain valid.

Article 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws. (Emphases supplied)

In Spouses Cueno v. Spouses Bautista^[30] (Cueno), the Court En Banc held that the sale of conjugal property without the consent of the wife is merely voidable. In that case, the marriage of the spouses and the alienations of their conjugal property transpired before the effectivity of the Family Code. The applicable laws are Articles 165 and 166 in relation to Article 173.of the Civil Code, viz.:

Article 165. The husband is the administrator of the conjugal partnership.

Article 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction, or is confined in a leprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same.

This article shall not apply to property acquired by the conjugal partnership before the effective date of this Code.

x x x x

Article 173. The wife may, during the marriage, and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent, when such consent is required, or any act or contract of the husband which tends to defraud her or impair her interest in the conjugal partnership property. Should the wife fail to exercise this right, she or her heirs, after the dissolution of the marriage, may demand the value of property fraudulently alienated by the husband. (Emphases supplied)

The Court in Cueno observed the conflict of characterizations as regards the status of alienations or encumbrances that fail to comply with Article 166 of the Civil Code, thus:

x x x The first view treats such contracts c1s void 1) on the basis of lack of consent of an indispensable party and/or 2) because such transactions contravene mandatory provisions of law. On the other hand, the second view holds that although Article 166 requires the consent of the wife, the absence of such consent does not render the entire transaction void but merely voidable in accordance with Article 173 of the Civil Code.^[31] (Emphases supplied)

To end the conflict on the proper characterization of the transaction, the Court in Cueno adopted the second view as the correct rule and abandoned all contrary cases. Thus, a sale that fails to comply with Article 166 is not "void" but merely "voidable" in accordance with Article 173 of the Civil Code. The ruling in Cueno cited the following cases which espoused the second view, namely, Villocino v. Doyon,^[32] Roxas v. CA,^[33] Heirs of Aguilar-Reyes v. Spouses Mijares,^[34] Villaranda v. Spouses Villaranda^[35] (Villaranda), Spouses Vera Cruz v. Calderon,^[36] Vda. De Ramones v. Agbayani^[37] (Vda. De Ramones), Bravo-Guerrero v. Bravo,^[38] Heirs of Hernandez, Sr. v. Mingoa, Sr.,^[39] Ros v. Philippine National Bank - Laoag Brunch,^[40] and Mendoza v. Fermin.^[41] On the other hand, the Court overturned the following cases which espoused the first view, namely, Tolentino v. Cardenas,^[42] Bucoy v. Paulino,^[43] Nicolas v. CA,^[44] Garcia v. CA,^[45] Malabanan v. Malabanan, Jr.,^[46] and Spouses Tarrosa v. De Leon,^[47] wherein contracts that fail to comply with Article 166 of the Civil Code are void either for lack of consent of an indispensable party or for being executed against mandatory provisions of law.

However, a scrutiny of the above-mentioned cases both supporting the first and second views reveals an identical factual setting with that of Cueno where both the marriage of the spouses and the date of the alienation transpired before the effectivity of the Family Code. In the cases of Villaranda and Vda. De Ramones, which were cited in Cueno, the Court even categorically held that "[w]ithout the wife's consent, the husband's alienation or encumbrance of conjugal property prior to the ejfectivity of the Family Code is not void, but merely voidable."^[48] Also in Pelayo v. Perez,^[49] the Court stated that "under Article 173, in relation to Article 166, both of the New Civil Code, which was still in effect on January 11, 1988 when the deed in question was executed, the lack of marital consent to the disposition of conjugal property does not make the contract void ab initio but merely voidable."^[50] In Spouses Alfredo v. Spouses Borras,^[51] the Court explained that the "[t]he Family Code, which took effect on 3 August 1988, provides that any alienation or encumbrance made by the husband of the conjugal partnership property without the consent of the wife is void. However, when the sale is made before the effectivity of the Family Code, the applicable law is the Civil Code. Article 173 of the Civil Code provides that the disposition of conjugal property without the wife's consent is not void but merely voidable."^[52]

These cases evidently suggest that the date of alienation or encumbrance of the conjugal property is material in determining the applicable law. As intimated earlier, Cueno applied Article 173 of the Civil Code because the marriage of the spouses and the alienations of their conjugal property transpired before the effectivity of the Family Code. Likewise, Cueno only settled the conflict of characterizations as regards the status of alienations or encumbrances that fail to comply with Article 166 of the Civil Code. Relatively, Cueno is inapplicable when the facts of the case do not call for the operation of Articles 166 and 173 of the Civil Code. Differently stated, Cueno did not abandon previous rulings that presented a different factual milieu calling for the application of Article 124 of the Family Code.

For instance, in Spouses Aggabao v. Parulan, Jr.^[53] (Aggabao), the Court declared the transaction void and held that the applicable law is Article 124 of the Family Code, not Article 173 of the Civil Code, because the alienation of the conjugal property transpired after the effectivity of the Family Code even if the spouses were married under the Civil Code, thus:

Article 124, Family Code, applies to sale of conjugal properties made after the effectivity of the Family Code

The petitioners submit that Article 173 of the Civil Code, not Article 124 of the Family Code, governed the property relations of the respondents because they had been married prior to the effectivity of the Family Code; and that the second paragraph of Article 124 of the Family Code should not apply because the other spouse held the administration over the conjugal property. They argue that notwithstanding his absence from the country Dionisio still held the administration of the conjugal property by virtue of his execution of the SPA in favor of his brother; and that even assuming that Article 124 of the Family Code properly applied, Dionisio ratified the sale through Atty. Parulan's counter-offer during the March 25, 1991 meeting.

We do not subscribe to the petitioners' submissions.

To start with, Article 254 of the Family Code has expressly repealed several titles under the Civil Code, among them the entire Title VI in which the provisions on the property relations between husband and wife, Article 173 included, are found.

Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the effectivity of the Family Code. The proper law to apply is, therefore, Article 124 of the Family Code, for it is settled that any alienation or encumbrance of conjugal property made during the effectivity of the Family Code is governed by Article 124 of the Family Code.

x x x x

Thirdly, according to Article 256 of the Family Code, the provisions of the Family Code may apply retroactively provided no vested rights are impaired. In Tumlos v. Fernandez, the Court rejected the petitioner's argument that the Family Code did not apply because the acquisition of the contested property had occurred prior to the effectivity of the Family Code, and pointed out that Article 256 provided that the Family Code could apply retroactively if the application would not prejudice vested or acquired rights existing before the effectivity of the Family Code. Herein, however, the petitioners did not show any vested right in the property acquired prior to August 3, 1988 that exempted their situation from the retroactive application of the Family Code.^[54] (Emphases supplied and citations omitted)

Hence, Aggabao can hardly fall within the statement in Cueno where the Court "adopts the second view x x x as the prevailing and correct rule" and "abandons all cases contrary thereto."^[55] The ruling in Aggabao is not inconsistent with the pronouncement in Cueno where a sale that fails to comply with Article 166 is not "void" but merely "voidable" in accordance with Article 173 of the Civil Code. The Aggabao case happened in a diverse factual background where the applicable law is Article 124 of the Family Code, and not Article 173 of the Civil Code. More telling is that Aggabao and the analogous cases of Philippine National Bank v. Reyes^[56] (PNB), Boston Equity Resources, Inc. v. Del Rosario^[57] (Boston Equity), Homeowners Savings & Loan Bank v. Dailo^[58] (Homeowners Savings), Spouses Alinas v. Spouses Alinas^[59] (Alinas), Titan Construction Corporation v. Spouses David^[60] (Titan Construction), and Strong Fort Warehousing Corporation v. Banta^[61] (Strong Fort), were never discussed or mentioned in Cueno. Notably, these cases declared void the alienations of conjugal properties made after the effectivity of the Family Code notwithstanding that the spouses were married under the Civil Code.

Cueno cited the En Banc case of Spouses Fuentes v. Roca^[62] (Fuentes) and the ruling in Spouses Guiang v. CA^[63] (Guiang) wherein the alienation or encumbrance of conjugal properties transpired after the effectivity of the Family Code even if the spouses were married under the Civil Code. Yet, there is nothing in Cueno that would suggest the intention to overturn these cases. At most, the Court cited Guiang to stress that the "remedies afforded by Article 173 were not carried over to the Family Code, which thus signified the change in status of such transactions from the Civil Code to the Family Code."^[64] Moreover, the Court in Cueno simply expressed its agreement with the rationale in Guiang "that the evident revisions under the Family Code are deliberate and confirm the legislative intent to change the status of such transactions from voidable under Civil Code to void under the Family Code."^[65] Similarly, Cueno merely discussed the obiter dictum in Fuentes that a sale made in violation of Article 166 of the Civil Code "is not void but merely voidable [under Article 173 and gave the wife] the right to have the sale annulled during the marriage within ten years from the date of the sale."^[66] The ratio decidendi in Fuentes remains that any alienation of the conjugal property made after the effectivity of the Family Code is void although the spouses were married under the Civil Code, thus:

Second. Contrary to the ruling of the Court of Appeals, the law that applies to this case is the Family Code, not the Civil Code. Although Tarciano and Rosario got married in 1950, Tarciano sold the conjugal property to the Fuentes spouses on January 11, 1989, a few months after the Family Code took effect on August 3, 1988.

x x x x

But, as already stated, the Family Code took effect on August 3, 1988. Its Chapter 4 on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife. Further, the Family Code provisions were also made to apply to already existing conjugal partnerships without prejudice to vested rights. x x x

x x x x

In contrast to Article 173 of the Civil Code, Article 124 of the Family Code does not provide a period within which the wife who gave no consent may assail her husband's sale of the real property. It simply provides that without the other spouse's written consent or a court order allowing the sale, the same would be void. x x x

x x x x

Under the provisions of the Civil Cock governing contracts, a void or inexistent contract has no force and effect from the very beginning. And this rule applies to contracts that are declared void by positive provision of law, as in the case of a sale of conjugal property without the other spouse's written consent. A void contract is equivalent to nothing and is absolutely wanting in civil effects. It cannot be validated either by ratification or prescription.^[67] (Emphases supplied and citations omitted)

In the subsequent case of Esteban v. Campano^[68] (Esteban) the Court observed that the provisions of the Civil Code govern the couple's property relations because they were married before the effectivity of the Family Code. The Court discussed Cueno although the alienations of conjugal properties were made after the effectivity of the Family Code. Yet, Esteban explicitly held that Articles 166 and 173 of the Civil Code do not apply so as to characterize the transactions as voidable. In that case, the Court held that the transactions lack considerations and are void for being sham transfers, viz.:

Elpidio and Maryline were married on January 30, 1988, hence, the provisions of the Civil Code govern the couple's property relations. Under Article 119 thereof, the property relations of Elpidio and Mary line is conjugal partnership of gains. Considering that the properties were acquired. during the subsistence of their marriage, these are conjugal in nature.

Maryline asserts that the three agreements are void for the transfers were executed without her consent, citing Articles 96 and 124 of the Family Code and Article 1409 of the Civil Code.

Since the Civil Code provisions govern the property relations of Elpidio and Maryline, Articles 166 and 173 should be applied to determine whether the transfer of the properties without the consent of the wife is void, and not the Family Code provisions.

In the very recent case of [Cueno], decided by the Court En Banc under the ponencia of Justice [Alfredo Benjamin S. Caguioa (Justice Caguioa)], the Court settled the recurring conflict on the proper characterization of a transfer of conjugal property entered into without a wife's consent as merely voidable and not void. The Court abandoned all cases contrary thereto and held that the prevailing and correct rule is that' a sale that fails to comply with Article 166 is not [']void['] but merely [']voidable['] in accordance with Article 173 of the Civil Code." Unlike void contracts, voidable or annullable contracts, before they are set aside, are existent, valid, binding and are effective and are obligatory between the parties. They may be ratified and the action to annul the same may be barred by prescription.

The Court further explained in [Cueno] that Article 173 is explicit that the action for the annulment of a contract involving conjugal real property entered into by a husband without the wife's consent must be brought (1) by the wife (2) during the marriage, and (3) within ten years from the questioned transaction.

After a judicious examination of three Kasulatan dated December 4, 2004, March 30, 2005, and April 10, 2005, the Court finds that Articles 166 and 173 of the Civil Code do not apply so as to characterize these three (3) Kasulatan as voidable. From the cases cited in [Cueno], it can be inferred that the conveyances executed without the consent of the wife were "real transfers of properties with consideration[,"] such that without the consent of the wife, these transfers are only voidable consistent with Article 173 of the Civil Code.

In this case, the Court holds that the three Kasulatan are null and void for being sham transfers done by Elpidio in anticipation of the annulment of his marriage with Maryline. A notarized Kasunduan dated December 9, 2004 (Exh. "K") between Elpidio and Campano was offered by Maryline to prove that Campano is receiving a monthly compensation as caretaker of the properties in the meantime that Elpidio and Maryline have disagreements as to the settlement of their conjugal properties. It was also stated in the Kasunduan that Campano agreed not to adjudicate the properties to himself considering that the intended beneficiaries are the children of Elpidio and Mary line. Campano did not even refute his signature therein. Regardless of the date when this Kasunduan was executed, whether before or after the filing of the annulment case, as assailed by Campano, the Kasunduan established the nature of Campano's possession of the properties. This shows that the three Kasulatan were not intended to transfer the properties in favor of Campano.

In addition, these agreements to transfer the properties in favor of Campano were without any consideration. The three Kasulatan stated no consideration at all. When a contract of conveyance lacks consideration, it is null and void ab initio.^[69] (Emphases supplied and citations omitted)

However, Esteban's sheer discussion of Cueno cannot be construed as an abandonment of the En Banc decision in Fuentes and the allied cases of Guiang, Aggabao, PNB, Boston Equity, Homeowners Savings, Alinas, Titan Construction, and Strong Fort. This holds even if the facts in Esteban show that the spouses were married under the Civil Code but the alienation of the conjugal property transpired after the effectivity of the Family Code.

To avoid confusion, Cueno and Esteban must be harmonized with existing jurisprudence and be given proper interpretation in light of the material facts of the cases with cautious attention on the date of marriage of the spouses and the time of alienation of the conjugal property. Admittedly, Cueno is silent on whether Article 173 is applicable in instances where the marriage was celebrated under the Civil Code, but the alienation of the conjugal property was made during the Family Code. Hence, it is quite a stretch to insist that Cueno abandoned all previous cases which declared void the alienation of the conjugal property without the consent of the other spouse. This is especially true if the facts of the case call for the application of Article 124 of the Family Code, and not Article 173 of the Civil Code. The supposed wholesale abandonment of all previous cases is contrary to the tenor of Cueno which overturned only the rulings supporting the first view as regards the status of alienations or encumbrances that fail to comply with Article 166 of the Civil Code. Otherwise, such approach will do more injustice and jeopardize the property rights of the concerned parties. Also, the Court takes exception with regard to the import of Esteban that the Civil Code governs the spouses' property relations simply because they were married before the effectivity of the Family Code. This stance undermines the retroactive effect of the Family Code to existing conjugal partnerships subject to the principles on vested rights.

More importantly, the action to nullify the void alienation or encumbrance of the conjugal property, without authority of the court or the written consent of the other spouse, is not imprescriptible. The nature, effect, and availability of the remedy in transactions under Article 124 of the Family Code are distinct from void and inexistent contracts under Article 1409 in relation to Article 1410 of the Civil Code.^[70] The transaction in Article 124 of the Family Code, while also dubbed "void," shall "be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors." In Spouses Anastacio, Sr. v. Heirs of Coloma,^[71] the Court rendered the continuing offer impossible due to the death of the non-consenting spouse, to wit:

Since petitioners have not presented strong, clear, convincing evidence that the subject property was exclusive property of Juan, its alienation to them required the consent of Juliana to be valid pursuant to Article 124 of the Family Code, which provides in part:

[Article] 124. x x x

x x x These powers [of administration] do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. x x x

Under Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. When Juan died on August 26, 2006, the continuing offer contemplated under Article 124 of the Family Code became ineffective and could not have materialized into a binding contract. It must be remembered that Juliana even died earlier on August 17, 2006 and there is no evidence that she consented to the sale of the subject property by Juan in favor of petitioners.^[72] (Emphases supplied)

Thus, it is an opportune time for the Court to clarify any confusion besetting the applicable laws and jurisprudence in transactions involving alienation or encumbrance of conjugal properties, without consent of the other spouse, which is determinative of the remedies available to the aggrieved parties and the prescriptive period of actions. At this juncture, the Court holds that more than the date of the marriage of the spouses, the applicable law must be reckoned on the date of the alienation or encumbrance of the conjugal property made without the consent of the other spouse, to wit:

1. The alienation or encumbrance of the conjugal property, without the wife's consent, made before the effectivity of the Family Code, is not void but merely voidable. The applicable laws are Articles 166 and 173 of the Civil Code. The wife may file an action for annulment of contract within 10 years from the transaction; and

2. The alienation or encumbrance of the conjugal property, without the authority of the court or the written consent of the other spouse, made after the effectivity of the Family Code is void. The applicable Jaw is Article 124 of the Family Code without prejudice to vested rights in the property acquired before August 3, 1988. Unless the transaction is accepted by the non-consenting spouse or is authorized by the court, an action for declaration of nullity of the contract may be filed before the continuing offer on the part of the consenting spouse and the third person becomes ineffective.

Reygan and Belinda did not acquire a vested right over Lot No. 1 before the Family Code took effect on August 3, 1988. Moreover, Belinda is not a buyer in good faith.

As mentioned earlier, the retroactive effect of Article 124 of the Family Code to existing conjugal partnerships is without prejudice to vested rights in the property acquired before August 3, 1988. A vested right refers to a present fixed interest that is immediate, absolute, and unconditional, to wit:

A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will of the holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency. The term "vested right" expresses the concept of present fixed interest which, in right reason and natural justice, should be protected against arbitrary State action, or an innately just and imperative right which enlightened free society, sensitive to inherent and irrefragable individual rights, cannot deny.^[73] (Emphases supplied)

Significantly, a vested right is exempted from new obligations created after it is acquired. A new law cannot be invoked to prejudice or affect a right which has become vested or accrued while the old law was still in force,^[74] thus:

The concept of "vested right" is a consequence of the constitutional guaranty of due process that expresses a present fixed interest which in right reason and natural justice is protected against arbitrary state action; it includes not only legal or equitable title to the enforcement of a demand but also exemptions from new obligations created after the right has become vested. Rights are considered vested when the right to enjoyment is a present interest, absolute, unconditional, and perfect or fixed and irrefutable.^[75] (Emphasis supplied and citations omitted)

Here, Reygan and Belinda did not show any vested right over Lot No. 1 acquired before August 3, 1988 that exempted their situation from the retroactive application of the Family Code. The transactions over Lot No. 1 in favor of Reygan and Belinda happened in 1998 and 2005, respectively, or after the effectivity of the Family Code. It is also undisputed that Hilaria did not give her written consent to these contracts. Hence, the applicable law is Article 124 of the Family Code, not the Civil Code, which renders void any alienation or encumbrance of the conjugal property without the consent of the other spouse.

Even supposing that Hilaria knew the contracts, her being merely aware of these transactions is insufficient.^[76] The Court reiterates that the congruence of the wills of the spouses is essential for the valid disposition of conjugal properties. The absence of the written consent of one spouse renders the alienation void.^[77] Consequently, Spouses Escalona remained the lawful owners of Lot No. 1. Assuming that Jorge transferred only his portion of the conjugal partnership, the contracts are still void because the right of the husband or the wife to one-half of the conjugal assets does not vest until the liquidation of the conjugal partnership. When Jorge waived his rights over Lot No. 1 in 1998, his marriage with Hilaria was still existing and the conjugal partnership was not yet dissolved. Hence, it could not be determined yet which of the conjugal assets belonged to Jorge that he can validly alienate. Again, the interest of each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen into a title until it appears that there are assets in the community as a result of the liquidation and settlement.^[78] The inchoate interest of either spouse before the dissolution of the conjugal partnership is incompatible to the concept of vested rights.

The Court likewise agrees with the findings that Belinda can hardly qualify as a buyer in good faith as she merely stepped into the shoes of Reygan whose rights were anchored on ineffective instruments. Similarly, Belinda was negligent when she failed to investigate as to the required consent of Jorge's wife despite notice that he was married as indicated in the waiver of rights over Lot No. 1 in favor of Reygan. Belinda pushed through with the sale of Lot No. 1 notwithstanding prior knowledge of Spouses Escalona's adverse claim. Lastly, there is no reason for laches to apply since Spouses Escalona never slept on their rights as lawful owners of the lots. As an equitable doctrine, laches cannot work to defeat justice or to perpetrate fraud.^[79] 
 

The alienation of Lot No. 2 is inexistent under Article 1318 of the Civil Code because it was made without Spouses Escalona's consent. The action to nullify the transaction is imprescriptible pursuant to Article 1410 of the Civil Code.

There is no contract unless the following requisites concur: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established.^[80] All these elements must be present to constitute a valid contract. In a contract of sale, its perfection is consummated at the moment there is a meeting of the minds upon the thing that is the object of the contract and upon the price. Consent is manifested by the meeting of the offer and the acceptance of the thing and the cause, which are to constitute the contract. The absence of consent renders the contract void and inexistent.^[81]

Here, it is undisputed that Spouses Escalona did not transfer Lot No. 2 to Reygan. There is no document purporting to convey Lot No. 2 from Spouses Escalona to Reygan. As discussed earlier, the waiver that Jorge executed pertained only to Lot No. 1. Neither Jorge or Hilaria consented to the transfer of Lot No. 2 from Reygan to Belinda. Consequently, the transactions over Lot No. 2 is void because Reygan never acquired ownership which he can validly convey to Belinda. It is settled that contracts involving the sale or mortgage of unregistered property by a person who was not the owner or by an unauthorized person are void.^[82] Reygan and Belinda cannot acquire any right from a void contract that has no force and effect from the very beginning. This contract cannot he validated either by ratification or prescription. The action to nullify the transaction is imprescriptible.^[83]

On this point, it bears emphasis that there is no need to consider the date of marriage of Spouses Escalona or the time of alienation of Lot No. 2. The circumstances surrounding the sale of the conjugal property do not call for the application of either Articles 166 and 173 of the Civil Code or Article 124 of the Family Code because the transfer was made without the consent of both spouses. 
 

Belinda is entitled to reimburse from Reygan the purchase price for the sale of Lot Nos. 1 and 2.

At most, Belinda and Reygan, as parties to the void transactions, must be restored to their original situation. The duty of restitution arises if the ground justifying the retention of payment ceases.^[84] The objective is to prevent one from enriching himself at the expense of another. Accordingly, the CA correctly ruled that Belinda may reimburse from Reygan the purchase price of the lots. It would be the height of inequity tantamount to judicial acquiescence of unjust enrichment if Reygan retains the amount received from Belinda. However, instead of requiring Belinda to file a separate suit, the CA should have ordered the reimbursement in view of Reygan's admission as to the receipt of the P1,600,000.00 purchase price. This approach is consistent with judicial economy to avoid further delay and circuitous litigation.^[85]

To end, it is the duty of the Court to rationalize various rulings interpreting a statute in the interest of harmony of laws and stability of jurisprudence. This case did not abandon but clarified Cueno with the current state of case law. The discussions serve to guide the Bench and the Bar as to the status of a contract and the prescriptive period of an action in transactions involving the alienation or encumbrance of the conjugal property made without consent of the other spouse.

FOR THESE REASONS, the petition is PARTLY GRANTED. The Decision dated October 26, 2020 and the Resolution dated March 5, 2021 of the Court of Appeals in CA-G.R. CV No. 110958 are AFFIRMED with MODIFICATION in that respondent Reygan Escalona is ORDERED to reimburse petitioner Belinda Alexander the amount of P1,600,000.00 representing the purchase price of Lot Nos. 1 and 2.

SO ORDERED.

Gesmundo, C.J., Leonen, SAJ., Hernando, Inting, Zalameda, Gaerlan, Rosario, J. Lopez, Dimaampao, Marquez, Kho, Jr., and Singh, JJ., concur.
Caguioa, J., See Concurring Opinion.
Lazaro-Javier, J., with Concurrence.

---

^[1] Republic Act No. 386, entitled "AN ACT TO ORDAIN AND INSTITUTE THE CIVIL CODE OF THE PHILIPPINES," approved on June 18, 1949.

^[2] Executive Order No. 209, entitled "THE FAMILY CODE OF THE PHILIPPINES," effective on August 3, 1988.

^[3] Rollo, pp. 3-40.

^[4] Id. at 41-51. Penned by Associate Justice Ronaldo Roberto B. Martin, with the concurrence of Associate Justices Manuel M. Barrios and Alfredo D. Ampuan.

^[5] Id. at 52-53.

^[6] Id. at 88-89.

^[7] Id. at 90.

^[8] Id. at 41-42, 124-127, and 136.

^[9] Id. at 91-94.

^[10] Id. at 42-43, 92-93, and 125-127.

^[11] See Answer with Crossclaim and Motion to Dismiss dated October 3, 2005; id. at 95-105.

^[12] Id. at 106-110.

^[13] Id. at 43-44 and 126-127.

^[14] Id. at 124-141. Penned by Judge Richard A. Paradeza.

^[15] Id. at 141.

^[16] Id. at 137-141.

^[17] Id. at 142.

^[18] See id. at 43-44 and 46.

^[19] Id. at 41-51.

^[20] Id. at 47-50.

^[21] Id. at 48-51.

^[22] See Motion for Reconsideration dated December 7, 2020; id. at 164-170.

^[23] Id. at 52-53.

^[24] Id. at 13-34.

^[25] See Philippine National Bank v. Garcia, 734 Phil. 623, 631 (2014).

^[26] Dewara v. Spouses Lamela, 663 Phil. 35, 44 (2011).

^[27] The Family Code took effect on August 3, 1988. Chapter 4, Title IV on Conjugal Partnership of Gains expressly superseded Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife. Further, the Family Code provisions were also made to apply to already existing conjugal partnerships without prejudice to vested rights.
 
^[28] Philippine National Bank v. Reyes, 796 Phil. 736, 744 (2016); and Spouses Aggabao v. Parulan, Jr., 644 Phil. 26, 36 (2010).

^[29] Spouses Tarrosa v. De Leon, 611 Phil. 384, 397-398 (2009).

^[30] G.R. No. 246445, March 2, 2021.

^[31] Id.

^[32] 125 Phil. 180 (1966). There is no specific date of marriage in the body of the Decision but the facts inferred that the spouses got married during the effectivity of the 1889 Spanish Civil Code and before the effectivity of the Civil Code. In this case, the husband sold conjugal lots on August 7, 1951 and December 20, 1951.

^[33] 275 Phil. 589 (1991). There is no specific date of marriage in the body of the Decision but the facts inferred that the spouses got married during the effectivity of the Civil Code and before the effectivity of the Family Code. In this case, the husband leased the conjugal lot on March 30, 1987 without the consent of his wife. The Court held that the applicable laws are Articles 166 and 173 of the Civil Code, and that the transaction was voidable.

^[34] 457 Phil. 120 (2003). The spouses got married in 1960. The husband sold the conjugal property without the consent of his wife on March 1, 1983. The Court held that the applicable laws are Articles 166 and 173 of the Civil Code, and that the transaction was voidable.

^[35] 467 Phil. 1089 (2004). There is no specific date of marriage in the body of the Decision but the facts inferred that the spouses got married during the effectivity of the Civil Code and before the effectivity or the Family Code. In this case, the husband alienated the conjugal property on July 6, 1976 through a Deed of Exchange with his brother but without his wife's consent. The Court held that the applicable laws are Articles 166 and 173 of the Civil Code, and that the transaction was voidable. However, the Court sustained the validity of the transaction because the wife failed to seek the annulment of the voidable transaction with the 10-year prescriptive period.

^[36] 478 Phil. 691 (2004). The spouses got married on January 31, 1967. The husband sold the conjugal property without his wife's consent on June 3, 1986. The Court held that the pertinent provisions of law are Articles 165, 166, and 173 of the Civil Code.

^[37] 508 Phil. 299 (2005). There is no specific date of marriage in the body of the Decision but the facts inferred that the spouses got married during the effectivity of the Civil Code and before the effectivity of the Family Code. In this case, the husband sold the conjugal property on May 23, 1979 without his wife's consent. The Court held that the applicable laws are Articles 166 and 173 of the Civil Code, and that the transaction was voidable.

^[38] 503 Phil. 220 (2005). The spouses got married before the Family Code. The husband sold the conjugal property on October 25, 1970 without his wife's consent.

^[39] 623 Phil. 303 (2009). The spouses got married before the Family Code. The husband sold the conjugal property without his wife's consent on July 9, 1978.

^[40] 662 Phil. 696 (2011). The spouses got married on January 16, 1954 while the conjugal property was acquired in 1968. On October 23, 1974, the husband mortgaged the conjugal property. The Court held that the applicable laws are Articles 166 and 173 of the Civil Code, and that the transaction was voidable.

^[41] 738 Phil. 429 (2014). The spouses got married before the Family Code. The husband sold the conjugal property without his wife's consent on September 22, 1986.

^[42] 123 Phil. 517 (1966). The case was decided before August 3, 1988 which means that the marriage of the spouses and the alienation of the conjugal property both transpired before the effectivity of the Family Code.

^[43] 131 Phil. 790 (1968). The case was decided before August 3, 1988 which means that the marriage of the spouses and the alienation of the conjugal property both transpired before the effectivity of the Family Code.

^[44] 238 Phil. 622 (1987). The case was decided before August 3, 1988 which means that the marriage of the spouses and the alienation of the conjugal property both transpired before the effectivity of the Family Code.

^[45] 215 Phil. 380 (1984). The case was decided before August 3, 1988 which means that the marriage of the spouses and the alienation of the conjugal property both transpired before the effectivity of the Family Code.

^[46] 848 Phil. 439 (2019). The spouses got married before the Family Code. The alienations of the conjugal property occurred in 1985 without his wife's consent.

^[47] Supra note 29. The spouses got married on April 24, 1968 or before the Family Code. The alienation of the conjugal property occurred in 1974 without his wife's consent.

^[48] Vda. De Ramones v. Agbayani, supra nute 37, at 303; and Villaranda v. Spouses Villaranda, supra note 35, at 1091.

^[49] 498 Phil. 515 (2005). The spouses were married before the effcctivity of the Family Code. On January 11, 1988, the husband executed a Deed of Absolute Sale in favor of the buyer.

^[50] Id. at 524; emphasis supplied.

^[51] 452 Phil. 178 (2003). The spouses got married before family Code. In 1970, the wife sold the conjugal property without the husband's consent.

^[52] Id. at 198; emphasis supplied.

^[53] Supra note 28. The spouses got married before the effectivity of the Family Code. The wife sold the conjugal property on March 18, 1991 without the husband's consent.

^[54] Id. at 35-37.

^[55] Spouses Cueno v. Spouses Bautista, supra note 30.

^[56] Supra note 28. The spouses were married in 1973. The wife mortgaged the conjugal property on August 25, 1994 without the consent of the husband. The Court held that the applicable law is Article 124 of the Family Code, and that the transaction was void.

^[57] 821 Phil. 701 (2017). The spouses were married on March 9, 1968. The husband mortgaged the conjugal properties on April 12, 1999 without the consent of the wife. The Court held that the applicable law is Article 124 of the Family Code, and that the transaction was void.

^[58] 493 Phil. 436 (2005). The spouses were married on August 8, 1967. The husband mortgaged the conjugal properties in 1993 without the consent of the wife. The Court held that the applicable law is Article 124 of the Family Code and that the transaction was void.

^[59] 574 Phil. 311 (2008). In this case, the Court held that although the spouses were married before the enactment of the Family Code on August 3, 1988, the sale in question occurred in 1989. Thus, their property relations are governed by Chapter IV on Conjugal Partnership of Gains of the Family Code. The Court did not see how applying Article 124 of the Family Code would lead to injustice or absurdity.

^[60] 629 Phil. 346 (2010). The spouses were married on March 25, 1957. The wife sold the conjugal property to the petitioner through a Deed of Sale dated April 24, 1995 without the consent of husband. The Court declared the transaction void under Article 124 or Family Code.

^[61] G.R. Nos. 222369 and 222502. November 16, 2020. The spouses were married on April 5, 1975. The husband mortgaged the conjugal properties on November 23, 1995 without his wife's consent. The Court held that any alienation or encumbrance of conjugal property made during the effectivity of the Family Code is governed by Article 124 of the same Code.

^[62] 633 Phil. 9 (2010). The spouses were married in 1950. The husband sold the conjugal property on January 11, 1989 without the consent of his wife. The Court held that the applicable law is Article 124 of the Family Code, and that the transaction was void.

^[63] 353 Phil. 578 (1998). The spouses were married on December 24, 1968. The husband sold the conjugal property on March 1, 1990 without the consent of wife. The Court ruled that the alienation was void pursuant to Article 124 of the Family Code.

^[64] Spouses Cueno v. Spouses Bautista, supra note 30.

^[65] Id.

^[66] Spouses Fuentes v. Roca, supra note 62, at 18.

^[67] Id. at 18-20.

^[68] G.R. No. 235364, April 26, 2021.

^[69] Id.

^[70] See Opinion of Justice Caguioa, p. 9.

^[71] G.R. No. 224572, August 27, 2020.

^[72] Id.

^[73] Go, Jr. v. CA, 640 Phil. 238, 259 (2010).

^[74] Francisco v. CA, 359 Phil. 519, 525 (1998).

^[75] Lahom v. Sibulo, 453 Phil. 987, 996 (2003).

^[76] See Tinitigan v. Tinitigan, Sr., 188 Phil. 597, 613-614 (1980).

^[77] Guiang v. CA, supra note 63, at 588.

^[78] Spouses Tarrosa v. De Leon, supra note 29, at 397.

^[79] See De Vera-Cruz v. Miguel, 505 Phil. 591, 604 (2005).

^[80] See Article 1318 of the Civil Code.

^[81] Heirs of Spouses Intac v. CA, 697 Phil. 373, 383 (2012).

^[82] Heirs of Lopez v. Development Bank of the Philippines, 747 Phil. 427, 444 (2014).

^[83] Spouses Fuentes v. Roca, supra note 62, at 20.

^[84] Article 22 of the Civil Code provides that "[e]very person who, through an act of performance by another, or any other means, acquires or comes into possession of something at the expense of the latter without just or legal ground, shall return the same to him."

^[85] Spouses Alinas v. Spouses Alinas, supra note 59, at 324 (2008); and Heirs of Aguilar-Reyes v. Spouses Mijares, supra note 34, at 139.

---

CAGUIOA, J.:

Confronted with a scenario where the husband disposed of conjugal property without the benefit of his wife's consent during the effectivity of the Family Code in a marriage that was celebrated prior to its enactment, the Court has already previously held,^[1] as the ponencia seeks to propose with clarity, the following guidelines:

Thus, it is an opportune time for the Court to clarify any confusion besetting the applicable laws and jurisprudence in transactions involving alienation or encumbrance of conjugal properties, without consent of the other spouse, which is determinative of the remedies available to the aggrieved parties and the prescriptive period of actions. At this juncture, the Court holds that more than the date of the marriage of the spouses, the applicable law must be reckoned on the date of the alienation or encumbrance of the conjugal property made without the consent of the other spouse, to wit:

1. The alienation or encumbrance of the conjugal property, without the wife's consent, made before the effectivity of the Family Code, is not void but merely voidable. The applicable laws are Articles 166 and 173 of the New Civil Code. The wife may file an action for annulment of contract within ten (10) years from the transaction; and

2. The alienation or encumbrance of the conjugal property, without the authority of the court or the written consent of the other spouse, made after the effectivity of the Family Code is void. The applicable law is Article 124 of the Family Code without prejudice to vested rights in the property acquired before August 3, 1988. Unless the transaction is accepted by the non-consenting spouse or is authorized by the court, an action for declaration of nullity of the contract may be filed before the continuing offer on the part of the consenting spouse and the third person becomes ineffective.^[2]

I fully concur.

First, I concur with the ponencia's ruling that the litmus test in determining which between the Civil Code or the Family Code is applicable in the disposition of conjugal properties is the time of the questioned disposition, and not the time of the celebration of the marriage. This necessarily delimits the scope and qualifies the breadth of precedence of the Court's ruling in Spouses Cueno v. Spouses Bautista^[3] (Cueno) vis-à-vis the case at bar. I also note that no prospective application may be claimed against this guideline since this Court has consistently held that dispositions of conjugal property after the effectivity of the Family Code made by a spouse without the written consent of the other is void under Article 124^[4] of the same, even if the spouses were married prior to the effectivity thereof.

Second, I concur with the ponencia's categorization that the remedy to impugn a void disposition under Article 124 of the Family Code is not imprescriptible, since the nature, effect and availability of the remedy therein are decidedly distinct from the remedy against void contracts under Articles 1409^[5] and 1410^[6] of the Civil Code.

Finally, and further to the ponencia's ruling that Belinda Alexander (Belinda) is entitled to reimbursement and that she was not a buyer in good faith, I submit additional basis that root these pronouncements more firmly both in facts as well as in law. 
 

Applicability of the Family Code and its retroactive application

First, on the matter of the determining factor with respect to the applicable law, the ponencia placed considerable stock on the Court's pronouncements in the recent case of Cueno in resolving the instant controversy. In Cueno, the Court refrained from making any bright-line rule as to whether the provisions of the Family Code apply to dispositions by the husband lacking the wife's consent made during its effectivity precisely because such was not the legal issue therein. The spouses in Cueno were married, and the subject properties disposed of, during the effectivity of the Civil Code. Hence, the Court rightfully saw it fit to resolve the issue within the confines of Article 166, in relation to Article 173, of the Civil Code and its established, yet then conflicting, judicial precedents.

Cueno was the result of a string of cases on the lack of the wife's consent in dispositions of conjugal property acquired and disposed of during the effectivity of the Civil Code which brought into application Article 166 of the Civil Code:

Art. 166. Unless the wife has been declared a non compos mentis or a spendthrift, or is under civil interdiction or is confined in a Ieprosarium, the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent. If she refuses unreasonably to give her consent, the court may compel her to grant the same.

This article shall not apply to property acquired by the conjugal partnership before the effective date of this Code.

Drawing from recognized civil law authorities on the provisions, the Court, in Cueno, pointed out:

Recognized Civil Law Commentator, former CA Justice Eduardo P. Caguioa, explained:

Under the [Spanish] Civil Code the husband had full authority to alienate or encumber the conjugal partnership property without the consent of the wife. This rule has been changed in view of the new position of the wife under the [Civil] Code and for the purpose of protecting the wife against illegal or unlawful alienations made by the husband. In line with this purpose[,] alienations made by the husband of real properties cannot now be made without the consent of the wife except in cases provided for by law.

x x x Under our present Code all dispositions, alienations or encumbrances of conjugal real property acquired after the effectivity of the new Civil Code needs the consent of the wife. Also, all donations of real or personal property require the consent of the wife except those to the common children for securing their future or finishing a career, and moderate donations for charity. But should the wife refuse unreasonably to give her consent, the court may compel her to grant the same.^[7] (Citation omitted)

Sifting through the authorities, the Court, in Cueno, made the pronouncement that dispositions in violation of Article 166 of the Civil Code renders the sale voidable, not void.

To put an end to this recurring conflict on the proper characterization of such transactions, the Court now hereby adopts the second view espoused in Villocino, Roxas, and Aguilar-Reyes as the prevailing and correct rule, abandons all cases contrary thereto, and holds that a sale that fails to comply with Article 166 is not "void" but merely "voidable" in accordance with Article 173 of the Civil Code.

x x x x

Article 173 is unambiguous that the failure to secure the wife's consent, when such consent is required, does not render the contract void. Contrary to the nature of void contracts, transactions that fail to comply with Article 166 produce effects. The time-bound nature of the remedy provided under Article 173, in contrast to the imprescriptible nature of void contracts, demonstrates the voidable character of such contracts since the failure to bring the action within the period provided renders the contract between the husband and the third-person perfectly valid and binding. Vda. De Ramones v. Agbayani already held that "the wife's failure to file with the courts an action for annulment of the contract during the marriage and within ten (10) years from the transaction shall render the sale valid." Indeed, even the right to demand the value of the property should the wife fail to exercise her right to annul confirms this voidable nature. If said transaction were void, the remedy would have been mutual restitution. Fm1her, unlike void contracts that are subject to collateral attack by any interested party, the remedies available under Article 173 are expressly limited to the wife and, in proper cases, her heirs.^[8] (Citations omitted)

The Court, in Cueno, clarified that for dispositions that fail to comply with Article 166 of the Civil Code due to lack of the wife's consent, the contracts are merely voidable. As a remedy for this non-compliance, Article 173 of the Civil Code "unequivocally states that the action to annul the same must be brought 1) by the wife, 2) during the marriage, and 3) within ten (10) years from the questioned transaction."^[9] The logical extension of the precedent set by Cueno is that for Articles 166 and 173 of the Civil Code to apply, the disposition must have occurred when these provisions were in force, i.e., prior to the effectivity of the Family Code.

At most, the Court in Cueno, in passing, noted the legislative intent of changing the characterization of dispositions without the benefit of spousal consent from voidable to void under the Family Code:

Finally, it bears reiterating that unlike Articles 166 and 173 of the Civil Code, the Family Code now expressly declares that alienations or encumbrances of community or conjugal property without the consent of the other spouse are null and void x x x[.]

x x x x

In Guiang v. Court of Appeals (Guiang), the Court affirmed the observation of the RTC that the remedies afforded by Article 173 were not carried over to the Family Code, which thus signified the change in status of such transactions from the Civil Code to the Family Code. The Court agrees with the rationale in Guiang that the evident revisions under the Family Code are deliberate and confirm the legislative intent to change the status of such transactions from voidable under the Civil Code to void under the Family Code. However, the Court notes the special nature of these void transactions even under the Family Code, which can become binding contracts upon the acceptance by the other spouse or authorization by the court before the continuing offers are withdrawn by either or both spouses.^[10] (Citations omitted)

In the instant case, the spouses were married during the effectivity of the Civil Code but the husband's sale of conjugal property challenged for lack of the wife's consent was made during the effectivity of the Family Code. As pointed out by the ponente, Associate Justice Mario V. Lopez, the instant case presents "a different factual milieu,"^[11] and therefore calls for a separate rule to address the issue, as well as adds to the clarificatory precedent of the Cueno decision.

It is worth adding that Article 105 of the Family Code provides that its provisions also apply to conjugal partnership of gains that have been constituted during the effectivity of the Civil Code, subject to the limitations on retroactivity as provided for in Article 256 of the same Code, to wit:

ART. 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256. (n)

x x x x

ART. 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws.

Pursuant to this clarification, the Court effectively notes in the case at bar that, while both Articles 105 and 256 of the Family Code contain an express limitation on its retroactive effect by providing that it must not prejudice or impair vested or acquired right, such limitation finds no relevance in this case since here, no vested right is involved. A vested right is some right or interest in property that had become fixed and established and is no longer open to doubt or controversy.^[12] Rights are vested when the right to enjoyment, present or prospective, has become the property of some person as a person in interest.^[13] Likewise unyielding is the general rule that a person has no vested right in any particular remedy.^[14] Hence, a right should only be considered acquired or vested if its holder can actually exercise or make use of it at the time of the change in law. Otherwise, the concept of vested rights runs the risk of dilution and its protection ultimately impeded.

Plainly stated, therefore, no vested right may be claimed on the legal characterization of a sale as voidable and the corresponding remedies afforded under Article 173 of the Civil Code where, as here, no such sale was made prior to the Family Code. Specifically, the non-vestedness of any right to annul the void disposition, as in this case, is clear from the fact that the disposition in question did not take place until after a decade from the enactment of the Family Code.

Apropos is the Court's ruling in Bernabe v. Alejo^[15] (Bernabe) where the Court held that the substantive right was only vested when the cause which gave rise to its assertion took place prior to the enactment of the change in the law, viz.:

Under the new law, an action for the recognition of an illegitimate child must be brought within the lifetime of the alleged parent. The Family Code makes no distinction on whether the former was still a minor when the latter died. Thus, the putative parent is given by the new Code a chance to dispute the claim, considering that "illegitimate children are usually begotten and raised in secrecy and without the legitimate family being aware of their existence. x x x The putative parent should thus be given the opportunity to affirm or deny the child's filiation, and this, he or she cannot do if he or she is already dead.

Nonetheless, the Family Code provides the caveat that rights that have already vested prior to its enactment should not be prejudiced or impaired as follows:

"ART. 255. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws."

The crucial issue to be resolved therefore is whether Adrian's right to an action for recognition, which was granted by Article 285 of the Civil Code, had already vested prior to the enactment of the Family Code. Our answer is affirmative.

A vested right is defined as "one which is absolute, complete and unconditional, to the exercise of which no obstacle exists, and which is immediate and perfect in itself and not dependent upon a contingency x x x." Respondent however contends that the filing of an action for recognition is procedural in nature and that "as a general rule, no vested right may attach to [or] arise from procedural laws."

Bustos v. Lucero distinguished substantive from procedural law in these words:

"x x x Substantive law creates substantive rights and the two terms in this respect may be said to be synonymous. ["]Substantive rights["] is a term which includes those rights which one enjoys under the legal system prior to the disturbance of normal relations. Substantive law is that part of the law which creates, defines and regulates rights, or which regulates the rights and duties which give rise to a cause of action; that part of the law which courts are established to administer; as opposed to adjective or remedial law, which prescribes the method of enforcing rights or obtains redress for their invasion." x x x

Recently, in Fabian v. Desierto, the Court laid down the test for determining whether a rule is procedural or substantive:

"[I]n determining whether a rule prescribed by the Supreme Court, for the practice and procedure of the lower courts, abridges, enlarges, or modifies any substantive right, the test is whether the rule really regulates procedure, that is, the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for a disregard or infraction of them. If the rule takes away a vested right, it is not procedural. If the rule creates a right such as the right to appeal, it may be classified as a substantive matter; but if it operates as a means of implementing an existing right then the rule deals merely with procedure."

Applying the foregoing jurisprudence, we hold that Article 285 of the Civil Code is a substantive law, as it gives Adrian the right to file his petition for recognition within four years from attaining majority age. Therefore, the Family Code cannot impair or take Adrian's right to file an action for recognition, because that right had already vested prior to its enactment.^[16] (Citations omitted, emphasis supplied)

As unequivocally held in Bernabe, "[t]he right to seek [compulsory] recognition granted by the Civil Code to illegitimate children who were still minors at the time the Family Code took effect cannot be impaired or taken away."^[17] In contrast, in the instant case, the right to challenge the void disposition had not vested since there was no void disposition to speak of at the time of the enactment of the Family Code.

With no right vesting or accruing, the challenged transaction that was made after the effectivity of the Family Code is not immune to the legal effects of the application of Articles 96^[18] and 124 of the Family Code which now declare all dispositions or encumbrances of community or conjugal property without the consent of the other spouse void.

In any case, a closer look at the evolution of the right to seek a remedy in the face of a void disposition of a conjugal property between the Civil Code and the Family Code would demonstrably show that even if there was a right that did vest, there is no impairment of the same as the remedy so expressly provided in Articles 96 and 124 of the Family Code decidedly enhanced the same and did not diminish it. Particularly, the remedy in Article 124 of the Family Code took it out of a finite 10-year period, as it conve1ied the void disposition to a continuing offer which may be impugned by the non-­consenting spouse or confirmed by the court, as the case may be, prior to the withdrawal of said offer by either the consenting spouse or the third person.

The enhancement of the right of the non-consenting spouse to a remedy is also distilled in the pivotal consideration which underpinned Article 124 of the Family Code — the joint administration of the conjugal property. As renowned civilist Arturo M. Tolentino explains:

Under the Civil Code, the husband was the administrator of the conjugal partnership. The present article makes the husband and wife joint administrators. The provisions of this article are the same as those of Article 96 on the administration of the absolute community property. The sale of property of the conjugal partnership is void ab initio due to the absence of the wife's consent, there being no showing that she is incapacitated. Being merely aware of a transaction is not consent.^[19]

As further echoed by Justice Alicia V. Sempio-Diy, citing Justice J.B.L. Reyes, in her own annotation on the provision:

The Family Code is primarily intended to reform the family law so as to emancipate the wife from the exclusive control of the husband and to place her at parity with him insofar as the family is concerned. The wife and the husband are now placed on equal standing by the Code. They are now joint administrators of the family properties of their children. This means a dual authority in the family. The husband will no longer prevail over the wife but she has to agree on all matters concerning the family.^[20]

In other words, there can be no impairment in the right to remedy against a void disposition of the conjugal property precisely because the new provision of Article 124 of the Family Code exactly responds to the unequal footing between the husband and the wife in matters of administration, with the said provision now making the remedy available to any non-consenting spouse. Under the Family Code, only the non-consenting spouse, to the exclusion of all others, may accept or reject the continuing offer of the void disposition. 
 

"Void" under Article 124 of the Family Code versus "void" under obligations and contracts

Second, the ponencia appreciates that the action to seek the declaration of nullity of a void alienation of conjugal property is not imprescriptible, thus:

2. The alienation or encumbrance of the conjugal property, without the authority of the court or the written consent of the other spouse, made after the effectivity of the Family Code is void. The applicable law is Article 124 of the Family Code without prejudice to vested rights in the property acquired before August 3, 1988. Unless the transaction is accepted by the non-consenting spouse or is authorized by the court, an action for declaration of nullity of the contract may be filed before the continuing offer on the part of the consenting spouse and the third person becomes ineffective.^[21]

I agree.

While using the same nomenclature of "void," the distinction in treatment, effects and remedies of void contracts under Article 1409 in relation to Article 1410 of the Civil Code and the void disposition as described in Article 124 of the Family Code are unmistakable, so that the principles of the former must not be automatically superimposed over the latter.

For one, void contracts under Article 1409 of the Civil Code are deemed inexistent and are consequently incapable of perfection or ratification, to wit:

x x x The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;

(2) Those which are absolutely simulated or fictitious;

(3) Those whose cause or object did not exist at the time of the transaction;

(4) Those whose object is outside the commerce of men;

(5) Those which contemplate an impossible service;

(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;

(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense or illegality be waived. (Emphasis supplied)

In contrast, void dispositions under Article 124 of the Family Code, while also dubbed "void," are expressly deemed as a continuing offer which may be perfected and accepted either by consent of the previously non-­consenting spouse or by confirmation of the court, viz.:

ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. (Emphasis supplied)

The nature of the "void" contract as a continuing offer susceptible of perfection through acceptance contemplated in Article 124 of the Family Code, is distinct from void contracts under Article 1409 of the Civil Code, with such difference further illustrated when the continuing offer is rendered impossible due to the death of the non-consenting spouse or offeree, as the Court resolved in the case of Spouses Anastacio, Sr. v. Heirs of Coloma,^[22] viz.:

Since petitioners have not presented strong, clear, convincing evidence that the subject property was exclusive property of Juan, its alienation to them required the consent of Juliana to be valid pursuant to Article 124 of the Family Code, which provides in part:

ART. 124. x x x

x x x These powers [of administration] do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors. x x x

Under Article 1323 of the Civil Code, an offer becomes ineffective upon the death, civil interdiction, insanity, or insolvency of either party before acceptance is conveyed. When Juan died on August 26, 2006, the continuing offer contemplated under Article 124 of the Family Code became ineffective and could not have materialized into a binding contract. It must be remembered that Juliana even died earlier on August 17, 2006 and there is no evidence that she consented to the sale of the subject property by Juan in favor of petitioners.^[23]

Even more tellingly, a previous draft Article 126 of the Family Code, which provided for a period within which the non-consenting spouse may question the void transaction, was deleted during the deliberations for the reason that the present Article 124 already covered such a scenario, thus:

B. Article (126). –

Either spouse may, during the marriage, and within four years from discovery of the questioned transaction, ask the courts for the declaration of nullity of any contract of one spouse entered into without the other's consent, when such consent is required.

Whenever any act or contract of one spouse tends to defraud or impair the other's interest in the conjugal partnership, the defrauded spouse or his or her heirs, after the dissolution of the marriage, may demand the return of the value of the property fraudulently alienated for purposes of liquidation.

Justice Caguioa remarked that the above Article may be deleted in view of the new Article 124 with which the other members agreed.^[24] (Emphasis supplied)

Clearly, therefore, while the action to impugn void contracts under Article 1409 of the Civil Code does not prescribe, the same may not be said of void contracts as contemplated under Article 124 of the Family Code. The former considers contracts that are not hemmed in by the particular restrictions and rationale of the latter, which exist against the backdrop of a body of legal provisions that specifically apply to marriages.

Finally, I submit that the ponencia correctly found that Belinda is entitled to reimbursement not only on the basis of unjust enrichment^[25] and pursuant to judicial economy,^[26] but primarily because Belinda also filed a cross-claim against Reygan Escalona (Reygan).^[27] Surely, there is really no more need for a separate suit since the cross-claim is the proper vehicle within which to grant the reimbursement. The Court may even impose legal interest on the reimbursement to be computed from the date of finality of judgment since Belinda's claim is akin to an unliquidated one.

Relatedly, I similarly agree with the ponencia's finding that Belinda was not a buyer in good faith since, apart from the waiver of Jorge Escalona (Jorge) in favor of Reygan (which served as the basis of Reygan's waiver in favor of Belinda), it must also be noted that the Spouses Escalona were actually in possession of the lots at the time of her purchase, which should have alerted her to investigate and inquire into the nature of said possession. Her failure or omission to inquire as warranted can only be attributed to her lack of good faith. This, in addition to the correct ruling of the ponencia that Belinda can hardly be deemed as a buyer in good faith for the reason that she merely steps into the shoes of Reygan,^[28] who himself had no right or interest in his favor under the waiver, and who, therefore, had no right or interest to transfer or waive in favor of Belinda.

On this score, as well, it is fitting to recall and apply by extension that any contract arising from a void contract is also void, unless the defect in the earlier void contract is cured pursuant to Article 124 of the Family Code. As applied to this case, since the void disposition by Jorge here was not cured, any disposition, contract or waiver that rose from said original void disposition must, necessarily, be void as well.^[29]

Bearing the foregoing reasons in mind, I concur with the ponencia and vote to PARTLY GRANT the instant petition.

---

^[1] Strong Fort Warehousing Corp. v. Banta, G.R. Nos. 222369 & 222502, November 16, 2020, accessed at <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/67127>; Spouses Anastacio, Sr. v. Heirs of Coloma, G.R. No. 224572, August 27, 2020, accessed at <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/66519>; Boston Equity Resources, Inc. v. Del Rosario, 821 Phil. 710 (2017); Philippine National Bank v. Reyes, Jr., 796 Phil. 736 (2016); Spouses Aggabao v. Spouses Parulan, Jr., 644 Phil. 26 (2010); Spouses Fuentes v. Roca, 633 Phil. 9 (2010); Titan Construction Corp. v. Spouses David, 629 Phil. 346 (2010); Spouses Alinas v. Spouses Alinas, 574 Phil. 311 (2008); Homeowners Savings & Loan Bank v. Dailo, 493 Phil. 436 (2005); and Spouses Guiang v. Court of Appeals, 353 Phil. 578 (1998).

^[2] Ponencia, p. 18.

^[3] G.R. No. 246445, March 2, 2021, accessed at <https://elibrary.judiciary.gov.ph/thebookshelf/showdocs/1/67306>.

^[4] FAMILY CODE, Art. 124 provides:

ART. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.

^[5] ARTICLE 1409. The following contracts are inexistent and void from the beginning:

(1) Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.

These contracts cannot be ratified. Neither can the right to set up the defense of illegality be waived.

^[6] ARTICLE 1410. The action or defense for the declaration of the inexistence of a contract does not prescribe.

^[7] Spouses Cueno v. Spouses Bautista, supra note 3.

^[8] Id.

^[9] Id. Citation omitted.

^[10] Id.

^[11] Ponencia, p. 12.

^[12] Director of Lands v. Court of Appeals, 260 Phil. 477, 486 (1990).

^[13] Susi v. Razon, 48 Phil. 424 (1925); see also 12 C.J., Sec. 485, p. 955 cited in Balboa v. Farrales, 51 Phil. 498, 502 (1928).

^[14] Tan, Jr. v. Court of Appeals, 424 Phil. 556, 569 (2002).

^[15] 424 Phil. 933 (2002).

^[16] Id. at 940-942.

^[17] Id. at 935.

^[18] FAMILY CODE, Art. 96 provides:

ART. 96. The administration and enjoyment of the community property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the common properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance without the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerers.

^[19] Arturo M. Tolentino, COMMENTARIES AND JURISPRUDENCE ON THE CIVIL CODE OF THE PHILIPPINES VOLUME ONE WITH THE FAMILY CODE OF THE PHILIPPINES, p. 461.

^[20] Alicia V. Sempio-Diy, HANDBOOK ON THE FAMILY CODE OF THE PHILIPPINES (1995), p. 216.

^[21] Ponencia, p. 18.

^[22] Supra note 1.

^[23] Id.

^[24] Minutes of the 175^th Meeting of the Civil Code and Family Law Committees held on Saturday, 7 March 1987, 9:00 A.M., at the First Floor Conference Room of Bocobo Hall, U.P. Law Complex, Diliman, Quezon City, p. 28.

^[25] Ponencia, p. 21.

^[26] Id.

^[27] Id. at 2.

^[28] Id. at 20.

^[29] See Civil CODE, Art. 1422 which provides: "A contract which is the direct result of a previous illegal contract, is also void and inexistent."

---

CONCURRENCE

LAZARO-JAVIER, J.:

I concur.

On November 14, 1960, Jorge Escalona and Hilaria Escalona (Spouses Escalona) got married. During their marriage, they acquired unregistered parcels of land identified as Lot Nos. 1 and 2 with a total area of 100,375 square meters. On June 16, 1998, Jorge waived his right over Lot No. 1 in favor of his illegitimate son Reygan Escalona (Reygan) without his wife Hilaria's consent. On July 28, 2005, Reygan relinquished his right over Lot No. 1 to Belinda Alexander (Belinda). Less than two (2) weeks later, or on August 8, 2005, Reygan also transferred Lot No. 2 to Belinda through a Deed of Renunciation and Quitclaim. On August 10, 2005, a Deed of Absolute Sale covering Lot Nos. 1 and 2 for P1,600,000.00 was executed between Reygan and Belinda.

On September 5, 2005, Spouses Escalona filed a complaint for annulment of documents with damages against Belinda and Reygan before the Regional Trial Court, docketed as Civil Case No. 342-0-2005. They claimed that Hilaria did not consent to Jorge's waiver of his rights over Lot No. 1. Too, the waiver was not meant to convey ownership to Reygan. As for Lot No. 2, Spouses Escalona never transferred the same to anyone. Reygan fraudulently sold the lot to Belinda who was a buyer in bad faith. She continued to transact with Reygan after Spouses Escalona already informed her on August 5, 2005, before the barangay, that Reygan had no authority to sell Lot Nos. 1 and 2.
 
Belinda sought to dismiss the case on the grounds of laches and prescription. She also countered that she was a buyer in good faith. Jorge's waiver of his rights in favor of Reygan was unconditional. She maintained that Reygan and Spouses Escalona conspired to commit fraud against her.

For his part, Reygan averred that he was already the owner of Lot No. 1 when he transferred the same to Belinda. But Belinda was in bad faith for inducing him to sell Lot Nos. 1 and 2 despite prior knowledge of the nature of his ownership thereof.

By Decision dated February 20, 2017, the Regional Trial Court dismissed the complaint for being time-barred. It held that Spouses Escalona had seven (7) years from June 16, 1998 (date of Jorge's waiver in favor of Reygan) within which to file the complaint but they filed the same only on September 5, 2005, or about three (3) months late.^[1]

By Decision dated October 28, 2020, the Court of Appeals reversed. It held that an action or defense for declaration of nullity of contract does not prescribe. As for the nature of Belinda's participation in the transaction, she cannot be considered a buyer in good faith because there were circumstances which should have put her on guard. The Waiver and Quitclaim itself showed that Jorge was "married" but nowhere in the said document can his wife's consent be found. Under Article 124 of the Family Code, lack of written consent of one of the spouses to the disposition or encumbrance renders the transaction void.^[2]

Belinda's motion for reconsideration was subsequently denied.^[3]

The main issue here is whether the subject waiver of rights/alienation is void or merely voidable.

The prevailing law when Spouses Escalona got married was the Civil Code. It is undisputed that the property relation of Spouses Escalona is governed by the conjugal property of gains for lack of showing that they agreed on some other particular regime prior to the date of their marriage.^[4]
 
Under Article 166 of the Civil Code, "the husband cannot alienate or encumber any real property of the conjugal partnership without the wife's consent x x x."^[5] While Article 173 states that "x x x [t]he wife may, during the marriage and within ten years from the transaction questioned, ask the courts for the annulment of any contract of the husband entered into without her consent x x x."^[6] Thus, under the Civil Code, the sale of conjugal property without the consent of the wife is merely voidable or valid until annulled. And the wife has 10 years within which to assail the validity of the transaction.

Meanwhile, on August 3, 1988, the Family Code took effect and expressly repealed Title VI, Book I of the Civil Code on Property Relations Between Husband and Wife.^[7] Chapter 4 of the Family Code on Conjugal Partnership of Gains was made applicable to conjugal partnership of gains already established before the effectivity of the Family Code, unless vested rights have been acquired under the Civil Code or other laws.^[8]

Article 124^[9] provides that in the absence of the consent of one spouse, any disposition of the conjugal properties by the other spouse is void. Corollary, Article 105 provides that the provisions on property relations under the Family Code apply to conjugal partnership of gains already established before its effectivity, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws. This retroactive application of the Family Code is reiterated in Article 256.^[10]

For the purpose of determining whether a retroactive application of the Family Code provisions is proper, a singular question comes to fore, viz.: Has the person against whom the retroactive application of the Family Code is sought acquired a vested right prior to its effectivity?

This question is straightforward. The Court has defined a vested right as "some right or interest in the property which has become fixed and established, and is no longer open to doubt or controversy;" it is an "immediate fixed right of present and future enjoyment;" it is to be contradistinguished from a right that is "expectant or contingent." The right must be absolute, complete, and unconditional, independent of a contingency, and a mere expectancy of future benefit.^[11]

As to when the vested rights should have accrued, Article 105 provides:

ARTICLE 105. In case the future spouses agree in the marriage settlements that the regime of conjugal partnership of gains shall govern their property relations during marriage, the provisions in this Chapter shall be of supplementary application.

The provisions of this Chapter shall also apply to conjugal partnerships of gains already established between spouses before the effectivity of this Code, without prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in Article 256.

For these vested rights to be exempt from the retroactive application of the Family Code, the same should have already been acquired prior to the effectivity of the Family Code on August 3, 1988.^[12] For instance, in Tayag v. Court of Appeals,^[13] we found that a right of action filed under the regime of the Civil Code and prior to the effectivity of the Family Code constituted a vested right that should not be impaired by the retroactive application of the Family Code. Too, the failure of a petitioner to show any vested right in a property acquired prior to August 3, 1988 means that his or her situation is not exempt from the retroactive application of the Family Code.^[14]

Here, Reygan and Belinda did not have any vested right to the conjugal property prior to the effectivity date of the Family Code. Neither was it shown that such vested right, if any, had inured to their benefit.^[15]

As the ponencia keenly observes, the supposed conveyance of Lot No. 1 to Reygan only took place in 1998, more or less ten (10) years after the effectivity of the Family Code.^[16] Hence, the provisions of the Family Code should retroactively apply to this conveyance. More so because the retroactive application of the Family Code provisions to the conjugal partnership of gains is mandatory. Article 105 uses the word "shall" which denotes something imperative or operating to impose a duty.^[17] No discretion is given, unless the retroactive application will operate to prejudice established vested rights.

Article 124 of the Family Code, therefore, governs the transfer of Lot No. 1 to Reygan,^[18] viz.:

Article 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. (Emphases supplied)

It is undisputed that Jorge waived his right over Lot No. 1 in favor of Reygan without Hilaria's consent. Therefore, the conveyance of Lot No. 1 by Jorge to Reygan (and the subsequent transfer to Belinda) is void.

In Spouses Aggabao v. Parulan^[19] which likewise involved a marriage celebrated under the Civil Code and an alienation of conjugal property after the effectivity of the Family Code, the Court categorically decreed that Article 124 of the Family Code ought to apply. There is no reason to depart from the disposition in that case. After all, like cases ought to be decided alike absent any powerful countervailing considerations.^[20]

As for Lot No. 2, neither Jorge nor Hilaria alienated the same in favor of Reygan. Consequently, Reygan acquired no right whatsoever over Lot No. 2. Too, Reygan's purported relinquishment of his supposed right over Lot No. 2 in favor of Belinda is void. He certainly cannot relinquish a property which did not belong to him in the first place. Nemo dat quod non habet.
 
Finally, I join the ponencia in holding that the 2021 case of Spouses Cueno v. Spouses Bautista,^[21] where the Court En Banc held that the sale of conjugal property without the consent of the wife is merely voidable, is not on all fours with the present case.

In Cueno, the marriage of Spouses Cueno and the alienation of their conjugal property by the husband Eulalia both happened during the effectivity of the Civil Code, as opposed to the present case where Spouses Escalona got married during the effectivity of the Civil Code but the alienation of the conjugal property happened after the Family Code already took effect.

More important, Cueno ordained the voidability of the sale only in the context of the apparent conflicting rulings of the Court on the nature of the husband's alienation of the conjugal property without the consent of the wife under the regime of the Civil Code, i.e., voidable or void. In fact, Cueno laid down that unlike in Article 96 and 124 of the Family Code which unequivocally state that a disposition of community or conjugal property without the consent of the other spouse is void, there appears to be an ongoing conflict of characterization as regards the status of alienations or encumbrances that fail to comply with Article 166 of the Civil Code. The first view treats such contracts as void (1) on the basis of lack of consent of an indispensable party and/or (2) because such transactions contravene mandatory provisions of law. On the other hand, the second view holds that although Article 166 requires the consent of the wife, the absence of such consent does not render the entire transaction void but merely voidable in accordance with Article 173 of the Civil Code."

In ruling that the sale is merely voidable, the Court held:

Evidently, the remedies and limitations provided under Article 173 in transactions covered by Article 166 are completely inconsistent with the nature of void contracts, which are subject to collateral attacks by interested parties, do not prescribe and have no force and effect. Categorizing dispositions and encumbrances under Article 166 as void and thus imprescriptible would not only nullify Article 173 of the Civil Code but also render the limitations provided therein inutile.

At this juncture, the Court finds it proper to correct its ruling in Bucoy that contracts disposing of conjugal property without the wife's consent are "void for lack of consent of an indispensable party under Article 166." This is not accurate. It is not a matter of "lack of consent," which gives rise to a "no contract" situation under Article 1318 of the Civil Code. Neither can the contract be considered "void" because it does not fall under any of those expressly mentioned in Article 1409 of the Civil Code. Rather, Article 166 demonstrates that the husband has no legal capacity to alienate or encumber conjugal real property without his wife's consent. This is akin to an incapacity to give consent under Article 1390 of the Civil Code, which renders the contract merely voidable x x x. (Emphasis supplied; citations omitted)

Notably, Cueno made no definite ruling that Article 173 of the Civil Code applies even to alienation of conjugal property after the Family Code took effect, as long as the spouses were married during the effectivity of the Civil Code. Neither can this be implied from Cueno's discussion of the issues. Hence, Cueno finds no application in the present case.

---

^[1] Id. at 2.

^[2] Id. at 4-6.

^[3] Id. at 5.

^[4] Family Code, Article 119. The future spouses may in the marriage settlements agree upon absolute or relative community of property, or upon complete separation of property, or upon any other regime. In the absence of marriage settlements, or when the same are void, the system of relative community or conjugal partnership of gains x x x shall govern the property relations between husband and wife."

^[5] Civil Code, Article 166.

^[6] Civil Code, Article 173.

^[7] Munoz, Jr. v. Ramirez and Carlos, 643 Phil. 267 (2010) (Per J. Brion, Third Division].

^[8] See Homeowners Savings & Loan Bank v. Dailo, 493 Phil. 436, 443 (2005) [Per J. Tinga, Second Division].

^[9] Family Code, Article 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to recourse to the court by the wife for proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.

^[10] Family Code, Article 256. This Code shall have retroactive effect insofar as it does not prejudice or impair vested or acquired rights in accordance with the Civil Code or other laws.

^[11] Heirs of Zari v. Santos, 137 Phil. 79, 90 (1969) [Per J. Sanchez], citing Benguet Consolidated Mining Co. v. Pineda, 98 Phil. 711, 722 [Per J. Reyes, J.B.L.].

^[12] See Tayag v. Court of Appeals, 285 Phil. 234, 245 (1992) [Per J. Regalado, Second Division]; David v. Calilung, G.R. No. 241036, January 26, 2021 [Per J. Delos Santos, En Banc]; Tumlos v. Sps. Fernandez, 386 Phil. 936 (2000) [Per J. Panganiban, Third Division].

^[13] Supra.

^[14] Spouses Aggabao v. Parulan, Jr., 644 Phil. 26, 36-37 (2010) [Per J. Bersamin, Third Division].

^[15] Draft Decision, p. 17.

^[16] Id.

^[17] See Spouses Abella v. Spouses Abella, 763 Phil. 372, 383 (2015) [Per J. Leonen, Second Division].

^[18] Draft Decision, pp. 15-16.

^[19] Supra note 15, at 36.

^[20] Visayan Electric Company Employees Union [VECEU] v. Visayan Electric Company, Inc., (Notice) G.R. No. 234556, April 28, 2021.

^[21] G.R. No. 246445, March 2, 2021 [Per J. Caguioa, En Banc].