Spouses George and Hillary were married in 1960. During their marriage, they acquired Lots 1 and 2.
In 1998, Jorge waived his right over Lot No. 1 in favor of his non-marital child, Rey. In 2005, Rey relinquished his right over Lot 1 in favor of Bel. In 2005, Rey also transferred Lot No. 2 to Bel through a Deed of Renunciation and Quitclaim. In 2005, Rey and Bel entered into a Deed of Absolute Sale covering Lot Nos. 1 and 2.
Aghast at the transfer, the spouses confronted Bel and explained that Rey cannot validly sell the lots. However, Bel invoked the legitimacy of her contracts with Rey. The spouses countered that they never transferred Lot No. 2 to a third person, but Rey fraudulently sold the lot to Bel. 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.
Q: What is the nature of Lots 1 and 2?
A: Since George and Hillary wed in 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.
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.”
Q: What applicable law will govern transactions involving alienation or encumbrance of conjugal properties, without consent of the other spouse?
A: The alienation or encumbrance of the conjugal property, without the wife’s consent, made before the effectivity of the Family Code (i.e., August 3, 1988) 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 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 Aug. 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: Is the sale of Lots 1 and 2 void or voidable?
A: It is void. Any alienation or encumbrance of the conjugal property concluded after the effectivity of the Family Code requires the other spouse’s written consent or a court order allowing the transaction. Otherwise, the disposition is void.
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 dissolution 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.
(Source: Alexander vs. Sps. Escalona, G.R. No. 256141, July 19, 2022 [J. Lopez, M., en banc])
The author is Dean of Lyceum of the Philippines University, former chairperson of the Philippine Association of Law Schools, and founder of Mawis Law Office