PEOPLE BANK AND TRUST CO., PETITIONER AND APPELLANT, VS. THE REGISTER OF DEEDS FOR THE CITY OF MANILA, RESPONDENT AND APPELLEE.

People Bank and Trust versus Register of Deeds for the City of Manila

The Case

This is an appeal by the People Bank and Trust Company from a judgment of the Court of First Instance of Manila refusing to register an instrument entitled Agreement and Declaration of Trust. The bank, as trustee, sought registration of a deed executed in its favor by a married woman over her paraphernal lands and buildings in Manila. The Register of Deeds refused, and the trial court agreed, on the theory that the fruits of paraphernal property are conjugal and that the husband's consent was indispensable. The case matters because it fixes the boundary between the wife's power of administration under the old Civil Code and the husband's role as head of the conjugal partnership, and because it settles that the absence of marital consent makes a contract voidable, not void, and therefore registrable.

Procedural History

The instrument was presented to the Register of Deeds for the City of Manila, who denied registration. The bank brought the matter in consulta before the Court of First Instance of Manila. On January 5, 1934, that court sustained the Register of Deeds and denied registration, holding that the trustee was authorized to collect the fruits of paraphernal property, that those fruits are conjugal partnership property under the Civil Code, that their management belongs to the husband, and that since the husband neither intervened nor consented, the instrument was null and void and could not be registered. The bank appealed directly to the Supreme Court, which reversed the trial court.

Facts

Dominga Angeles was married to Manuel Sandoval, who resided in Palawan and from whom she lived separate and apart. On October 26, 1933, she executed an Agreement and Declaration of Trust in favor of the People Bank and Trust Company. By that instrument she conveyed in trust her paraphernal property, consisting of three parcels of land with two buildings on them, situated on Juan Luna in Manila and covered by a transfer certificate of title in her name.

The trust was constituted so that the lands would be subdivided into small lots and sold for cash or on installments, so that the trustee would grant a loan of ten thousand pesos with which to redeem a mortgage on the property, and so that the trustee would collect the rents from the property while the lots remained unsold. The grantor did not convey the rents to the trustee; she merely authorized the trustee to collect them during the period of the trust.

The Register of Deeds refused registration. The trial court upheld the refusal on the ground that the fruits belonged to the conjugal partnership, managed by the husband, who had not consented. The bank appealed, arguing that under the amended article on the wife's powers over paraphernal property, no marital consent was needed.

Issues

• Whether or not the grantor wife, as legal administratrix of her paraphernal property not delivered to her husband, may delegate to a trustee the collection of the fruits of that property without the husband's consent.
• Whether or not the absence of marital consent renders the instrument null and void, and therefore not susceptible of registration.

Applicable Provisions

Article 1384 of the Civil Code provides:

Article 1384. The wife shall have the management of the paraphernal property unless she has delivered the same to her husband before a notary, for the purpose of conferring its management upon him. In such cases it shall be the duty of the husband to execute a mortgage for the value of any personality which may be so delivered to him or otherwise secure it in the manner prescribed with respect to dowry property.

This is the provision on which the whole case turns, because it vests management in the wife and makes her, not the husband, the administrator of paraphernal property not formally delivered.

Ruling

On the first issue, the Court held that the deed did not convey the rents to the trustee but merely authorized their collection while the lots remained unsold. That authority is a mere act of administration, which article 1384 expressly vests in the grantor, since she had not delivered the property to her husband before a notary for the purpose of conferring its management on him. If she is the legal administratrix, she has the right to collect the fruits and may delegate that power. To deny her that right would be to convert her from administratrix into a mere collector of rents.

The Court added that the wife manages the fruits of her paraphernal property while those fruits remain unliquidated, because they answer for the necessary and indispensable expenses of administration and preservation. Only after liquidation does the husband acquire the right to claim them for the conjugal partnership. The husband here cannot claim the fruits until the wife has made a liquidation.

On the second issue, the Court held that failure to comply with the requirement of marital consent does not render the contract null and void from the beginning but merely voidable, and the right of action belongs exclusively to the husband or his heirs. Even granting that the instrument is defective, it is nevertheless susceptible of registration. The Court relied on the commentaries of Manresa, which teach that the husband's consent is a personal power granted to the head of the family, not a rule of capacity in favor of third persons, and that lack of marital consent makes the act voidable at the instance of the husband or his heirs, so that such contracts have long been admitted for registration.

Doctrine

First, the wife has the management of her paraphernal property unless she has delivered it to her husband before a notary for that purpose, and management carries with it the power to perform acts of administration, including the delegation of the collection of fruits to a trustee. Second, the fruits of paraphernal property answer for the expenses of administration and preservation while unliquidated, and the husband cannot claim them for the conjugal partnership until the wife has made a liquidation. Third, the lack of marital consent does not make a contract void but only voidable, and the right to annul belongs exclusively to the husband or his heirs; hence the instrument is registrable. These rules flow directly from article 1384 as the Court construed it.

Disposition

The Court reversed the judgment of the trial court and ordered the Register of Deeds for the City of Manila to register the instrument upon payment of the corresponding legal fees, without special pronouncement as to costs.

Remember This

The line to memorize is that the wife is the administratrix of her paraphernal property and may delegate the collection of its fruits, and that want of marital consent makes the act voidable, not void, and therefore registrable. Examiners use this case to test the distinction between void and voidable contracts arising from lack of marital consent and the scope of the wife's power of administration.