Tuazon v. Fuentes
REITERATIONFacts
The Antecedents: Dennis T. Uy Tuazon (Tuazon) and Myra V. Fuentes (Fuentes) were co-owners of a property where a building known as DM Building was constructed. Pending their nullity of marriage proceedings, the RTC authorized Fuentes to sell the property to Philippine Coast Guard Savings and Loan Association, Inc. (PCGSLAI) to pay for support pendente lite. After their marriage was declared null and void, the property was sold to PCGSLAI. The property was occupied by World Wiser International, Inc. (World Wiser) and Jerzon Manpower and Trading, Inc. (Jerzon), companies owned by Tuazon and his family. Fuentes sent a notice to vacate to World Wiser. Subsequently, Fuentes filed an unlawful detainer suit against World Wiser for refusal to vacate. World Wiser presented contracts of lease executed by Tuazon in its favor and in favor of Jerzon, with terms extending to 2022. In response, Fuentes filed a complaint for declaration of nullity/annulment of these contracts of lease. Procedural History: The RTC declared the contracts of lease null and void, finding them void for lack of written consent from Fuentes. The RTC denied petitioners' request for referral to judicial dispute resolution, reasoning that the validity of the contracts could not be a subject of compromise given the property was already under liquidation proceedings. The Court of Appeals (CA) affirmed the RTC's decision, holding that contracts of lease for more than one year are conveyances requiring the joinder of the wife, and that Tuazon's contracts without Fuentes' written consent are void under Article 96 of the Family Code. The CA also found no violation of due process in the denial of judicial dispute resolution, noting petitioners' repeated failure to appear in mediation. The Petition: Petitioners assailed the CA's decision, arguing that Fuentes had knowledge of the contracts and her inaction constituted implied consent. They also contended that the RTC should have conducted judicial dispute resolution and that the denial violated their due process rights, as World Wiser and Jerzon were not parties to the nullity of marriage proceedings.
Issue(s)
Whether the Court of Appeals committed reversible error in declaring the questioned contracts of lease as void. Whether the denial of the RTC to refer the case to a judicial dispute resolution invalidated the proceedings. Whether the petitioners' due process rights were violated due to the lack of judicial dispute resolution.
Ruling
The petition is denied. The Decision dated April 6, 2018 and the Resolution dated August 1, 2018 of the Court of Appeals in CA-G.R. CV No. 107826 are affirmed. The contracts of lease executed by Dennis T. Uy Tuazon in favor of World Wiser International, Inc. and Jerzon Manpower and Trading, Inc. are declared null and void.
Ratio Decidendi
On the validity of the contracts of lease: The Court reiterated that the disposition of common property by one spouse requires the written consent of the other spouse; otherwise, the disposition is void. Article 124 of the Family Code is clear and categorical on this requirement. Knowledge of the transaction by the non-consenting spouse is not equivalent to consent, as explicitly held in Jader-Manalo v. Camaisa. In this case, the contracts of lease involved common property, and Tuazon admitted that Fuentes did not participate in nor sign the contracts. The Court found no injustice or absurdity in applying Article 124, as it serves to protect community or conjugal property from unlawful dissipation. The procedure for a spouse to convey common property without the other's written consent in cases of incapacity or inability to participate in administration, which requires court authority, was not shown to have been followed by Tuazon. On the denial of judicial dispute resolution: The Court found that the denial of the RTC to refer the case to judicial dispute resolution did not invalidate the proceedings. While the guidelines for such referral were newly introduced, the Court noted that the RTC was convinced that settlement was unlikely, especially given the petitioners' conduct and repeated failure to appear during mediation. The RTC's decision was a valid exercise of sound discretion, particularly since Fuentes had already opposed the referral. Petitioners' active participation in the trial proceedings below, despite the denial, and their raising of this procedural issue only after the decision further weakened their claim. The Court viewed their actions as potentially dilatory tactics. On the alleged violation of due process: The Court found no violation of due process. Petitioners actively participated in the proceedings before the RTC and CA, where they had the opportunity to raise all their defenses and objections. Their repeated failure to attend mediation and their belated assertion of the judicial dispute resolution issue indicated a lack of genuine interest in the alternative dispute resolution process. The Court concluded that petitioners were attempting to resurrect procedural technicalities rather than bolster their claims on the merits, especially after a trial on the evidence.
Main Doctrine
Contracts of lease involving common property executed by one spouse without the written consent of the other spouse are void, pursuant to Article 124 of the Family Code. Knowledge of the transaction by the non-consenting spouse does not equate to consent.