In the Philippines, the validity of real estate transactions involving married couples often hinges on a crucial element: spousal consent. The Supreme Court, in Alexander v. Escalona, clarified the rules governing the sale or encumbrance of conjugal property, particularly when one spouse acts without the explicit consent of the other. This landmark decision emphasizes that transactions made after the effectivity of the Family Code, without proper spousal consent or court authorization, are considered void. This ruling offers significant protection to the rights of spouses in marital property and sets clear guidelines for determining the applicable law based on the date of the transaction, not the date of marriage. This ensures that both parties in a marriage have equal say in managing and disposing of assets acquired during their union.

Unapproved Property Transfer: Can One Spouse’s Deal Sink a Conjugal Sale?

The case revolves around Spouses Jorge and Hilaria Escalona, married in 1960, who acquired properties during their marriage. In 1998, Jorge waived his rights to one of these properties in favor of his illegitimate son, Reygan, without Hilaria’s consent. Reygan later transferred the properties to Belinda Alexander, leading to a legal battle when Spouses Escalona sought to annul these transactions, arguing Hilaria’s lack of consent invalidated the deals. The central legal question was: Under what conditions can a contract be voided due to the absence of spousal consent, and what laws govern such situations when the marriage occurred before, but the transaction after, the Family Code’s enactment?

The Supreme Court addressed the complexities arising from the interplay between the Civil Code and the Family Code concerning conjugal property rights. The Court emphasized that the applicable law hinges on the date of the property’s alienation or encumbrance, not the marriage date. Since the transactions occurred after the Family Code took effect, its provisions applied. Building on this principle, Article 124 of the Family Code requires written consent from both spouses, or a court order, for any disposition of conjugal property. Without such consent, the transaction is void.

The Court also clarified that Article 124 does not create an imprescriptible action. While seemingly ‘void,’ these transactions are treated as continuing offers that can be perfected if the non-consenting spouse accepts or the court authorizes them before withdrawal. This approach contrasts with void contracts under Article 1409 of the Civil Code, which are inherently flawed from inception and cannot be ratified. Such contracts are void because, under Article 1318 of the Civil Code, there is no consent of the contracting parties, object certain, nor cause of the obligation, which are required for contracts to exist.

Article 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 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 disposition or encumbrance without 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.

Addressing the retroactive application of the Family Code, the Court acknowledged the protection of vested rights acquired before its enactment. However, in this case, Reygan and Belinda could not claim such rights as the transfers occurred well after the Family Code’s effectivity. Furthermore, Belinda’s claim as a buyer in good faith was rejected. She had notice of Jorge’s marital status and failed to investigate whether Hilaria consented, thus assuming the risks of the transaction.

The Court’s analysis underscored the importance of protecting the conjugal partnership. It clarified that the husband or wife’s right to one-half of the conjugal assets only vests upon liquidation of the partnership. Therefore, any unilateral transfer before dissolution remains inchoate and ineffective. The Supreme Court also pointed out that one of the married couple never transferred Lot 2 to Reygan, and for that reason, Reygan had no ownership or right to transfer to Belinda, making the transfer null and void.

In its final judgment, the Supreme Court affirmed the Court of Appeals’ decision, declaring the transactions void. Moreover, the Court ordered Reygan to reimburse Belinda for the purchase price, preventing unjust enrichment. By emphasizing these aspects, the Court provided clear guidelines for similar cases, ensuring that family property rights are carefully protected and that all parties involved in property transactions act with due diligence and good faith.

FAQs

What was the key issue in this case?	The central issue was determining the validity of a property transfer by one spouse without the other’s consent, especially when the marriage predated the Family Code but the transfer occurred after its enactment.
Which law applies to the transaction: the Civil Code or the Family Code?	The Family Code applies because the alienation of the property occurred after its effectivity, regardless of when the marriage was celebrated.
What does Article 124 of the Family Code say about spousal consent?	Article 124 requires written consent from both spouses or a court order for any disposition or encumbrance of conjugal property. Without this, the transaction is void.
Is a transaction without spousal consent completely invalid?	Yes, but it is considered a continuing offer that can be perfected if the non-consenting spouse accepts it, or the court authorizes it before either party withdraws the offer.
What is a “vested right,” and how does it affect the application of the Family Code?	A vested right is a fixed and established right or interest in a property. The Family Code’s retroactive application does not prejudice vested rights acquired before its enactment.
Was Belinda considered a buyer in good faith in this case?	No, because she was aware that Jorge was married but failed to verify Hilaria’s consent to the transaction.
What was the ruling of the court?	The Supreme Court affirmed the Court of Appeals’ decision, declaring the transactions void and ordering Reygan to reimburse Belinda for the purchase price.
What was the basis of the claim for Lot No. 2?	Because neither Jorge nor Hilaria alienated the same in favor of Reygan. Consequently, Reygan acquired no right whatsoever over Lot No. 2.
Did the Supreme Court abandon previous rulings?	No, the Court clarified the Cueno decision by providing guidance as to the status of a contract involving the alienation of property without consent of the other spouse.

In conclusion, Alexander v. Escalona serves as a critical reminder of the importance of spousal consent in property transactions in the Philippines. This ruling protects marital property rights and provides clear guidelines for determining the applicable law based on the date of the transaction. It also reinforces the need for parties to conduct due diligence and act in good faith when engaging in real estate dealings involving married individuals.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawwpartners.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 v. Spouses Jorge and Hilaria Escalona, and Reygan Escalona, G.R. No. 256141, July 19, 2022