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570

SUPREMECOURTREPORTSANNOTATED
Ferrer vs. Ferrer
*

G.R.No.166496.November29,2006.

JOSEFA BAUTISTA FERRER, petitioner, vs. SPS.


MANUEL M. FERRER & VIRGINIA FERRER and SPS.
ISMAELM.FERRERandFLORAFERRER,respondents.
Actions; Causes of Action; Elements; Failure to make a
sufficient allegation of a cause of action in the complaint warrants
the dismissal thereof.Section 1(g) Rule 16 of the 1997 Rules of
Civil Procedure makes it clear that failure to make a sufficient
allegation of a cause of action in the complaint warrants the
dismissal thereof. Section 2, Rule 2 of the 1997 Rules of Civil
Proceduredefinesacauseofactionastheactoromissionbywhich
apartyviolatestherightofanother.Itisthedelictorthewrongful
act or omission committed by the defendant in violation of the
primary right of the plaintiff. A cause of action has the following
essential elements, viz.: (1) A right in favor of the plaintiff by
whatevermeansandunderwhateverlawitarisesoriscreated;(2)
Anobligationonthepartofthenameddefendanttorespectornot
to violate such right; and (3) Act or omission on the part of such
defendant in violation of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the plaintiff for which
thelattermaymaintainanactionforrecoveryofdamagesorother
appropriaterelief.
Husband and Wife; Conjugal Partnerships; Sales; The
obligation to reimburse for the cost of improvements, under Article
120 of the Family Code, rests on the spouse upon whom ownership
of the
_______________
* FIRSTDIVISION.

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VOL.508,NOVEMBER29,2006

571

Ferrer vs. Ferrer


entire property is vestedthere is no obligation on the part of the
purchaser of the property, in case the property is sold by the
ownerspouse; When the cost of the improvement and any resulting
increase in value are more than the value of the property at the time
of the improvement, the entire property of one of the spouses shall

belong to the conjugal partnership, subject to reimbursement of the


value of the property of the ownerspouse at the time of the
improvement, otherwise, said property shall be retained in
ownership by the ownerspouse.Petitioner was not able to show
thatthereisanobligationonthepartoftherespondentstorespect
or not to violate her right. While we could concede that Civil Case
No. 61327 made a reference to the right of the spouse as
contemplatedinArticle120oftheFamilyCodetobereimbursedfor
the cost of the improvements, the obligation to reimburse rests on
the spouse upon whom ownership of the entire property is vested.
Thereisnoobligationonthepartofthepurchaseroftheproperty,
incasethepropertyissoldbytheownerspouse.Indeed,Article120
provides the solution in determining the ownership of the
improvements that are made on the separate property of the
spouses at the expense of the partnership or through the acts or
efforts of either or both spouses. Thus, when the cost of the
improvementandanyresultingincreaseinvaluearemorethanthe
value of the property at the time of the improvement, the entire
property of one of the spouses shall belong to the conjugal
partnership, subject to reimbursement of the value of the property
oftheownerspouseatthetimeoftheimprovement;otherwise,said
property shall be retained in ownership by the ownerspouse,
likewise subject to reimbursement of the cost of the improvement.
The subject property was precisely declared as the exclusive
propertyofAlfredoonthebasisofArticle120oftheFamilyCode.

PETITIONforreviewoncertiorariofthedecisionand
resolutionoftheCourtofAppeals.
ThefactsarestatedintheopinionoftheCourt.
Romualdo M. Jubayforpetitioner.
Tambio Law Officeforprivaterespondents.
572

572

SUPREMECOURTREPORTSANNOTATED
Ferrer vs. Ferrer

CHICONAZARIO,J.:
Before this Court
is an Appeal by Certiorari which assails
1
theDecision oftheCourtofAppealsdated16August2004
inCAG.R.
SP No. 78525, reversing and setting aside the
2
Order dated16December2002oftheRegionalTrialCourt
(RTC), Mandaluyong City, Branch 212 in Civil Case No.
MC021780.TheCourtofAppealsorderedthedismissalof
3
the Complaint filed by petitioner Josefa Bautista Ferrer
against respondents Sps. Manuel M. Ferrer and Virginia
Ferrer,andSps.IsmaelM.FerrerandFloraFerrerinthe
aforesaidCivilCaseNo.MC021780.
InherComplaintforpaymentofconjugalimprovements,
sum of money, and accounting with prayer for injunction
and damages, petitioner alleged that she is the widow of
Alfredo Ferrer (Alfredo), a halfbrother of respondents
ManuelM.Ferrer(Manuel)andIsmaelM.Ferrer(Ismael).
BeforehermarriagetoAlfredo,thelatteracquiredapieceof
lot, covered
by Transfer Certificate of Title (TCT) No.
4
67927. He applied for a loan with the Social Security
System (SSS) to build improvements thereon, including a

residential house and a twodoor apartment building.


However,itwasduringtheirmarriagethatpaymentofthe
loanwasmadeusingthecouplesconjugalfunds.Fromtheir
conjugal funds, petitioner posited, they constructed a
warehouse on the lot. Moreover, petitioner averred that
respondent Manuel occupied one door of the apartment
building,aswellasthewarehouse;however,inSeptember
1991, he stopped paying rentals thereon, alleging that he
had acquired ownership over the property by virtue of a
DeedofSaleexecutedbyAlfredoinfavorofrespondents,
_______________
1

Penned by Associate Justice Delilah VidallonMagtolis with

Associate Justices Eliezer R. De Los Santos and Arturo D. Brion,


concurring;Rollo,pp.2735.
2Id.,atpp.4041.
3Records,pp.19.
4Id.,atpp.1112.

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VOL.508,NOVEMBER29,2006

573

Ferrer vs. Ferrer


ManuelandIsmaelandtheirspouses.TCTNo.67927was
cancelled,andTCT.No.2728wasissuedandregisteredin
thenamesofrespondents.
Itispetitionerscontentionthaton2October1989,when
her husband was already bedridden, respondents Ismael
andFloraFerrermadehimsignadocument,purportedto
behislastwillandtestament.Thedocument,however,was
aDeedofSalecoveringAlfredoslotandtheimprovements
thereon. Learning of this development, Alfredo filed with
the RTC of Pasig, a Complaint for Annulment of the said5
saleagainstrespondents,docketedasCivilCaseNo.61327.
6
On22June1993,theRTCdismissedthesame. TheRTC
foundthatthetermsandconditionsoftheDeedofSaleare
notcontrarytolaw,morals,goodcustoms,andpublicpolicy,
and should be complied with by the parties in good faith,
there being no compelling reason under the law to do
otherwise. The dismissal was affirmed by the Court of
Appeals.Subsequently,on7November1994,thisCourt,in
G.R.No.L117067,findingnoreversibleerrorcommittedby
the appellate court in affirming the dismissal
of the RTC,
7
affirmedtheDecisionoftheCourtofAppeals.
Further,insupportofherComplaint,petitioneralluded
toaportionoftheDecisiondated22June1993oftheRTC
inCivilCaseNo.61327,whichstated,towit:
In determining which property is the principal and which is the
accessory, the property of greater value shall be considered the
principal.Inthiscase,thelotistheprincipalandtheimprovements
the accessories. Since Article 120 of the Family Code provides the
rule that the ownership of accessory follows the ownership of the
principal, then the subject lot with all its improvements became an
exclusiveandcapitalpropertyofAlfredowithanobligationtoreim

_______________
5 Entitled, Sps.

Alfredo S. Ferrer and Josefa Jimenez Ferrer v. Sps.

Ismael R. Ferrer and Flora C. Ferrer and Sps. Manuel M. Ferrer and
Virginia Ferrer.
6PennedbyJoseH.Hernandez;Records,pp.1722.
7Id.,atp.3.

574

574

SUPREMECOURTREPORTSANNOTATED
Ferrer vs. Ferrer

burse the conjugal partnership of the cost of improvements at the


time of liquidation of [the] conjugal partnership. Clearly, Alfredo
has all the rights to sell the subject property by himself without
8
needofJosefasconsent.

According to petitioner, the ruling of the RTC shows that,


whenAlfredodiedon29September1999,oratthetimeof
the liquidation of the conjugal partnership, she had the
righttobereimbursedforthecostoftheimprovementson
Alfredoslot.Sheallegedthatthecostoftheimprovements
amountedtoP500,000.00;hence,onehalfthereofshouldbe
reimbursed and paid by respondents as they are now the
registered owners of Alfredos lot. She averred that
respondents cannot claim lack of knowledge about the fact
that the improvements were constructed using conjugal
fundsastheyhadoccupiedoneoftheapartmentbuildings
on Alfredos lot, and even paid rentals to petitioner. In
addition, petitioner prayed that respondents be ordered to
renderanaccountingfromSeptember,1991,ontheincome
of the boarding house constructed thereon which they had
appropriated for themselves, and to remit onehalf thereof
as her share. Finally, petitioner sought from respondents
moral and exemplary damages, litigation and incidental
expenses.
9
For their part, respondents filed a Motion to Dismiss,
contending that petitioner had no cause of action against
them, and that the cause of action was barred by prior
judgment.
10
On 16 December 2002, the RTC rendered an Order,
denying the Motion to Dismiss. According to the RTC, no
pronouncement as to the improvements constructed on
AlfredoslothasbeenmadeinCivilCaseNo.61327,andthe
payment of petitioners share in the conjugal partnership
11
constitutesaseparatecauseofaction.AsubsequentOrder
dated17
_______________
8Id.,atp.20.
9Id.,atpp.201210.
10Id.,atpp.244245.
11Id.,atp.251.

575

VOL.508,NOVEMBER29,2006

575

Ferrer vs. Ferrer


January2003wasissuedbytheRTC,denyingrespondents
MotionforReconsideration.
Aggrieved,respondentselevatedthecasetotheCourtof
AppealsbywayofaPetitionforCertiorari, alleging grave
abuse of discretion amounting to lack or excess of
jurisdictionontheRTCindenyingthedismissal.
On 16 August 2004, the Court of Appeals rendered a
Decision granting the Petition. It held that petitioners
Complaint failed to state a cause of action. The appellate
courtrationalizedasfollows:
[W]ebelievethattheinstantcomplaintisnottheproperactionfor
therespondenttoenforceherrightofreimbursementofthecostof
theimprovement[s]onthesubjectproperty.Ascorrectlypointedout
by the petitioners, the same should be made and directed in the
settlement of estate of her deceased husband Alfredo Ferrer
12
pursuanttoArticle129 oftheFamilyCode.Suchbeingthecase,it
ap
_______________
12Art.129.Uponthedissolutionoftheconjugalpartnershipregime,

thefollowingprocedureshallapply:
(1) An inventory shall be prepared, listing separately all the
properties of the conjugal partnership and the exclusive
propertiesofeachspouse.
(2) Amounts advanced by the conjugal partnership in payment of
personaldebtsandobligationsofeitherspouseshallbecredited
totheconjugalpartnershipasanassetthereof.
(3) Each spouse shall be reimbursed for the use of his or her
exclusivefundsintheacquisitionofpropertyorforthevalueof
his or her exclusive property, the ownership of which has been
vestedbylawintheconjugalpartnership.
(4) The debts and obligations of the conjugal partnership shall be
paid out of the conjugal assets. In case of insufficiency of said
assets, the spouses shall be solidarily liable for the unpaid
balance with their separate properties, in accordance with the
provisionsofparagraph(2)ofArticle121.
(5) Whatever remains of the exclusive properties of the spouses
shallthereafterbedeliveredtoeachofthem.
576

576

SUPREMECOURTREPORTSANNOTATED
Ferrer vs. Ferrer

pears that the complaint herein fails to state a cause of action


against the petitioners, the latter not being the proper parties
againstwhomthesubjectactionforreimbursementmustbedirected
to. A complaint states a cause of action where it contains three
essentialelementsofacauseofaction,namely:(1)thelegalrightof
theplaintiff;(2)thecorrelativeobligationofthedefendant,and(3)
theactoromissionofthedefendantinviolationofsaidlegalright.
Iftheseelementsareabsent,thecomplaintbecomesvulnerabletoa

motiontodismissonthegroundoffailuretostateacauseofaction.
Albeittherespondenthereinhasthelegalrighttobereimbursedof
the cost of the improvements of the subject property, it is not the
petitioners but the estate of her deceased husband which has the
obligation to pay the same. The complaint herein is therefore
dismissible for failure to state a cause of action against the
petitioners. Needless to say, the respondent is not without any
furtherrecourseasshemayfileherclaimagainsttheestateofher
deceasedhusband.
_______________
(6) Unless the owner had been indemnified from whatever source,
the loss or deterioration of movables used for the benefit of the
family,belongingtoeitherspouse,evenduetofortuitousevent,
shallbepaidtosaidspousefromtheconjugalfunds,ifany.
(7) The net remainder of the conjugal partnership properties shall
constitute the profits, which shall be divided equally between
husband and wife, unless a different proportion or division was
agreed upon in the marriage settlements or unless there has
been a voluntary waiver or forfeiture of such share as provided
inthisCode.
(8) The presumptive legitimes of the common children shall be
delivereduponthepartitioninaccordancewithArticle51.
(9) In the partition of the properties, the conjugal dwelling and the
lotonwhichitissituatedshall,unlessotherwiseagreeduponby
the parties, be adjudicated to the spouse with whom the
majority of the common children choose to remain. Children
below the age of seven years are deemed to have chosen the
mother,unlessthecourthasdecidedotherwise.Incasethereis
no such majority, the court shall decide, taking into
considerationthebestinterestsofsaidchildren.
577

VOL.508,NOVEMBER29,2006

577

Ferrer vs. Ferrer


In light of the foregoing, we find that the public respondent
committed grave abuse of discretion in denying the petitioners
13
motiontodismissforfailuretostateacauseofaction.

Aggrieved, petitioner filed a Motion for Reconsideration


thereon. However, on 17 December
2004, the Court of
14
AppealsrenderedaResolution denyingthemotion.
Hence,thepresentrecourse.
Petitioner submits the following grounds for the
allowanceoftheinstantPetition,towit:
A. THE HONORABLE COURT OF APPEALS
ERRED IN RULING THAT PETITIONERS
COMPLAINT FAILS TO STATE A CAUSE OF
ACTION AGAINST THE RESPONDENTS, THE
LATTER NOT BEING THE PROPER PARTIES
AGAINST WHOM THE SUBJECT ACTION FOR
REIMBURSEMENTMUSTBEDIRECTEDTO.
B. THE HONORABLE COURT OF APPEALS
ERRED IN RULING THAT THE PUBLIC

RESPONDENT, HON. RIZALINA T. CAPCO


UMALI, COMMITTED GRAVE ABUSE OF
DISCRETION
IN
DENYING
THE
[RESPONDENTS] MOTION TO DISMISS 15FOR
FAILURETOSTATEACAUSEOFACTION.
BothargumentsraisethesoleissueofwhethertheCourtof
Appeals erred in dismissing petitioners Complaint for
failuretostateacauseofaction.
16
Section 1(g) Rule 16 of the 1997 Rules of Civil
Procedure makes it clear that failure to make a sufficient
allegationofa
_______________
13Rollo,pp.3334.
14

Penned by Associate Justice Delilah VidallonMagtolis with

Associate Justices Eliezer R. De Los Santos and Monina


ArevaloZenarosa,concurring;Rollo,pp.3839.
15Id.,atp.16.
16

Section 1. Grounds.Within the time for but before filing the

answer to the complaint or pleading asserting a claim, a motion to


dismissmaybemadeonanyofthefollowinggrounds:
578

578

SUPREMECOURTREPORTSANNOTATED
Ferrer vs. Ferrer

cause of action in the complaint warrants the dismissal


thereof. Section 2, Rule 2 of the 1997 Rules of Civil
Proceduredefinesacauseofactionastheactoromissionby
whichapartyviolatestherightofanother.Itisthedelictor
thewrongfulactoromissioncommittedbythedefendantin
17
violationoftheprimaryrightoftheplaintiff.
A cause of action has the following essential elements,
viz.:
(1) Arightinfavoroftheplaintiffbywhatevermeans
andunderwhateverlawitarisesoriscreated;
(2) Anobligationonthepartofthenameddefendantto
respectornottoviolatesuchright;and
(3) Act or omission on the part of such defendant in
violationoftherightoftheplaintifforconstitutinga
breachoftheobligation
_______________
(a) That the court has no jurisdiction over the person of the
defendingparty;
(b) Thatthecourthasnojurisdictionoverthesubjectmatterofthe
claim;
(c) Thatvenueisimproperlylaid;
(d) Thattheplaintiffhasnolegalcapacitytosue;
(e) That there is another action pending between the same parties
forthesamecause;
(f) Thatthecauseofactionisbarredbyapriorjudgmentorbythe

statuteoflimitations;
(g) Thatthepleadingassertingtheclaimstatesnocauseofaction;
(h) Thattheclaimordemandsetforthintheplaintiffspleadinghas
beenpaid,waived,abandoned,orotherwiseextinguished;
(i) That the claim on which the action is founded is unenforceable
undertheprovisionsofthestatuteoffrauds;and
(j) That a condition precedent for filing the claim has not been
compliedwith.
17

Danfoss, Incorporated v. Continental Cement Corporation, G.R.

No.143788,9September2005,469SCRA505,511.
579

VOL.508,NOVEMBER29,2006

579

Ferrer vs. Ferrer


ofthedefendanttotheplaintiffforwhichthelatter
maymaintainanactionforrecoveryofdamagesor
18
otherappropriaterelief.
A complaint states a cause of
action only when it has the
19
threeindispensableelements.
In the determination of the presence of these elements,
inquiryisconfinedtothefourcornersofthecomplaint.Only
the statements
in the Complaint may be properly
20
considered. Theabsenceofanyoftheseelementsmakesa
complaintvulnerabletoaMotiontoDismissontheground
21
ofafailuretostateacauseofaction.
After a reading of the allegations contained in
petitioners Complaint, we are convinced that the same
failedtostateacauseofaction.
Inthecaseatbar,petitionerassertsalegalrightinher
favor by relying on the Decision of the RTC in Civil Case
No.61327. It can be recalled that the aforesaid case is an
actionforAnnulmentfiledbyAlfredoandpetitioneragainst
the respondents to seek annulment of the Deed of Sale,
executedbyAlfredoinrespondentsfavorandcoveringthe
herein subject premises. The Complaint was dismissed by
the RTC, and subsequently affirmed by the Court of
AppealsandbythisCourtinG.R.No.L117067.
Accordingtopetitioner,whiletheRTCinCivilCaseNo.
61327 recognized that the improvements constructed on
AlfredoslotsweredeemedasAlfredosexclusiveandcapital
property,thecourtalsoheldthatpetitioner,asAlfredos
_______________
18 Swagman

Hotels and Travel, Inc. v. Court of Appeals and Neal B.

Christian,G.R.No.161135,8April2005,455SCRA175,183.
19 Goodyear

Philippines, Inc. v. Anthony Sy and Jose L. Lee, G.R.

No.154554,9November2005,474SCRA427,435.
20Concepcion

V. Vda. de Daffon v. Court of Appeals,G.R.No.129017,

436Phil.233,238;387SCRA427,432(2002).
21 Victoria

J. Ilano v. Hon. Dolores L. Espaol, G.R. No. 161756, 16

December2005,478SCRA365,372.
580

580

SUPREMECOURTREPORTSANNOTATED
Ferrer vs. Ferrer

spouse, has the right to claim reimbursement from the


estateofAlfredo.Itisarguedbypetitionerthatherhusband
hadnootherproperty,andhisonlypropertyhadbeensold
to the respondents; hence, she has the legal right to claim
for reimbursement from the respondents who are now the
owners of the lot and the improvements thereon. In fine,
petitioner asseverates that the Complaint cannot be
dismissedonthegroundoffailuretostateacauseofaction
because the respondents have the correlative obligation to
paythevalueoftheimprovements.
Petitioner was not able to show that there is an
obligationonthepartoftherespondentstorespectornotto
violate her right. While we could concede that Civil Case
No. 61327 made a reference22to the right of the spouse as
contemplated in Article 120 of the Family Code to be
reimbursedforthecostoftheimprovements,theobligation
to reimburse rests on the spouse upon whom ownership of
theentirepropertyisvested.Thereisnoobligationonthe
partofthepurchaseroftheproperty,incasethepropertyis
soldbytheownerspouse.
_______________
22 Art. 120. The ownership of improvements, whether for utility or

adornment, made on the separate property of the spouses at the


expense of the partnership or through the acts or efforts of either or
bothspousesshallpertaintotheconjugalpartnership,ortotheoriginal
ownerspouse,subjecttothefollowingrules:
Whenthecostoftheimprovementmadebytheconjugalpartnership
and any resulting increase in value are more than the value of the
property at the time of the improvement, the entire property of one of
the spouses shall belong to the conjugal partnership, subject to
reimbursementofthevalueofthepropertyoftheownerspouseatthe
time of the improvement; otherwise, said property shall be retained in
ownership by the ownerspouse, likewise subject to reimbursement of
thecostoftheimprovement.
In either case, the ownership of the entire property shall be vested
upon the reimbursement, which shall be made at the time of the
liquidationoftheconjugalpartnership.
581

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581

Ferrer vs. Ferrer


Indeed,Article120providesthesolutionindeterminingthe
ownership of the improvements that are made on the
separate property of the spouses at the expense of the
partnership or through the acts or efforts of either or both
spouses. Thus, when the cost of the improvement and any
resultingincreaseinvaluearemorethanthevalueofthe
propertyatthetimeoftheimprovement,theentireproperty
of one of the spouses shall belong to the conjugal
partnership, subject to reimbursement of the value of the

property of the ownerspouse at the time of the


improvement;otherwise,saidpropertyshallberetainedin
ownership by the ownerspouse, likewise subject to
reimbursementofthecostoftheimprovement.Thesubject
propertywaspreciselydeclaredastheexclusivepropertyof
AlfredoonthebasisofArticle120oftheFamilyCode.
Whatisincontrovertibleisthattherespondents,despite
theallegationscontainedintheComplaintthattheyarethe
buyers of the subject premises, are not petitioners spouse
nor can they ever be deemed as the ownerspouse upon
whom the obligation to reimburse petitioner for her costs
rested. It is the ownerspouse who has the obligation to
reimburse the conjugal partnership or the spouse who
expendedtheactsorefforts,asthecasemaybe.Otherwise
stated, respondents do not have the obligation to respect
petitionersrighttobereimbursed.
Onthismatter,wedonotfindanactoromissiononthe
part of respondents in violation of petitioners rights. The
right of the respondents to acquire as buyers the subject
premises from Alfredo under the assailed Deed of Sale in
CivilCaseNo.61327hadbeenlaidtorest.Thisisbecause
the validity of the Deed of Sale had already been
determined and upheld with finality. The same had been
similarlyadmittedbypetitionerinherComplaint.Itcanbe
said, thus, that respondents act of acquiring the subject
property by sale was not in violation of petitioners rights.
The same can also be said of the respondents objection to
reimburse petitioner. Simply, no correlative obligation
existsonthepartofthe
582

582

SUPREMECOURTREPORTSANNOTATED
Ferrer vs. Ferrer

respondents to reimburse the petitioner. Corollary thereto,


neither can it be said that their refusal to reimburse
constituted a violation of petitioners rights. As has been
shown in the foregoing, no obligation by the respondents
underthelawexists.PetitionersComplaintfailedtostatea
causeofactionagainsttherespondents,andforthisreason,
the Court of Appeals was not in error in dismissing the
same.
WHEREFORE, the Petition is DENIED. The Decision
dated 16 August 2004 and the Resolution dated 17
December2004oftheCourtofAppealsinCAG.R.SP.No.
78525areAFFIRMED.Costsde oficio.
SOORDERED.
Panganiban (C.J., Chairperson), YnaresSantiago,
AustriaMartinezandCallejo, Sr., JJ.,concur.
Petition denied, judgment and resolution affirmed.
Notes.A spouse who desires to sell real property as
such administrator of the conjugal property must observe
the procedure for the sale of the wards estate required of
judicial guardians under Rule 95, 1964 Revised Rules of
Court, not the summary judicial proceedings under the

Family Code. (Uy vs. Court of Appeals, 346 SCRA 246


[2000])
In the enforcement of a writ of execution relative to a
judgmentarisingfromatransactionofthehusbandwhich
did not redound to the benefit of the family, nor with her
consent,thewifeisdeemedastrangertotheactionandis
justifiedinbringinganindependentactiontovindicateher
right of ownership over her separate property which is
levied upon. (Naguit vs. Court of Appeals, 347 SCRA 60
[2000])
o0o
583

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