G.R. No. 109355 October 29, 1999
SERAFIN MODINA, petitioner, vs. COURT OF APPEALS AND ERNESTO HONTARCIEGO, PAUL FIGUEROA, TEODORO HIPALLA AND RAMON CHIANG, MERLINDA CHIANG, respondents.

FACTS

The properties in dispute, originally part of the estate of Nelson Plana, were under the administration of his widow, Merlinda Plana Chiang, as administratrix. A probate court authorized their sale. Merlinda subsequently executed a Deed of Absolute Sale dated December 17, 1975, conveying the properties to her then husband, Ramon Chiang. Ramon later sold the same properties to Serafin Modina through deeds dated August 3 and 24, 1979. Modina filed a Complaint for Recovery of Possession against private respondents who were in possession as lessees. Merlinda intervened, seeking the annulment of the sale to Ramon and, consequently, the sale to Modina. She argued the sale to her husband was void, and thus he acquired no valid title to transfer.
The trial court declared both the sale between Merlinda and Ramon and the subsequent sale to Modina null and void. It ordered the cancellation of the titles issued to Ramon and Modina, the reinstatement of the original titles in the name of Nelson Plana, and the restitution of payments between the parties. The Court of Appeals affirmed this decision in toto. Modina elevated the case, arguing the sale was merely voidable and that the principle of in pari delicto should apply, leaving him as an innocent purchaser for value protected.

ISSUE

The primary issue is whether the sale between spouses Merlinda and Ramon Chiang is void, and if so, whether Modina can be considered a purchaser in good faith entitled to protection.

RULING

The Supreme Court denied the petition and affirmed the lower courts’ decisions. The sale between Merlinda and Ramon Chiang is void ab initio under Article 1490 of the Civil Code, which expressly prohibits sales between spouses unless an exception (like separation of property) exists, which was not present. A void contract produces no legal effect whatsoever; it is as if it never existed. Consequently, Ramon Chiang acquired no ownership rights over the properties. Having no valid title himself, he could not transmit any to Modina. The principle of nemo dat quod non habet (no one can give what he does not have) applies squarely.
The Court rejected Modina’s reliance on the principle of in pari delicto. This principle, which bars recovery by parties equally at fault, applies to contracts with an illegal cause or purpose. The nullity here stems from a direct legal prohibition under Article 1490, making the contract inexistent or void, not merely illegal in its cause. For void contracts, the law does not apply in pari delicto to prevent the return of the property to the innocent party. The Court found Merlinda not in equal fault, as the sale lacked consideration and was a simulated transaction. Therefore, she could recover the property. Modina’s claim of being a purchaser in good faith was unavailing because one cannot purchase in good faith from a seller who has no valid title to convey. The titles in Ramon’s name were deemed void, providing no basis for the protection afforded to innocent purchasers for value under the Torrens system.