TERESA F. DACILLO, PLAINTIFF-APPELLANT, VS. JULITO D. ELMA AND RUBEN SAVELLANO, DEFENDANTS-APPELLEES.

Dacillo versus Elma

The Case

This is an appeal by Teresa Dacillo against her husband's sale of conjugal property to Julito Elma and Ruben Savellano. The action sought to have the Contract to Sell declared void from the beginning because she never gave her consent. The case matters because it fixes the dividing line between the Civil Code and the Family Code for a husband's disposition of conjugal property without the wife's consent, and it shows how prescription and laches defeat a wife who sleeps on her rights.

Procedural History

Teresa Dacillo filed her complaint before the Regional Trial Court, Branch 49 of Puerto Princesa City. The defendant Julito Elma moved to dismiss on three grounds: prior judgment, failure to state a cause of action, and forum shopping. The trial court granted the motion and dismissed the complaint on the ground of extinctive prescription, holding that the action had prescribed under Article 173 of the Civil Code. Dacillo then appealed directly to the Supreme Court, assigning as errors the trial court's application of the Civil Code and its conclusion that her cause of action had prescribed. The Supreme Court denied the appeal and affirmed the trial court's resolution.

Facts

On February 29, 1988, Rodrigo Dacillo, without the knowledge and consent of his wife Teresa, entered into a Contract to Sell with Julito Elma and Ruben Savellano. The contract covered a portion of a lot covered by Transfer Certificate of Title Number 44049, situated in Barangay San Pedro, Puerto Princesa, which formed part of the conjugal property.

Rodrigo later filed a civil case against Elma seeking rescission of that very same Contract to Sell. In that earlier case, Teresa personally received a court order dated January 15, 1998. Rodrigo could have raised the absence of his wife's signature on the contract, but he did not.

On August 28, 2012, more than twenty-four years after the contract was executed, Teresa filed the present complaint, alleging that the contract was void from the beginning under the Family Code and that any transaction derived from it was likewise void. Elma moved to dismiss, arguing that the action was barred by prior judgment, that the complaint stated no cause of action, and that Teresa was guilty of forum shopping for failing to disclose the pendency of the earlier case in her certification against forum shopping.

Issues

• Whether or not the trial court erred in applying the Civil Code rather than the Family Code to a contract executed before the Family Code took effect.
• Whether or not the appellant's cause of action had already prescribed or was barred by laches.

Applicable Provisions

Article 173 of the Civil Code provides:

Art. 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.

This provision governs because the contract was executed on February 29, 1988, before the Family Code took effect, and it makes the husband's disposition without the wife's consent merely voidable, not void, and subject to a ten-year period.

Ruling

On the first issue, the Court held that there was no merit in the appeal. Jurisprudence has declared that when a sale of conjugal property is made before the effectivity of the Family Code, the law that governs is the Civil Code, particularly Article 173. It is the date of execution of the contract that determines which law applies, not the date of its discovery. The Court stressed that where the law speaks in clear and categorical language, there is no room for interpretation, only application.

On the second issue, the Court held that the alienation of conjugal property by the husband without the wife's consent is not null and void but merely voidable. To annul the contract, the action must be brought during the marriage and within ten years from the questioned transaction. Where either condition is lacking, the action is deemed filed out of time, and the failure to file within the period renders the sale valid. Since the contract was executed on February 29, 1988, the wife had only until March 1998 to challenge it, yet she filed only in 2012. Even reckoning her knowledge from the January 1998 order she personally received, she filed fourteen years later. The Court also invoked laches, holding that relief will be denied to a litigant whose claim has become stale or who has slept on her rights, for public policy requires the discouragement of claims grown stale for non-assertion.

Doctrine

A sale of conjugal property by the husband without the wife's consent, made before the Family Code took effect, is governed by Article 173 of the Civil Code and is merely voidable, not void. The action to annul it must be brought during the marriage and within ten years from the transaction questioned; failing either condition, the action is filed out of time and the sale becomes valid. The law applicable is determined by the date of execution of the contract, not the date of its discovery. A litigant who sleeps on her rights is barred by laches.

Disposition

The Supreme Court denied the appeal for lack of merit and affirmed the trial court's resolution dismissing the complaint.

Remember This

Memorize this line: it is the date of execution of the contract, not the date of its discovery, that determines whether the Civil Code or the Family Code governs. Examiners use this case to test the void versus voidable distinction for a husband's disposition of conjugal property without the wife's consent, and the ten-year prescriptive period under Article 173 of the Civil Code.