Uy Tuazon vs. Fuentes

Under Article 124 of the Family Code, any disposition or encumbrance of common property by one spouse without the written consent of the other spouse is void; mere knowledge or awareness of the transaction does not constitute consent. The statutory language is clear, categorical, and admits no room for interpretation through judicial construction or implication.

Dennis Tuazon and Myra Fuentes, as registered co-owners, held two parcels of land in Pasay City on which stood a building known as the DM Building. Their marriage was subsequently declared null and void, with the judgment attaining finality on October 31, 2012. During the pendency of the nullity proceedings, the trial court authorized Fuentes to sell the subject property to cover support obligations. The property was eventually sold to the Philippine Coast Guard Savings and Loan Association, Inc. (PCGSLAI) under a court-approved contract. Two companies owned by Tuazon and his family—World Wiser and Jerzon—occupied the building. After Fuentes demanded that World Wiser vacate, the company refused and produced lease contracts executed solely by Tuazon, covering the period from July 1, 2012 to July 1, 2022. This prompted Fuentes to file a complaint seeking the nullification of those lease agreements.

Nature of the Action: Complaint for declaration of nullity/annulment of contracts of lease filed by Fuentes against her estranged husband Tuazon and his two companies, World Wiser and Jerzon.

Co-ownership and Marital Strife: Tuazon and Fuentes were registered co-owners of two parcels of land with a building known as the DM Building situated at 2004 F.B. Harrison corner San Juan Streets, Pasay City. The spouses had been estranged since 2006 and were living separately. Proceedings for the declaration of nullity of their marriage were pending before Branch 260, RTC, Parañaque City.

Court Authorization to Sell: On August 24, 2012, the RTC authorized Fuentes to sell the subject property—along with other common properties—to pay for her support pendente lite and that of their adoptive daughter. Pursuant to this court order, the property was sold to PCGSLAI. The judgment declaring the marriage null and void attained finality on October 31, 2012, after which the liquidation of the subject property was included in the proceedings.

The Lease Contracts: Tuazon executed two contracts of lease, both notarized by Atty. N. Almenario as Doc. No. 312 and Doc. No. 313, Page No. 64, Book No. 4, series of 2012. One contract was between Tuazon and World Wiser; the other was between Tuazon and Jerzon. Both contracts covered the DM Building and ran for a term of July 1, 2012 to July 1, 2022. Tuazon conceded that Fuentes did not participate in or sign either contract. The two companies occupying the building were owned by Tuazon and his family.

Demand to Vacate and Discovery: On August 8, 2014, Fuentes sent a notice to vacate to World Wiser. Jerzon had already been ordered closed by the Philippine Overseas Employment Administration and was no longer occupying the premises. World Wiser refused to vacate, prompting Fuentes to file an unlawful detainer suit. It was in its defense to that suit that World Wiser presented the lease contracts executed by Tuazon. Fuentes claimed she learned of the contracts only upon their presentation in the unlawful detainer case, and subsequently filed the instant complaint for nullification.

RTC Approval of Sale: On September 8, 2014, the RTC approved the contract to sell between Fuentes and PCGSLAI and directed the execution of a contract of sale.

Petitioners' Defense: Petitioners raised the affirmative defense that the contracts were valid even without Fuentes's consent, arguing that because Fuentes no longer resided in the conjugal home and failed to participate in administering their common properties, Tuazon's decision as husband and co-administrator should prevail.

• Implied Consent through Knowledge and Inaction: Petitioners maintained that Fuentes had knowledge of the lease contracts even prior to the unlawful detainer suit and that her prolonged inaction in challenging them constituted implied consent and acceptance of the transactions.

• Mandatory Judicial Dispute Resolution: Petitioners argued that the RTC was obliged to conduct judicial dispute resolution and that the pendency of liquidation proceedings involving the subject property did not justify dispensing with this requirement. They contended that the lease contracts did not affect the liquidation proceedings because they granted only possession, not title.

• Due Process Violation: Petitioners asserted that their due process rights were violated because World Wiser and Jerzon were not parties in the nullity-of-marriage proceedings between Tuazon and Fuentes; consequently, the two companies were deprived of the opportunity to participate in a judicial dispute resolution where the matter could have been amicably resolved.

• Written Consent Required by Law: Fuentes countered that the theory of implied consent was not only factually baseless but legally untenable. She emphasized that the law clearly and categorically requires written consent for conveyances involving common property.

• Knowledge Not Equivalent to Consent: Fuentes argued that her knowledge that World Wiser and Jerzon were occupying the subject property did not amount to knowledge of—much less implied consent to—the lease transactions, particularly because she had been estranged from Tuazon since 2006 and had been living apart from him since then.

• No Due Process Violation from Lack of JDR: Fuentes averred that the absence of judicial dispute resolution did not violate due process. She underscored that petitioners had abandoned this objection by actively participating in the proceedings without further challenging the RTC's denial of their request, and that petitioners' repeated failure to appear at scheduled mediation conferences demonstrated their lack of genuine interest in settlement.

• Validity of the Lease Contracts: Whether the contracts of lease executed by Tuazon without the written consent of Fuentes are void under Article 124 of the Family Code, notwithstanding Fuentes's alleged knowledge of and inaction toward the transactions.

• Effect of Non-Referral to Judicial Dispute Resolution: Whether the RTC's refusal to refer the case to judicial dispute resolution after failed mediation invalidated the proceedings below on due process grounds.

• Validity of the Lease Contracts: The lease contracts were properly declared void. Article 124 of the Family Code requires the written consent of both spouses for any disposition or encumbrance of common property; in the absence of such consent or court authorization, the disposition or encumbrance is void. The statutory language is unequivocal and admits no exceptions by implication. Fuentes's knowledge or awareness of the lease contracts, even if proven, does not satisfy the explicit requirement of written consent. As established in Jader-Manalo v. Camaisa, knowledge of a transaction is not consent. Tuazon himself admitted that Fuentes neither participated in nor signed the contracts. Moreover, Tuazon failed to demonstrate that he had obtained judicial authority under the same provision to act unilaterally on account of Fuentes's alleged incapacity or inability to participate in administration. The protective purpose of Article 124—safeguarding community or conjugal property from unilateral dissipation by either spouse—would be frustrated were mere knowledge to be equated with the statutorily mandated written consent. No injustice or absurdity results from applying the provision's plain meaning.

• Effect of Non-Referral to Judicial Dispute Resolution: The absence of judicial dispute resolution did not invalidate the proceedings. Under the applicable guidelines, referral to judicial dispute resolution after failed mediation is predicated on the possibility of settlement. The RTC, in the valid exercise of its discretion, determined that settlement was out of the question given petitioners' conduct—particularly their repeated failure to appear at scheduled mediation conferences. Fuentes also expressly opposed the referral. The issue was raised only after trial on the merits and with petitioners' active participation, effectively rendering the objection untimely. Raising procedural technicalities at such a late stage, without corresponding diligence during mediation, warranted the inference that petitioners were resorting to dilatory tactics rather than asserting a genuine procedural grievance.

• Void Disposition of Common Property Without Written Spousal Consent (Article 124, Family Code) — Under the regime of absolute community or conjugal partnership, any disposition or encumbrance of common property by one spouse without the written consent of the other spouse or the authority of the court is void. The law is clear, categorical, and unambiguous; it makes no room for interpretation or implication. Knowledge or awareness of the transaction by the non-consenting spouse is not equivalent to the written consent required by law. The provision establishes two specific modes by which the requirement may be satisfied: (1) the written consent of the other spouse, or (2) judicial authorization in cases where the other spouse is incapacitated or otherwise unable to participate in administration. In the absence of either, the transaction is void but is construed as a continuing offer that may be perfected upon acceptance by the other spouse or authorization by the court before withdrawal.

• Knowledge Is Not Consent in Spousal Dispositions — Mere awareness of or passive acquiescence to a transaction involving common property does not satisfy the statutory requirement of written consent under the Family Code. The doctrine, drawn from Jader-Manalo v. Camaisa and Tinitigan v. Tinitigan, reinforces the formal and protective character of the written-consent requirement.

• "The law requires written consent of the other spouse, otherwise, the disposition of common property is void. The requirement under the law is clear, categorical, unambiguous, and makes no room for interpretation. Under the rules on statutory construction, where the law is clear and unambiguous, it must be taken to mean exactly what it says, and courts have no choice but to see to it that the mandate is obeyed."

• "It is immaterial whether Fuentes had knowledge of the questioned transactions as the latter admittedly did not give her written consent to the contracts. Significantly, Tuazon himself admitted that Fuentes did not participate nor sign the contracts of lease. Unfortunately for petitioners, knowledge or being merely aware of a transaction is not consent."

• "Article 124 of the Family Code protects the community or conjugal property from unlawful dissipation by any of the spouses which could inevitably prejudice the family. The law already outline[s] the necessary safeguards and the straightforward procedure for every possible scenario in the disposition or encumbrance of common properties in keeping with the special nature of ownership and property regime governing marriage."

• Jader-Manalo v. Camaisa, 425 Phil. 346 (2002) — Followed. Declared the sale of common property void where the written consent of the other spouse was absent, holding that awareness of or active participation in negotiations is not equivalent to the statutorily required consent.

• Alejo v. Sps. Cortez, et al., 811 Phil. 129 (2017) — Followed. Reiterated that the disposition of conjugal property by one spouse without the written consent of the other is void under the unequivocal language of the Family Code.

• Abakada Guro Party List v. Hon. Exec. Ermita, 506 Phil. 1 (2005) — Cited for the principle of statutory construction that where the law is clear and unambiguous, it must be applied exactly as written.

• Spouses Alinas v. Spouses Alinas, 574 Phil. 311 (2008) — Referenced for the principle that courts may refrain from literal application where it would produce unjust or absurd results, but distinguished on the ground that applying Article 124 as written produced no such injustice.

• Article 124, Family Code of the Philippines — The central provision applied. Requires the written consent of both spouses for the disposition or encumbrance of conjugal partnership property. Where one spouse is incapacitated or unable to participate in administration, the other may assume sole powers of administration but may not dispose of or encumber property without either the written consent of the other spouse or court authority. Absent such consent or authority, the disposition or encumbrance is void but operates as a continuing offer. The contracts of lease, being encumbrances on common property for a term exceeding one year, fell squarely within the provision's coverage.

• Section 2, Rule 19, Rules of Court — Applied to deny PCGSLAI's Motion for Intervention, which was filed only before the Supreme Court, long after judgment had been rendered by the trial court.

• A.M. No. 19-10-20-SC (2020 Guidelines for the Conduct of Court-Annexed Mediation and Judicial Dispute Resolution in Civil Cases) — Referenced to support the conclusion that referral to judicial dispute resolution after failed mediation is permissive and contingent upon the likelihood of settlement, which the RTC had validly determined did not exist.

Perlas-Bernabe, S.A.J. (Chairperson), Hernando, Gaerlan, and Rosario (designated additional member per Special Order No. 2835 dated July 15, 2021), JJ., concurred.

N/A — The decision was unanimous with no dissenting opinions registered.