Art. 124.

The administration and enjoyment of the conjugal partnership 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 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before the offer is withdrawn by either or both offerors. (165a)

Art. 125. Neither spouse may donate any conjugal partnership property without the consent of
the other. However, either spouse may, without the consent of the other, make moderate
donations from the conjugal partnership property for charity or on occasions of family rejoicing
or family distress. (174a)

The pivotal issue in this case is whether or not a lease is an encumbrance

and/or alienation within the scope of Art. 166 of the New Civil Code.

In the contract of lease, the lessor transfers his light of use in favor of the
lessee. The lessor's right of use is impaired, therein. He may even be ejected by
the lessee if the lessor uses the leased realty. Therefore, lease is a burden on
the land, it is an encumbrance on the land. The opinion of the Court of Appeals
that lease is not an encumbrance is not supported by law. The concept of
encumbrance includes lease, thus "an encumbrance is sometimes construed
broadly to include not only liens such as mortgages and taxes, but also
attachment, LEASES, inchoate dower rights, water rights, easements, and
other RESTRICTIONS on USE." (Capitalization is Ours) (533 Pacific Reporter
[second series] 9, 12).

Moreover, lease is not only an encumbrance but also a "qualified alienation,

with the lessee becoming, for all legal intents and purposes, and subject to its
terms, the owner of the thing affected by the lease." (51 C C.J.S., p. 522)

Thus, the joinder of the wife, although unnecessary for an oral lease of
conjugal realty which does not exceed one year in duration, is required in
a lease of conjugal realty for a period of more than one year, such a lease
being considered a conveyance and encumbrance within the provisions of
the Civil Code requiring the joinder of the wife in the instrument by
which real property is conveyed or encumbered (See also 41 C.J.S., p.
1149). In case the wife's consent is not secured by the husband as required by
law, the wife has the remedy of filing an action for the annulment of the
contract. Art. 173 of the Civil Code states "the wife may, during the marriage
and within ten years from the transaction questioned, ask the courts for the
annulment of any contract of the husband entered into without her consent,
when such consent is required. . . .

In the case at bar, the allegation in paragraph 2 of the complaint indicates that
petitioner's estranged husband, defendant Antonio S. Roxas had entered into a
contract of lease with defendant Antonio M. Cayetano without her marital
consent being secured as required by law under Art. 166 of the Civil Code.
Petitioner, therefore, has a cause of action under Art. 173 to file a case for
annulment of the contract of lease entered into without her consent. Petitioner
has a cause of action not only against her husband but also against the lessee,
Antonio M. Cayetano, who is a party to the contract of lease.
(ROXAS vs. THE HON. COURT OF APPEALS, G.R. No. 92245, June 26, 1991)

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The key issue in this case is whether the Kasunduan for the sale of a conjugal
real property between Jacinta and Dolores as a continuing offer has been
converted to a perfected and binding contract. For, if Jorge has not accepted or
consented to the said sale, the Kasunduan is considered void rendering the
other issues raised herein merely academic.

Any alienation or encumbrance of conjugal property made during the effectivity

of the Family Code is governed by Article 124.

The law is therefore unequivocal when it states that the disposition of conjugal
property of one spouse sans the written consent of the other is void. Here, it is
an established fact that the Kasunduan was entered into solely by Jacinta and
signed by her alone. By plain terms of the law therefore, the Kasunduan is
void.

Nevertheless, We agree with the RTC and the CA when it held that the
void Kasunduan constitutes a continuing offer from Jacinta and Dolores and
that Jorge had the option of either accepting or rejecting the offer before it was
withdrawn by either, or both, Jacinta and Dolores.

The point of contention is whether Jorge accepted such continuing offer. If so,
then the Kasunduan is perfected as a binding contract; otherwise,
the Kasunduan remains void .

The RTC opined that Jorge's failure to expressly repudiate the Kasunduan and

his demand that Dolores comply with her undertakings therein show Jorge's
acceptance of the sale of the conjugal property. On the other hand, the CA
noted that in varying the terms of the Kasunduan, i.e.,  in the time of
payment and the purchase price, Jorge is deemed to have only qualifiedly
accepted the same.

We agree with the CA.

It is undisputed that after the execution of the Kasunduan, Jorge sent two

letters to Dolores: one, in forming her that he did not consent to the sale; and
the other, demanding that' Dolores pay the balance of the purchase price on or
before October 5, 1996 and failing which, the purchase price shall be increased
to PhP700,000.

Clearly, Jorge's first letter was an outright and express repudiation of

the Kasunduan. The second letter, while ostensibly a demand for compliance
with Dolores' obligation under the Kasunduan, varied its terms on material
points, i.e., the date of payment of the balance and the purchase price.
Consequently, such counter-offer cannot be construed as evidencing Jorge's
consent to or acceptance of the Kasunduan for it is settled that where the
other spouse's putative consent to the sale of the conjugal property appears in
a separate document which does not contain the same terms and conditions as
in the first document signed by the other spouse, a valid transaction could not
have arisen.

Neither can Jorge's subsequent letters to Dolores be treated as a ratification of

the Kasunduan for the basic reason that a void contract is not susceptible
to ratification. Nor can Jorge's alleged participation in the negotiation for
the sale of the property or his acquiescence to Dolores' transfer to and
possession of the subject property be treated as converting· such
continuing offer into a binding contract as the law distinctly requires
nothing less than a written consent to the sale for its validity. Suffice to
say that participation in or awareness of the negotiations is not consent.  

As above intimated, a determination that the Kasunduan is void renders the

other issues raised by Dolores academic, i.e., whether the doctrine of res
judicata applies and whether the Spouses Cortez are buyers in bad faith;
hence they merit no further discussion .
(ALEJO vs SPS. CORTEZ, G.R. No. 206114, June 19, 2017)

In this case, the Promissory Note and the Deed of Real Estate Mortgage were
executed on 31 October 1995. The Special Power of Attorney was executed on 4
November 1995. The execution of the SPA is the acceptance by the other
spouse that perfected the continuing offer as a binding contract between
the parties, making the Deed of Real Estate Mortgage a valid contract.
(FLORES vs SPOUSES LINDO, G.R. No. 183984 ,   April 13, 2011)
Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the
effectivity of the Family Code. The proper law to apply is, therefore, Article 124 of the
Family Code, for it is settled that any alienation or encumbrance of conjugal
property made during the effectivity of the Family Code is governed by Article
124 of the Family Code.

xxxxxxxx

Lastly, the petitioners’ insistence that Atty. Parulan’s making of a counter-offer during
the March 25, 1991 meeting ratified the sale merits no consideration. Under Article
124 of the Family Code, the transaction executed sans the written consent of Dionisio
or the proper court order was void; hence, ratification did not occur, for a void
contract could not be ratified.

On the other hand, we agree with Dionisio that the void sale was a continuing offer
from the petitioners and Ma. Elena that Dionisio had the option of accepting or
rejecting before the offer was withdrawn by either or both Ma. Elena and the
petitioners. The last sentence of the second paragraph of Article 124 of the Family
Code makes this clear, stating that in the absence of the other spouse’s consent, the
transaction should 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 upon authorization by the court before the offer is
withdrawn by either or both offerors.

Article 124 of the Family Code categorically requires the consent of both spouses
before the conjugal property may be disposed of by sale, mortgage, or other modes of
disposition. In Bautista v. Silva,35 the Court erected a standard to determine the good
faith of the buyers dealing with a seller who had title to and possession of the land but
whose capacity to sell was restricted, in that the consent of the other spouse was
required before the conveyance, declaring that in order to prove good faith in such a
situation, the buyers must show that they inquired not only into the title of the seller
but also into the seller’s capacity to sell. 36 Thus, the buyers of conjugal property
must observe two kinds of requisite diligence, namely: (a) the diligence in
verifying the validity of the title covering the property; and (b) the diligence in
inquiring into the authority of the transacting spouse to sell conjugal property
in behalf of the other spouse.

It is true that a buyer of registered land needs only to show that he has relied on the
face of the certificate of title to the property, for he is not required to explore beyond
what the certificate indicates on its face.37 In this respect, the petitioners sufficiently
proved that they had checked on the authenticity of TCT No. 63376 and TCT No.
63377 with the Office of the Register of Deeds in Pasay City as the custodian of the
land records; and that they had also gone to the Los Baños Rural Bank to inquire
about the mortgage annotated on TCT No. 63377. Thereby, the petitioners observed
the requisite diligence in examining the validity of the TCTs concerned.

Yet, it ought to be plain enough to the petitioners that the issue was whether or not
they had diligently inquired into the authority of Ma. Elena to convey the property, not
whether or not the TCT had been valid and authentic, as to which there was no doubt.
Thus, we cannot side with them.

Firstly, the petitioners knew fully well that the law demanded the written consent of
Dionisio to the sale, but yet they did not present evidence to show that they had made
inquiries into the circumstances behind the execution of the SPA purportedly executed
by Dionisio in favor of Ma. Elena. Had they made the appropriate inquiries, and not
simply accepted the SPA for what it represented on its face, they would have
uncovered soon enough that the respondents had been estranged from each other and
were under de facto separation, and that they probably held conflicting interests that
would negate the existence of an agency between them. To lift this doubt, they must,
of necessity, further inquire into the SPA of Ma. Elena. The omission to inquire
indicated their not being buyers in good faith, for, as fittingly observed in Domingo v.
Reed:

What was required of them by the appellate court, which we affirm, was merely to
investigate – as any prudent vendee should – the authority of Lolita to sell the property
and to bind the partnership. They had knowledge of facts that should have led them to
inquire and to investigate, in order to acquaint themselves with possible defects in her
title. The law requires them to act with the diligence of a prudent person; in this case,
their only prudent course of action was to investigate whether respondent had indeed
given his consent to the sale and authorized his wife to sell the property.

Indeed, an unquestioning reliance by the petitioners on Ma. Elena’s SPA without first
taking precautions to verify its authenticity was not a prudent buyer’s move.40 They
should have done everything within their means and power to ascertain whether the
SPA had been genuine and authentic. If they did not investigate on the relations of the
respondents vis-à-vis each other, they could have done other things towards the same
end, like attempting to locate the notary public who had notarized the SPA, or checked
with the RTC in Manila to confirm the authority of Notary Public Atty. Datingaling. It
turned out that Atty. Datingaling was not authorized to act as a Notary Public for
Manila during the period 1990-1991, which was a fact that they could easily discover
with a modicum of zeal.

Secondly, the final payment of ₱700,000.00 even without the owner’s duplicate copy of
the TCT No. 63376 being handed to them by Ma. Elena indicated a revealing lack of
precaution on the part of the petitioners. It is true that she promised to produce and
deliver the owner’s copy within a week because her relative having custody of it had
gone to Hongkong, but their passivity in such an essential matter was puzzling light of
their earlier alacrity in immediately and diligently validating the TCTs to the extent of
inquiring at the Los Baños Rural Bank about the annotated mortgage. Yet, they could
have rightly withheld the final payment of the balance. That they did not do so
reflected their lack of due care in dealing with Ma. Elena.

Lastly, another reason rendered the petitioners’ good faith incredible. They did not
take immediate action against Ma. Elena upon discovering that the owner’s original
copy of TCT No. 63376 was in the possession of Atty. Parulan, contrary to Elena’s
representation. Human experience would have impelled them to exert every effort to
proceed against Ma. Elena, including demanding the return of the substantial
amounts paid to her. But they seemed not to mind her inability to produce the TCT,
and, instead, they contented themselves with meeting with Atty. Parulan to negotiate
for the possible turnover of the TCT to them.

The fault of the petitioner in Veloso was that he did not adduce sufficient evidence to
prove that his signature and that of the notary public on the SPA had been forged. The
Court pointed out that his mere allegation that the signatures had been forged could
not be sustained without clear and convincing proof to substantiate the allegation.
Herein, however, both the RTC and the CA found from the testimonies and evidence
presented by Dionisio that his signature had been definitely forged, as borne out by
the entries in his passport showing that he was out of the country at the time of the
execution of the questioned SPA; and that the alleged notary public, Atty. Datingaling,
had no authority to act as a Notary Public for Manila during the period of 1990-1991.
(SPOUSES AGGABAO vs. PARULAN, G.R. No. 165803, September 1, 2010)