This Supreme Court decision clarifies the rules governing property rights in marriages when one spouse disposes of conjugal property without the other’s consent, particularly when the Family Code took effect after the marriage but before the transaction. The Court ruled that the validity of such transactions depends on when the alienation occurred, not when the marriage was celebrated. If the alienation happened after the Family Code’s enactment, it’s considered void without the other spouse’s consent, ensuring stronger protection for spousal property rights regardless of when the marriage began. This decision emphasizes the importance of obtaining spousal consent in property dealings to avoid legal complications and potential nullification of transactions.

Unconsented Transfers: When Does the Family Code Protect Spousal Rights?

The case of Belinda Alexander v. Spouses Jorge and Hilaria Escalona revolves around a dispute over two parcels of land acquired during the marriage of Spouses Escalona, who wed in 1960. Years later, in 1998, Jorge waived his rights to one of the properties in favor of his illegitimate son, Reygan, without Hilaria’s consent. Subsequently, Reygan transferred both properties to Belinda Alexander, leading to a legal battle when Spouses Escalona sought to annul these transactions, claiming Hilaria’s lack of consent and Reygan’s fraudulent actions. The central legal question is whether the transfers are valid, considering they occurred after the Family Code’s enactment, which requires spousal consent for property alienation, despite the marriage taking place under the prior Civil Code.

The Regional Trial Court (RTC) initially sided with Belinda, arguing that the action to annul the transactions had prescribed, but the Court of Appeals (CA) reversed this decision, declaring the contracts void due to the lack of Hilaria’s consent. Belinda then elevated the case to the Supreme Court, asserting that the properties belonged solely to Jorge, the transactions were valid, and the action to annul had indeed prescribed. She also claimed to be a buyer in good faith, entitled to ownership and possession of the properties. The Supreme Court, in its analysis, focused on whether the properties were conjugal in nature, the applicable laws, and the prescriptive period of the action.

The Court emphasized that under Article 119 of the Civil Code, the default property relations between spouses, absent any marriage settlements, is the conjugal partnership of gains. Article 160 further presumes that all property of the marriage belongs to the conjugal partnership unless proven otherwise. Belinda failed to provide clear and convincing evidence that the properties were Jorge’s exclusive property, thus the presumption of conjugal ownership stood. This presumption placed the burden of proof on Belinda, which she failed to discharge, as mere assertions lack probative value.

Having established the conjugal nature of the properties, the Court then addressed the applicable laws governing the transactions and the prescriptive period. Article 124 of the Family Code stipulates that any alienation or encumbrance of conjugal property after its effectivity requires the other spouse’s written consent or a court order; otherwise, the disposition is void. This requirement stems from the principle that before the liquidation of the conjugal partnership, each spouse’s interest is inchoate and does not ripen into title until the liquidation reveals net assets.

The Court noted that the Family Code expressly repealed Title VI, Book I of the Civil Code, which previously governed property relations between husband and wife. The Family Code has retroactive effect on existing conjugal partnerships without prejudice to vested rights. This retroactive application is enshrined in Articles 105, 254, 255, and 256 of the Family Code. The decision highlighted the conflict between characterizing alienations or encumbrances that fail to comply with Article 166 of the Civil Code, with some viewing such contracts as void and others as merely voidable.

In Spouses Cueno v. Spouses Bautista, the Court En Banc held that the sale of conjugal property without the wife’s consent is merely voidable when both the marriage and alienation occurred before the Family Code. However, the Court clarified that Cueno is inapplicable when the facts call for the application of Article 124 of the Family Code. Cases such as Spouses Aggabao v. Parulan, Jr. have declared transactions void when the alienation occurred after the Family Code, even if the marriage was under the Civil Code. The Court underscored that the date of alienation is crucial in determining the applicable law.

To further clarify, the Court stated that more than the marriage date, the applicable law hinges on the alienation date. If the alienation occurred before the Family Code, Articles 166 and 173 of the Civil Code apply, and the transaction is voidable with a 10-year period for the wife to file an annulment action. Conversely, if the alienation occurred after the Family Code, Article 124 governs, rendering the transaction void unless accepted by the non-consenting spouse or authorized by the court, with the action for nullity filed before the continuing offer becomes ineffective.

The Court also addressed the issue of vested rights, emphasizing that Reygan and Belinda did not acquire any such rights over Lot No. 1 before the Family Code’s enactment. A vested right is defined as a present, fixed interest that is immediate, absolute, and unconditional. Given that the transactions occurred in 1998 and 2005, Article 124 of the Family Code applied, rendering the contracts void due to Hilaria’s lack of consent. Even if Hilaria knew of the contracts, her mere awareness was insufficient, as the law requires written consent for valid disposition.

Concerning Lot No. 2, the Court found that Spouses Escalona never transferred the property to Reygan, making his subsequent transfer to Belinda void. Without ownership, Reygan could not validly convey the property to Belinda, reinforcing the principle that one cannot give what one does not have. The Court noted that since the transfer was made without the consent of both spouses, the date of marriage or alienation was irrelevant, rendering the action to nullify the transaction imprescriptible.

Finally, the Court addressed the issue of restitution. While the transactions were void, the parties must be restored to their original situation. The duty of restitution prevents unjust enrichment. The Court directed Belinda to reimburse Reygan for the purchase price of the lots, preventing Reygan from unjustly retaining the funds. This directive aligned with judicial economy, avoiding further litigation and delays. In conclusion, the Supreme Court clarified that the Family Code applies retroactively to existing conjugal partnerships, and the date of alienation determines the applicable law in cases of spousal consent.

FAQs

What was the key issue in this case?	The key issue was determining the validity of property transfers made without spousal consent after the Family Code took effect, even though the marriage occurred under the Civil Code. The Court had to decide which law applied and whether the transactions were void or voidable.
When does the Family Code apply to marriages celebrated under the Civil Code?	The Family Code applies retroactively to existing conjugal partnerships formed under the Civil Code, except where it would prejudice vested rights acquired before the Family Code’s effectivity on August 3, 1988. This ensures consistency in property relations unless doing so infringes on previously established rights.
What constitutes a ‘vested right’ in the context of marital property?	A vested right is a present, fixed interest in property that is immediate, absolute, and unconditional, not dependent on any contingency. It must be an established right, no longer open to doubt or controversy, and must have been acquired before the Family Code took effect.
What happens if conjugal property is alienated without spousal consent after the Family Code’s enactment?	Under Article 124 of the Family Code, any disposition or encumbrance of conjugal property without the written consent of the other spouse or a court order is void. This means the transaction has no legal effect unless the non-consenting spouse accepts it or the court authorizes it.
Is an action to nullify a transfer without spousal consent imprescriptible?	The Court clarified that such actions are not imprescriptible. The alienation is considered a continuing offer that can be accepted by the non-consenting spouse or authorized by the court before the offer is withdrawn. An action for declaration of nullity must be filed before this continuing offer becomes ineffective.
What is the remedy for a buyer who unknowingly purchases property transferred without spousal consent?	The buyer is entitled to restitution, meaning they can recover the purchase price from the seller. This prevents unjust enrichment, ensuring that neither party benefits unfairly from the void transaction.
How does this ruling affect real estate transactions involving married individuals?	It underscores the necessity of obtaining written consent from both spouses for any property transaction involving conjugal assets. Buyers must exercise due diligence to verify spousal consent to avoid the risk of the transaction being declared void.
What should parties do if they find themselves in a similar situation?	Consult with a qualified attorney to assess their specific circumstances and determine the appropriate legal course of action. This will help protect their rights and navigate the complexities of marital property law.

In summary, this landmark case underscores the critical importance of spousal consent in property transactions and provides clear guidelines for determining the applicable laws based on the timing of the alienation. The decision offers valuable insight for legal professionals and individuals navigating complex marital property issues, ensuring fair and just outcomes in property disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Belinda Alexander vs. Spouses Jorge and Hilaria Escalona, and Reygan Escalona, G.R. No. 256141, July 19, 2022