JOSEFINA V. NOBLEZA, PETITIONER, VS. SHIRLEY B. NUEGA, RESPONDENT.

Nobleza versus Nuega

The Case

This is a petition for review on certiorari brought by Josefina Nobleza against Shirley Nuega, arising from a complaint for rescission of sale and recovery of property. Shirley sued to recover a house and lot in Marikina City that her husband Rogelio had sold to Josefina without her consent while their marriage subsisted. The case matters because it settles two rules every reviewee must carry into the bar: that a buyer who relies only on the face of a Torrens title may still fail as a buyer in good faith, and that a sale of community property made by one spouse without the written consent of the other is void in its entirety, not merely as to the innocent spouse's share.

Procedural History

Shirley filed her complaint for rescission of sale and recovery of property before the Regional Trial Court of Marikina City, Branch 273. On February 14, 2001, the trial court ruled in her favor, rescinding the deed of sale only as to the fifty five and five hundredths square meters representing her one half share, ordering Josefina to reconvey that portion or pay its present market value, and awarding attorney's fees of 20,000 pesos. Josefina appealed to the Court of Appeals, while Rogelio did not appeal. On May 14, 2010, the Court of Appeals affirmed with modification, declaring the deed of sale void in its entirety and ordering Josefina to reconvey the whole property to Shirley and Rogelio, without prejudice to her right to recover from Rogelio whatever she had paid. Josefina's motion for reconsideration was denied on July 21, 2010. She then came to the Supreme Court by petition for review on certiorari.

Facts

Shirley and Rogelio were married on September 1, 1990. Even before the marriage, while Shirley was working as a domestic helper in Israel and Rogelio was working abroad as a seaman, she sent him money at his request for the purchase of a residential lot in Marikina. On September 13, 1989, Rogelio purchased the house and lot from Rodeanna Realty Corporation for 102,000 pesos, and a transfer certificate of title was issued solely in his name on October 19, 1989. Shirley later settled the equity and paid the monthly amortizations.

After the marriage, Shirley returned to Israel for work. While overseas she learned that Rogelio had brought another woman, Monica Escobar, into the family home, and she confirmed this upon her return in May 1992. In June 1992 she filed a complaint for concubinage and one for legal separation and liquidation of property. She later withdrew the second complaint and refiled it on January 29, 1993. Learning that Rogelio intended to sell the property, Shirley warned the interested buyers, including their neighbor Josefina, against buying until the cases were terminated.

Despite the warning, Rogelio sold the property to Josefina under a Deed of Absolute Sale dated December 29, 1992, without Shirley's consent, for 380,000 pesos, with Josefina assuming the existing mortgage and paying the real property taxes. On May 16, 1994, the Regional Trial Court of Pasig City, Branch 70, granted the legal separation, dissolved the absolute community of property, enjoined Rogelio from disposing of community property, and directed Shirley to file a separate action against the buyers. That decision became final and executory. Shirley then filed this complaint on August 27, 1996.

Issues

• Whether or not Josefina was a buyer in good faith.
• Whether or not the Court of Appeals erred in declaring the Deed of Absolute Sale void in its entirety rather than only as to Shirley's one half share.

Applicable Provisions

Article 91 of the Family Code provides:

Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the community property shall consist of all the property owned by the spouses at the time of the celebration of the marriage or acquired thereafter.

This defines what falls into the absolute community, and it is the basis for holding that the property, acquired before the marriage but owned by the spouses at its celebration, formed part of the community mass.

Article 92 of the Family Code provides:

Art. 92. The following shall be excluded from the community property: (1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits as well as the income thereof, if any, unless it is expressly provided by the donor, testator or grantor that they shall form part of the community property; (2) Property for personal and exclusive use of either spouse; however, jewelry shall form part of the community property; (3) Property acquired before the marriage by either spouse who has legitimate descendants by a former marriage, and the fruits as well as the income, if any, of such property.

Since the subject property falls under none of these exclusions, it remained community property regardless of whose contribution paid for it.

Article 96 of the Family Code provides:

Art. 96. The administration and enjoyment of the community property 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 a 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 common properties, the other spouse may assume sole powers of administration. These powers do not include the powers of disposition or encumbrance without the 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.

This is the provision that makes Rogelio's unilateral sale void, and it is the heart of the ruling.

Ruling

On the first issue, the Court held that Josefina was not a buyer in good faith. An innocent purchaser for value is one who buys the property of another without notice that some other person has a right or interest in it, for which a full and fair price is paid before receipt of any notice of such claim. It is the party claiming that status who bears the burden of proving it, and the ordinary presumption of good faith is not enough. The buyer must show the prudence and due diligence of an average man, doing his homework and verifying the title, the parties, the mode of transfer, and the capacity of the seller to dispose of the property, including the seller's civil status and whether marital consent was secured.

The Court stressed that a buyer cannot claim to be an innocent purchaser by merely relying on the transfer certificate of title while ignoring the surrounding circumstances. Here, Josefina's sister lived in the same village as the subject property, and Shirley had warned the neighbors, including that sister, against dealing with Rogelio. The Court also noted the irregularity in the deed of sale, whose witnesses bore community tax certificates dated after the deed itself, and the fact that Rogelio's civil status as seller was not stated in the deed even as Josefina repeatedly claimed he was single. These circumstances, taken together, defeated her claim of good faith.

On the second issue, the Court held that the Court of Appeals correctly voided the entire sale. The property formed part of the absolute community of Shirley and Rogelio, and actual contribution to its acquisition was irrelevant because the law itself defines what constitutes community property. Rogelio sold it during the subsistence of the marriage without Shirley's written consent or court authority. Under Article 96, the disposition is void, and the Court quoted the provision to that effect. The Court added that Shirley could not be made to reimburse Josefina, since under Article 94 the community is liable for debts contracted by one spouse without the other's consent only to the extent that the family may have been benefited, and there was no evidence that the amount received by Rogelio redounded to the family's benefit.

Doctrine

First, a buyer in good faith must exercise the prudence and due diligence of an average man, and mere reliance on the face of a Torrens title does not make one an innocent purchaser for value where surrounding circumstances should have put the buyer on guard. Second, under Article 91 and Article 92 of the Family Code, property owned by the spouses at the celebration of the marriage or acquired thereafter forms part of the absolute community unless expressly excluded, and actual contribution to its acquisition is immaterial. Third, under Article 96, a sale or encumbrance of community property by one spouse without the written consent of the other or court authority is void in its entirety, not merely as to the innocent spouse's share. Fourth, under Article 94, the community is liable for a debt contracted by one spouse without the other's consent only to the extent that the family may have been benefited.

Disposition

The petition was denied, and the Decision and Resolution of the Court of Appeals were affirmed, with costs against Josefina.

Remember This

The single line worth memorizing is that a sale of community property by one spouse without the written consent of the other is void in its entirety, and a buyer who relies only on the face of the title is not a buyer in good faith. Examiners like to use this case in questions on innocent purchasers for value, on the void effects of a unilateral disposition of conjugal or community property, and on the extent of the community's liability for debts contracted by one spouse.