Spouses George and Hillary were married in 1960. Thereafter, they bought several unregistered parcels of land.
In 1998, George waived his right over Lot No. 1 in favor of his non-marital child, Rey. In 2005, Rey relinquished his right over Lot No. 1 to Linda. In the same year, Rey likewise transferred Lot No. 2 to Linda through a Deed of Renunciation and Quitclaim. Also in 2005, Rey and Linda entered into a Deed of Absolute Sale covering Lot Nos. 1 and 2.
Seven years after the execution of the said contracts, George and Hillary judicially sought the annulment of said contracts against Rey and Linda executed. They said that they never transferred Lot No. 2 to Rey. Hence, Rey fraudulently sold Lot 2 to Linda. Also, Hillary did not consent to the waiver of rights over Lot No. 1 and that such transaction was not meant to convey ownership to Rey.
Linda sought to dismiss the case on the grounds of laches and prescription. She likewise argued that she was a buyer in good faith and that George’s waiver of rights in favor of Rey was unconditional.
In any event, Rey may have committed fraud in conspiracy with spouses Linda impleaded Rey and the latter’s mother. Rey denied any deception and asserted that he is already the owner of Lot No. 1 when he transferred it to Linda. Rey countered that Linda 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.
Q: What is the nature of Lots 1 and 2?A: Since the spouses were married in 1960, or during the effectivity of the Civil Code, Art. 119 of the Civil Code shall apply. Said article 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 the spouses is the conjugal partnership of gains absent any showing that they agreed on a particular regime.
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.
Q: What are the rules on the alienation of conjugal properties?A: The following are the rules 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.
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:
i. 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
ii. 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.
Q: Applying the above, are the sale of Lots 1 and 2 valid, void or voidable?A: Here, Rey and Linda 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 Rey and Linda happened in 1998 and 2005, respectively, or after the effectivity of the Family Code. It is also undisputed that Hillary 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. Here, it is undisputed that the spouses did not transfer Lot No. 2 to Rey.
Consequently, the transactions over Lot No. 2 is void because Rey never acquired ownership which he can validly convey to Linda. 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.
Rey and Linda 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.
Q: What happens to the payment made by Linda?A: Linda is entitled to reimbursement. The duty of restitution arises if the ground justifying the retention of payment ceases. The objective is to prevent one from enriching himself at the expense of another. (Source: Alexander vs Escalona, en banc, G.R. No. 256141. July 19, 2022)
The author is Chairman of Philippine Association of Law Schools; Dean of Lyceum of the Philippines University; and founder of Mawis Law Office