G.R. No. 152716; October 23, 2003
ELNA MERCADO-FEHR, petitioner, vs. BRUNO FEHR, respondent.

FACTS

Petitioner Elna Mercado-Fehr filed a petition for the declaration of nullity of her marriage to respondent Bruno Fehr on the ground of psychological incapacity under Article 36 of the Family Code. The Regional Trial Court granted the petition, declaring the marriage void ab initio. In subsequent proceedings for property liquidation, the trial court, in an Order dated October 5, 2000, ruled on the classification and partition of properties. A key dispute involved Suite 204 of the LCG Condominium. The trial court declared it the exclusive property of respondent, having been purchased via a Contract to Sell dated July 26, 1983, prior to the marriage in March 1985, albeit while the parties were cohabiting.
Petitioner contested this, arguing that since the property was acquired on installment during their period of exclusive cohabitation, it should be governed by the rules on co-ownership under Article 147 of the Family Code. The trial court also noted an alleged agreement for a three-way partition (1/3 each to petitioner, respondent, and their children), which petitioner disputed. The Court of Appeals dismissed petitioner’s subsequent certiorari petition, ruling it raised errors of judgment, not jurisdiction.

ISSUE

Whether the trial court erred in: (1) classifying Suite 204 as the respondent’s exclusive property; and (2) applying an improper regime for the liquidation of the parties’ common properties.

RULING

The Supreme Court ruled in favor of the petitioner. On the first issue, the Court held that Suite 204 is a common property of the parties. Applying Article 147 of the Family Code, which governs property relations of couples living together without the benefit of marriage, the property regime is one of co-ownership. The Contract to Sell for Suite 204 was executed on July 26, 1983, during the period when the parties were in a state of exclusive cohabitation, a fact established in the nullity case. Therefore, the installment payments, regardless of the source, created a common fund, making the property part of their co-ownership.
On the second issue, the Court held that the liquidation must follow the law on co-ownership, not the alleged three-way partition. The trial court’s reference to an agreement for a 1/3 share each for petitioner, respondent, and the children lacked evidentiary support. Moreover, Articles 50 and 51 of the Family Code, which provide for such a division, apply only to voidable marriages and, exceptionally, to void marriages under Article 40, not to marriages nullified under Article 36 for psychological incapacity. Consequently, the case was remanded to the trial court for proper liquidation in accordance with the rules on co-ownership.