Complying with a void contract

A void contract has no force and effect from the very beginning and is equivalent to nothing. But if it has been complied with in good faith what are the remedies of the parties? This is the question answered in this case of the spouses Tirso and Charing.

Tirso and Charing were married in Zamboanga City way back in 1950. But after only eight years of marriage or in 1958, they already separated. Tirso remained in Zamboanga while Charing decided to live in Manila.

On October 11, 1982, Tirso acquired a 358 square meter titled lot in Zamboanga City but did not, for the meantime, transfer the title in his name. Six years later, he offered to sell the lot to the spouses Mike and Letty. So on April 29, 1988 an Agreement to Sell was signed by them wherein the spouses gave a down-payment of P60,000 with the balance payable within six months subject to the following conditions: that Tirso will have the title transferred in his name; that he will clear the lot of the structures and occupants and secure the consent of his estranged spouse. They also agreed that if Tirso fails to comply with these conditions within six months, the spouses Mike and Letty would become owners of the lot without any further formality and payment.

The parties left the signed agreement with Atty. Paco who prepared it and whom they designated to work on the other requirements of the sale particularly in getting the consent of Charing. Then on January 11, 1989, after complying with the other conditions, Tirso executed a Deed of Absolute Sale in favor of Mike and Letty. Attached to the Deed was the Affidavit of Consent of Charing notarized by Atty. Paco on the same date in Zamboanga City although according to Paco himself, Charing signed the same four months earlier in her residence in Manila. Hence Mike and Letty paid Tirso the balance amounting to P140,000 and a new title (TCT T-90,981) was issued in their names to replace TCT 3533 in the name of Tirso. Then they immediately constructed a building on the lot. On January 28, 1990, Tirso passed away followed by his wife Charing who died nine months later.

Eight years thereafter or in 1997, Tirso and Charing’s children as well as Tirso’s sister (the heirs) filed an action against Mike and Letty in the Regional Trial Court (RTC) for annulment of the sale and re-conveyance of the property. They alleged that the sale was void because Charing’s signature in the affidavit of consent was forged as shown by its marked difference from her specimen signatures which were clearly observable.

Mike and Letty asked that the action be dismissed since it has already prescribed. They contended that since the ground cited by the heirs for annulling the sale was forgery or fraud, they should have filed it within four years after its discovery which in this case should be from the date the deed of sale was registered with the Register of Deeds pursuant to Article 1391 of the Civil Code. Were they correct?

No. While Tirso and Charing got married in 1950, Tirso sold the conjugal property on January 11, 1989 a few months after the Family Code (FC) governing the property relations between husband and wife took effect on August 3, 1988. Consequently it is the FC that should be applied here to determine the nature of deed of sale executed by Tirso, particularly Article 124 which provides that without the spouse’s written consent or a court order allowing its sale, the same shall be void and not merely voidable or annullable.

In this case, Charing’s signature strokes on the affidavit appear heavy, deliberate and forced. Her specimen signatures which were made at about the time she signed the affidavit, on the other hand, are consistently of a lighter stroke and more fluid. The way the letters “R” and “S” were written is also remarkably different. The variance is obvious even to the untrained eye. Taken together with the admission of Atty. Paco that he notarized the document only on January 11, 1989 in Zamboanga City when Charing supposedly signed it about four months earlier in Manila, such affidavit was really forged and could not serve as proof that Charing gave her consent to the sale.

However, since Mike and Letty honestly relied on the notarized affidavit as proof of Rosario’s consent and assured them that everything was already in order, thus prompting them to pay the balance, get a new title and built a building on it, they are considered as possessors in good faith and therefore was under no obligation to pay for their stay on the property. More importantly, they are entitled to indemnity for the improvements they introduced in the property with a right of retention until reimbursement is made (Article 448 Civil Code).

Hence, the deed of sale dated January 11, 1989 executed by Tirso and TCT T-90,981 issued pursuant thereto should be as they are hereby declared void while TCT 3533 in the name of Tirso married to Charing should be reinstated.

On the other hand, the heirs of Tirso should reimburse Mike and Letty, the P200,000 they paid, and at their option, they could indemnify the spouses with the expenses for the introduction of useful improvements on the lot or pay the increase in value which it may have acquired by reason of those improvements, with a right of retention until such indemnity has been paid (Spouses Fuentes vs. Roca et. al., G.R. 178902, April 21, 2010, 618 SCRA 702) .

* * *

E-mail at: [email protected]