Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 195670 December 3, 2012

WILLEM BEUMER, Petitioner,

vs.
AVELINA AMORES, Respondent.

DECISION

PERLAS-BERNABE, J.:

Before the Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of CoLlli assailing the
October 8, 2009 Decision2 and January 24, 2011 Resolution3 of the court of Appeals (CA) in CA-G.R. CV
No. 01940, which affirmed the February 28, 2007 Decision 4 of the Regional Trial Court (RTC) of Negros
Oriental, Branch 34 in Civil Case No. I 2884. The foregoing rulings dissolved the conjugal partnership of
gains of Willem Beumer (petitioner) and Avelina Amores (respondent) and distributed the properties
forming part of the said property regime.

The Factual Antecedents

Petitioner, a Dutch National, and respondent, a Filipina, married in March 29, 1980. After several years,
the RTC of Negros Oriental, Branch 32, declared the nullity of their marriage in the Decision 5 dated
November 10, 2000 on the basis of the formers psychological incapacity as contemplated in Article 36 of
the Family Code.

Consequently, petitioner filed a Petition for Dissolution of Conjugal Partnership 6 dated December 14, 2000
praying for the distribution of the following described properties claimed to have been acquired during the
subsistence of their marriage, to wit:

By Purchase:

a. Lot 1, Block 3 of the consolidated survey of Lots 2144 & 2147 of the Dumaguete Cadastre,
covered by Transfer Certificate of Title (TCT) No. 22846, containing an area of 252 square meters
(sq.m.), including a residential house constructed thereon.

b. Lot 2142 of the Dumaguete Cadastre, covered by TCT No. 21974, containing an area of 806
sq.m., including a residential house constructed thereon.

c. Lot 5845 of the Dumaguete Cadastre, covered by TCT No. 21306, containing an area of 756
sq.m.

d. Lot 4, Block 4 of the consolidated survey of Lots 2144 & 2147 of the Dumaguete Cadastre,
covered by TCT No. 21307, containing an area of 45 sq.m.

By way of inheritance:
 e. 1/7 of Lot 2055-A of the Dumaguete Cadastre, covered by TCT No. 23567, containing an area
of 2,635 sq.m. (the area that appertains to the conjugal partnership is 376.45 sq.m.).

f. 1/15 of Lot 2055-I of the Dumaguete Cadastre, covered by TCT No. 23575, containing an area
of 360 sq.m. (the area that appertains to the conjugal partnership is 24 sq.m.). 7

In defense,8 respondent averred that, with the exception of their two (2) residential houses on Lots 1 and
2142, she and petitioner did not acquire any conjugal properties during their marriage, the truth being that
she used her own personal money to purchase Lots 1, 2142, 5845 and 4 out of her personal funds and
Lots 2055-A and 2055-I by way of inheritance.9 She submitted a joint affidavit executed by her and
petitioner attesting to the fact that she purchased Lot 2142 and the improvements thereon using her own
money.10 Accordingly, respondent sought the dismissal of the petition for dissolution as well as payment
for attorneys fees and litigation expenses.11

During trial, petitioner testified that while Lots 1, 2142, 5845 and 4 were registered in the name of
respondent, these properties were acquired with the money he received from the Dutch government as
his disability benefit12 since respondent did not have sufficient income to pay for their acquisition. He also
claimed that the joint affidavit they submitted before the Register of Deeds of Dumaguete City was
contrary to Article 89 of the Family Code, hence, invalid. 13

For her part, respondent maintained that the money used for the purchase of the lots came exclusively
from her personal funds, in particular, her earnings from selling jewelry as well as products from Avon,
Triumph and Tupperware.14 She further asserted that after she filed for annulment of their marriage in
1996, petitioner transferred to their second house and brought along with him certain personal properties,
consisting of drills, a welding machine, grinders, clamps, etc. She alleged that these tools and equipment
have a total cost of P500,000.00.15

The RTC Ruling

On February 28, 2007, the RTC of Negros Oriental, Branch 34 rendered its Decision, dissolving the
parties conjugal partnership, awarding all the parcels of land to respondent as her paraphernal
properties; the tools and equipment in favor of petitioner as his exclusive properties; the two (2) houses
standing on Lots 1 and 2142 as co-owned by the parties, the dispositive of which reads:

WHEREFORE, judgment is hereby rendered granting the dissolution of the conjugal partnership of gains
between petitioner Willem Beumer and respondent Avelina Amores considering the fact that their
marriage was previously annulled by Branch 32 of this Court. The parcels of land covered by Transfer
Certificate of Titles Nos. 22846, 21974, 21306, 21307, 23567 and 23575 are hereby declared paraphernal
properties of respondent Avelina Amores due to the fact that while these real properties were acquired by
onerous title during their marital union, Willem Beumer, being a foreigner, is not allowed by law to acquire
any private land in the Philippines, except through inheritance.

The personal properties, i.e., tools and equipment mentioned in the complaint which were brought out by
Willem from the conjugal dwelling are hereby declared to be exclusively owned by the petitioner.

The two houses standing on the lots covered by Transfer Certificate of Title Nos. 21974 and 22846 are
hereby declared to be co-owned by the petitioner and the respondent since these were acquired during
their marital union and since there is no prohibition on foreigners from owning buildings and residential
units. Petitioner and respondent are, thereby, directed to subject this court for approval their project of
partition on the two houses aforementioned.

The Court finds no sufficient justification to award the counterclaim of respondent for attorneys fees
considering the well settled doctrine that there should be no premium on the right to litigate. The prayer
for moral damages are likewise denied for lack of merit.
No pronouncement as to costs.

SO ORDERED.16

It ruled that, regardless of the source of funds for the acquisition of Lots 1, 2142, 5845 and 4, petitioner
could not have acquired any right whatsoever over these properties as petitioner still attempted to acquire
them notwithstanding his knowledge of the constitutional prohibition against foreign ownership of private
lands.17 This was made evident by the sworn statements petitioner executed purporting to show that the
subject parcels of land were purchased from the exclusive funds of his wife, the herein
respondent.18 Petitioners plea for reimbursement for the amount he had paid to purchase the foregoing
properties on the basis of equity was likewise denied for not having come to court with clean hands.

The CA Ruling

Petitioner elevated the matter to the CA, contesting only the RTCs award of Lots 1, 2142, 5845 and 4 in
favor of respondent. He insisted that the money used to purchase the foregoing properties came from his
own capital funds and that they were registered in the name of his former wife only because of the
constitutional prohibition against foreign ownership. Thus, he prayed for reimbursement of one-half (1/2)
of the value of what he had paid in the purchase of the said properties, waiving the other half in favor of
his estranged ex-wife.19

On October 8, 2009, the CA promulgated a Decision20 affirming in toto the judgment rendered by the RTC
of Negros Oriental, Branch 34. The CA stressed the fact that petitioner was "well-aware of the
constitutional prohibition for aliens to acquire lands in the Philippines." 21 Hence, he cannot invoke equity
to support his claim for reimbursement.

Consequently, petitioner filed the instant Petition for Review on Certiorari assailing the CA Decision due to
the following error:

UNDER THE FACTS ESTABLISHED, THE COURT ERRED IN NOT SUSTAINING THE PETITIONERS
ATTEMPT AT SUBSEQUENTLY ASSERTING OR CLAIMING A RIGHT OF HALF OR WHOLE OF THE
PURCHASE PRICE USED IN THE PURCHASE OF THE REAL PROPERTIES SUBJECT OF THIS
CASE.22 (Emphasis supplied)

The Ruling of the Court

The petition lacks merit.

The issue to be resolved is not of first impression. In In Re: Petition For Separation of Property-Elena
Buenaventura Muller v. Helmut Muller23 the Court had already denied a claim for reimbursement of the
value of purchased parcels of Philippine land instituted by a foreigner Helmut Muller, against his former
Filipina spouse, Elena Buenaventura Muller. It held that Helmut Muller cannot seek reimbursement on the
ground of equity where it is clear that he willingly and knowingly bought the property despite the
prohibition against foreign ownership of Philippine land 24enshrined under Section 7, Article XII of the 1987
Philippine Constitution which reads:

Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed
except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.

Undeniably, petitioner openly admitted that he "is well aware of the above-cited constitutional
prohibition"25 and even asseverated that, because of such prohibition, he and respondent registered the
subject properties in the latters name.26 Clearly, petitioners actuations showed his palpable intent to skirt
the constitutional prohibition. On the basis of such admission, the Court finds no reason why it should not
apply the Muller ruling and accordingly, deny petitioners claim for reimbursement.

As also explained in Muller, the time-honored principle is that he who seeks equity must do equity, and he
who comes into equity must come with clean hands. Conversely stated, he who has done inequity shall
not be accorded equity. Thus, a litigant may be denied relief by a court of equity on the ground that his
conduct has been inequitable, unfair and dishonest, or fraudulent, or deceitful. 27

In this case, petitioners statements regarding the real source of the funds used to purchase the subject
parcels of land dilute the veracity of his claims: While admitting to have previously executed a joint
affidavit that respondents personal funds were used to purchase Lot 1, 28 he likewise claimed that his
personal disability funds were used to acquire the same. Evidently, these inconsistencies show his
untruthfulness. Thus, as petitioner has come before the Court with unclean hands, he is now precluded
from seeking any equitable refuge.

In any event, the Court cannot, even on the grounds of equity, grant reimbursement to petitioner given
that he acquired no right whatsoever over the subject properties by virtue of its unconstitutional purchase.
It is well-established that equity as a rule will follow the law and will not permit that to be done indirectly
which, because of public policy, cannot be done directly. 29 Surely, a contract that violates the Constitution
and the law is null and void, vests no rights, creates no obligations and produces no legal effect at
all.30 Corollary thereto, under Article 1412 of the Civil Code,31 petitioner cannot have the subject properties
deeded to him or allow him to recover the money he had spent for the purchase thereof. The law will not
aid either party to an illegal contract or agreement; it leaves the parties where it finds them. 32 Indeed, one
cannot salvage any rights from an unconstitutional transaction knowingly entered into.

Neither can the Court grant petitioners claim for reimbursement on the basis of unjust enrichment. 33 As
held in Frenzel v. Catito, a case also involving a foreigner seeking monetary reimbursement for money
spent on purchase of Philippine land, the provision on unjust enrichment does not apply if the action is
proscribed by the Constitution, to wit:

Futile, too, is petitioner's reliance on Article 22 of the New Civil Code which reads:

Art. 22. Every person who through an act of performance by another, or any other means, acquires or
comes into possession of something at the expense of the latter without just or legal ground, shall return
the same to him.1wphi1

The provision is expressed in the maxim: "MEMO CUM ALTERIUS DETER DETREMENTO PROTEST"
(No person should unjustly enrich himself at the expense of another). An action for recovery of what has
been paid without just cause has been designated as an accion in rem verso. This provision does not
apply if, as in this case, the action is proscribed by the Constitution or by the application of the pari delicto
doctrine. It may be unfair and unjust to bar the petitioner from filing an accion in rem verso over the
subject properties, or from recovering the money he paid for the said properties, but, as Lord Mansfield
stated in the early case of Holman v. Johnson: "The objection that a contract is immoral or illegal as
between the plaintiff and the defendant, sounds at all times very ill in the mouth of the defendant. It is not
for his sake, however, that the objection is ever allowed; but it is founded in general principles of policy,
which the defendant has the advantage of, contrary to the real justice, as between him and the
plaintiff."34(Citations omitted)

Nor would the denial of his claim amount to an injustice based on his foreign citizenship. 35 Precisely, it is
the Constitution itself which demarcates the rights of citizens and non-citizens in owning Philippine land.
To be sure, the constitutional ban against foreigners applies only to ownership of Philippine land and not
to the improvements built thereon, such as the two (2) houses standing on Lots 1 and 2142 which were
properly declared to be co-owned by the parties subject to partition. Needless to state, the purpose of the
prohibition is to conserve the national patrimony36 and it is this policy which the Court is duty-bound to
protect.

WHEREFORE, the petition is DENIED. Accordingly, the assailed October 8, 2009 Decision and January
24, 2011 Resolution of the Court of Appeals in CA-G.R. CV No. 01940 are AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 164201 December 10, 2012

EFREN PANA, Petitioner,

vs.
HEIRS OF JOSE JUANITE, SR. and JOSE JUANITE, JR., Respondents.

DECISION

ABAD, J.:

This case is about the propriety of levy and execution on conjugal properties where one of the spouses
has been found guilty of a crime and ordered to pay civil indemnities to the victims' heirs.

The Facts and the Case

The prosecution accused petitioner Efren Pana (Efren), his wife Melecia, and others of murder before the.
Regional Trial Court (RTC) of Surigao City in Criminal Cases 4232 and 4233. 1

On July 9, 1997 the RTC rendered a consolidated decision 2 acquitting Efren of the charge for insufficiency
of evidence but finding Melecia and another person guilty as charged and sentenced them to the penalty
of death. The RTC ordered those found guilty to pay each of the heirs of the victims, jointly and severally,
P50,000.00 as civil indemnity, P50,000.00 each as moral damages, and P150,000.00 actual damages.

On appeal to this Court, it affirmed on May 24, 2001 the conviction of both accused but modified the
penalty toreclusion perpetua. With respect to the monetary awards, the Court also affirmed the award of
civil indemnity and moral damages but deleted the award for actual damages for lack of evidentiary basis.
In its place, however, the Court made an award of P15,000.00 each by way of temperate damages. In
addition, the Court awarded P50,000.00 exemplary damages per victim to be paid solidarily by them. 3 The
decision became final and executory on October 1, 2001. 4

Upon motion for execution by the heirs of the deceased, on March 12, 2002 the RTC ordered the
issuance of the writ,5 resulting in the levy of real properties registered in the names of Efren and
Melecia.6 Subsequently, a notice of levy7 and a notice of sale on execution8 were issued.

On April 3, 2002, petitioner Efren and his wife Melecia filed a motion to quash the writ of execution,
claiming that the levied properties were conjugal assets, not paraphernal assets of Melecia. 9 On
September 16, 2002 the RTC denied the motion.10 The spouses moved for reconsideration but the RTC
denied the same on March 6, 2003.11

Claiming that the RTC gravely abused its discretion in issuing the challenged orders, Efren filed a petition
forcertiorari before the Court of Appeals (CA). On January 29, 2004 the CA dismissed the petition for
failure to sufficiently show that the RTC gravely abused its discretion in issuing its assailed orders. 12 It
also denied Efrens motion for reconsideration,13 prompting him to file the present petition for review
on certiorari.

The Issue Presented

The sole issue presented in this case is whether or not the CA erred in holding that the conjugal
properties of spouses Efren and Melecia can be levied and executed upon for the satisfaction of Melecias
civil liability in the murder case.

Ruling of the Court

To determine whether the obligation of the wife arising from her criminal liability is chargeable against the
properties of the marriage, the Court has first to identify the spouses property relations.

Efren claims that his marriage with Melecia falls under the regime of conjugal partnership of gains, given
that they were married prior to the enactment of the Family Code and that they did not execute any
prenuptial agreement.14Although the heirs of the deceased victims do not dispute that it was the Civil
Code, not the Family Code, which governed the marriage, they insist that it was the system of absolute
community of property that applied to Efren and Melecia. The reasoning goes:

Admittedly, the spouses were married before the effectivity of the Family Code. But that fact does not
prevent the application of [A]rt. 94, last paragraph, of the Family Code because their property regime is
precisely governed by the law on absolute community. This finds support in Art. 256 of the Family Code
which states:

"This code shall have retroactive effect in so far as it does not prejudice or impair vested or acquired
rights in accordance with the Civil Code or other laws."

None of the spouses is dead. Therefore, no vested rights have been acquired by each over the properties
of the community. Hence, the liabilities imposed on the accused-spouse may properly be charged against
the community as heretofore discussed.15

The RTC applied the same reasoning as above.16 Efren and Melecias property relation was admittedly
conjugal under the Civil Code but, since the transitory provision of the Family Code gave its provisions
retroactive effect if no vested or acquired rights are impaired, that property relation between the couple
was changed when the Family Code took effect in 1988. The latter code now prescribes in Article 75
absolute community of property for all marriages unless the parties entered into a prenuptial agreement.
As it happens, Efren and Melecia had no prenuptial agreement. The CA agreed with this position. 17

Both the RTC and the CA are in error on this point. While it is true that the personal stakes of each
spouse in their conjugal assets are inchoate or unclear prior to the liquidation of the conjugal partnership
of gains and, therefore, none of them can be said to have acquired vested rights in specific assets, it is
evident that Article 256 of the Family Code does not intend to reach back and automatically convert into
absolute community of property relation all conjugal partnerships of gains that existed before 1988
excepting only those with prenuptial agreements.

The Family Code itself provides in Article 76 that marriage settlements cannot be modified except prior to
marriage.

Art. 76. In order that any modification in the marriage settlements may be valid, it must be made before
the celebration of the marriage, subject to the provisions of Articles 66, 67, 128, 135 and 136.

Clearly, therefore, the conjugal partnership of gains that governed the marriage between Efren and
Melecia who were married prior to 1988 cannot be modified except before the celebration of that
marriage.

Post-marriage modification of such settlements can take place only where: (a) the absolute community or
conjugal partnership was dissolved and liquidated upon a decree of legal separation; 18 (b) the spouses
who were legally separated reconciled and agreed to revive their former property regime; 19 (c) judicial
separation of property had been had on the ground that a spouse abandons the other without just cause
or fails to comply with his obligations to the family; 20 (d) there was judicial separation of property under
Article 135; (e) the spouses jointly filed a petition for the voluntary dissolution of their absolute community
or conjugal partnership of gains.21 None of these circumstances exists in the case of Efren and Melecia.

What is more, under the conjugal partnership of gains established by Article 142 of the Civil Code, the
husband and the wife place only the fruits of their separate property and incomes from their work or
industry in the common fund. Thus:

Art. 142. By means of the conjugal partnership of gains the husband and wife place in a common fund the
fruits of their separate property and the income from their work or industry, and divide equally, upon the
dissolution of the marriage or of the partnership, the net gains or benefits obtained indiscriminately by
either spouse during the marriage.

This means that they continue under such property regime to enjoy rights of ownership over their
separate properties. Consequently, to automatically change the marriage settlements of couples who got
married under the Civil Code into absolute community of property in 1988 when the Family Code took
effect would be to impair their acquired or vested rights to such separate properties.

The RTC cannot take advantage of the spouses loose admission that absolute community of property
governed their property relation since the record shows that they had been insistent that their property
regime is one of conjugal partnership of gains.22 No evidence of a prenuptial agreement between them
has been presented.

What is clear is that Efren and Melecia were married when the Civil Code was still the operative law on
marriages. The presumption, absent any evidence to the contrary, is that they were married under the
regime of the conjugal partnership of gains. Article 119 of the Civil Code thus provides:

Art. 119. The future spouses may in the marriage settlements agree upon absolute or relative community
of property, or upon complete separation of property, or upon any other regime. In the absence of
marriage settlements, or when the same are void, the system of relative community or conjugal
partnership of gains as established in this Code, shall govern the property relations between husband and
wife.

Of course, the Family Code contains terms governing conjugal partnership of gains that supersede the
terms of the conjugal partnership of gains under the Civil Code. Article 105 of the Family Code states:

"x x x x

The provisions of this Chapter [on the Conjugal Partnership of Gains] shall also apply to conjugal
partnerships of gains already established between spouses before the effectivity of this Code, without
prejudice to vested rights already acquired in accordance with the Civil Code or other laws, as provided in
Article 256."23

Consequently, the Court must refer to the Family Code provisions in deciding whether or not the conjugal
properties of Efren and Melecia may be held to answer for the civil liabilities imposed on Melecia in the
murder case. Its Article 122 provides:

Art. 122. The payment of personal debts contracted by the husband or the wife before or during the
marriage shall not be charged to the conjugal properties partnership except insofar as they redounded to
the benefit of the family.
Neither shall the fines and pecuniary indemnities imposed upon them be charged to the partnership.

However, the payment of personal debts contracted by either spouse before the marriage, that of fines
and indemnities imposed upon them, as well as the support of illegitimate children of either spouse, may
be enforced against the partnership assets after the responsibilities enumerated in the preceding Article
have been covered, if the spouse who is bound should have no exclusive property or if it should be
insufficient; but at the time of the liquidation of the partnership, such spouse shall be charged for what has
been paid for the purpose above-mentioned.

Since Efren does not dispute the RTCs finding that Melecia has no exclusive property of her own, 24 the
above applies. The civil indemnity that the decision in the murder case imposed on her may be enforced
against their conjugal assets after the responsibilities enumerated in Article 121 of the Family Code have
been covered.25 Those responsibilities are as follows:

Art. 121. The conjugal partnership shall be liable for:

(1) The support of the spouse, their common children, and the legitimate children of either
spouse; however, the support of illegitimate children shall be governed by the provisions of this
Code on Support;

(2) All debts and obligations contracted during the marriage by the designated administrator-
spouse for the benefit of the conjugal partnership of gains, or by both spouses or by one of them
with the consent of the other;

(3) Debts and obligations contracted by either spouse without the consent of the other to the
extent that the family may have benefited;

(4) All taxes, liens, charges, and expenses, including major or minor repairs upon the conjugal
partnership property;

(5) All taxes and expenses for mere preservation made during the marriage upon the separate
property of either spouse;

(6) Expenses to enable either spouse to commence or complete a professional, vocational, or

other activity for self-improvement;

(7) Antenuptial debts of either spouse insofar as they have redounded to the benefit of the family;

(8) The value of what is donated or promised by both spouses in favor of their common legitimate
children for the exclusive purpose of commencing or completing a professional or vocational
course or other activity for self-improvement; and

(9) Expenses of litigation between the spouses unless the suit is found to be groundless.

If the conjugal partnership is insufficient to cover the foregoing liabilities, the spouses shall be solidarily
liable for the unpaid balance with their separate properties.1wphi1

Contrary to Efrens contention, Article 121 above allows payment of the criminal indemnities imposed on
his wife, Melecia, out of the partnership assets even before these are liquidated. Indeed, it states that
such indemnities "may be enforced against the partnership assets after the responsibilities enumerated in
the preceding article have been covered."[26] No prior liquidation of those assets is required. This is not
altogether unfair since Article 122 states that "at the time of liquidation of the partnership, such [offending]
spouse shall be charged for what has been paid for the purposes above-mentioned."
WHEREFORE, the Court AFFIRMS with MODIFICATION the Resolutions of the Court of Appeals in CA-
G.R. SP 77198 dated January 29, 2004 and May 14, 2004. The Regional Trial Court of Surigao City,
Branch 30, shall first ascertain that, in enforcing the writ of execution on the conjugal properties of
spouses Efren and Melecia Pana for the satisfaction of the indemnities imposed by final judgment on the
latter accused in Criminal Cases 4232 and 4233, the responsibilities enumerated in Article 121 of the
Family Code have been covered.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No 176556 July 4, 2012

BRIGIDO B. QUIAO, Petitioner,

vs.
RITA C. QUIAO, KITCHIE C. QUIAO, LOTIS C. QUIAO, PETCHIE C. QUIAO, represented by their
mother RITA QUIAO, Respondents.

DECISION

REYES, J.:

The family is the basic and the most important institution of society. It is in the family where children are
born and molded either to become useful citizens of the country or troublemakers in the community. Thus,
we are saddened when parents have to separate and fight over properties, without regard to the message
they send to their children. Notwithstanding this, we must not shirk from our obligation to rule on this case
involving legal separation escalating to questions on dissolution and partition of properties.

The Case

This case comes before us via Petition for Review on Certiorari1 under Rule 45 of the Rules of Court. The
petitioner seeks that we vacate and set aside the Order2 dated January 8, 2007 of the Regional Trial
Court (RTC), Branch 1, Butuan City. In lieu of the said order, we are asked to issue a Resolution defining
the net profits subject of the forfeiture as a result of the decree of legal separation in accordance with the
provision of Article 102(4) of the Family Code, or alternatively, in accordance with the provisions of Article
176 of the Civil Code.

Antecedent Facts

On October 26, 2000, herein respondent Rita C. Quiao (Rita) filed a complaint for legal separation against
herein petitioner Brigido B. Quiao (Brigido).3 Subsequently, the RTC rendered a Decision4 dated October
10, 2005, the dispositive portion of which provides:

WHEREFORE, viewed from the foregoing considerations, judgment is hereby rendered declaring the
legal separation of plaintiff Rita C. Quiao and defendant-respondent Brigido B. Quiao pursuant to Article
55.

As such, the herein parties shall be entitled to live separately from each other, but the marriage bond shall
not be severed.

Except for Letecia C. Quiao who is of legal age, the three minor children, namely, Kitchie, Lotis and
Petchie, all surnamed Quiao shall remain under the custody of the plaintiff who is the innocent spouse.

Further, except for the personal and real properties already foreclosed by the RCBC, all the remaining
properties, namely:
 1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;

2. coffee mill in Durian, Las Nieves, Agusan del Norte;

3. corn mill in Casiklan, Las Nieves, Agusan del Norte;

4. coffee mill in Esperanza, Agusan del Sur;

5. a parcel of land with an area of 1,200 square meters located in Tungao, Butuan City;

6. a parcel of agricultural land with an area of 5 hectares located in Manila de Bugabos, Butuan
City;

7. a parcel of land with an area of 84 square meters located in Tungao, Butuan City;

8. Bashier Bon Factory located in Tungao, Butuan City;

shall be divided equally between herein [respondents] and [petitioner] subject to the respective legitimes
of the children and the payment of the unpaid conjugal liabilities of [P]45,740.00.

[Petitioners] share, however, of the net profits earned by the conjugal partnership is forfeited in favor of
the common children.

He is further ordered to reimburse [respondents] the sum of [P]19,000.00 as attorney's fees and litigation
expenses of [P]5,000.00[.]

SO ORDERED.5

Neither party filed a motion for reconsideration and appeal within the period provided for under Section
17(a) and (b) of the Rule on Legal Separation. 6

On December 12, 2005, the respondents filed a motion for execution 7 which the trial court granted in its
Order dated December 16, 2005, the dispositive portion of which reads:

"Wherefore, finding the motion to be well taken, the same is hereby granted. Let a writ of execution be
issued for the immediate enforcement of the Judgment.

SO ORDERED."8

Subsequently, on February 10, 2006, the RTC issued a Writ of Execution 9 which reads as follows:

NOW THEREFORE, that of the goods and chattels of the [petitioner] BRIGIDO B. QUIAO you cause to
be made the sums stated in the afore-quoted DECISION [sic], together with your lawful fees in the service
of this Writ, all in the Philippine Currency.

But if sufficient personal property cannot be found whereof to satisfy this execution and your lawful fees,
then we command you that of the lands and buildings of the said [petitioner], you make the said sums in
the manner required by law. You are enjoined to strictly observed Section 9, Rule 39, Rule [sic] of the
1997 Rules of Civil Procedure.
You are hereby ordered to make a return of the said proceedings immediately after the judgment has
been satisfied in part or in full in consonance with Section 14, Rule 39 of the 1997 Rules of Civil
Procedure, as amended.10

On July 6, 2006, the writ was partially executed with the petitioner paying the respondents the amount
ofP46,870.00, representing the following payments:

(a) P22,870.00 as petitioner's share of the payment of the conjugal share;

(b) P19,000.00 as attorney's fees; and

(c) P5,000.00 as litigation expenses.11

On July 7, 2006, or after more than nine months from the promulgation of the Decision, the petitioner filed
before the RTC a Motion for Clarification,12 asking the RTC to define the term "Net Profits Earned."

To resolve the petitioner's Motion for Clarification, the RTC issued an Order 13 dated August 31, 2006,
which held that the phrase "NET PROFIT EARNED" denotes "the remainder of the properties of the
parties after deducting the separate properties of each [of the] spouse and the debts." 14 The Order further
held that after determining the remainder of the properties, it shall be forfeited in favor of the common
children because the offending spouse does not have any right to any share of the net profits earned,
pursuant to Articles 63, No. (2) and 43, No. (2) of the Family Code. 15 The dispositive portion of the Order
states:

WHEREFORE, there is no blatant disparity when the sheriff intends to forfeit all the remaining properties
after deducting the payments of the debts for only separate properties of the defendant-respondent shall
be delivered to him which he has none.

The Sheriff is herein directed to proceed with the execution of the Decision.

IT IS SO ORDERED.16

Not satisfied with the trial court's Order, the petitioner filed a Motion for Reconsideration 17 on September
8, 2006. Consequently, the RTC issued another Order 18 dated November 8, 2006, holding that although
the Decision dated October 10, 2005 has become final and executory, it may still consider the Motion for
Clarification because the petitioner simply wanted to clarify the meaning of "net profit
earned."19 Furthermore, the same Order held:

ALL TOLD, the Court Order dated August 31, 2006 is hereby ordered set aside. NET PROFIT EARNED,
which is subject of forfeiture in favor of [the] parties' common children, is ordered to be computed in
accordance [with] par. 4 of Article 102 of the Family Code. 20

On November 21, 2006, the respondents filed a Motion for Reconsideration, 21 praying for the correction
and reversal of the Order dated November 8, 2006. Thereafter, on January 8, 2007, 22 the trial court had
changed its ruling again and granted the respondents' Motion for Reconsideration whereby the Order
dated November 8, 2006 was set aside to reinstate the Order dated August 31, 2006.

Not satisfied with the trial court's Order, the petitioner filed on February 27, 2007 this instant Petition for
Review under Rule 45 of the Rules of Court, raising the following:

Issues

I
IS THE DISSOLUTION AND THE CONSEQUENT LIQUIDATION OF THE COMMON PROPERTIES OF
THE HUSBAND AND WIFE BY VIRTUE OF THE DECREE OF LEGAL SEPARATION GOVERNED BY
ARTICLE 125 (SIC) OF THE FAMILY CODE?

II

WHAT IS THE MEANING OF THE NET PROFITS EARNED BY THE CONJUGAL PARTNERSHIP FOR
PURPOSES OF EFFECTING THE FORFEITURE AUTHORIZED UNDER ARTICLE 63 OF THE FAMILY
CODE?

III

WHAT LAW GOVERNS THE PROPERTY RELATIONS BETWEEN THE HUSBAND AND WIFE WHO
GOT MARRIED IN 1977? CAN THE FAMILY CODE OF THE PHILIPPINES BE GIVEN RETROACTIVE
EFFECT FOR PURPOSES OF DETERMINING THE NET PROFITS SUBJECT OF FORFEITURE AS A
RESULT OF THE DECREE OF LEGAL SEPARATION WITHOUT IMPAIRING VESTED RIGHTS
ALREADY ACQUIRED UNDER THE CIVIL CODE?

IV

WHAT PROPERTIES SHALL BE INCLUDED IN THE FORFEITURE OF THE SHARE OF THE GUILTY
SPOUSE IN THE NET CONJUGAL PARTNERSHIP AS A RESULT OF THE ISSUANCE OF THE
DECREE OF LEGAL SEPARATION?23

Our Ruling

While the petitioner has raised a number of issues on the applicability of certain laws, we are well-aware
that the respondents have called our attention to the fact that the Decision dated October 10, 2005 has
attained finality when the Motion for Clarification was filed. 24 Thus, we are constrained to resolve first the
issue of the finality of the Decision dated October 10, 2005 and subsequently discuss the matters that we
can clarify.

The Decision dated October 10, 2005 has become final and executory at the time the Motion for
Clarification was filed on July 7, 2006.

Section 3, Rule 41 of the Rules of Court provides:

Section 3. Period of ordinary appeal. - The appeal shall be taken within fifteen (15) days from notice of the
judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a
notice of appeal and a record on appeal within thirty (30) days from notice of the judgment or final order.

The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for
extension of time to file a motion for new trial or reconsideration shall be allowed.

In Neypes v. Court of Appeals,25 we clarified that to standardize the appeal periods provided in the Rules
and to afford litigants fair opportunity to appeal their cases, we held that "it would be practical to allow a
fresh period of 15 days within which to file the notice of appeal in the RTC, counted from receipt of the
order dismissing a motion for a new trial or motion for reconsideration." 26

In Neypes, we explained that the "fresh period rule" shall also apply to Rule 40 governing appeals from
the Municipal Trial Courts to the RTCs; Rule 42 on petitions for review from the RTCs to the Court of
Appeals (CA); Rule 43 on appeals from quasi-judicial agencies to the CA and Rule 45 governing appeals
by certiorari to the Supreme Court. We also said, "The new rule aims to regiment or make the appeal
period uniform, to be counted from receipt of the order denying the motion for new trial, motion for
reconsideration (whether full or partial) or any final order or resolution." 27 In other words, a party litigant
may file his notice of appeal within a fresh 15-day period from his receipt of the trial court's decision or
final order denying his motion for new trial or motion for reconsideration. Failure to avail of the fresh 15-
day period from the denial of the motion for reconsideration makes the decision or final order in question
final and executory.

In the case at bar, the trial court rendered its Decision on October 10, 2005. The petitioner neither filed a
motion for reconsideration nor a notice of appeal. On December 16, 2005, or after 67 days had lapsed,
the trial court issued an order granting the respondent's motion for execution; and on February 10, 2006,
or after 123 days had lapsed, the trial court issued a writ of execution. Finally, when the writ had already
been partially executed, the petitioner, on July 7, 2006 or after 270 days had lapsed, filed his Motion for
Clarification on the definition of the "net profits earned." From the foregoing, the petitioner had clearly
slept on his right to question the RTCs Decision dated October 10, 2005. For 270 days, the petitioner
never raised a single issue until the decision had already been partially executed. Thus at the time the
petitioner filed his motion for clarification, the trial courts decision has become final and executory. A
judgment becomes final and executory when the reglementary period to appeal lapses and no appeal is
perfected within such period. Consequently, no court, not even this Court, can arrogate unto itself
appellate jurisdiction to review a case or modify a judgment that became final. 28

The petitioner argues that the decision he is questioning is a void judgment. Being such, the petitioner's
thesis is that it can still be disturbed even after 270 days had lapsed from the issuance of the decision to
the filing of the motion for clarification. He said that "a void judgment is no judgment at all. It never attains
finality and cannot be a source of any right nor any obligation." 29 But what precisely is a void judgment in
our jurisdiction? When does a judgment becomes void?

"A judgment is null and void when the court which rendered it had no power to grant the relief or no
jurisdiction over the subject matter or over the parties or both." 30 In other words, a court, which does not
have the power to decide a case or that has no jurisdiction over the subject matter or the parties, will
issue a void judgment or a coram non judice.31

The questioned judgment does not fall within the purview of a void judgment. For sure, the trial court has
jurisdiction over a case involving legal separation. Republic Act (R.A.) No. 8369 confers upon an RTC,
designated as the Family Court of a city, the exclusive original jurisdiction to hear and decide, among
others, complaints or petitions relating to marital status and property relations of the husband and wife or
those living together.32 The Rule on Legal Separation33 provides that "the petition [for legal separation]
shall be filed in the Family Court of the province or city where the petitioner or the respondent has been
residing for at least six months prior to the date of filing or in the case of a non-resident respondent,
where he may be found in the Philippines, at the election of the petitioner." 34In the instant case, herein
respondent Rita is found to reside in Tungao, Butuan City for more than six months prior to the date of
filing of the petition; thus, the RTC, clearly has jurisdiction over the respondent's petition below.
Furthermore, the RTC also acquired jurisdiction over the persons of both parties, considering that
summons and a copy of the complaint with its annexes were served upon the herein petitioner on
December 14, 2000 and that the herein petitioner filed his Answer to the Complaint on January 9,
2001.35 Thus, without doubt, the RTC, which has rendered the questioned judgment, has jurisdiction over
the complaint and the persons of the parties.

From the aforecited facts, the questioned October 10, 2005 judgment of the trial court is clearly not
void ab initio, since it was rendered within the ambit of the court's jurisdiction. Being such, the same
cannot anymore be disturbed, even if the modification is meant to correct what may be considered an
erroneous conclusion of fact or law.36 In fact, we have ruled that for "[as] long as the public respondent
acted with jurisdiction, any error committed by him or it in the exercise thereof will amount to nothing more
than an error of judgment which may be reviewed or corrected only by appeal." 37 Granting without
admitting that the RTC's judgment dated October 10, 2005 was erroneous, the petitioner's remedy should
be an appeal filed within the reglementary period. Unfortunately, the petitioner failed to do this. He has
already lost the chance to question the trial court's decision, which has become immutable and
unalterable. What we can only do is to clarify the very question raised below and nothing more.

For our convenience, the following matters cannot anymore be disturbed since the October 10, 2005
judgment has already become immutable and unalterable, to wit:

(a) The finding that the petitioner is the offending spouse since he cohabited with a woman who is
not his wife;38

(b) The trial court's grant of the petition for legal separation of respondent Rita; 39

(c) The dissolution and liquidation of the conjugal partnership; 40

(d) The forfeiture of the petitioner's right to any share of the net profits earned by the conjugal
partnership;41

(e) The award to the innocent spouse of the minor children's custody; 42

(f) The disqualification of the offending spouse from inheriting from the innocent spouse by
intestate succession;43

(g) The revocation of provisions in favor of the offending spouse made in the will of the innocent
spouse;44

(h) The holding that the property relation of the parties is conjugal partnership of gains and
pursuant to Article 116 of the Family Code, all properties acquired during the marriage, whether
acquired by one or both spouses, is presumed to be conjugal unless the contrary is proved; 45

(i) The finding that the spouses acquired their real and personal properties while they were living
together;46

(j) The list of properties which Rizal Commercial Banking Corporation (RCBC) foreclosed; 47

(k) The list of the remaining properties of the couple which must be dissolved and liquidated and
the fact that respondent Rita was the one who took charge of the administration of these
properties;48

(l) The holding that the conjugal partnership shall be liable to matters included under Article 121
of the Family Code and the conjugal liabilities totaling P503,862.10 shall be charged to the
income generated by these properties;49

(m) The fact that the trial court had no way of knowing whether the petitioner had separate
properties which can satisfy his share for the support of the family; 50

(n) The holding that the applicable law in this case is Article 129(7); 51

(o) The ruling that the remaining properties not subject to any encumbrance shall therefore be
divided equally between the petitioner and the respondent without prejudice to the children's
legitime;52

(p) The holding that the petitioner's share of the net profits earned by the conjugal partnership is
forfeited in favor of the common children;53 and
 (q) The order to the petitioner to reimburse the respondents the sum of P19,000.00 as attorney's
fees and litigation expenses of P5,000.00.54

After discussing lengthily the immutability of the Decision dated October 10, 2005, we will discuss the
following issues for the enlightenment of the parties and the public at large.

Article 129 of the Family Code applies to the present case since the parties' property relation is
governed by the system of relative community or conjugal partnership of gains.

The petitioner claims that the court a quo is wrong when it applied Article 129 of the Family Code, instead
of Article 102. He confusingly argues that Article 102 applies because there is no other provision under
the Family Code which defines net profits earned subject of forfeiture as a result of legal separation.

Offhand, the trial court's Decision dated October 10, 2005 held that Article 129(7) of the Family Code
applies in this case. We agree with the trial court's holding.

First, let us determine what governs the couple's property relation. From the record, we can deduce that
the petitioner and the respondent tied the marital knot on January 6, 1977. Since at the time of the
exchange of marital vows, the operative law was the Civil Code of the Philippines (R.A. No. 386) and
since they did not agree on a marriage settlement, the property relations between the petitioner and the
respondent is the system of relative community or conjugal partnership of gains. 55 Article 119 of the Civil
Code provides:

Art. 119. The future spouses may in the marriage settlements agree upon absolute or relative community
of property, or upon complete separation of property, or upon any other regime. In the absence of
marriage settlements, or when the same are void, the system of relative community or conjugal
partnership of gains as established in this Code, shall govern the property relations between husband and
wife.

Thus, from the foregoing facts and law, it is clear that what governs the property relations of the petitioner
and of the respondent is conjugal partnership of gains. And under this property relation, "the husband and
the wife place in a common fund the fruits of their separate property and the income from their work or
industry."56 The husband and wife also own in common all the property of the conjugal partnership of
gains.57

Second, since at the time of the dissolution of the petitioner and the respondent's marriage the operative
law is already the Family Code, the same applies in the instant case and the applicable law in so far as
the liquidation of the conjugal partnership assets and liabilities is concerned is Article 129 of the Family
Code in relation to Article 63(2) of the Family Code. The latter provision is applicable because according
to Article 256 of the Family Code "[t]his Code shall have retroactive effect insofar as it does not prejudice
or impair vested or acquired rights in accordance with the Civil Code or other law." 58

Now, the petitioner asks: Was his vested right over half of the common properties of the conjugal
partnership violated when the trial court forfeited them in favor of his children pursuant to Articles 63(2)
and 129 of the Family Code?

We respond in the negative.

Indeed, the petitioner claims that his vested rights have been impaired, arguing: "As earlier adverted to,
the petitioner acquired vested rights over half of the conjugal properties, the same being owned in
common by the spouses. If the provisions of the Family Code are to be given retroactive application to the
point of authorizing the forfeiture of the petitioner's share in the net remainder of the conjugal partnership
properties, the same impairs his rights acquired prior to the effectivity of the Family Code." 59 In other
words, the petitioner is saying that since the property relations between the spouses is governed by the
regime of Conjugal Partnership of Gains under the Civil Code, the petitioner acquired vested rights over
half of the properties of the Conjugal Partnership of Gains, pursuant to Article 143 of the Civil Code, which
provides: "All property of the conjugal partnership of gains is owned in common by the husband and
wife."60 Thus, since he is one of the owners of the properties covered by the conjugal partnership of gains,
he has a vested right over half of the said properties, even after the promulgation of the Family Code; and
he insisted that no provision under the Family Code may deprive him of this vested right by virtue of
Article 256 of the Family Code which prohibits retroactive application of the Family Code when it will
prejudice a person's vested right.

However, the petitioner's claim of vested right is not one which is written on stone. In Go, Jr. v. Court of
Appeals,61we define and explained "vested right" in the following manner:

A vested right is one whose existence, effectivity and extent do not depend upon events foreign to the will
of the holder, or to the exercise of which no obstacle exists, and which is immediate and perfect in itself
and not dependent upon a contingency. The term "vested right" expresses the concept of present fixed
interest which, in right reason and natural justice, should be protected against arbitrary State action, or an
innately just and imperative right which enlightened free society, sensitive to inherent and irrefragable
individual rights, cannot deny.

To be vested, a right must have become a titlelegal or equitableto the present or future enjoyment of
property.62(Citations omitted)

In our en banc Resolution dated October 18, 2005 for ABAKADA Guro Party List Officer Samson S.
Alcantara, et al. v. The Hon. Executive Secretary Eduardo R. Ermita,63 we also explained:

The concept of "vested right" is a consequence of the constitutional guaranty of due process that
expresses a present fixed interest which in right reason and natural justice is protected against arbitrary
state action; it includes not only legal or equitable title to the enforcement of a demand but also
exemptions from new obligations created after the right has become vested. Rights are considered vested
when the right to enjoyment is a present interest, absolute, unconditional, and perfect or fixed and
irrefutable.64 (Emphasis and underscoring supplied)

From the foregoing, it is clear that while one may not be deprived of his "vested right," he may lose the
same if there is due process and such deprivation is founded in law and jurisprudence.

In the present case, the petitioner was accorded his right to due process. First, he was well-aware that the
respondent prayed in her complaint that all of the conjugal properties be awarded to her. 65 In fact, in his
Answer, the petitioner prayed that the trial court divide the community assets between the petitioner and
the respondent as circumstances and evidence warrant after the accounting and inventory of all the
community properties of the parties.66 Second, when the Decision dated October 10, 2005 was
promulgated, the petitioner never questioned the trial court's ruling forfeiting what the trial court termed as
"net profits," pursuant to Article 129(7) of the Family Code. 67 Thus, the petitioner cannot claim being
deprived of his right to due process.

Furthermore, we take note that the alleged deprivation of the petitioner's "vested right" is one founded, not
only in the provisions of the Family Code, but in Article 176 of the Civil Code. This provision is like Articles
63 and 129 of the Family Code on the forfeiture of the guilty spouse's share in the conjugal partnership
profits. The said provision says:

Art. 176. In case of legal separation, the guilty spouse shall forfeit his or her share of the conjugal
partnership profits, which shall be awarded to the children of both, and the children of the guilty spouse
had by a prior marriage. However, if the conjugal partnership property came mostly or entirely from the
work or industry, or from the wages and salaries, or from the fruits of the separate property of the guilty
spouse, this forfeiture shall not apply.

In case there are no children, the innocent spouse shall be entitled to all the net profits.

From the foregoing, the petitioner's claim of a vested right has no basis considering that even under
Article 176 of the Civil Code, his share of the conjugal partnership profits may be forfeited if he is the
guilty party in a legal separation case. Thus, after trial and after the petitioner was given the chance to
present his evidence, the petitioner's vested right claim may in fact be set aside under the Civil Code
since the trial court found him the guilty party.

More, in Abalos v. Dr. Macatangay, Jr.,68 we reiterated our long-standing ruling that:

[P]rior to the liquidation of the conjugal partnership, the interest of each spouse in the conjugal assets is
inchoate, a mere expectancy, which constitutes neither a legal nor an equitable estate, and does not ripen
into title until it appears that there are assets in the community as a result of the liquidation and
settlement. The interest of each spouse is limited to the net remainder or "remanente liquido" (haber
ganancial) resulting from the liquidation of the affairs of the partnership after its dissolution. Thus, the right
of the husband or wife to one-half of the conjugal assets does not vest until the dissolution and liquidation
of the conjugal partnership, or after dissolution of the marriage, when it is finally determined that, after
settlement of conjugal obligations, there are net assets left which can be divided between the spouses or
their respective heirs.69 (Citations omitted)

Finally, as earlier discussed, the trial court has already decided in its Decision dated October 10, 2005
that the applicable law in this case is Article 129(7) of the Family Code. 70 The petitioner did not file a
motion for reconsideration nor a notice of appeal. Thus, the petitioner is now precluded from questioning
the trial court's decision since it has become final and executory. The doctrine of immutability and
unalterability of a final judgment prevents us from disturbing the Decision dated October 10, 2005
because final and executory decisions can no longer be reviewed nor reversed by this Court. 71

From the above discussions, Article 129 of the Family Code clearly applies to the present case since the
parties' property relation is governed by the system of relative community or conjugal partnership of gains
and since the trial court's Decision has attained finality and immutability.

The net profits of the conjugal partnership of gains are all the fruits of the separate properties of
the spouses and the products of their labor and industry.

The petitioner inquires from us the meaning of "net profits" earned by the conjugal partnership for
purposes of effecting the forfeiture authorized under Article 63 of the Family Code. He insists that since
there is no other provision under the Family Code, which defines "net profits" earned subject of forfeiture
as a result of legal separation, then Article 102 of the Family Code applies.

What does Article 102 of the Family Code say? Is the computation of "net profits" earned in the conjugal
partnership of gains the same with the computation of "net profits" earned in the absolute community?

Now, we clarify.

First and foremost, we must distinguish between the applicable law as to the property relations between
the parties and the applicable law as to the definition of "net profits." As earlier discussed, Article 129 of
the Family Code applies as to the property relations of the parties. In other words, the computation and
the succession of events will follow the provisions under Article 129 of the said Code. Moreover, as to the
definition of "net profits," we cannot but refer to Article 102(4) of the Family Code, since it expressly
provides that for purposes of computing the net profits subject to forfeiture under Article 43, No. (2) and
Article 63, No. (2), Article 102(4) applies. In this provision, net profits "shall be the increase in value
between the market value of the community property at the time of the celebration of the marriage and the
market value at the time of its dissolution."72 Thus, without any iota of doubt, Article 102(4) applies to both
the dissolution of the absolute community regime under Article 102 of the Family Code, and to the
dissolution of the conjugal partnership regime under Article 129 of the Family Code. Where lies the
difference? As earlier shown, the difference lies in the processes used under the dissolution of the
absolute community regime under Article 102 of the Family Code, and in the processes used under the
dissolution of the conjugal partnership regime under Article 129 of the Family Code.

Let us now discuss the difference in the processes between the absolute community regime and the
conjugal partnership regime.

On Absolute Community Regime:

When a couple enters into a regime of absolute community, the husband and the wife becomes joint
owners of all the properties of the marriage. Whatever property each spouse brings into the marriage, and
those acquired during the marriage (except those excluded under Article 92 of the Family Code) form the
common mass of the couple's properties. And when the couple's marriage or community is dissolved, that
common mass is divided between the spouses, or their respective heirs, equally or in the proportion the
parties have established, irrespective of the value each one may have originally owned. 73

Under Article 102 of the Family Code, upon dissolution of marriage, an inventory is prepared, listing
separately all the properties of the absolute community and the exclusive properties of each; then the
debts and obligations of the absolute community are paid out of the absolute community's assets and if
the community's properties are insufficient, the separate properties of each of the couple will be solidarily
liable for the unpaid balance. Whatever is left of the separate properties will be delivered to each of them.
The net remainder of the absolute community is its net assets, which shall be divided between the
husband and the wife; and for purposes of computing the net profits subject to forfeiture, said profits shall
be the increase in value between the market value of the community property at the time of the
celebration of the marriage and the market value at the time of its dissolution. 74

Applying Article 102 of the Family Code, the "net profits" requires that we first find the market value of the
properties at the time of the community's dissolution. From the totality of the market value of all the
properties, we subtract the debts and obligations of the absolute community and this result to the net
assets or net remainder of the properties of the absolute community, from which we deduct the market
value of the properties at the time of marriage, which then results to the net profits. 75

Granting without admitting that Article 102 applies to the instant case, let us see what will happen if we
apply Article 102:

(a) According to the trial court's finding of facts, both husband and wife have no separate
properties, thus, the remaining properties in the list above are all part of the absolute community.
And its market value at the time of the dissolution of the absolute community constitutes the
"market value at dissolution."

(b) Thus, when the petitioner and the respondent finally were legally separated, all the properties
which remained will be liable for the debts and obligations of the community. Such debts and
obligations will be subtracted from the "market value at dissolution."

(c) What remains after the debts and obligations have been paid from the total assets of the
absolute community constitutes the net remainder or net asset. And from such net
asset/remainder of the petitioner and respondent's remaining properties, the market value at the
time of marriage will be subtracted and the resulting totality constitutes the "net profits."
 (d) Since both husband and wife have no separate properties, and nothing would be returned
to each of them, what will be divided equally between them is simply the "net profits." However, in
the Decision dated October 10, 2005, the trial court forfeited the half-share of the petitioner in
favor of his children. Thus, if we use Article 102 in the instant case (which should not be the
case), nothing is left to the petitioner since both parties entered into their marriage without
bringing with them any property.

On Conjugal Partnership Regime:

Before we go into our disquisition on the Conjugal Partnership Regime, we make it clear that Article
102(4) of the Family Code applies in the instant case for purposes only of defining "net profit." As
earlier explained, the definition of "net profits" in Article 102(4) of the Family Code applies to both the
absolute community regime and conjugal partnership regime as provided for under Article 63, No. (2) of
the Family Code, relative to the provisions on Legal Separation.

Now, when a couple enters into a regime of conjugal partnership of gains under Article 142 of the Civil
Code, "the husband and the wife place in common fund the fruits of their separate property and income
from their work or industry, and divide equally, upon the dissolution of the marriage or of the partnership,
the net gains or benefits obtained indiscriminately by either spouse during the marriage." 76 From the
foregoing provision, each of the couple has his and her own property and debts. The law does not intend
to effect a mixture or merger of those debts or properties between the spouses. Rather, it establishes a
complete separation of capitals.77

Considering that the couple's marriage has been dissolved under the Family Code, Article 129 of the
same Code applies in the liquidation of the couple's properties in the event that the conjugal partnership
of gains is dissolved, to wit:

Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall apply:

(1) An inventory shall be prepared, listing separately all the properties of the conjugal partnership
and the exclusive properties of each spouse.

(2) Amounts advanced by the conjugal partnership in payment of personal debts and obligations
of either spouse shall be credited to the conjugal partnership as an asset thereof.

(3) Each spouse shall be reimbursed for the use of his or her exclusive funds in the acquisition of
property or for the value of his or her exclusive property, the ownership of which has been vested
by law in the conjugal partnership.

(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 provisions of paragraph (2) of Article 121.

(5) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to
each of them.

(6) Unless the owner had been indemnified from whatever source, the loss or deterioration of
movables used for the benefit of the family, belonging to either spouse, even due to fortuitous
event, shall be paid to said spouse from the conjugal funds, if any.

(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 in this Code.

(8) The presumptive legitimes of the common children shall be delivered upon the partition in
accordance with Article 51.

(9) In the partition of the properties, the conjugal dwelling and the lot on which it is situated shall,
unless otherwise agreed upon by 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, unless the court has decided otherwise. In case there is no
such majority, the court shall decide, taking into consideration the best interests of said children.

In the normal course of events, the following are the steps in the liquidation of the properties of the
spouses:

(a) An inventory of all the actual properties shall be made, separately listing the couple's conjugal
properties and their separate properties.78 In the instant case, the trial court found that the
couple has no separate properties when they married. 79 Rather, the trial court identified the
following conjugal properties, to wit:

1. coffee mill in Balongagan, Las Nieves, Agusan del Norte;

2. coffee mill in Durian, Las Nieves, Agusan del Norte;

3. corn mill in Casiklan, Las Nieves, Agusan del Norte;

4. coffee mill in Esperanza, Agusan del Sur;

5. a parcel of land with an area of 1,200 square meters located in Tungao, Butuan City;

6. a parcel of agricultural land with an area of 5 hectares located in Manila de Bugabos,

Butuan City;

7. a parcel of land with an area of 84 square meters located in Tungao, Butuan City;

8. Bashier Bon Factory located in Tungao, Butuan City. 80

(b) Ordinarily, the benefit received by a spouse from the conjugal partnership during the marriage
is returned in equal amount to the assets of the conjugal partnership; 81 and if the community is
enriched at the expense of the separate properties of either spouse, a restitution of the value of
such properties to their respective owners shall be made. 82

(c) Subsequently, the couple's conjugal partnership shall pay the debts of the conjugal
partnership; while the debts and obligation of each of the spouses shall be paid from their
respective separate properties. But if the conjugal partnership is not sufficient to pay all its debts
and obligations, the spouses with their separate properties shall be solidarily liable. 83

(d) Now, what remains of the separate or exclusive properties of the husband and of the wife shall
be returned to each of them.84 In the instant case, since it was already established by the trial
court that the spouses have no separate properties,85 there is nothing to return to any of
them. The listed properties above are considered part of the conjugal partnership. Thus,
ordinarily, what remains in the above-listed properties should be divided equally between the
spouses and/or their respective heirs.86 However, since the trial court found the petitioner the
 guilty party, his share from the net profits of the conjugal partnership is forfeited in favor of the
common children, pursuant to Article 63(2) of the Family Code. Again, lest we be confused, like in
the absolute community regime, nothing will be returned to the guilty party in the conjugal
partnership regime, because there is no separate property which may be accounted for in
the guilty party's favor.

In the discussions above, we have seen that in both instances, the petitioner is not entitled to any
property at all. Thus, we cannot but uphold the Decision dated October 10, 2005 of the trial court.
However, we must clarify, as we already did above, the Order dated January 8, 2007.

WHEREFORE, the Decision dated October 10, 2005 of the Regional Trial Court, Branch 1 of Butuan City
is AFFIRMED. Acting on the Motion for Clarification dated July 7, 2006 in the Regional Trial Court, the
Order dated January 8, 2007 of the Regional Trial Court is hereby CLARIFIED in accordance with the
above discussions.

SO ORDERED.

Republic of the Philippines

SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 188289 August 20, 2014

DAVID A. NOVERAS, Petitioner,

vs.
LETICIA T. NOVERAS, Respondent.

DECISION

PEREZ, J.:

Before the Court is a petition for review assailing the 9 May 2008 Decision 1 of the Court of Appeals in CA-
G.R .. CV No. 88686, which affirmed in part the 8 December 2006 Decision 2 of the Regional Trial Court
(RTC) of Baler, Aurora, Branch 96.

The factual antecedents are as follow:

David A. Noveras (David) and Leticia T. Noveras (Leticia) were married on 3 December 1988 in Quezon
City, Philippines. They resided in California, United States of America (USA) where they eventually
acquired American citizenship. They then begot two children, namely: Jerome T.

Noveras, who was born on 4 November 1990 and JenaT. Noveras, born on 2 May 1993. David was
engaged in courier service business while Leticia worked as a nurse in San Francisco, California.

During the marriage, they acquired the following properties in the Philippines and in the USA:

PHILIPPINES
PROPERTY FAIR MARKET VALUE
 P1,693,125.00
House and Lot with an area of 150
sq. m. located at 1085 Norma Street,
Sampaloc, Manila (Sampaloc
property)

P400,000.00
Agricultural land with an area of
20,742 sq. m. located at Laboy,
Dipaculao, Aurora

P490,000.00
A parcel of land with an area of 2.5
hectares located at Maria Aurora,
Aurora

3
P175,000.00
A parcel of land with an area of 175
sq.m. located at Sabang Baler,
Aurora

P750,000.00
3-has. coconut plantation in San
Joaquin Maria Aurora, Aurora

USA
PROPERTY FAIR MARKET VALUE

House and Lot at 1155 Hanover

Street, Daly City, California

$550,000.00
(unpaid debt of
$285,000.00)
$3,000
Furniture and furnishings

$9,000
Jewelries (ring and watch)

$13,770.00
2000 Nissan Frontier 4x4 pickup truck

$8,000
Bank of America Checking Account
 Bank of America Cash Deposit

$100,000.00
Life Insurance (Cash Value)

4
$56,228.00
Retirement, pension, profit-sharing,
annuities

The Sampaloc property used to beowned by Davids parents. The parties herein secured a loan from a
bank and mortgaged the property. When said property was about to be foreclosed, the couple paid a total
of P1.5 Million for the redemption of the same.

Due to business reverses, David left the USA and returned to the Philippines in 2001. In December
2002,Leticia executed a Special Power of Attorney (SPA) authorizing David to sell the Sampaloc property
for P2.2 Million. According to Leticia, sometime in September 2003, David abandoned his family and lived
with Estrellita Martinez in Aurora province. Leticia claimed that David agreed toand executed a Joint
Affidavit with Leticia in the presence of Davids father, Atty. Isaias Noveras, on 3 December 2003 stating
that: 1) the P1.1Million proceeds from the sale of the Sampaloc property shall be paid to and collected by
Leticia; 2) that David shall return and pay to LeticiaP750,000.00, which is equivalent to half of the amount
of the redemption price of the Sampaloc property; and 3) that David shall renounce and forfeit all his
rights and interest in the conjugal and real properties situated in the Philippines. 5 David was able to
collect P1,790,000.00 from the sale of the Sampaloc property, leaving an unpaid balance of P410,000.00.

Upon learning that David had an extra-marital affair, Leticia filed a petition for divorce with the Superior
Court of California, County of San Mateo, USA. The California court granted the divorce on 24 June 2005
and judgment was duly entered on 29 June 2005.6 The California court granted to Leticia the custody of
her two children, as well as all the couples properties in the USA. 7

On 8 August 2005, Leticia filed a petition for Judicial Separation of Conjugal Property before the RTC of
Baler, Aurora. She relied on the 3 December 2003 Joint Affidavit and Davids failure to comply with his
obligation under the same. She prayed for: 1) the power to administer all conjugal properties in the
Philippines; 2) David and his partner to cease and desist from selling the subject conjugal properties; 3)
the declaration that all conjugal properties be forfeited in favor of her children; 4) David to remit half of the
purchase price as share of Leticia from the sale of the Sampaloc property; and 5) the payment
ofP50,000.00 and P100,000.00 litigation expenses.8

In his Answer, David stated that a judgment for the dissolution of their marriage was entered on 29 June
2005 by the Superior Court of California, County of San Mateo. He demanded that the conjugal
partnership properties, which also include the USA properties, be liquidated and that all expenses of
liquidation, including attorneys fees of both parties be charged against the conjugal partnership. 9

The RTC of Baler, Aurora simplified the issues as follow:

 1. Whether or not respondent David A. Noveras committed acts of abandonment and marital
infidelity which can result intothe forfeiture of the parties properties in favor of the petitioner and
their two (2) children.

2. Whether or not the Court has jurisdiction over the properties in California, U.S.A. and the same
can be included in the judicial separation prayed for.

3. Whether or not the "Joint Affidavit" x x x executed by petitioner Leticia T. Noveras and
respondent David A. Noveras will amount to a waiver or forfeiture of the latters property rights
over their conjugal properties.

4. Whether or not Leticia T. Noveras isentitled to reimbursement of onehalf of the P2.2 [M]illion
sales proceeds of their property in Sampaloc, Manila and one-half of the P1.5 [M]illion used to
redeem the property of Atty. Isaias Noveras, including interests and charges.

5. How the absolute community properties should be distributed.

6. Whether or not the attorneys feesand litigation expenses of the parties were chargeable
against their conjugal properties.

Corollary to the aboveis the issue of:

Whether or not the two common children of the parties are entitled to support and presumptive
legitimes.10

On 8 December 2006, the RTC rendered judgment as follows:

1. The absolute community of property of the parties is hereby declared DISSOLVED;

2. The net assets of the absolute community of property ofthe parties in the Philippines are
hereby ordered to be awarded to respondent David A. Noveras only, with the properties in the
United States of America remaining in the sole ownership of petitioner Leticia Noveras a.k.a.
Leticia Tacbiana pursuant to the divorce decree issuedby the Superior Court of California, County
of San Mateo, United States of America, dissolving the marriage of the parties as of June 24,
2005. The titles presently covering said properties shall be cancelled and new titles be issued in
the name of the party to whom said properties are awarded;

3. One-half of the properties awarded to respondent David A. Noveras in the preceding paragraph
are hereby given to Jerome and Jena, his two minor children with petitioner LeticiaNoveras a.k.a.
Leticia Tacbiana as their presumptive legitimes and said legitimes must be annotated on the titles
covering the said properties.Their share in the income from these properties shall be remitted to
them annually by the respondent within the first half of January of each year, starting January
2008;

4. One-half of the properties in the United States of America awarded to petitioner Leticia
Noveras a.k.a. Leticia Tacbiana in paragraph 2 are hereby given to Jerome and Jena, her two
minor children with respondent David A. Noveras as their presumptive legitimes and said
legitimes must be annotated on the titles/documents covering the said properties. Their share in
the income from these properties, if any, shall be remitted to them annually by the petitioner
within the first half of January of each year, starting January 2008;

5. For the support of their two (2) minor children, Jerome and Jena, respondent David A. Noveras
shall give them US$100.00 as monthly allowance in addition to their income from their
 presumptive legitimes, while petitioner Leticia Tacbiana shall take care of their food, clothing,
education and other needs while they are in her custody in the USA. The monthly allowance due
from the respondent shall be increased in the future as the needs of the children require and his
financial capacity can afford;

6. Of the unpaid amount of P410,000.00 on the purchase price of the Sampaloc property, the
Paringit Spouses are hereby ordered to pay P5,000.00 to respondent David A. Noveras
and P405,000.00 to the two children. The share of the respondent may be paid to him directly but
the share of the two children shall be deposited with a local bank in Baler, Aurora, in a joint
account tobe taken out in their names, withdrawal from which shall only be made by them or by
their representative duly authorized with a Special Power of Attorney. Such payment/deposit shall
be made withinthe period of thirty (30) days after receipt of a copy of this Decision, with the
passbook of the joint account to be submitted to the custody of the Clerk of Court of this Court
within the same period. Said passbook can be withdrawn from the Clerk of Court only by the
children or their attorney-in-fact; and

7. The litigation expenses and attorneys fees incurred by the parties shall be shouldered by them
individually.11

The trial court recognized that since the parties are US citizens, the laws that cover their legal and
personalstatus are those of the USA. With respect to their marriage, the parties are divorced by virtue of
the decree of dissolution of their marriage issued by the Superior Court of California, County of San
Mateo on 24June 2005. Under their law, the parties marriage had already been dissolved. Thus, the trial
court considered the petition filed by Leticia as one for liquidation of the absolute community of property
regime with the determination of the legitimes, support and custody of the children, instead of an action
for judicial separation of conjugal property.

With respect to their property relations, the trial court first classified their property regime as absolute
community of property because they did not execute any marriage settlement before the solemnization of
their marriage pursuant to Article 75 of the Family Code. Then, the trial court ruled that in accordance with
the doctrine of processual presumption, Philippine law should apply because the court cannot take judicial
notice of the US law since the parties did not submit any proof of their national law. The trial court held
that as the instant petition does not fall under the provisions of the law for the grant of judicial separation
of properties, the absolute community properties cannot beforfeited in favor of Leticia and her children.
Moreover, the trial court observed that Leticia failed to prove abandonment and infidelity with
preponderant evidence.

The trial court however ruled that Leticia is not entitled to the reimbursements she is praying for
considering that she already acquired all of the properties in the USA. Relying still on the principle of
equity, the Court also adjudicated the Philippine properties to David, subject to the payment of the
childrens presumptive legitimes. The trial court held that under Article 89 of the Family Code, the waiver
or renunciation made by David of his property rights in the Joint Affidavit is void.

On appeal, the Court of Appeals modified the trial courts Decision by directing the equal division of the
Philippine properties between the spouses. Moreover with respect to the common childrens presumptive
legitime, the appellate court ordered both spouses to each pay their children the amount of P520,000.00,
thus:

WHEREFORE, the instant appeal is PARTLY GRANTED. Numbers 2, 4 and 6 of the assailedDecision
dated December 8, 2006 of Branch 96, RTC of Baler, Aurora Province, in Civil Case No. 828 are hereby
MODIFIED to read as follows:
 2. The net assets of the absolute community of property of the parties in the Philippines are
hereby divided equally between petitioner Leticia Noveras a.k.a. Leticia Tacbiana (sic) and
respondent David A. Noveras;

xxx

4. One-half of the properties awarded to petitioner Leticia Tacbiana (sic) in paragraph 2 shall
pertain to her minor children, Jerome and Jena, as their presumptive legitimes which shall be
annotated on the titles/documents covering the said properties. Their share in the income
therefrom, if any, shall be remitted to them by petitioner annually within the first half of January,
starting 2008;

xxx

6. Respondent David A. Noveras and petitioner Leticia Tacbiana (sic) are each ordered to pay the
amount ofP520,000.00 to their two children, Jerome and Jena, as their presumptive legitimes
from the sale of the Sampaloc property inclusive of the receivables therefrom, which shall be
deposited to a local bank of Baler, Aurora, under a joint account in the latters names. The
payment/deposit shall be made within a period of thirty (30) days from receipt ofa copy of this
Decision and the corresponding passbook entrusted to the custody ofthe Clerk of Court a
quowithin the same period, withdrawable only by the children or their attorney-in-fact.

A number 8 is hereby added, which shall read as follows:

8. Respondent David A. Noveras is hereby ordered to pay petitioner Leticia Tacbiana (sic) the
amount ofP1,040,000.00 representing her share in the proceeds from the sale of the Sampaloc
property.

The last paragraph shall read as follows:

Send a copy of this Decision to the local civil registry of Baler, Aurora; the local civil registry of Quezon
City; the Civil RegistrarGeneral, National Statistics Office, Vibal Building, Times Street corner EDSA,
Quezon City; the Office of the Registry of Deeds for the Province of Aurora; and to the children, Jerome
Noveras and Jena Noveras.

The rest of the Decision is AFFIRMED.12

In the present petition, David insists that the Court of Appeals should have recognized the California
Judgment which awarded the Philippine properties to him because said judgment was part of the pleading
presented and offered in evidence before the trial court. David argues that allowing Leticia to share in the
Philippine properties is tantamount to unjust enrichment in favor of Leticia considering that the latter was
already granted all US properties by the California court.

In summary and review, the basic facts are: David and Leticia are US citizens who own properties in the
USA and in the Philippines. Leticia obtained a decree of divorce from the Superior Court of California in
June 2005 wherein the court awarded all the properties in the USA to Leticia. With respect to their
properties in the Philippines, Leticiafiled a petition for judicial separation ofconjugal properties.

At the outset, the trial court erred in recognizing the divorce decree which severed the bond of marriage
between the parties. In Corpuz v. Sto. Tomas,13 we stated that:

The starting point in any recognition of a foreign divorce judgment is the acknowledgment that our courts
do not take judicial notice of foreign judgments and laws. Justice Herrera explained that, as a rule, "no
sovereign is bound to give effect within its dominion to a judgment rendered by a tribunal of another
country." This means that the foreign judgment and its authenticity must beproven as facts under our rules
on evidence, together with the aliens applicable national law to show the effect of the judgment on the
alien himself or herself. The recognition may be made in an action instituted specifically for the purpose or
in another action where a party invokes the foreign decree as an integral aspect of his claim or defense. 14

The requirements of presenting the foreign divorce decree and the national law of the foreigner must
comply with our Rules of Evidence. Specifically, for Philippine courts to recognize a foreign judgment
relating to the status of a marriage, a copy of the foreign judgment may be admitted in evidence and
proven as a fact under Rule 132, Sections 24 and 25, in relation to Rule 39, Section 48(b) of the Rules of
Court.15

Under Section 24 of Rule 132, the record of public documents of a sovereign authority or tribunal may be
proved by: (1) an official publication thereof or (2) a copy attested by the officer having the legal custody
thereof. Such official publication or copy must beaccompanied, if the record is not kept in the Philippines,
with a certificate that the attesting officer has the legal custody thereof. The certificate may be issued by
any of the authorized Philippine embassy or consular officials stationed in the foreign country in which the
record is kept, and authenticated by the seal of his office. The attestation must state, in substance, that
the copy is a correct copy of the original, or a specific part thereof, asthe case may be, and must be under
the official seal of the attesting officer.

Section 25 of the same Rule states that whenever a copy of a document or record is attested for the
purpose of evidence, the attestation must state, in substance, that the copy is a correct copy of the
original, or a specific part thereof, as the case may be. The attestation must be under the official seal of
the attesting officer, if there be any, or if hebe the clerk of a court having a seal, under the seal of such
court.

Based on the records, only the divorce decree was presented in evidence. The required certificates to
prove its authenticity, as well as the pertinent California law on divorce were not presented.

It may be noted that in Bayot v. Court of Appeals, 16 we relaxed the requirement on certification where we
held that "[petitioner therein] was clearly an American citizenwhen she secured the divorce and that
divorce is recognized and allowed in any of the States of the Union, the presentation of a copy of foreign
divorce decree duly authenticatedby the foreign court issuing said decree is, as here, sufficient." In this
case however, it appears that there is no seal from the office where the divorce decree was obtained.

Even if we apply the doctrine of processual presumption 17 as the lower courts did with respect to the
property regime of the parties, the recognition of divorce is entirely a different matter because, to begin
with, divorce is not recognized between Filipino citizens in the Philippines. Absent a valid recognition of
the divorce decree, it follows that the parties are still legally married in the Philippines. The trial court thus
erred in proceeding directly to liquidation.

As a general rule, any modification in the marriage settlements must be made before the celebration of
marriage. An exception to this rule is allowed provided that the modification isjudicially approved and
refers only to the instances provided in Articles 66,67, 128, 135 and 136 of the Family Code. 18

Leticia anchored the filing of the instant petition for judicial separation of property on paragraphs 4 and 6
of Article 135 of the Family Code, to wit:

Art. 135. Any of the following shall be considered sufficient cause for judicial separation of property:

(1) That the spouse of the petitioner has been sentenced to a penalty which carries with it civil
interdiction;
 (2) That the spouse of the petitioner has been judicially declared an absentee;

(3) That loss of parental authority ofthe spouse of petitioner has been decreed by the court;

(4) That the spouse of the petitioner has abandoned the latter or failed to comply with his or her
obligations to the family as provided for in Article 101;

(5) That the spouse granted the power of administration in the marriage settlements has abused
that power; and

(6) That at the time of the petition, the spouses have been separated in fact for at least one year
and reconciliation is highly improbable.

In the cases provided for in Numbers (1), (2), and (3), the presentation of the final judgment against the
guiltyor absent spouse shall be enough basis for the grant of the decree ofjudicial separation of property.
(Emphasis supplied).

The trial court had categorically ruled that there was no abandonment in this case to necessitate judicial
separation of properties under paragraph 4 of Article 135 of the Family Code. The trial court ratiocinated:

Moreover, abandonment, under Article 101 of the Family Code quoted above, must be for a valid cause
and the spouse is deemed to have abandoned the other when he/she has left the conjugal dwelling
without intention of returning. The intention of not returning is prima facie presumed if the allegedly [sic]
abandoning spouse failed to give any information as to his or her whereabouts within the period of three
months from such abandonment.

In the instant case, the petitioner knows that the respondent has returned to and stayed at his hometown
in Maria Aurora, Philippines, as she even went several times to visit him there after the alleged
abandonment. Also, the respondent has been going back to the USA to visit her and their children until
the relations between them worsened. The last visit of said respondent was in October 2004 when he and
the petitioner discussed the filing by the latter of a petition for dissolution of marriage with the California
court. Such turn for the worse of their relationship and the filing of the saidpetition can also be considered
as valid causes for the respondent to stay in the Philippines. 19

Separation in fact for one year as a ground to grant a judicial separation of property was not tackled in the
trial courts decision because, the trial court erroneously treated the petition as liquidation of the absolute
community of properties.

The records of this case are replete with evidence that Leticia and David had indeed separated for more
than a year and that reconciliation is highly improbable. First, while actual abandonment had not been
proven, it is undisputed that the spouses had been living separately since 2003 when David decided to go
back to the Philippines to set up his own business. Second, Leticia heard from her friends that David has
been cohabiting with Estrellita Martinez, who represented herself as Estrellita Noveras. Editha Apolonio,
who worked in the hospital where David was once confined, testified that she saw the name of Estrellita
listed as the wife of David in the Consent for Operation form. 20Third and more significantly, they had filed
for divorce and it was granted by the California court in June 2005.

Having established that Leticia and David had actually separated for at least one year, the petition for
judicial separation of absolute community of property should be granted.

The grant of the judicial separation of the absolute community property automatically dissolves the
absolute community regime, as stated in the 4th paragraph of Article 99 ofthe Family Code, thus:
Art. 99. The absolute community terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled or declared void; or

(4) In case of judicial separation of property during the marriage under Articles 134 to 138.
(Emphasis supplied).

Under Article 102 of the same Code, liquidation follows the dissolution of the absolute community regime
and the following procedure should apply:

Art. 102. Upon dissolution of the absolute community regime, the following procedure shall apply:

(1) An inventory shall be prepared, listing separately all the properties of the absolute community
and the exclusive properties of each spouse.

(2) The debts and obligations of the absolute community shall be paid out of its 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 provisions of the second paragraph of Article 94.

(3) Whatever remains of the exclusive properties of the spouses shall thereafter be delivered to
each of them.

(4) The net remainder of the properties of the absolute community shall constitute its net assets,
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 of
such share provided in this Code. For purposes of computing the net profits subject to forfeiture in
accordance with Articles 43, No. (2) and 63, No. (2),the said profits shall be the increase in value
between the market value of the community property at the time of the celebration of the marriage
and the market value at the time of its dissolution.

(5) The presumptive legitimes of the common children shall be delivered upon partition, in
accordance with Article 51.

(6) Unless otherwise agreed upon by the parties, in the partition of the properties, the conjugal
dwelling and the lot on which it is situated shall be adjudicated tothe 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, unless the court has decided otherwise. In case there is no
such majority, the court shall decide, taking into consideration the best interests of said children.
At the risk of being repetitious, we will not remand the case to the trial court. Instead, we shall
adopt the modifications made by the Court of Appeals on the trial courts Decision with respect to
liquidation.

We agree with the appellate court that the Philippine courts did not acquire jurisdiction over the California
properties of David and Leticia. Indeed, Article 16 of the Civil Code clearly states that real property as well
as personal property is subject to the law of the country where it is situated. Thus, liquidation shall only be
limited to the Philippine properties.
We affirm the modification madeby the Court of Appeals with respect to the share of the spouses in the
absolutecommunity properties in the Philippines, as well as the payment of their childrens presumptive
legitimes, which the appellate court explained in this wise:

Leticia and David shall likewise have an equal share in the proceeds of the Sampaloc
property.1wphi1 While both claimed to have contributed to the redemption of the Noveras property,
absent a clear showing where their contributions came from, the same is presumed to have come from
the community property. Thus, Leticia is not entitled to reimbursement of half of the redemption money.

David's allegation that he used part of the proceeds from the sale of the Sampaloc property for the benefit
of the absolute community cannot be given full credence. Only the amount of P120,000.00 incurred in
going to and from the U.S.A. may be charged thereto. Election expenses in the amount of P300,000.00
when he ran as municipal councilor cannot be allowed in the absence of receipts or at least the Statement
of Contributions and Expenditures required under Section 14 of Republic Act No. 7166 duly received by
the Commission on Elections. Likewise, expenses incurred to settle the criminal case of his personal
driver is not deductible as the same had not benefited the family. In sum, Leticia and David shall share
equally in the proceeds of the sale net of the amount ofP120,000.00 or in the respective amounts
of P1,040,000.00.

xxxx

Under the first paragraph of Article 888 of the Civil Code, "(t)he legitime of legitimate children and
descendants consists of one-half or the hereditary estate of the father and of the mother." The children
arc therefore entitled to half of the share of each spouse in the net assets of the absolute community,
which shall be annotated on the titles/documents covering the same, as well as to their respective shares
in the net proceeds from the sale of the Sampaloc property including the receivables from Sps. Paringit in
the amount of P410,000.00. Consequently, David and Leticia should each pay them the amount
of P520,000.00 as their presumptive legitimes therefrom. 21

WHEREFORE, the petition is DENIED. The assailed Decision of the Court of Appeals in CA G.R. CV No.
88686 is AFFIRMED.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 163744 February 29, 2008

METROPOLITAN BANK AND TRUST CO., petitioner,

vs.
NICHOLSON PASCUAL a.k.a. NELSON PASCUAL, respondent.

DECISION

VELASCO, JR., J.:

Respondent Nicholson Pascual and Florencia Nevalga were married on January 19, 1985. During the
union, Florencia bought from spouses Clarito and Belen Sering a 250-square meter lot with a three-door
apartment standing thereon located in Makati City. Subsequently, Transfer Certificate of Title (TCT) No. S-
101473/T-510 covering the purchased lot was canceled and, in lieu thereof, TCT No. 156283 1 of the
Registry of Deeds of Makati City was issued in the name of Florencia, "married to Nelson Pascual" a.k.a.
Nicholson Pascual.

In 1994, Florencia filed a suit for the declaration of nullity of marriage under Article 36 of the Family Code,
docketed as Civil Case No. Q-95-23533. After trial, the Regional Trial Court (RTC), Branch 94 in Quezon
City rendered, on July 31, 1995, a Decision,2 declaring the marriage of Nicholson and Florencia null and
void on the ground of psychological incapacity on the part of Nicholson. In the same decision, the
RTC, inter alia, ordered the dissolution and liquidation of the ex-spouses conjugal partnership of gains.
Subsequent events saw the couple going their separate ways without liquidating their conjugal
partnership.

On April 30, 1997, Florencia, together with spouses Norberto and Elvira Oliveros, obtained a PhP 58
million loan from petitioner Metropolitan Bank and Trust Co. (Metrobank). To secure the obligation,
Florencia and the spouses Oliveros executed several real estate mortgages (REMs) on their properties,
including one involving the lot covered by TCT No. 156283. Among the documents Florencia submitted to
procure the loan were a copy of TCT No. 156283, a photocopy of the marriage-nullifying RTC decision,
and a document denominated as "Waiver" that Nicholson purportedly executed on April 9, 1995. The
waiver, made in favor of Florencia, covered the conjugal properties of the ex-spouses listed therein, but
did not incidentally include the lot in question.

Due to the failure of Florencia and the spouses Oliveros to pay their loan obligation when it fell due,
Metrobank, on November 29, 1999, initiated foreclosure proceedings under Act No. 3135, as amended,
before the Office of the Notary Public of Makati City. Subsequently, Metrobank caused the publication of
the notice of sale on three issues ofRemate.3 At the auction sale on January 21, 2000, Metrobank
emerged as the highest bidder.

Getting wind of the foreclosure proceedings, Nicholson filed on June 28, 2000, before the RTC in Makati
City, a Complaint to declare the nullity of the mortgage of the disputed property, docketed as Civil Case
No. 00-789 and eventually raffled to Branch 65 of the court. In it, Nicholson alleged that the property,
which is still conjugal property, was mortgaged without his consent.
Metrobank, in its Answer with Counterclaim and Cross-Claim,4 alleged that the disputed lot, being
registered in Florencias name, was paraphernal. Metrobank also asserted having approved the mortgage
in good faith.

Florencia did not file an answer within the reglementary period and, hence, was subsequently declared in
default.

The RTC Declared the REM Invalid

After trial on the merits, the RTC rendered, on September 24, 2001, judgment finding for Nicholson.
The fallo reads:

PREMISES CONSIDERED, the Court renders judgment declaring the real estate mortgage on
the property covered by [TCT] No. 156283 of the Registry of Deeds for the City of Makati as well
as all proceedings thereon null and void.

The Court further orders defendants [Metrobank and Florencia] jointly and severally to pay
plaintiff [Nicholson]:

1. PhP100,000.00 by way of moral damages;

2. PhP75,000.00 by way of attorneys fees; and

3. The costs.

SO ORDERED.5

Even as it declared the invalidity of the mortgage, the trial court found the said lot to be conjugal, the
same having been acquired during the existence of the marriage of Nicholson and Florencia. In so ruling,
the RTC invoked Art. 116 of the Family Code, providing that "all property acquired during the marriage,
whether the acquisition appears to have been made, contracted or registered in the name of one or both
spouses, is presumed to be conjugal unless the contrary is proved." To the trial court, Metrobank had not
overcome the presumptive conjugal nature of the lot. And being conjugal, the RTC concluded that the
disputed property may not be validly encumbered by Florencia without Nicholsons consent.

The RTC also found the deed of waiver Florencia submitted to Metrobank to be fatally defective. For let
alone the fact that Nicholson denied executing the same and that the signature of the notarizing officer
was a forgery, the waiver document was allegedly executed on April 9, 1995 or a little over three months
before the issuance of the RTC decision declaring the nullity of marriage between Nicholson and
Florencia.

The trial court also declared Metrobank as a mortgagee in bad faith on account of negligence, stating the
observation that certain data appeared in the supporting contract documents, which, if properly
scrutinized, would have put the bank on guard against approving the mortgage. Among the data referred
to was the date of execution of the deed of waiver.

The RTC dismissed Metrobanks counterclaim and cross-claim against the ex-spouses.

Metrobanks motion for reconsideration was denied. Undeterred, Metrobank appealed to the Court of
Appeals (CA), the appeal docketed as CA-G.R. CV No. 74874.

The CA Affirmed with Modification the RTCs Decision

On January 28, 2004, the CA rendered a Decision affirmatory of that of the RTC, except for the award
therein of moral damages and attorneys fees which the CA ordered deleted. The dispositive portion of the
CAs Decision reads:

WHEREFORE, premises considered, the appealed decision is hereby AFFIRMED WITH

MODIFICATION with respect to the award of moral damages and attorneys fees which is hereby
DELETED.

SO ORDERED.6

Like the RTC earlier held, the CA ruled that Metrobank failed to overthrow the presumption established in
Art. 116 of the Family Code. And also decreed as going against Metrobank was Florencias failure to
comply with the prescriptions of the succeeding Art. 124 of the Code on the disposition of conjugal
partnership property. Art. 124 states:

Art. 124. The administration and enjoyment of the conjugal partnership property shall belong to
both spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to
recourse to the court by the wife for proper remedy x x x.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or encumbrance without authority of the
court or written consent of the other spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. However, the transaction shall be construed as a
continuing offer on the part of the consenting spouse and the third person, and may be perfected
as a binding contract upon the acceptance by the other spouse or authorization by the court
before the offer is withdrawn by either or both offerors.

As to the deletion of the award of moral damages and attorneys fees, the CA, in gist, held that Metrobank
did not enter into the mortgage contract out of ill-will or for some fraudulent purpose, moral obliquity, or
like dishonest considerations as to justify damages.

Metrobank moved but was denied reconsideration by the CA.

Thus, Metrobank filed this Petition for Review on Certiorari under Rule 45, raising the following issues for
consideration:

a. Whether or not the [CA] erred in declaring subject property as conjugal by applying Article 116
of the Family Code.

b. Whether or not the [CA] erred in not holding that the declaration of nullity of marriage between
the respondent Nicholson Pascual and Florencia Nevalga ipso facto dissolved the regime of
community of property of the spouses.

c. Whether or not the [CA] erred in ruling that the petitioner is an innocent purchaser for value. 7

Our Ruling

A modification of the CAs Decision is in order.

The Disputed Property is Conjugal

It is Metrobanks threshold posture that Art. 160 of the Civil Code providing that "[a]ll property of the
marriage is presumed to belong to the conjugal partnership, unless it be prove[n] that it pertains
exclusively to the husband or to the wife," applies. To Metrobank, Art. 116 of the Family Code could not be
of governing application inasmuch as Nicholson and Florencia contracted marriage before the effectivity
of the Family Code on August 3, 1988. CitingManongsong v. Estimo,8 Metrobank asserts that the
presumption of conjugal ownership under Art. 160 of the Civil Code applies when there is proof that the
property was acquired during the marriage. Metrobank adds, however, that for the presumption of
conjugal ownership to operate, evidence must be adduced to prove that not only was the property
acquired during the marriage but that conjugal funds were used for the acquisition, a burden Nicholson
allegedly failed to discharge.

To bolster its thesis on the paraphernal nature of the disputed property, Metrobank cites Francisco v.
Court of Appeals9 and Jocson v. Court of Appeals,10 among other cases, where this Court held that a
property registered in the name of a certain person with a description of being married is no proof that the
property was acquired during the spouses marriage.

On the other hand, Nicholson, banking on De Leon v. Rehabilitation Finance Corporation11 and Wong v.
IAC,12contends that Metrobank failed to overcome the legal presumption that the disputed property is
conjugal. He asserts that Metrobanks arguments on the matter of presumption are misleading as only
one postulate needs to be shown for the presumption in favor of conjugal ownership to arise, that is, the
fact of acquisition during marriage. Nicholson dismisses, as inapplicable, Francisco and Jocson, noting
that they are relevant only when there is no indication as to the exact date of acquisition of the property
alleged to be conjugal.

As a final point, Nicholson invites attention to the fact that Metrobank had virtually recognized the conjugal
nature of the property in at least three instances. The first was when the bank lumped him with Florencia
in Civil Case No. 00-789 as co-mortgagors and when they were referred to as "spouses" in the petition for
extrajudicial foreclosure of mortgage. Then came the published notice of foreclosure sale where
Nicholson was again designated as co-mortgagor. And third, in its demand-letter 13 to vacate the disputed
lot, Metrobank addressed Nicholson and Florencia as "spouses," albeit the finality of the decree of nullity
of marriage between them had long set in.

We find for Nicholson.

First, while Metrobank is correct in saying that Art. 160 of the Civil Code, not Art. 116 of the Family Code,
is the applicable legal provision since the property was acquired prior to the enactment of the Family
Code, it errs in its theory that, before conjugal ownership could be legally presumed, there must be a
showing that the property was acquired during marriage using conjugal funds. Contrary to Metrobanks
submission, the Court did not, inManongsong,14 add the matter of the use of conjugal funds as an
essential requirement for the presumption of conjugal ownership to arise. Nicholson is correct in pointing
out that only proof of acquisition during the marriage is needed to raise the presumption that the property
is conjugal. Indeed, if proof on the use of conjugal is still required as a necessary condition before the
presumption can arise, then the legal presumption set forth in the law would veritably be a superfluity. As
we stressed in Castro v. Miat:

Petitioners also overlook Article 160 of the New Civil Code. It provides that "all property of the
marriage is presumed to be conjugal partnership, unless it be prove[n] that it pertains exclusively
to the husband or to the wife." This article does not require proof that the property was
acquired with funds of the partnership.The presumption applies even when the manner in
which the property was acquired does not appear.15(Emphasis supplied.)

Second, Francisco and Jocson do not reinforce Metrobanks theory. Metrobank would thrust on the Court,
invoking the two cases, the argument that the registration of the property in the name of "Florencia
Nevalga, married to Nelson Pascual" operates to describe only the marital status of the title holder, but
not as proof that the property was acquired during the existence of the marriage.

Metrobank is wrong. As Nicholson aptly points out, if proof obtains on the acquisition of the property
during the existence of the marriage, then the presumption of conjugal ownership applies. The correct
lesson of Francisco andJocson is that proof of acquisition during the marital coverture is a condition sine
qua non for the operation of the presumption in favor of conjugal ownership. When there is no showing as
to when the property was acquired by the spouse, the fact that a title is in the name of the spouse is an
indication that the property belongs exclusively to said spouse. 16

The Court, to be sure, has taken stock of Nicholsons arguments regarding Metrobank having implicitly
acknowledged, thus being in virtual estoppel to question, the conjugal ownership of the disputed lot, the
bank having named the former in the foreclosure proceedings below as either the spouse of Florencia or
her co-mortgagor. It is felt, however, that there is no compelling reason to delve into the matter of
estoppel, the same having been raised only for the first time in this petition. Besides, however Nicholson
was designated below does not really change, one way or another, the classification of the lot in question.

Termination of Conjugal Property Regime does

not ipso facto End the Nature of Conjugal Ownership

Metrobank next maintains that, contrary to the CAs holding, Art. 129 of the Family Code is inapplicable.
Art. 129 in part reads:

Art. 129. Upon the dissolution of the conjugal partnership regime, the following procedure shall
apply:

xxxx

(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 in this Code.

Apropos the aforequoted provision, Metrobank asserts that the waiver executed by Nicholson,
effected as it were before the dissolution of the conjugal property regime, vested on Florencia full
ownership of all the properties acquired during the marriage.

Nicholson counters that the mere declaration of nullity of marriage, without more, does not automatically
result in a regime of complete separation when it is shown that there was no liquidation of the conjugal
assets.

We again find for Nicholson.

While the declared nullity of marriage of Nicholson and Florencia severed their marital bond and dissolved
the conjugal partnership, the character of the properties acquired before such declaration continues to
subsist as conjugal properties until and after the liquidation and partition of the partnership. This
conclusion holds true whether we apply Art. 129 of the Family Code on liquidation of the conjugal
partnerships assets and liabilities which is generally prospective in application, or Section 7, Chapter 4,
Title IV, Book I (Arts. 179 to 185) of the Civil Code on the subject, Conjugal Partnership of Gains. For, the
relevant provisions of both Codes first require the liquidation of the conjugal properties before a regime of
separation of property reigns.
In Dael v. Intermediate Appellate Court, we ruled that pending its liquidation following its dissolution, the
conjugal partnership of gains is converted into an implied ordinary co-ownership among the surviving
spouse and the other heirs of the deceased.17

In this pre-liquidation scenario, Art. 493 of the Civil Code shall govern the property relationship between
the former spouses, where:

Each co-owner shall have the full ownership of his part and of the fruits and benefits pertaining
thereto, and he may therefore alienate, assign or mortgage it, and even substitute another person
in its enjoyment, except when personal rights are involved. But the effect of the alienation or
the mortgage, with respect to the co-owners, shall be limited to the portion which may be
allotted to him in the division upon the termination of the co-ownership. (Emphasis
supplied.)

In the case at bar, Florencia constituted the mortgage on the disputed lot on April 30, 1997, or a little less
than two years after the dissolution of the conjugal partnership on July 31, 1995, but before the liquidation
of the partnership. Be that as it may, what governed the property relations of the former spouses when the
mortgage was given is the aforequoted Art. 493. Under it, Florencia has the right to mortgage or even sell
her one-half (1/2) undivided interest in the disputed property even without the consent of Nicholson.
However, the rights of Metrobank, as mortgagee, are limited only to the 1/2 undivided portion that
Florencia owned. Accordingly, the mortgage contract insofar as it covered the remaining 1/2 undivided
portion of the lot is null and void, Nicholson not having consented to the mortgage of his undivided half.

The conclusion would have, however, been different if Nicholson indeed duly waived his share in the
conjugal partnership. But, as found by the courts a quo, the April 9, 1995 deed of waiver allegedly
executed by Nicholson three months prior to the dissolution of the marriage and the conjugal partnership
of gains on July 31, 1995 bore his forged signature, not to mention that of the notarizing officer. A spurious
deed of waiver does not transfer any right at all, albeit it may become the root of a valid title in the hands
of an innocent buyer for value.

Upon the foregoing perspective, Metrobanks right, as mortgagee and as the successful bidder at the
auction of the lot, is confined only to the 1/2 undivided portion thereof heretofore pertaining in ownership
to Florencia. The other undivided half belongs to Nicholson. As owner pro indiviso of a portion of the lot in
question, Metrobank may ask for the partition of the lot and its property rights "shall be limited to the
portion which may be allotted to [the bank] in the division upon the termination of the co-
ownership."18 This disposition is in line with the well-established principle that the binding force of a
contract must be recognized as far as it is legally possible to do soquando res non valet ut ago, valeat
quantum valere potest.19

In view of our resolution on the validity of the auction of the lot in favor of Metrobank, there is hardly a
need to discuss at length whether or not Metrobank was a mortgagee in good faith. Suffice it to state for
the nonce that where the mortgagee is a banking institution, the general rule that a purchaser or
mortgagee of the land need not look beyond the four corners of the title is inapplicable. 20 Unlike private
individuals, it behooves banks to exercise greater care and due diligence before entering into a mortgage
contract. The ascertainment of the status or condition of the property offered as security and the validity of
the mortgagors title must be standard and indispensable part of the banks operation. 21 A bank that failed
to observe due diligence cannot be accorded the status of a bona fide mortgagee,22 as here.

But as found by the CA, however, Metrobanks failure to comply with the due diligence requirement was
not the result of a dishonest purpose, some moral obliquity or breach of a known duty for some interest or
ill-will that partakes of fraud that would justify damages.

WHEREFORE, the petition is PARTLY GRANTED. The appealed Decision of the CA dated January 28,
2004, upholding with modification the Decision of the RTC, Branch 65 in Makati City, in Civil Case No. 00-
789, isAFFIRMED with the MODIFICATION that the REM over the lot covered by TCT No. 156283 of the
Registry of Deeds of Makati City is hereby declared valid only insofar as the pro indiviso share of
Florencia thereon is concerned.

As modified, the Decision of the RTC shall read:

PREMISES CONSIDERED, the real estate mortgage on the property covered by TCT No. 156283 of the
Registry of Deeds of Makati City and all proceedings thereon are NULL and VOID with respect to the
undivided 1/2 portion of the disputed property owned by Nicholson, but VALID with respect to the other
undivided 1/2 portion belonging to Florencia.

The claims of Nicholson for moral damages and attorneys fees are DENIED for lack of merit.

No pronouncement as to costs.

SO ORDERED.
G.R. No. 193038, March 11, 2015 - JOSEFINA V. NOBLEZA, Petitioner, v. SHIRLEY B.
NUEGA, Respondent.

THIRD DIVISION

G.R. No. 193038, March 11, 2015

JOSEFINA V. NOBLEZA, Petitioner, v. SHIRLEY B. NUEGA, Respondent.

DECISION

VILLARAMA, JR., J.:

At bar is a petition for review on certiorari of the Decision1 dated May 14, 2010 and the
Resolution2dated July 21, 2010 of the Court of Appeals (CA) in CA-G.R. CV No. 70235,
which affirmed with modification the assailed Decision3 dated February 14, 2001 of the
Regional Trial Court (RTC) of Marikina City, Branch 273, in Civil Case No. 96-274-MK.

The following facts are found by the trial court and affirmed by the appellate court:

Respondent Shirley B. Nuega (Shirley) was married to Rogelio A. Nuega (Rogelio) on

September 1, 1990.4 Sometime in 1988 when the parties were still engaged, Shirley was
working as a domestic helper in Israel. Upon the request of Rogelio, Shirley sent him
money5 for the purchase of a residential lot in Marikina where they had planned to
eventually build their home. Rogelio was then also working abroad as a seaman. The
following year, or on September 13, 1989, Rogelio purchased the subject house and lot for
One Hundred Two Thousand Pesos (P102,000.00)6 from Rodeanna Realty Corporation. The
subject property has an aggregate area of one hundred eleven square meters (111 sq. m.)
covered by Transfer Certificate of Title (TCT) No. N-133844.7 Shirley claims that upon her
arrival in the Philippines sometime in 1989, she settled the balance for the equity over the
subject property with the developer through SSS8 financing. She likewise paid for the
succeeding monthly amortizations. On October 19, 1989, TCT No. 171963 9 over the subject
property was issued by the Registry of Deeds of Marikina, Rizal solely under the name of
Rogelio.

On September 1, 1990, Shirley and Rogelio got married and lived in the subject property.
The following year, Shirley returned to Israel for work. While overseas, she received
information that Rogelio had brought home another woman, Monica Escobar, into the family
home. She also learned, and was able to confirm upon her return to the Philippines in May
1992, that Rogelio had been introducing Escobar as his wife.

In June 1992, Shirley filed two cases against Rogelio: one for Concubinage before the
Provincial Prosecution Office of Rizal, and another for Legal Separation and Liquidation of
Property before the RTC of Pasig City. Shirley later withdrew the complaint for legal
separation and liquidation of property, but re-filed10 the same on January 29, 1993. In
between the filing of these cases, Shirley learned that Rogelio had the intention of selling
the subject property. Shirley then advised the interested buyers - one of whom was their
neighbor and petitioner Josefina V. Nobleza (petitioner) - of the existence of the cases that
she had filed against Rogelio and cautioned them against buying the subject property until
the cases are closed and terminated. Nonetheless, under a Deed of Absolute Sale 11 dated
December 29, 1992, Rogelio sold the subject property to petitioner without Shirley's
consent in the amount of Three Hundred Eighty Thousand Pesos (P380,000.00), including
petitioner's undertaking to assume the existing mortgage on the property with the National
Home Mortgage Finance Corporation and to pay the real property taxes due thereon.

Meanwhile, in a Decision12 dated May 16, 1994, the RTC of Pasig City, Branch 70, granted
the petition for legal separation and ordered the dissolution and liquidation of the regime of
absolute community of property between Shirley and
Rogelio, viz.:chanroblesvirtuallawlibrary

WHEREFORE, in view of the foregoing, the Court hereby grants the instant petition for legal
separation between the subject spouses with all its legal effects as provided for in Art. 63 of
the Family Code. Their community property is consequently dissolved and must be
liquidated in accordance with Art. 102 of the New Family Code. The respondent is thus
hereby enjoined from selling, encumbering or in any way disposing or alienating any of their
community property including the subject house and lot before the required liquidation.
Moreover, he, being the guilty spouse, must forfeit the net profits of the community
property in favor of the petitioner who is the innocent spouse pursuant to Art. 43 of the
aforesaid law. Finally, in the light of the claim of ownership by the present occupants who
have not been impleaded in the instant case, a separate action must be instituted by the
petitioner against the alleged buyer or buyers thereof to determine their respective rights
thereon.

Let a copy of this decision be furnished the Local Civil Registrar of Manila, the Register of
Deeds of Marikina, Metro Manila and the National Statistics Office (NSO), sta. Mesa, Manila.

SO ORDERED.13cralawlawlibrary
Rogelio appealed the above-quoted ruling before the CA which denied due course and
dismissed the petition. It became final and executory and a writ of execution was issued in
August 1995.14

On August 27, 1996, Shirley instituted a Complaint15 for Rescission of Sale and Recoveiy of
Property against petitioner and Rogelio before the RTC of Marikina City, Branch 273. After
trial on the merits, the trial court rendered its decision on February 14,
2001, viz.:chanroblesvirtuallawlibrary
WHEREFORE, foregoing premises considered, judgment is hereby rendered in favor of
plaintiff Shirley Nuega and against defendant Josefina Nobleza, as follows:

1) the Deed of Absolute Sale dated December 29, 1992 insofar as the 55.05 square
meters representing the one half (1/2) portion of plaintiff Shirley Nuega is concerned, is
hereby ordered rescinded, the same being null and void;
2) defendant Josefina Nobleza is ordered to reconvey said 55.05 square meters to plaintiff
Shirley Nuega, or in the alternative to pay plaintiff Shirley Nuega the present market
value of said 55.05 square meters; and
3) to pay plaintiff Shirley Nuega attorney's fees in the sum of Twenty Thousand Pesos
(P20,000.00).
For lack of merit, defendant's counterclaim is hereby DENIED.

SO ORDERED.16
Petitioner sought recourse with the CA, while Rogelio did not appeal the ruling of the trial
court. In its assailed Decision promulgated on May 14, 2010, the appellate court affirmed
with modification the trial court's ruling, viz.:chanroblesvirtuallawlibrary
WHEREFORE, subject to the foregoing disquisition, the appeal is DENIED. The Decision
dated 14 February 2001 of the Regional Trial Court of Marikina City, Branch 273 in Civil
Case No. 96-274-MK is AFFIRMED with MODIFICATION in that the Deed of Absolute Sale
dated 29 December 1992 is hereby declared null and void in its entirety, and defendant-
appellant Josefina V. Nobleza is ordered to reconvey the entire subject property to plaintiff-
appellee Shirley B. Nuega and defendant Rogelio Nuega, without prejudice to said
defendant-appellant's right to recover from defendant Rogelio whatever amount she paid for
the subject property. Costs against defendant-appellant Nobleza.

SO ORDERED.17cralawlawlibrary
Petitioner moved for reconsideration. In a Resolution dated July 21, 2010, the appellate
court denied the motion for lack of merit. Hence, this petition raising the following
assignment of errors:chanroblesvirtuallawlibrary
[I.] THE HONORABLE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE DECISION OF
THE REGIONAL TRIAL COURT BY SUSTAINING THE FINDING THAT PETITIONER WAS
NOT A PURCHASER IN GOOD FAITH.
[II.] THE HONORABLE COURT OF APPEALS ERRED WHEN IT MODIFIED THE DECISION OF
THE REGIONAL TRIAL COURT BY DECLARING AS NULL AND VOID THE DEED OF
ABSOLUTE SALE DATED 29 DECEMBER 1992 IN ITS ENTIRETY.18
We deny the petition.

Petitioner is not a buyer in good faith.

An innocent purchaser for value is one who buys the property of another, without notice
that some other person has a right or interest in the property, for which a full and fair
price is paid by the buyer at the time of the purchase or before receipt of any notice of
claims or interest of some other person in the property.19 It is the party who claims to be an
innocent purchaser for value who has the burden of proving such assertion, and it is not
enough to invoke the ordinary presumption of good faith.20 To successfully invoke and be
considered as a buyer in good faith, the presumption is that first and foremost, the "buyer
in good faith" must have shown prudence and due diligence in the exercise of his/her rights.
It presupposes that the buyer did everything that an ordinary person would do for the
protection and defense of his/her rights and interests against prejudicial or injurious
concerns when placed in such a situation. The prudence required of a buyer in good faith is
"not that of a person with training in law, but rather that of an average man who 'weighs
facts and circumstances without resorting to the calibration of our technical rules of
evidence of which his knowledge is nil.'"21 A buyer in good faith does his homework and
verifies that the particulars are in order such as the title, the parties, the mode of transfer
and the provisions in the deed/contract of sale, to name a few. To be more specific, such
prudence can be shown by making an ocular inspection of the property, checking the
title/ownership with the proper Register of Deeds alongside the payment of taxes therefor,
or inquiring into the minutiae such as the parameters or lot area, the type of ownership,
and the capacity of the seller to dispose of the property, which capacity necessarily includes
an inquiry into the civil status of the seller to ensure that if married, marital consent is
secured when necessary. In fine, for a purchaser of a property in the possession of another
to be in good faith, he must exercise due diligence, conduct an investigation, and weigh the
surrounding facts and circumstances like what any prudent man in a similar situation would
do.22

In the case at bar, petitioner claims that she is a buyer in good faith of the subject property
which is titled under the name of the seller Rogelio A. Nuega alone as evidenced by TCT No.
171963 and Tax Declaration Nos. D-012-04723 and D-012-04724.23 Petitioner argues,
among others, that since she has examined the TCT over the subject property and found
the property to have been registered under the name of seller Rogelio alone, she is an
innocent purchaser for value and "she is not required to go beyond the face of the title in
verifying the status of the subject property at the time of the consummation of the sale and
at the date of the sale."24

We disagree with petitioner.

A buyer cannot claim to be an innocent purchaser for value by merely relying on the TCT of
the seller while ignoring all the other surrounding circumstances relevant to the sale.

In the case of Spouses Raymundo v. Spouses Bandong,25 petitioners therein - as does

petitioner herein - were also harping that due to the indefeasibility of a Torrens title, there
was nothing in the TCT of the property in litigation that should have aroused the buyer's
suspicion as to put her on guard that there was a defect in the title of therein seller. The
Court held in the Spouses Raymundo case that the buyer therein could not hide behind the
cloak of being an innocent purchaser for value by merely relying on the TCT which showed
that the registered owner of the land purchased is the seller. The Court ruled in this case
that the buyer was not an innocent purchaser for value due to the following attendant
circumstances, viz.:chanroblesvirtuallawlibrary
In the present case, we are not convinced by the petitioners' incessant assertion that
Jocelyn is an innocent purchaser for value. To begin with, she is a grandniece of Eulalia and
resides in the same locality where the latter lives and conducts her principal business. It is
therefore impossible for her not to acquire knowledge of her grand aunt's business practice
of requiring her biyaheros to surrender the titles to their properties and to sign the
corresponding deeds of sale over said properties in her favor, as security. This alone should
have put Jocelyn on guard for any possible abuses that Eulalia may commit with the titles
and the deeds of sale in her possession.26cralawlawlibrary
Similarly, in the case of Arrofo v. Quio,27 the Court held that while "the law does not
require a person dealing with registered land to inquire further than what the Torrens Title
on its face indicates," the rule is not absolute.28 Thus, finding that the buyer therein failed to
take the necessary precaution required of a prudent man, the Court held that Arrofo was
not an innocent purchaser for value, viz.:chanroblesvirtuallawlibrary
In the present case, the records show that Arrofo failed to act as a prudent buyer. True, she
asked her daughter to verify from the Register of Deeds if the title to the Property is free
from encumbrances. However, Arrofo admitted that the Property is within the neighborhood
and that she conducted an ocular inspection of the Property. She saw the house constructed
on the Property. Yet, Arrofo did not even bother to inquire about the occupants of the
house. Arrofo also admitted that at the time of the sale, Myrna was occupying a room in her
house as her lessee. The fact that Myrna was renting a room from Arrofo yet selling a land
with a house should have put Arrofo on her guard. She knew that Myrna was not occupying
the house. Hence, someone else must have been occupying the house.

Thus, Arrofo should have inquired who occupied the house, and if a lessee, who received
the rentals from such lessee. Such inquiry would have led Arrofo to discover that the lessee
was paying rentals to Quino, not to Renato and Myrna, who claimed to own the
Property.29cralawlawlibrary
An analogous situation obtains in the case at bar.

The TCT of the subject property states that its sole owner is the seller Rogelio himself who
was therein also described as "single". However, as in the cases of Spouses
Raymundo and Arrofo, there are circumstances critical to the case at bar which convince us
to affirm the ruling of both the appellate and lower courts that herein petitioner is not a
buyer in good faith.

First, petitioner's sister Hilda Bautista, at the time of the sale, was residing near Rogelio and
Shirley's house - the subject property - in Ladislao Diwa Village, Marikina City. Had
petitioner been more prudent as a buyer, she could have easily checked if Rogelio had the
capacity to dispose of the subject property. Had petitioner been more vigilant, she could
have inquired with such facility - considering that her sister lived in the same Ladislao Diwa
Village where the property is located - if there was any person other than Rogelio who had
any right or interest in the subject property.

To be sure, respondent even testified that she had warned their neighbors at Ladislao Diwa
Village - including petitioner's sister - not to engage in any deal with Rogelio relative to the
purchase of the subject property because of the cases she had filed against Rogelio.
Petitioner denies that respondent had given such warning to her neighbors, which includes
her sister, therefore arguing that such warning could not be construed as "notice" on her
part that there is a person other than the seller himself who has any right or interest in the
subject property. Nonetheless, despite petitioner's adamant denial, both courts a quo gave
probative value to the testimony of respondent, and the instant petition failed to present
any convincing evidence for this Court to reverse such factual finding. To be sure, it is not
within our province to second-guess the courts a quo, and the re-determination of this
factual issue is beyond the reach of a petition for review on certiorari where only questions
of law may be reviewed.30

Second, issues surrounding the execution of the Deed of Absolute Sale also pose question
on the claim of petitioner that she is a buyer in good faith. As correctly observed by both
courts a quo, the Deed of Absolute Sale was executed and dated on December 29, 1992.
However, the Community Tax Certificates of the witnesses therein were dated January 2
and 20, 1993.31 While this irregularity is not a direct proof of the intent of the parties to the
sale to make it appear that the Deed of Absolute Sale was executed on December 29, 1992
- or before Shirley filed the petition for legal separation on January 29, 1993 - it is
circumstantial and relevant to the claim of herein petitioner as an innocent purchaser for
value.

That is not all.

In the Deed of Absolute Sale dated December 29, 1992, the civil status of Rogelio as seller
was not stated, while petitioner as buyer was indicated as
"single," viz.:chanroblesvirtuallawlibrary
ROGELIO A. NUEGA, of legal age, Filipino citizen and with postal address at 2-A-2 Ladislao
Diwa St., Concepcion, Marikina, Metro Manila, hereinafter referred to as the VENDOR

And

JOSEFINA V. NOBLEZA, of legal age, Filipino citizen, single and with postal address at No. L-
2-A-3 Ladislao Diwa St., Concepcion, Marikina, Metro Manila, hereinafter referred to as the
VENDEE.32cralawlawlibrary
It puzzles the Court that while petitioner has repeatedly claimed that Rogelio is "single"
under TCT No. 171963 and Tax Declaration Nos. D-012-04723 and D-012-04724, his civil
status as seller was not stated in the Deed of Absolute Sale - further creating a cloud on the
claim of petitioner that she is an innocent purchaser for value.

As to the second issue, we rule that the appellate court did not err when it modified the
decision of the trial court and declared that the Deed of Absolute Sale dated December 29,
1992 is void in its entirety.

The trial court held that while the TCT shows that the owner of the subject property is
Rogelio alone, respondent was able to prove at the trial court that she contributed in the
payment of the purchase price of the subject property. This fact was also settled with
finality by the RTC of Pasig City, Branch 70, and affirmed by the CA, in the case for legal
separation and liquidation of property docketed as JDRC Case No. 2510. The pertinent
portion of the decision reads:chanroblesvirtuallawlibrary
xxx Clearly, the house and lot jointly acquired by the parties prior to their marriage forms
part of their community property regime, xxx

From the foregoing, Shirley sufficiently proved her financial contribution for the purchase of
the house and lot covered by TCT 171963. Thus, the present lot which forms part of their
community property should be divided equally between them upon the grant of the instant
petition for legal separation. Having established by preponderance of evidence the fact of
her husband's guilt in contracting a subsequent marriage xxx, Shirley alone should be
entitled to the net profits earned by the absolute community property. 33cralawlawlibrary
However, the nullity of the sale made by Rogelio is not premised on proof of respondent's
financial contribution in the purchase of the subject property. Actual contribution is not
relevant in determining whether a piece of property is community property for the law itself
defines what constitutes community property.

Article 91 of the Family Code thus provides:chanroblesvirtuallawlibrary

Art. 91. Unless otherwise provided in this Chapter or in the marriage settlements, the
community property shall consist of all the property owned by the spouses at the time of
the celebration of the marriage or acquired thereafter.
The only exceptions from the above rule are: (1) those excluded from the absolute
community by theFamily Code; and (2) those excluded by the marriage settlement.

Under the first exception are properties enumerated in Article 92 of the Family Code, which
states:chanroblesvirtuallawlibrary
Art. 92. The following shall be excluded from the community property:

(1) Property acquired during the marriage by gratuitous title by either spouse, and the fruits
as well as the income thereof, if any, unless it is expressly provided by the donor, testator
or grantor that they shall form part of the community property;

(2) Property for personal and exclusive use of either spouse; however, jewelry shall form
part of the community property;

(3) Property acquired before the marriage by either spouse who has legitimate descendants
by a former marriage, and the fruits as well as the income, if any, of such property.
As held in Quiao v. Quiao:34ChanRoblesVirtualawlibrary
When a couple enters into a regime of absolute community, the husband and the wife
becomes joint owners of all the properties of the marriage. Whatever property each spouse
brings into the marriage, and those acquired during the marriage (except those excluded
under Article 92 of the Family Code) form the common mass of the couple's properties. And
when the couple's marriage or community is dissolved, that common mass is divided
between the spouses, or their respective heirs, equally or in the proportion the parties have
established, irrespective of the value each one may have originally owned.
Since the subject property does not fall under any of the exclusions provided in Article 92, it
therefore forms part of the absolute community property of Shirley and Rogelio. Regardless
of their respective contribution to its acquisition before their marriage, and despite the fact
that only Rogelio's name appears in the TCT as owner, the property is owned jointly by the
spouses Shirley and Rogelio.

Respondent and Rogelio were married on September 1, 1990. Rogelio, on his own and
without the consent of herein respondent as his spouse, sold the subject property via a
Deed of Absolute Sale dated December 29, 1992 - or during the subsistence of a valid
contract of marriage. Under Article 96 of Executive Order No. 209, otherwise known as The
Family Code of the Philippines, the said disposition of a communal property is
void, viz.:chanroblesvirtuallawlibrary
Art. 96. The administration and enjoyment of the community property shall belong to both
spouses jointly. In case of disagreement, the husband's decision shall prevail, subject to
recourse to the court by the wife for a proper remedy, which must be availed of within five
years from the date of the contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the common properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of disposition or
encumbrance without the authority of the court or the written consent of the other
spouse. In the absence of such authority or consent, the disposition or
encumbrance shall be void. However, the transaction shall be construed as a continuing
offer on the part of the consenting spouse and the third person, and may be perfected as a
binding contract upon the acceptance by the other spouse or authorization by the court
before the offer is withdrawn by either or both offerors.35cralawlawlibrary
It is clear under the foregoing provision of the Family Code that Rogelio could not sell the
subject property without the written consent of respondent or the authority of the court.
Without such consent or authority, the entire sale is void. As correctly explained by the
appellate court:chanroblesvirtuallawlibrary
In the instant case, defendant Rogelio sold the entire subject property to defendant-
appellant Josefina on 29 December 1992 or during the existence of Rogelio's marriage to
plaintiff-appellee Shirley, without the consent of the latter. The subject property forms part
of Rogelio and Shirley's absolute community of property. Thus, the trial court erred in
declaring the deed of sale null and void only insofar as the 55.05 square meters
representing the one-half (1/2) portion of plaintiff-appellee Shirley. In absolute community
of property, if the husband, without knowledge and consent of the wife, sells (their)
property, such sale is void. The consent of both the husband Rogelio and the wife Shirley is
required and the absence of the consent of one renders the entire sale null and void
including the portion of the subject property pertaining to defendant Rogelio who contracted
the sale with defendant-appellant Josefina. Since the Deed of Absolute Sale x x x entered
into by and between defendant-appellant Josefina and defendant Rogelio dated 29
December 1992, during the subsisting marriage between plaintiff-appellee Shirley and
Rogelio, was without the written consent of Shirley, the said Deed of Absolute Sale is void in
its entirety. Hence, the trial court erred in declaring the said Deed of Absolute Sale as void
only insofar as the 1/2 portion pertaining to the share of Shirley is
concerned.36cralawlawlibrary
Finally, consistent with our ruling that Rogelio solely entered into the contract of sale with
petitioner and acknowledged receiving the entire consideration of the contract under the
Deed of Absolute Sale, Shirley could not be held accountable to petitioner for the
reimbursement of her payment for the purchase of the subject property. Under Article 94 of
the Family Code, the absolute community of property shall only be "liable for x x x [d]ebts
and obligations contracted by either spouse without the consent of the other to the extent
that the family may have been benefited x x x." As correctly stated by the appellate court,
there being no evidence on record that the amount received by Rogelio redounded to the
benefit of the family, respondent cannot be made to reimburse any amount to petitioner. 37

WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed Decision and
Resolution of the Court of Appeals dated May 14, 2010 and July 21, 2010, respectively, in
CA-G.R. CV No. 70235 areAFFIRMED.

Costs against petitioner.

SO ORDERED.chanroblesv
 Republic of the Philippines
SUPREME COURT
Manila

FIRST DIVISION

G.R. No. 171914 July 23, 2014

SOLEDAD L. LAVADIA, Petitioner,

vs.
HEIRS OF JUAN LUCES LUNA, represented by GREGORIO Z. LUNA and EUGENIA ZABALLERO-
LUNA,Respondents.

DECISION

BERSAMIN, J.:

Divorce between Filipinos is void and ineffectual under the nationality rule adopted by Philippine law.
Hence, any settlement of property between the parties of the first marriage involving Filipinos submitted
as an incident of a divorce obtained in a foreign country lacks competent judicial approval, and cannot be
enforceable against the assets of the husband who contracts a subsequent marriage.

The Case

The petitioner, the second wife of the late Atty. Juan Luces Luna, appeals the adverse decision
promulgated on November 11, 2005,1 whereby the Court of Appeals (CA) affirmed with modification the
decision rendered on August 27, 2001 by the Regional Trial Court (RTC), Branch 138, in Makati City. 2 The
CA thereby denied her right in the 25/100 pro indiviso share of the husband in a condominium unit, and in
the law books of the husband acquired during the second marriage.

Antecedents

The antecedent facts were summarized by the CA as follows:

ATTY. LUNA, a practicing lawyer, was at first a name partner in the prestigious law firm Sycip, Salazar,
Luna, Manalo, Hernandez & Feliciano Law Offices at that time when he was living with his first wife,
herein intervenor-appellant Eugenia Zaballero-Luna (EUGENIA), whom he initially married ina civil
ceremony conducted by the Justice of the Peace of Paraaque, Rizal on September 10, 1947 and later
solemnized in a church ceremony at the Pro-Cathedral in San Miguel, Bulacan on September 12, 1948. In
ATTY. LUNAs marriage to EUGENIA, they begot seven (7) children, namely: Regina Maria L. Nadal, Juan
Luis Luna, Araceli Victoria L. Arellano, Ana Maria L. Tabunda, Gregorio Macario Luna, Carolina Linda L.
Tapia, and Cesar Antonio Luna. After almost two (2) decades of marriage, ATTY. LUNA and EUGENIA
eventually agreed to live apart from each other in February 1966 and agreed to separation of property, to
which end, they entered into a written agreement entitled "AGREEMENT FOR SEPARATION AND
PROPERTY SETTLEMENT" dated November 12, 1975, whereby they agreed to live separately and to
dissolve and liquidate their conjugal partnership of property.

On January 12, 1976, ATTY. LUNA obtained a divorce decree of his marriage with EUGENIA from the
Civil and Commercial Chamber of the First Circumscription of the Court of First Instance of Sto. Domingo,
Dominican Republic. Also in Sto.Domingo, Dominican Republic, on the same date, ATTY. LUNA
contracted another marriage, this time with SOLEDAD. Thereafter, ATTY. LUNA and SOLEDAD returned
to the Philippines and lived together as husband and wife until 1987.
Sometime in 1977, ATTY. LUNA organized a new law firm named: Luna, Puruganan, Sison and Ongkiko
(LUPSICON) where ATTY. LUNA was the managing partner.

On February 14, 1978, LUPSICON through ATTY. LUNA purchased from Tandang Sora Development
Corporation the 6th Floor of Kalaw-Ledesma Condominium Project(condominium unit) at Gamboa St.,
Makati City, consisting of 517.52 square meters, for P1,449,056.00, to be paid on installment basis for
36months starting on April 15, 1978. Said condominium unit was to be usedas law office of LUPSICON.
After full payment, the Deed of Absolute Sale over the condominium unit was executed on July 15, 1983,
and CCT No. 4779 was issued on August 10, 1983, which was registered bearing the following names:

"JUAN LUCES LUNA, married to Soledad L. Luna (46/100); MARIO E. ONGKIKO, married to Sonia P.G.
Ongkiko (25/100); GREGORIO R. PURUGANAN, married to Paz A. Puruganan (17/100); and TERESITA
CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x" Subsequently, 8/100 share of ATTY. LUNA
and 17/100 share of Atty. Gregorio R. Puruganan in the condominium unit was sold to Atty. Mario E.
Ongkiko, for which a new CCT No. 21761 was issued on February 7, 1992 in the following names:

"JUAN LUCES LUNA, married to Soledad L. Luna (38/100); MARIO E. ONGKIKO, married to Sonia P.G.
Ongkiko (50/100); TERESITA CRUZ SISON, married to Antonio J.M. Sison (12/100) x x x"

Sometime in 1992, LUPSICON was dissolved and the condominium unit was partitioned by the partners
but the same was still registered in common under CCT No. 21716. The parties stipulated that the interest
of ATTY. LUNA over the condominium unit would be 25/100 share. ATTY. LUNA thereafter established
and headed another law firm with Atty. Renato G. Dela Cruzand used a portion of the office condominium
unit as their office. The said law firm lasted until the death of ATTY. JUAN on July 12, 1997.

After the death of ATTY. JUAN, his share in the condominium unit including the lawbooks, office furniture
and equipment found therein were taken over by Gregorio Z. Luna, ATTY. LUNAs son of the first
marriage. Gregorio Z. Luna thenleased out the 25/100 portion of the condominium unit belonging to his
father to Atty. Renato G. De la Cruz who established his own law firm named Renato G. De la Cruz &
Associates.

The 25/100 pro-indiviso share of ATTY. Luna in the condominium unit as well as the law books, office
furniture and equipment became the subject of the complaint filed by SOLEDAD against the heirs of
ATTY. JUAN with the RTC of Makati City, Branch 138, on September 10, 1999, docketed as Civil Case
No. 99-1644. The complaint alleged that the subject properties were acquired during the existence of the
marriage between ATTY. LUNA and SOLEDAD through their joint efforts that since they had no children,
SOLEDAD became co-owner of the said properties upon the death of ATTY. LUNA to the extent of pro-
indiviso share consisting of her share in the said properties plus her share in the net estate of ATTY.
LUNA which was bequeathed to her in the latters last will and testament; and thatthe heirs of ATTY.
LUNA through Gregorio Z. Luna excluded SOLEDAD from her share in the subject properties. The
complaint prayed that SOLEDAD be declared the owner of the portion of the subject properties;that the
same be partitioned; that an accounting of the rentals on the condominium unit pertaining to the share of
SOLEDAD be conducted; that a receiver be appointed to preserve ad administer the subject
properties;and that the heirs of ATTY. LUNA be ordered to pay attorneys feesand costs of the suit to
SOLEDAD.3

Ruling of the RTC

On August 27, 2001, the RTC rendered its decision after trial upon the aforementioned facts, 4 disposing
thusly:

WHEREFORE, judgment is rendered as follows:

 (a) The 24/100 pro-indiviso share in the condominium unit located at the SIXTH FLOOR of the
KALAW LEDESMA CONDOMINIUM PROJECT covered by Condominium Certificate of Title No.
21761 consisting of FIVE HUNDRED SEVENTEEN (517/100) SQUARE METERS is adjudged to
have been acquired by Juan Lucas Luna through his sole industry;

(b) Plaintiff has no right as owner or under any other concept over the condominium unit, hence
the entry in Condominium Certificate of Title No. 21761 of the Registry of Deeds of Makati with
respect to the civil status of Juan Luces Luna should be changed from "JUAN LUCES LUNA
married to Soledad L. Luna" to "JUAN LUCES LUNA married to Eugenia Zaballero Luna";

(c) Plaintiff is declared to be the owner of the books Corpus Juris, Fletcher on Corporation,
American Jurisprudence and Federal Supreme Court Reports found in the condominium unit and
defendants are ordered to deliver them to the plaintiff as soon as appropriate arrangements have
been madefor transport and storage.

No pronouncement as to costs.

SO ORDERED.5

Decision of the CA

Both parties appealed to the CA.6

On her part, the petitioner assigned the following errors to the RTC, namely:

I. THE LOWER COURT ERRED IN RULING THAT THE CONDOMINIUM UNIT WAS ACQUIRED
THRU THE SOLE INDUSTRY OF ATTY. JUAN LUCES LUNA;

II. THE LOWER COURT ERRED IN RULING THAT PLAINTIFFAPPELLANT DID NOT
CONTRIBUTE MONEY FOR THE ACQUISITION OF THE CONDOMINIUM UNIT;

III. THE LOWER COURT ERRED IN GIVING CREDENCE TO PORTIONS OF THE TESTIMONY
OF GREGORIO LUNA, WHO HAS NO ACTUAL KNOWLEDGE OF THE ACQUISITION OF THE
UNIT, BUT IGNORED OTHER PORTIONS OF HIS TESTIMONY FAVORABLE TO THE
PLAINTIFF-APPELLANT;

IV. THE LOWER COURT ERRED IN NOT GIVING SIGNIFICANCE TO THE FACT THAT THE
CONJUGAL PARTNERSHIP BETWEEN LUNA AND INTERVENOR-APPELLANT WAS
ALREADY DISSOLVED AND LIQUIDATED PRIOR TO THE UNION OF PLAINTIFF-APPELLANT
AND LUNA;

V. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE ABSENCE OF

THE DISPOSITION OF THE CONDOMINIUM UNIT IN THE HOLOGRAPHIC WILL OF THE
PLAINTIFF-APPELLANT;

VI. THE LOWER COURT ERRED IN GIVING UNDUE SIGNIFICANCE TO THE FACTTHAT THE
NAME OF PLAINTIFF-APPELLANT DID NOT APPEAR IN THE DEED OF ABSOLUTE SALE
EXECUTED BY TANDANG SORA DEVELOPMENT CORPORATION OVER THE
CONDOMINIUM UNIT;

VII. THE LOWER COURT ERRED IN RULING THAT NEITHER ARTICLE 148 OF THE
FAMILYCODE NOR ARTICLE 144 OF THE CIVIL CODE OF THE PHILIPPINES ARE
APPLICABLE;
 VIII. THE LOWER COURT ERRED IN NOT RULING THAT THE CAUSE OF ACTION OF THE
INTERVENOR-APPELLANT HAS BEEN BARRED BY PESCRIPTION AND LACHES; and

IX. THE LOWER COURT ERRED IN NOT EXPUNGING/DISMISSING THE INTERVENTION

FOR FAILURE OF INTERVENOR-APPELLANT TO PAY FILING FEE. 7

In contrast, the respondents attributedthe following errors to the trial court, to wit:

I. THE LOWER COURT ERRED IN HOLDING THAT CERTAIN FOREIGN LAW BOOKS IN THE
LAW OFFICE OF ATTY. LUNA WERE BOUGHT WITH THE USE OF PLAINTIFFS MONEY;

II. THE LOWER COURT ERRED IN HOLDING THAT PLAINTIFF PROVED BY

PREPONDERANCE OF EVIDENCE (HER CLAIM OVER) THE SPECIFIED FOREIGN LAW
BOOKS FOUND IN ATTY. LUNAS LAW OFFICE; and

III. THE LOWER COURT ERRED IN NOT HOLDING THAT, ASSUMING PLAINTIFF PAID FOR
THE SAID FOREIGN LAW BOOKS, THE RIGHT TO RECOVER THEM HAD PRESCRIBED AND
BARRED BY LACHES AND ESTOPPEL.8

On November 11, 2005, the CA promulgated its assailed modified decision, 9 holding and ruling:

EUGENIA, the first wife, was the legitimate wife of ATTY. LUNA until the latters death on July 12, 1997.
The absolute divorce decree obtained by ATTY. LUNA inthe Dominican Republic did not terminate his
prior marriage with EUGENIA because foreign divorce between Filipino citizens is not recognized in our
jurisdiction. x x x10

xxxx

WHEREFORE, premises considered, the assailed August 27, 2001 Decision of the RTC of MakatiCity,
Branch 138, is hereby MODIFIEDas follows:

(a) The 25/100 pro-indiviso share in the condominium unit at the SIXTH FLOOR of the KALAW
LEDESMA CONDOMINIUM PROJECT covered by Condominium Certificate of Title No. 21761
consisting of FIVE HUNDRED SEVENTEEN (517/100) (sic) SQUARE METERS is hereby
adjudged to defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-Luna
(first marriage), having been acquired from the sole funds and sole industry of Juan Luces Luna
while marriage of Juan Luces Luna and Eugenia Zaballero-Luna (first marriage) was still
subsisting and valid;

(b) Plaintiff-appellant Soledad Lavadia has no right as owner or under any other concept over the
condominium unit, hence the entry in Condominium Certificate of Title No. 21761 of the Registry
of Deeds ofMakati with respect to the civil status of Juan Luces Luna should be changed from
"JUAN LUCES LUNA married to Soledad L. Luna" to "JUAN LUCES LUNA married to Eugenia
Zaballero Luna";

(c) Defendants-appellants, the heirs of Juan Luces Luna and Eugenia Zaballero-Luna(first
marriage) are hereby declared to be the owner of the books Corpus Juris, Fletcher on
Corporation, American Jurisprudence and Federal Supreme Court Reports found in the
condominium unit.

No pronouncement as to costs.

SO ORDERED.11
On March 13, 2006,12 the CA denied the petitioners motion for reconsideration. 13

Issues

In this appeal, the petitioner avers in her petition for review on certiorarithat:

A. The Honorable Court of Appeals erred in ruling that the Agreement for Separation and Property
Settlement executed by Luna and Respondent Eugenia was unenforceable; hence, their conjugal
partnership was not dissolved and liquidated;

B. The Honorable Court of Appeals erred in not recognizing the Dominican Republic courts
approval of the Agreement;

C. The Honorable Court of Appeals erred in ruling that Petitioner failed to adduce sufficient proof
of actual contribution to the acquisition of purchase of the subjectcondominium unit; and

D. The Honorable Court of Appeals erred in ruling that Petitioner was not entitled to the subject
law books.14

The decisive question to be resolved is who among the contending parties should be entitled to the
25/100 pro indivisoshare in the condominium unit; and to the law books (i.e., Corpus Juris, Fletcher on
Corporation, American Jurisprudence and Federal Supreme Court Reports).

The resolution of the decisive question requires the Court to ascertain the law that should determine,
firstly, whether the divorce between Atty. Luna and Eugenia Zaballero-Luna (Eugenia) had validly
dissolved the first marriage; and, secondly, whether the second marriage entered into by the late Atty.
Luna and the petitioner entitled the latter to any rights in property. Ruling of the Court

We affirm the modified decision of the CA.

1. Atty. Lunas first marriage with Eugenia

subsisted up to the time of his death

The first marriage between Atty. Luna and Eugenia, both Filipinos, was solemnized in the Philippines on
September 10, 1947. The law in force at the time of the solemnization was the Spanish Civil Code, which
adopted the nationality rule. The Civil Codecontinued to follow the nationality rule, to the effect that
Philippine laws relating to family rights and duties, or to the status, condition and legal capacity of persons
were binding upon citizens of the Philippines, although living abroad. 15 Pursuant to the nationality rule,
Philippine laws governed thiscase by virtue of bothAtty. Luna and Eugenio having remained Filipinos until
the death of Atty. Luna on July 12, 1997 terminated their marriage.

From the time of the celebration ofthe first marriage on September 10, 1947 until the present, absolute
divorce between Filipino spouses has not been recognized in the Philippines. The non-recognition of
absolute divorce between Filipinos has remained even under the Family Code, 16 even if either or both of
the spouses are residing abroad.17 Indeed, the only two types of defective marital unions under our laws
have beenthe void and the voidable marriages. As such, the remedies against such defective marriages
have been limited to the declaration of nullity ofthe marriage and the annulment of the marriage.

It is true that on January 12, 1976, the Court of First Instance (CFI) of Sto. Domingo in the Dominican
Republic issued the Divorce Decree dissolving the first marriage of Atty. Luna and
Eugenia.18 Conformably with the nationality rule, however, the divorce, even if voluntarily obtained abroad,
did not dissolve the marriage between Atty. Luna and Eugenia, which subsisted up to the time of his death
on July 12, 1997. This finding conforms to the Constitution, which characterizes marriage as an inviolable
social institution,19 and regards it as a special contract of permanent union between a man and a woman
for the establishment of a conjugal and family life. 20 The non-recognition of absolute divorce in the
Philippines is a manifestation of the respect for the sanctity of the marital union especially among Filipino
citizens. It affirms that the extinguishment of a valid marriage must be grounded only upon the death of
either spouse, or upon a ground expressly provided bylaw. For as long as this public policy on marriage
between Filipinos exists, no divorce decree dissolving the marriage between them can ever be given legal
or judicial recognition and enforcement in this jurisdiction.

2. The Agreement for Separation and Property Settlement

was void for lack of court approval

The petitioner insists that the Agreement for Separation and Property Settlement (Agreement) that the
late Atty. Luna and Eugenia had entered into and executed in connection with the divorce proceedings
before the CFI of Sto. Domingo in the Dominican Republic to dissolve and liquidate their conjugal
partnership was enforceable against Eugenia. Hence, the CA committed reversible error in decreeing
otherwise.

The insistence of the petitioner was unwarranted.

Considering that Atty. Luna and Eugenia had not entered into any marriage settlement prior to their
marriage on September 10, 1947, the system of relative community or conjugal partnership of gains
governed their property relations. This is because the Spanish Civil Code, the law then in force at the time
of their marriage, did not specify the property regime of the spouses in the event that they had not entered
into any marriage settlement before or at the time of the marriage. Article 119 of the Civil Codeclearly so
provides, to wit:

Article 119. The future spouses may in the marriage settlements agree upon absolute or relative
community of property, or upon complete separation of property, or upon any other regime. In the
absence of marriage settlements, or when the same are void, the system of relative community or
conjugal partnership of gains as established in this Code, shall govern the property relations between
husband and wife.

Article 142 of the Civil Codehas defined a conjugal partnership of gains thusly:

Article 142. By means of the conjugal partnership of gains the husband and wife place in a common fund
the fruits of their separate property and the income from their work or industry, and divide equally, upon
the dissolution of the marriage or of the partnership, the net gains or benefits obtained indiscriminately by
either spouse during the marriage.

The conjugal partnership of gains subsists until terminated for any of various causes of termination
enumerated in Article 175 of the Civil Code, viz:

Article 175. The conjugal partnership of gains terminates:

(1) Upon the death of either spouse;

(2) When there is a decree of legal separation;

(3) When the marriage is annulled;

(4) In case of judicial separation of property under Article 191.

The mere execution of the Agreement by Atty. Luna and Eugenia did not per sedissolve and liquidate their
conjugal partnership of gains. The approval of the Agreement by a competent court was still required
under Article 190 and Article 191 of the Civil Code, as follows:

Article 190. In the absence of an express declaration in the marriage settlements, the separation of
property between spouses during the marriage shall not take place save in virtue of a judicial order.
(1432a)

Article 191. The husband or the wife may ask for the separation of property, and it shall be decreed when
the spouse of the petitioner has been sentenced to a penalty which carries with it civil interdiction, or has
been declared absent, or when legal separation has been granted.

xxxx

The husband and the wife may agree upon the dissolution of the conjugal partnership during the
marriage, subject to judicial approval. All the creditors of the husband and of the wife, as well as of the
conjugal partnership shall be notified of any petition for judicialapproval or the voluntary dissolution of the
conjugal partnership, so that any such creditors may appear atthe hearing to safeguard his interests.
Upon approval of the petition for dissolution of the conjugal partnership, the court shall take such
measures as may protect the creditors and other third persons.

After dissolution of the conjugal partnership, the provisions of articles 214 and 215 shall apply. The
provisions of this Code concerning the effect of partition stated in articles 498 to 501 shall be applicable.
(1433a)

But was not the approval of the Agreement by the CFI of Sto. Domingo in the Dominican Republic
sufficient in dissolving and liquidating the conjugal partnership of gains between the late Atty. Luna and
Eugenia?

The query is answered in the negative. There is no question that the approval took place only as an
incident ofthe action for divorce instituted by Atty. Luna and Eugenia, for, indeed, the justifications for their
execution of the Agreement were identical to the grounds raised in the action for divorce. 21 With the
divorce not being itself valid and enforceable under Philippine law for being contrary to Philippine public
policy and public law, the approval of the Agreement was not also legally valid and enforceable under
Philippine law. Consequently, the conjugal partnership of gains of Atty. Luna and Eugenia subsisted in the
lifetime of their marriage.

3. Atty. Lunas marriage with Soledad, being bigamous,

was void; properties acquired during their marriage
were governed by the rules on co-ownership

What law governed the property relations of the second marriage between Atty. Luna and Soledad?

The CA expressly declared that Atty. Lunas subsequent marriage to Soledad on January 12, 1976 was
void for being bigamous,22 on the ground that the marriage between Atty. Luna and Eugenia had not been
dissolved by the Divorce Decree rendered by the CFI of Sto. Domingo in the Dominican Republic but had
subsisted until the death of Atty. Luna on July 12, 1997.

The Court concurs with the CA.

In the Philippines, marriages that are bigamous, polygamous, or incestuous are void. Article 71 of the Civil
Codeclearly states:
Article 71. All marriages performed outside the Philippines in accordance with the laws in force in the
country where they were performed, and valid there as such, shall also be valid in this country, except
bigamous, polygamous, or incestuous marriages as determined by Philippine law.

Bigamy is an illegal marriage committed by contracting a second or subsequent marriage before the first
marriage has been legally dissolved, or before the absent spouse has been declared presumptively dead
by means of a judgment rendered in the proper proceedings. 23 A bigamous marriage is considered void
ab initio.24

Due to the second marriage between Atty. Luna and the petitioner being void ab initioby virtue of its being
bigamous, the properties acquired during the bigamous marriage were governed by the rules on co-
ownership, conformably with Article 144 of the Civil Code, viz:

Article 144. When a man and a woman live together as husband and wife, but they are not married,
ortheir marriage is void from the beginning, the property acquired by eitheror both of them through their
work or industry or their wages and salaries shall be governed by the rules on co-ownership.(n)

In such a situation, whoever alleges co-ownership carried the burden of proof to confirm such
fact.1wphi1 To establish co-ownership, therefore, it became imperative for the petitioner to offer proof of
her actual contributions in the acquisition of property. Her mere allegation of co-ownership, without
sufficient and competent evidence, would warrant no relief in her favor. As the Court explained in Saguid
v. Court of Appeals:25

In the cases of Agapay v. Palang, and Tumlos v. Fernandez, which involved the issue of co-ownership
ofproperties acquired by the parties to a bigamous marriage and an adulterous relationship, respectively,
we ruled that proof of actual contribution in the acquisition of the property is essential. The claim of co-
ownership of the petitioners therein who were parties to the bigamous and adulterousunion is without
basis because they failed to substantiate their allegation that they contributed money in the purchase of
the disputed properties. Also in Adriano v. Court of Appeals, we ruled that the fact that the controverted
property was titled in the name of the parties to an adulterous relationship is not sufficient proof of
coownership absent evidence of actual contribution in the acquisition of the property.

As in other civil cases, the burden of proof rests upon the party who, as determined by the pleadings or
the nature of the case, asserts an affirmative issue. Contentions must be proved by competent evidence
and reliance must be had on the strength of the partys own evidence and not upon the weakness of the
opponents defense. This applies with more vigor where, as in the instant case, the plaintiff was allowed to
present evidence ex parte.1wphi1 The plaintiff is not automatically entitled to the relief prayed for. The
law gives the defendantsome measure of protection as the plaintiff must still prove the allegations in the
complaint. Favorable relief can be granted only after the court isconvinced that the facts proven by the
plaintiff warrant such relief. Indeed, the party alleging a fact has the burden of proving it and a
mereallegation is not evidence.26

The petitioner asserts herein that she sufficiently proved her actual contributions in the purchase of the
condominium unit in the aggregate amount of at least P306,572.00, consisting in direct contributions
ofP159,072.00, and in repaying the loans Atty. Luna had obtained from Premex Financing and Banco
Filipino totalingP146,825.30;27 and that such aggregate contributions of P306,572.00 corresponded to
almost the entire share of Atty. Luna in the purchase of the condominium unit amounting to P362,264.00
of the units purchase price ofP1,449,056.00.28 The petitioner further asserts that the lawbooks were paid
for solely out of her personal funds, proof of which Atty. Luna had even sent her a "thank you" note; 29 that
she had the financial capacity to make the contributions and purchases; and that Atty. Luna could not
acquire the properties on his own due to the meagerness of the income derived from his law practice.

Did the petitioner discharge her burden of proof on the co-ownership?

In resolving the question, the CA entirely debunked the petitioners assertions on her actual contributions
through the following findings and conclusions, namely:

SOLEDAD was not able to prove by preponderance of evidence that her own independent funds were
used to buy the law office condominium and the law books subject matter in contentionin this case proof
that was required for Article 144 of the New Civil Code and Article 148 of the Family Code to apply as to
cases where properties were acquired by a man and a woman living together as husband and wife but
not married, or under a marriage which was void ab initio. Under Article 144 of the New Civil Code, the
rules on co-ownership would govern. But this was not readily applicable to many situations and thus it
created a void at first because it applied only if the parties were not in any way incapacitated or were
without impediment to marry each other (for it would be absurd to create a co-ownership where there still
exists a prior conjugal partnership or absolute community between the man and his lawful wife). This void
was filled upon adoption of the Family Code. Article 148 provided that: only the property acquired by both
of the parties through their actual joint contribution of money, property or industry shall be owned in
common and in proportion to their respective contributions. Such contributions and corresponding shares
were prima faciepresumed to be equal. However, for this presumption to arise, proof of actual contribution
was required. The same rule and presumption was to apply to joint deposits of money and evidence of
credit. If one of the parties was validly married to another, his or her share in the co-ownership accrued to
the absolute community or conjugal partnership existing in such valid marriage. If the party who acted in
bad faith was not validly married to another, his or her share shall be forfeited in the manner provided in
the last paragraph of the Article 147. The rules on forfeiture applied even if both parties were in bad faith.
Co-ownership was the exception while conjugal partnership of gains was the strict rule whereby marriage
was an inviolable social institution and divorce decrees are not recognized in the Philippines, as was held
by the Supreme Court in the case of Tenchavez vs. Escao, G.R. No. L-19671, November 29, 1965, 15
SCRA 355, thus:

xxxx

As to the 25/100pro-indivisoshare of ATTY. LUNA in the condominium unit, SOLEDAD failed to prove that
she made an actual contribution to purchase the said property. She failed to establish that the four (4)
checks that she presented were indeed used for the acquisition of the share of ATTY. LUNA in the
condominium unit. This was aptly explained in the Decision of the trial court, viz.:

"x x x The first check, Exhibit "M" for P55,000.00 payable to Atty. Teresita Cruz Sison was issued on
January 27, 1977, which was thirteen (13) months before the Memorandum of Agreement, Exhibit "7" was
signed. Another check issued on April 29, 1978 in the amount of P97,588.89, Exhibit "P" was payable to
Banco Filipino. According to the plaintiff, thiswas in payment of the loan of Atty. Luna. The third check
which was for P49,236.00 payable to PREMEX was dated May 19, 1979, also for payment of the loan of
Atty. Luna. The fourth check, Exhibit "M", forP4,072.00 was dated December 17, 1980. None of the
foregoing prove that the amounts delivered by plaintiff to the payees were for the acquisition of the
subject condominium unit. The connection was simply not established. x x x"

SOLEDADs claim that she made a cash contribution of P100,000.00 is unsubstantiated. Clearly, there is
no basis for SOLEDADs claim of co-ownership over the 25/100 portion of the condominium unit and the
trial court correctly found that the same was acquired through the sole industry of ATTY. LUNA, thus:

"The Deed of Absolute Sale, Exhibit "9", covering the condominium unit was in the name of Atty. Luna,
together with his partners in the law firm. The name of the plaintiff does not appear as vendee or as the
spouse of Atty. Luna. The same was acquired for the use of the Law firm of Atty. Luna. The loans from
Allied Banking Corporation and Far East Bank and Trust Company were loans of Atty. Luna and his
partners and plaintiff does not have evidence to show that she paid for them fully or partially. x x x"

The fact that CCT No. 4779 and subsequently, CCT No. 21761 were in the name of "JUAN LUCES
LUNA, married to Soledad L. Luna" was no proof that SOLEDAD was a co-owner of the condominium
unit. Acquisition of title and registration thereof are two different acts. It is well settled that registration
does not confer title but merely confirms one already existing. The phrase "married to" preceding
"Soledad L. Luna" is merely descriptive of the civil status of ATTY. LUNA.

SOLEDAD, the second wife, was not even a lawyer. So it is but logical that SOLEDAD had no
participation in the law firm or in the purchase of books for the law firm. SOLEDAD failed to prove that she
had anything to contribute and that she actually purchased or paid for the law office amortization and for
the law books. It is more logical to presume that it was ATTY. LUNA who bought the law office space and
the law books from his earnings from his practice of law rather than embarrassingly beg or ask from
SOLEDAD money for use of the law firm that he headed. 30

The Court upholds the foregoing findings and conclusions by the CA both because they were
substantiated by the records and because we have not been shown any reason to revisit and undo them.
Indeed, the petitioner, as the party claiming the co-ownership, did not discharge her burden of proof. Her
mere allegations on her contributions, not being evidence, 31 did not serve the purpose. In contrast, given
the subsistence of the first marriage between Atty. Luna and Eugenia, the presumption that Atty. Luna
acquired the properties out of his own personal funds and effort remained. It should then be justly
concluded that the properties in litislegally pertained to their conjugal partnership of gains as of the time of
his death. Consequently, the sole ownership of the 25/100 pro indivisoshare of Atty. Luna in the
condominium unit, and of the lawbooks pertained to the respondents as the lawful heirs of Atty. Luna.

WHEREFORE, the Court AFFIRMS the decision promulgated on November 11, 2005; and ORDERS the
petitioner to pay the costs of suit.

SO ORDERED.
 Republic of the Philippines
SUPREME COURT
Manila

THIRD DIVISION

G.R. No. 165803 September 1, 2010

SPOUSES REX AND CONCEPCION AGGABAO, Petitioners,

vs.
DIONISIO Z. PARULAN, JR. and MA. ELENA PARULAN, Respondents.

DECISION

BERSAMIN, J.:

On July 26, 2000, the Regional Trial Court (RTC), Branch 136, in Makati City annulled the deed of
absolute sale executed in favor of the petitioners covering two parcels of registered land the respondents
owned for want of the written consent of respondent husband Dionisio Parulan, Jr. On July 2, 2004, in
C.A.-G.R. CV No. 69044,1 the Court of Appeals (CA) affirmed the RTC decision.

Hence, the petitioners appeal by petition for review on certiorari, seeking to reverse the decision of the
CA. They present as the main issue whether the sale of conjugal property made by respondent wife by
presenting a special power of attorney to sell (SPA) purportedly executed by respondent husband in her
favor was validly made to the vendees, who allegedly acted in good faith and paid the full purchase price,
despite the showing by the husband that his signature on the SPA had been forged and that the SPA had
been executed during his absence from the country.

We resolve the main issue against the vendees and sustain the CAs finding that the vendees were not
buyers in good faith, because they did not exercise the necessary prudence to inquire into the wifes
authority to sell. We hold that the sale of conjugal property without the consent of the husband was not
merely voidable but void; hence, it could not be ratified.

Antecedents

Involved in this action are two parcels of land and their improvements (property) located at No. 49 Miguel
Cuaderno Street, Executive Village, BF Homes, Paraaque City and registered under Transfer Certificate
of Title (TCT) No. 633762 and TCT No. 633773 in the name of respondents Spouses Maria Elena A.
Parulan (Ma. Elena) and Dionisio Z. Parulan, Jr. (Dionisio), who have been estranged from one another.

In January 1991, real estate broker Marta K. Atanacio (Atanacio) offered the property to the petitioners,
who initially did not show interest due to the rundown condition of the improvements. But Atanacios
persistence prevailed upon them, so that on February 2, 1991, they and Atanacio met with Ma. Elena at
the site of the property. During their meeting, Ma. Elena showed to them the following documents,
namely: (a) the owners original copy of TCT No. 63376; (b) a certified true copy of TCT No. 63377; (c)
three tax declarations; and (d) a copy of the special power of attorney (SPA) dated January 7, 1991
executed by Dionisio authorizing Ma. Elena to sell the property. 4 Before the meeting ended, they
paid P20,000.00 as earnest money, for which Ma. Elena executed a handwritten Receipt of Earnest
Money, whereby the parties stipulated that: (a) they would pay an additional payment of P130,000.00 on
February 4, 1991; (b) they would pay the balance of the bank loan of the respondents amounting
to P650,000.00 on or before February 15, 1991; and (c) they would make the final payment
of P700,000.00 once Ma. Elena turned over the property on March 31, 1991. 5
On February 4, 1991, the petitioners went to the Office of the Register of Deeds and the Assessors Office
of Paraaque City to verify the TCTs shown by Ma. Elena in the company of Atanacio and her husband
(also a licensed broker).6 There, they discovered that the lot under TCT No. 63376 had been encumbered
to Banco Filipino in 1983 or 1984, but that the encumbrance had already been cancelled due to the full
payment of the obligation.7They noticed that the Banco Filipino loan had been effected through an SPA
executed by Dionisio in favor of Ma. Elena.8 They found on TCT No. 63377 the annotation of an existing
mortgage in favor of the Los Baos Rural Bank, also effected through an SPA executed by Dionisio in
favor of Ma. Elena, coupled with a copy of a court order authorizing Ma. Elena to mortgage the lot to
secure a loan of P500,000.00.9

The petitioners and Atanacio next inquired about the mortgage and the court order annotated on TCT No.
63377 at the Los Baos Rural Bank. There, they met with Atty. Noel Zarate, the banks legal counsel, who
related that the bank had asked for the court order because the lot involved was conjugal property. 10

Following their verification, the petitioners delivered P130,000.00 as additional down payment on
February 4, 1991; and P650,000.00 to the Los Baos Rural Bank on February 12, 1991, which then
released the owners duplicate copy of TCT No. 63377 to them. 11

On March 18, 1991, the petitioners delivered the final amount of P700,000.00 to Ma. Elena, who executed
a deed of absolute sale in their favor. However, Ma. Elena did not turn over the owners duplicate copy of
TCT No. 63376, claiming that said copy was in the possession of a relative who was then in
Hongkong.12 She assured them that the owners duplicate copy of TCT No. 63376 would be turned over
after a week.

On March 19, 1991, TCT No. 63377 was cancelled and a new one was issued in the name of the
petitioners.

Ma. Elena did not turn over the duplicate owners copy of TCT No. 63376 as promised. In due time, the
petitioners learned that the duplicate owners copy of TCT No. 63376 had been all along in the custody of
Atty. Jeremy Z. Parulan, who appeared to hold an SPA executed by his brother Dionisio authorizing him to
sell both lots.13

At Atanacios instance, the petitioners met on March 25, 1991 with Atty. Parulan at the Manila
Peninsula.14 For that meeting, they were accompanied by one Atty. Olandesca. 15 They recalled that Atty.
Parulan "smugly demandedP800,000.00" in exchange for the duplicate owners copy of TCT No. 63376,
because Atty. Parulan represented the current value of the property to be P1.5 million. As a counter-offer,
however, they tendered P250,000.00, which Atty. Parulan declined,16 giving them only until April 5, 1991
to decide.

Hearing nothing more from the petitioners, Atty. Parulan decided to call them on April 5, 1991, but they
informed him that they had already fully paid to Ma. Elena. 17

Thus, on April 15, 1991, Dionisio, through Atty. Parulan, commenced an action (Civil Case No. 91-
1005 entitledDionisio Z. Parulan, Jr., represented by Jeremy Z. Parulan, as attorney in fact, v. Ma. Elena
Parulan, Sps. Rex and Coney Aggabao), praying for the declaration of the nullity of the deed of absolute
sale executed by Ma. Elena, and the cancellation of the title issued to the petitioners by virtue thereof.

In turn, the petitioners filed on July 12, 1991 their own action for specific performance with damages
against the respondents.

Both cases were consolidated for trial and judgment in the RTC. 18

Ruling of the RTC

After trial, the RTC rendered judgment, as follows:

WHEREFORE, and in consideration of the foregoing, judgment is hereby rendered in favor of plaintiff
Dionisio A. Parulan, Jr. and against defendants Ma. Elena Parulan and the Sps. Rex and Concepcion
Aggabao, without prejudice to any action that may be filed by the Sps. Aggabao against co-defendant Ma.
Elena Parulan for the amounts they paid her for the purchase of the subject lots, as follows:

1. The Deed of Absolute Sale dated March 18, 1991 covering the sale of the lot located at No. 49
M. Cuaderno St., Executive Village, BF Homes, Paraaque, Metro Manila, and covered by TCT
Nos. 63376 and 63377 is declared null and void.

2. Defendant Mrs. Elena Parulan is directed to pay litigation expenses amounting to P50,000.00
and the costs of the suit.

SO ORDERED.19

The RTC declared that the SPA in the hands of Ma. Elena was a forgery, based on its finding that Dionisio
had been out of the country at the time of the execution of the SPA; 20 that NBI Sr. Document Examiner
Rhoda B. Flores had certified that the signature appearing on the SPA purporting to be that of Dionisio
and the set of standard sample signatures of Dionisio had not been written by one and the same
person;21 and that Record Officer III Eliseo O. Terenco and Clerk of Court Jesus P. Maningas of the
Manila RTC had issued a certification to the effect that Atty. Alfred Datingaling, the Notary Public who had
notarized the SPA, had not been included in the list of Notaries Public in Manila for the year 1990-1991. 22

The RTC rejected the petitioners defense of being buyers in good faith because of their failure to exercise
ordinary prudence, including demanding from Ma. Elena a court order authorizing her to sell the
properties similar to the order that the Los Baos Rural Bank had required before accepting the mortgage
of the property.23 It observed that they had appeared to be in a hurry to consummate the transaction
despite Atanacios advice that they first consult a lawyer before buying the property; that with ordinary
prudence, they should first have obtained the owners duplicate copies of the TCTs before paying the full
amount of the consideration; and that the sale was void pursuant to Article 124 of the Family Code. 24

Ruling of the CA

As stated, the CA affirmed the RTC, opining that Article 124 of the Family Code applied because Dionisio
had not consented to the sale of the conjugal property by Ma. Elena; and that the RTC correctly found the
SPA to be a forgery.

The CA denied the petitioners motion for reconsideration. 25

Issues

The petitioners now make two arguments: (1) they were buyers in good faith; and (2) the CA erred in
affirming the RTCs finding that the sale between Mrs. Elena and the petitioners had been a nullity under
Article 124 of the Family Code.

The petitioners impute error to the CA for not applying the "ordinary prudent mans standard" in
determining their status as buyers in good faith. They contend that the more appropriate law to apply was
Article 173 of the Civil Code, not Article 124 of the Family Code; and that even if the SPA held by Ma.
Elena was a forgery, the ruling inVeloso v. Court of Appeals26 warranted a judgment in their favor.

Restated, the issues for consideration and resolution are as follows:

 1) Which between Article 173 of the Civil Code and Article 124 of the Family Code should apply to
the sale of the conjugal property executed without the consent of Dionisio?

2) Might the petitioners be considered in good faith at the time of their purchase of the property?

3) Might the ruling in Veloso v. Court of Appeals be applied in favor of the petitioners despite the
finding of forgery of the SPA?

Ruling

The petition has no merit. We sustain the CA.

1.

Article 124, Family Code, applies to sale of conjugal

properties made after the effectivity of the Family Code

The petitioners submit that Article 173 of the Civil Code, not Article 124 of the Family Code, governed the
property relations of the respondents because they had been married prior to the effectivity of the Family
Code; and that the second paragraph of Article 124 of the Family Code should not apply because the
other spouse held the administration over the conjugal property. They argue that notwithstanding his
absence from the country Dionisio still held the administration of the conjugal property by virtue of his
execution of the SPA in favor of his brother; and that even assuming that Article 124 of the Family Code
properly applied, Dionisio ratified the sale through Atty. Parulans counter-offer during the March 25, 1991
meeting.

We do not subscribe to the petitioners submissions.

To start with, Article 25427 the Family Code has expressly repealed several titles under the Civil Code,
among them the entire Title VI in which the provisions on the property relations between husband and
wife, Article 173 included, are found.

Secondly, the sale was made on March 18, 1991, or after August 3, 1988, the effectivity of the Family
Code. The proper law to apply is, therefore, Article 124 of the Family Code, for it is settled that any
alienation or encumbrance of conjugal property made during the effectivity of the Family Code is
governed by Article 124 of the Family Code.28

Article 124 of the Family Code provides:

Article 124. The administration and enjoyment of the conjugal partnership property shall belong to both
spouses jointly. In case of disagreement, the husbands decision shall prevail, subject to recourse to the
court by the wife for proper remedy, which must be availed of within five years from the date of the
contract implementing such decision.

In the event that one spouse is incapacitated or otherwise unable to participate in the
administration of the conjugal properties, the other spouse may assume sole powers of
administration. These powers do not include disposition or encumbrance without authority of the
court or the written consent of the other spouse. In the absence of such authority or consent, the
disposition or encumbrance shall be void. However, the transaction shall be construed as a continuing
offer on the part of the consenting spouse and the third person, and may be perfected as a binding
contract upon the acceptance by the other spouse or authorization by the court before the offer is
withdrawn by either or both offerors.
Thirdly, according to Article 25629 of the Family Code, the provisions of the Family Code may apply
retroactively provided no vested rights are impaired. In Tumlos v. Fernandez,30 the Court rejected the
petitioners argument that the Family Code did not apply because the acquisition of the contested
property had occurred prior to the effectivity of the Family Code, and pointed out that Article 256 provided
that the Family Code could apply retroactively if the application would not prejudice vested or acquired
rights existing before the effectivity of the Family Code. Herein, however, the petitioners did not show any
vested right in the property acquired prior to August 3, 1988 that exempted their situation from the
retroactive application of the Family Code.

Fourthly, the petitioners failed to substantiate their contention that Dionisio, while holding the
administration over the property, had delegated to his brother, Atty. Parulan, the administration of the
property, considering that they did not present in court the SPA granting to Atty. Parulan the authority for
the administration.

Nonetheless, we stress that the power of administration does not include acts of disposition or
encumbrance, which are acts of strict ownership. As such, an authority to dispose cannot proceed from
an authority to administer, and vice versa, for the two powers may only be exercised by an agent by
following the provisions on agency of the Civil Code (from Article 1876 to Article 1878). Specifically, the
apparent authority of Atty. Parulan, being a special agency, was limited to the sale of the property in
question, and did not include or extend to the power to administer the property. 31

Lastly, the petitioners insistence that Atty. Parulans making of a counter-offer during the March 25, 1991
meeting ratified the sale merits no consideration. Under Article 124 of the Family Code, the transaction
executed sans the written consent of Dionisio or the proper court order was void; hence, ratification did
not occur, for a void contract could not be ratified. 32

On the other hand, we agree with Dionisio that the void sale was a continuing offer from the petitioners
and Ma. Elena that Dionisio had the option of accepting or rejecting before the offer was withdrawn by
either or both Ma. Elena and the petitioners. The last sentence of the second paragraph of Article 124 of
the Family Code makes this clear, stating that in the absence of the other spouses consent, the
transaction should be construed as a continuing offer on the part of the consenting spouse and the third
person, and may be perfected as a binding contract upon the acceptance by the other spouse or upon
authorization by the court before the offer is withdrawn by either or both offerors.

2.

Due diligence required in verifying not only vendors title,

but also agents authority to sell the property

A purchaser in good faith is one who buys the property of another, without notice that some other person
has a right to, or interest in, such property, and pays the full and fair price for it at the time of such
purchase or before he has notice of the claim or interest of some other persons in the property. He buys
the property with the belief that the person from whom he receives the thing was the owner and could
convey title to the property. He cannot close his eyes to facts that should put a reasonable man on his
guard and still claim he acted in good faith.33 The status of a buyer in good faith is never presumed but
must be proven by the person invoking it.34

Here, the petitioners disagree with the CA for not applying the "ordinary prudent mans standard" in
determining their status as buyers in good faith. They insist that they exercised due diligence by verifying
the status of the TCTs, as well as by inquiring about the details surrounding the mortgage extended by the
Los Baos Rural Bank. They lament the holding of the CA that they should have been put on their guard
when they learned that the Los Baos Rural Bank had first required a court order before granting the loan
to the respondents secured by their mortgage of the property.
The petitioners miss the whole point.

Article 124 of the Family Code categorically requires the consent of both spouses before the conjugal
property may be disposed of by sale, mortgage, or other modes of disposition. In Bautista v. Silva,35 the
Court erected a standard to determine the good faith of the buyers dealing with

a seller who had title to and possession of the land but whose capacity to sell was restricted, in that the
consent of the other spouse was required before the conveyance, declaring that in order to prove good
faith in such a situation, the buyers must show that they inquired not only into the title of the seller but also
into the sellers capacity to sell.36Thus, the buyers of conjugal property must observe two kinds of
requisite diligence, namely: (a) the diligence in verifying the validity of the title covering the property; and
(b) the diligence in inquiring into the authority of the transacting spouse to sell conjugal property in behalf
of the other spouse.

It is true that a buyer of registered land needs only to show that he has relied on the face of the certificate
of title to the property, for he is not required to explore beyond what the certificate indicates on its
face.37 In this respect, the petitioners sufficiently proved that they had checked on the authenticity of TCT
No. 63376 and TCT No. 63377 with the Office of the Register of Deeds in Pasay City as the custodian of
the land records; and that they had also gone to the Los Baos Rural Bank to inquire about the mortgage
annotated on TCT No. 63377. Thereby, the petitioners observed the requisite diligence in examining the
validity of the TCTs concerned.

Yet, it ought to be plain enough to the petitioners that the issue was whether or not they had diligently
inquired into the authority of Ma. Elena to convey the property, not whether or not the TCT had been valid
and authentic, as to which there was no doubt. Thus, we cannot side with them.

Firstly, the petitioners knew fully well that the law demanded the written consent of Dionisio to the sale,
but yet they did not present evidence to show that they had made inquiries into the circumstances behind
the execution of the SPA purportedly executed by Dionisio in favor of Ma. Elena. Had they made the
appropriate inquiries, and not simply accepted the SPA for what it represented on its face, they would
have uncovered soon enough that the respondents had been estranged from each other and were
under de facto separation, and that they probably held conflicting interests that would negate the
existence of an agency between them. To lift this doubt, they must, of necessity, further inquire into the
SPA of Ma. Elena. The omission to inquire indicated their not being buyers in good faith, for, as fittingly
observed in Domingo v. Reed:381avvphi1

What was required of them by the appellate court, which we affirm, was merely to investigate as any
prudent vendee should the authority of Lolita to sell the property and to bind the partnership. They had
knowledge of facts that should have led them to inquire and to investigate, in order to acquaint
themselves with possible defects in her title. The law requires them to act with the diligence of a prudent
person; in this case, their only prudent course of action was to investigate whether respondent had indeed
given his consent to the sale and authorized his wife to sell the property. 39

Indeed, an unquestioning reliance by the petitioners on Ma. Elenas SPA without first taking precautions to
verify its authenticity was not a prudent buyers move. 40 They should have done everything within their
means and power to ascertain whether the SPA had been genuine and authentic. If they did not
investigate on the relations of the respondents vis--vis each other, they could have done other things
towards the same end, like attempting to locate the notary public who had notarized the SPA, or checked
with the RTC in Manila to confirm the authority of Notary Public Atty. Datingaling. It turned out that Atty.
Datingaling was not authorized to act as a Notary Public for Manila during the period 1990-1991, which
was a fact that they could easily discover with a modicum of zeal.

Secondly, the final payment of P700,000.00 even without the owners duplicate copy of the TCT No.
63376 being handed to them by Ma. Elena indicated a revealing lack of precaution on the part of the
petitioners. It is true that she promised to produce and deliver the owners copy within a week because
her relative having custody of it had gone to Hongkong, but their passivity in such an essential matter was
puzzling light of their earlier alacrity in immediately and diligently validating the TCTs to the extent of
inquiring at the Los Baos Rural Bank about the annotated mortgage. Yet, they could have rightly
withheld the final payment of the balance. That they did not do so reflected their lack of due care in
dealing with Ma. Elena.

Lastly, another reason rendered the petitioners good faith incredible. They did not take immediate action
against Ma. Elena upon discovering that the owners original copy of TCT No. 63376 was in the
possession of Atty. Parulan, contrary to Elenas representation. Human experience would have impelled
them to exert every effort to proceed against Ma. Elena, including demanding the return of the substantial
amounts paid to her. But they seemed not to mind her inability to produce the TCT, and, instead, they
contented themselves with meeting with Atty. Parulan to negotiate for the possible turnover of the TCT to
them.

3.

Veloso v. Court of Appeals cannot help petitioners

The petitioners contend that the forgery of the SPA notwithstanding, the CA could still have decided in
their favor conformably with Veloso v. Court of Appeals,41 a case where the petitioner husband claimed
that his signature and that of the notary public who had notarized the SPA the petitioner supposedly
executed to authorize his wife to sell the property had been forged. In denying relief, the Court upheld the
right of the vendee as an innocent purchaser for value.

Veloso is inapplicable, however, because the contested property therein was exclusively owned by the
petitioner and did not belong to the conjugal regime. Veloso being upon conjugal property, Article 124 of
the Family Code did not apply.

In contrast, the property involved herein pertained to the conjugal regime, and, consequently, the lack of
the written consent of the husband rendered the sale void pursuant to Article 124 of the Family Code.
Moreover, evenassuming that the property involved in Veloso was conjugal, its sale was made on
November 2, 1987, or prior to the effectivity of the Family Code; hence, the sale was still properly covered
by Article 173 of the Civil Code, which provides that a sale effected without the consent of one of the
spouses is only voidable, not void. However, the sale herein was made already during the effectivity of the
Family Code, rendering the application of Article 124 of the Family Code clear and indubitable.

The fault of the petitioner in Veloso was that he did not adduce sufficient evidence to prove that his
signature and that of the notary public on the SPA had been forged. The Court pointed out that his mere
allegation that the signatures had been forged could not be sustained without clear and convincing proof
to substantiate the allegation. Herein, however, both the RTC and the CA found from the testimonies and
evidence presented by Dionisio that his signature had been definitely forged, as borne out by the entries
in his passport showing that he was out of the country at the time of the execution of the questioned SPA;
and that the alleged notary public, Atty. Datingaling, had no authority to act as a Notary Public for Manila
during the period of 1990-1991.

WHEREFORE, we deny the petition for review on certiorari, and affirm the decision dated July 2, 2004
rendered by the Court of Appeals in C.A.-G.R. CV No. 69044 entitled "Dionisio Z. Parulan, Jr. vs. Ma.
Elena Parulan and Sps. Rex and Concepcion Aggabao" and "Sps. Rex and Concepcion Aggabao vs.
Dionisio Z. Parulan, Jr. and Ma. Elena Parulan."

Costs of suit to be paid by the petitioners.

SO ORDERED.