Ainza vs. Spouses Padua

A sale of conjugal real property by the wife without the husband’s consent, made before the effectivity of the Family Code, is governed by the Civil Code and is a voidable contract, not void; it remains binding unless annulled within the prescriptive period. The Statute of Frauds does not bar an oral contract of sale that has been completed or partially consummated.

Concepcion Ainza is the mother of respondent Eugenia Padua, who was married to respondent Antonio Padua. The dispute concerns a conjugal lot and unfinished residential house in Quezon City originally owned by the Padua spouses. At the time of the April 1987 transaction, the Civil Code governed conjugal partnership property and required spousal consent for dispositions; the Family Code took effect on August 3, 1988, and Article 256 limited its retroactive application so as not to impair vested or acquired rights under the Civil Code or other laws.

Concepcion Ainza is the mother of respondent Eugenia Padua, who was married to respondent Antonio Padua. The Padua spouses owned a 216.40-square-meter lot with an unfinished residential house at No. 85-A Durian corner Pajo Streets, Barangay Quirino 2-C, Project 2, Quezon City, covered by Transfer Certificate of Title No. 271935. According to Concepcion, sometime in April 1987, she bought one-half of an undivided portion of the property from Eugenia and Antonio for One Hundred Thousand Pesos (P100,000.00). No Deed of Absolute Sale was executed, but cash payment was received by the respondents, and ownership was transferred to Concepcion through physical delivery to her attorney-in-fact and daughter, Natividad Tuliao. Concepcion authorized Natividad and Natividad’s husband, Ceferino Tuliao, to occupy the premises and make improvements on the unfinished building.

Concepcion further alleged that, without her consent, respondents caused the subdivision of the property into three portions and registered them in their names under TCT Nos. N-155122, N-155123, and N-155124, in violation of the restrictions annotated at the back of the title. Antonio, for his part, averred that he bought the property in 1980 and introduced improvements thereon. Between 1989 and 1990, he and Eugenia allowed Natividad and Ceferino to occupy the premises temporarily. In 1994, they caused the subdivision of the property, and three separate titles were issued.

Thereafter, Antonio requested Natividad to vacate the premises, but Natividad refused and claimed that Concepcion owned the property. Antonio filed an ejectment suit on April 1, 1999. On May 4, 1999, Concepcion, represented by Natividad, filed a civil case for partition of real property and annulment of titles with damages. Antonio claimed that Eugenia admitted that Concepcion offered to buy one third of the property and gave her small amounts over several years, which totaled P100,000.00 by 1987 and for which Eugenia signed a receipt. The receipt stated: “Received the amount of ONE HUNDRED THOUSAND PESOS (P100,000.00) as payment for the lot on 85-A Durian St., Project 2, Quezon City, from Mrs. Concepcion R. Ainza, on April, 1987.”

The trial court found that Eugenia offered to sell a portion of the property to Concepcion, who accepted and agreed to pay P100,000.00; that Eugenia delivered the property to Concepcion; and that Concepcion paid the price as evidenced by the receipt signed by Eugenia. It also noted Antonio’s statement that his wife admitted she sold the property to Concepcion.

• Validity and Consummation of Sale: Concepcion alleged that she bought one-half of an undivided portion of the property from Eugenia and Antonio in April 1987 for P100,000.00; although no Deed of Absolute Sale was executed, cash payment was received and ownership was transferred through physical delivery to her attorney-in-fact, Natividad.
• Unauthorized Subdivision and Registration: Concepcion alleged that, without her consent, respondents subdivided the property into three portions and registered them in their names under TCT Nos. N-155122, N-155123, and N-155124, in violation of the restrictions annotated at the back of the title.

• Ownership and Temporary Occupation: Antonio averred that he bought the property in 1980 and introduced improvements thereon; between 1989 and 1990, he and Eugenia allowed Natividad and Ceferino to occupy the premises temporarily.
• Subdivision and Ejectment: Antonio averred that in 1994 they caused the subdivision of the property and three separate titles were issued; thereafter he requested Natividad to vacate, but she refused and claimed Concepcion owned the property, prompting him to file an ejectment suit on April 1, 1999.
• Nature of Payment: Antonio claimed that Eugenia admitted that Concepcion offered to buy one third of the property and gave small amounts over several years totaling P100,000.00 by 1987, for which Eugenia signed a receipt.

• Validity of Contract of Sale: Whether there was a valid contract of sale between Eugenia and Concepcion.
• Applicable Law: Whether the Civil Code or the Family Code governs the April 1987 sale of conjugal property.
• Husband’s Consent: Whether Antonio’s consent was required and what effect its absence had on the sale.
• Statute of Frauds: Whether the oral contract of sale violated the Statute of Frauds.
• Prescription: Whether Antonio’s right to annul the sale was extinguished by prescription.

• Validity of Contract of Sale: Yes, but the sale was voidable, not void. A contract of sale is perfected by mere consent; the parties agreed on the subject matter, price, and terms, and both performed. Because Antonio did not timely annul, the sale is binding.
• Applicable Law: Civil Code. The sale occurred in April 1987, before the Family Code took effect on August 3, 1988; Article 256 limits retroactivity so as not to impair vested rights, and applying the Family Code would impair Concepcion’s vested rights.
• Husband’s Consent: Antonio’s consent was required, but its absence made the sale voidable, not void. Under the Civil Code, the wife could not bind the conjugal partnership without the husband’s consent; the contract is annullable at the husband’s instance.
• Statute of Frauds: No. The Statute of Frauds applies only to executory agreements; the oral sale was completed or partially consummated, as evidenced by payment and delivery, and a receipt signed by Eugenia.
• Prescription: Yes, barred. The action to annul the oral contract had to be commenced within six years from April 1987 under Article 1145; no action was filed by April 1993. Even under the ten-year period of Article 173, more than ten years had lapsed.

• Validity of Contract of Sale: A contract of sale is perfected by mere consent, upon a meeting of the minds on the offer and acceptance based on subject matter, price, and terms of payment, as cited in Alcantara-Daus vs. De Leon. Eugenia offered to sell a portion of the property to Concepcion, who accepted and agreed to pay P100,000.00. The contract was consummated when both parties fully complied with their obligations: Eugenia delivered the property to Concepcion, who in turn paid the price as evidenced by the receipt signed by Eugenia. Antonio also stated that his wife admitted she sold the property to Concepcion. Thus, a perfected and consummated contract of sale existed.
• Applicable Law: The subject property was conjugal and sold by Eugenia in April 1987, prior to the effectivity of the Family Code on August 3, 1988. Article 254 of the Family Code repealed Title V, Book I of the Civil Code provisions on property relations between husband and wife. However, Article 256 limited the Family Code’s retroactive effect only to cases where it would not prejudice or impair vested or acquired rights under the Civil Code or other laws. Since Concepcion’s vested rights would be impaired by applying the Family Code, the Civil Code governed. The Court of Appeals therefore erred in applying Article 124 of the Family Code.
• Husband’s Consent: Under the Civil Code, the husband is the administrator of the conjugal partnership (Article 165); subject to exceptions, he cannot alienate or encumber real property of the conjugal partnership without the wife’s consent (Article 166); and the wife cannot bind the conjugal partnership without the husband’s consent, except in cases provided by law (Article 172). The consent of both Eugenia and Antonio was necessary for the sale of conjugal property to be valid, and Antonio’s consent cannot be presumed. Except for the self-serving testimony of Natividad, no evidence showed Antonio participated or consented to the sale. Eugenia alone was incapable of giving consent. Therefore, in the absence of Antonio’s consent, the disposition made by Eugenia was voidable. Felipe vs. Heirs of Aldon, et al. clarified that a sale by the wife of conjugal property without the husband’s consent is a defective contract but voidable, not void, because one party is incapable of giving consent under Article 1390 of the Civil Code; it is binding unless annulled. Gavieres vs. Administrators of Peña was cited for the rule that consent cannot be presumed.
• Statute of Frauds: The verbal contract of sale did not violate the Statute of Frauds, which provides that a contract for the sale of real property shall be unenforceable unless the contract or some note or memorandum of the sale is in writing and subscribed by the party charged or his agent. When a verbal contract has been completed, executed, or partially consummated, its enforceability is not barred by the Statute of Frauds, which applies only to an executory agreement. Where one party has performed his obligation, oral evidence is admissible to prove the agreement. Here, the oral contract was evidenced by a receipt signed by Eugenia, and Antonio stated that his wife admitted the sale. Alfredo vs. Borras and Cordial vs. Miranda were cited in support.
• Prescription: The contract of sale between Eugenia and Concepcion being an oral contract, the action to annul it had to be commenced within six years from the time the right of action accrued under Article 1145 of the Civil Code. Eugenia sold the property in April 1987, so Antonio should have asked the courts to annul the sale on or before April 1993. No action was commenced by Antonio to annul the sale, hence his right to seek annulment was extinguished by prescription. Even assuming that the ten-year prescriptive period under Article 173 should apply, Antonio was still barred because more than ten years had lapsed since April 1987 without any such action being filed. Thus, the sale was binding unless annulled, and Antonio failed to exercise his right within the prescribed period.

• Voidable Sale of Conjugal Property by Wife Without Husband’s Consent — Under the Civil Code, a sale by the wife of conjugal real property without the husband’s consent is not void but voidable, because the wife lacks capacity to give consent; the consent of both spouses is necessary. The contract is binding unless annulled by the husband within the prescribed period. Applied here, Eugenia’s sale to Concepcion was voidable, and Antonio failed to annul it.
• Retroactivity of the Family Code and Vested Rights — Article 256 of the Family Code limits its retroactive application to cases where it would not prejudice or impair vested or acquired rights under the Civil Code or other laws. Applied here, the April 1987 sale was governed by the Civil Code; applying Article 124 of the Family Code would impair Concepcion’s vested rights.
• Statute of Frauds Does Not Apply to Executed or Partially Executed Oral Contracts — The Statute of Frauds applies only to executory agreements; an oral contract that has been completed, executed, or partially consummated is enforceable, and oral evidence is admissible where one party has performed. Applied here, the receipt signed by Eugenia and the delivery and payment removed the Statute of Frauds bar.
• Prescription of Action to Annul a Voidable Contract — An action to annul an oral contract must be brought within six years from accrual under Article 1145 of the Civil Code; if the ten-year period under Article 173 is applied, the action is still barred after ten years. Applied here, Antonio’s failure to file within either period extinguished his right to annul.
• Consent Cannot Be Presumed — The husband’s consent to a sale of conjugal property cannot be presumed; mere self-serving testimony is insufficient to establish consent. Applied here, no evidence showed Antonio consented to the sale by Eugenia.

• “A contract of sale is perfected by mere consent, upon a meeting of the minds on the offer and the acceptance thereof based on subject matter, price and terms of payment.” — States the controlling rule on perfection of sale, which the Court applied to find that Eugenia and Concepcion had a perfected contract.
• “When a verbal contract has been completed, executed or partially consummated, as in this case, its enforceability will not be barred by the Statute of Frauds, which applies only to an executory agreement.” — Defines the exception to the Statute of Frauds that the Court applied to uphold the oral sale.
• “The consent of both Eugenia and Antonio is necessary for the sale of the conjugal property to be valid. Antonio’s consent cannot be presumed.” — States the consent requirement for conjugal property and the rule that consent cannot be presumed.
• “In sum, the sale of the conjugal property by Eugenia without the consent of her husband is voidable. It is binding unless annulled. Antonio failed to exercise his right to ask for the annulment within the prescribed period, hence, he is now barred from questioning the validity of the sale between his wife and Concepcion.” — Summarizes the ratio decidendi: the sale was voidable, not void, and prescription barred Antonio’s challenge.

• Felipe vs. Heirs of Aldon, et al., 205 Phil. 537, 541-542 (1983) — Controlling precedent clarifying that a sale of conjugal property by the wife without the husband’s consent is a voidable contract, not void; followed by the Court.
• Alcantara-Daus vs. De Leon, G.R. No. 149750, 16 June 2003, 404 SCRA 74, 79 — Cited for the rule that a contract of sale is perfected by mere consent upon a meeting of the minds on subject matter, price, and terms of payment.
• Alfredo vs. Borras, G.R. No. 144225, 17 June 2003, 404 SCRA 145, 158 — Cited for the Statute of Frauds requirement that a contract for the sale of real property be in writing and subscribed by the party charged or his agent.
• Cordial vs. Miranda, G.R. No. 135495, 14 December 2000, 348 SCRA 158, 160 — Cited for the rule that a completed, executed, or partially consummated verbal contract is not barred by the Statute of Frauds, and oral evidence is admissible where one party has performed.
• Gavieres vs. Administrators of Peña, 13 Phil. 449, 454 (1909) — Cited for the rule that consent cannot be presumed.

• Article 124, Family Code — Applied by the Court of Appeals to require Antonio’s written consent for the sale of conjugal property; the Supreme Court held it inapplicable because the sale occurred in April 1987, before the Family Code took effect.
• Article 254, Family Code — Repealed Title V, Book I of the Civil Code provisions on property relations between husband and wife; cited to establish the Family Code’s effectivity and repeal.
• Article 256, Family Code — Limits the retroactive effect of the Family Code to cases where it would not prejudice or impair vested or acquired rights under the Civil Code or other laws; applied to hold that the Civil Code governed the sale.
• Article 165, Civil Code — Provides that the husband is the administrator of the conjugal partnership; cited in the Felipe ruling quoted by the Court.
• Article 166, Civil Code — Provides that, subject to exceptions, the husband cannot alienate or encumber real property of the conjugal partnership without the wife’s consent; cited in the Felipe ruling.
• Article 172, Civil Code — Provides that the wife cannot bind the conjugal partnership without the husband’s consent, except in cases provided by law; cited to show Eugenia could not alone bind the conjugal partnership.
• Article 173, Civil Code — Provides that contracts entered into by the husband without the wife’s consent, when such consent is required, are annullable at her instance during the marriage and within ten years from the transaction; cited in Felipe and as an alternative prescriptive period.
• Article 1390, Civil Code — Defines voidable contracts as including those where one of the parties is incapable of giving consent; applied to classify the sale by Eugenia without Antonio’s consent as voidable, not void.
• Article 1145, Civil Code — Requires an action to annul an oral contract to be commenced within six years from the time the right of action accrued; applied to bar Antonio’s annulment action after April 1993.
• Article 1403, Civil Code (Statute of Frauds) — Requires a contract for the sale of real property to be in writing and subscribed by the party charged or his agent, otherwise unenforceable; held inapplicable to the oral sale because it had been completed or partially consummated.
• Article 1409, Civil Code — Defines void or inexistent contracts; cited in the Felipe ruling to explain that the sale by the wife without the husband’s consent is not void because it is not among those listed.

Davide, Jr., C.J. (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.