The En Banc case of Alexander vs Spouses Escalona (G.R. 256141, 19 July 2022) lays down the rules governing the status of a contract when a conjugal property is alienated or encumbered without the other spouse’s consent. It also identifies the applicable law, the appropriate relief of the aggrieved spouse, and the prescriptive period governing such relief.
Previously, in Cueno v Bautista (G.R. 246445, 2 March 2021), the Court En Banc held that the sale of conjugal property without the consent of the wife is merely voidable. In that case, the marriage of the spouses and the alienations of their conjugal property transpired before the effectivity of the Family Code. The Court in Cueno observed the conflicting views on the status of alienations or encumbrances without the wife’s consent, as required in Article 166 of the Civil Code:
“x x x The first view treats such contracts as void 1) on the basis of lack of consent of an indispensable party and/or 2) because such transactions contravene mandatory provisions of law; the second view holds that although Article 166 requires the consent of the wife, the absence of such consent does not render the entire transaction void but merely voidable in accordance with Article 173 of the Civil Code.”
The Court adopted the second view as the correct rule and abandoned all contrary cases. Thus, a sale, without the wife’s consent, is not “void” but merely “voidable”. This conclusion was reached by considering Article 173 of the Civil Code. It provides that the wife’s remedy is for the annulment of the contract within ten years from the date of the transaction signifying that it is valid until annulled. A further scrutiny of the cases mentioned in Cueno which support the first and second views reveals an identical factual setting — the marriage and the alienation transpired before the effectivity of the Family Code. These cases show that the date of alienation or encumbrance of the conjugal property is material in determining the applicable law.
Meanwhile, in the subsequent case of Esteban v Campano (G.R. 235364, 26 April 2021), the Court observed that the provisions of the Civil Code govern the couple’s property relations because they were married before the effectivity of the Family Code. The Court in this case discussed Cueno although the alienations of conjugal properties were made after the effectivity of the Family Code. This, together with the declaration in Cueno “abandoning all cases contrary thereto” gives rise to confusion on whether such alienations and encumbrances should be treated as voidable or void.
The SC stated that to avoid confusion, Cueno and Esteban must be harmonized with existing jurisprudence and be given proper interpretation in light of the material facts of the cases with cautious attention on the date of marriage of the spouses and the time of alienation of the conjugal property.
The Court ruled that 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:
- Any 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 the contract within 10 years from the date of the transaction; and
- Meanwhile, any 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.
