Sale of property without marital consent

Is marital consent required for the sale by the husband of property he purchased under a conditional contract to sell executed while he was still single but title of which was transferred when he was already married?  The Supreme Court faced this issue in Sps. Lita De Leon, et al. vs. Anita B. De Leon, et al.,  G.R. No. 185063, July 23, 2009.

Sometime in 1965, Bonifacio O. De Leon, then single, and the People’s Homesite and Housing Corporation (PHHC) entered into a Conditional Contract to Sell for the purchase on installment of a parcel of land. Three years later, Bonifacio married Anita.

After full payment of the purchase price for the lot, PHHC executed, on June 22, 1970, a Final Deed of Sale in favor of Bonifacio. Transfer Certificate of Title (TCT) No. 173677 was issued on February 24, 1972 in the name of Bonifacio, “single.”

Subsequently, Bonifacio, for PhP 19,000, sold the subject land to his sister, Lita, and her husband. Felix Rio Tarrosa (Tarrosas). The Deed of Sale dated January 12, 1974 (Deed of Sale) did not bear the written consent and signature of Anita. Bonifacio died in 1996. The Tarrosas registered the Deed of Sale and had TCT No. 173677 canceled. They secured the issuance in their names of TCT No. N-173911 from the Quezon City Register of Deeds.  Anita and her children then filed an action for reconveyance against the Tarrosas.

The Regional Trial Court, on the finding that the lot in question was the conjugal property of Bonifacio and Anita, rendered judgment in favor of Anita and her children. The Court of Appeals held that the Tarrosas failed to overthrow the legal presumption that the parcel of land in dispute was conjugal.

In their petition before the Supreme Court, the Tarrosas assert that, since Bonifacio purchased the lot from PHHC on installment before he married Anita, the land was Bonifacio’s exclusive property and not conjugal, even though some installments were paid and the title was issued to Bonifacio during the marriage.

The Supreme Court ruled that the property is conjugal:

Article 160 of the 1950 Civil Code, the governing provision in effect at the time Bonifacio and Anita contracted marriage, provides that all property of the marriage is presumed to belong to the conjugal partnership unless it is proved that it pertains exclusively to the husband or the wife. For the presumption to arise, it is not, as Tan v. Court of Appeals teaches, even necessary to prove that the property was acquired with funds of the partnership. Only proof of acquisition during the marriage is needed to raise the presumption that the property is conjugal. In fact, even when the manner in which the properties were acquired does not appear, the presumption will still apply, and the properties will still be considered conjugal.

In the case at bar, ownership over what was once a PHHC lot and covered by the PHHC-Bonifacio Conditional Contract to Sell was only transferred during the marriage of Bonifacio and Anita. It is well settled that a conditional sale is akin, if not equivalent, to a contract to sell. In both types of contract, the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event, usually the full payment of the purchase price, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. In other words, in a contract to sell ownership is retained by the seller and is not passed to the buyer until full payment of the price, unlike in a contract of sale where title passes upon delivery of the thing sold.

Such is the situation obtaining in the instant case. The conditional contract to sell executed by and between Bonifacio and PHHC on July 20, 1965 provided that ownership over and title to the property will vest on Bonifacio only upon execution of the final deed of sale which, in turn, will be effected upon payment of the full purchase price. . .

Evidently, title to the property in question only passed to Bonifacio after he had fully paid the purchase price on June 22, 1970. This full payment, to stress, was made more than two (2) years after his marriage to Anita on April 24, 1968. In net effect, the property was acquired during the existence of the marriage; as such, ownership to the property is, by law, presumed to belong to the conjugal partnership.

Such presumption is rebuttable only with strong, clear, categorical, and convincing evidence. There must be clear evidence of the exclusive ownership of one of the spouses, and the burden of proof rests upon the party asserting it.

The Supreme Court also ruled that the fact that the transfer certificate of title was in the name of Bonifacio did not change the conjugal nature of the property:

Petitioners’ argument that the disputed lot was Bonifacio’s exclusive property, since it was registered solely in his name, is untenable. The mere registration of a property in the name of one spouse does not destroy its conjugal nature. What is material is the time when the property was acquired.

As Anita never gave consent to the sale, the Supreme Court ruled that the sale was void:

. . . the 1950 Civil Code is very explicit on the consequence of the husband alienating or encumbering any real property of the conjugal partnership without the wife’s consent. To a specific point, the sale of a conjugal piece of land by the husband, as administrator, must, as a rule, be with the wife’s consent. Else, the sale is not valid. So it is that in several cases we ruled that the sale by the husband of property belonging to the conjugal partnership without the consent of the wife is void ab initio, absent any showing that the latter is incapacitated, under civil interdiction, or like causes. The nullity, as we have explained, proceeds from the fact that sale is in contravention of the mandatory requirements of Art. 166 of the Code. Since Art. 166 of the Code requires the consent of the wife before the husband may alienate or encumber any real property of the conjugal partnership, it follows that the acts or transactions executed against this mandatory provision are void except when the law itself authorized their validity.

Accordingly, the Deed of Sale executed on January 12, 1974 between Bonifacio and the Tarrosas covering the PHHC lot is void.

The Supreme Court held that Bonifacio cannot sell his portion of the conjugal partnership:

Prior to 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 or “remanente liquido” (haber ganancial) 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.

Therefore, even on the supposition that Bonifacio only sold his portion of the conjugal partnership, the sale is still theoretically void, for, as previously stated, the right of the husband or the wife to one-half of the conjugal assets does not vest until the liquidation of the conjugal partnership.

Finally, the Supreme Court ruled that the Tarrosas should be reimbursed for the amount they paid to purchase the property.