In Mario Siochi v. Alfredo Gozon, the Supreme Court reiterated the importance of spousal consent in the disposition of conjugal property. The Court held that under Article 124 of the Family Code, the sale of conjugal property by one spouse without the written consent of the other spouse or authority of the court is void. This ruling protects the rights of both spouses in managing and disposing of property acquired during their marriage, ensuring that neither party can unilaterally make decisions that affect their shared assets.

When One Signature Isn’t Enough: Upholding Spousal Rights in Property Sales

This case arose from a dispute over a 30,000 square meter parcel of land in Malabon, Metro Manila, registered in the name of “Alfredo Gozon, married to Elvira Gozon.” While Alfredo and Elvira were undergoing legal separation proceedings, Alfredo entered into an Agreement to Buy and Sell the property with Mario Siochi. The agreement stipulated that Alfredo would obtain an affidavit from Elvira stating the property was his exclusive asset and secure court approval to exclude the property from the legal separation case. Despite receiving a P5 million earnest money payment, Alfredo failed to fulfill these conditions. Later, Alfredo donated the property to his daughter Winifred and, acting under a Special Power of Attorney from her, sold it to Inter-Dimensional Realty, Inc. (IDRI). Mario Siochi then filed a complaint, leading to a legal battle that ultimately reached the Supreme Court. The central legal question was whether Alfredo could validly sell the conjugal property without Elvira’s consent, especially given the pending legal separation and the subsequent transfer of the property.

The Supreme Court firmly anchored its decision on Article 124 of the Family Code, which governs the administration and disposition of conjugal property. This article mandates that both spouses jointly manage and enjoy conjugal assets. In situations where one spouse is unable to participate, the other may assume sole administrative powers. However, these powers explicitly exclude the ability to dispose of or encumber the property without either court authorization or the written consent of the other spouse. The key provision states that “[i]n the absence of such authority or consent, the disposition or encumbrance shall be void.” The Court emphasized the mandatory nature of this requirement, underscoring that written consent is indispensable for the validity of any transaction involving conjugal property. To underscore the importance of this provision, the Court referenced its previous ruling:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to both spouses jointly. In case of disagreement, the husband’s decision shall prevail, subject to the recourse to the court by the wife for a proper remedy, which must be availed of within five years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance which must have the authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing offer on the part of the consenting spouse and the third person, and may be perfected as a binding contract upon the acceptance by the other spouse or authorization by the court before the offer is withdrawn by either or both offerors.

In this case, Alfredo, despite being separated in fact from Elvira and acting as the sole administrator, lacked the legal authority to sell the property without her explicit written consent. The Court clarified that the absence of consent from one spouse renders the entire sale void, affecting even the portion of the property belonging to the spouse who initiated the sale. Mario Siochi argued that the Agreement to Buy and Sell should be considered a continuing offer that could be perfected by Elvira’s acceptance. However, the Court dismissed this argument, noting that Alfredo’s subsequent donation of the property to Winifred and its subsequent sale to IDRI indicated a clear withdrawal of the offer.

The Court also addressed the Court of Appeals’ finding that Alfredo’s share in the property was forfeited in favor of his daughter Winifred due to the legal separation case. The Supreme Court clarified that while the legal separation decree deprived Alfredo of his share in the net profits of the conjugal partnership, it did not automatically forfeit his entire share in the conjugal property itself. Article 63 of the Family Code specifies that upon legal separation, the offending spouse forfeits their share of the net profits, not their entire stake in the property. The Court explained that the forfeited profits are calculated as the increase in value of the community property between the marriage and its dissolution, as outlined in Article 102(4) of the Family Code. Therefore, Alfredo’s share in the conjugal property remained intact, subject to the requirement of Elvira’s consent for any valid disposition.

Regarding Inter-Dimensional Realty, Inc. (IDRI), the Court concurred with the Court of Appeals’ assessment that IDRI was not a buyer in good faith. The evidence showed that IDRI was aware of the notice of lis pendens on the property’s title and the ongoing legal separation case between Alfredo and Elvira. This knowledge should have prompted IDRI to conduct a more thorough investigation into the property’s ownership and the validity of the sale. The Court noted the irregularity in the cancellation of the lis pendens, which was done at Alfredo’s request without a court order or Elvira’s verified petition, as required by Section 77 of Presidential Decree No. 1529. Furthermore, IDRI’s failure to discover that Alfredo’s donation of the property to Winifred lacked Elvira’s consent indicated a lack of due diligence. As Article 125 of the Family Code prohibits one spouse from donating conjugal property without the other’s consent, IDRI’s claim of good faith was untenable.

FAQs

What was the key issue in this case?	The key issue was whether Alfredo Gozon could validly sell conjugal property without the written consent of his wife, Elvira Gozon, especially given their pending legal separation.
What does Article 124 of the Family Code say?	Article 124 states that while one spouse can administer conjugal properties if the other is unable, disposition or encumbrance requires court authority or written consent from the other spouse; without it, the transaction is void.
Why was the sale to Mario Siochi deemed void?	The sale was void because Alfredo did not obtain Elvira’s written consent, a requirement under Article 124 of the Family Code for the valid disposition of conjugal property.
What is a “lis pendens” and why was it important in this case?	A “lis pendens” is a notice that a lawsuit is pending concerning the property. IDRI’s knowledge of the lis pendens should have prompted them to investigate further, making them not a buyer in good faith.
Did Alfredo’s legal separation affect his property rights?	Yes, but only regarding the net profits of the conjugal partnership. While he forfeited his share of the net profits to his daughter, he retained his share in the conjugal property itself.
Why was Inter-Dimensional Realty, Inc. (IDRI) not considered a buyer in good faith?	IDRI was aware of the lis pendens and the legal separation case, indicating they knew of potential issues with the property’s title, and they failed to diligently investigate the lack of spousal consent.
What is the significance of spousal consent in property sales?	Spousal consent ensures that both spouses have a say in the management and disposition of conjugal property, protecting their rights and preventing unilateral decisions that could affect their shared assets.
What happened to the P18 million that IDRI paid for the property?	The Supreme Court ordered Alfredo Gozon and Winifred Gozon to jointly and severally reimburse IDRI the P18 million, with legal interest from the finality of the decision.

The Supreme Court’s decision in Mario Siochi v. Alfredo Gozon reinforces the principle that spousal consent is essential for the valid disposition of conjugal property under the Family Code. This ruling serves as a reminder to those dealing with married individuals to exercise due diligence and ensure compliance with the law to avoid potential legal challenges and financial losses.

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: Mario Siochi v. Alfredo Gozon, G.R. No. 169900, March 18, 2010