SPS LITA DE LEON and FELIX TARROS v.

ANITA, DANILO and VILMA DE LEON

July 23, 2009

What constitutes CPG if property bought by installments

*A property bought in installment, if not proven to be bought solely by exclusive funds, is not exclusive
property if ownership was vested during marriage. The sale of one half of the conjugal property without
liquidation of partnership is void as the interest during marriage is merely inchoate and will only be realized
upon liquidation.


FACTS
July 20, 1965 - Bonifacio De Leon, then single, and Peoples Homesite and Housing Corporation
(PHHC) entered into a Conditional Contract to Sell for the purchase on installment of a lot in QC
April 24, 1968 - Bonifacio married Anita de Leon in civil rites ; they had two children Danilo and Vilma
June 22, 1970 - At the full payment of the cost price, PHHC executed a final deed of sale in favor of
Bonifacio; a transfer certificate of title was issued in Bonifacios name, where it was stated therein that
he was "single"
January 12, 1974 - He sold the lot to petitioners - her sister Lita and her husband Rio Tarrosa; however,
Anita De Leon was not a signatory to the Deed of Sal eexecuted
May 23, 1977 - Bonifacio and Anita renewed their vows in a church wedding
Feb. 29, 1996 - Bonifacio died
May 8, 1996 - Sps. Tarrosa registered their Deed of Sale and had the first TCT canceled. Another TCT
was issued in their names
May 19, 2003 - Daniel and Vilma De Leon then filed a Notice of Adverse Claim to protect their rights
over the property
Subsequently, Anita, Danilo and Vilma filed a reconveyance suit before the RTC and alleged that fraud
attended the execution of Deed of Sale to the Tarrosas and that Bonifacio was still the owner of the
property by his subsequent acts, i.e. Bonifacio also executed a real estate mortgage over the same
property in favor of another spouse, which had already been nullified by the CFI
The Tarrosas answered that the property was Bonifacio's exclusive property as he was single when he
acquired it from the PHHC and that they were not aware of the supposed marriage at the time of the
execution of Deed of Sale
RTC ruled that lot was conjugal property of Bonifacio and Anita and declared the subsequent deed of
sale and TCT void ab initio and awarded damages to Anita and her children
CA affirmed RTC; held that the Tarrosas failed to overthrow legal presumption that the parcel of land
was conjugal; that of the conjugal assets does not vest to Bonifacio because of the absence of
liquidation. It deleted the grant of damages.

ISSUES
1. Whether the property purchased on installment by Boni before marriage although some installments were
paid during the marriage is conjugal and not his exclusive property (YES)
2. Whether 1/2 of the conjugal assets do not vest to Bonifacio because of the absence of liquidation (YES)

HELD
1. The full payment of the conditional contract was during marriage, thus ownership was transferred only
during the marriage.
NCC 160, the governing provision at the time of Boni and Anitas marriage, provides that
properties acquired during marriage are presumed to belong to the conjugal partnership unless it is
proved that it pertains exclusively to the husband or the wife. It is not even necessary to prove that
the property was acquired with the funds of the partnership, for only proof of acquisition during the
marriage is needed to raise the presumption that the property is conjugal. Even when the manner
in which the properties were acquired does not appear, the presumption will apply.
Here, ownership over what was once a PHHC lot and covered by the PHHC-Bonifacio Conditional
Contract to Sell was only transferred during the marriage of Bonifacio and Anita. Conditional sale
is akin, if not equivalent to a contract to sell - ownership is retained by the seller and is not
passed to the buyer until full payment of the price, unlike in a contract of sale where title passes
upon delivery of the thing sold. The efficacy or obligatory force of the vendor's obligation to transfer
title is conditioned upon full payment; if the condition has not been fulfilled, the conditional
obligation would stand as it had never existed.
Evidently, title to the property in question only passed to Bonifacio after he had fully paid
the purchase price on June 22, 1970. This full payment was made more than two (2) years
after his marriage to Anita on April 24, 1968. In net effect, the property was acquired during
the existence of the marriage; as such, ownership to the property is, by law, presumed to
belong to the conjugal partnership.
It is not exclusive just because it was registered solely in his name. The mere registration of a
property in the name of one spouse does not destroy its conjugal nature. What is material is the
time when the property was acquired. Thus, they were not able to overthrow the presumption of
the conjugal nature of the property as no evidence was brought forth to prove that the source of
funding solely came from Bonifacio.
The deed of sale is also void ab initio for not having marital consent from Anita as provided by
NCC 166. Since Art. 166 of the Code requires the consent of the wife before the husband may
alienate or encumber any real property of the conjugal partnership, it follows that the acts or
transactions executed against this mandatory provision are void except when the law itself
authorized their validity.

2. Sale of one-half of the conjugal property without liquidation of the partnership is void.
Prior to liquidation, right of the husband or wife in the conjugal assets is inchoate (mere
expectancy) and does not ripen into a title until it appears that there are assets in the community
as a result of the liquidation and settlement. Their interest is limited to the net remainder
(remanente liquido) resulting from the liquidation after dissolution. Thus, their right will only be
determined by the net assets left after settlement of obligations which can be divided by the
spouses or their heirs.
Nevertheless, because the Tarrosas paid a valuable consideration for the property in question. As
a matter of fairness and equity, the share of Bonifacio after the liquidation of the partnership
should be liable to reimburse the amount paid by the Tarrosas (ground: unjust enrichment).

PETITION IS DENIED