THIRD DIVISION P615,732.50 when, in truth, the spouses did not have any intention from P300,000.00 to P150,000.

uses did not have any intention from P300,000.00 to P150,000.00 and the attorney's fees which
G.R. No. L-61464 May 28, 1988
BA FINANCE CORPORATION, petitioner,
vs.
THE HONORABLE COURT OF APPEALS, AUGUSTO YULO, LILY YULO
(doing business under the name and style of A & L
INDUSTRIES), respondents.
GUTIERREZ, JR., J.:
This is a petition for review seeking to set aside the decision of the
Court of Appeals which affirmed the decision of the then Court of
First Instance of Manila, dismissing the complaint instituted by the
petitioner and ordering it to pay damages on the basis of the private
respondent's counterclaim.
On July 1, 1975, private respondent Augusto Yulo secured a loan
from the petitioner in the amount of P591,003.59 as evidenced by a
promissory note he signed in his own behalf and as representative
of the A & L Industries. Respondent Yulo presented an alleged
special power of attorney executed by his wife, respondent Lily Yulo,
who manages A & L Industries and under whose name the said
business is registered, purportedly authorizing Augusto Yulo to
procure the loan and sign the promissory note. About two months
prior to the loan, however, Augusto Yulo had already left Lily Yulo
and their children and had abandoned their conjugal home. When
the obligation became due and demandable, Augusto Yulo failed to
pay the same.
of remitting the proceeds of the said construction contract to the
petitioner because despite the provisions in the Deed of Assignment
that the spouses shall, without compensation or costs, collect and
receive in trust for the petitioner all payments made upon the
construction contract and shall remit to the petitioner all collections
therefrom, the said spouses failed and refuse to remit the
collections and instead, misappropriated the proceeds for their own
use and benefit, without the knowledge or consent of the
petitioner.
The trial court issued the writ of attachment prayed for thereby
enabling the petitioner to attach the properties of A & L Industries.
Apparently not contented with the order, the petitioner filed
another motion for the examination of attachment debtor, alleging
that the properties attached by the sheriff were not sufficient to
secure the satisfaction of any judgment that may be recovered by it
in the case. This was likewise granted by the court.
Private respondent Lily Yulo filed her answer with counterclaim,
alleging that although Augusta Yulo and she are husband and wife,
the former had abandoned her and their children five (5) months
before the filing of the complaint; that they were already separated
when the promissory note was executed; that her signature in the
special power of attorney was forged because she had never
authorized Augusto Yulo in any capacity to transact any business for
and in behalf of A & L Industries, which is owned by her as a single
proprietor, that she never got a single centavo from the proceeds of
the loan mentioned in the promissory note; and that as a result of
the illegal attachment of her properties, which constituted the
assets of the A & L Industries, the latter closed its business and was
taken over by the new owner.
were reduced from P30,000.00 to P20,000.00.
In resolving the question of whether or not the trial court erred in
holding that the signature of respondent Lily Yulo in the special
power of attorney was forged, the Court of Appeals said:
The crucial issue to be determined is whether or
not the signatures of the appellee Lily Yulo in
Exhibits B and B-1 are forged. Atty. Crispin
Ordoña, the Notary Public, admitted in open court
that the parties in the subject documents did not
sign their signatures in his presence. The same
were already signed by the supposed parties and
their supposed witnesses at the time they were
brought to him for ratification. We quote from the
records the pertinent testimony of Atty. Ordoña,
thus:
Q. This document marked as
Exhibit B-1, when this was
presented to you by that
common friend, June Enriquez, it
was already typewritten, it was
already accomplished, all
typewritten.?
A. Yes, sir.
Q And the parties had already
affixed their signatures in this
document?

After hearing, the trial court rendered judgment dismissing the

On October 7, 1975, the petitioner filed its amended complaint A. Yes, sir.
petitioner's complaint against the private respondent Lily Yulo and A
against the spouses Augusto and Lily Yulo on the basis of the
& L Industries and ordering the petitioner to pay the respondent Lily
promissory note. It also prayed for the issuance of a writ of Q. In this document marked as
Yulo P660,000.00 as actual damages; P500,000.00 as unrealized
attatchment alleging that the said spouses were guilty of fraud in Exhibit B although it appears
profits; P300,000.00 as exemplary damages; P30,000.00 as and for
contracting the debt upon which the action was brought and that here that this is an
attorney's fees; and to pay the costs.
the fraud consisted of the spouses' inducing the petitioner to enter acknowledgment, you have not
into a contract with them by executing a Deed of Assignment in stated here that the principal
The petitioner appealed. The Court of Appeals affirmed the trial
favor of the petitioner, assigning all their rights, titles and interests actually acknowledged this
court's decision except for the exemplary damages which it reduced
over a construction contract executed by and between the spouses document to be her voluntary
and A. Soriano Corporation on June 19, 1974 for a consideration of act and deed?
 A This in one of those things that
escaped my attention. Actually I
have not gone over the second
page. I believed it was in order I
signed it. (TSN pp. 13-14,
Hearing of Nov. 26, 1976).
The glaring admission by the Notary Public that he
failed to state in the acknowledgment portion of
Exhibit B-1 that the appellee Lily Yulo
acknowledged the said document to be her own
voluntary act and deed, is a very strong and
commanding circumstance to show that she did
not appear personally before the said Notary
Public and did not sign the document.
Additionally, the Notary Public admitted that,
while June Enriquez is admittedly a mutual friend
of his and the defendant Augusta Yulo, and who is
also an instrumental witness in said Exhibit B-1.,
he could not recognize or tell which of the two
signatures appearing therein, was the signature of
this June Enriquez.
Furthermore, as the issue is one of credibility of a
witness, the findings and conclusions of the trial
court before whom said witness, Atty. Crispin
Ordoña, the Notary Public before whom the
questioned document was supposedly ratified and
acknowledged, deserve great respect and are
seldom disturbed on appeal by appellate tribunals,
since it is in the best and peculiar advantage of
determining and observing the conduct,
demeanor and deportment of a particular witness
while he is testifying in court, an opportunity not
enjoyed by the appellate courts who merely have
to rely on the recorded proceedings which
transpired in the court below, and the records are
bare of any circumstance of weight, which the trial
court had overlooked and which if duly
considered, may radically affect the outcome of
the case.
On the other hand, the appellee Lily Yulo, to back
up her claim of forgery of her signature in Exhibit
B-1, presented in court a handwriting expert
witness in the person of Police Captain Yakal Giron
of the Integrated National Police Training
Command, and who is also a Document Examiner
of the same Command's Crime Laboratory at Fort
Bonifacio, Metro Manila. His experience as an
examiner of questioned and disputed documents,
in our mind, is quite impressive. To qualify him as
a handwriting expert, he declared that he
underwent extensive and actual studies and
examination of disputed or questioned document,
both at the National Bureau of Investigation
Academy and National Bureau of Investigation
Questioned Document Laboratory, respectively,
from July 1964, up to his appointment as
Document Examiner in June, 1975, and, to further
his experience along this line, he attended the
297th Annual Conference of the American Society
of Questioned Docurnent Examiners held at
Seattle, Washington, in August 1971, as a
representative of the Philippines, and likewise
conducted an observation of the present and
modern trends of crime laboratories in the West
Coast, U.S.A., in 1971; that he likewise had
conducted actual tests and examination of about
100,000 documents, as requested by the different
courts, administrative, and governmental agencies
of the Government, substantial portions of which
relate to actual court cases.
In concluding that the signatures of the appellee
Lily Yulo, in the disputed document in question
(Exh. B-1), were all forgeries, and not her genuine
signature, the expert witness categorically recited
and specified in open court what he observed to
be about twelve (12) glaring and material
significant differences, in his comparison of the
signatures appearing in the genuine specimen
signatures of the said appellee and with those
appearing in the questioned document (Exhibit B-
1). Indeed, we have likewise seen the supposed
notable differences, found in the standard or
genuine signatures of the appellee which were
lifted and obtained in the official files of the
government, such as the Bureau of Internal
Revenue on her income tax returns, as compared
to the pretended signature of the appellee
appearing in Exhibits B, B-1. It is also noteworthy
to mention that the appellant did not even bother
to conduct a cross-examination of the handwriting
expert witness, Capt. Giron, neither did the
appellant present another handwriting expert, at
least to counter-act or balance the appellee's
handwriting expert.
Prescinding from the foregoing facts, we subscribe
fully to the lower court's observations that the
signatures of the appellee Lily Yulo in the
questioned document (Exh. B-1) were forged.
Hence, we find no factual basis to disagree. (pp.
28-30, Rollo)
As to the petitioner's contention that even if the signature of Lily
Yulo was forged or even if the attached properties were her
exclusive property, the same can be made answerable to the
obligation because the said properties form part of the conjugal
partnership of the spouses Yulo, the appellate court held that these
contentions are without merit because there is strong preponderant
evidence to show that A & L Industries belongs exclusively to
respondent Lily Yulo, namely: a) The Certificate of Registration of A
& L Industries, issued by the Bureau of Commerce, showing that said
business is a single proprietorship, and that the registered owner
thereof is only Lily Yulo; b) The Mayor's Permit issued in favor of A &
L Industries, by the Caloocan City Mayor's Office showing
compliance by said single proprietorship company with the City
Ordinance governing business establishments; and c) The Special
Power of Attorney itself, assuming but without admitting its due
execution, is tangible proof that Augusto Yulo has no interest
whatsoever in the A & L Industries, otherwise, there would have
been no necessity for the Special Power of Attorney if he is a part
owner of said single proprietorship.
With regard to the award of damages, the Court of Appeals affirmed
the findings of the trial court that there was bad faith on the part of
the petitioner as to entitle the private respondent to damages as
shown not only by the fact that the petitioner did not present the
Deed of Assignment or the construction agreement or any evidence
whatsoever to support its claim of fraud on the part of the private
respondent and to justify the issuance of a preliminary attachment,
but also by the following findings:
Continuing and elaborating further on the
appellant's mala fide actuations in securing the
writ of attachment, the lower court stated as
follows:
Plaintiff not satisfied with the
instant case where an order for
attachment has already been
issued and enforced, on the
strength of the same Promissory
Note (Exhibit"A"), utilizing the
Deed of Chattel Mortgage
(Exhibit "4"), filed a foreclosure
proceedings before the Office of
the Sheriff of Caloocan
(Exhibit"6") foreclosing the
remaining properties found
inside the premises formerly
occupied by the A & L Industries.
A minute examination of Exhibit
"4" will show that the
contracting parties thereto, as
appearing in par. 1 thereof, are
Augusto Yulo, doing business
under the style of A & L
Industries (should be A & L Glass
Industries Corporation), as
mortgagor and BA Finance
Corporation as mortgagee, thus
the enforcement of the Chattel
Mortgage against the property
of A & L Industries exclusively
owned by Lily T. Yulo appears to
be without any factual or legal
basis whatsoever. The chattel
mortgage, Exhibit "4" and the
Promissory Note, Exhibit A, are
based on one and the same
obligation. Plaintiff tried to
enforce as it did enforce its claim
into two different modes a single
obligation.
Aware that defendant Lily Yulo,
filed a Motion to Suspend
Proceedings by virtue of a
complaint she filed with the
Court of First Instance of
Caloocan, seeking annulment of
the Promissory Note, the very
basis of the plaintiff in filing this
complaint, immediately after the
day it filed a Motion for the
Issuance of an Alias Writ of
Preliminary Attachment . . .Yet,
inspite of the knowledge and the
filing of this Motion to Suspend
Proceedings, the Plaintiff still
filed a Motion for the Issuance of
a Writ of Attachment dated
February 6, 1976 before this
court. To add insult to injury,
plaintiff even filed a Motion for
Examination of the Attachment
Debtor, although aware that Lily
Yulo had already denied
participation in the execution of
Exhibits "A" and "B". These
incidents and actions taken by
plaintiff, to the thinking of the
court, are sufficient to prove and
establish the element of bad
faith and malice on the part of
plaintiff which may warrant the
award of damages in favor of
defendant Lily Yulo. (Ibid., pp.
102-103).<äre||anº•1àw>
Indeed, the existence of evident
bad faith on the appellant's part
in proceeding against the
appellee Lily Yulo in the present
case, may likewise be distressed
on the fact that its officer Mr.
Abraham Co, did not even
bother to demand the
production of at least the
duplicate original of the Special
Power of Attorney (Exhibit B)
and merely contended himself
with a mere xerox copy thereof,
neither did he require a more
specific authority from the A & L
Industries to contract the loan in
question, since from the very
content and recitals of the
disputed document, no
authority, express or implied,
has been delegated or granted
to August Yulo to contract a
loan, especially with the
appellant. (pp. 33-34, Rollo)
Concerning the actual damages, the appellate court ruled that the
petitioner should have presented evidence to disprove or rebut the
private respondent's claim but it remained quiet and chose not to
disturb the testimony and the evidence presented by the private
respondent to prove her claim.
In this petition for certiorari, the petitioner raises three issues. The
first issue deals with the appellate court's affirmance of the trial
court's findings that the signature of the private respondent on the
Special Power of Attorney was forged. According to the petitioner,
the Court of Appeals disregarded the direct mandate of Section 23,
Rule 132 of the Rules of Court which states in part that evidence of
handwriting by comparison may be made "with writings admitted or
treated as genuine by the party against whom the evidence is
offered, or proved to be genuine to the satisfaction of the judge,"
and that there is no evidence on record which proves or tends to
prove the genuineness of the standards used.
There is no merit in this contention.
The records show that the signatures which were used as
"standards" for comparison with the alleged signature of the private
respondent in the Special Power of Attorney were those from the
latter's residence certificates in the years 1973, 1974 and 1975, her
income tax returns for the years 1973 and 1975 and from a
document on long bond paper dated May 18, 1977. Not only were
the signatures in the foregoing documents admitted by the private
respondent as hers but most of the said documents were used by
the private respondent in her transactions with the government. As
was held in the case of Plymouth Saving & Loan Assn. No. 2 v.
Kassing (125 NE 488, 494):
We believe the true rule deduced from the
authorities to be that the genuineness of a
"standard" writing may be established (1) by the
admission of the person sought to be charged with
the disputed writing made at or for the purposes
of the trial or by his testimony; (2) by witnesses
who saw the standards written or to whom or in
whose hearing the person sought to be charged
acknowledged the writing thereof; (3) by evidence
showing that the reputed writer of the standard
has acquiesced in or recognized the same, or that
it has been adopted and acted upon by him his
business transactions or other concerns....
Furthermore, the judge found such signatures to be sufficient as
standards. In the case of Taylor-Wharton Iron & Steel Co. v.
Earnshaw (156 N.E. 855, 856), it was held:
When a writing is offered as a standard of
comparison it is for the presiding judge to decide
whether it is the handwriting of the party to be
charged. Unless his finding is founded upon error
of law, or upon evidence which is, as matter of
law, insufficient to justify the finding, this court
will not revise it upon exceptions." (Costelo v.
Crowell, 139 Mass. 588, 590, 2 N.E. 648; Nuñez v.
Perry, 113 Mass, 274, 276.)
We cannot find any error on the part of the trial judge in using the
above documents as standards and also in giving credence to the
expert witness presented by the private respondent whose
testimony the petitioner failed to rebut and whose credibility it
likewise failed to impeach. But more important is the fact that the
unrebutted handwriting expert's testimony noted twelve (12)
glaring and material differences in the alleged signature of the
private respondent in the Special Power of Attorney as compared
with the specimen signatures, something which the appellate court
also took into account. In Cesar v. Sandiganbayan (134 SCRA 105,
132), we ruled:
Mr. Maniwang pointed to other significant
divergences and distinctive characteristics
between the sample signatures and the signatures
on the questioned checks in his report which the
court's Presiding Justice kept mentioning during
Maniwang's testimony.
In the course of his cross-examination, NBI expert
Tabayoyong admitted that he saw the differences
between the exemplars used and the questioned
signatures but he dismissed the differences
because he did not consider them fundamental.
We rule that significant differences are more
fundamental than a few similarities. A forger
always strives to master some similarities.
The second issue raised by the petitioner is that while it is true that
A & L Industries is a single proprietorship and the registered owner
thereof is private respondent Lily Yulo, the said proprietorship was
established during the marriage and its assets were also acquired
during the same. Therefore, it is presumed that this property forms
part of the conjugal partnership of the spouses Augusto and Lily
Yulo and thus, could be held liable for the obligations contracted by
Augusto Yulo, as administrator of the partnership.
There is no dispute that A & L Industries was established during the
marriage of Augusta and Lily Yulo and therefore the same is
presumed conjugal and the fact that it was registered in the name of
only one of the spouses does not destroy its conjugal nature (See
Mendoza v. Reyes, 124 SCRA 161, 165). However, for the said
property to be held liable, the obligation contracted by the husband
must have redounded to the benefit of the conjugal partnership
under Article 161 of the Civil Code. In the present case, the
obligation which the petitioner is seeking to enforce against the
conjugal property managed by the private respondent Lily Yulo was
undoubtedly contracted by Augusto Yulo for his own benefit
because at the time he incurred the obligation he had already
abandoned his family and had left their conjugal home. Worse, he
made it appear that he was duly authorized by his wife in behalf of A
& L Industries, to procure such loan from the petitioner. Clearly, to
make A & L Industries liable now for the said loan would be unjust
and contrary to the express provision of the Civil Code. As we have
ruled in Luzon Surety Co., Inc. v. De Gracia (30 SCRA 111, 115-117):
As explained in the decision now under review: "It
is true that the husband is the administrator of the
conjugal property pursuant to the provisions of
Art. 163 of the new Civil Code. However, as such
administrator the only obligations incurred by the
husband that are chargeable against the conjugal
property are those incurred in the legitimate
pursuit of his career, profession or business with
the honest belief that he is doing right for the
benefit of the family. This is not true in the case at
bar for we believe that the husband in acting as
guarantor or surety for another in an indemnity
agreement as that involved in this case did not act
for the benefit of the conjugal partnership. Such
inference is more emphatic in this case, when no
proof is presented that Vicente Garcia in acting as
surety or guarantor received consideration
therefore, which may redound to the benefit of
the conjugal partnership.(Ibid, pp. 46-47).
xxx xxx xxx
xxx xxx xxx
In the most categorical language, a conjugal
partnership under that provision is liable only for
such "debts and obligations contracted by the
husband for the benefit of the conjugal
partnership." There must be the requisite showing
then of some advantage which clearly accrued to
the welfare of the spouses. There is none in this
case.
 xxx xxx xxx
Moreover, it would negate the plain object of the
additional requirement in the present Civil Code
that a debt contracted by the husband to bind a
conjugal partnership must redound to its benefit.
That is still another provision indicative of the
solicitude and tender regard that the law
manifests for the family as a unit. Its interest is
paramount; its welfare uppermost in the minds of
the codifiers and legislators.
We, therefore, rule that the petitioner cannot enforce the obligation
contracted by Augusto Yulo against his conjugal properties with
respondent Lily Yulo. Thus, it follows that the writ of attachment
cannot issue against the said properties.
Finally, the third issue assails the award of actual damages according
to the petitioner, both the lower court and the appellate court
overlooked the fact that the properties referred to are still subject
to a levy on attachment. They are, therefore, still under custodia
legis and thus, the assailed decision should have included a
declaration as to who is entitled to the attached properties and that
assuming arguendo that the attachment was erroneous, the lower
court should have ordered the sheriff to return to the private
respondent the attached properties instead of condemning the
petitioner to pay the value thereof by way of actual damages.
In the case of Lazatin v. Twaño (2 SCRA 842, 847), we ruled:
xxx xxx xxx
... It should be observed that Sec. 4 of Rule 59,
does not prescribed the remedies available to the
attachment defendant in case of a wrongful
attachment, but merely provides an action for
recovery upon the bond, based on the undertaking
therein made and not upon the liability arising
from a tortuous act, like the malicious suing out of
an attachment. Under the first, where malice is
not essential, the attachment defendant, is
entitled to recover only the actual damages
sustained by him by reason of the attachment.
Under the second, where the attachment is
maliciously sued out, the damages recoverable
may include a compensation for every injury to his
credit, business or feed (Tyler v. Mahoney, 168 NC
237, 84 SE 362; Pittsburg etc. 5 Wakefield, etc.,
135 NC 73, 47 SE 234). ...
The question before us, therefore, is whether the attachment of the
properties of A & L Industries was wrongful so as to entitle the
petitioner to actual damages only or whether the said attachment
was made in bad faith and with malice to warrant the award of
other kinds of damages. Moreover, if the private respondent is
entitled only to actual damages, was the court justified in ordering
the petitioner to pay for the value of the attached properties
instead of ordering the return of the said properties to the private
respondent Yulo ?
Both the trial and appellate courts found that there was bad faith on
the part of the petitioner in securing the writ of attachment. We do
not think so. "An attachment may be said to be wrongful when, for
instance, the plaintiff has no cause of action, or that there is no true
ground therefore, or that the plaintiff has a sufficient security other
than the property attached, which is tantamout to saying that the
plaintiff is not entitled to attachment because the requirements of
entitling him to the writ are wanting. (7 C.J.S., 664)" (p. 48, Section
4, Rule 57, Francisco, Revised Rules of Court).
Although the petitioner failed to prove the ground relied upon for
the issuance of the writ of attachment, this failure cannot be
equated with bad faith or malicious intent. The steps which were
taken by the petitioner to ensure the security of its claim were
premised, on the firm belief that the properties involved could be
made answerable for the unpaid obligation due it. There is no
question that a loan in the amount of P591,003.59 was borrowed
from the bank.
We, thus, find that the petitioner is liable only for actual damages
and not for exemplary damages and attorney's fees. Respondent Lily
Yulo has manifested before this Court that she no longer desires the
return of the attached properties since the said attachment caused
her to close down the business. From that time she has become a
mere employee of the new owner of the premises. She has grave
doubts as to the running condition of the attached machineries and
equipments considering that the attachment was effected way back
in 1975. She states as a matter of fact that the petitioner has already
caused the sale of the machineries for fear that they might be
destroyed due to prolonged litigation. We, therefore, deem it just
and equitable to allow private respondent Lily Yulo to recover actual
damages based on the value of the attached properties as proven in
the trial court, in the amount of P660,000.00. In turn, if there are
any remaining attached properties, they should be permanently
released to herein petitioner.
We cannot, however, sustain the award of P500,000.00
representing unrealized profits because this amount was not proved
or justified before the trial court. The basis of the alleged unearned
profits is too speculative and conjectural to show actual damages
for a future period. The private respondent failed to present reports
on the average actual profits earned by her business and other
evidence of profitability which are necessary to prove her claim for
the said amount (See G. A. Machineries, Inc. v. Yaptinchay, 126 SCRA
78, 88).
The judgment is therefore set aside insofar as it holds the petitioner
liable for P500,000.00 actual damages representing unrealized
profits, P150,000.00 for exemplary damages and P20,000.00 for
attorney's fees. As stated earlier, the attached properties, should be
released in favor of the petitioner.
WHEREFORE, the decision of the Court of Appeals is hereby SET
ASIDE and the petitioner is ordered to pay the private respondent
Lily Yulo the amount of SIX HUNDRED SIXTY THOUSAND PESOS
(P660,000.00) as actual damages. The remaining properties subject
of the attachment are ordered released in favor of the petitioner.
SO ORDERED.
SECOND DIVISION
G.R. No. 143382 November 29, 2006
SECURITY BANK and TRUST COMPANY, Petitioner,
vs.
MAR TIERRA CORPORATION, WILFRIDO C. MARTINEZ, MIGUEL J.
LACSON and RICARDO A. LOPA, Respondents.
DECISION
CORONA, J.:
May the conjugal partnership be held liable for an indemnity
agreement entered into by the husband to accommodate a third
party?
This issue confronts us in this petition for review on certiorari
assailing the November 9, 1999 decision1 of the Court of Appeals
(CA) in CA-G.R. CV No. 48107.
On May 7, 1980, respondent Mar Tierra Corporation, through its
president, Wilfrido C. Martinez, applied for a ₱12,000,000 credit
accommodation with petitioner Security Bank and Trust Company.
Petitioner approved the application and entered into a credit line
agreement with respondent corporation. It was secured by an
indemnity agreement executed by individual respondents Wilfrido
C. Martinez, Miguel J. Lacson and Ricardo A. Lopa who bound
themselves jointly and severally with respondent corporation for
the payment of the loan.
On July 2, 1980, the credit line agreement was amended and
increased to ₱14,000,000. Individual respondents correspondingly
executed a new indemnity agreement in favor of the bank to secure
the increased credit line.
On September 25, 1981, respondent corporation availed of its credit
line and received the sum of ₱9,952,000 which it undertook to pay
on or before November 30, 1981. It was able to pay ₱4,648,000 for
the principal loan and ₱2,729,195.56 for the interest and other
charges. However, respondent corporation was not able to pay the
balance as it suffered business reversals, eventually ceasing
operations in 1984.
Unable to collect the balance of the loan, petitioner filed a
complaint for a sum of money with a prayer for preliminary
attachment against respondent corporation and individual
respondents in the Regional Trial Court (RTC) of Makati, Branch 66.
It was docketed as Civil Case No. 3947.
Subsequently, however, petitioner had the case dismissed with
respect to individual respondents Lacson and Lopa, 2leaving Martinez
as the remaining individual respondent.
On August 10, 1982, the RTC issued a writ of attachment on all real
and personal properties of respondent corporation and individual
respondent Martinez. As a consequence, the conjugal house and lot
of the spouses Wilfrido and Josefina Martinez in Barrio Calaanan,
Caloocan City covered by Transfer Certificate of Title (TCT) No.
49158 was levied on.
3
The RTC rendered its decision on June 20, 1994. It held respondent
corporation and individual respondent Martinez jointly and severally
liable to petitioner for ₱5,304,000 plus 12% interest per annum and
5% penalty commencing on June 21, 1982 until fully paid, plus
₱10,000 as attorney’s fees. It, however, found that the obligation
contracted by individual respondent Martinez did not redound to
the benefit of his family, hence, it ordered the lifting of the
attachment on the conjugal house and lot of the spouses Martinez.
Dissatisfied with the RTC decision, petitioner appealed to the CA but
the appellate court affirmed the trial court’s decision in toto.
Petitioner sought reconsideration but it was denied. Hence, this
petition.
Petitioner makes two basic assertions: (1) the RTC and CA erred in
finding that respondent corporation availed of ₱9,952,000 only from
its credit line and not the entire ₱14,000,000 and (2) the RTC and CA
were wrong in ruling that the conjugal partnership of the Martinez
spouses could not be held liable for the obligation incurred by
individual respondent Martinez.
We uphold the CA.
Factual findings of the CA, affirming those of the trial court, will not
be disturbed on appeal but must be accorded great weight.4 These
findings are conclusive not only on the parties but on this Court as
well.5
The CA affirmed the finding of the RTC that the amount availed of by
respondent corporation from its credit line with petitioner was only
₱9,952,000. Both courts correctly pointed out that petitioner itself
admitted this amount when it alleged in paragraph seven of its
complaint that respondent corporation "borrowed and received the
principal sum of ₱9,952,000."6 Petitioner was therefore bound by
the factual finding of the appellate and trial courts, as well as by its
own judicial admission, on this particular point.
At any rate, the issue of the amount actually availed of by
respondent corporation is factual. It is not within the ambit of this
Court’s discretionary power of judicial review under Rule 45 of the
Rules of Court which is concerned solely with questions of law.7
We now move on to the principal issue in this case.
Under Article 161(1) of the Civil Code,8 the conjugal partnership is
liable for "all debts and obligations contracted by the husband for
the benefit of the conjugal partnership." But when are debts and
obligations contracted by the husband alone considered for the
benefit of and therefore chargeable against the conjugal
partnership? Is a surety agreement or an accommodation contract
entered into by the husband in favor of his employer within the
contemplation of the said provision?
We ruled as early as 1969 in Luzon Surety Co., Inc. v. de Garcia9 that,
in acting as a guarantor or surety for another, the husband does not
act for the benefit of the conjugal partnership as the benefit is
clearly intended for a third party.
In Ayala Investment and Development Corporation v. Court of
Appeals,10 we ruled that, if the husband himself is the principal
obligor in the contract, i.e., the direct recipient of the money and
services to be used in or for his own business or profession, the
transaction falls within the term "obligations for the benefit of the
conjugal partnership." In other words, where the husband contracts
an obligation on behalf of the family business, there is a legal
presumption that such obligation redounds to the benefit of the
conjugal partnership.11

On the other hand, if the money or services are given to another

person or entity and the husband acted only as a surety or
guarantor, the transaction cannot by itself be deemed an obligation
for the benefit of the conjugal partnership.12 It is for the benefit of
the principal debtor and not for the surety or his family. No
presumption is raised that, when a husband enters into a contract of
surety or accommodation agreement, it is for the benefit of the
conjugal partnership. Proof must be presented to establish the
benefit redounding to the conjugal partnership.13 In the absence of
any showing of benefit received by it, the conjugal partnership
cannot be held liable on an indemnity agreement executed by the
husband to accommodate a third party.14

In this case, the principal contract, the credit line agreement

between petitioner and respondent corporation, was solely for the
benefit of the latter. The accessory contract (the indemnity
agreement) under which individual respondent Martinez assumed
the obligation of a surety for respondent corporation was similarly
for the latter’s benefit. Petitioner had the burden of proving that the
conjugal partnership of the spouses Martinez benefited from the
transaction. It failed to discharge that burden.

To hold the conjugal partnership liable for an obligation pertaining

to the husband alone defeats the objective of the Civil Code to
protect the solidarity and well being of the family as a unit. 15 The
underlying concern of the law is the conservation of the conjugal
partnership.16 Hence, it limits the liability of the conjugal
partnership only to debts and obligations contracted by the husband
for the benefit of the conjugal partnership.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.
FIRST DIVISION
G.R. No. 160347 November 29, 2006
ARCADIO and MARIA LUISA CARANDANG, Petitioners,
vs.
HEIRS OF QUIRINO A. DE GUZMAN, namely: MILAGROS DE
GUZMAN, VICTOR DE GUZMAN, REYNALDO DE GUZMAN, CYNTHIA
G. RAGASA and QUIRINO DE GUZMAN, JR., Respondents.
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari assailing the Court of
Appeals Decision1 and Resolution affirming the Regional Trial Court
(RTC) Decision rendering herein petitioners Arcadio and Luisa
Carandang [hereinafter referred to as spouses Carandang] jointly
and severally liable for their loan to Quirino A. de Guzman.
The Court of Appeals summarized the facts as follows:
[Quirino de Guzman] and [the Spouses Carandang] are stockholders
as well as corporate officers of Mabuhay Broadcasting System (MBS
for brevity), with equities at fifty four percent (54%) and forty six
percent (46%) respectively.
On November 26, 1983, the capital stock of MBS was increased,
from ₱500,000 to P1.5 million and ₱345,000 of this increase was
subscribed by [the spouses Carandang]. Thereafter, on March 3,
1989, MBS again increased its capital stock, from ₱1.5 million to ₱3
million, [the spouses Carandang] yet again subscribed to the
increase. They subscribed to ₱93,750 worth of newly issued capital
stock.
[De Guzman] claims that, part of the payment for these
subscriptions were paid by him, ₱293,250 for the November 26,
1983 capital stock increase and ₱43,125 for the March 3, 1989
Capital Stock increase or a total of ₱336,375. Thus, on March 31,
1992, [de Guzman] sent a demand letter to [the spouses Carandang]
for the payment of said total amount.
[The spouses Carandang] refused to pay the amount, contending
that a pre-incorporation agreement was executed between [Arcadio
Carandang] and [de Guzman], whereby the latter promised to pay
for the stock subscriptions of the former without cost, in
consideration for [Arcadio Carandang’s] technical expertise, his
newly purchased equipment, and his skill in repairing and upgrading
radio/communication equipment therefore, there is no
indebtedness on their part [sic].
On June 5, 1992, [de Guzman] filed his complaint, seeking to recover
the ₱336,375 together with damages. After trial on the merits, the
trial court disposed of the case in this wise:
"WHEREFORE, premises considered, judgment is hereby rendered in
favor of [de Guzman]. Accordingly, [the spouses Carandang] are
ordered to jointly and severally pay [de Guzman], to wit:
(1) ₱336,375.00 representing [the spouses Carandang’s]
loan to de Guzman;
(2) interest on the preceding amount at the rate of twelve
percent (12%) per annum from June 5, 1992 when this
complaint was filed until the principal amount shall have
been fully paid;
(3) ₱20,000.00 as attorney’s fees;
(4) Costs of suit.
The spouses Carandang appealed the RTC Decision to the Court of
Appeals, which affirmed the same in the 22 April 2003 assailed
Decision:
WHEREFORE, in view of all the foregoing the assailed Decision is
hereby AFFIRMED. No costs.2
The Motion for Reconsideration filed by the spouses Carandang was
similarly denied by the Court of Appeals in the 6 October 2003
assailed Resolution:
WHEREFORE, in view thereof, the motion for reconsideration is
hereby DENIED and our Decision of April 22, 2003, which is based on
applicable law and jurisprudence on the matter is hereby AFFIRMED
and REITERATED.3
The spouses Carandang then filed before this Court the instant
Petition for Review on Certiorari, bringing forth the following issues:
I.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED MANIFEST ERROR IN FAILING TO STRICTLY COMPLY
WITH SECTION 16, RULE 3 OF THE 1997 RULES OF CIVIL PROCEDURE.
II.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY
ERRED IN ITS FINDING THAT THERE IS AN ALLEGED LOAN FOR
WHICH PETITIONERS ARE LIABLE, CONTRARY TO EXPRESS
PROVISIONS OF BOOK IV, TITLE XI, OF THE NEW CIVIL CODE
PERTAINING TO LOANS.
III.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY
ERRED IN FINDING THAT THE RESPONDENTS WERE ABLE TO
DISCHARGE THEIR BURDEN OF PROOF, IN COMPLETE DISREGARD OF
THE REVISED RULES ON EVIDENCE.
IV.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED REVERSIBLE ERROR WHEN IT FAILED TO APPLY
SECTIONS 2 AND 7, RULE 3 OF THE 1997 RULES OF CIVIL
PROCEDURE.
V.
WHETHER OR NOT THE HONORABLE COURT OF APPEALS SERIOUSLY
ERRED IN FINDING THAT THE PURPORTED LIABILITY OF PETITIONERS
ARE JOINT AND SOLIDARY, IN VIOLATION OF ARTICLE 1207 OF THE
NEW CIVIL CODE.4
Whether or not the RTC Decision is void for failing to comply with
Section 16, Rule 3 of the Rules of Court
The spouses Carandang claims that the Decision of the RTC, having
been rendered after the death of Quirino de Guzman, is void for
failing to comply with Section 16, Rule 3 of the Rules of Court, which
provides:
SEC. 16. Death of party; duty of counsel. – Whenever a party to a
pending action dies, and the claim is not thereby extinguished, it
shall be the duty of his counsel to inform the court within thirty (30)
days after such death of the fact thereof, and to give the name and
address of his legal representative or representatives. Failure of
counsel to comply with this duty shall be a ground for disciplinary
action.
The heirs of the deceased may be allowed to be substituted for the
deceased, without requiring the appointment of an executor or
administrator and the court may appoint a guardian ad litem for the
minor heirs.
The court shall forthwith order the legal representative or
representatives to appear and be substituted within a period of
thirty (30) days from notice.
If no legal representative is named by the counsel for the deceased
party, or if the one so named shall fail to appear within the specified
period, the court may order the opposing party, within a specified
time, to procure the appointment of an executor or administrator
for the estate of the deceased and the latter shall immediately
appear for and on behalf of the deceased. The court charges in
procuring such appointment, if defrayed by the opposing party, may
be recovered as costs.
The spouses Carandang posits that such failure to comply with the
above rule renders void the decision of the RTC, in adherence to the
following pronouncements in Vda. de Haberer v. Court of
Appeals5 and Ferreria v. Vda. de Gonzales6 :
Thus, it has been held that when a party dies in an action that
survives and no order is issued by the court for the appearance of
the legal representative or of the heirs of the deceased in
substitution of the deceased, and as a matter of fact no substitution
has ever been effected, the trial held by the court without such legal
representatives or heirs and the judgment rendered after such trial
are null and void because the court acquired no jurisdiction over the
persons of the legal representatives or of the heirs upon whom the
trial and judgment would be binding.7
In the present case, there had been no court order for the legal
representative of the deceased to appear, nor had any such legal
representative appeared in court to be substituted for the
deceased; neither had the complainant ever procured the
appointment of such legal representative of the deceased, including
appellant, ever asked to be substituted for the deceased. As a result,
no valid substitution was effected, consequently, the court never
acquired jurisdiction over appellant for the purpose of making her a
party to the case and making the decision binding upon her, either
personally or as a representative of the estate of her deceased
mother.8
However, unlike jurisdiction over the subject matter which is
conferred by law and is not subject to the discretion of the
parties,9 jurisdiction over the person of the parties to the case may
be waived either expressly or impliedly.10Implied waiver comes in
the form of either voluntary appearance or a failure to object. 11
In the cases cited by the spouses Carandang, we held that there had
been no valid substitution by the heirs of the deceased party, and
therefore the judgment cannot be made binding upon them. In the
case at bar, not only do the heirs of de Guzman interpose no
objection to the jurisdiction of the court over their persons; they are
actually claiming and embracing such jurisdiction. In doing so, their
waiver is not even merely implied (by their participation in the
appeal of said Decision), but express (by their explicit espousal of
such view in both the Court of Appeals and in this Court). The heirs
of de Guzman had no objection to being bound by the Decision of
the RTC.
Thus, lack of jurisdiction over the person, being subject to waiver, is
a personal defense which can only be asserted by the party who can
thereby waive it by silence.
It also pays to look into the spirit behind the general rule requiring a
formal substitution of heirs. The underlying principle therefor is not
really because substitution of heirs is a jurisdictional requirement,
but because non-compliance therewith results in the undeniable
violation of the right to due process of those who, though not duly
notified of the proceedings, are substantially affected by the
decision rendered therein.12 Such violation of due process can only
be asserted by the persons whose rights are claimed to have been
violated, namely the heirs to whom the adverse judgment is sought
to be enforced.
Care should, however, be taken in applying the foregoing
conclusions. In People v. Florendo,13 where we likewise held that
the proceedings that took place after the death of the party are
void, we gave another reason for such nullity: "the attorneys for the
offended party ceased to be the attorneys for the deceased upon
the death of the latter, the principal x x x." Nevertheless, the case at
bar had already been submitted for decision before the RTC on 4
June 1998, several months before the passing away of de Guzman
on 19 February 1999. Hence, no further proceedings requiring the
appearance of de Guzman’s counsel were conducted before the
promulgation of the RTC Decision. Consequently, de Guzman’s
counsel cannot be said to have no authority to appear in trial, as
trial had already ceased upon the death of de Guzman.
In sum, the RTC Decision is valid despite the failure to comply with
Section 16, Rule 3 of the Rules of Court, because of the express
waiver of the heirs to the jurisdiction over their persons, and
because there had been, before the promulgation of the RTC
Decision, no further proceedings requiring the appearance of de
Guzman’s counsel.
Before proceeding with the substantive aspects of the case,
however, there is still one more procedural issue to tackle, the
fourth issue presented by the spouses Carandang on the non-
inclusion in the complaint of an indispensable party.
Whether or not the RTC should have dismissed the case for failure
to state a cause of action, considering that Milagros de Guzman,
allegedly an indispensable party, was not included as a party-
plaintiff
The spouses Carandang claim that, since three of the four checks
used to pay their stock subscriptions were issued in the name of
Milagros de Guzman, the latter should be considered an
indispensable party. Being such, the spouses Carandang claim, the
failure to join Mrs. de Guzman as a party-plaintiff should cause the
dismissal of the action because "(i)f a suit is not brought in the name
of or against the real party in interest, a motion to dismiss may be
filed on the ground that the complaint states no cause of action." 14
The Court of Appeals held:
We disagree. The joint account of spouses Quirino A de Guzman and
Milagros de Guzman from which the four (4) checks were drawn is
part of their conjugal property and under both the Civil Code and
the Family Code the husband alone may institute an action for the
recovery or protection of the spouses’ conjugal property.
Thus, in Docena v. Lapesura [355 SCRA 658], the Supreme Court
held that "x x x Under the New Civil Code, the husband is the
administrator of the conjugal partnership. In fact, he is the sole
administrator, and the wife is not entitled as a matter of right to join
him in this endeavor. The husband may defend the conjugal
partnership in a suit or action without being joined by the wife. x x x
Under the Family Code, the administration of the conjugal property
belongs to the husband and the wife jointly. However, unlike an act
of alienation or encumbrance where the consent of both spouses is
required, joint management or administration does not require that
the husband and wife always act together. Each spouse may validly
exercise full power of management alone, subject to the
intervention of the court in proper cases as provided under Article
124 of the Family Code. x x x."
The Court of Appeals is correct. Petitioners erroneously interchange
the terms "real party in interest" and "indispensable party." A real
party in interest is the party who stands to be benefited or injured
by the judgment of the suit, or the party entitled to the avails of the
suit.15 On the other hand, an indispensable party is a party in
interest without whom no final determination can be had of an
action,16 in contrast to a necessary party, which is one who is not
indispensable but who ought to be joined as a party if complete
relief is to be accorded as to those already parties, or for a complete
determination or settlement of the claim subject of the action.17
The spouses Carandang are indeed correct that "(i)f a suit is not
brought in the name of or against the real party in interest, a motion
to dismiss may be filed on the ground that the complaint states no
cause of action."18 However, what dismissal on this ground entails is
an examination of whether the parties presently pleaded are
interested in the outcome of the litigation, and not whether all
persons interested in such outcome are actually pleaded. The latter
query is relevant in discussions concerning indispensable and
necessary parties, but not in discussions concerning real parties in
interest. Both indispensable and necessary parties are considered as
real parties in interest, since both classes of parties stand to be
benefited or injured by the judgment of the suit.
Quirino and Milagros de Guzman were married before the
effectivity of the Family Code on 3 August 1988. As they did not
execute any marriage settlement, the regime of conjugal
partnership of gains govern their property relations.19
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.20 Credits are personal properties,21 acquired during the
time the loan or other credit transaction was executed. Therefore,
credits loaned during the time of the marriage are presumed to be
conjugal property.
Consequently, assuming that the four checks created a debt for
which the spouses Carandang are liable, such credits are presumed
to be conjugal property. There being no evidence to the contrary,
such presumption subsists. As such, Quirino de Guzman, being a co-
owner of specific partnership property,22 is certainly a real party in
interest. Dismissal on the ground of failure to state a cause of
action, by reason that the suit was allegedly not brought by a real
party in interest, is therefore unwarranted.
So now we come to the discussion concerning indispensable and
necessary parties. When an indispensable party is not before the
court, the action should likewise be dismissed.23 The absence of an
indispensable party renders all subsequent actuations of the court
void, for want of authority to act, not only as to the absent parties
but even as to those present.24 On the other hand, the non-joinder
of necessary parties do not result in the dismissal of the case.
Instead, Section 9, Rule 3 of the Rules of Court provides for the
consequences of such non-joinder:
Sec. 9. Non-joinder of necessary parties to be pleaded. – Whenever
in any pleading in which a claim is asserted a necessary party is not
joined, the pleader shall set forth his name, if known, and shall state
why he is omitted. Should the court find the reason for the omission
unmeritorious, it may order the inclusion of the omitted necessary
party if jurisdiction over his person may be obtained.
The failure to comply with the order for his inclusion, without
justifiable cause, shall be deemed a waiver of the claim against such
party.
The non-inclusion of a necessary party does not prevent the court
from proceeding in the action, and the judgment rendered therein
shall be without prejudice to the rights of such necessary party.
Non-compliance with the order for the inclusion of a necessary
party would not warrant the dismissal of the complaint. This is an
exception to Section 3, Rule 17 which allows the dismissal of the
complaint for failure to comply with an order of the court, as
Section 9, Rule 3 specifically provides for the effect of such non-
inclusion: it shall not prevent the court from proceeding in the
action, and the judgment rendered therein shall be without
prejudice to the rights of such necessary party. Section 11, Rule 3
likewise provides that the non-joinder of parties is not a ground for
the dismissal of the action.
Other than the indispensable and necessary parties, there is a third
set of parties: the pro-forma parties, which are those who are
required to be joined as co-parties in suits by or against another
party as may be provided by the applicable substantive law or
procedural rule.25 An example is provided by Section 4, Rule 3 of the
Rules of Court:
Sec. 4. Spouses as parties. – Husband and wife shall sue or be sued
jointly, except as provided by law.
Pro-forma parties can either be indispensable, necessary or neither
indispensable nor necessary. The third case occurs if, for example, a
husband files an action to recover a property which he claims to be
part of his exclusive property. The wife may have no legal interest in
such property, but the rules nevertheless require that she be joined
as a party.
In cases of pro-forma parties who are neither indispensable nor
necessary, the general rule under Section 11, Rule 3 must be
followed: such non-joinder is not a ground for dismissal. Hence, in a
case concerning an action to recover a sum of money, we held that
the failure to join the spouse in that case was not a jurisdictional
defect.26 The non-joinder of a spouse does not warrant dismissal as
it is merely a formal requirement which may be cured by
amendment.27
Conversely, in the instances that the pro-forma parties are also
indispensable or necessary parties, the rules concerning
indispensable or necessary parties, as the case may be, should be
applied. Thus, dismissal is warranted only if the pro-forma party not
joined in the complaint is an indispensable party.
Milagros de Guzman, being presumed to be a co-owner of the
credits allegedly extended to the spouses Carandang, seems to be
either an indispensable or a necessary party. If she is an
indispensable party, dismissal would be proper. If she is merely a
necessary party, dismissal is not warranted, whether or not there
was an order for her inclusion in the complaint pursuant to Section
9, Rule 3.
Article 108 of the Family Code provides:
Art. 108. The conjugal partnership shall be governed by the rules on
the contract of partnership in all that is not in conflict with what is
expressly determined in this Chapter or by the spouses in their
marriage settlements.
This provision is practically the same as the Civil Code provision it
superceded:
Art. 147. The conjugal partnership shall be governed by the rules on
the contract of partnership in all that is not in conflict with what is
expressly determined in this Chapter.
In this connection, Article 1811 of the Civil Code provides that "[a]
partner is a co-owner with the other partners of specific partnership
property." Taken with the presumption of the conjugal nature of the
funds used to finance the four checks used to pay for petitioners’
stock subscriptions, and with the presumption that the credits
themselves are part of conjugal funds, Article 1811 makes Quirino
and Milagros de Guzman co-owners of the alleged credit.
Being co-owners of the alleged credit, Quirino and Milagros de participation in the corporation even if the capital structures were
Guzman may separately bring an action for the recovery thereof. In increased, and that Quirino de Guzman would personally pay the
the fairly recent cases of Baloloy v. Hular28 and Adlawan v. equity shares/stock subscriptions of Arcardio Carandang with no
Adlawan,29 we held that, in a co-ownership, co-owners may bring cost to the latter.
actions for the recovery of co-owned property without the necessity
of joining all the other co-owners as co-plaintiffs because the suit is On this main issue, the Court of Appeals held:
presumed to have been filed for the benefit of his co-owners. In the
latter case and in that of De Guia v. Court of Appeals,30 we also held [The spouses Carandang] aver in its ninth assigned error that [the de
that Article 487 of the Civil Code, which provides that any of the co- Guzmans] failed to prove by preponderance of evidence, either the
owners may bring an action for ejectment, covers all kinds of action existence of the purported loan or the non-payment thereof.
for the recovery of possession.31
Simply put, preponderance of evidence means that the evidence as
In sum, in suits to recover properties, all co-owners are real parties a whole adduced by one side is superior to that of the other. The
in interest. However, pursuant to Article 487 of the Civil Code and concept of preponderance of evidence refers to evidence that is of
relevant jurisprudence, any one of them may bring an action, any greater weight, or more convincing, than that which is offered in
kind of action, for the recovery of co-owned properties. Therefore, opposition to it; it means probability of truth.
only one of the co-owners, namely the co-owner who filed the suit
for the recovery of the co-owned property, is an indispensable party
[The spouses Carandang] admitted that it was indeed [the de
thereto. The other co-owners are not indispensable parties. They
Guzmans] who paid their stock subscriptions and their reason for
are not even necessary parties, for a complete relief can be
not reimbursing the latter is the alleged pre-incorporation
accorded in the suit even without their participation, since the suit is
agreement, to which they offer no clear proof as to its existence.
presumed to have been filed for the benefit of all co-owners.32
It is a basic rule in evidence that each party must prove his
We therefore hold that Milagros de Guzman is not an indispensable
affirmative allegation. Thus, the plaintiff or complainant has to
party in the action for the recovery of the allegedly loaned money to
prove his affirmative allegations in the complaints and the
the spouses Carandang. As such, she need not have been impleaded
defendant or respondent has to prove the affirmative allegations in
in said suit, and dismissal of the suit is not warranted by her not
his affirmative defenses and counterclaims.33
being a party thereto.
The spouses Carandang, however, insist that the de Guzmans have
Whether or not respondents were able to prove the loan sought to
not proven the loan itself, having presented evidence only of the
be collected from petitioners
payment in favor of the Carandangs. They claim:
In the second and third issues presented by the spouses Carandang,
It is an undeniable fact that payment is not equivalent to a loan. For
they claim that the de Guzmans failed to prove the alleged loan for
instance, if Mr. "A" decides to pay for Mr. "B’s" obligation, that
which the spouses Carandang were held liable. As previously stated,
payment by Mr. "A" cannot, by any stretch of imagination, possibly
spouses Quirino and Milagros de Guzman paid for the stock
mean that there is now a loan by Mr. "B" to Mr. "A". There is a
subscriptions of the spouses Carandang, amounting to ₱336,375.00.
possibility that such payment by Mr. "A" is purely out of generosity
The de Guzmans claim that these payments were in the form of
or that there is a mutual agreement between them. As applied to
loans and/or advances and it was agreed upon between the late
the instant case, that mutual agreement is the pre-incorporation
Quirino de Guzman, Sr. and the spouses Carandang that the latter
agreement (supra) existing between Mr. de Guzman and the
would repay him. Petitioners, on the other hand, argue that there
petitioners --- to the effect that the former shall be responsible for
was an oral pre-incorporation agreement wherein it was agreed that
paying stock subscriptions of the latter. Thus, when Mr. de Guzman
Arcardio Carandang would always maintain his 46% equity
paid for the stock subscriptions of the petitioners, there was no loan
to speak of, but only a compliance with the pre-incorporation
agreement.34
The spouses Carandang are mistaken. If indeed a Mr. "A" decides to
pay for a Mr. "B’s" obligation, the presumption is that Mr. "B" is
indebted to Mr. "A" for such amount that has been paid. This is
pursuant to Articles 1236 and 1237 of the Civil Code, which provide:
Art. 1236. The creditor is not bound to accept payment or
performance by a third person who has no interest in the fulfillment
of the obligation, unless there is a stipulation to the contrary.
Whoever pays for another may demand from the debtor what he
has paid, except that if he paid without the knowledge or against
The de Guzmans have successfully proven their payment of the
spouses Carandang’s stock subscriptions. These payments were, in
fact, admitted by the spouses Carandang. Consequently, it is now up
to the spouses Carandang to prove the existence of the pre-
incorporation agreement that was their defense to the purported
loan.
Unfortunately for the spouses Carandang, the only testimony which
touched on the existence and substance of the pre-incorporation
agreement, that of petitioner Arcardio Carandang, was stricken off
the record because he did not submit himself to a cross-examination
of the opposing party. On the other hand, the testimonies of Romeo
Saavedra,36 Roberto S. Carandang,37 Gertrudes Z.
Esteban, Ceferino Basilio, and Ma. Luisa Carandang40touched on
38 39
"Q: How much?
A: ₱40,000.00 to ₱50,000.00 per month.
Q: The plaintiff also claimed thru witness Edgar Ragasa, that there
were receipts issued for the payment of your shares; which receipts
were marked as Exhibits "G" to "L" (Plaintiff).
I’m showing to you these receipts so marked by the plaintiff as their
exhibits which were issued in the name of Ma. Luisa Carandang,
your wife; and also, Arcadio M. Carandang. Will you please go over
this Official Receipt and state for the records, who made for the
payment stated in these receipts in your name?

the will of the debtor, he can recover only insofar as the payment
has been beneficial to the debtor.
Art. 1237. Whoever pays on behalf of the debtor without the
knowledge or against the will of the latter, cannot compel the
creditor to subrogate him in his rights, such as those arising from a
mortgage, guarantee, or penalty.
Articles 1236 and 1237 are clear that, even in cases where the
debtor has no knowledge of payment by a third person, and even in
cases where the third person paid against the will of the debtor,
such payment would produce a debt in favor of the paying third
person. In fact, the only consequences for the failure to inform or
get the consent of the debtor are the following: (1) the third person
can recover only insofar as the payment has been beneficial to the
debtor; and (2) the third person is not subrogated to the rights of
the creditor, such as those arising from a mortgage, guarantee or
penalty.35
We say, however, that this is merely a presumption. By virtue of the
parties’ freedom to contract, the parties could stipulate otherwise
and thus, as suggested by the spouses Carandang, there is indeed a
possibility that such payment by Mr. "A" was purely out of
generosity or that there was a mutual agreement between them.
But such mutual agreement, being an exception to presumed course
of events as laid down by Articles 1236 and 1237, must be
adequately proven.
matters other than the existence and substance of the pre-
A: I paid for those shares."42
incorporation agreement. So aside from the fact that these
witnesses had no personal knowledge as to the alleged existence of
There being no testimony or documentary evidence proving the
the pre-incorporation agreement, the testimonies of these
existence of the pre-incorporation agreement, the spouses
witnesses did not even mention the existence of a pre-incorporation
Carandang are forced to rely upon an alleged admission by the
agreement.
original plaintiff of the existence of the pre-incorporation
agreement.
Worse, the testimonies of petitioners Arcadio Carandang and Ma.
Luisa Carandang even contradicted the existence of a pre-
Petitioners claim that the late Quirino A. de Guzman, Sr. had
incorporation agreement because when they were asked by their
admitted the existence of the pre-incorporation agreement by
counsel regarding the matter of the check payments made by the
virtue of paragraphs 13 and 14 of their Answer and paragraph 4 of
late Quirino A. de Guzman, Sr. in their behalf, they said that they
private respondents’ Reply.
had already paid for it thereby negating their own defense that
there was a pre-incorporation agreement excusing themselves from
Paragraphs 13 and 14 of petitioners’ Answer dated 7 July 1992 state
paying Mr. de Guzman the amounts he advanced or loaned to them.
in full:
This basic and irrefutable fact can be gleaned from their testimonies
which the private respondents are quoting for easy reference:
13. Sometime in November, 1973 or thereabout, herein plaintiff
a. With respect to the testimony of Ma. Luisa Carandang invited defendant Arcadio M. Carandang to a joint venture by
pooling together their technical expertise, equipments, financial
resources and franchise. Plaintiff proposed to defendant and
Q: Now, can you tell this Honorable Court how do you feel with
mutually agreed on the following:
respect to the Complaint of the plaintiff in this case charging you
that you paid for this year and asking enough to paid (sic) your tax?
1. That they would organize a corporation known as
Mabuhay Broadcasting Systems, Inc.
A: We have paid already, so, we are not liable for anything payment
(sic).41
2. Considering the technical expertise and talent of
defendant Arcadio M. Carandang and his new equipments
b. With respect to the testimony of Arcadio Carandang
he bought, and his skill in repairing and modifying
 radio/communication equipments into high proficiency,
said defendant would have an equity participation in the
corporation of 46%, and plaintiff 54% because of his
financial resources and franchise.
3. That defendant would always maintain his 46% equity
participation in the corporation even if the capital
structures are increased, and that plaintiff would personally
pay the equity shares/stock subscriptions of defendant
with no cost to the latter.
4. That because of defendant’s expertise in the trade
including the marketing aspects, he would be the President
and General Manager, and plaintiff the Chairman of the
Board.
5. That considering their past and trustworthy relations,
they would maintain such relations in the joint venture
without any mental reservation for their common benefit
and success of the business.
14. Having mutually agreed on the above arrangements,
the single proprietorship of plaintiff was immediately spun-
off into a corporation now known as Mabuhay
Broadcasting System, Inc. The incorporators are plaintiff
and his family members/nominees controlling jointly 54%
of the stocks and defendant Arcadio M. Carandang
controlling singly 46% as previously agreed.43
Meanwhile, paragraphs 3 and 4 of private respondents’ Reply dated
29 July 1992 state in full:
3. Plaintiffs admits the allegation in paragraph 13.1 of the Answer
only insofar the plaintiff and defendant Arcadio M. Carandang
organized a corporation known as Mabuhay Broadcasting Systems,
Inc. Plaintiff specifically denies the other allegations in paragraph 13
of the Answer, the same being devoid of any legal or factual bases.
The truth of the matter is that defendant Arcadio M. Carandang was
not able to pay plaintiff the agreed amount of the lease for a
number of months forcing the plaintiff to terminate lease.
Additionally, the records would show that it was the defendant
Arcadio M. Carandang who proposed a joint venture with the
plaintiff.
It appears that plaintiff agreed to the formation of the corporation
principally because of a directive of then President Marcos
indicating the need to broaden the ownership of radio broadcasting
stations. The plaintiff owned the franchise, the radio transmitter,
the antenna tower, the building containing the radio transmitter
and other equipment. Verily, he would be placed in a great
disadvantage if he would still have to personally pay for the shares
of defendant Arcadio M. Carandang.
4. Plaintiff admits the allegations in paragraph 14 of the Answer.44
In effect, the spouses Carandang are relying on the fact that Quirino
de Guzman stated that he admitted paragraph 14 of the Answer,
which incidentally contained the opening clause "(h)aving mutually
agreed on the above arrangements, x x x."
Admissions, however, should be clear and unambiguous. This
purported admission by Quirino de Guzman reeks of ambiguity, as
the clause "(h)aving mutually agreed on the above arrangements,"
seems to be a mere introduction to the statement that the single
proprietorship of Quirino de Guzman had been converted into a
corporation. If Quirino de Guzman had meant to admit paragraph
13.3, he could have easily said so, as he did the other paragraphs he
categorically admitted. Instead, Quirino de Guzman expressly stated
the opposite: that "(p)laintiff specifically denies the other
allegations of paragraph 13 of the Answer."45 The Reply furthermore
states that the only portion of paragraph 13 which Quirino de
Guzman had admitted is paragraph 13.1, and only insofar as it said
that Quirino de Guzman and Arcardio Carandang organized
Mabuhay Broadcasting Systems, Inc.46
All the foregoing considered, we hold that Quirino de Guzman had
not admitted the alleged pre-incorporation agreement. As there was
no admission, and as the testimony of Arcardio Carandang was
stricken off the record, we are constrained to rule that there was no
pre-incorporation agreement rendering Quirino de Guzman liable
for the spouses Carandang’s stock subscription. The payment by the
spouses de Guzman of the stock subscriptions of the spouses
Carandang are therefore by way of loan which the spouses
Carandang are liable to pay.1âwphi1
Whether or not the liability of the spouses Carandang is joint and
solidary
Finally, the Court of Appeals also upheld the RTC Decision insofar as
it decreed a solidary liability. According to the Court of Appeals:
With regards (sic) the tenth assigned error, [the spouses Carandang]
contend that:
"There is absolutely no evidence, testimonial or documentary,
showing that the purported obligation of [the spouses Carandang] is
joint and solidary. x x x
"Furthermore, the purported obligation of [the spouses Carandang]
does not at all qualify as one of the obligations required by law to be
solidary x x x."
It is apparent from the facts of the case that [the spouses
Carandang] were married way before the effectivity of the Family
Code hence; their property regime is conjugal partnership under the
Civil Code.
It must be noted that for marriages governed by the rules of
conjugal partnership of gains, an obligation entered into by the
husband and wife is chargeable against their conjugal partnership
and it is the partnership, which is primarily bound for its repayment.
Thus, when the spouses are sued for the enforcement of the
obligation entered into by them, they are being impleaded in their
capacity as representatives of the conjugal partnership and not as
independent debtors, such that the concept of joint and solidary
liability, as between them, does not apply.47
The Court of Appeals is correct insofar as it held that when the
spouses are sued for the enforcement of the obligation entered into
by them, they are being impleaded in their capacity as
representatives of the conjugal partnership and not as independent
debtors. Hence, either of them may be sued for the whole amount,
similar to that of a solidary liability, although the amount is
chargeable against their conjugal partnership property. Thus, in the
case cited by the Court of Appeals, Alipio v. Court of Appeals, 48 the
two sets of defendant-spouses therein were held liable for
₱25,300.00 each, chargeable to their respective conjugal
partnerships.
WHEREFORE, the Decision of the Court of Appeals, affirming the
judgment rendered against the spouses Carandang, is hereby
AFFIRMED with the following MODIFICATION: The spouses
Carandang are ORDERED to pay the following amounts from their
conjugal partnership properties:

(1) ₱336,375.00 representing the spouses Carandang’s loan

to Quirino de Guzman; and

(2) Interest on the preceding amount at the rate of twelve

percent (12%) per annum from 5 June 1992 when the
complaint was filed until the principal amount can be fully
paid; and

(3) ₱20,000.00 as attorney’s fees.

No costs.

SO ORDERED.
FIRST DIVISION
G.R. No. 160762 May 3, 2006
Spouses JOSEPHINE MENDOZA GO & HENRY GO, Petitioners,
vs.
LEONARDO YAMANE, Respondent.
DECISION
PANGANIBAN, CJ:
Property purchased by spouses during the existence of their
marriage is presumed to be conjugal in nature. This presumption
stands, absent any clear, categorical, and convincing evidence that
the property is paraphernal. Conjugal property cannot be held liable
for the personal obligation contracted by one spouse, unless some
advantage or benefit is shown to have accrued to the conjugal
partnership.
The Case
Before the Court is a Petition for Review1 under Rule 45 of the Rules
of Court, challenging the November 22, 2002 Decision 2 and the
September 17, 2003 Resolution3 of the Court of Appeals (CA) in CA-
GR CV No. 60939. The assailed Decision disposed as follows:
"WHEREFORE, premises considered, the Decision appealed from is
hereby REVERSED and SET ASIDE. The Sheriff's Certificate of Sale
dated August 12, 1981 and the Final Sheriff's Certificate of Sale
dated August 26, 1982 are declared NULL and VOID."4
The CA denied reconsideration in its September 17, 2003
Resolution.
The Facts
The undisputed factual findings of the CA are as follows:
"Involved in the suit is a 750 square meters (sic) parcel of lot located
at Res. Sec. 'K', Baguio City, registered in the name of Muriel Pucay
Yamane, wife of Leonardo Yamane, [respondent] herein, under
Transfer Certificate of Title No. 12491.
"As a result of a motion for execution of a charging lien filed by Atty.
Guillermo F. De Guzman in Civil Case No. 1841, entitled 'Florence
Pucay De Gomez, Elsie Pucay Kiwas and Muriel Pucay Yamane v.
Cypress Corporation,' which said counsel handled for the plaintiffs
therein, hereinafter collectively referred to as the Pucay sisters, the
subject property was levied to satisfy the lien for attorney's fees in
the amount of P10,000. The said property was scheduled to be sold
at public auction on August 11, 1981.
"Four days prior to the auction sale, [respondent] filed a Third-Party
Claim with the Office of the Provincial Sheriff to stop the public
auction on the ground that the subject property is conjugal property
and, therefore, should not be held answerable for the personal
obligation of the Pucay sisters. However, the Sheriff proceeded with
the auction sale despite [respondent's] protest. The subject
property was sold to spouses Josephine [and] Henry Go (or
[petitioners]) as highest bidder. No redemption having been made
during the one-year period, a Final Sheriff's Certificate of Sale was
eventually issued on August 26, 1982 conveying and transferring the
said property to [petitioners].
"On September 4, 1984, [respondent] filed a Complaint with the
Regional Trial Court of Baguio City, docketed as Civil Case No. 417-R,
against [petitioners] and Sheriff Melgar for annulment and
cancellation of auction sale upon the same ground stated in the
abovementioned third-party claim. Citing the Order of the Regional
Trial Court of Baguio City, Branch V in LRC Case No. 2288, which
ordered the cancellation of TCT No. 12491 and directed the Register
of Deeds to issue new title in the name of Josephine Go x x x,
[petitioners] moved to dismiss the complaint on the ground of res
judicata. In the Order dated November 28, 1984, the motion was
denied by the trial court.
"In their Answer filed on December 10, 1984, [petitioners] denied
the material allegations of the complaint and interposed the
following special affirmative defenses: that the cause of action was
barred by prior judgment; that [respondent] has not pursued any
lawful remedy to annul the execution proceeding; that there is no
flaw or irregularity in the auction sale; and that since the execution
sale was made in accordance with Section 21, Rule 39 of the Revised
Rules of Court, it is deemed final and any irregularity committed in
the course thereof will not vitiate its validity.
"On December 28, 1984, Muriel likewise lodged a Complaint for
Damages, docketed as Civil Case No. 505-R, against [petitioners] and
Atty. Guillermo De Guzman alleging, in gist, fraud,
misrepresentation, manipulation and unlawful acts of the
defendants in causing the levy of the subject property with an
estimated commercial value of P200,000 as against a charging lien in
the amount of P10,000.
"In its May 27, 1985 Order, the trial court ordered the joint hearing
of Civil Cases Nos. 417-R and 505-R. On August 30, 1985, Muriel was
declared non-suited for failure to appear in the hearing despite due
notice. As a consequence, Civil Case No. 505-R was dismissed on
October 15, 1985."5
In its Decision6 dated March 25, 1998, the Regional Trial Court (RTC)
of Baguio City, Branch 4, held that the subject parcel of land was the
paraphernal property of the late Muriel Pucay Yamane -- spouse of
respondent -- and was not their conjugal property. The appearance
of his name on the Transfer Certificate of Title (TCT) was deemed to
be merely descriptive of the civil status of the registered owner, his
late wife. Hence, finding that he had no legal standing to question
the auction sale or to pray for its annulment or cancellation, the RTC
dismissed the case for lack of merit.
Upon receipt of the RTC Decision on April 8, 1998, respondent filed
a Motion,7 in which he prayed that he be allowed to file his Motion
for Reconsideration of the Decision, on or before May 30, 1998. The
trial court granted8 his Motion; received the Motion for
Reconsideration,9 which was filed on May 28, 1998; and eventually
denied it in its Order dated June 5, 1998.10 He then elevated the
matter to the CA on June 15, 1998.
Ruling of the Court of Appeals
The CA reversed the RTC's Decision. The Sheriff's Certificate of Sale
dated August 12, 1981, and the Final Sheriff's Certificate of Sale
dated August 26, 1982, were declared null and void.
According to the appellate court, property acquired during marriage
is presumed to be conjugal, unless the exclusive funds of one spouse
are shown to have been used for the purpose. That the land was
acquired during the spouses' coverture was sufficiently established
by the TCT and the Deed of Absolute Sale, both indicating that
Muriel Pucay Yamane was "married to Leonardo Yamane"; and by
the undisputed testimony of the previous owner, Eugene Pucay.
Because of petitioners' failure to establish that the land in question
had been acquired by Muriel using her exclusive funds, the CA
concluded that the contested land was conjugal property.
The appellate court further held thus:
"x x x [T]he disputed property being a conjugal property of
[respondent] and his wife, and absent any showing of some
advantage or benefit that accrued to their conjugal partnership from
the transaction between the Pucay sisters and Atty. De Guzman, the
public auction sale of the subject property in favor of [petitioners] is
null and void."11
Hence, this Petition.12
Issues
Petitioners submit the following issues for our consideration:
"I. The Court of Appeals gravely erred in taking cognizance
of the appeal and in not dismissing the same, despite the
fact that the respondent failed to perfect his appeal within
the 15-day reglementary period set by the Rules of Court.
"II. The Court of Appeals gravely erred in declaring the
subject property as conjugal property, despite the
existence of clear evidence showing that the subject
property is the exclusive paraphernal property of Muriel
who, even during her lifetime, always claimed the said
property as her own exclusive paraphernal property and
not as property co-owned with her husband, the
respondent herein.1avvphil.net
"III. The Court of Appeals, assuming, ex grati argumenti,
that the subject property is conjugal property between
respondent and Muriel, gravely erred in ruling that the
same cannot answer for the charging lien of Atty. Guillermo
de Guzman in Civil Case No. 1841."13
In the main, they posit two issues. They raise, first, the procedural
question of whether the CA erred in giving due course to
respondent's lapsed appeal; and, second, the substantive issue of
whether the subject property is conjugal or paraphernal.
The Court's Ruling
The Petition has no merit.
Procedural Issue:
Whether Respondent's Appeal Should Be Given Due Course
Petitioners contend that the CA erred in giving due course to the
appeal filed by respondent beyond the 15-day reglementary period.
Concededly, he received a copy of the RTC Decision on April 8, 1998.
He had, therefore, until April 23, 1998, within which to file an
appeal. Prior to the latter date, however, he moved that his new
counsel be allowed to file a motion for reconsideration on May 30,
1998. It was eventually filed on May 28, 1998, but was denied.
Respondent subsequently filed a Notice of Appeal on June 15, 1998.
By this time, the original period to appeal had expired. It should be
clear that the Rules prohibit an extension to file a motion for
reconsideration.14
The perfection of an appeal in the manner and within the period
prescribed by the Rules of Civil Procedure is not only mandatory, but
also jurisdictional; and the lapse of the appeal period of fifteen days
deprives a court of the jurisdiction to alter a final judgment.15
There have been exceptions, however, in which the Court dispensed
with technical infirmities and gave due course to tardy appeals. In
some of those instances, the presence of any justifying circumstance
recognized by law -- such as fraud, accident, mistake or excusable
negligence -- properly vested the judge with discretion to approve
or admit an appeal filed out of time.16 In other instances, lapsed
appeals were allowed in order to serve substantial justice, upon
consideration of a) matters of life, liberty, honor or property; b) the
existence of special or compelling circumstances; c) the merits of
the case; d) causes not entirely attributable to the fault or
negligence of the party that would be favored by the suspension of
the rules; e) the failure to show that the review being sought was
merely frivolous and dilatory; and f) the fact that the other party
would not be unjustly prejudiced.17
Indeed, in some exceptional cases, the Court has allowed the
relaxation of the rules regulating the reglementary periods of
appeal. These exceptions were cited in Manila Memorial Park
Cemetery v. CA,18 from which we quote:
"In Ramos vs. Bagasao, the Court excused the delay of four days in
the filing of the notice of appeal because the questioned decision of
the trial court had been served upon appellant Ramos at a time
when her counsel of record was already dead. The new counsel
could only file the appeal four days after the prescribed
reglementary period was over. In Republic vs. Court of Appeals, the
Court allowed the perfection of an appeal by the Republic despite
the delay of six days to prevent a gross miscarriage of justice since
the Republic stood to lose hundreds of hectares of land already
titled in its name and had since then been devoted for public
purposes. In Olacao vs. National Labor Relations Commission, a
tardy appeal was accepted considering that the subject matter in
issue had theretofore been judicially settled with finality in another
case, and a dismissal of the appeal would have had the effect of the
appellant being ordered twice to make the same reparation to the
appellee."19
We believe that a suspension of the Rules is similarly warranted in
the present controversy. We have carefully studied the merits of the
case and noted that the review being sought has not been shown to
be merely frivolous and dilatory. The Court has come to the
conclusion that the Decision of the RTC, Branch 4 (in Civil Case No.
417-R), must be set aside. It would be far better and more prudent
to attain the ends of justice, rather than to dispose of the case on
technicality and cause grave injustice in the process. Thus, we would
rather excuse a technical lapse and afford respondent a review of
the case on appeal.
Substantive Issue:
Paraphernal or Conjugal?
The purchase of the property had been concluded in 1967, before
the Family Code took effect on August 3, 1988.20Accordingly, the
transaction was aptly covered by the then governing provisions of
the New Civil Code. On the latter basis, therefore, we shall resolve
the issue of the nature of the contested property.
Article 160 of the New Civil Code provides that "all property of the
marriage is presumed to belong to the conjugal partnership, unless
it be proved that it pertains exclusively to the husband or to the
wife."21 As a conditio sine qua non for the operation of this article in
favor of the conjugal partnership,22 the party who invokes the
presumption must first prove that the property was acquired during
the marriage.23
In other words, the presumption in favor of conjugality does not
operate if there is no showing of when the property alleged to be
conjugal was acquired.24 Moreover, the presumption may be
rebutted only with strong, clear, categorical and convincing
evidence.25 There must be strict proof of the exclusive ownership of
one of the spouses,26 and the burden of proof rests upon the party
asserting it.27
The CA committed no error in declaring that the parcel of land
belonged to the conjugal partnership of Spouses Muriel and
Leonardo Yamane. They acquired it from Eugene Pucay on February
27, 1967,28 or specifically during the marriage.29 We then follow the
rule that proof of the acquisition of the subject property during a
marriage suffices to render the statutory presumption operative. It
is clear enough that the presently disputed piece of land pertains to
the conjugal partnership.
Petitioners concede that the property was acquired during the
subsistence of the marriage of Muriel to respondent. 30 Nonetheless,
they insist that it belonged exclusively to her for the following
reasons:
First. Respondent never denied nor opposed her claim in
Civil Case No. 505-R, which she had filed during her
lifetime; or in AG-GR Sp. No. 01616 (entitled "Muriel Pucay
Yamane v. Josephine Go"), that the disputed parcel of land
was her exclusive paraphernal property. They allege that
his failure to file a denial or opposition in those cases is
tantamount to a judicial admission that militates against his
belated claim.
Second. The Deed of Absolute Sale of the property is in the
sole name of Muriel. Petitioners posit that, had the spouses
jointly purchased this piece of land, the document should
have indicated this fact or carried the name of respondent
as buyer.
Third. The failure of respondent to redeem the parcel of
land within the redemption period after the auction sale
indicated that he was not its co-owner.
We will discuss the three arguments seriatim.
Unilateral Declaration
Respondent's interest cannot be prejudiced by the claim of Muriel in
her Complaint in Civil Case No. 505-R that the subject parcel of land
was her paraphernal property. Significantly, the nature of a property
-- whether conjugal or paraphernal -- is determined by law and not
by the will of one of the spouses.31 Thus, no unilateral declaration by
one spouse can change the character of a conjugal property.32
Besides, the issue presented in Civil Case No. 505-R was not the
nature of the subject piece of land being levied upon, but whether
Atty. Guillermo de Guzman was entitled to a charging lien. In that
case, Muriel claimed that she had not officially retained him as
counsel, and that no lawyer-client relationship had been established
between them.33
Deed and Title in the Name of One Spouse
Further, the mere registration of a property in the name of one
spouse does not destroy its conjugal nature.34Hence, it cannot be
contended in the present case that, simply because the title and the
Deed of Sale covering the parcel of land were in the name of Muriel
alone, it was therefore her personal and exclusive property. In
concluding that it was paraphernal, the trial court's reliance on
Stuart v. Yatco35 was clearly erroneous.
As stated earlier, to rebut the presumption of the conjugal nature of
the property, petitioners must present clear and convincing
evidence. We affirm and quote below, for easy reference, the
relevant dispositions of the CA:
"x x x. We are unable to go along with [petitioners'] contention that
the subject property was acquired by Muriel with her exclusive
funds. Mere registration of the contested property in the name of
the wife is not sufficient to establish the paraphernal nature of the
property. This reminds Us of the teaching in the recent case
of Diancin v. Court of Appeals, that all the property acquired by the
spouses, regardless of in whose name the same is registered, during
the marriage is presumed to belong to the conjugal partnership of
gains, unless it is proved that it pertains exclusively to the husband
or to the wife. To quote:
"As a general rule, all property acquired by the spouses, regardless
of in whose name the same is registered, during the marriage is
presumed to belong to the conjugal partnership of gains, unless it is
proved that it pertains exclusively to the husband or to the wife. In
the case at bar, the fishpond lease right is not paraphernal having
been acquired during the coverture of the marriage between
Matilde and Tiburcio, which was on April 9, 1940. The fact that the
grant was solely in the name of Matilde did not make the property
paraphernal property. What was material was the time the fishpond
lease right was acquired by the grantee, and that was during the
lawful existence of Matilde's marriage to Tiburcio.
"x x x [T]his presumption is rebuttable, but only with strong, clear
and convincing evidence. The burden of proving that the property
belongs exclusively to the wife rests upon the party asserting it.
Mere assertion of the property's paraphernal nature is not
sufficient."
"The record as well as the foregoing established jurisprudence lead
us to conclude that the contested property was indeed acquired
during the marriage of herein [respondent] and Muriel. To prove
that it is nonetheless paraphernal property, it is incumbent upon
[petitioners] to adduce strong, clear and convincing evidence that
Muriel bought the same with her exclusive funds. [Petitioners] failed
to discharge the burden. Nowhere in the evidence presented by
them do We find any indication that the land in question was
acquired by Muriel with her exclusive funds. The presumption not
having been overthrown, the conclusion is that the contested land is
conjugal property."36
Non-Redemption After the Auction Sale
The non-redemption of the property by respondent within the
period prescribed by law did not, in any way, indicate the absence of
his right or title to it. Contrary to petitioners' allegation, the fact is
that he filed a Third-Party Claim37with the sheriff, upon learning of
the levy and impending auction sale. This fact was specifically
admitted by petitioners.38 Respondent claimed that the parcel of
land was conjugal, and that he could not answer for the separate
obligation of his wife and her sisters.39 Notwithstanding his claim,
the disputed piece of land was sold at a public auction on August 11,
1981. Consequently issued were a Sheriff's Certificate of Sale dated
August 12, 1981, and a Final Sheriff's Certificate of Sale dated
August 26, 1982.40
Likewise, in his Opposition (Answer) to the Petition in LRC File Adm.
Case No. 2288,41 respondent raised the issue of the conjugal nature
of the property and reserved his right to file an independent action
to annul the auction sale. In its March 30, 1983 Order,42 however,
Branch 5 of the RTC of Baguio City did not rule on either the actual
ownership or the nature of the parcel of land. Rather, it granted the
Petition to issue a new certificate of title in favor of Petitioner
Josephine Mendoza Go. It found that, under Section 75 of
Presidential Decree 1529, respondent had no legal standing to
question the auction sale, because he was not the registered owner
of the property. Instead, his right to prove his claim in a separate
and independent action was upheld.43 Thus, he instituted the
present case for annulment and cancellation of the auction sale.
The foregoing points clearly explain the failure of respondent to
redeem the property. Misplaced is petitioners' emphasis on his
failure to do so within the period required by law, because
redemption in this case would have been inconsistent with his claim
that the sale was invalid.44 Redemption would have served as an
implied admission of the regularity of the sale and estopped him
from later impugning its validity on that ground.45
Since petitioners have failed to present convincing evidence that the
property is paraphernal, the presumption that it is conjugal
therefore stands. The next question before us is, whether the
charging lien of Atty. de Guzman may be properly enforced against
the piece of land in question.
Charging Lien Not Chargeable Against Conjugal Property
It is indisputable that the services of Atty. de Guzman were acquired husband's failure to deliver the needed sum; 51 when administration
during the marriage of respondent and Muriel. The lawyer's legal of the conjugal partnership is transferred to the wife by the
services were engaged to recover from Cypress Corporation (in Civil courts52 or by the husband;53 or when the wife gives moderate
Case No. 1841) the balance of the purchase price of the sale of the donations for charity.54 Failure to establish any of these
exclusive property of Muriel and her sisters. 46 The recovery was circumstances in the present case means that the conjugal asset
done during the marriage.47 may not be bound to answer for Muriel's personal obligation.
The CA elucidated on this matter as follows: The power of the court in executing judgments extends only to
properties unquestionably belonging to the judgment debtor
"x x x. The contract or transaction between Atty. De Guzman and alone.55 In this case, therefore, the property -- being conjugal in
the Pucay sisters appears to have been incurred for the exclusive nature -- cannot be levied upon.56
interest of the latter. Muriel was acting privately for her exclusive
interest when she joined her two sisters in hiring the services of WHEREFORE, the Petition is DENIED, and the assailed Decision and
Atty. De Guzman to handle a case for them. Accordingly, whatever Resolution AFFIRMED. Costs against petitioners.
expenses were incurred by Muriel in the litigation for her and her
sisters' private and exclusive interests, are her exclusive SO ORDERED.
responsibility and certainly cannot be charged against the contested
conjugal property.
"Even on the remote assumption that the conjugal property could
be held liable, levy on execution of the same property should still be
denied in accordance with the ruling in Luzon Surety Co., Inc. v. De
Garcia that before a conjugal property could be held liable for the
obligation contracted by a spouse, there must be a showing of some
advantage or benefit that accrued to the conjugal partnership.
Concededly, the burden is on the [petitioners] to prove that the
services rendered by Atty. De Guzman in handling Civil Case No.
1841 for the Pucay sisters had, somehow, redounded to the benefit
of the conjugal partnership of herein [respondent] and Muriel. This
onus, [petitioners], however, failed to discharge." 48
We find no reason to deviate from the CA's findings, which are
amply supported by evidence. The expenses incurred by Muriel for
the recovery of the balance of the purchase price of her paraphernal
property are her exclusive responsibility. 49 This piece of land may
not be used to pay for her indebtedness, because her obligation has
not been shown to be one of the charges against the conjugal
partnership.50 Moreover, her rights to the property are merely
inchoate prior to the liquidation of the conjugal partnership.
Under the New Civil Code, a wife may bind the conjugal partnership
only when she purchases things necessary for the support of the
family, or when she borrows money for that purpose upon her
SECOND DIVISION
G.R. No. 124642 February 23, 2004
ALFREDO CHING and ENCARNACION CHING, petitioners
vs.
THE HON. COURT OF APPEALS and ALLIED BANKING
CORPORATION, respondents.
DECISION
CALLEJO, SR., J.:
This petition for review, under Rule 45 of the Revised Rules of Court,
assails the Decision1 of the Court of Appeals (CA) dated November
27, 1995 in CA-G.R. SP No. 33585, as well as the Resolution2 on April
2, 1996 denying the petitioners’ motion for reconsideration. The
impugned decision granted the private respondent’s petition
for certiorariand set aside the Orders of the trial court dated
December 15, 19933 and February 17, 19944 nullifying the
attachment of 100,000 shares of stocks of the Citycorp Investment
Philippines under the name of petitioner Alfredo Ching.
The following facts are undisputed:
On September 26, 1978, the Philippine Blooming Mills Company,
Inc. (PBMCI) obtained a loan of ₱9,000,000.00 from the Allied
Banking Corporation (ABC). By virtue of this loan, the PBMCI,
through its Executive Vice-President Alfredo Ching, executed a
promissory note for the said amount promising to pay on December
22, 1978 at an interest rate of 14% per annum.5 As added security
for the said loan, on September 28, 1978, Alfredo Ching, together
with Emilio Tañedo and Chung Kiat Hua, executed a continuing
guaranty with the ABC binding themselves to jointly and severally
guarantee the payment of all the PBMCI obligations owing the ABC
to the extent of ₱38,000,000.00.6 The loan was subsequently
renewed on various dates, the last renewal having been made on
December 4, 1980.7
Earlier, on December 28, 1979, the ABC extended another loan to
the PBMCI in the amount of ₱13,000,000.00 payable in eighteen
months at 16% interest per annum. As in the previous loan, the
PBMCI, through Alfredo Ching, executed a promissory note to
evidence the loan maturing on June 29, 1981.8 This was renewed
once for a period of one month.9
The PBMCI defaulted in the payment of all its loans. Hence, on
August 21, 1981, the ABC filed a complaint for sum of money with
prayer for a writ of preliminary attachment against the PBMCI to
collect the ₱12,612,972.88 exclusive of interests, penalties and
other bank charges. Impleaded as co-defendants in the complaint
were Alfredo Ching, Emilio Tañedo and Chung Kiat Hua in their
capacity as sureties of the PBMCI.
The case was docketed as Civil Case No. 142729 in the Regional Trial
Court of Manila, Branch XVIII.10 In its application for a writ of
preliminary attachment, the ABC averred that the "defendants are
guilty of fraud in incurring the obligations upon which the present
action is brought11 in that they falsely represented themselves to be
in a financial position to pay their obligation upon maturity
thereof."12 Its supporting affidavit stated, inter alia, that the
"[d]efendants have removed or disposed of their properties, or [are]
ABOUT to do so, with intent to defraud their creditors."13
On August 26, 1981, after an ex-parte hearing, the trial court issued
an Order denying the ABC’s application for a writ of preliminary
attachment. The trial court decreed that the grounds alleged in the
application and that of its supporting affidavit "are all conclusions of
fact and of law" which do not warrant the issuance of the writ
prayed for.14On motion for reconsideration, however, the trial
court, in an Order dated September 14, 1981, reconsidered its
previous order and granted the ABC’s application for a writ of
preliminary attachment on a bond of ₱12,700,000. The order, in
relevant part, stated:
With respect to the second ground relied upon for the grant of the
writ of preliminary attachment ex-parte, which is the alleged
disposal of properties by the defendants with intent to defraud
creditors as provided in Sec. 1(e) of Rule 57 of the Rules of Court,
the affidavits can only barely justify the issuance of said writ as
against the defendant Alfredo Ching who has allegedly bound
himself jointly and severally to pay plaintiff the defendant
corporation’s obligation to the plaintiff as a surety thereof.
WHEREFORE, let a writ of preliminary attachment issue as against
the defendant Alfredo Ching requiring the sheriff of this Court to
attach all the properties of said Alfredo Ching not exceeding
₱12,612,972.82 in value, which are within the jurisdiction of this
Court and not exempt from execution upon, the filing by plaintiff of
a bond duly approved by this Court in the sum of Twelve Million
Seven Hundred Thousand Pesos (₱12,700,000.00) executed in favor
of the defendant Alfredo Ching to secure the payment by plaintiff to
him of all the costs which may be adjudged in his favor and all
damages he may sustain by reason of the attachment if the court
shall finally adjudge that the plaintiff was not entitled thereto.
SO ORDERED.15
Upon the ABC’s posting of the requisite bond, the trial court issued a
writ of preliminary attachment. Subsequently, summonses were
served on the defendants,16 save Chung Kiat Hua who could not be
found.
Meanwhile, on April 1, 1982, the PBMCI and Alfredo Ching jointly
filed a petition for suspension of payments with the Securities and
Exchange Commission (SEC), docketed as SEC Case No. 2250, at the
same time seeking the PBMCI’s rehabilitation.17
On July 9, 1982, the SEC issued an Order placing the PBMCI’s
business, including its assets and liabilities, under rehabilitation
receivership, and ordered that "all actions for claims listed in
Schedule "A" of the petition pending before any court or tribunal
are hereby suspended in whatever stage the same may be until
further orders from the Commission."18 The ABC was among the
PBMCI’s creditors named in the said schedule.
Subsequently, on January 31, 1983, the PBMCI and Alfredo Ching
jointly filed a Motion to Dismiss and/or motion to suspend the
proceedings in Civil Case No. 142729 invoking the PBMCI’s pending
application for suspension of payments (which Ching co-signed) and
over which the SEC had already assumed jurisdiction. 19 On February
4, 1983, the ABC filed its Opposition thereto.20
In the meantime, on July 26, 1983, the deputy sheriff of the trial
court levied on attachment the 100,000 common shares of Citycorp
stocks in the name of Alfredo Ching.21
Thereafter, in an Order dated September 16, 1983, the trial court
partially granted the aforementioned motion by suspending the
proceedings only with respect to the PBMCI. It denied Ching’s
motion to dismiss the complaint/or suspend the proceedings and
pointed out that P.D. No. 1758 only concerns the activities of
corporations, partnerships and associations and was never intended
to regulate and/or control activities of individuals. Thus, it directed
the individual defendants to file their answers.22
Instead of filing an answer, Ching filed on January 14, 1984 a Motion
to Suspend Proceedings on the same ground of the pendency of SEC
Case No. 2250. This motion met the opposition from the ABC.23
On January 20, 1984, Tañedo filed his Answer with counterclaim and
cross-claim.24 Ching eventually filed his Answer on July 12, 1984.25
On October 25, 1984, long after submitting their answers, Ching
filed an Omnibus Motion,26 again praying for the dismissal of the
complaint or suspension of the proceedings on the ground of the
July 9, 1982 Injunctive Order issued in SEC Case No. 2250. He
averred that as a surety of the PBMCI, he must also necessarily
benefit from the defenses of his principal. The ABC opposed Ching’s
omnibus motion.
Emilio Y. Tañedo, thereafter, filed his own Omnibus
Motion27 praying for the dismissal of the complaint, arguing that the
ABC had "abandoned and waived" its right to proceed against the
continuing guaranty by its act of resorting to preliminary
attachment.
On December 17, 1986, the ABC filed a Motion to Reduce the
amount of his preliminary attachment bond from ₱12,700,000 to
₱6,350,000.28 Alfredo Ching opposed the motion,29 but on April 2,
1987, the court issued an Order setting the incident for further
hearing on May 28, 1987 at 8:30 a.m. for the parties to adduce
evidence on the actual value of the properties of Alfredo Ching
levied on by the sheriff.30
On March 2, 1988, the trial court issued an Order granting the
motion of the ABC and rendered the attachment bond of
₱6,350,000.31
On November 16, 1993, Encarnacion T. Ching, assisted by her
husband Alfredo Ching, filed a Motion to Set Aside the levy on
attachment. She alleged inter alia that the 100,000 shares of stocks
levied on by the sheriff were acquired by her and her husband
during their marriage out of conjugal funds after the Citycorp
Investment Philippines was established in 1974. Furthermore, the
indebtedness covered by the continuing guaranty/comprehensive
suretyship contract executed by petitioner Alfredo Ching for the
account of PBMCI did not redound to the benefit of the conjugal
partnership. She, likewise, alleged that being the wife of Alfredo
Ching, she was a third-party claimant entitled to file a motion for the
release of the properties.32 She attached therewith a copy of her
marriage contract with Alfredo Ching.33
The ABC filed a comment on the motion to quash preliminary
attachment and/or motion to expunge records, contending that:
2.1 The supposed movant, Encarnacion T. Ching, is not a
party to this present case; thus, she has no personality to
file any motion before this Honorable Court;
2.2 Said supposed movant did not file any Motion for
Intervention pursuant to Section 2, Rule 12 of the Rules of
Court;
2.3 Said Motion cannot even be construed to be in the
nature of a Third-Party Claim conformably with Sec. 14,
Rule 57 of the Rules of Court.
3. Furthermore, assuming in gracia argumenti that the supposed
movant has the required personality, her Motion cannot be acted
upon by this Honorable Court as the above-entitled case is still in
the archives and the proceedings thereon still remains suspended.
And there is no previous Motion to revive the same. 34
The ABC also alleged that the motion was barred by prescription or
by laches because the shares of stocks were in custodia legis.
During the hearing of the motion, Encarnacion T. Ching adduced in
evidence her marriage contract to Alfredo Ching to prove that they
were married on January 8, 1960;35 the articles of incorporation of
Citycorp Investment Philippines dated May 14, 1979;36 and, the
General Information Sheet of the corporation showing that
petitioner Alfredo Ching was a member of the Board of Directors of
the said corporation and was one of its top twenty stockholders.
On December 10, 1993, the Spouses Ching filed their
Reply/Opposition to the motion to expunge records.
Acting on the aforementioned motion, the trial court issued on
December 15, 1993 an Order37 lifting the writ of preliminary
attachment on the shares of stocks and ordering the sheriff to
return the said stocks to the petitioners. The dispositive portion
reads:
WHEREFORE, the instant Motion to Quash Preliminary Attachment,
dated November 9, 1993, is hereby granted. Let the writ of
preliminary attachment subject matter of said motion, be quashed
and lifted with respect to the attached 100,000 common shares of
stock of Citycorp Investment Philippines in the name of the
defendant Alfredo Ching, the said shares of stock to be returned to
him and his movant-spouse by Deputy Sheriff Apolonio A. Golfo who
effected the levy thereon on July 26, 1983, or by whoever may be
presently in possession thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a motion for the
reconsideration of the order but denied the same on February 17,
1994. The petitioner bank forthwith filed a petition for certiorari
with the CA, docketed as CA-G.R. SP No. 33585, for the nullification
of the said order of the court, contending that:
1. The respondent Judge exceeded his authority thereby
acted without jurisdiction in taking cognizance of, and
granting a "Motion" filed by a complete stranger to the
case.
2. The respondent Judge committed a grave abuse of
discretion in lifting the writ of preliminary attachment
without any basis in fact and in law, and contrary to
established jurisprudence on the matter.39
On November 27, 1995, the CA rendered judgment granting the
petition and setting aside the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition is GRANTED, hereby
setting aside the questioned orders (dated December 15, 1993 and
February 17, 1994) for being null and void.
SO ORDERED.40
The CA sustained the contention of the private respondent and set
aside the assailed orders. According to the CA, the RTC deprived the
private respondent of its right to file a bond under Section 14, Rule
57 of the Rules of Court. The petitioner Encarnacion T. Ching was
not a party in the trial court; hence, she had no right of action to
have the levy annulled with a motion for that purpose. Her remedy
in such case was to file a separate action against the private
respondent to nullify the levy on the 100,000 Citycorp shares of
stocks. The court stated that even assuming that Encarnacion T.
Ching had the right to file the said motion, the same was barred by
laches.
Citing Wong v. Intermediate Appellate Court,41 the CA ruled that the
presumption in Article 160 of the New Civil Code shall not apply
where, as in this case, the petitioner-spouses failed to prove the
source of the money used to acquire the shares of stock. It held that
the levied shares of stocks belonged to Alfredo Ching, as evidenced
by the fact that the said shares were registered in the corporate
books of Citycorp solely under his name. Thus, according to the
appellate court, the RTC committed a grave abuse of its discretion
amounting to excess or lack of jurisdiction in issuing the assailed
orders. The petitioners’ motion for reconsideration was denied by
the CA in a Resolution dated April 2, 1996.
The petitioner-spouses filed the instant petition for review on
certiorari, asserting that the RTC did not commit any grave abuse of
discretion amounting to excess or lack of jurisdiction in issuing the
assailed orders in their favor; hence, the CA erred in reversing the
same. They aver that the source of funds in the acquisition of the
levied shares of stocks is not the controlling factor when invoking
the presumption of the conjugal nature of stocks under Art.
160,42 and that such presumption subsists even if the property is
registered only in the name of one of the spouses, in this case,
petitioner Alfredo Ching.43 According to the petitioners, the
suretyship obligation was not contracted in the pursuit of the
petitioner-husband’s profession or business. 44 And, contrary to the
ruling of the CA, where conjugal assets are attached in a collection
suit on an obligation contracted by the husband, the wife should
exhaust her motion to quash in the main case and not file a separate
suit.45 Furthermore, the petitioners contend that under Art. 125 of
the Family Code, the petitioner-husband’s gratuitous suretyship is
null and void ab initio,46 and that the share of one of the spouses in
the conjugal partnership remains inchoate until the dissolution and
liquidation of the partnership.47
In its comment on the petition, the private respondent asserts that
the CA correctly granted its petition for certiorari nullifying the
assailed order. It contends that the CA correctly relied on the ruling
of this Court in Wong v. Intermediate Appellate Court. Citing Cobb-
Perez v. Lantin and G-Tractors, Inc. v. Court of Appeals, the private
respondent alleges that the continuing guaranty and suretyship
executed by petitioner Alfredo Ching in pursuit of his profession or
business. Furthermore, according to the private respondent, the
right of the petitioner-wife to a share in the conjugal partnership
property is merely inchoate before the dissolution of the
partnership; as such, she had no right to file the said motion to
quash the levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a) whether the petitioner-
wife has the right to file the motion to quash the levy on attachment
on the 100,000 shares of stocks in the Citycorp Investment
Philippines; (b) whether or not the RTC committed a grave abuse of
its discretion amounting to excess or lack of jurisdiction in issuing
the assailed orders.
On the first issue, we agree with the petitioners that the petitioner-
wife had the right to file the said motion, although she was not a
party in Civil Case No. 142729.48
In Ong v. Tating,49 we held that the sheriff may attach only those
properties of the defendant against whom a writ of attachment has
been issued by the court. When the sheriff erroneously levies on
attachment and seizes the property of a third person in which the
said defendant holds no right or interest, the superior authority of
the court which has authorized the execution may be invoked by the
aggrieved third person in the same case. Upon application of the
third person, the court shall order a summary hearing for the
purpose of determining whether the sheriff has acted rightly or
wrongly in the performance of his duties in the execution of the writ
of attachment, more specifically if he has indeed levied on
attachment and taken hold of property not belonging to the
plaintiff. If so, the court may then order the sheriff to release the
property from the erroneous levy and to return the same to the
third person. In resolving the motion of the third party, the court
does not and cannot pass upon the question of the title to the
property with any character of finality. It can treat the matter only
insofar as may be necessary to decide if the sheriff has acted
correctly or not. If the claimant’s proof does not persuade the court
of the validity of the title, or right of possession thereto, the claim
will be denied by the court. The aggrieved third party may also avail
himself of the remedy of "terceria" by executing an affidavit of his
title or right of possession over the property levied on attachment
and serving the same to the office making the levy and the adverse
party. Such party may also file an action to nullify the levy with
damages resulting from the unlawful levy and seizure, which should
be a totally separate and distinct action from the former case. The
above-mentioned remedies are cumulative and any one of them
may be resorted to by one third-party claimant without availing of
the other remedies.50
In this case, the petitioner-wife filed her motion to set aside the levy
on attachment of the 100,000 shares of stocks in the name of
petitioner-husband claiming that the said shares of stocks were
conjugal in nature; hence, not liable for the account of her husband
under his continuing guaranty and suretyship agreement with the
PBMCI. The petitioner-wife had the right to file the motion for said
relief.
On the second issue, we find and so hold that the CA erred in setting
aside and reversing the orders of the RTC. The private respondent,
the petitioner in the CA, was burdened to prove that the RTC
committed a grave abuse of its discretion amounting to excess or
lack of jurisdiction. The tribunal acts without jurisdiction if it does
not have the legal purpose to determine the case; there is excess of
jurisdiction where the tribunal, being clothed with the power to
determine the case, oversteps its authority as determined by law.
There is grave abuse of discretion where the tribunal acts in a
capricious, whimsical, arbitrary or despotic manner in the exercise
of its judgment and is equivalent to lack of jurisdiction.51
It was incumbent upon the private respondent to adduce a
sufficiently strong demonstration that the RTC acted whimsically in
total disregard of evidence material to, and even decide of, the
controversy before certiorari will lie. A special civil action for
certiorari is a remedy designed for the correction of errors of
jurisdiction and not errors of judgment. When a court exercises its
jurisdiction, an error committed while so engaged does not deprive
it of its jurisdiction being exercised when the error is committed.52
After a comprehensive review of the records of the RTC and of the
CA, we find and so hold that the RTC did not commit any grave
abuse of its discretion amounting to excess or lack of jurisdiction in
issuing the assailed orders.
Article 160 of the New Civil Code provides that all the properties
acquired during the marriage are presumed to belong to the
conjugal partnership, unless it be proved that it pertains exclusively
to the husband, or to the wife. In Tan v. Court of Appeals,53 we held
that it is not even necessary to prove that the properties were
acquired with funds of the partnership. As long as the properties
were acquired by the parties during the marriage, they are
presumed to be conjugal in nature. In fact, even when the manner
in which the properties were acquired does not appear, the
presumption will still apply, and the properties will still be
considered conjugal. The presumption of the conjugal nature of the
properties acquired during the marriage subsists in the absence of
clear, satisfactory and convincing evidence to overcome the same. 54
In this case, the evidence adduced by the petitioners in the RTC is
that the 100,000 shares of stocks in the Citycorp Investment
Philippines were issued to and registered in its corporate books in
the name of the petitioner-husband when the said corporation was
incorporated on May 14, 1979. This was done during the
subsistence of the marriage of the petitioner-spouses. The shares of
stocks are, thus, presumed to be the conjugal partnership property
of the petitioners. The private respondent failed to adduce evidence
that the petitioner-husband acquired the stocks with his exclusive
money.55 The barefaced fact that the shares of stocks were
registered in the corporate books of Citycorp Investment Philippines
solely in the name of the petitioner-husband does not constitute
proof that the petitioner-husband, not the conjugal partnership,
owned the same.56 The private respondent’s reliance on the rulings
of this Court in Maramba v. Lozano57 and Associated Insurance &
Surety Co., Inc. v. Banzon58 is misplaced. In the Maramba case, we
held that where there is no showing as to when the property was
acquired, the fact that the title is in the wife’s name alone is
determinative of the ownership of the property. The principle was
reiterated in the Associated Insurance case where the
uncontroverted evidence showed that the shares of stocks were
acquired during the marriage of the petitioners.
Instead of fortifying the contention of the respondents, the ruling of
this Court in Wong v. Intermediate Appellate Court59 buttresses the
case for the petitioners. In that case, we ruled that he who claims
that property acquired by the spouses during their marriage is not
conjugal partnership property but belongs to one of them as his
personal property is burdened to prove the source of the money
utilized to purchase the same. In this case, the private respondent
claimed that the petitioner-husband acquired the shares of stocks
from the Citycorp Investment Philippines in his own name as the
owner thereof. It was, thus, the burden of the private respondent to
prove that the source of the money utilized in the acquisition of the
shares of stocks was that of the petitioner-husband alone. As held
by the trial court, the private respondent failed to adduce evidence
to prove this assertion.
The CA, likewise, erred in holding that by executing a continuing
guaranty and suretyship agreement with the private respondent for
the payment of the PBMCI loans, the petitioner-husband was in the
exercise of his profession, pursuing a legitimate business. The
appellate court erred in concluding that the conjugal partnership is
liable for the said account of PBMCI under Article 161(1) of the New
Civil Code.
Article 161(1) of the New Civil Code (now Article 121[2 and 3]60 of
the Family Code of the Philippines) provides:
Art. 161. The conjugal partnership shall be liable for:
(1) All debts and obligations contracted by the husband for the
benefit of the conjugal partnership, and those contracted by the
wife, also for the same purpose, in the cases where she may legally
bind the partnership.
The petitioner-husband signed the continuing guaranty and
suretyship agreement as security for the payment of the loan
obtained by the PBMCI from the private respondent in the amount
of ₱38,000,000. In Ayala Investment and Development Corp. v.
Court of Appeals,61 this Court ruled "that the signing as surety is
certainly not an exercise of an industry or profession. It is not
embarking in a business. No matter how often an executive acted
on or was persuaded to act as surety for his own employer, this
should not be taken to mean that he thereby embarked in the
business of suretyship or guaranty."
For the conjugal partnership to be liable for a liability that should
appertain to the husband alone, there must be a showing that some
advantages accrued to the spouses. Certainly, to make a conjugal
partnership responsible for a liability that should appertain alone to
one of the spouses is to frustrate the objective of the New Civil Code
to show the utmost concern for the solidarity and well being of the
family as a unit. The husband, therefore, is denied the power to
assume unnecessary and unwarranted risks to the financial stability
of the conjugal partnership.62
In this case, the private respondent failed to prove that the conjugal
partnership of the petitioners was benefited by the petitioner-
husband’s act of executing a continuing guaranty and suretyship
agreement with the private respondent for and in behalf of PBMCI.
The contract of loan was between the private respondent and the
PBMCI, solely for the benefit of the latter. No presumption can be
inferred from the fact that when the petitioner-husband entered
into an accommodation agreement or a contract of surety, the
conjugal partnership would thereby be benefited. The private
respondent was burdened to establish that such benefit redounded
to the conjugal partnership.63
It could be argued that the petitioner-husband was a member of the
Board of Directors of PBMCI and was one of its top twenty
stockholders, and that the shares of stocks of the petitioner-
husband and his family would appreciate if the PBMCI could be
rehabilitated through the loans obtained; that the petitioner-
husband’s career would be enhanced should PBMCI survive because
of the infusion of fresh capital. However, these are not the benefits
contemplated by Article 161 of the New Civil Code. The benefits
must be those directly resulting from the loan. They cannot merely
be a by-product or a spin-off of the loan itself.64
This is different from the situation where the husband borrows
money or receives services to be used for his own business or
profession. In the Ayala case, we ruled that it is such a contract that
is one within the term "obligation for the benefit of the conjugal
partnership." Thus:
(A) If the husband himself is the principal obligor in the contract, i.e.,
he directly received the money and services to be used in or for his
own business or his own profession, that contract falls within the
term "… obligations for the benefit of the conjugal partnership."
Here, no actual benefit may be proved. It is enough that the benefit
to the family is apparent at the time of the signing of the contract.
From the very nature of the contract of loan or services, the family
stands to benefit from the loan facility or services to be rendered to
the business or profession of the husband. It is immaterial, if in the
end, his business or profession fails or does not succeed. Simply
stated, where the husband contracts obligations on behalf of the
family business, the law presumes, and rightly so, that such
obligation will redound to the benefit of the conjugal partnership. 65

The Court held in the same case that the rulings of the Court in
Cobb-Perez and G-Tractors, Inc. are not controlling because the
husband, in those cases, contracted the obligation for his own
business. In this case, the petitioner-husband acted merely as a
surety for the loan contracted by the PBMCI from the private
respondent.

IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The

Decision and Resolution of the Court of Appeals are SET ASIDE AND
REVERSED. The assailed orders of the RTC are AFFIRMED.

SO ORDERED.
SPECIAL THIRD DIVISION
April 5, 2017
G.R. No. 217617
CARMELITA T. BORLONGAN, Petitioner,
vs.
BANCO DE ORO (formerly EQUITABLE PCI BANK), Respondent.
RESOLUTION
VELASCO, JR, J.:
Nature of the Case
Before the Court are two consolidated petitions invariably assailing
the foreclosure sale of a property without properly serving the
summons upon its owners.
Factual Antecedents
Sometime in 1976, Eliseo Borlongan, Jr. (Eliseo) and his wife
Carmelita, acquired a real property located at No. 111, Sampaguita
St., Valle Verde II, Pasig City covered by Transfer Certificate of Title
(TCT) No. 0421 (the subject property). In 2012, they went to the
Registry of Deeds of Pasig City to obtain a copy of the TCT in
preparation for a prospective sale of the subject property. To their
surprise, the title contained an annotation that the property
covered thereby was the subject of an execution sale in Civil Case
(CC) No. 03-0713 pending before Branch 134 of the Regional Trial
Court of Makati City (Makati RTC).
Petitioner immediately procured a copy of the records of CC No. 03-
0713 and found out that respondent Banco de Oro (BDO), formerly
Equitable PCI Bank, filed a complaint for sum of money against
Tancho
Corporation, the principal debtor of loan obligations obtained from
the bank. Likewise impleaded were several persons, including
Carmelita, who supposedly signed four (4) security agreements
totaling ₱l3,500,000 to guarantee the obligations of Tancho
Corporation.
It appears from the records of CC No. 03-0713 that on July 2, 2003,
the Makati R TC issued an Order directing the service of summons to
all the defendants at the business address of Tancho Corporation
provided by BDO: Fumakilla Compound, Amang Rodriguez Avenue,
Brgy. Dela Paz, Pasig City (Fumakilla Compound).
Parenthetically, the records of CC No. 03-0713 show that
respondent BDO already foreclosed the Fumakilla Compound as
early as August 21, 2000, following Tancho Corporation's failure to
pay its obligation, and BDO already consolidated its ownership of
the property on November 16, 2001.
Understandably, on July 31, 2003, the process server filed an
Officer's Return stating that summons remained unserved as the
"defendants are no longer holding office at [Fumakilla Compound]."
On October 27, 2003, after the single attempt at personal service on
Carmelita and her co-defendants, BDO moved for leave to serve the
summons by publication. On October 28, 2003, the RTC granted the
motion.
On August 10, 2004, BDO filed an ex-parte Motion for the Issuance
of a Writ of Attachment against the defendants, including Carmelita.
During the hearing on the motion, BDO submitted a copy of the title
of the subject property. The Makati RTC thereafter granted BDO's
motion and a Writ of Attachment was issued against the defendants
in CC No. 03-0713, effectively attaching the subject property on
behalf of BDO.
On December 20, 2005, BDO filed an ex-parte motion praying,
among others, that the summons and the complaint be served
against Carmelita at the subject property. The Makati RTC granted
the motion. On February 9, 2006, the Sheriff filed a return stating
that no actual personal service was made as Carmelita "is no longer
residing at the given address and the said address is for 'rent,' as per
information gathered from the security guard on duty."
On May 30, 2006, however, BDO filed a manifestation stating that it
had complied with the October 28, 2003 Order of the Makati RTC
having caused the publication of the alias summons and the
complaint in People's Taliba on May 15, 2006.
Thereafter, upon BDO's motion, the Makati RTC declared the
defendants in CC No. 03-0713, including Carmelita, in default. BDO
soon after proceeded to present its evidence ex-parte.
On November 29, 2007, the Makati RTC rendered a Decision holding
the defendants in CC No. 03-0713 liable to pay BDO ₱32,543,856.33
plus 12% interest per annum from the time of the filing of the
complaint until fully paid and attorney's fees. The Makati RTC
decision was published on June 9, 2008.
On August 20, 2008, the Makati RTC issued a Writ of Execution upon
BDO's motion. The Order states that in the event that the judgment
obligors cannot pay all or part of the obligation, the sheriff shall levy
upon the properties of the defendants to satisfy the award.
On October 28, 2008, the Makati R TC' s sheriff filed a Report stating
that he tried to serve the Writ of Execution upon the defendants at
Fumakilla Compound but he was not able to do so since the
defendants were no longer holding office thereat. The Sheriff also
reported that, on the same day, he went to the subject property to
serve the execution but likewise failed in his attempt since Carmelita
was no longer residing at the said address.
On November 11, 2008, BDO filed a Motion to Conduct Auction of
the subject property. The motion was granted by the Makati RTC on
May 5, 2009 so that the subject property was sold to BDO, as the
highest bidder, on October 6, 2009.
Following the discovery of the sale of their property, Eliseo executed
an affidavit of adverse claim and, on January 21, 2013, filed a
Complaint for Annulment of Surety Agreements, Notice of Levy on
Attachment, Auction Sale and Other Documents, docketed as CC No.
73761, with the Regional Trial Court of Pasig City (Pasig RTC). 1
He alleged in his Complaint that the subject property is a family
home that belongs to the conjugal partnership of gains he
established with his wife. He further averred that the alleged surety
agreements upon which the attachment of the property was
anchored were signed by his wife without his consent and did not
redound to benefit their family. Thus, he prayed that the surety
agreements and all other documents and processes, including the
ensuing attachment, levy and execution sale, based thereon be
nullified.
BDO filed a Motion to Dismiss the Complaint, asserting that the
Pasig RTC has no jurisdiction to hear Eliseo's Complaint, the case
was barred by res judicata given the Decision and orders of the
Makati RTC, and, finally, the Complaint failed to state a cause of
action.
In an Order dated May 31, 2013, the Pasig R TC dismissed the case
citing lack of jurisdiction. The RTC held that it could not pass upon
matters already brought before the R TC Makati and, citing Spouses
Ching v.Court of Appeals,2the husband of a judgment debtor is not a
stranger to a case who can file a separate and independent action to
determine the validity of the levy and sale of a property.
On a motion for reconsideration filed by Eliseo, the Pasig RTC
reinstated the case with qualification. Relying on Buado v. Court of
Appeals,3 the Pasig RTC held that since majority of Eliseo's causes of
action were premised on a claim that the obligation contracted by
his wife has not redounded to their family, and, thus, the levy on
their property was illegal, his filing of a separate action is not an
encroachment on the jurisdiction of the Makati R TC, which ordered
the attachment and execution in the first place.
The Pasig RTC clarified, however, that it cannot annul the surety
agreements supposedly signed by Carmelita since Eliseo was not a
party to those agreements and the validity and efficacy of these
contracts had already been decided by the Makati RTC.
Both Eliseo and BDO referred the Pasig RTC's Decision to the Court
of Appeals (CA).
In its petition, docketed as CA-G.R. SP No. 133994, BDO contended
that it was an error for the Pasig RTC to apply Buado as it does not
apply squarely to the circumstances of the case and has not
superseded Ching. BDO maintained that by reinstating the
complaint, Pasig R TC has violated the rule prohibiting non-
interference by one court with the orders of a coequal court.
In its January 20, 2015 Decision,4 the appellate court granted BDO's
petition and ordered the Pasig RTC to cease from hearing CC No.
73761 commenced by Eliseo. In so ruling, the CA held that Eliseo is
not a stranger who can initiate an action independent from the case
where the attachment and execution sale were ordered. Thus, the
CA concluded that in opting to review the validity of the levy and
execution sale of the subject property pursuant to the judgment of
the Makati RTC, the Pasig RTC acted without jurisdiction.
Eliseo moved for, but was denied, reconsideration by the appellate
court. Hence, he came to this Court via a Petition for Review
on Certiorari under Rule 45 of the Rules of Court, docketed as G.R.
No. 218540.
On August 19, 2015, the Court issued a Resolution denying Eliseo's
petition. Eliseo begs to differ and takes exception from the said
holding in his motion for reconsideration dated October 5, 2015,
which is presently for Resolution by this Court.
Meanwhile, on an ex-parte omnibus motion filed by BDO, the
Makati RTC ordered the issuance of a Writ of Possession and the
issuance of a new TCT covering the subject property in favor of the
respondent bank.
Arguing that the Makati R TC had not acquired jurisdiction over her
person as the service of the summons and the other processes of
the court was defective, Carmelita filed a Petition for Annulment of
Judgment (With Urgent Prayer for Issuance of Temporary
Restraining Order and/or Writ of Preliminary Injunction) with the
CA, docketed as CA-G.R. SP No. 134664.
Before the CA can act on the Petition for Annulment, the Borlongans
found posted on the subject property a Writ of Possession dated
August 1, 2014 and a Notice to Vacate dated August 29, 2014.
In its Resolution dated November 12, 2014,5 the appellate court
denied Carmelita's prayer for the issuance of a Temporary
Restraining Order (TRO) and/or Writ of Preliminary Injunction (WPI).
Aggrieved, Carmelita interposed a motion for the reconsideration of
the CA's November 12, 2014 Resolution. On March 23, 2015,
however, the appellate court denied her motion for reconsideration,
holding that "upon the expiration of the redemption period, the
right of the purchaser to the possession of the foreclosed property
becomes absolute."
Thus, on April 27, 2015, Carmelita filed a Petition for Review,
docketed as G.R. No. 217617, before this Court, ascribing to the
appellate court the commission of serious reversible errors. The
Court denied the petition on June 22, 2015. Hence, on September 1,
2015, Carmelita interposed a Motion for Reconsideration urging the
Court to take a second hard look at the facts of the case and
reconsider its stance.
Considering that both cases originated from the same facts and
involved interrelated issues, on January 25, 2016, the Court resolved
to consolidate G.R. No. 218540 with G.R. No. 217617.
Issues
The question posed in G.R. No. 217617 is whether or not the CA
erred in refusing to issue a TRO and/or WPI stopping the
consolidation of BDO's ownership over the subject property. On the
other hand, the issue in G.R. No. 218540 revolves around whether
the Pasig RTC has jurisdiction to hear and decide a case filed by the
non-debtor husband to annul the levy and execution sale of the
subject property ordered by the Makati RTC against his wife.
Our Ruling
A reexamination of the antecedents and arguments in G.R. Nos.
217617 and 218540 compels the reversal of the appellate court's
resolutions in both cases.
G.R. No. 217617
The Issuance of a TRO/WPI is not a
prejudgment of the main case
On the propriety of CA' s refusal to issue a TRO/WPI, it is worthy to
note that Section 3, Rule 58 of the Rules of Court provides the
grounds for the issuance of a preliminary injunction, viz:
Section 3. Grounds for issuance of preliminary injunction. - A
preliminary injunction may be granted when it is established:
(a) That the applicant is entitled to the relief demanded,
and the whole or part of such relief consists in restraining
 the commission or continuance of the act or acts
complained of, or in requiring the performance of an act or
acts either for a limited period or perpetually;
(b) That the commission, continuance or non-performance
of the act or acts complained of during the litigation would
probably work injustice to the applicant; or
(c) That a party, court, agency or a person is doing,
threatening, or is attempting to do, or is procuring or
suffering to be done some act or acts probably in violation
of the rights of the applicant respecting the subject of the
action or proceeding, and tending to render the judgment
ineffectual.
From the foregoing provision, it is clear that a writ of preliminary
injunction is warranted where there is a showing that there exists a
right to be protected and that the acts against which the writ is to
be directed violate an established right. Otherwise stated, for a
court to decide on the propriety of issuing a TRO and/or a WPI, it
must only inquire into the existence of two things: (1) a clear and
unmistakable right that must be protected; and (2) an urgent and
paramount necessity for the writ to prevent serious damage.
In Levi Strauss (Phils.) Inc. v. Vogue Traders Clothing Company,6 the
Court already explained that the issuance of a TRO is not conclusive
of the outcome of the case as it requires but a sampling of the
evidence, viz:
Indeed, a writ of preliminary injunction is generally based solely on
initial and incomplete evidence adduced by the applicant (herein
petitioner). The evidence submitted during the hearing of the
incident is not conclusive, for only a "sampling" is needed to give
the trial court an idea of the justification for its issuance pending
the decision of the case on the merits. As such, the findings of fact
and opinion of a court when issuing the writ of preliminary
injunction are interlocutory in nature. Moreover, the sole object of
a preliminary injunction is to preserve the status quo until the
merits of the case can be heard. Since Section 4 of Rule 58 of the
Rules of Civil Procedure gives the trial courts sufficient discretion to
evaluate the conflicting claims in an application for a provisional
writ which often involves a factual determination, the appellate
courts generally will not interfere in the absence of manifest abuse
of such discretion. A writ of preliminary injunction would become a
prejudgment of a case only when it grants the main prayer in the
complaint or responsive pleading, so much so that there is nothing
left for the trial court to try except merely incidental matters.
(emphasis supplied)
Notably, the primary prayer of the Petition for Annulment before
the appellate court is the declaration of the nullity of the
proceedings in the R TC and its Decision dated November 29, 2007;
it is not merely confined to the prevention of the issuance of the
writ of possession and the consolidation of the ownership of the
subject property in BDO's name-the concerns of the prayer for the
TRO and/or WPI.
Indeed, the petitioner's prayer for the issuance of a TRO and/or WPI
was intended to preserve the status quo ante, 7and not to pre-empt
the appellate court's decision on the merits of her petition for
annulment. Thus, it was a grievous error on the part of the CA to
deny her of this provisional remedy.
The appellate court's error is readily apparent given the stark
existence of the grounds for the issuance of a writ of preliminary
injunction.
On the first ground, petitioner has a clear and unmistakable right
that must be protected. This right is not just her proprietary rights
over the subject property but her constitutionally protected right to
due process before she can be deprived of her property. No less
than Section 1 of the Bill of Rights of the 1987 Constitution
mandates that:
No person shall be deprived of life, liberty, or property without due
process of law, nor shall any person be denied the equal protection
of the laws. (emphasis supplied)
In its classic formulation, due process means that any person with
interest to the thing in litigation must be notifiedand given an
opportunity to def end that interest. 8 Thus, as the essence of due
process lies in the reasonable opportunity to be heard and to submit
any evidence the defendant may have in support of her defense,
she must be properly served the summons of the court. In other
words, the service of summons is a vital and indispensable
ingredient of due process 9 and compliance with the rules regarding
the service of the summons is as much an issue of due process as it
is of jurisdiction. 10 Unfortunately, as will be discussed, it would
seem that the Constitutional right of the petitioner to be properly
served the summons and be notified has been disregarded by the
officers of the trial court.
At this very juncture, the existence of the second ground for the
issuance of a TRO and/or WPI is self-evident. Without a TRO and/or
WPI enjoining the respondent bank from continuing in the
possession and consolidating the ownership of the subject property,
petitioner's right to be afforded due process will unceasingly be
violated.
It need not be stressed that a continuous violation of constitutional
rights is by itself a grave and irreparable injury that this or any court
cannot plausibly tolerate.
Without a doubt, the appellate court should have acted intrepidly
and issued the TRO and/or WPI posthaste to protect the
constitutional rights of petitioner, as it is duty-bound to do.
The performance of official duty was
not regular
Regrettably, the appellate court fell short in the fulfillment of its
mandate and instead relied on the disputable presumption that
"official duty has been regularly performed." The Court cannot
subscribe to the position taken by the appellate court.
As a rule, summons should be personally served on a defendant.
When summons cannot be served personally within a reasonable
period of time, substituted service may be resorted to. Service of
summons by publication can be resorted to only if the defendant's
"whereabouts are unknown and cannot be ascertained by diligent
inquiry." The relevant sections of Rule 14 of the Rules of Court
provide, thus:
SEC. 6. Service in person on defendant. - Whenever practicable, the
summons shall be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive and sign for it, by
tendering it to him.
SEC. 7. Substituted service. - If, for justifiable causes, the defendant
cannot be served within a reasonable time as provided in the
preceding section, service may be effected (a) by leaving copies of
the summons at the defendant's residence with some person of
suitable age and discretion then residing therein, or (b) by leaving
the copies at defendant's office or regular place of business with
some competent person in charge thereof.
xxxx
SEC. 14. Service upon defendant whose identity or whereabouts are
unknown. - In any action where the defendant is designated as an
unknown owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry, service may,
by leave of court, be effected upon him by publication in a
newspaper of general circulation and in such places and for such
time as the court may order.
It is, therefore, proper to state that the hierarchy and rules in the
service of summons are as follows:
(1) Personal service;
(2) Substituted service, if for justifiable causes the
defendant cannot be served within a reasonable time; and
(3) Service by publication, whenever the defendant's
whereabouts are unknown and cannot be ascertained by
diligent inquiry.
Simply put, personal service of summons is the preferred mode.
And, the rules on the service of summons other than by personal
service may be used only as prescribed and only in the
circumstances authorized by statute. Thus, the impossibility of
prompt personal service must be shown by stating that efforts have
been made to find the defendant personally and that such efforts
have failed before substituted service may be
availed. 11Furthermore, their rules must be followed strictly,
faithfully and fully as they are extraordinary in character and
considered in derogation of the usual method of service.
In Manotoc v. Court of Appeals, 12 the Court enumerated and
explained the requirements to effect a valid service of summons
other than by personal service, viz:
(1) Impossibility of Prompt Personal Service
xxxx
Sheriffs are asked to discharge their duties on the service of
summons with due care, utmost diligence, and reasonable
promptness and speed so as not to prejudice the expeditious
dispensation of justice. Thus, they are enjoined to try their best
efforts to accomplish personal service on defendant. On the other
hand, since the defendant is expected to try to avoid and evade
service of summons, the sheriff must be resourceful, persevering,
canny, and diligent in serving the process on the defendant. For
substituted service of summons to be available, there must be
several attempts by the sheriff to personally serve the summons
within a reasonable period [of one month) which eventually
resulted in failure to prove impossibility of prompt service.
"Several attempts" means at least three (3) tries, preferably on at
least two different dates. In addition, the sheriff must cite why
such efforts were unsuccessful. It is only then that impossibility of
service can be confirmed or accepted.
(2) Specific Details in the Return
The sheriff must describe in the Return of Summons the facts and
circumstances surrounding the attempted personal service. The
efforts made to find the defendant and the reasons behind the
failure must be clearly narrated in detail in the Return. The date
and time of the attempts on personal service, the inquiries made to
locate the defendant, the name/s of the occupants of the alleged
residence or house of defendant and all other acts done, though
futile, to serve the summons on defendant must be specified in the
Return to justify substituted service. The form on Sheriffs Return of
Summons on Substituted Service prescribed in the Handbook for
Sheriffs published by the Philippine Judicial Academy requires a
narration of the efforts made to find the defendant personally and
the fact of failure. Supreme Court Administrative Circular No. 5
dated November 9, 1989 requires that "impossibility of prompt
service should be shown by stating the efforts made to find the
defendant personally and the failure of such efforts," which should
be made in the proof of service.
In the case now before Us, the summons was served on the
petitioner by publication. Yet, the circumstances surrounding the
case do not justify the resort.
Consider: in July 2003, the sheriff attempted to serve the summons
on the defendants, including petitioner Carmelita, at Fumakilla
Compound, i.e., at the property already foreclosed, acquired, and
possessed by the respondent bank as early as August 2001.
Immediately after this single attempt at personal service in July
2003, the respondent bank moved in October 2003 for leave to
serve the summons by publication (and not even substituted
service), which motion the RTC granted.
Clearly, there was no diligent effort made to find the petitioner and
properly serve her the summons before the service by publication
was allowed. Neither was it impossible to locate the residence of
petitioner and her whereabouts.
It should be noted that the principal obligor in CC No. 03-0713 was
Tancho Corporation and petitioner Carmelita was impleaded only
because she supposedly signed a surety agreement as a director. As
a juridical person, Tancho Corporation is required to file mandatory
corporate papers with the Securities and Exchange Commission
(SEC), such as its General Information Sheet (GIS). In 1997 and 2000,
the GIS filed by Tancho Corporation with the SEC provided the
names of its directors and their addresses. One of these directors
included petitioner Carmelita with her address listed at 41 Chicago
St., Quezon City. The GIS of Tancho Corporation was readily
available to the public including the RTC's process server and
respondent bank.
Patently, it cannot be plausibly argued that it was impossible to find
the petitioner and personally serve her with summons. In like
manner, it can hardly be stated that the process server regularly
performed his duty.
The subject property was not
foreclosed by the respondent bank;
right of BDO to the possession of the
subject property is questionable
Still unwilling to issue the TRO and/or WPI fervently prayed for by
petitioner, the appellate court held that "upon the expiration of the
redemption period, the right of the purchaser to the possession of
the foreclosed property becomes absolute." This Court cannot
affirm the appellate court's ruling.
At the outset, it must be pointed out that the subject property was
never mortgaged to, much less foreclosed by, the respondent bank.
Thus, it was error for the CA to refer to the subject property as
"foreclosed property."
Rather, as disclosed by the records, the possession of the subject
property was acquired by BDO through attachment and later by
execution sale. However, it is presumptive to state that the right of
BDO over the possession of the subject property is now absolute
considering that there is an action that questions the validity of the
bank's acquisition over the same property.
In Cometa v. Intermediate Appellate Court, 13 we explained that the
expiration of the redemption period does not automatically vest in
the auction purchaser an absolutely possessory right over the
property, viz:
From the foregoing discussion, it can be seen that the writ of
possession may issue in favor of a purchaser in an execution sale
when the deed of conveyance has been executed and delivered to
him after the period of redemption has expired and no redemption
has been made by the judgment debtor.
A writ of possession is complementary to a writ of execution (see
Vda. de Bogacki v. Inserto, 111 SCRA 356, 363), and in an execution
sale, it is a consequence of a writ of execution, a public auction sale,
and the fulfillment of several other conditions for conveyance set by
law. The issuance of a writ of possession is dependent on the valid
execution of the procedural stages preceding it. Any flaw afflicting
any of its stages, therefore, could affect the validity of its issuance.
In the case at bar, the validity of the levy and sale of the properties
is directly put in issue in another case by the petitioners. This Court
finds it an issue which requires pre-emptive resolution. For if the
respondent acquired no interest in the property by virtue of the
levy and sale, then, he is not entitled to its possession.
The respondent appellate court's emphasis on the failure of The
petitioner to redeem the properties within the period required by
law is misplaced because redemption, in this case, is inconsistent
with the petitioner's claim of invalidity of levy and sale.
Redemption is an implied admission of the regularity of the sale
and would estop the petitioner from later impugning its validity on
that ground. (emphasis supplied)
Thus, even given the expiration of the redemption period, a TRO
and/or WPI is still obtainable and warranted where the validity of
the acquisition of the possession is afflicted by Constitutional and
procedural infirmities.
G.R. No. 218540
Eliseo can file an independent action
for the annulment of the attachment
of their conjugal property
As to the question of the Pasig RTC' s jurisdiction to hear Eliseo's
complaint, we cannot subscribe to BDO' s contention that Eliseo
cannot file a separate and independent action for the annulment of
the levy on their conjugal property.
Section 16, Rule 39 of the Rules of Court allows third-party
claimants of properties under execution to vindicate their claims to
the property in a separate action with another court. It states, thus:
SECTION 16. Proceedings Where Property Claimed by Third Person. -
If the property levied on is claimed by any person other than the
judgment obligor or his agent, and such person makes an affidavit of
his title thereto or right to the possession thereof, stating the
grounds of such right or title, and serves the same upon the officer
making the levy and a copy thereof upon the judgment obligee, the
officer shall not be bound to keep the property, unless such
judgment obligee, on demand of the officer, files a bond approved
by the court to indemnify the third-party claimant in a sum not less
than the value of the property levied on. In case of disagreement as
to such value, the same shall be determined by the court issuing the
writ of execution. No claim for damages for the taking or keeping of
the property may be enforced against the bond unless the action
therefor is filed within one hundred twenty (120) days from the date
of the filing of the bond.
The officer shall not be liable for damages for the taking or keeping
of the property, to any third-party claimant if such bond is
filed. Nothing herein contained shall prevent such claimant or any
third person from vindicating his claim to the property in a
separate action, or prevent the judgment obligee from claiming
damages in the same or a separate action against a third-party
claimant who filed a frivolous or plainly spurious claim. (emphasis
supplied)
Clearly, the availability of the remedy provided under the foregoing
provision requires only that that the claim is a third-party or a
"stranger" to the case. The poser then is this: is the husband, who
was not a party to the suit but whose conjugal property was
executed on account of the other spouse's debt, a "stranger" to the
suit? In Buado v. Court of Appeals,14 this Court had the opportunity
to clarify that, to resolve the issue, it must first be determined
whether the debt had redounded to the benefit of the conjugal
partnership or not. In the negative, the spouse is a stranger to the
suit who can file an independent separate action, distinct from the
action in which the writ was issued. We held, thus:
A third-party claim must be filed [by] a person other than the
judgment debtor or his agent. In other words, only a stranger to the
case may file a third-party claim.
This leads us to the question: Is the husband, who was not a party to
the suit but whose conjugal property is being executed on account
of the other spouse being the judgment obligor, considered a
"stranger?"
xxxx
Pursuant to Mariano however, it must further be settled whether
the obligation of the judgment debtor redounded to the benefit of
the conjugal partnership or not.
Petitioners argue that the obligation of the wife arising from her
criminal liability is chargeable to the conjugal
partnership.1âwphi1 We do not agree.
There is no dispute that contested property is conjugal in nature.
Article 122 of the Family Code explicitly provides that payment of
personal debts contracted by the husband or the wife before or
during the marriage shall not be charged to the conjugal partnership
except insofar as they redounded to the benefit of the family.
xxxx
Parenthetically, by no stretch of imagination can it be concluded
that the civil obligation arising from the crime of slander committed
by Erlinda redounded to the benefit of the conjugal partnership.
To reiterate, conjugal property cannot be held liable for the
personal obligation contracted by one spouse, unless some
advantage or benefit is shown to have accrued to the conjugal
partnership.
xxxx
Hence, the filing of a separate action by respondent is proper and
jurisdiction is thus vested on Branch 21. (emphasis supplied)
In the present case, it is not disputed that the conjugal property was
attached on the basis of a surety agreement allegedly signed by
Carmelita for and in behalf of Tancho Corporation. In our 2004
Decision in Spouses Ching v. Court of Appeals, 15 we elucidated that
there is no presumption that the conjugal partnership is benefited
when a spouse enters into a contract of surety, holding thusly:
In this case, the private respondent failed to prove that the conjugal
partnership of the petitioners was benefited by the petitioner-
husband's act of executing a continuing guaranty and suretyship
agreement with the private respondent for and in behalf of PBMCI.
The contract of loan was between the private respondent and the
PBMCI, solely for the benefit of the latter. No presumption can be
inferred from the fact that when the petitioner-husband entered
into an accommodation agreement or a contract of surety, the
conjugal partnership would thereby be benefited. The private
respondent was burdened to establish that such benefit
redounded to the conjugal partnership.
It could be argued that the petitioner-husband was a member of the
Board of Directors of PBMCI and was one of its top twenty
stockholders, and that the shares of stocks of the petitioner-
husband and his family would appreciate if the PBMCI could be
rehabilitated through the loans obtained; that the petitioner-
husband's career would be enhanced should PBMCI survive because their property is taken. As this Court is duty-bound to protect and
of the infusion of fresh capital. However, these are not the benefits enforce Constitutional rights, this we cannot allow.
contemplated by Article 161 of the New Civil Code. The benefits
must be those directly resulting from the loan. They cannot merely WHEREFORE, the petitions are GRANTED.
be a by-product or a spin-off of the loan itself.
(1) The January 20, 2015 Decision and May 26, 2015
This is different from the situation where the husband borrows Resolution of the Court of Appeals in CA-G.R. SP No.
money or receives services to be used for his own business or 133994 are hereby REVERSED and SETASIDE. The Regional
profession. In the Ayala case, we ruled that it is such a contract that Trial Court of Pasig, Branch 155 is ordered to continue with
is one within the term "obligation for the benefit of the conjugal the proceedings and decide Civil Case No. 73761 with
partnership." Thus: reasonable dispatch.
xxxx (2) The November 12, 2014 and March 23, 2015
Resolutions of the appellate court in CA-G.R. SP No. 134664
The Court held in the same case that the rulings of the Court in are REVERSED and SETASIDE.
Cobb-Perez and G-Tractors, Inc. are not controlling because the
husband, in those cases, contracted the obligation for his own Accordingly, let a Temporary Restraining Order (TRO) be issued
business. In this case, the petitioner-husband acted merely as a enjoining, prohibiting, and preventing respondent Banco De Oro, its
surety for the loan contracted by the PBMCI from the private assigns, transferees, successors, or any and all other persons acting
respondent. (emphasis supplied) on its behalf from possessing, selling, transferring, encumbering or
otherwise exercising acts of ownership over the property subject of
Furthermore, it is not apparent from the records of this case that the controversy. Said TRO shall remain valid and effective until such
BDO had established the benefit to the conjugal partnership flowing time as the rights and interests of the parties in CA-G.R. SP No.
from the surety agreement allegedly signed by Carmelita. Thus, 134664 shall have been determined and finally resolved.
Eliseo's claim over the subject property lodged with the RTC Pasig is
proper, with the latter correctly exercising jurisdiction thereon.
Besides, BDO's reliance on Spouses Ching v. Court of
Appeals16 (2003) is improper. In the present case, Eliseo and his wife
discovered the attachment of their conjugal property only after the
finality of the decision by the R TC Makati. There was, therefore, no
opportunity for Eliseo to intervene in the case before the R TC
Makati which attached the conjugal property, as a motion to
intervene can only be filed "at any time before rendition of
judgment by the trial court."17 This spells the whale of difference
between the case at bar and the earlier Spouses Ching. Unlike in the
present case, the debtor in the case cited by BDO was properly
informed of the collection suit and his spouse had the opportunity
to question the attachment of their conjugal property before the
court that issued the levy on attachment, but simply refused to do
so. Thus, to now deny Eliseo the opportunity to question the
attachment made by the R TC Makati in a separate and independent
action will be to, again, refuse him the due process of law before
EN BANC
G.R. No. L-19346 May 31, 1965
SOLEDAD L. LACSON, ET AL., plaintiffs-appellees,
vs.
ABELARDO G. DIAZ, defendant-appellant.
Agustin Locsin for plaintiffs-appellees.
Abelardo G. Diaz in his own behalf as defendant-appellant.
BARRERA, J.:
The facts of this case are not disputed:
In connection with a final decision rendered by the Court of First
Instance of Negros Occidental in Civil Case No. 5790 (Soledad L.
Lacson, et al. v. Abelardo G. Diaz), sentencing therein defendant to
pay the plaintiffs the sum of P97,532.93 with legal interest thereon
from July 1, 1960 until fully paid, plus a sum equivalent to 25% of
the total amount as attorney's fees, the court issued a writ of
execution on August 1, 1961. On August 7, 1961, the Provincial
Sheriff of Negros Occidental sent to the manager of Talisay-Silay
Milling Company, wherein defendant Diaz was employed, a notice
to garnish one-third of his monthly salary and of any other personal
properties belonging to said defendant, to cover the total amount of
P132,718.30.
Diaz filed with the court a motion to quash the writ of execution and
to lift the notice of garnishment (of his salary), on the ground that
the same are not enforceable against his present family. It was
claimed that since the money-judgment arose out of a contract
entered into by him during his first marriage said judgment cannot
be enforced against his salaries which form part of the conjugal
properties of the second marriage. Plaintiffs opposed this motion,
for the reason that re-marriage is not a cause for extinction of
obligations. As his aforesaid motion after hearing was denied by the
court for lack of merit, the defendant instituted the present
appeal.1äwphï1.ñët
Appellant does not dispute the existence of the money-judgment
against him in the amount abovestated, which decision was
rendered in 1947 and affirmed by the appellate court in 1950. It
appears, however, that appellant, who became a widower in 1951, wife, against the conjugal assets, forms the exception to the general
remarried in 1960. The writ of execution and notice of garnishment rule, it is incumbent upon the one who invokes this provision or the
in this case were issued and implemented in 1961. It is now creditor to show that the requisites for its applicability are
contended that, as the conjugal partnership resulting of the second obtaining.
marriage is different from that of the first marriage, during which
existence the obligation arose, such obligation, as far as the second In the instant case, although it is not controverted that there is due
conjugal partnership is concerned, is personal to the husband and and owing the plaintiffs-appellees a certain sum of money from the
cannot be charged against the properties of the second union. And, appellant-debtor — a personal obligation yet, it has not been
since his salaries form part of the conjugal asset the same cannot be established that the latter does not have properties of his own or
garnished to satisfy his personal obligations. In support of this that the same are not adequate to satisfy appellees' claim.
proposition, appellant cites Article 163 of the new Civil Code and the Furthermore, there is no showing that the responsibilities named in
ruling of this Court that the right of the husband to one-half of the Article 161 of the new Civil Code have already been covered in order
assets of the conjugal partnership does not vest until the dissolution that the personal obligation of the husband may be made
of the marriage.1 chargeable against the properties of the second marriage.
Article 163 of the new Civil Code relied upon by the appellant IN VIEW OF THE FOREGOING CONSIDERATIONS, this case is hereby
provides: remanded to the court of origin for further proceedings, in
accordance with the aforestated observation. No costs. So ordered.
ART. 163. The payment of debts contracted by the husband
or the wife before the marriage shall not be charged to the
conjugal partnership.
Neither shall the fines and pecuniary indemnities imposed
upon them be charged to the partnership.
However, the payment of debts contracted by the husband
or the wife before the marriage, and that of fines and
indemnities imposed upon them, may be enforced against
the partnership assets after the responsibilities
enumerated in article 161 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.
As a general rule, therefore, debts contracted by the husband or the
wife before the marriage, 2 as well as fines and pecuniary
indemnities imposed thereon, are not chargeable to the conjugal
partnership. However, such obligations may be enforced against the
conjugal assets if the responsibilities enumerated in Article 161 3 of
the new Civil Code have already been covered, and that the obligor
has no exclusive property or the same is insufficient. Considering
that the enforceability of the personal obligations of the husband or
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 to reclusion 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 for certiorari 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 Efren’s
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 Melecia’s
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 Melecia’s
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 RTC’s 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.1âwphi1

Contrary to Efren’s 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.
THIRD DIVISION
G.R. No. 70082 August 19, 1991
SPOUSES RICKY WONG and ANITA CHAN, LEONARDO JOSON,
JUANITO SANTOS, EMERITO SICAT and CONRADO
LAGMAN, petitioners,
vs.
HON. INTERMEDIATE APPELLATE COURT and ROMARICO
HENSON, respondents.
Feliciano C. Tumale for petitioners.
Benjamin Dadios and Bausa, Ampil, Suarez, Paredes & Bausa for
private respondent.
FERNAN, C.J.:
Submitted for adjudication in the instant petition for review on
certiorari is the issue of whether or not the execution of a decision
in an action for collection of a sum of money may be nullified on the
ground that the real properties levied upon and sold at public
auction are the alleged exclusive properties of a husband who did
not participate in his wife's business transaction from which said
action stemmed.
Private respondent Romarico Henson married Katrina Pineda on
January 6, 1964.1 They have three children but even during the early
years of their marriage, Romarico and Katrina had been most of the
time living separately. The former stayed in Angeles City while the
latter lived in Manila. During the marriage or on January 6, 1971,
Romarico bought a 1,787 square-meter parcel of land in Angeles
City for P11,492 from his father, Dr. Celestino L. Henson 2with money
borrowed from an officemate. His father need the amount for
investments in Angeles City and Palawan.3
Meanwhile, in Hongkong sometime in June 1972, Katrina entered
into an agreement with Anita Chan whereby the latter consigned to
Katrina pieces of jewelry for sale valued at 199,895 Hongkong
dollars or P321,830.95.4 When Katrina failed to return the pieces of
jewelry within the 20-day period agreed upon, Anita Chan
demanded payment of their value.
On September 18, 1972, Katrina issued in favor of Anita Chan a
check for P55,000 which, however, was dishonored for lack of funds.
Hence, Katrina was charged with estafa before the then Court of
First Instance of Pampanga and Angeles City, Branch IV.5 After trial,
the lower court rendered a decision dismissing the case on the
ground that Katrina's liability was not criminal but civil in nature as
no estafa was committed by the issuance of the check in payment of
a pre-existing obligation.6
In view of said decision, Anita Chan and her husband Ricky Wong
filed against Katrina and her husband Romarico Henson, an action
for collection of a sum of money also in the same branch of the
aforesaid court.7 The records of the case show that Atty. Gregorio
Albino, Jr. filed an answer with counterclaim but only in behalf of
Katrina. When the case was called for pre-trial, Atty. Albino once
again appeared as counsel for Katrina only. While it is true that
during subsequent hearings, Atty. Expedite Yumul, who collaborated
with Atty. Albino, appeared for the defendants, it is not shown on
record that said counsel also represented Romarico. In fact, a power
of attorney which Atty. Albino produced during the trial, showed
that the same was executed solely by Katrina.8
After trial, the court promulgated a decisions9 in favor of the Wongs.
It ordered Katrina and Romarico Henson to pay the Wongs
HK$199,895.00 or P321,830.95 with legal interest from May 27,
1975, the date of filing of the complaint, until fully paid; P20,000 as
expenses for litigation; P15,000 as attorney's fees, and the costs of
the suit.
A writ of execution was thereafter issued. Levied upon were four
lots in Angeles City covered by Transfer Certificates of Title Nos.
30950, 30951, 30952 and 30953 all in the name of Romarico Henson
... married to Katrina Henson.10
The public auction sale was first set for October 30, 1977 but since
said date was declared a public holiday, Deputy Sheriff Emerito Sicat
reset the sale to November 11, 1977. On said date, the following
properties registered in the name of Romarico Henson "married to
Katrina Henson" were sold at public auction: (a) two parcels of land
covered by Transfer Certificates of Title Nos. 30950 and 30951 with
respective areas of 293 and 289 square meters at P145,000 each to
Juanito L. Santos,11 and (b) two parcels of land covered by Transfer
Certificates of Title Nos. 30952 and 30953 with respective areas of
289 and 916 square meters in the amount of P119,000.00 to
Leonardo B. Joson.12
After the inscription on Transfer Certificate of Title No. 30951 of the
levy on execution of the judgment in Civil Case No. 2224, the
property covered by said title was extrajudicially foreclosed by the
Rural Bank of Porac, Pampanga on account of the mortgage loan of
P8,000 which Romarico and Katrina had obtained from said bank.
The property was sold by the sheriff to the highest bidder for
P57,000 on September 9, 1977. On September 14, 1978, Juanito
Santos, who had earlier bought the same property at public auction
on November 11, 1977, redeemed it by paying the sum of P57,000
plus the legal interest of P6,840.00 or a total amount of
P63,840.00.13
About a month before such redemption or on August 8, 1 978,
Romarico filed an action for the annulment of the decision in Civil
Case No. 2224 as well as the writ of execution, levy on execution
and the auction sale therein in the same Court of First
Instance.14 Romarico alleged that he was "not given his day in court"
because he was not represented by counsel as Attys. Albino and
Yumul appeared solely for Katrina; that although he did not file an
answer to the complaint, he was not declared in default in the case;
that while Atty. Albino received a copy of the decision, he and his
wife were never personally served a copy thereof; that he had
nothing to do with the business transactions of Katrina as he did not
authorize her to enter into such transactions; and that the
properties levied on execution and sold at public auction by the
sheriff were his capital properties and therefore, as to him, all the
proceedings had in the case were null and void.
On November 10, 1978, the lower court issued an order restraining
the Register of Deeds of Angeles City from issuing the final bill of
sale of Transfer Certificates of Title Nos. 30950 and 30951 in favor of
Juanito Santos and Transfer Certificates of Title Nos. 30952 and
30953 in favor of Leonardo Joson until further orders of the
court.15 On January 22, 1979, upon motion of Romarico, the court
issued a writ of preliminary injunction enjoining the sheriff from
approving the final bill of sale of the land covered by the
aforementioned certificates of title and the Register of Deeds of
Angeles City from registering said certificates of title in the names of
Santos and Joson until the final outcome of the case subject to
Romarico's posting of a bond in the amount of P321,831.00. 16
After trial on the merits, the lower court17 rendered a decision
holding that Romarico was indeed not given his day in court as he
was not represented by counsel nor was he notified of the hearings
therein although he was never declared in default. Noting that the
complaint in Civil Case No. 2224 as well as the testimonial and
documentary evidence adduced at the trial in said case do not show
that Romarico had anything to do with the transactions between
Katrina and Anita Chan, the court ruled that the judgment in Civil
Case No. 2224 "is devoid of legal or factual basis which is not even
supported by a finding of fact or ratio decidendi in the body of the
decision, and may be declared null and void ... pursuant to a
doctrine laid down by the Supreme Court to the effect that the
Court of First Instance or a branch thereof, has authority and
jurisdiction to try and decide an action for annulment of a final and
executory judgment or order rendered by another court of first
instance or of a branch thereof (Gianan vs. Imperial, 55 SCRA
755)."18
On whether or not the properties lenied upon and sold at public
auction may be reconveyed to Romarico, the court, finding that
there was no basis for holding the conjugal partnership liable for the
personal indebtedness of Katrina, ruled in favor of reconveyance in
view of the jurisprudence that the interest of the wife in the
conjugal partnership property being inchoate and therefore merely
an expectancy, the same may not be sold or disposed of for value
until after the liquidation and settlement of the community assets.
The dispositive portion of the decision reads:
WHEREFORE, and in view of the foregoing, judgment is
hereby rendered in favor of the plaintiff and against all the
defendants, as follows:
(a) The Decision of the Court of First Instance of Pampanga
and Angeles City, Branch IV, rendered in Civil Case No.
2224, entitled "RICKY WONG, ET AL. vs. KATRINA PINEDA
HENSON and ROMARICO HENSON", is hereby declared null
and void, only as far as it affects plaintiff herein Romarico
Henson;
(b) The Writ of Execution, levy in execution and auction
The defendants appealed to the then Intermediate Appellate Court.
sale of the conjugal property of the spouses Romarico
In its decision of January 22, 198519 the said court affirmed in toto
Henson and Katrina Pineda Henson which were sold at
the decision of the lower court. It added that as to Romarico, the
public auction on November 11, 1977, without notice to
judgment in Civil Case No. 2224 had not attained finality as the
plaintiff herein, by Deputy Sheriff Emerito Sicat, are
likewise declared null and void and of no force and effect;
(c) Defendants Emerito Sicat and Conrado Lagman, in their
official capacity as Sheriff and Register of Deeds,
respectively, are enjoined permanently from issuing and/or
registering the corresponding deeds of sale affecting the
property;
(d) The aforementioned buyers are directed to reconvey
the property they have thus purchased at public auction to
plaintiff Romarico Henson;
(e) As far as the claim for reimbursement filed by Juanito
Santos concerning the redemption of the property covered
by Transfer Certificate of Title No. 30951 from the Rural
Bank of Porac, which foreclosed the same extrajudicially, is
concerned, plaintiff Romarico Henson may redeem the
same within the period and in the manner prescribed by
law, after the corresponding deed of redemption shall have
been registered in the Office of the Registry of Deeds for
Angeles City;
(f) Defendants Spouses Ricky Wong and Anita Chan are,
with the exception of the defendants Juanito Santos,
Leonardo Joson, Sheriff and Register of Deeds, are ordered
jointly and severally, to pay the plaintiff Romarico Henson
the sum of P10,000.00, corresponding to the expenses of
litigation, with legal interest thereon from the time this suit
was filed up to the time the same shall have been paid, plus
P5,000.00 for and as attorney's fees, and the costs of suit;
and
(g) The counterclaims respectively filed on behalf of all the
defendants in the above-entitled case are hereby
DISMISSED.
SO ORDERED.
decision therein was not served on him and that he was not
represented by counsel. Therefore, estoppel may not be applied
against him as, not having been served with the decision, Romarico
did not know anything about it. Corollarily, there can be no valid
writ of execution inasmuch as the decision had not become final as
far as Romarico is concerned.
On whether the properties may be levied upon as conjugal
properties, the appellate court ruled in the negative. It noted that
the properties are Romarico' s exclusive capital having been bought
by him with his own funds. But granting that the properties are
conjugal, they cannot answer for Katrina's obligations as the latter
were exclusively hers because they were incurred without the
consent of her husband, they were not for the daily expenses of the
family and they did not redound to the benefit of the family. The
court underscored the fact that no evidence has been submitted
that the administration of the conjugal partnership had been
transferred to Katrina either by Romarico or by the court before said
obligations were incurred.
The appellants filed a motion for reconsideration of the decision of
the appellate court but the same was denied for lack of merit on
February 6, 1985.20
Hence, the instant petition for review on certiorari. Petitioners
contend that, inasmuch as the Henson spouses were duly
represented by Atty. Albino as shown by their affidavit of August 25,
1977 wherein they admitted that they were represented by said
counsel until Atty. Yumul took over the actual management and
conduct of the case and that Atty. Albino had not withdrawn as their
counsel, the lower court "did not commit an error" in serving a copy
of the decision in Civil Case No. 2224 only on Atty. Albino.
Moreover, during the 2-year period between the filing of the
complaint in Civil Case No. 2224 and the public auction sale on
November 11, 1977, Romarico remained silent thereby making him
in estoppel and guilty of laches.
Petitioners further aver that there being sufficient evidence that the
auction sale was conducted in accordance with law, the acts of the
sheriffs concerned are presumed to be regular and valid. But
granting that an irregularity consisting of the non-notification of
Romarico attended the conduct of the auction sale, the rights of
Santos and Joson who were "mere strangers who participated as the
highest bidders" therein, may not be prejudiced. Santos and Joson
bought the properties sincerely believing that the sheriff was
regularly performing his duties and no evidence was presented to
the effect that they acted with fraud or that they connived with the
sheriff. However, should the auction sale be nullified, petitioners
assert that Romarico should not be unduly enriched at the expense
of Santos and Joson.
The petitioners' theory is that Romarico Henson was guilty of laches
and may not now belatedly assert his rights over the properties
because he and Katrina were represented by counsel in Civil Case
No. 2224. Said theory is allegedly founded on the perception that
the Hensons were like any other ordinary couple wherein a spouse
knows or should know the transactions of the other spouse which
necessarily must be in interest of the family. The factual background
of this case, however, takes it out of said ideal situation.
Romarico and Katrina had in fact been separated when Katrina
entered into a business deal with Anita Wong. Thus, when that
business transaction eventually resulted in the filing of Civil Case No.
2224, Romarico acted, or, as charged by petitioners, failed to act, in
the belief that he was not involved in the personal dealings of his
estranged wife. That belief was buttressed by the fact that the
complaint itself did not mention or implicate him other than as the
husband of Katrina. On whether Romarico was also represented by
Atty. Albino, Katrina's counsel, the courts below found that:
... Atty. Albino filed an Answer with Counterclaims dated
July 25, 1975 solely on behalf of defendant Katrina Henson.
The salutary statement in that Answer categorically reads:
... COMES NOW THE DEFENDANT KATRINA HENSON by and
through undersigned counsel, in answer to plaintiffs'
complaint respectfully alleges: ... .
That Answer was signed by GREGORIO ALBINO, JR., over
the phrase COUNSEL FOR DEFENDANT KATRINA HENSON.
Again, when Civil Case No. 2224 was called for pre-trial on
November 27, 1975, before then Presiding Judge
Bienvenido Ejercito, it is clearly stated on page 2 of the
day's stenographic notes, under "APPEARANCES that Atty.
Albino, Jr. appeared as COUNSEL FOR DEFENDANT KATRINA
HENSON". And when the case was called, Atty. Jose
Baltazar, Sr. appeared for the plaintiffs while Atty. Albino
categorically appeared "FOR DEFENDANT KATRINA
HENSON".
It might be true that in subsequent hearings, Atty. Expedito
Yumul 'appeared as counsel for the defendants,' but the
whole trouble is that he never expressly manifested to the
Court that he was likewise actually representing defendant
"ROMARICO HENSON", for it cannot be disputed that Atty.
Yumul only entered his appearance in collaboration with
Atty. Albino (see p. 2 tsn, January 26, 1976, Espinosa), who
in turn entered his initial appearance during the pre- trial,
and through the filing of an Answer, for defendant
KATRINA HENSON. As a matter of fact, the Power of
Attorney which Atty. Albino produced during the pre-trial
was executed solely by defendant KATRINA HENSON.
Accordingly, as collaborating counsel, Atty. Yumul cannot,
by any stretch of the imagination, be considered as duly
authorized to formally appear likewise on behalf of
defendant ROMARICO HENSON for whom principal counsel
of record Atty. Gregorio Albino, Jr. never made any formal
appearance. On this score, it is not amiss to state that "A
spring cannot rise higher than its source:.
Now, what about that statement in the aforementioned
joint affidavit of the spouses KATRINA HENSON and
ROMARICO HENSON, to the effect that our first lawyer in
said case was Atty. Gregorio Albino, Jr., and sometime later
Atty. Expedito B. Yumul took over ...
That statement which plaintiff ROMARICO HENSON was
made to sign by Atty. Yumul on August 25,1977, after the
filing of this case, allegedly for the purpose of dissolving the
writ of execution, as claimed in paragraph XIV of the
complaint herein, and is satisfactorily explained by both
plaintiff herein and his wife, while on cross-examination by
Atty. Baltazar, Sr., and We quote:
Q So, the summons directed your filing of your
Answer for both of you, your wife and your good
self?
A Yes, sir but may I add, I received the summons
but I did not file an answer because my wife took a
lawyer and that lawyer I think will protect her
interest and my interest being so I did not have
nothing to do in the transaction which is attached
to the complaint.' (TSN, Jan. 14, 1980, pp. 52-53).
That plaintiff never appeared in Civil Case No.
2224, nor was he therein represented by counsel
was impliedly admitted by defendants' counsel of
records thru a question he propounded on cross,
and the answer given by Katrina Pineda, to wit:
Q How about your husband, do you remember if
he physically appeared in that Civil Case No. 2224,
will you tell us if he was represented by counsel as
a party defendant?
A No, sir, he did not appear.
Q You are husband and wife, please tell us the
reason why you have your own counsel in that
case whereas Romarico Henson did not appear
nor a counsel did not appear in that proceedings
(TSN, Feb. 25,1980, pp. 6-7).
xxx xxx xxx
A Because that case is my exclusive and personal
case, he has nothing to do with that, sir. (TSN, Feb.
25, 1980, p. 9). (Rollo, pp. 17-20)
Hence, laches may not be charged against Romarico because, aside
from the fact that he had no knowledge of the transactions of his
estranged wife, he was also not afforded an opportunity to defend
himself in Civil Case No. 2224.21 There is no laches or even finality of
decision to speak of with respect to Romarico since the decision in
Civil Case No. 2224 is null and void for having been rendered
without jurisdiction for failure to observe the notice requirements
prescribed by law.22 Failure to notify Romarico may not be
attributed to the fact that the plaintiffs in Civil Case No. 2224 acted
on the presumption that the Hensons were still happily married
because the complaint itself shows that they did not consider
Romarico as a party to the transaction which Katrina undertook with
Anita Wong. In all likelihood, the plaintiffs merely impleaded
Romarico as a nominal party in the case pursuant to the provisions
of Rule 3, Section 4 of the Rules of Court.
Consequently, the writ of execution cannot be issued against
Romarico as he has not yet had his day in court23 and, necessarily,
the public auction sale is null and void.24 Moreover, the power of
the court in the execution of judgments extends only over
properties unquestionably belonging to the judgment debtor. 25
On the matter of ownership of the properties involved, however,
the Court disagrees with the appellate court that the said properties
are exclusively owned by Romarico.1âwphi1 Having been acquired
during the marriage, they are still presumed to belong to the
conjugal partnership26 even though Romarico and Katrina had been
living separately.27
The presumption of the conjugal nature of the properties subsists in
the absence of clear, satisfactory and convincing evidence to
overcome said presumption or to prove that the properties are
exclusively owned by Romarico.28 While there is proof that
Romarico acquired the properties with money he had borrowed
from an officemate, it is unclear where he obtained the money to
repay the loan. If he paid it out of his salaries, then the money is
part of the conjugal assets29 and not exclusively his. Proof on this
matter is of paramount importance considering that in the
determination of the nature of a property acquired by a person
during covertrue, the controlling factor is the source of the money
utilized in the purchase.
The conjugal nature of the properties notwithstanding, Katrina's
indebtedness may not be paid for with them her obligation not
having been shown by the petitioners to be one of the charges
against the conjugal partnership.30 In addition to the fact that her
rights over the properties are merely inchoate prior to the
liquidation of the conjugal partnership, the consent of her husband
and her authority to incur such indebtedness had not been alleged
in the complaint and proven at the trial.31
Furthermore, under the Civil Code (before the effectivity of the
Family Code on August 3, 1988), a wife may bind the conjugal
partnership only when she purchases things necessary for the
support of the family or when she borrows money for the purpose inchoate proprietary rights over the properties sold at public
of purchasing things necessary for the support of the family if the auction. After all, a person can sell only what he owns or is
husband fails to deliver the proper sum;32 when the administration authorized to sell and the buyer can, as a consequence, acquire no
of the conjugal partnership is transferred to the wife by the more that what the seller can legally transfer.36 But, inasmuch as the
courts33 or by the husband34 and when the wife gives moderate decision in Civil Case No. 2224 is void only as far as Romarico and
donations for charity.35 Having failed to establish that any of these the conjugal properties are concerned, the same may still be
circumstances occurred, the Wongs may not bind the conjugal executed by the Spouses Wong against Katrina Henson personally
assets to answer for Katrina's personal obligation to them. and exclusively. The Spouses Wong must return to Juanito Santos
and Leonardo Joson the purchase prices of P145,000 and P119,000
Petitioners' contention that the rights of Santos and Joson as respectively, received by said spouse from the public auction sale.
innocent buyers at the public auction sale may not be prejudiced, is,
to a certain extent, valid. After all, in the absence of proof that The redemption made by Santos in the foreclosure proceeding
irregularities attended the sale, the same must be presumed to have against Romarico and Katrina Henson filed by the Rural Bank of
been conducted in accordance with law. There is, however, a Porac, should, however, be respected unless Romarico exercises his
peculiar factual circumstance that goes against the grain of that right of redemption over the property covered by Transfer
general presumption the properties levied upon and sold at the Certificate of Title No. 30951 in accordance with law.
public auction do not exclusively belong to the judgment debtor.
Thus, the guiding jurisprudence is as follows: WHEREFORE, the decisions of the appellate court and the lower
court in Civil Case No. 28-09 are hereby AFFIRMED subject to the
The rule in execution sales is that an execution creditor modifications above stated. No costs.
acquires no higher or better right than what the execution
debtor has in the property levied upon. The purchaser of SO ORDERED.
property on sale under execution and levy takes as
assignee, only as the judicial seller possesses no title other
than that which would pass by an assignment by the
owner. "An execution purchaser generally acquires such
estate or interest as was vested in the execution debtor at
the time of the seizure on execution, and only such
interest, taking merely a quit-claim of the execution
debtor's title, without warranty on the part of either the
execution officer or of the parties, whether the property is
realty or personalty. This rule prevails even if a larger
interest in the property was intended to be sold.
Accordingly, if the judgment debtor had no interest in the
property, the execution purchaser acquires no interest
therein." (Pacheco vs. Court of Appeals, L-48689, August
31, 1987, 153 SCRA 382, 388-389 quoting Laureano vs.
Stevenson, 45 Phil. 252; Cabuhat vs. Ansery, 42 Phil. 170;
Fore v. Manove, 18 Cal. 436 and 21 Am. Jur., 140-141.
Emphasis supplied.)
Applying this jurisprudence, execution purchasers Santos and Joson
possess no rights which may rise above judgment debtor Katrina's
SECOND DIVISION
G.R. No. 141323 June 8, 2005
DAVID V. PELAYO and LORENZA* B. PELAYO, Petitioners,
vs.
MELKI E. PEREZ, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the petition for review on certiorari seeking the
reversal of the Decision1 of the Court of Appeals (CA) promulgated
on April 20, 1999 which reversed the Decision of the Regional Trial
Court (RTC) of Panabo, Davao, Branch 34, in Civil Case No. 91-46;
and the CA Resolution dated December 17, 1999 denying
petitioners’ motion for reconsideration.
The antecedent facts as aptly narrated by the CA are as follows:
David Pelayo (Pelayo),by a Deed of Absolute Sale executed on
January 11, 1988, conveyed to Melki Perez (Perez) two parcels of
agricultural land (the lots) situated in Panabo, Davao which are
portions of Lot 4192, Cad. 276 covered by OCT P-16873.
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose
signature is illegible witnessed the execution of the deed.
Loreza, however, signed only on the third page in the space
provided for witnesses on account of which Perez’ application for
registration of the deed with the Office of the Register of Deeds in
Tagum, Davao was denied.
Perez thereupon asked Loreza to sign on the first and second pages
of the deed but she refused, hence, he instituted on August 8, 1991
the instant complaint for specific performance against her and her
husband Pelayo (defendants).
The defendants moved to dismiss the complaint on the ground that
it stated no cause of action, citing Section 6 of RA 6656 otherwise
known as the Comprehensive Agrarian Reform Law which took
effect on June 10, 1988 and which provides that contracts executed
prior thereto shall "be valid only when registered with the Register
of Deeds within a period of three (3) months after the effectivity of
this Act."
The questioned deed having been executed on January 10, 1988,
the defendants claimed that Perez had at least up to September 10,
1988 within which to register the same, but as they failed to, it is
not valid and, therefore, unenforceable.
The trial court thus dismissed the complaint. On appeal to this
Court, the dismissal was set aside and the case was remanded to the
lower court for further proceedings.
In their Answer, the defendants claimed that as the lots were
occupied illegally by some persons against whom they filed an
ejectment case, they and Perez who is their friend and known at the
time as an activist/leftist, hence feared by many, just made it appear
in the deed that the lots were sold to him in order to frighten said
illegal occupants, with the intentional omission of Loreza’s signature
so that the deed could not be registered; and that the deed being
simulated and bereft of consideration is void/inexistent.
Perez countered that the lots were given to him by defendant
Pelayo in consideration of his services as his attorney-in-fact to
make the necessary representation and negotiation with the illegal
occupants-defendants in the ejectment suit; and that after his
relationship with defendant Pelayo became sour, the latter sent a
letter to the Register of Deeds of Tagum requesting him not to
entertain any transaction concerning the lots title to which was
entrusted to Perez who misplaced and could [not] locate it.
Defendant Pelayo claimed in any event, in his Pre-trial brief filed on
March 19, 1996, that the deed was without his wife Loreza’s
consent, hence, in light of Art. 166 of the Civil Code which provides:
Article 166. Unless the wife has been declared a non compos mentis
or a spendthrift, or is under civil interdiction or is confined in a
leprosarium, the husband cannot alienate or encumber any real
property of the conjugal partnership without the wife’s consent . . .
it is null and void.
The trial court, finding, among others, that Perez did not possess,
nor pay the taxes on the lots, that defendant Pelayo was indebted
to Perez for services rendered and, therefore, the deed could only
be considered as evidence of debt, and that in any event, there was
no marital consent to nor actual consideration for the deed, held
that the deed was null and void and accordingly rendered judgment
the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered ordering and directing
the defendants to pay plaintiff Melki Perez the sum of TEN
THOUSAND (₱10,000.00) Pesos as principal with 12% interest per
annum starting from the date of filing of the complaint on August 1,
1991 until plaintiff is fully paid.
The defendants shall likewise pay to plaintiff the sum of THREE
THOUSAND (₱3,000.00) as attorney’s fees.
The court further orders that the Deed of Absolute Sale, (Annex ‘A’)
of the complaint and (Annex ‘C’) of the plaintiff’s Motion for
Summary Judgment is declared null and void and without force and
it is likewise removed as a cloud over defendants’ title and property
in suit. . . ."2
The RTC Decision was appealed by herein respondent Perez to the
CA. Petitioners failed to file their appellees’ brief. The CA then
promulgated its Decision on April 20, 1999 whereby it ruled that by
Lorenza’s signing as witness to the execution of the deed, she had
knowledge of the transaction and is deemed to have given her
consent to the same; that herein petitioners failed to adduce
sufficient proof to overthrow the presumption that there was
consideration for the deed, and that petitioner David Pelayo, being a
lawyer, is presumed to have acted with due care and to have signed
the deed with full knowledge of its contents and import. The CA
reversed and set aside the RTC Decision, declaring as valid and
enforceable the questioned deed of sale and ordering herein
petitioner Lorenza Pelayo to affix her signature on all pages of said
document.
Petitioners moved for reconsideration of the decision but the same
was denied per Resolution dated December 17, 1999. The CA found
said motion to have been filed out of time and ruled that even
putting aside technicality, petitioners failed to present any ground
bearing on the merits of the case to justify a reversal or setting aside
of the decision.
Hence, this petition for review on certiorari on the following
grounds:
1. The CA erred in ignoring the specific provision of Section
6, in relation to Section 4 of R.A. No. 6657 otherwise known
as the Comprehensive Agrarian Reform Law of 1988 which
took effect on June 15, 1988 and which provides that
contracts executed prior thereto shall "be valid only when
registered with the Register of Deeds within a period of
three (3) months after the effectivity of this Act."
2. The CA erred in holding that the deed of sale was valid
and considering the ₱10,000.00 adjudged by the trial court
as Perez’s remuneration as the consideration for the deed
of sale, instead of declaring the same as null and void for
being fictitious or simulated and on the basis of Art. 491,
Par. 2 of the New Civil Code which prohibits agents from
acquiring by purchase properties from his principal under
his charge.
3. The CA made a novel ruling that there was implied
marital consent of the wife of petitioner David Pelayo.
4. Petitioners should have been allowed to file their
appellees’ brief to ventilate their side, considering the
existence of peculiar circumstances which prevented
petitioners from filing said brief.
On the other hand, respondent points out that the CA, in resolving
the first appeal docketed as CA-G.R. SP No. 387003 brought by
respondent assailing the RTC Order granting herein petitioners’
motion to dismiss, already ruled that under R.A. No. 6657, the sale
or transfer of private agricultural land is allowed only when the area
of the land being conveyed constitutes or is a part of, the
landowner-seller retained area and when the total landholding of
the purchaser-transferee, including the property sold, does not
exceed five (5) hectares; that in this case, the land in dispute is only
1.3 hectares and there is no proof that the transferee’s (herein
respondent) total landholding inclusive of the subject land will
exceed 5 hectares, the landholding ceiling prescribed by R.A. No.
6657; that the failure of respondent to register the instrument was
not due to his fault or negligence but can be attributed to Lorenza’s
unjustified refusal to sign two pages of the deed despite several
requests of respondent; and that therefore, the CA ruled that the
deed of sale subject of this case is valid under R.A. No. 6657.
Respondent further maintains that the CA correctly held in its
assailed Decision that there was consideration for the contract and
that Lorenza is deemed to have given her consent to the deed of
sale.
Respondent likewise opines that the CA was right in denying
petitioners’ motion for reconsideration where they prayed that they
be allowed to file their appellees’ brief as their counsel failed to file
the same on account of said counsel’s failing health due to cancer of
the liver. Respondent emphasized that in petitioners’ motion for
reconsideration, they did not even cite any errors made by the CA in
its Decision.
The issues boil down to the question of whether or not the deed of
sale was null and void on the following grounds: (a) for not
complying with the provision in R.A. No. 6657 that such document
must be registered with the Register of Deeds within three months
after the effectivity of said law; (b) for lack of marital consent; (c) for
being prohibited under Article 1491 (2) of the Civil Code; and (d) for
lack of consideration.
We rule against petitioners.
The issue of whether or not the deed of sale is null and void under
R.A. No. 6657, for respondent’s failure to register said document
with the Register of Deeds within three months after the effectivity
of R.A. No. 6657, had been resolved with finality by the CA in its
Decision dated November 24, 1994 in CA-G.R. SP No. 38700.4 Herein
petitioners no longer elevated said CA Decision to this Court and the
same became final and executory on January 7, 1995.5
In said decision, the CA interpreted Section 4, in relation to Section
70 of R.A. No. 6657, to mean thus:
. . . the proper interpretation of both sections is that under R.A. No.
6657, the sale or transfer of a private agricultural land is allowed
only when said land area constitutes or is a part of the landowner-
seller retained area and only when the total landholdings of the
purchaser-transferee, including the property sold does not exceed
five (5) hectares.
Aside from declaring that the failure of respondent to register the
deed was not of his own fault or negligence, the CA ruled that
respondent’s failure to register the deed of sale within three months
after effectivity of The Comprehensive Agrarian Reform Law did not
invalidate the deed of sale as "the transaction over said property is
not proscribed by R.A. No. 6657."
Thus, under the principle of law of the case, said ruling of the CA is
now binding on petitioners.1avvph!1 Such principle was elucidated
in Cucueco vs. Court of Appeals,6 to wit:
Law of the case has been defined as the opinion delivered on a
former appeal. It is a term applied to an established rule that when
an appellate court passes on a question and remands the case to
the lower court for further proceedings, the question there settled
becomes the law of the case upon subsequent appeal. It means that
whatever is once irrevocably established as the controlling legal rule
or decision between the same parties in the same case continues to
be the law of the case, whether correct on general principles or not,
so long as the facts on which such decision was predicated continue
to be the facts of the case before the court.
Petitioners not having questioned the Decision of the CA dated
November 24, 1994 which then attained finality, the ruling that the
deed of sale subject of this case is not among the transactions
deemed as invalid under R.A. No. 6657, is now immutable.
We agree with the CA ruling that petitioner Lorenza, by affixing her
signature to the Deed of Sale on the space provided for witnesses, is
deemed to have given her implied consent to the contract of sale.
Sale is a consensual contract that is perfected by mere consent,
which may either be express or implied.7 A wife’s consent to the
husband’s disposition of conjugal property does not always have to
be explicit or set forth in any particular document, so long as it is
shown by acts of the wife that such consent or approval was indeed
given.8 In the present case, although it appears on the face of the
deed of sale that Lorenza signed only as an instrumental witness,
circumstances leading to the execution of said document point to
the fact that Lorenza was fully aware of the sale of their conjugal
property and consented to the sale.
In their Pre-Trial Brief,9 petitioners admitted that even prior to 1988,
they have been having serious problems, including threats to the life
of petitioner David Pelayo, due to conflicts with the illegal occupants
of the property in question, so that respondent, whom many feared
for being a leftist/activist, offered his help in driving out said illegal
occupants.
Human experience tells us that a wife would surely be aware of
serious problems such as threats to her husband’s life and the
reasons for such threats. As they themselves stated, petitioners’
problems over the subject property had been going on for quite
some time, so it is highly improbable for Lorenza not to be aware of
what her husband was doing to remedy such problems. Petitioners
do not deny that Lorenza Pelayo was present during the execution
of the deed of sale as her signature appears thereon. Neither do
they claim that Lorenza Pelayo had no knowledge whatsoever about
the contents of the subject document. Thus, it is quite
certain that she knew of the sale of their conjugal property between
her husband and respondent.
Under the rules of evidence, it is presumed that a person takes
ordinary care of his concerns.10 Petitioners did not even attempt to
overcome the aforementioned presumption as no evidence was
ever presented to show that Lorenza was in any way lacking in her
mental faculties and, hence, could not have fully understood the
ramifications of signing the deed of sale. Neither did petitioners
present any evidence that Lorenza had been defrauded, forced,
intimidated or threatened either by her own husband or by
respondent into affixing her signature on the subject document. If
Lorenza had any objections over the conveyance of the disputed
property, she could have totally refrained from having any part in
the execution of the deed of sale. Instead, Lorenza even affixed her
signature thereto.
Moreover, under Article 173, in relation to Article 166, both of the
New Civil Code, which was still in effect on January 11, 1988 when
the deed in question was executed, the lack of marital consent to
the disposition of conjugal property does not make the contract
void ab initio but merely voidable. Said provisions of law provide:
Art. 166. Unless the wife has been declared a non compos mentis or
a spendthrift, or is under civil interdiction or is confined in a
leprosarium, the husband cannot alienate or encumber any real
property of the conjugal property without the wife’s consent. If she
refuses unreasonably to give her consent, the court may compel her
to grant the same.
...
Art. 173. The wife may, during the marriage, and within ten years
from the transaction questioned, ask the courts for the annulment
of any contract of the husband entered into without her consent,
when such consent is required, or any act or contract of the
husband which tends to defraud her or impair her interest in the
conjugal partnership property. Should the wife fail to exercise this
right, she or her heirs, after the dissolution of the marriage, may
demand the value of property fraudulently alienated by the
husband.
Hence, it has been held that the contract is valid until the court
annuls the same and only upon an action brought by the wife whose
consent was not obtained.11 In the present case, despite
respondent’s repeated demands for Lorenza to affix her signature
on all the pages of the deed of sale, showing respondent’s insistence
on enforcing said contract, Lorenza still did not file a case for
annulment of the deed of sale. It was only when respondent filed a
complaint for specific performance on August 8, 1991 when
petitioners brought up Lorenza’s alleged lack of consent as an
affirmative defense. Thus, if the transaction was indeed entered into
without Lorenza’s consent, we find it quite puzzling why for more
than three and a half years, Lorenza did absolutely nothing to seek
the nullification of the assailed contract.
The foregoing circumstances lead the Court to believe that Lorenza
knew of the full import of the transaction between respondent and
her
husband; and, by affixing her signature on the deed of sale, she, in
effect, signified her consent to the disposition of their conjugal
property.
With regard to petitioners’ asseveration that the deed of sale is
invalid under Article 1491, paragraph 2 of the New Civil Code, we
find such argument unmeritorious. Article 1491 (2) provides:
Art. 1491. The following persons cannot acquire by purchase, even
at a public or judicial auction, either in person or through the
mediation of another:
...
(2) Agents, the property whose administration or sale may have
been entrusted to them, unless the consent of the principal has
been given;
...
In Distajo vs. Court of Appeals,12 a landowner, Iluminada Abiertas,
designated one of her sons as the administrator of several parcels of
her land. The landowner subsequently executed a Deed of
Certification of Sale of Unregistered Land, conveying some of said
land to her son/administrator. Therein, we held that:
Under paragraph (2) of the above article, the prohibition against
agents purchasing property in their hands for sale or management is
not absolute. It does not apply if the principal consents to the sale of
the property in the hands of the agent or administrator. In this case,
the deeds of sale signed by Iluminada Abiertas shows that she gave
consent to the sale of the properties in favor of her son, Rufo, who
was the administrator of the properties. Thus, the consent of the
principal Iluminada Abiertas removes the transaction out of the
prohibition contained in Article 1491(2). 13
The above-quoted ruling is exactly in point with this case before us.
Petitioners, by signing the Deed of Sale in favor of respondent, are
also deemed to have given their consent to the sale of the subject
property in favor of respondent, thereby making the transaction an
exception to the general rule that agents are prohibited from
purchasing the property of their principals.
Petitioners also argue that the CA erred in ruling that there was
consideration for the sale. We find no error in said appellate court’s
ruling. The element of consideration for the sale is indeed present.
Petitioners, in adopting the trial court’s narration of antecedent
facts in their petition,14 thereby admitted that they authorized
respondent to represent them in negotiations with the "squatters"
occupying the disputed property and, in consideration of
respondent’s services, they executed the subject deed of sale. Aside
from such services rendered by respondent, petitioners also
acknowledged in the deed of sale that they received in full the
amount of Ten Thousand Pesos. Evidently, the consideration for the
sale is respondent’s services plus the aforementioned cash money.
Petitioners contend that the consideration stated in the deed of sale
is excessively inadequate, indicating that the deed of sale was
merely simulated. We are not persuaded. Our ruling
in Buenaventura vs. Court of Appeals15 is pertinent, to wit:
. . . Indeed, there is no requirement that the price be equal to the
exact value of the subject matter of sale. . . . As we stated in Vales
vs. Villa:
Courts cannot follow one every step of his life and extricate him
from bad bargains, protect him from unwise investments, relieve
him from one-sided contracts, or annul the effects of foolish acts.
Courts cannot constitute themselves guardians of persons who are
not legally incompetent. Courts operate not because one person has
been defeated or overcome by another, but because he has been
defeated or overcome illegally. Men may do foolish things, make
ridiculous contracts, use miserable judgment, and lose money by
them – indeed, all they have in the world; but not for that alone can
the law intervene and restore. There must be, in addition,
a violation of the law, the commission of what the law knows as
an actionable wrong, before the courts are authorized to lay hold of
the situation and remedy it.16
Verily, in the present case, petitioners have not presented proof
that there has been fraud, mistake or undue influence exercised
upon them by respondent. It is highly unlikely and contrary to
human experience that a layman like respondent would be able to
defraud, exert undue influence, or in any way vitiate the consent of
a lawyer like petitioner David Pelayo who is expected to be more
knowledgeable in the ways of drafting contracts and other legal
transactions.
Furthermore, in their Reply to Respondent’s
Memorandum,17 petitioners adopted the CA’s narration of fact that
petitioners stated in a letter they sent to the Register of Deeds of We have consistently held that a petitioner’s right to due process is
Tagum that they have entrusted the titles over subject lots to herein not violated where he was able to move for reconsideration of the
respondent. Such act is a clear indication that they intended to order or decision in question.19 In this case, petitioners had the
convey the subject property to herein respondent and the deed of opportunity to fully expound on their defenses through a motion for
sale was not merely simulated or fictitious. reconsideration. Petitioners did file such motion but they wasted
such opportunity by failing to present therein whatever errors they
Lastly, petitioners claim that they were not able to fully ventilate believed the CA had committed in its Decision. Definitely, therefore,
their defense before the CA as their lawyer, who was then suffering the denial of petitioners’ motion for reconsideration, praying that
from cancer of the liver, failed to file their appellees’ brief. Thus, in they be allowed to file appellees’ brief, did not infringe petitioners’
their motion for reconsideration of the CA Decision, they prayed right to due process as any issue that petitioners wanted to raise
that they be allowed to submit such appellees’ brief. The CA, in its could and should have been contained in said motion for
Resolution dated December 17, 1999, stated thus: reconsideration.
By movant-defendant-appellee’s own information, his counsel IN VIEW OF THE FOREGOING, the petition is DENIED and the
received a copy of the decision on May 5, 1999. He, therefore, had Decision of the Court of Appeals dated April 20, 1999 and its
fifteen (15) days from said date or up to May 20, 1999 to file the Resolution dated December 17, 1999 are hereby AFFIRMED.
motion. The motion, however, was sent through a private courier
and, therefore, considered to have been filed on the date of actual SO ORDERED.
receipt on June 17, 1999 by the addressee – Court of Appeals, was
filed beyond the reglementary period.
Technicality aside, movant has not proffered any ground bearing on
the merits of the case why the decision should be set aside.1awphi1
Petitioners never denied the CA finding that their motion for
reconsideration was filed beyond the fifteen-day reglementary
period. On that point alone, the CA is correct in denying due course
to said motion. The motion having been belatedly filed, the CA
Decision had then attained finality. Thus, in Abalos vs. Philex Mining
Corporation,18 we held that:
. . . Nothing is more settled in law than that once a judgment attains
finality it thereby becomes immutable and unalterable. It may no
longer be modified in any respect, even if the modification is meant
to correct what is perceived to be an erroneous conclusion of fact or
law, and regardless of whether the modification is attempted to be
made by the court rendering it or by the highest court of the land.
Moreover, it is pointed out by the CA that said motion did not
present any defense or argument on the merits of the case that
could have convinced the CA to reverse or modify its Decision.
SECOND DIVISION
G.R. No. 153802. March 11, 2005
HOMEOWNERS SAVINGS & LOAN BANK, Petitioner,
vs.
MIGUELA C. DAILO, Respondents.
DECISION
TINGA, J.:
This is a petition for review on certiorari under Rule 45 of the
Revised Rules of Court, assailing the Decision1 of the Court of
Appeals in CA-G.R. CV No. 59986 rendered on June 3, 2002, which
affirmed with modification the October 18, 1997 Decision2 of the
Regional Trial Court, Branch 29, San Pablo City, Laguna in Civil Case
No. SP-4748 (97).
The following factual antecedents are undisputed.
Respondent Miguela C. Dailo and Marcelino Dailo, Jr. were married
on August 8, 1967. During their marriage, the spouses purchased a
house and lot situated at Barangay San Francisco, San Pablo City
from a certain Sandra Dalida. The subject property was declared for
tax assessment purposes under Assessment of Real Property No. 94-
051-2802. The Deed of Absolute Sale, however, was executed only
in favor of the late Marcelino Dailo, Jr. as vendee thereof to the
exclusion of his wife.3
On December 1, 1993, Marcelino Dailo, Jr. executed a Special Power
of Attorney (SPA) in favor of one Lilibeth Gesmundo, authorizing the
latter to obtain a loan from petitioner Homeowners Savings and
Loan Bank to be secured by the spouses Dailo’s house and lot in San
Pablo City. Pursuant to the SPA, Gesmundo obtained a loan in the
amount of ₱300,000.00 from petitioner. As security therefor,
Gesmundo executed on the same day a Real Estate Mortgage
constituted on the subject property in favor of petitioner. The
abovementioned transactions, including the execution of the SPA in
favor of Gesmundo, took place without the knowledge and consent
of respondent.4
Upon maturity, the loan remained outstanding. As a result,
petitioner instituted extrajudicial foreclosure proceedings on the
mortgaged property. After the extrajudicial sale thereof, a
Certificate of Sale was issued in favor of petitioner as the highest
bidder. After the lapse of one year without the property being
redeemed, petitioner, through its vice-president, consolidated the
ownership thereof by executing on June 6, 1996 an Affidavit of
Consolidation of Ownership and a Deed of Absolute Sale.5
In the meantime, Marcelino Dailo, Jr. died on December 20, 1995. In
one of her visits to the subject property, respondent learned that
petitioner had already employed a certain Roldan Brion to clean its
premises and that her car, a Ford sedan, was razed because Brion
allowed a boy to play with fire within the premises.
Claiming that she had no knowledge of the mortgage constituted on
the subject property, which was conjugal in nature, respondent
instituted with the Regional Trial Court, Branch 29, San Pablo City,
Civil Case No. SP-2222 (97) for Nullity of Real Estate Mortgage and
Certificate of Sale, Affidavit of Consolidation of Ownership, Deed of
Sale, Reconveyance with Prayer for Preliminary Injunction and
Damages against petitioner. In the latter’s Answer with
Counterclaim, petitioner prayed for the dismissal of the complaint
on the ground that the property in question was the exclusive
property of the late Marcelino Dailo, Jr.
After trial on the merits, the trial court rendered a Decision on
October 18, 1997. The dispositive portion thereof reads as follows:
WHEREFORE, the plaintiff having proved by the preponderance of
evidence the allegations of the Complaint, the Court finds for the
plaintiff and hereby orders:
ON THE FIRST CAUSE OF ACTION:
1. The declaration of the following documents as null and void:
(a) The Deed of Real Estate Mortgage dated December 1, 1993
executed before Notary Public Romulo Urrea and his notarial
register entered as Doc. No. 212; Page No. 44, Book No. XXI, Series
of 1993.
(b) The Certificate of Sale executed by Notary Public Reynaldo
Alcantara on April 20, 1995.
(c) The Affidavit of Consolidation of Ownership executed by the
defendant
(c) The Affidavit of Consolidation of Ownership executed by the
defendant over the residential lot located at Brgy. San Francisco,
San Pablo City, covered by ARP No. 95-091-1236 entered as Doc. No.
406; Page No. 83, Book No. III, Series of 1996 of Notary Public
Octavio M. Zayas.
(d) The assessment of real property No. 95-051-1236.
2. The defendant is ordered to reconvey the property subject of this
complaint to the plaintiff.
ON THE SECOND CAUSE OF ACTION
1. The defendant to pay the plaintiff the sum of ₱40,000.00
representing the value of the car which was burned.
ON BOTH CAUSES OF ACTION
1. The defendant to pay the plaintiff the sum of ₱25,000.00 as
attorney’s fees;
2. The defendant to pay plaintiff ₱25,000.00 as moral damages;
3. The defendant to pay the plaintiff the sum of ₱10,000.00 as
exemplary damages;
4. To pay the cost of the suit.
The counterclaim is dismissed.
SO ORDERED.6
Upon elevation of the case to the Court of Appeals, the appellate
court affirmed the trial court’s finding that the subject property was
conjugal in nature, in the absence of clear and convincing evidence
to rebut the presumption that the subject property acquired during
the marriage of spouses Dailo belongs to their conjugal
partnership.7 The appellate court declared as void the mortgage on
the subject property because it was constituted without the
knowledge and consent of respondent, in accordance with Article
124 of the Family Code. Thus, it upheld the trial court’s order to
reconvey the subject property to respondent.8 With respect to the
damage to respondent’s car, the appellate court found petitioner to
be liable therefor because it is responsible for the consequences of
the acts or omissions of the person it hired to accomplish the
assigned task.9 All told, the appellate court affirmed the trial
court’s Decision, but deleted the award for damages and attorney’s
fees for lack of basis.10
Hence, this petition, raising the following issues for this Court’s
consideration:
1. WHETHER OR NOT THE MORTGAGE CONSTITUTED BY THE LATE
MARCELINO DAILO, JR. ON THE SUBJECT PROPERTY AS CO-OWNER
THEREOF IS VALID AS TO HIS UNDIVIDED SHARE.
2. WHETHER OR NOT THE CONJUGAL PARTNERSHIP IS LIABLE FOR
THE PAYMENT OF THE LOAN OBTAINED BY THE LATE MARCELINO
DAILO, JR. THE SAME HAVING REDOUNDED TO THE BENEFIT OF THE
FAMILY.11
First, petitioner takes issue with the legal provision applicable to the
factual milieu of this case. It contends that Article 124 of the Family
Code should be construed in relation to Article 493 of the Civil Code,
which states:
ART. 493. 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.
Article 124 of the Family Code provides in part:
ART. 124. The administration and enjoyment of the conjugal
partnership property shall belong to both spouses jointly. . . .
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 the powers of disposition or encumbrance
which must have 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. . . .
Petitioner argues that although Article 124 of the Family Code
requires the consent of the other spouse to the mortgage of
conjugal properties, the framers of the law could not have intended
to curtail the right of a spouse from exercising full ownership over
the portion of the conjugal property pertaining to him under the
concept of co-ownership.12 Thus, petitioner would have this Court
uphold the validity of the mortgage to the extent of the late
Marcelino Dailo, Jr.’s share in the conjugal partnership.
In Guiang v. Court of Appeals,13 it was held that the sale of a
conjugal property requires the consent of both the husband and
wife.14 In applying Article 124 of the Family Code, this Court
declared that the absence of the consent of one renders the entire
sale null and void, including the portion of the conjugal property
pertaining to the husband who contracted the sale. The same
principle in Guiang squarely applies to the instant case. As shall be
discussed next, there is no legal basis to construe Article 493 of the
Civil Code as an exception to Article 124 of the Family Code.
Respondent and the late Marcelino Dailo, Jr. were married on
August 8, 1967. In the absence of a marriage settlement, the system
of relative community or conjugal partnership of gains governed the
property relations between respondent and her late
husband.15 With the effectivity of the Family Code on August 3,
1988, Chapter 4 on Conjugal Partnership of Gains in the Family Code
was made applicable to conjugal partnership of gains already
established before its effectivity unless vested rights have already
been acquired under the Civil Code or other laws.16
The rules on co-ownership do not even apply to the property
relations of respondent and the late Marcelino Dailo, Jr. even in a
suppletory manner. The regime of conjugal partnership of gains is a
special type of partnership, where the husband and wife place in a
common fund the proceeds, products, fruits and income from their
separate properties and those acquired by either or both spouses
through their efforts or by chance.17 Unlike the absolute community
of property wherein the rules on co-ownership apply in a suppletory
manner,18 the conjugal partnership shall be governed by the rules
on contract of partnership in all that is not in conflict with what is
expressly determined in the chapter (on conjugal partnership of
gains) or by the spouses in their marriage settlements.19 Thus, the
property relations of respondent and her late husband shall be
governed, foremost, by Chapter 4 on Conjugal Partnership of
Gains of the Family Code and, suppletorily, by the rules on
partnership under the Civil Code. In case of conflict, the former
prevails because the Civil Code provisions on partnership apply only
when the Family Code is silent on the matter.
The basic and established fact is that during his lifetime, without the
knowledge and consent of his wife, Marcelino Dailo, Jr. constituted
a real estate mortgage on the subject property, which formed part
of their conjugal partnership. By express provision of Article 124 of
the Family Code, in the absence of (court) authority or written
consent of the other spouse, any disposition or encumbrance of the
conjugal property shall be void.
The aforequoted provision does not qualify with respect to the
share of the spouse who makes the disposition or encumbrance in
the same manner that the rule on co-ownership under Article 493 of
the Civil Code does. Where the law does not distinguish, courts
should not distinguish.20 Thus, both the trial court and the appellate
court are correct in declaring the nullity of the real estate mortgage
on the subject property for lack of respondent’s consent.
Second, petitioner imposes the liability for the payment of the
principal obligation obtained by the late Marcelino Dailo, Jr. on the
conjugal partnership to the extent that it redounded to the benefit
of the family.21
Under Article 121 of the Family Code, "[T]he conjugal partnership
shall be liable for: . . . (3) Debts and obligations contracted by either
spouse without the consent of the other to the extent that the
family may have been benefited; . . . ." For the subject property to
be held liable, the obligation contracted by the late Marcelino Dailo,
Jr. must have redounded to the benefit of the conjugal partnership.
There must be the requisite showing then of some advantage which
clearly accrued to the welfare of the spouses. Certainly, to make a
conjugal partnership respond for a liability that should appertain to
the husband alone is to defeat and frustrate the avowed objective
of the new Civil Code to show the utmost concern for the solidarity
and well-being of the family as a unit.22

The burden of proof that the debt was contracted for the benefit of
the conjugal partnership of gains lies with the creditor-party litigant
claiming as such.23 Ei incumbit probatio qui dicit, non qui negat (he
who asserts, not he who denies, must prove).24 Petitioner’s
sweeping conclusion that the loan obtained by the late Marcelino
Dailo, Jr. to finance the construction of housing units without a
doubt redounded to the benefit of his family, without adducing
adequate proof, does not persuade this Court. Other than
petitioner’s bare allegation, there is nothing from the records of the
case to compel a finding that, indeed, the loan obtained by the late
Marcelino Dailo, Jr. redounded to the benefit of the family.
Consequently, the conjugal partnership cannot be held liable for the
payment of the principal obligation.

In addition, a perusal of the records of the case reveals that during

the trial, petitioner vigorously asserted that the subject property
was the exclusive property of the late Marcelino Dailo, Jr. Nowhere
in the answer filed with the trial court was it alleged that the
proceeds of the loan redounded to the benefit of the family. Even
on appeal, petitioner never claimed that the family benefited from
the proceeds of the loan. When a party adopts a certain theory in
the court below, he will not be permitted to change his theory on
appeal, for to permit him to do so would not only be unfair to the
other party but it would also be offensive to the basic rules of fair
play, justice and due process.25 A party may change his legal theory
on appeal only when the factual bases thereof would not require
presentation of any further evidence by the adverse party in order
to enable it to properly meet the issue raised in the new theory. 26

WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.
FIRST DIVISION
G.R. No. 109557 November 29, 2000
JOSE UY and his Spouse GLENDA J. UY and GILDA L.
JARDELEZA, petitioners,
vs.
COURT OF APPEALS and TEODORO L. JARDELEZA, respondents.
DECISION
PARDO, J.:
The case is an appeal via certiorari from the decision1 of the Court of
Appeals and its resolution denying reconsideration 2 reversing that of
the Regional Trial Court, Iloilo, Branch 323 and declaring void the
special proceedings instituted therein by petitioners to authorize
petitioner Gilda L. Jardeleza, in view of the comatose condition of
her husband, Ernesto Jardeleza, Sr., with the approval of the court,
to dispose of their conjugal property in favor of co-petitioners, their
daughter and son in law, for the ostensible purpose of "financial
need in the personal, business and medical expenses of her
‘incapacitated’ husband."
The facts, as found by the Court of Appeals, are as follows:
"This case is a dispute between Teodoro L. Jardeleza (herein
respondent) on the one hand, against his mother Gilda L. Jardeleza,
and sister and brother-in-law, the spouses Jose Uy and Glenda
Jardeleza (herein petitioners) on the other hand. The controversy
came about as a result of Dr. Ernesto Jardeleza, Sr.’s suffering of a
stroke on March 25, 1991, which left him comatose and bereft of
any motor or mental faculties. Said Ernesto Jardeleza, Sr. is the
father of herein respondent Teodoro Jardeleza and husband of
herein private respondent Gilda Jardeleza.
"Upon learning that one piece of real property belonging to the
senior Jardeleza spouses was about to be sold, petitioner Teodoro
Jardeleza, on June 6, 1991, filed a petition (Annex "A") before the
R.T.C. of Iloilo City, Branch 25, where it was docketed as Special
Proceeding No. 4689, in the matter of the guardianship of Dr.
Ernesto Jardeleza, Sr. The petitioner averred therein that the
present physical and mental incapacity of Dr. Ernesto Jardeleza, Sr.
prevent him from competently administering his properties, and in
order to prevent the loss and dissipation of the Jardelezas’ real and
personal assets, there was a need for a court-appointed guardian to
administer said properties. It was prayed therein that Letters of
Guardianship be issued in favor of herein private respondent Gilda
Ledesma Jardeleza, wife of Dr. Ernesto Jardeleza, Sr. It was further
prayed that in the meantime, no property of Dr. Ernesto Jardeleza,
Sr. be negotiated, mortgaged or otherwise alienated to third
persons, particularly Lot No. 4291 and all the improvements
thereon, located along Bonifacio Drive, Iloilo City, and covered by
T.C.T. No. 47337.
"A few days later, or on June 13, 1991, respondent Gilda L. Jardeleza
herself filed a petition docketed as Special Proceeding NO. 4691,
before Branch 32 of the R.T.C. of Iloilo City, regarding the
declaration of incapacity of Ernesto Jardeleza, Sr., assumption of
sole powers of administration of conjugal properties, and
authorization to sell the same (Annex "B"). Therein, the petitioner
Gilda L. Jardeleza averred the physical and mental incapacity of her
husband, who was then confined for intensive medical care and
treatment at the Iloilo Doctor’s Hospital. She signified to the court
her desire to assume sole powers of administration of their conjugal
properties. She also alleged that her husband’s medical treatment
and hospitalization expenses were piling up, accumulating to several
hundred thousands of pesos already. For this, she urgently needed
to sell one piece of real property, specifically Lot No. 4291 and its
improvements. Thus, she prayed for authorization from the court to
sell said property.
"The following day, June 14, 1991, Branch 32 of the R.T.C. of Iloilo
City issued an Order (Annex "C") finding the petition in Spec. Proc.
No. 4691 to be sufficient in form and substance, and setting the
hearing thereof for June 20, 1991. The scheduled hearing of the
petition proceeded, attended by therein petitioner Gilda Jardeleza,
her counsel, her two children, namely Ernesto Jardeleza, Jr., and
Glenda Jardeleza Uy, and Dr. Rolando Padilla, one of Ernesto
Jardeleza, Sr.’s attending physicians.
"On that same day, June 20, 1991, Branch 32 of the RTC of Iloilo City
rendered its Decision (Annex "D"), finding that it was convinced that
Ernesto Jardeleza, Sr. was truly incapacitated to participate in the
administration of the conjugal properties, and that the sale of Lot
No. 4291 and the improvements thereon was necessary to defray
the mounting expenses for treatment and Hospitalization. The said
court also made the pronouncement that the petition filed by Gilda
L. Jardeleza was "pursuant to Article 124 of the Family Code, and
that the proceedings thereon are governed by the rules on summary
proceedings sanctioned under Article 253 of the same Code x x x.
"The said court then disposed as follows:
"WHEREFORE, there being factual and legal bases to the petition
dated June 13, 1991, the Court hereby renders judgment as follows:
"1) declaring Ernesto Jardeleza, Sr., petitioner’s husband, to be
incapacitated and unable to participate in the administration of
conjugal properties;
"2) authorizing petitioner Gilda L. Jardeleza to assume sole powers
of administration of their conjugal properties; and
"3) authorizing aforesaid petitioner to sell Lot No. 4291 of the
Cadastral Survey of Iloilo, situated in Iloilo City and covered by TCT
No. 47337 issued in the names of Ernesto Jardeleza, Sr. and Gilda L.
Jardeleza and the buildings standing thereof.
"SO ORDERED.
"On June 24, 1991, herein petitioner Teodoro Jardeleza filed his
Opposition to the proceedings before Branch 32 in Spec. Proc. Case
No. 4691, said petitioner being unaware and not knowing that a
decision has already been rendered on the case by public
respondent.
"On July 3, 1991, herein petitioner Teodoro Jardeleza filed a motion
for reconsideration of the judgment in Spec. Proc. No. 4691 and a
motion for consolidation of the two cases (Annex "F"). He
propounded the argument that the petition for declaration of
incapacity, assumption of sole powers of administration, and
authority to sell the conjugal properties was essentially a petition
for guardianship of the person and properties of Ernesto Jardeleza,
Sr. As such, it cannot be prosecuted in accordance with the
provisions on summary proceedings set out in Article 253 of the
Family Code. It should follow the rules governing special
proceedings in the Revised Rules of Court which require procedural
due process, particularly the need for notice and a hearing on the
merits. On the other hand, even if Gilda Jardeleza’s petition can be
prosecuted by summary proceedings, there was still a failure to
comply with the basic requirements thereof, making the decision in
Spec. Proc. No. 4691 a defective one. He further alleged that under
the New Civil Code, Ernesto Jardeleza, Sr. had acquired vested rights
as a conjugal partner, and that these rights cannot be impaired or
prejudiced without his consent. Neither can he be deprived of his
share in the conjugal properties through mere summary
proceedings. He then restated his position that Spec. Proc. No. 4691
should be consolidated with Spec. Proc. No. 4689 which was filed
earlier and pending before Branch 25.
"Teodoro Jardeleza also questioned the propriety of the sale of Lot
No. 4291 and the improvements thereon supposedly to pay the
accumulated financial obligations arising from Ernesto Jardeleza,
Sr.’s hospitalization. He alleged that the market value of the
property would be around Twelve to Fifteen Million Pesos, but that
he had been informed that it would be sold for much less. He also
pointed out that the building thereon which houses the Jardeleza
Clinic is a monument to Ernesto Jardeleza Sr.’s industry, labor and
service to his fellowmen. Hence, the said property has a lot of
sentimental value to his family. Besides, argued Teodoro Jardeleza,
then conjugal partnership had other liquid assets to pay off all
financial obligations. He mentioned that apart from sufficient cash,
Jardeleza, Sr. owned stocks of Iloilo Doctors’ Hospital which can be
off-set against the cost of medical and hospital bills. Furthermore,
Ernesto Jardeleza, Sr. enjoys certain privileges at the said hospital
which allows him to pay on installment basis. Moreover, two of
Ernesto Jardeleza Sr.’s attending physicians are his own sons who do
not charge anything for their professional services.
"On July 4, 1991, Teodoro Jardeleza filed in Spec. Proc. No. 4691 a
supplement to his motion for reconsideration (Annex "G"). He
reiterated his contention that summary proceedings was irregularly
applied. He also noted that the provisions on summary proceedings
found in Chapter 2 of the Family Code comes under the heading on
"Separation in Fact Between Husband and Wife" which
contemplates of a situation where both spouses are of disposing
mind. Thus, he argued that were one spouse is "comatose without
motor and mental faculties," the said provisions cannot be made to
apply.
"While the motion for reconsideration was pending, Gilda Jardeleza
disposed by absolute sale Lot No. 4291 and all its improvements to
her daughter, Ma. Glenda Jardeleza Uy, for Eight Million Pesos
(P8,000,000.00), as evidenced by a Deed Absolute Sale dated July 8,
1991 executed between them (p. 111, Rollo). Under date of July 23,
1991, Gilda Jardeleza filed an urgent ex-parte motion for approval of
the deed of absolute sale.
"On August 12, 1991 Teodoro Jardeleza filed his Opposition to the
motion for approval of the deed of sale on the grounds that: (1) the
motion was prematurely filed and should be held in abeyance until
the final resolution of the petition; (2) the motion does not allege
nor prove the justifications for the sale; and (3) the motion does not
allege that had Ernesto Jardeleza, Sr. been competent, he would
have given his consent to the sale.
"Judge Amelita K. del Rosario-Benedicto of Branch 32 of the
respondent Court, who had penned the decision in Spec. Proc. No.
4691 had in the meantime formally inhibited herself from further
acting in this case (Annex "I"). The case was then reraffled to Branch
28 of the said court.
"On December 19, 1991, the said court issued an Order (Annex "M")
denying herein petitioner’s motion for reconsideration and
approving respondent Jardeleza’s motion for approval of the deed
of absolute sale. The said court ruled that:
"After a careful and thorough perusal of the decision, dated June 20,
1991, the Motion for Reconsideration, as well as its supplements
filed by "oppositor", Teodoro L. Jardeleza, through counsel, and the
opposition to the Motion for Reconsideration, including its
supplements, filed by petitioner, through counsel, this Court is of
the opinion and so holds, that her Honor, Amelita K. del Rosario-
Benedicto, Presiding Judge of Branch 32, of this Court, has properly
observed the procedure embodied under Article 253, in relation to
Article 124, of the Family Code, in rendering her decision dated June
20, 1991.
"Also, as correctly stated by petitioner, through counsel, that
"oppositor" Teodor L. Jardeleza does not have the personality to
oppose the instant petition considering that the property or
properties, subject of the petition, belongs to the conjugal
partnership of the spouses Ernesto and Gilda Jardeleza, who are
both still alive.
"In view thereof, the Motion for Reconsideration of "oppositor"
Teodoro L. Jardeleza, is hereby denied for lack of merit.
"Considering the validity of the decision dated June 20, 1991, which
among others, authorized Gilda L. Jardeleza to sell Lot No. 4291 of
the Cadastral Survey of Iloilo, covered by Transfer Certificate of Title
No. 47337 issued in the names of Ernesto Jardeleza, Sr., and Gilda L.
Jardeleza and the building standing thereon, the Urgent Ex-Parte
Motion for Approval of Deed of Absolute Sale dated July 23, 1991,
filed by petitioner, through counsel, is hereby granted and the deed
of absolute sale, executed and notarized on July 8, 1991, by and
between Gilda L. Jardeleza, as vendor, and Ma. Glenda Jardeleza, as
vendee, is hereby approved, and the Register of Deeds of Iloilo City,
is directed to register the sale and issue the corresponding transfer
certificate of title to the vendee.
"SO ORDERED."4
On December 9, 1992, the Court of Appeals promulgated its
decision reversing the appealed decision and ordering the trial court
to dismiss the special proceedings to approve the deed of sale,
which was also declared void.5
On December 29, 1992, petitioners filed a motion for
reconsideration,6 however, on March 29, 1993, the Court of Appeals
denied the motion, finding no cogent and compelling reason to
disturb the decision.7
Hence, this appeal.8
The issue raised is whether petitioner Gilda L. Jardeleza as the wife
of Ernesto Jardeleza, Sr. who suffered a stroke, a cerebrovascular
accident, rendering him comatose, without motor and mental
faculties, and could not manage their conjugal partnership property
may assume sole powers of administration of the conjugal property
under Article 124 of the Family Code and dispose of a parcel of land
with its improvements, worth more than twelve million pesos, with
the approval of the court in a summary proceedings, to her co-
petitioners, her own daughter and son-in-law, for the amount of
eight million pesos.
The Court of Appeals ruled that in the condition of Dr. Ernesto
Jardeleza, Sr., the procedural rules on summary proceedings in
relation to Article 124 of the Family Code are not applicable.
Because Dr. Jardeleza, Sr. was unable to take care of himself and
manage the conjugal property due to illness that had rendered him
comatose, the proper remedy was the appointment of a judicial
guardian of the person or estate or both of such incompetent, under
Rule 93, Section 1, 1964 Revised Rules of Court. Indeed, petitioner
earlier had filed such a petition for judicial guardianship.
Article 124 of the Family Code provides as follows:
"ART. 124. The administration and enjoyment of the conjugal
partnership 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 conjugal properties, the
other spouse may assume sole powers of administration. These
powers do not include the powers of disposition or encumbrance
which must have 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. (165a)."
In regular manner, the rules on summary judicial proceedings under
the Family Code govern the proceedings under Article 124 of the
Family Code. The situation contemplated is one where the spouse is
absent, or separated in fact or has abandoned the other or consent
is withheld or cannot be obtained. Such rules do not apply to cases
where the non-consenting spouse is incapacitated or incompetent
to give consent. In this case, the trial court found that the subject
spouse "is an incompetent" who was in comatose or semi-comatose
condition, a victim of stroke, cerebrovascular accident, without
motor and mental faculties, and with a diagnosis of brain stem
infarct.9 In such case, the proper remedy is a judicial guardianship
proceedings under Rule 93 of the 1964 Revised Rules of Court.
Even assuming that the rules of summary judicial proceedings under
the Family Code may apply to the wife's administration of the
conjugal property, the law provides that the wife who assumes sole
powers of administration has the same powers and duties as a
guardian under the Rules of Court.10
Consequently, a spouse who desires to sell real property as such
administrator of the conjugal property must observe the procedure
for the sale of the ward’s estate required of judicial guardians under
Rule 95, 1964 Revised Rules of Court, not the summary judicial
proceedings under the Family Code.
In the case at bar, the trial court did not comply with the procedure
under the Revised Rules of Court.1âwphi1 Indeed, the trial court did
not even observe the requirements of the summary judicial
proceedings under the Family Code. Thus, the trial court did not
serve notice of the petition to the incapacitated spouse; it did not
require him to show cause why the petition should not be granted.
Hence, we agree with the Court of Appeals that absent an
opportunity to be heard, the decision rendered by the trial court is
void for lack of due process. The doctrine consistently adhered to by
this Court is that a denial of due process suffices to cast on the
official act taken by whatever branch of the government the impress
of nullity.11 A decision rendered without due process is void ab
initio and may be attacked directly or collaterally.12 "A decision is
void for lack of due process if, as a result, a party is deprived of the
opportunity of being heard."13 "A void decision may be assailed or
impugned at any time either directly or collaterally, by means of a
separate action, or by resisting such decision in any action or
proceeding where it is invoked."14
WHEREFORE, the Court AFFIRMS the decision of the Court of
Appeals in CA-G. R. SP No. 26936, in toto.
Costs against petitioners.
SO ORDERED.
FIRST DIVISION
G.R. No. 147978 January 23, 2002
THELMA A. JADER-MANALO, petitioner,
vs.
NORMA FERNANDEZ C. CAMAISA and EDILBERTO
CAMAISA, respondents.
KAPUNAN, J.:
The issue raised in this case is whether or not the husband may
validly dispose of a conjugal property without the wife's written
consent.
The present controversy had its beginning when petitioner Thelma
A. Jader-Manalo allegedly came across an advertisement placed by
respondents, the Spouses Norma Fernandez C. Camaisa and
Edilberto Camaisa, in the Classified Ads Section of the newspaper
BULLETIN TODAY in its April, 1992 issue, for the sale of their ten-
door apartment in Makati, as well as that in Taytay, Rizal.
As narrated by petitioner in her complaint filed with the Regional
Trial Court of Makati, Metro Manila, she was interested in buying
the two properties so she negotiated for the purchase through a
real estate broker, Mr. Proceso Ereno, authorized by respondent
spouses.1 Petitioner made a visual inspection of the said lots with
the real estate broker and was shown the tax declarations, real
property tax payment receipts, location plans, and vicinity maps
relating to the properties.2 Thereafter, petitioner met with the
vendors who turned out to be respondent spouses. She made a
definite offer to buy the properties to respondent Edilberto Camaisa
with the knowledge and conformity of his wife, respondent Norma
Camaisa in the presence of the real estate broker.3 After some
bargaining, petitioner and Edilberto agreed upon the purchase price
of ₱1,500,000.00 for the Taytay property and ₱2,100,000.00 for the
Makati property4 to be paid on installment basis with
downpayments of ₱100,000.00 and ₱200,000.00, respectively, on
April 15, 1992. The balance thereof was to be paid as follows5 :
Taytay Property Makati Property
6th month P200,000.00 P300,000.00
12th month 700,000.00 1,600,000.00
18th month 500,000.00
This agreement was handwritten by petitioner and signed by
Edilberto.6 When petitioner pointed out the conjugal nature of the
properties, Edilberto assured her of his wife's conformity and
consent to the sale.7 The formal typewritten Contracts to Sell were
thereafter prepared by petitioner. The following day, petitioner, the
real estate broker and Edilberto met in the latter's office for the
formal signing of the typewritten Contracts to Sell. 8 After Edilberto
signed the contracts, petitioner delivered to him two checks,
namely, UCPB Check No. 62807 dated April 15, 1992 for
₱200,000.00 and UCPB Check No. 62808 also dated April 15, 1992
for ₱100,000.00 in the presence of the real estate broker and an
employee in Edilberto's office.9 The contracts were given to
Edilberto for the formal affixing of his wife's signature.
The following day, petitioner received a call from respondent
Norma, requesting a meeting to clarify some provisions of the
contracts.10 To accommodate her queries, petitioner, accompanied
by her lawyer, met with Edilberto and Norma and the real estate
broker at Cafe Rizal in Makati.11 During the meeting, handwritten
notations were made on the contracts to sell, so they arranged to
incorporate the notations and to meet again for the formal signing
of the contracts.12
When petitioner met again with respondent spouses and the real
estate broker at Edilberto's office for the formal affixing of Norma's
signature, she was surprised when respondent spouses informed
her that they were backing out of the agreement because they
needed "spot cash" for the full amount of the
consideration.13 Petitioner reminded respondent spouses that the
contracts to sell had already been duly perfected and Norma's
refusal to sign the same would unduly prejudice petitioner. Still,
Norma refused to sign the contracts prompting petitioner to file a
complaint for specific performance and damages against
respondent spouses before the Regional Trial Court of Makati,
Branch 136 on April 29, 1992, to compel respondent Norma Camaisa
to sign the contracts to sell.
A Motion to Dismiss14 was filed by respondents which was denied by
the trial court in its Resolution of July 21, 1992.15
Respondents then filed their Answer with Compulsory Counter-
claim, alleging that it was an agreement between herein petitioner
and respondent Edilberto Camaisa that the sale of the subject
properties was still subject to the approval and conformity of his
wife Norma Camaisa.16 Thereafter, when Norma refused to give her
consent to the sale, her refusal was duly communicated by Edilberto
to petitioner.17 The checks issued by petitioner were returned to her
by Edilberto and she accepted the same without any
objection.18 Respondent further claimed that the acceptance of the
checks returned to petitioner signified her assent to the cancellation
of the sale of the subject properties. 19 Respondent Norma denied
that she ever participated in the negotiations for the sale of the
subject properties and that she gave her consent and conformity to
the same.20
On October 20, 1992, respondent Norma F. Camaisa filed a Motion
for Summary Judgment21 asserting that there is no genuine issue as
to any material fact on the basis of the pleadings and admission of
the parties considering that the wife's written consent was not
obtained in the contract to sell, the subject conjugal properties
belonging to respondents; hence, the contract was null and void.
On April 14, 1993, the trial court rendered a summary judgment
dismissing the complaint on the ground that under Art. 124 of the
Family Code, the court cannot intervene to authorize the
transaction in the absence of the consent of the wife since said wife
who refused to give consent had not been shown to be
incapacitated. The dispositive portion of the trial court's decision
reads:
WHEREFORE, considering these premises, judgment is
hereby rendered:
1. Dismissing the complaint and ordering the cancellation
of the Notice of Lis Pendens by reason of its filing on TCT
Nos. (464860) S-8724 and (464861) S-8725 of the Registry
of Deeds at Makati and on TCT Nos. 295976 and 295971 of
the Registry of Rizal.
 2. Ordering plaintiff Thelma A. Jader to pay defendant
spouses Norma and Edilberto Camaisa, FIFTY THOUSAND
(₱50,000.00) as Moral Damages and FIFTY THOUSAND
(₱50,000.00) as Attorney's Fees.
Costs against plaintiff.22
Petitioner, thus, elevated the case to the Court of Appeals. On
November 29, 2000, the Court of Appeals affirmed the dismissal by
the trial court but deleted the award of ₱50,000.00 as damages and
₱50,000.00 as attorney's fees.
The Court of Appeals explained that the properties subject of the
contracts were conjugal properties and as such, the consent of both
spouses is necessary to give effect to the sale. Since private
respondent Norma Camaisa refused to sign the contracts, the sale
was never perfected. In fact, the downpayment was returned by
respondent spouses and was accepted by petitioner. The Court of
Appeals also stressed that the authority of the court to allow sale or
encumbrance of a conjugal property without the consent of the
other spouse is applicable only in cases where the said spouse is
incapacitated or otherwise unable to participate in the
administration of the conjugal property.
Hence, the present recourse assigning the following errors:
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED
IN RENDERING SUMMARY JUDGMENT IN DISMISSING THE
COMPLAINT ENTIRELY AND ORDERING THE CANCELLATION
OF NOTICE OF LIS PENDENS ON THE TITLES OF THE SUBJECT
REAL PROPERTIES;
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED
IN FAILING TO CONSIDER THAT THE SALE OF REAL
PROPERTIES BY RESPONDENTS TO PETITIONER HAVE
ALREADY BEEN PERFECTED, FOR AFTER THE LATTER PAID
P300,000.00 DOWNPAYMENT, RESPONDENT MRS.
CAMAISA NEVER OBJECTED TO STIPULATIONS WITH
RESPECT TO PRICE, OBJECT AND TERMS OF PAYMENT IN
THE CONTRACT TO SELL ALREADY SIGNED BY THE
PETITIONER, RESPONDENT MR. CAMAISA AND WITNESSES
MARKED AS ANNEX "G" IN THE COMPLAINT EXCEPT, FOR
MINOR PROVISIONS ALREADY IMPLIED BY LAW, LIKE
EJECTMENT OF TENANTS, SUBDIVISION OF TITLE AND
RESCISSION IN CASE OF NONPAYMENT, WHICH PETITIONER
READILY AGREED AND ACCEDED TO THEIR INCLUSION;
THE HONORABLE COURT OF APPEALS GRIEVIOUSLY ERRED
WHEN IT FAILED TO CONSIDER THAT CONTRACT OF SALE IS
CONSENSUAL AND IT IS PERFECTED BY THE MERE CONSENT
OF THE PARTIES AND THE APPLICABLE PROVISIONS ARE
ARTICLES 1157, 1356, 1357, 1358, 1403, 1405 AND 1475 OF
THE CIVIL CODE OF THE PHILIPPINES AND GOVERNED BY
THE STATUTE OF FRAUD.23
The Court does not find error in the decisions of both the trial court
and the Court of Appeals.
Petitioner alleges that the trial court erred when it entered a
summary judgment in favor of respondent spouses there being a
genuine issue of fact. Petitioner maintains that the issue of whether
the contracts to sell between petitioner and respondent spouses
was perfected is a question of fact necessitating a trial on the
merits.
The Court does not agree. A summary judgment is one granted by
the court upon motion by a party for an expeditious settlement of a
case, there appearing from the pleadings, depositions, admissions
and affidavits that there are no important questions or issues of fact
involved, and that therefore the moving party is entitled to
judgment as a matter of law.24 A perusal of the pleadings submitted
by both parties show that there is no genuine controversy as to the
facts involved therein.
Both parties admit that there were negotiations for the sale of four
parcels of land between petitioner and respondent spouses; that
petitioner and respondent Edilberto Camaisa came to an agreement
as to the price and the terms of payment, and a downpayment was
paid by petitioner to the latter; and that respondent Norma refused
to sign the contracts to sell. The issue thus posed for resolution in
the trial court was whether or not the contracts to sell between
petitioner and respondent spouses were already perfected such
that the latter could no longer back out of the agreement.
The law requires that the disposition of a conjugal property by the
husband as administrator in appropriate cases requires the written
consent of the wife, otherwise, the disposition is void. Thus, Article
124 of the Family Code provides:
Art. 124. The administration and enjoyment of the conjugal
partnership 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 conjugal
properties, the other spouse may assume sole powers of
administration. These powers do not include the powers of
disposition or encumbrance which must have 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. (Underscoring
ours.)
The properties subject of the contracts in this case were conjugal;
hence, for the contracts to sell to be effective, the consent of both
husband and wife must concur.
Respondent Norma Camaisa admittedly did not give her written
consent to the sale. Even granting that respondent Norma actively
participated in negotiating for the sale of the subject properties,
which she denied, her written consent to the sale is required by law
for its validity. Significantly, petitioner herself admits that Norma
refused to sign the contracts to sell. Respondent Norma may have
been aware of the negotiations for the sale of their conjugal
properties. However, being merely aware of a transaction is not
consent.25
Finally, petitioner argues that since respondent Norma unjustly
refuses to affix her signatures to the contracts to sell, court
authorization under Article 124 of the Family Code is warranted.
The argument is bereft of merit. Petitioner is correct insofar as she
alleges that if the written consent of the other spouse cannot be
obtained or is being withheld, the matter may be brought to court
which will give such authority if the same is warranted by the
circumstances. However, it should be stressed that court
authorization under Art. 124 is only resorted to in cases where the
spouse who does not give consent is incapacitated.26

In this case, petitioner failed to allege and prove that respondent

Norma was incapacitated to give her consent to the contracts. In the
absence of such showing of the wife's incapacity, court
authorization cannot be sought.

Under the foregoing facts, the motion for summary judgment was
proper considering that there was no genuine issue as to any
material fact. The only issue to be resolved by the trial court was
whether the contract to sell involving conjugal properties was valid
without the written consent of the wife.

WHEREFORE, the petition is hereby DENIED and the decision of the

Court of Appeals dated November 29, 2000 in CA-G.R. CV No.
43421 AFFIRMED.

SO ORDERED.
FIRST DIVISION
G.R. No. 125172 June 26, 1998
Spouses ANTONIO and LUZVIMINDA GUIANG, petitioners,
vs.
COURT OF APPEALS and GILDA COPUZ, respondents.
PANGANIBAN, J.:
The sale of a conjugal property requires the consent of both the
husband and the wife. The absence of the consent of one renders
the sale null and void, while the vitiation thereof makes it merely
voidable. Only in the latter case can ratification cure the defect.
The Case
These were the principles that guided the Court in deciding this
petition for review of the Decision 1 dated January 30, 1996 and the
Resolution 2 dated May 28, 1996, promulgated by the Court of
Appeals in CA-GR CV No. 41758, affirming the Decision of the lower
court and denying reconsideration, respectively.
Dissatisfied, petitioners-spouses filed an appeal with the Court of
Appeals. Respondent Court, in its challenged Decision, ruled as
On May 28, 1990, Private Respondent Gilda Corpuz filed an
follow: 6
Amended Complainant 3 against her husband Judie Corpuz and
Petitioner-Spouses Antonio and Luzviminda Guiang. The said
Complaint sought the declaration of a certain deed of sale, which
involved the conjugal property of private respondent and her
husband, null and void. The case was raffled to the Regional Trial
Court of Koronadal, South Cotabato, Branch 25. In due course, the
trial court rendered a Decision 4 dated September 9, 1992, disposing
Reconsideration was similarly denied by the same court in its
as follow: 5
assailed Resolution: 7
ACCORDINGLY, judgment is rendered for the
plaintiff and against the defendants,
1. Declaring both the Deed of Transfer of Rights
dated March 1, 1990 (Exh. "A") and the "amicable
settlement" dated March 16, 1990 (Exh. "B") as
null void and of no effect;
2. Recognizing as lawful and valid the ownership
and possession of plaintiff Gilda Corpuz over the
remaining one-half portion of Lot 9, Block 8, (LRC)
Psd-165409 which has been the subject of the
Deed of Transfer of Rights (Exh. "A");
3. Ordering plaintiff Gilda Corpuz to reimburse
defendants Luzviminda Guiang the amount of
NINE THOUSAND (P9,000.00) PESOS
corresponding to the payment made by
defendants Guiangs to Manuel Callejo for the
unpaid balance of the account of plaintiff in favor
of Manuel Callejo, and another sum of P379.62
representing one-half of the amount of realty
taxes paid by defendants Guiangs on Lot 9, Block
8, (LRC) Psd-165409, both with legal interests
thereon computed from the finality of the
decision.
No pronouncement as to costs in view of the
factual circumstances of the case.
WHEREFORE, the appealed of the lower court in
Civil Case No. 204 is hereby AFFIRMED by this
Court. No costs considering plaintiff-appellee's
failure to file her brief despite notice.
Finding that the issues raised in defendants-
appellants motion for reconsideration of Our
decision in this case of January 30, 1996, to be a
mere rehash of the same issues which we have
already passed upon in the said decision, and
there [being] no cogent reason to disturb the
same, this Court RESOLVED to DENY the instant
motion for reconsideration for lack of merit.
The Facts
The facts of this case are simple. Over the objection of private
respondent and while she was in Manila seeking employment, her
husband sold to the petitioners-spouses one half of their conjugal
peoperty, consisting of their residence and the lot on which it stood.
The circumstances of this sale are set forth in the Decision of
Respondent Court, which quoted from the Decision of the trial court
as follows: 8
1. Plaintiff Gilda Corpuz and defendant Judie
Corpuz are legally married spouses. They were
married on December 24, 1968 in Bacolod City,
before a judge. This is admitted by defendants-
spouses Antonio and Luzviminda Guiang in their
answer, and also admitted by defendant Judie
Corpuz when he testified in court (tsn. p. 3, June 9,
1992), although the latter says that they were
married in 1967. The couple have three children,
namely: Junie — 18 years old, Harriet — 17 years
of age, and Jodie or Joji, the youngest, who was 15
years of age in August, 1990 when her mother
testified in court.
Sometime on February 14, 1983, the couple Gilda
and Judie Corpuz, with plaintiff-wife Gilda Corpuz
as vendee, bought a 421 sq. meter lot located in
Barangay Gen. Paulino Santos (Bo. 1), Koronadal,
South Cotabato, and particularly known as Lot 9,
Block 8, (LRC) Psd-165409 from Manuel Callejo
who signed as vendor through a conditional deed
of sale for a total consideration of P14,735.00. The
consideration was payable in installment, with
right of cancellation in favor of vendor should
vendee fail to pay three successive installments
(Exh. "2", tsn p. 6, February 14, 1990).
2. Sometime on April 22, 1988, the couple Gilda
and Judie Corpuz sold one-half portion of their Lot
No. 9, Block 8, (LRC) Psd-165409 to the
defendants-spouses Antonio and Luzviminda
Guiang. The latter have since then occupied the
one-half portion [and] built their house thereon
(tsn. p. 4, May 22, 1992). They are thus adjoining
neighbors of the Corpuzes.
3. Plaintiff Gilda Corpuz left for Manila sometime
in June 1989. She was trying to look for work
abroad, in [the] Middle East. Unfortunately, she
became a victim of an unscrupulous illegal
recruiter. She was not able to go abroad. She
stayed for sometime in Manila however, coming
back to Koronadal, South Cotabato, . . . on March
11, 1990. Plaintiff's departure for Manila to look
for work in the Middle East was with the consent
of her husband Judie Corpuz (tsn. p. 16, Aug. 12,
1990; p. 10 Sept. 6, 1991).
After his wife's departure for Manila, defendant
Judie Corpuz seldom went home to the conjugal
dwelling. He stayed most of the time at his place
of work at Samahang Nayon Building, a hotel,
restaurant, and a cooperative. Daughter Herriet
Corpuz went to school at King's College, Bo. 1,
Koronadal, South Cotabato, but she was at the
same time working as household help of, and
staying at, the house of Mr. Panes. Her brother
Junie was not working. Her younger sister Jodie
(Jojie) was going to school. Her mother sometimes
sent them money (tsn. p. 14, Sept. 6, 1991.)
Sometime in January 1990, Harriet Corpuz learned
that her father intended to sell the remaining one-
half portion including their house, of their homelot
to defendants Guiangs. She wrote a letter to her
mother informing her. She [Gilda Corpuz] replied
that she was objecting to the sale. Harriet,
however, did not inform her father about this; but
instead gave the letter to Mrs. Luzviminda Guiang
so that she [Guiang] would advise her father (tsn.
pp. 16-17, Sept. 6, 1991).
4. However, in the absence of his wife Gilda
Corpuz, defendant Judie Corpuz pushed through
the sale of the remaining one-half portion of Lot 9,
Block 8, (LRC) Psd-165409. On March 1, 1990, he
sold to defendant Luzviminda Guiang thru a
document known as "Deed of Transfer of Rights"
(Exh. "A") the remaining one-half portion of their
lot and the house standing thereon for a total
consideration of P30,000.00 of which P5,000.00
was to be paid in June, 1990. Transferor Judie
Corpuz's children Junie and Harriet signed the
document as witness.
Four (4) days after March 1, 1990 or on March 5,
1990, obviously to cure whatever defect in
defendant Judie Corpuz's title over the lot
transferred, defendant Luzviminda Guiang as
vendee executed another agreement over Lot 9,
Block 8, (LRC) Psd-165408 (Exh. "3"), this time with
Manuela Jimenez Callejo, a widow of the original
registered owner from whom the couple Judie and
Gilda Corpuz originally bought the lot (Exh. "2"),
who signed as vendor for a consideration of
P9,000.00. Defendant Judie Corpuz signed as a
witness to the sale (Exh. "3-A"). The new sale (Exh.
"3") describes the lot sold as Lot 8, Block 9, (LRC)
Psd-165408 but it is obvious from the mass of
evidence that the correct lot is Lot 8, Block 9, (LRC)
Psd-165409, the very lot earlier sold to the couple
Gilda and Judie Corpuz.
5. Sometimes on March 11, 1990, plaintiff
returned home. She found her children staying
with other households. Only Junie was staying in
their house. Harriet and Joji were with Mr. Panes.
Gilda gathered her children together and stayed at
their house. Her husband was nowhere to be
found. She was informed by her children that their
father had a wife already.
6. For staying in their house sold by her husband,
plaintiff was complained against by defendant
Luzviminda Guiang and her husband Antonio
Guiang before the Barangay authorities of
Barangay General Paulino Santos (Bo. 1),
Koronadal, South Cotabato, for trespassing (tsn. p.
34, Aug. 17, 1990). The case was docketed by the
barangay authorities as Barangay Case No. 38 for
"trespassing". On March 16, 1990, the parties
thereat signed a document known as "amicable
settlement". In full, the settlement provides for, to
wit:
That respondent, Mrs. Gilda
Corpuz and her three children,
namely: Junie, Hariet and Judie
to leave voluntarily the house of
Mr. and Mrs. Antonio Guiang,
where they are presently
boarding without any charge, on
or before April 7, 1990.
FAIL NOT UNDER THE PENALTY
OF THE LAW.
Believing that she had received the shorter end of
the bargain, plaintiff to the Barangay Captain of
Barangay Paulino Santos to question her signature
on the amicable settlement. She was referred
however to the Office-In-Charge at the time, a
certain Mr. de la Cruz. The latter in turn told her
that he could not do anything on the matter (tsn.
p. 31, Aug. 17, 1990).
This particular point not rebutted. The Barangay
Captain who testified did not deny that Mrs. Gilda
Corpuz approached him for the annulment of the
settlement. He merely said he forgot whether Mrs.
Corpuz had approached him (tsn. p. 13, Sept. 26,
1990). We thus conclude that Mrs. Corpuz really
approached the Barangay Captain for the
annulment of the settlement. Annulment not
having been made, plaintiff stayed put in her
house and lot.
7. Defendant-spouses Guiang followed thru the
amicable settlement with a motion for the
execution of the amicable settlement, filing the
same with the Municipal Trial Court of Koronadal,
South Cotabato. The proceedings [are] still
 pending before the said court, with the filing of
the instant suit.
8. As a consequence of the sale, the spouses
Guiang spent P600.00 for the preparation of the
Deed of Transfer of Rights, Exh. "A", P9,000.00 as
the amount they paid to Mrs. Manuela Callejo,
having assumed the remaining obligation of the
Corpuzes to Mrs. Callejo (Exh. "3"); P100.00 for
the preparation of Exhibit "3"; a total of P759.62
basic tax and special education fund on the lot;
P127.50 as the total documentary stamp tax on
the various documents; P535.72 for the capital
gains tax; P22.50 as transfer tax; a standard fee of
P17.00; certification fee of P5.00. These expenses
particularly the taxes and other expenses towards
the transfer of the title to the spouses Guiangs
were incurred for the whole Lot 9, Block 8, (LRC)
Psd-165409.
Ruling of Respondent Court
Respondent Court found no reversible error in the trial court's ruling
that any alienation or encumbrance by the husband of the conjugal
propety without the consent of his wife is null and void as provided
under Article 124 of the Family Code. It also rejected petitioners'
contention that the "amicable sttlement" ratified said
sale, citing Article 1409 of the Code which expressly bars ratification
of the contracts specified therein, particularly those "prohibited or
declared void by law."
Hence, this petition. 9
The Issues
In their Memorandum, petitioners assign to public respondent the
following errors: 10
I residential house and lot
Whether or not the assailed Deed of Transfer of
Rights was validly executed.
II
Whether or not the Cour of Appeals erred in not
declairing as voidable contract under Art. 1390 of
the Civil Code the impugned Deed of Transfer of
Rights which was validly ratified thru the
execution of the "amicable settlement" by the
contending parties.
III
Whether or not the Court of Appeals erred in not
setting aside the findings of the Court a quowhich
recognized as lawful and valid the ownership and
possession of private respondent over the
remaining one half (1/2) portion of the properly.
In a nutshell, petitioners-spouses contend that (1) the contract of
sale (Deed of Transfer of Rights) was merely voidable, and (2) such
contract was ratified by private respondent when she entered into
an amicable sttlement with them.
This Court's Ruling
The petition is bereft of merit.
First Issue: Void or Voidable Contract?
Petitioners insist that the questioned Deed of Transfer of Rights was
validly executed by the parties-litigants in good faith and for
valuable consideration. The absence of private respondent's consent
merely rendered the Deed voidable under Article 1390 of the Civil
Code, which provides:
Art. 1390. The following contracts are voidable or
annullable, even though there may have been no
damage to the contracting parties:
xxx xxx xxx
(2) Those where the consent is vitiated by mistake,
violence, intimidation, undue influence or fraud.
These contracts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification.(n)
The error in petitioners' contention is evident. Article 1390, par. 2,
refers to contracts visited by vices of consent, i.e., contracts which
were entered into by a person whose consent was obtained and
vitiated through mistake, violence, intimidation, undue influence or
fraud. In this instance, private respondent's consent to the contract
of sale of their conjugal property was totally inexistent or absent.
Gilda Corpuz, on direct examination, testified thus: 11
Q Now, on March 1, 1990, could
you still recall where you were?
A I was still in Manila during that
time.
xxx xxx xxx
ATTY. FUENTES:
Q When did you come back to
Koronadal, South Cotabato?
A That was on March 11, 1990,
Ma'am.
Q Now, when you arrived at
Koronadal, was there any
problem which arose concerning
the ownership of your
residential house at Callejo
Subdivision?
A When I arrived here in
Koronadal, there was a problem
which arose regarding my
because it was sold by my
husband without my knowledge.
This being the case, said contract properly falls within the ambit of
Article 124 of the Family Code, which was correctly applied by the
teo lower court:
Art. 124. The administration and enjoyment of the
conjugal partnerhip properly shall belong to both
spouses jointly. In case of disgreement, the
husband's decision shall prevail, subject 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 the
powers of disposition or encumbrance which must
have 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. (165a)
(Emphasis supplied)
Comparing said law with its equivalent provision in the Civil Code,
the trial court adroitly explained the amendatory effect of the above
provision in this wise: 12
The legal provision is clear. The disposition or
encumbrance is void. It becomes still clearer if we
compare the same with the equivalent provision
of the Civil Code of the Philippines. Under Article
166 of the Civil Code, the husband cannot
generally alienate or encumber any real property
of the conjugal partnershit without the wife's
consent. The alienation or encumbrance if so
made however is not null and void. It is merely
voidable. The offended wife may bring an action
to annul the said alienation or encumbrance. Thus
the provision of Article 173 of the Civil Code of the
Philippines, to wit:
Art. 173. The wife may, during
the marriage and within ten
years from the transaction
questioned, ask the courts for
the annulment of any contract of
the husband entered into
without her consent, when such
consent is required, or any act or
contract of the husband which
tends to defraud her or impair
her interest in the conjugal
partnership property. Should the
wife fail to exercise this right,
she or her heirs after the
dissolution of the marriage, may
demand the value of property
fraudulently alienated by the
husband.(n)
This particular provision giving the wife ten (10)
years . . . during [the] marriage to annul the
alienation or encumbrance was not carried over to
the Family Code. It is thus clear that any alienation
or encumbrance made after August 3, 1988 when
the Family Code took effect by the husband of the
conjugal partnership property without the consent
of the wife is null and void.
Furthermore, it must be noted that the fraud and the intimidation
referred to by petitioners were perpetrated in the execution of the
document embodying the amicable settlement. Gilda Corpuz alleged
during trial that barangay authorities made her sign said document
through misrepresentation and
coercion. 13 In any event, its execution does not alter the void
character of the deed of sale between the husband and the
petitioners-spouses, as will be discussed later. The fact remains that
such contract was entered into without the wife's consent.
In sum, the nullity of the contract of sale is premised on the absence
of private respondent's consent. To constitute a valid contract, the
Civil Code requires the concurrence of the following elements: (1)
cause, (2) object, and (3) consent, 14 the last element being
indubitably absent in the case at bar.
Second Issue: Amicable Settlement
Insisting that the contract of sale was merely voidable, petitioners
aver that it was duly ratified by the contending parties through the
"amicable settlement" they executed on March 16, 1990 in
Barangay Case No. 38.
The position is not well taken. The trial and the appellate courts
have resolved this issue in favor of the private respondent. The trial
court correctly held: 15
By the specific provision of the law [Art. 1390, Civil
Code] therefore, the Deed to Transfer of Rights
(Exh. "A") cannot be ratified, even by an "amicable
settlement". The participation by some barangay
authorities in the "amicable settlement" cannot
otherwise validate an invalid act. Moreover, it
cannot be denied that the "amicable settlement
(Exh. "B") entered into by plaintiff Gilda Corpuz
and defendent spouses Guiang is a contract. It is a
direct offshoot of the Deed of Transfer of Rights
(Exh. "A"). By express provision of law, such a
contract is also void. Thus, the legal provision, to
wit:
Art. 1422. Acontract which is the
direct result of a previous illegal
contract, is also void and
inexistent. (Civil Code of the
Philippines).
In summation therefore, both the Deed of transfer
of Rights (Exh. "A") and the "amicable settlement"
(Exh. "3") are null and void.
Doctrinally and clearly, a void contract cannot be ratified. 16
Neither can the "amicable settlement" be considered a continuing
offer that was accepted and perfected by the parties, following the
last sentence of Article 124. The order of the pertinent events is
clear: after the sale, petitioners filed a complaint for trespassing
against private respondent, after which the barangay authorities
secured an "amicable settlement" and petitioners filed before the
MTC a motion for its execution. The settlement, however, does not
mention a continuing offer to sell the property or an acceptance of
such a continuing offer. Its tenor was to the effect that private
respondent would vacate the property. By no stretch of the
imagination, can the Court interpret this document as the
acceptance mentioned in Article 124.

WHEREFORE, the Court hereby DENIES the petition and AFFIRMS

the challenged Decision and Resolution. Costs against petitioners.

SO ORDERED.
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 Order 2 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 Decision 4 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 [₱]45,740.00.
[Petitioner’s] 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
[₱]19,000.00 as attorney's fees and litigation expenses of
[₱]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
execution7 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
Execution9 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 of ₱46,870.00, representing the
following payments:
(a) ₱22,870.00 – as petitioner's share of the payment of the
conjugal share;
(b) ₱19,000.00 – as attorney's fees; and
(c) ₱5,000.00 – 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 Order13 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 Reconsideration17 on September 8, 2006. Consequently,
the RTC issued another Order18 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 executory at the time the Motion for Clarification was filed on July
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
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 RTC’s 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 court’s 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."34 In 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 ₱503,862.10 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 ₱19,000.00 as attorney's fees and
litigation expenses of ₱5,000.00.54
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 title—legal or equitable—
to 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.
SECOND DIVISION
April 20, 2016
G.R. No. 200274
MELECIO DOMINGO, Petitioner,
vs.
SPOUSES GENARO MOLINA and ELENA B. MOLINA, substituted by
ESTER MOLINA, Respondents.
DECISION
BRION, J.:
1 Melecio presented the testimonies of the Records Officer of the
We resolve the petition for review on certiorari filed by the
petitioner Melecio Domingo (Melecio) assailing the August 9, 2011
decision2 and January 10, 2012 resolution 3 of the Court of
Appeals (CA) in CA-G.R. CV No. 94160.
THE FACTS
In June 15, 1951, the spouses Anastacio and Flora Domingo bought
a property in Camiling, Tarlac, consisting of a one-half undivided
portion over an 18, 164 square meter parcel of land. The sale was
annotated on the Original Certificate of Title (OCT) No. 16354
covering the subject property.
During his lifetime, Anastacio borrowed money from the respondent
spouses Genaro and Elena Molina (spouses Molina). On September
10, 1978 or 10 years after Flora’s death4, Anastacio sold his interest
over the land to the spouses Molina to answer for his debts. The
sale to the spouses Molina was annotated at the OCT of the subject
property.5 In 1986, Anastacio died.6
In May 19, 1995, the sale of Anastacio’s interest was registered
under Transfer Certificate of Title (TCT) No. 272967[[7 ]]and
transferred the entire one-half undivided portion of the land to the
spouses Molina.
Melecio, one of the children of Anastacio and Flora, learned of the
transfer and filed a Complaint for Annulment of Title and Recovery
of Ownership (Complaint) against the spouses Molina on May 17,
1999.8
Melecio claims that Anastacio gave the subject property to the
spouses Molina to serve as collateral for the money that Anastacio
borrowed. Anastacio could not have validly sold the interest over
the subject property without Flora’s consent, as Flora was already
dead at the time of the sale.
Melecio also claims that Genaro Molina must have falsified the
document transferring Anastacio and Flora’s one-half undivided
interest over the land. Finally, Melecio asserts that he occupied the
subject property from the time of Anastacio’s death up to the time
he filed the Complaint.9
Register of Deeds of Tarlac, and of Melecio’s nephew, George
Domingo (George).10
The Records Officer testified that he could not locate the instrument
that documents the transfer of the subject property ownership from
Anastacio to the spouses Molina. The Records Officer also testified
that the alleged sale was annotated at the time when Genaro
Molina’s brother was the Register of Deeds for Camiling, Tarlac.11
George, on the other hand, testified that he has been living on the
subject property owned by Anastacio since 1986. George testified,
however, that aside from himself, there were also four other
occupants on the subject property, namely Jaime Garlitos, Linda
Sicangco, Serafio Sicangco and Manuel Ramos.12
The spouses Molina asserted that Anastacio surrendered the title to
the subject property to answer for his debts and told the spouses
Molina that they already own half of the land. The spouses Molina
have been in possession of the subject property before the title was
registered under their names and have religiously paid the
property’s real estate taxes.
The spouses Molina also asserted that Melecio knew of the disputed
sale since he accompanied Anastacio several times to borrow
money. The last loan was even used to pay for Melecio’s wedding.
Finally, the spouses Molina asserted that Melecio built his nipa hut
on the subject property only in 1999, without their knowledge and
consent.13
The spouses Molina presented Jaime Garlitos (Jaime) as their sole
witness and who is one of the occupants of the subject lot.
Jaime testified that Elena Molina permitted him to build a house on
the subject property in 1993. Jaime, together with the other
tenants, planted fruit bearing trees on the subject property and
gave portions of their harvest to Elena Molina without any
complaint from Melecio. Jaime further testified that Melecio never
lived on the subject property and that only George Domingo, as the
caretaker of the spouses Molina, has a hut on the property.
Meanwhile, the spouses Molina died during the pendency of the
case and were substituted by their adopted son, Cornelio Molina. 14
THE RTC RULING
The Regional Trial Court (RTC) dismissed15 the case because Melecio
failed to establish his claim that Anastacio did not sell the property
to the spouses Molina.
The RTC also held that Anastacio could dispose of conjugal property
without Flora’s consent since the sale was necessary to answer for
conjugal liabilities.
The RTC denied Melecio’s motion for reconsideration of the RTC
ruling. From this ruling, Melecio proceeded with his appeal to the
CA.
THE CA RULING
In a decision dated August 9, 2011, the CA affirmed the RTC ruling in
toto.
The CA held that Melecio failed to prove by preponderant evidence
that there was fraud in the conveyance of the property to the
spouses Molina. The CA gave credence to the OCT annotation of the
disputed property sale.
The CA also held that Flora’s death is immaterial because Anastacio
only sold his rights, excluding Flora’s interest, over the lot to the
spouses Molina.1âwphi1 The CA explained that "[t]here is no
prohibition against the sale by the widower of real property
formerly belonging to the conjugal partnership of gains" 16.
Finally, the CA held that Melecio’s action has prescribed. According
to the CA, Melecio failed to file the action within one year after
entry of the decree of registration.
Melecio filed a motion for reconsideration of the CA Decision. The
CA denied Melecio’s motion for reconsideration for lack of merit. 17
THE PETITION
Melecio filed the present petition for review on certiorari to
challenge the CA ruling.
Melecio principally argues that the sale of land belonging to the
conjugal partnership without the wife’s consent is invalid.
Melecio also claims that fraud attended the conveyance of the
subject property and the absence of any document evidencing the
alleged sale made the transfer null and void. Finally, Melecio claims
that the action has not yet prescribed.
The respondents, on the other hand, submitted and adopted their
arguments in their Appeal Brief18.
First, Melecio’s counsel admitted that Anastacio had given the lot
title in payment of the debt amounting to Php30,000.00. The
delivery of the title is constructive delivery of the lot itself based on
Article 1498, paragraph 2 of
the Civil Code.
Second, the constructive delivery of the title coupled with the
spouses Molina’s exercise of attributes of ownership over the
subject property, perfected the sale and completed the transfer of
ownership.
THE ISSUES
The core issues of the petition are as follows: (1) whether the sale of
a conjugal property to the spouses Molina without Flora’s consent is
valid and legal; and (2) whether fraud attended the transfer of the
subject property to the spouses Molina.
OUR RULING
We deny the petition.
It is well settled that when the trial court’s factual findings have
been affirmed by the CA, the findings are generally conclusive and
binding upon the Court and may no longer be reviewed on Rule 45
petitions.19 While there are exceptions20 to this rule, the Court finds
no applicable exception with respect to the lower courts’ finding
that the subject property was Anastacio and Flora’s conjugal
property. Records before the Court show that the parties did not
dispute the conjugal nature of the property.
Melecio argues that the sale of the disputed property to the spouses
Molina is void without Flora’s consent.
We do not find Melecio’s argument meritorious.
Anastacio and Flora’s
conjugal partnership was
dissolved upon Flora’s death.
There is no dispute that Anastacio and Flora Domingo married
before the Family Code’s effectivity on August 3, 1988 and their
property relation is a conjugal partnership.21
Conjugal partnership of gains established before and after the
effectivity of the Family Code are governed by the rules found in
Chapter 4 (Conjugal Partnership of Gains) of Title IV (Property
Relations Between Husband and Wife) of the Family Code. This is
clear from Article 105 of the Family Code which states:
x x x The provisions of this Chapter 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.
The conjugal partnership of Anastacio and Flora was dissolved
when Flora died in 1968, pursuant to Article 175 (1) of the Civil
Code22 (now Article 126 (1) of the Family Code).
Article 130 of the Family Code requires the liquidation of the
conjugal partnership upon death of a spouse and prohibits any
disposition or encumbrance of the conjugal property prior to the
conjugal partnership liquidation, to quote:
Article 130. Upon the termination of the marriage by death, the
conjugal partnership property shall be liquidated in the same
proceeding for the settlement of the estate of the deceased.
If no judicial settlement proceeding is instituted, the surviving
spouse shall liquidate the conjugal partnership property either
judicially or extrajudicially within one year from the death of the
deceased spouse. If upon the lapse of the six month period no
liquidation is made, any disposition or encumbrance involving the
conjugal partnership property of the terminated marriage shall be
void. x x x (emphases supplied)
While Article 130 of the Family Code provides that any disposition
involving the conjugal property without prior liquidation of the
partnership shall be void, this rule does not apply since the
provisions of the Family Code shall be "without prejudice to vested
rights already acquired in accordance with the Civil Code or other
laws."23
An implied co-ownership
among Flora’s heirs governed
the conjugal properties
pending liquidation and
partition.
In the case of Taningco v. Register of Deeds of Laguna,24 we held
that the properties of a dissolved conjugal partnership fall under the
regime of co-ownership among the surviving spouse and the heirs of
the deceased
spouse until final liquidation and partition. The surviving spouse,
however, has an actual and vested one-half undivided share of the
properties, which does not consist of determinate and segregated
properties until liquidation
and partition of the conjugal partnership.
An implied ordinary co-ownership ensued among Flora’s surviving
heirs, including Anastacio, with respect to Flora’s share of the
conjugal partnership until final liquidation and partition; Anastacio,
on the other hand, owns one-half of the original conjugal
partnership properties as his share, but this is an undivided interest.
Article 493 of the Civil Code on co-ownership provides:
Article 493. 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. (399) (emphases supplied)
Thus, Anastacio, as co-owner, cannot claim title to any specific
portion of the conjugal properties without an actual partition being
first done either by agreement or by judicial decree. Nonetheless,
Anastacio had the right to freely sell and dispose of his undivided
interest in the subject property.
The spouses Molina became
co-owners of the subject
property to the extent of
Anastacio’s interest.
The OCT annotation of the sale to the spouses Molina reads
that "[o]nly the rights, interests and participation of Anastacio
Domingo, married to Flora Dela Cruz, is hereby sold, transferred,
and conveyed unto the said vendees for the sum of ONE THOUSAND
PESOS (P1,000.00) which pertains to an undivided one-half (1/2)
portion and subject to all other conditions specified in the
document x x x"25 (emphases supplied). At the time of the sale,
Anastacio’s undivided interest in the conjugal properties consisted
of: (1) one-half of the entire conjugal properties; and (2) his share as
Flora’s heir on the conjugal properties.
Anastacio, as a co-owner, had the right to freely sell and dispose of
his undivided interest, but not the interest of his co-owners.
Consequently, Anastactio’s sale to the spouses Molina without the The sale of the subject
consent of the other co-owners was not totally void, for Anastacio’s property to the spouses Molina
rights or a portion thereof were thereby effectively transferred, was not attended with fraud.
making the spouses Molina a co-owner of the subject property to
the extent of Anastacio’s interest. This result conforms with the On the issue of fraud, the lower courts found that there was no
well-established principle that the binding force of a contract must fraud in the sale of the disputed property to the spouses Molina.
be recognized as far as it is legally possible to do so (quando res non
valet ut ago, valeat quantum valere potest).26 The issue of fraud would require the Court to inquire into the weight
of evidentiary matters to determine the merits of the petition and is
The spouses Molina would be a trustee for the benefit of the co- essentially factual in nature. It is basic that factual questions cannot
heirs of Anastacio in respect of any portion that might belong to the be cannot be entertained in a Rule 45 petition, unless it falls under
co-heirs after liquidation and partition. The observations of Justice any of the recognized exceptions29 found in jurisprudence. The
Paras cited in the case of Heirs of Protacio Go, Sr. V. Servacio27 are present petition does not show that it falls under any of the
instructive: exceptions allowing factual review.
x x x [I]f it turns out that the property alienated or mortgaged really The CA and RTC conclusion that there is no fraud in the sale is
would pertain to the share of the surviving spouse, then said supported by the evidence on record.
transaction is valid. If it turns out that there really would be, after
liquidation, no more conjugal assets then the whole transaction is Melecio' s argument that no document was executed for the sale is
null and void. But if it turns out that half of the property thus negated by the CA finding that there was a notarized deed of
alienated or mortgaged belongs to the husband as his share in the conveyance executed between Anastacio and the spouses Molina,
conjugal partnership, and half should go to the estate of the wife, as annotated on the OCT of the disputed property.
then that corresponding to the husband is valid, and that
corresponding to the other is not. Since all these can be determined
Furthermore, Melecio's belief that Anastacio could not have sold the
only at the time the liquidation is over, it follows logically that a
property without his knowledge cannot be considered as proof of
disposal made by the surviving spouse is not void ab initio. Thus, it
fraud to invalidate the spouses Molina's registered title over the
has been held that the sale of conjugal properties cannot be made
subject property.30
by the surviving spouse without the legal requirements. The sale is
void as to the share of the deceased spouse (except of course as to
Prevailing jurisprudence uniformly holds that findings of facts of the
that portion of the husband’s share inherited by her as the surviving
trial court, particularly when affirmed by the Court of Appeals, are
spouse). The buyers of the property that could not be validly sold
binding upon t his court. 31
become trustees of said portion for the benefit of the husband’s
other heirs, the cestui que trust ent. Said heirs shall not be barred
Considering these findings, we find no need to discuss the other
by prescription or by laches.
issues raised by Melecio.
Melecio’s recourse as a co-owner of the conjugal properties,
WHEREFORE, we hereby DENY the petition for review
including the subject property, is an action for partition under Rule
on certiorari. The decision dated August 9, 2011 of the Court of
69 of the Revised Rules of Court. As held in the case of Heirs of
Appeals in CA-G.R. CV No. 94160 is AFFIRMED.
Protacio Go, Sr., "it is now settled that the appropriate recourse of
co-owners in cases where their consent were not secured in a sale
of the entire property as well as in a sale merely of the undivided SO ORDERED.
shares of some of the co-owners is an action for PARTITION under
Rule 69 of the Revised Rules of Court."28
FIRST DIVISION
G.R. No. 122749 July 31, 1996
ANTONIO A. S. VALDEZ, petitioner,
vs.
REGIONAL TRIAL COURT, BRANCH 102, QUEZON CITY, and
CONSUELO M. GOMEZ-VALDEZ, respondents.
VITUG, J.:p
The petition for new bewails, purely on the question of law, an
alleged error committed by the Regional Trial Court in Civil Case No.
Q-92-12539. Petitioner avers that the court a quo has failed to apply
the correct law that should govern the disposition of a family
dwelling in a situation where a marriage is declared void ab
initio because of psychological incapacity on the part of either or
both parties in the contract.
The pertinent facts giving rise to this incident are, by large, not in
dispute.
Antonio Valdez and Consuelo Gomez were married on 05 January
1971. Begotten during the marriage were five children. In a petition,
dated 22 June 1992, Valdez sought the declaration of nullity of the
marriage pursuant to Article 36 of the Family code (docketed Civil
Case No. Q-92-12539, Regional Trial Court of Quezon City, Branch
102). After the hearing the parties following the joinder of issues,
the trial court,1 in its decision of 29 July 1994, granted the
petition, viz:
WHEREFORE, judgment is hereby rendered as follows:
(1) The marriage of petitioner Antonio Valdez and
respondent Consuelo Gomez-Valdez is hereby declared null
and void under Article 36 of the Family Code on the ground
of their mutual psychological incapacity to comply with
their essential marital obligations;
(2) The three older children, Carlos Enrique III, Antonio
Quintin and Angela Rosario shall choose which parent they
would want to stay with.
Stella Eloisa and Joaquin Pedro shall be placed in the
custody of their mother, herein respondent Consuelo
Gomez-Valdes.
The petitioner and respondent shall have visitation rights
over the children who are in the custody of the other.
(3) The petitioner and the respondent are directed to start
proceedings on the liquidation of their common
properties as defined by Article 147 of the Family Code, and
to comply with the provisions of Articles 50, 51, and 52 of
the same code, within thirty (30) days from notice of this
decision.
Let a copy of this decision be furnished the Local Civil
Registrar of Mandaluyong, Metro Manila, for proper
recording in the registry of marriages.2 (Emphasis ours.)
Consuelo Gomez sought a clarification of that portion of the
decision directing compliance with Articles 50, 51 and 52 of the
Family Code. She asserted that the Family Code contained no
provisions on the procedure for the liquidation of common property
in "unions without marriage." Parenthetically, during the hearing of
the motion, the children filed a joint affidavit expressing their desire
to remain with their father, Antonio Valdez, herein petitioner.
In an order, dated 05 May 1995, the trial court made the following
clarification:
Consequently, considering that Article 147 of the Family
Code explicitly provides that the property acquired by both
parties during their union, in the absence of proof to the
contrary, are presumed to have been obtained through the
joint efforts of the parties and will be owned by them in
equal shares, plaintiff and defendant will own their "family
home" and all their properties for that matter in equal
shares.
In the liquidation and partition of properties owned in
common by the plaintiff and defendant, the provisions on
ownership found in the Civil Code shall apply.3 (Emphasis
supplied.)
In addressing specifically the issue regarding the disposition of the
family dwelling, the trial court said:
Considering that this Court has already declared the
marriage between petitioner and respondent as null and
void ab initio, pursuant to Art. 147, the property regime of
petitioner and respondent shall be governed by the rules
on ownership.
The provisions of Articles 102 and 129 of the Family Code
finds no application since Article 102 refers to the
procedure for the liquidation of the conjugal partnership
property and Article 129 refers to the procedure for the
liquidation of the absolute community of property.4
Petitioner moved for a reconsideration of the order. The motion
was denied on 30 October 1995.
In his recourse to this Court, petitioner submits that Articles 50, 51
and 52 of the Family Code should be held controlling: he argues
that:
I
Article 147 of the Family Code does not apply to cases
where the parties are psychologically incapacitated.
II
Articles 50, 51 and 52 in relation to Articles 102 and 129 of
the Family Code govern the disposition of the family
dwelling in cases where a marriage is declared void ab
initio, including a marriage declared void by reason of the
psychological incapacity of the spouses.
III
 Assuming arguendo that Article 147 applies to marriages
declared void ab initio on the ground of the psychological
incapacity of a spouse, the same may be read consistently
with Article 129.
IV
It is necessary to determine the parent with whom majority
of the children wish to stay.5
The trial court correctly applied the law. In a void marriage,
regardless of the cause thereof, the property relations of the parties
during the period of cohabitation is governed by the provisions of
Article 147 or Article 148, such as the case may be, of the Family
Code. Article 147 is a remake of Article 144 of the Civil Code as
interpreted and so applied in previous cases;6 it provides:
Art. 147. When a man and a woman who are capacitated to
marry each other, live exclusively with each other as
husband and wife without the benefit of marriage or under
a void marriage, their wages and salaries shall be owned by
them in equal shares and the property acquired by both of
them through their work or industry shall be governed by
the rules on co-ownership.
In the absence of proof to the contrary, properties acquired
while they lived together shall be presumed to have been
obtained by their joint efforts, work or industry, and shall
be owned by them in equal shares. For purposes of this
Article, a party who did not participate in the acquisition by
the other party of any property shall be deemed to have
contributed jointly in the acquisition thereof in the former's
efforts consisted in the care and maintenance of the family
and of the household.
Neither party can encumber or dispose by acts inter
vivos of his or her share in the property acquired during
cohabitation and owned in common, without the consent
of the other, until after the termination of their
cohabitation.
When only one of the parties to a void marriage is in good
faith, the share of the party in bad faith in the ownership
shall be forfeited in favor of their common children. In case
of default of or waiver by any or all of the common children
or their descendants, each vacant share shall belong to the
innocent party. In all cases, the forfeiture shall take place
upon the termination of the cohabitation.
This particular kind of co-ownership applies when a man and a
woman, suffering no illegal impediment to marry each other, so
exclusively live together as husband and wife under a void marriage
or without the benefit of marriage. The term "capacitated" in the
provision (in the first paragraph of the law) refers to the legal
capacity of a party to contract marriage, i.e., any "male or female of
the age of eighteen years or upwards not under any of the
impediments mentioned in Articles 37 and 38"7 of the Code.
Under this property regime, property acquired by both spouses
through their work and industry shall be governed by the rules on
equal co-ownership. Any property acquired during the union
is prima facie presumed to have been obtained through their joint
efforts. A party who did not participate in the acquisition of the
property shall be considered as having contributed thereto jointly if
said party's "efforts consisted in the care and maintenance of the
family household."8 Unlike the conjugal partnership of gains, the
fruits of the couple's separate property are not included in the co-
ownership.
Article 147 of the Family Code, in the substance and to the above
extent, has clarified Article 144 of the Civil Code; in addition, the law
now expressly provides that —
(a) Neither party can dispose or encumber by act intervivos his or
her share in co-ownership property, without consent of the other,
during the period of cohabitation; and
(b) In the case of a void marriage, any party in bad faith shall forfeit
his or her share in the co-ownership in favor of their common
children; in default thereof or waiver by any or all of the common
children, each vacant share shall belong to the respective surviving
descendants, or still in default thereof, to the innocent party. The
forfeiture shall take place upon the termination of the
cohabitation9 or declaration of nullity of the marriage. 10
When the common-law spouses suffer from a legal impediment to
marry or when they do not live exclusively with each other (as
husband and wife), only the property acquired by both of them
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, however, are prima facie presumed to be equal. The share
of any party who is married to another shall accrue to the absolute
community or conjugal partnership, as the case may be, if so
existing under a valid marriage. If the party who has acted in bad
faith is not validly married to another, his or her share shall be
forfeited in the manner already heretofore expressed. 11
In deciding to take further cognizance of the issue on the settlement
of the parties' common property, the trial court acted neither
imprudently nor precipitately; a court which has jurisdiction to
declare the marriage a nullity must be deemed likewise clothed in
authority to resolve incidental and consequential matters. Nor did it
commit a reversible error in ruling that petitioner and private
respondent own the "family home" and all their common property
in equal shares, as well as in concluding that, in the liquidation and
partition of the property owned in common by them, the provisions
on co-ownership under the Civil Code, not Articles 50, 51 and 52, in
relation to Articles 102 and 129, 12 of the Family Code, should aptly
prevail. The rules set up to govern the liquidation of either the
absolute community or the conjugal partnership of gains, the
property regimes recognized for valid and voidable marriages (in the
latter case until the contract is annulled), are irrelevant to the
liquidation of the co-ownership that exists between common-law
spouses. The first paragraph of Articles 50 of the Family Code,
applying paragraphs (2), (3), (4) and 95) of Article 43, 13 relates only,
by its explicit terms, to voidable marriages and, exceptionally,
to void marriages under Article 40 14 of the Code, i.e., the
declaration of nullity of a subsequent marriage contracted by a
spouse of a prior void marriage before the latter is judicially
declared void. The latter is a special rule that somehow recognizes
the philosophy and an old doctrine that void marriages are
inexistent from the very beginning and no judicial decree is
necessary to establish their nullity. In now requiring for purposes of
remarriage, the declaration of nullity by final judgment of the
previously contracted void marriage, the present law aims to do
away with any continuing uncertainty on the status of the second
marriage. It is not then illogical for the provisions of Article 43, in
relation to Articles 41 15 and 42, 16 of the Family Code, on the effects
of the termination of a subsequent marriage contracted during the
subsistence of a previous marriage to be made applicable pro hac
vice. In all other cases, it is not to be assumed that the law has also
meant to have coincident property relations, on the one hand,
between spouses in valid and voidable marriages (before
annulment) and, on the other, between common-law spouses or
spouses of void marriages, leaving to ordain, on the latter case, the
ordinary rules on co-ownership subject to the provisions of the
Family Code on the "family home," i.e., the provisions found in Title
V, Chapter 2, of the Family Code, remain in force and effect
regardless of the property regime of the spouses.

WHEREFORE, the questioned orders, dated 05 May 1995 and 30

October 1995, of the trial court are AFFIRMED. No costs.
SECOND DIVISION
G.R. No. 178044 January 19, 2011
ALAIN M. DIÑO , Petitioner,
vs.
MA. CARIDAD L. DIÑO, Respondent.
DECISION
CARPIO, J.:
The Case
Before the Court is a petition for review1 assailing the 18 October
2006 Decision2 and the 12 March 2007 Order3 of the Regional Trial
Court of Las Piñas City, Branch 254 (trial court) in Civil Case No. LP-
01-0149.
The Antecedent Facts
Alain M. Diño (petitioner) and Ma. Caridad L. Diño (respondent)
were childhood friends and sweethearts. They started living
together in 1984 until they decided to separate in 1994. In 1996,
petitioner and respondent decided to live together again. On 14
January 1998, they were married before Mayor Vergel Aguilar of Las
Piñas City.
On 30 May 2001, petitioner filed an action for Declaration of Nullity
of Marriage against respondent, citing psychological incapacity
under Article 36 of the Family Code. Petitioner alleged that
respondent failed in her marital obligation to give love and support
to him, and had abandoned her responsibility to the family,
choosing instead to go on shopping sprees and gallivanting with her
friends that depleted the family assets. Petitioner further alleged
that respondent was not faithful, and would at times become
violent and hurt him.
Extrajudicial service of summons was effected upon respondent
who, at the time of the filing of the petition, was already living in the
United States of America. Despite receipt of the summons,
respondent did not file an answer to the petition within the
reglementary period. Petitioner later learned that respondent filed a
petition for divorce/dissolution of her marriage with petitioner,
which was granted by the Superior Court of California on 25 May
2001. Petitioner also learned that on 5 October 2001, respondent
married a certain Manuel V. Alcantara.
On 30 April 2002, the Office of the Las Piñas prosecutor found that
there were no indicative facts of collusion between the parties and
the case was set for trial on the merits.
Dr. Nedy L. Tayag (Dr. Tayag), a clinical psychologist, submitted a
psychological report establishing that respondent was suffering
from Narcissistic Personality Disorder which was deeply ingrained in
her system since her early formative years. Dr. Tayag found that
respondent’s disorder was long-lasting and by nature, incurable.
In its 18 October 2006 Decision, the trial court granted the petition
on the ground that respondent was psychologically incapacited to
comply with the essential marital obligations at the time of the
celebration of the marriage.
The Decision of the Trial Court
The trial court ruled that based on the evidence presented,
petitioner was able to establish respondent’s psychological
incapacity. The trial court ruled that even without Dr. Tayag’s
psychological report, the allegations in the complaint, substantiated
in the witness stand, clearly made out a case of psychological
incapacity against respondent. The trial court found that respondent
committed acts which hurt and embarrassed petitioner and the rest
of the family, and that respondent failed to observe mutual love,
respect and fidelity required of her under Article 68 of the Family
Code. The trial court also ruled that respondent abandoned
petitioner when she obtained a divorce abroad and married another
man.
The dispositive portion of the trial court’s decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1. Declaring the marriage between plaintiff ALAIN M. DIÑO
and defendant MA. CARIDAD L. DIÑO on January 14, 1998,
and all its effects under the law, as NULL and VOID from
the beginning; and
2. Dissolving the regime of absolute community of
property.
A DECREE OF ABSOLUTE NULLITY OF MARRIAGE shall only be issued
upon compliance with Article[s] 50 and 51 of the Family Code.
Let copies of this Decision be furnished the parties, the Office of the
Solicitor General, Office of the City Prosecutor, Las Piñas City and
the Office of the Local Civil Registrar of Las Piñas City, for their
information and guidance.
SO ORDERED.4
Petitioner filed a motion for partial reconsideration questioning the
dissolution of the absolute community of property and the ruling
that the decree of annulment shall only be issued upon compliance
with Articles 50 and 51 of the Family Code.
In its 12 March 2007 Order, the trial court partially granted the
motion and modified its 18 October 2006 Decision as follows:
WHEREFORE, in view of the foregoing, judgment is hereby rendered:
1) Declaring the marriage between plaintiff ALAIN M. DIÑO
and defendant MA. CARIDAD L. DIÑO on January 14, 1998,
and all its effects under the law, as NULL and VOID from
the beginning; and
2) Dissolving the regime of absolute community of
property.
A DECREE OF ABSOLUTE NULLITY OF MARRIAGE shall be issued after
liquidation, partition and distribution of the parties’ properties
under Article 147 of the Family Code.
Let copies of this Order be furnished the parties, the Office of the
Solicitor General, the Office of the City Prosecutor of Las Piñas City
and the Local Civil Registrar of Las Piñas City, for their information
and guidance.5
Hence, the petition before this Court.
The Issue
The sole issue in this case is whether the trial court erred when it
ordered that a decree of absolute nullity of marriage shall only be
issued after liquidation, partition, and distribution of the parties’
properties under Article 147 of the Family Code.
The Ruling of this Court
The petition has merit.
Petitioner assails the ruling of the trial court ordering that a decree
of absolute nullity of marriage shall only be issued after liquidation,
partition, and distribution of the parties’ properties under Article
147 of the Family Code. Petitioner argues that Section 19(1) of the
Rule on Declaration of Absolute Nullity of Null Marriages and
Annulment of Voidable Marriages6 (the Rule) does not apply to
Article 147 of the Family Code.
We agree with petitioner.
The Court has ruled in Valdes v. RTC, Branch 102, Quezon City that in
a void marriage, regardless of its cause, the property relations of the
parties during the period of cohabitation is governed either by
Article 147 or Article 148 of the Family Code.7 Article 147 of the
Family Code applies to union of parties who are legally capacitated
and not barred by any impediment to contract marriage, but whose
marriage is nonetheless void, 8 such as petitioner and respondent in
the case before the Court.
Article 147 of the Family Code provides:
Article 147. When a man and a woman who are capacitated to
marry each other, live exclusively with each other as husband and
wife without the benefit of marriage or under a void marriage, their
wages and salaries shall be owned by them in equal shares and the
property acquired by both of them through their work or industry
shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while
they lived together shall be presumed to have been obtained by
their joint efforts, work or industry, and shall be owned by them in
equal shares. For purposes of this Article, a party who did not
participate in the acquisition by the other party of any property shall
be deemed to have contributed jointly in the acquisition thereof if
the former’s efforts consisted in the care and maintenance of the
family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or
her share in the property acquired during cohabitation and owned
in common, without the consent of the other, until after the
termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the
share of the party in bad faith in the co-ownership shall be forfeited
in favor of their common children. In case of default of or waiver by
any or all of the common children or their descendants, each vacant
share shall belong to the respective surviving descendants. In the
absence of descendants, such share shall belong to the innocent
party. In all cases, the forfeiture shall take place upon termination of
the cohabitation.
For Article 147 of the Family Code to apply, the following elements
must be present:
1. The man and the woman must be capacitated to marry
each other;
2. They live exclusively with each other as husband and
wife; and
3. Their union is without the benefit of marriage, or their
marriage is void.9
All these elements are present in this case and there is no question
that Article 147 of the Family Code applies to the property relations
between petitioner and respondent.
We agree with petitioner that the trial court erred in ordering that a
decree of absolute nullity of marriage shall be issued only after
liquidation, partition and distribution of the parties’ properties
under Article 147 of the Family Code. The ruling has no basis
because Section 19(1) of the Rule does not apply to cases governed
under Articles 147 and 148 of the Family Code. Section 19(1) of the
Rule provides:
Sec. 19. Decision. - (1) If the court renders a decision granting the
petition, it shall declare therein that the decree of absolute nullity or
decree of annulment shall be issued by the court only after
compliance with Articles 50 and 51 of the Family Code as
implemented under the Rule on Liquidation, Partition and
Distribution of Properties.
The pertinent provisions of the Family Code cited in Section 19(1) of
the Rule are:
Article 50. The effects provided for in paragraphs (2), (3), (4) and (5)
of Article 43 and in Article 44 shall also apply in proper cases to
marriages which are declared void ab initio or annulled by final
judgment under Articles 40 and 45.10
The final judgment in such cases shall provide for the liquidation,
partition and distribution of the properties of the spouses, the
custody and support of the common children, and the delivery of
their presumptive legitimes, unless such matters had been
adjudicated in previous judicial proceedings.
All creditors of the spouses as well as of the absolute community of
the conjugal partnership shall be notified of the proceedings for
liquidation.
In the partition, the conjugal dwelling and the lot on which it is
situated, shall be adjudicated in accordance with the provisions of
Articles 102 and 129.
Article 51. In said partition, the value of the presumptive legitimes
of all common children, computed as of the date of the final
judgment of the trial court, shall be delivered in cash, property or
sound securities, unless the parties, by mutual agreement judicially
approved, had already provided for such matters.
The children of their guardian, or the trustee of their property, may
ask for the enforcement of the judgment.
The delivery of the presumptive legitimes herein prescribed shall in
no way prejudice the ultimate successional rights of the children
accruing upon the death of either or both of the parents; but the
value of the properties already received under the decree of
annulment or absolute nullity shall be considered as advances on
their legitime.
It is clear from Article 50 of the Family Code that Section 19(1) of the
Rule applies only to marriages which are declared void ab initio or
annulled by final judgment under Articles 40 and 45 of the Family
Code. In short, Article 50 of the Family Code does not apply to
marriages which are declared void ab initio under Article 36 of the
Family Code, which should be declared void without waiting for the
liquidation of the properties of the parties.
Article 40 of the Family Code contemplates a situation where a
second or bigamous marriage was contracted.1avvphilUnder Article
40, "[t]he absolute nullity of a previous marriage may be invoked for
purposes of remarriage on the basis solely of a final judgment
declaring such previous marriage void." Thus we ruled:
x x x where the absolute nullity of a previous marriage is sought to
be invoked for purposes of contracting a second marriage, the sole
basis acceptable in law, for said projected marriage to be free from
legal infirmity, is a final judgment declaring a previous marriage
void.11
In this case, petitioner’s marriage to respondent was declared void
under Article 3615 of the Family Code and not under Article 40 or 45.
Thus, what governs the liquidation of properties owned in common
by petitioner and respondent are the rules on co-ownership.
In Valdes, the Court ruled that the property relations of parties in a
void marriage during the period of cohabitation is governed either
by Article 147 or Article 148 of the Family Code. 16 The rules on co-
ownership apply and the properties of the spouses should be
liquidated in accordance with the Civil Code provisions on co-
ownership. Under Article 496 of the Civil Code, "[p]artition may be
made by agreement between the parties or by judicial proceedings.
x x x." It is not necessary to liquidate the properties of the spouses
in the same proceeding for declaration of nullity of marriage.
WHEREFORE, we AFFIRM the Decision of the trial court with
the MODIFICATION that the decree of absolute nullity of the
marriage shall be issued upon finality of the trial court’s decision
without waiting for the liquidation, partition, and distribution of the
parties’ properties under Article 147 of the Family Code.
SO ORDERED.

Article 45 of the Family Code, on the other hand, refers to voidable

marriages, meaning, marriages which are valid until they are set
aside by final judgment of a competent court in an action for
annulment.12 In both instances under Articles 40 and 45, the
marriages are governed either by absolute community of
property13 or conjugal partnership of gains14 unless the parties agree
to a complete separation of property in a marriage settlement
entered into before the marriage. Since the property relations of the
parties is governed by absolute community of property or conjugal
partnership of gains, there is a need to liquidate, partition and
distribute the properties before a decree of annulment could be
issued. That is not the case for annulment of marriage under Article
36 of the Family Code because the marriage is governed by the
ordinary rules on co-ownership.
THIRD DIVISION
G.R. No. 176492 October 20, 2014
MARIETTA N. BARRIDO, Petitioner,
vs.
LEONARDO V. NONATO, Respondent.
DECISION
PERALTA, J.:
For the Court's resolution is a Petition for Review filed by petitioner
Marietta N. Barrido questioning the Decision 1 of the Court of
Appeals (CA), dated November 16, 2006, and its Resolution 2 dated
January 24, 2007 in CA-G.R. SP No. 00235. The CA affirmed the
Decision3 of the Regional Trial Court (RTC) ofBacolod City, Branch
53, dated July 21, 2004, in Civil Case No. 03-12123, which ordered
the partition of the subject property.
The facts, as culled from the records, are as follows: In the course of
the marriage of respondent Leonardo V. Nonato and petitioner
Marietta N. Barrido,they were able to acquire a property situated in
Eroreco, Bacolod City, consisting ofa house and lot, covered by
Transfer Certificate of Title (TCT) No. T-140361. On March 15, 1996,
their marriage was declared void on the ground of psychological
incapacity. Since there was no more reason to maintain their co-
ownership over the property, Nonato asked Barrido for partition,
but the latter refused. Thus, on January 29, 2003, Nonato filed a
Complaint for partition before the Municipal Trial Court in Cities
(MTCC) of Bacolod City, Branch 3.
Barrido claimed, by way of affirmative defense, that the subject
property had already been sold to their children, Joseph Raymund
and Joseph Leo. She likewise moved for the dismissal of the
complaint because the MTCC lacked jurisdiction, the partition case
being an action incapable of pecuniary estimation.
The Bacolod MTCC rendered a Decision dated September 17, 2003,
applying Article 129 of the Family Code. It ruled in this wise:
WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered,
ordering the conjugal property of the former Spouses Leonardo and
Marietta Nonato, a house and lot covered by TCT No. T-140361
located at Eroreco, Bacolod City, which was their conjugal dwelling,
adjudicated to the defendant Marietta Nonato, the spouse with
whom the majority of the common children choose to remain.
Furthermore, defendant’s counterclaim is hereby granted, ordering
plaintiff to pay defendant ₱10,000.00 as moral damages for the
mental anguish and unnecessary inconvenience brought about by
this suit; and an additional ₱10,000.00 as exemplary damages to
deter others from following suit; and attorney’s fees of ₱2,000.00
and litigation expenses of ₱575.00.
SO ORDERED.4
Nonato appealed the MTCC Decision before the RTC. On July 21,
2004, the Bacolod RTC reversed the ruling of the MTCC. It found
that even though the MTCC aptly applied Article 129 of the Family
Code, it nevertheless made a reversible error in adjudicating the
subject property to Barrido. Its dispositive portion reads:
WHEREFORE, premises considered, the decision dated September
17, 2003 is hereby REVERSED and SET ASIDE and a new judgment is
hereby rendered ordering the parties:
(1) to equitably partition the house and lot covered by TCT
No. T-140361;
(2) to reimburse Joseph Raymund and Joseph Leo Nonato
of the amount advanced by them in payment of the debts
and obligation of TCT No. T-140361 with Philippine
National Bank;
(3) to deliver the presumptive legitimes of Joseph Raymund
and Joseph Leo Nonato pursuant to Article 51 of the Family
Code.
SO ORDERED.5
Upon appeal, the CA affirmed the RTC Decision on November 16,
2006. It held that since the property’s assessed value was only
₱8,080.00, it clearly fell within the MTCC’s jurisdiction. Also,
although the RTC erred in relying on Article 129 of the FamilyCode,
instead of Article 147, the dispositive portion of its decision still
correctly ordered the equitable partition of the property. Barrido
filed a Motion for Reconsideration, which was, however, denied for
lack of merit.
Hence, Barrido brought the case to the Court via a Petition for
Review. She assigned the following errors in the CA Decision:
I.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
MTCC HAD JURISDICTION TO TRY THE PRESENT CASE.
II.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
LOT COVERED BY TCT NO. T-140361 IS CONJUGAL AFTER BEING
SOLD TO THE CHILDREN, JOSEPH LEO NONATO AND JOSEPH
RAYMUND NONATO.
III.
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT
ARTICLE 129 OF THE FAMILY CODE HAS NO APPLICATION IN THE
PRESENT CASE, ON THE ASSUMPTION
THAT THE TRIAL COURT HAD JURISDICTION OVER THE CASE. 6
The petition lacks merit.
Contrary to Barrido’s contention, the MTCC has jurisdiction to take
cognizance of real actions or those affecting title to real property, or
for the recovery of possession, or for the partition or condemnation
of, or foreclosure of a mortgage on real property.7 Section 33 of
Batas Pambansa Bilang 1298 provides:
Section 33. Jurisdiction of Metropolitan Trial Courts, Municipal Trial
Courts and Municipal Circuit Trial Courts in civil cases.–
Metropolitan Trial Courts, Municipal Trial Courts, and Municipal
Circuit
Trial Courts shall exercise:
xxxx
(3) Exclusive original jurisdiction in all civil actions which involve title
to, or possession of, real property, or any interest therein where the
assessed value of the propertyor interest therein does not exceed
Twenty thousand pesos (₱20,000.00)or, in civil actions in Metro
Manila, where such assessed value does not exceed Fifty thousand
pesos (₱50,000.00) exclusive of interest, damages of whatever kind,
attorney's fees, litigation expenses and costs: Provided, That value
of such property shall be determined by the assessed value of the
adjacent lots. (as amended by R.A. No. 7691) 9
Here, the subject property’s assessed value was merely ₱8,080.00,
an amount which certainly does not exceed the required limit of
₱20,000.00 for civil actions outside Metro Manila tofall within the
jurisdiction of the MTCC. Therefore, the lower court correctly took
cognizance of the instant case.
The records reveal that Nonatoand Barrido’s marriage had been
declared void for psychological incapacity under Article 36 10 of the
Family Code. During their marriage, however, the conjugal
partnership regime governed their property relations. Although
Article 12911 provides for the
procedure in case of dissolution of the conjugal partnership regime,
Article 147 specifically covers the effects of void marriages on the
spouses’ property relations. Article 147 reads:
Art. 147. When a man and a woman who are capacitated to marry
each other, live exclusively with each other as husband and wife
without the benefit of marriage or under a void marriage, their
wages and salaries shall be owned by them in equal shares and the
property acquired by both of them through their work or industry
shall be governed by the rules on co-ownership.
In the absence of proof to the contrary, properties acquired while
they lived together shall be presumed tohave been obtained by
their joint efforts, work or industry, and shall beowned by them in
equal shares. For purposes of this Article, a party who did not
participate in the acquisition by the other party of any property shall
be deemed to have contributed jointly in the acquisition thereof if
the former's efforts consisted in the care and maintenance of the
family and of the household.
Neither party can encumber or dispose by acts inter vivos of his or
her share in the property acquired during cohabitation and owned
in common, without the consent of the other, until after the
termination of their cohabitation.
When only one of the parties to a void marriage is in good faith, the
share of the party in bad faith in the co-ownership shall be forfeited
in favor of their common children. In case of default of or waiver by
any or all of the common children or their descendants, each vacant
share shall belong to the respective surviving descendants. In the
absence of descendants, such share shall belong to the innocent
party.1âwphi1 In all cases, the forfeiture shall take place upon
termination of the cohabitation.
This particular kind of co-ownership applies when a man and a
woman, suffering no illegal impedimentto marry each other,
exclusively live together as husband and wife under a void marriage
or without the benefit of marriage.12 It is clear, therefore, that for
Article 147 to operate, the man and the woman: (1) must be
capacitated to marry each other; (2) live exclusively with each other
as husband and wife; and (3) their union is without the benefit of
marriage or their marriage is void. Here, all these elements are
present.13 The term "capacitated" inthe first paragraph of the
provision pertains to the legal capacity of a party to contract
marriage.14 Any impediment to marry has not been shown to have
existed on the part of either Nonato or Barrido. They lived
exclusively with each other as husband and wife. However, their
marriage was found to be void under Article 36 of the Family Code
on the ground of psychological incapacity.15
Under this property regime, property acquired by both spouses
through their work and industry shall be governed by the rules on
equal coownership. Any property acquired during the union is prima
faciepresumed to have been obtained through their joint efforts. A
party who did not participate in the acquisition of the property shall
be considered as having contributed to the same jointly if said
party's efforts consisted in the care and maintenance of the family
household.16 Efforts in the care and maintenance of the family and
household are regarded as contributions to the acquisition of
common property by one who has no salary or income or work or
industry.17
In the analogous case of Valdez,18 it was likewise averred that the
trial court failed to apply the correct law that should govern the
disposition of a family dwelling in a situation where a marriage is
declared void ab initiobecause of psychological incapacity on the
part of either or both parties in the contract of marriage.The Court
held that the court a quodid not commit a reversible error in
utilizing Article 147 of the Family Code and in ruling that the former
spouses own the family home and all their common property in
equal shares, as well as in concluding that, in the liquidation and
partition of the property that they owned in common, the
provisions on coownership under the Civil Code should aptly
prevail.19 The rules which are set up to govern the liquidation of
either the absolute community or the conjugal partnership of gains,
the property regimes recognized for valid and voidable marriages,
are irrelevant to the liquidation of the co-ownership that exists
between common-law spousesor spouses of void marriages.20
Here, the former spouses both agree that they acquired the subject
property during the subsistence of their marriage. Thus, it shall be
presumed to have been obtained by their joint efforts, work or
industry, and shall be jointly owned by them in equal shares.
Barrido, however, claims that the ownership over the property in
question is already vested on their children, by virtue of a Deed of
Sale. But aside from the title to the property still being registered in
the names of the former spouses, said document of safe does not
bear a notarization of a notary public. It must be noted that without
the notarial seal, a document remains to be private and cannot be
converted into a public document,21 making it inadmissible in
evidence unless properly authenticated.22 Unfortunately, Barrido
failed to prove its due execution and authenticity. In fact, she
merely annexed said Deed of Sale to her position paper. Therefore,
the subject property remains to be owned in common by Nonato
and Barrido, which should be divided in accordance with the rules
on co-ownership.
WHEREFORE, premises considered, the petition is DENIED. The
Decision of the Court of Appeals, dated November 16, 2006, as well
as its Resolution dated January 24, 2007 in CA-G.R. SP No. 00235,
are hereby AFFIRMED. SO ORDERED.
SECOND DIVISION
G.R. No. 116668 July 28, 1997
ERLINDA A. AGAPAY, petitioner,
vs.
CARLINA (CORNELIA) V. PALANG and HERMINIA P. DELA
CRUZ, respondents.
ROMERO, J.:
Before us is a petition for review of the decision of the Court of
Appeals in CA-G.R. CV No. 24199 entitled "Erlinda Agapay v. Carlina
(Cornelia) Palang and Herminia P. Dela Cruz" dated June 22, 1994
involving the ownership of two parcels of land acquired during the
cohabitation of petitioner and private respondent's legitimate
spouse.
Miguel Palang contracted his first marriage on July 16, 1949 when
he took private respondent Carlina (or Cornelia) Vallesterol as a wife
at the Pozorrubio Roman Catholic Church in Pangasinan. A few
months after the wedding, in October 1949, he left to work in
Hawaii. Miguel and Carlina's only child, Herminia Palang, was born
on May 12, 1950.
Miguel returned in 1954 for a year. His next visit to the Philippines
was in 1964 and during the entire duration of his year-long sojourn
he stayed in Zambales with his brother, not in Pangasinan with his
wife and child. The trial court found evidence that as early as 1957,
Miguel had attempted to divorce Carlina in Hawaii.1 When he
returned for good in 1972, he refused to live with private
respondents, but stayed alone in a house in Pozorrubio, Pangasinan.
On July 15, 1973, the then sixty-three-year-old Miguel contracted
his second marriage with nineteen-year-old Erlinda Agapay, herein
petitioner.2 Two months earlier, on May 17, 1973, Miguel and
Erlinda, as evidenced by the Deed of Sale, jointly purchased a parcel
of agricultural land located at San Felipe, Binalonan, Pangasinan
with an area of 10,080 square meters. Consequently, Transfer
Certificate of Title No. 101736 covering said rice land was issued in
their names.
A house and lot in Binalonan, Pangasinan was likewise purchased on
September 23, 1975, allegedly by Erlinda as the sole vendee. TCT
No. 143120 covering said property was later issued in her name.
On October 30, 1975, Miguel and Cornelia Palang executed a Deed
of Donation as a form of compromise agreement to settle and end a
case filed by the latter.3 The parties therein agreed to donate their
conjugal property consisting of six parcels of land to their only child,
Herminia Palang.4
Miguel and Erlinda's cohabitation produced a son, Kristopher A.
Palang, born on December 6, 1977. In 1979, Miguel and Erlinda
were convicted of Concubinage upon Carlina's complaint. 5 Two
years later, on February 15, 1981, Miguel died.
On July 11, 1981, Carlina Palang and her daughter Herminia Palang
de la Cruz, herein private respondents, instituted the case at bar, an
action for recovery of ownership and possession with damages
against petitioner before the Regional Trial Court in Urdaneta,
Pangasinan (Civil Case No. U-4265). Private respondents sought to
get back the riceland and the house and lot both located at
Binalonan, Pangasinan allegedly purchased by Miguel during his
cohabitation with petitioner.
Petitioner, as defendant below, contended that while the riceland
covered by TCT No. 101736 is registered in their names (Miguel and
Erlinda), she had already given her half of the property to their son
Kristopher Palang. She added that the house and lot covered by TCT
No. 143120 is her sole property, having bought the same with her
own money. Erlinda added that Carlina is precluded from claiming
aforesaid properties since the latter had already donated their
conjugal estate to Herminia.
After trial on the merits, the lower court rendered its decision on
June 30, 1989 dismissing the complaint after declaring that there
was little evidence to prove that the subject properties pertained to
the conjugal property of Carlina and Miguel Palang. The lower court
went on to provide for the intestate shares of the parties,
particularly of Kristopher Palang, Miguel's illegitimate son. The
dispositive portion of the decision reads.
WHEREFORE, premises considered, judgment is hereby
rendered —
1) Dismissing the complaint, with costs against plaintiffs;
2) Confirming the ownership of defendant Erlinda Agapay
of the residential lot located at Poblacion, Binalonan,
Pangasinan, as evidenced by TCT No. 143120, Lot 290-B
including the old house standing therein;
3) Confirming the ownership of one-half (1/2) portion of
that piece of agricultural land situated at Balisa, San Felipe,
Binalonan, Pangasinan, consisting of 10,080 square meters
and as evidenced by TCT No. 101736, Lot 1123-A to Erlinda
Agapay;
4. Adjudicating to Kristopher Palang as his inheritance from
his deceased father, Miguel Palang, the one-half (1/2) of
the agricultural land situated at Balisa, San Felipe,
Binalonan, Pangasinan, under TCT No. 101736 in the name
of Miguel Palang, provided that the former (Kristopher)
executes, within 15 days after this decision becomes final
and executory, a quit-claim forever renouncing any claims
to annul/reduce the donation to Herminia Palang de la Cruz
of all conjugal properties of her parents, Miguel Palang and
Carlina Vallesterol Palang, dated October 30, 1975,
otherwise, the estate of deceased Miguel Palang will have
to be settled in another separate action;
5) No pronouncement as to damages and attorney's fees.
SO ORDERED.6
On appeal, respondent court reversed the trial court's decision. The
Court of Appeals rendered its decision on July 22, 1994 with the
following dispositive portion;
WHEREFORE, PREMISES CONSIDERED, the appealed
decision in hereby REVERSED and another one entered:
1. Declaring plaintiffs-appellants the owners of the
properties in question;
2. Ordering defendant-appellee to vacate and deliver the
properties in question to herein plaintiffs-appellants;
 3. Ordering the Register of Deeds of Pangasinan to cancel
Transfer Certificate of Title Nos. 143120 and 101736 and to
issue in lieu thereof another certificate of title in the name
of plaintiffs-appellants.
No pronouncement as to costs.7
Hence, this petition.
Petitioner claims that the Court of Appeals erred in not sustaining
the validity of two deeds of absolute sale covering the riceland and
the house and lot, the first in favor of Miguel Palang and Erlinda
Agapay and the second, in favor of Erlinda Agapay alone. Second,
petitioner contends that respondent appellate court erred in not
declaring Kristopher A. Palang as Miguel Palang's illegitimate son
and thus entitled to inherit from Miguel's estate. Third, respondent
court erred, according to petitioner, "in not finding that there is
sufficient pleading and evidence that Kristopher A. Palang or
Christopher A. Palang should be considered as party-defendant in
Civil Case No. U-4625 before the trial court and in CA-G.R. No.
24199.8
After studying the merits of the instant case, as well as the pertinent
provisions of law and jurisprudence, the Court denies the petition
and affirms the questioned decision of the Court of Appeals.
The first and principal issue is the ownership of the two pieces of
property subject of this action. Petitioner assails the validity of the
deeds of conveyance over the same parcels of land. There is no
dispute that the transfer of ownership from the original owners of
the riceland and the house and lot, Corazon Ilomin and the spouses
Cespedes, respectively, were valid.
The sale of the riceland on May 17, 1973, was made in favor of
Miguel and Erlinda. The provision of law applicable here is Article
148 of the Family Code providing for cases of cohabitation when a
man and a woman who are not capacitated to marry each other live
exclusively with each other as husband and wife without the benefit
of marriage or under a void marriage. While Miguel and Erlinda
contracted marriage on July 15, 1973, said union was patently void
because the earlier marriage of Miguel and Carlina was still
subsisting and unaffected by the latter's de facto separation.
Under Article 148, only the properties acquired by both of the
parties through their actual joint contribution of money, property or
industry shall be owned by them in common in proportion to their
respective contributions. It must be stressed that actual
contribution is required by this provision, in contrast to Article 147
which states that efforts in the care and maintenance of the family
and household, are regarded as contributions to the acquisition of
common property by one who has no salary or income or work or
industry. If the actual contribution of the party is not proved, there
will be no co-ownership and no presumption of equal shares.9
In the case at bar, Erlinda tried to establish by her testimony that
she is engaged in the business of buy and sell and had a sari-
sari store10 but failed to persuade us that she actually contributed
money to buy the subject riceland. Worth noting is the fact that on
the date of conveyance, May 17, 1973, petitioner was only around
twenty years of age and Miguel Palang was already sixty-four and a
pensioner of the U.S. Government. Considering her youthfulness, it
is unrealistic to conclude that in 1973 she contributed P3,750.00 as
her share in the purchase price of subject property, 11 there being no
proof of the same.
Petitioner now claims that the riceland was bought two months
before Miguel and Erlinda actually cohabited. In the nature of an
afterthought, said added assertion was intended to exclude their
case from the operation of Article 148 of the Family Code. Proof of
the precise date when they commenced their adulterous
cohabitation not having been adduced, we cannot state definitively
that the riceland was purchased even before they started living
together. In any case, even assuming that the subject property was
bought before cohabitation, the rules of co-ownership would still
apply and proof of actual contribution would still be essential.
Since petitioner failed to prove that she contributed money to the
purchase price of the riceland in Binalonan, Pangasinan, we find no
basis to justify her co-ownership with Miguel over the same.
Consequently, the riceland should, as correctly held by the Court of
Appeals, revert to the conjugal partnership property of the
deceased Miguel and private respondent Carlina Palang.
Furthermore, it is immaterial that Miguel and Carlina previously
agreed to donate their conjugal property in favor of their daughter
Herminia in 1975. The trial court erred in holding that the decision
adopting their compromise agreement "in effect partakes the
nature of judicial confirmation of the separation of property
between spouses and the termination of the conjugal
partnership."12 Separation of property between spouses during the
marriage shall not take place except by judicial order or without
judicial conferment when there is an express stipulation in the
marriage settlements.13 The judgment which resulted from the
parties' compromise was not specifically and expressly for
separation of property and should not be so inferred.
With respect to the house and lot, Erlinda allegedly bought the
same for P20,000.00 on September 23, 1975 when she was only 22
years old. The testimony of the notary public who prepared the
deed of conveyance for the property reveals the falsehood of this
claim. Atty. Constantino Sagun testified that Miguel Palang provided
the money for the purchase price and directed that Erlinda's name
alone be placed as the vendee.14
The transaction was properly a donation made by Miguel to Erlinda,
but one which was clearly void and inexistent by express provision
of law because it was made between persons guilty of adultery or
concubinage at the time of the donation, under Article 739 of the
Civil Code. Moreover, Article 87 of the Family Code expressly
provides that the prohibition against donations between spouses
now applies to donations between persons living together as
husband and wife without a valid marriage,15 for otherwise, the
condition of those who incurred guilt would turn out to be better
than those in legal union.16
The second issue concerning Kristopher Palang's status and claim as
an illegitimate son and heir to Miguel's estate is here resolved in
favor of respondent court's correct assessment that the trial court
erred in making pronouncements regarding Kristopher's heirship
and filiation "inasmuch as questions as to who are the heirs of the
decedent, proof of filiation of illegitimate children and the
determination of the estate of the latter and claims thereto should
be ventilated in the proper probate court or in a special proceeding
instituted for the purpose and cannot be adjudicated in the instant
ordinary civil action which is for recovery of ownership and
possession."17
As regards the third issue, petitioner contends that Kristopher
Palang should be considered as party-defendant in the case at bar
following the trial court's decision which expressly found that
Kristopher had not been impleaded as party defendant but
theorized that he had submitted to the court's jurisdiction through
his mother/guardian ad litem.18 The trial court erred gravely.
Kristopher, not having been impleaded, was, therefore, not a party
to the case at bar. His mother, Erlinda cannot be called his
guardian ad litem for he was not involved in the case at bar.
Petitioner adds that there is no need for Kristopher to file another
action to prove that he is illegitimate son of Miguel, in order to
avoid multiplicity of suits.19 Petitioner's grave error has been
discussed in the preceding paragraph where the need for probate
proceedings to resolve the settlement of Miguel's estate and
Kristopher's successional rights has been pointed out.

WHEREFORE, the instant petition is hereby DENIED. The questioned

decision of the Court of Appeals is AFFIRMED. Costs against
petitioner.

SO ORDERED.
EN BANC
G.R. No. L-20530 June 29, 1967
MANILA SURETY and FIDELITY COMPANY, INC., petitioner,
vs.
TRINIDAD TEODORO and THE COURT OF APPEALS, respondents.
De Santos and Delfino for petitioner.
V. J. Francisco and R. F. Francisco for respondents.
MAKALINTAL, J.:
The Manila Surety & Fidelity Company, Inc., filed this petition for
review by certiorari of the decision of the Court of Appeals in its
Case No. CA-G.R. 30916. The case relates to the execution of a joint
and several judgment for money obtained by the said company
against the Philippine Ready-Mix Concrete Co., Inc. and Jose
Corominas, Jr., in a litigation started in 1952 in the Court of First
Instance of Manila (Civil Case No. 17014), whose decision was
affirmed by the Court of Appeals with only a slight modification in
respect of the award for attorney's fees.
The proceedings which took place thereafter are narrated in the
decision sought to be reviewed as follows:
When said decision became final, respondent Manila Sure
secured on September 20, 1961, from the Court of First
Instance of Manila in Civil Case No. 17014 a second alias
writ of execution addressed to respondent provincial
sheriff of Rizal whose deputy, together with counsel for
respondent Manila Surety, repaired to the residence of
herein petitioner at No. 794 Harvard Street, Mandaluyong,
Rizal, and levied upon a car, some furniture, appliances and
personal properties found therein belonging solely and
exclusively to the petitioner with the exception of sewing
machine which belonged to a maid by the name of Nati
Fresco, a G.E. television set which was the property of the
minor Jose Alfonso Corominas, and a baby grand piano as
well as a Columbia radio phonograph which belonged to
Jose Corominas, Jr. As the petitioner was then abroad, her
sister Josefina Teodoro, to whom she had entrusted the
custody and safekeeping of the properties, had made
representations to the deputy sheriff and to the counsel of
respondent Manila Surety regarding the ownership of the
petitioner over certain personal effects levied upon, but
they ignored the same and proceeded with the levy.
Thus, respondents caused the posting at several places
notices of sale, preparatory to disposing petitioner's
properties at public auction.
To stay the sale at public auction of petitioner's properties,
she filed on November 3, 1961, with the Court of First
Instance of Rizal a complaint with injunction, entitled
"Trinidad Teodoro vs Manila Surety & Fidelity Co., Inc. and
the Provincial Sheriff of Rizal," praying among other things,
for damages and a writ of preliminary injunction which was
accordingly issued upon petitioner's filing of a bond in the
sum of P30,000.00 enjoining the provincial sheriff of Rizal
from selling at public auction the properties claimed by said
petitioner.
However, on November 9, 1961, respondent Manila Surety
filed an "Omnibus Motion to Dismiss the Complaint and to
Dissolve Injunction" to which an opposition was filed.
After the parties had adduced their evidence in support of
their respective claims and after hearing their arguments,
the lower court declared that the properties in question are
community properties of Trinidad Teodoro (herein
petitioner) and Jose Corominas, Jr., dissolved on May 12,
1962, the writ of preliminary injunction it had issued and
dismissed the complaint (Civil case No. 6865, CFI Rizal).
Not satisfied, Trinidad Teodoro (as plaintiff in said civil case
No. 6865 of Rizal) interposed an appeal. In the meanwhile,
however, the Manila Surety filed on May 29, 1962, in the
Court of First Instance of Manila a motion for the issuance
of a third alias writ of execution for the satisfaction of the
judgment debt in civil case No. 17014. Acting upon said
motion the Court of First Instance of Manila issued
on June 2, 1962, the "Third Alias Writ of Execution."
Thus, on June 7,1962, deputies of the provincial sheriff of
Rizal again repaired to the residence of herein petitioner at
No. 794 Harvard St., Mandaluyong, and levied upon the
same properties, with the exception of the baby grand
piano and the "Columbia" phonograph which were the
properties of Jose Corominas, Jr. and which had already
been sold at public auction November 6, 1961 for
P3,305.00, the Regal sewing machine owned by Nati
Fresco, the beds found in the boy's and girl's rooms, a
marble dining table and chairs, a stereophonic phonograph
and the G.E. television set. And on the following day, June
8, 1962, respondent provincial sheriff of Rizal advertised
the sale at public auction of the aforementioned properties
claimed by herein petitioner, setting the date thereof
for June 16, 1962.
Trinidad Teodoro thereupon filed an original petition for injunction
in the Court of Appeals to stop the scheduled sale. On October 24,
1962 the said Court rendered the decision now under review,
granting the writ prayed for and permanently enjoining respondent
provincial sheriff of Rizal from selling at public auction the
properties in question for the satisfaction of the judgment debt of
Jose Corominas, Jr.1äwphï1.ñët
The case for herein petitioner rests on the proposition that the said
properties, claimed by respondent Teodoro to be hers exclusively,
pertain to the co-ownership established between her and Jose
Corominas, Jr., pursuant to Article 144 of the Civil Code, and
consequently may be levied upon on execution for the satisfaction
of the latter's judgment debt. The facts relied upon in support of
this theory of co-ownership are stated in the decision of the court a
quo and quoted by the Court of Appeals, as follows:
Jose Corominas, Jr. and Sonia Lizares were married in Iloilo
on January 5, 1935. On November 29,1954, a decree of
divorce was granted by the Court of the State of Nevada
dissolving the bonds of matrimony between Sonia Lizares
and Jose Corominas, Jr. . . .
Trinidad Teodoro met Jose Corominas, Jr. in Hongkong on
October 30, 1955. . . . On March 26,1956, they went
through a Buddhist wedding ceremony in Hongkong. Upon
their return to the Philippines they took up residence in a
rented house at No. 2305 Agno Street, . . . Manila. On
September 5, 1961, plaintiff and Jose Corominas, Jr. were
 married for a second time on Washoe County, Nevada.
U.S.A.
Additional Pertinent facts, also mentioned in the decision under
review and controverted by the parties, are that Sonia Lizares is still
living and that the conjugal partnership formed by her marriage to
Corominas was dissolved by the Juvenile and Domestic Relations
Court of Manila upon their joint petition, the decree of dissolution
having been issued on October 21, 1957.
The principal issue here is the applicability of Article 144 of the Civil
Code to the situation thus created. This Article provides:
When a man and a woman live together as husband and
wife, but they are not married, or their marriage is void
from the beginning, the property acquired by either or both
of them through then work or industry or their wages and
salaries shall be governed by the rules on co-ownership.
There is no doubt that the decree of divorce granted by the Court of
Nevada in 1954 is not valid under Philippine law, which has
outlawed divorce altogether; that the matrimonial bonds between
Jose Corominas, Jr. and Sonia Lizares have not been dissolved,
although their conjugal partnership was terminated in 1957; and
that the former's subsequent marriage in Hongkong to Trinidad
Teodoro is bigamous and void.
While Article 144 speaks, inter alia, of a void marriage without any
qualification, the Court of Appeals declined to apply it in this case on
two grounds: (1) the subsisting marriage of Corominas to Sonia
Lizares constitutes an impediment to a valid marriage between him
and respondent Trinidad Teodoro, which impediment, according to
a number of decisions of the Supreme Court, precludes the
establishment of a co-ownership under said article, and (2) the
funds used by said respondent in acquiring the properties in
question were "fruits of her paraphernal investments which accrued
before her marriage to Corominas."
The decisions cited under the first ground are Christensen vs. Garcia,
56 O.G. No. 16, p. 3199; Samson vs. Salaysay, 56 O.G. No. 11, p.
2401; and Osmeña vs. Rodriguez, 54 O.G. No. 20, p. 5526. In a
proper case, where it may be necessary to do so in order to resolve
an unavoidable issue, the precise scope of the "no impediment to a
valid marriage" dictum in said decisions will undoubtedly deserve injunction. Of course, what happened here was that before the
closer examination, since it establishes an exception to the broad record on appeal could be filed (on June 18, 1962) or approved (on
terms of Article 144. For one thing, a situation may arise involving a September 8, 1962) a third alias writ of execution was issued by the
conflict of rights between a co-ownership under that provision and trial court (on June 2, 1962) and the properties in question were
an existing conjugal partnership formed by a prior marriage where, again levied upon by the sheriff and advertised for sale on June 16,
for instance, the husband in such marriage lives with another 1962. It was impracticable for respondent to first wait for the appeal
woman and with his salary or wages acquires properties during the to be elevated to and docketed in the Court of Appeals and there
extra-marital cohabitation. A ruling would then be in order to secure the ancillary remedy of injunction therein. An independent
determine which — as between the co-ownership and the conjugal petition for injunction, under the circumstances, was not
partnership — could claim ascendancy insofar as the properties are unjustified.
concerned.
Respondent could, indeed, have filed a third party claim instead as
In the present case, however, we find no need to pass on this indicated in Rule 39, Section 15.* But then her sister Josefina
question. The particular properties involved here which were Teodoro did make such a claim in her behalf after the second alias
admittedly acquired by respondent Teodoro, cannot be deemed to writ of execution was issued, but it was ignored and the sheriff
belong to such co-ownership because, as found by the trial court proceeded with the levy. In any event, a third party claim is not an
and confirmed by the Court of Appeals, the funds used in acquiring exclusive remedy: the same rule provides that nothing therein
said properties were fruits of respondent's paraphernal investments contained "shall prevent such third person from vindicating his claim
which accrued before her "marriage" to Corominas. In other words to the property by any proper action.
they were not acquired by either or both of the partners in the void
marriage through their work or industry or their wages and salaries, We do not deem it to be a reversible error for Trinidad Teodoro not
and hence cannot be the subject of co-ownership under Article 144. to include the trial Judge as party-respondent in her petition for
They remain respondent's exclusive properties, beyond the reach of injunction in the Court of Appeals. The trial Judge would have been
execution to satisfy the judgment debt of Corominas. merely a nominal party anyway, and no substantial rights of
petitioner here have been prejudiced by the omission.
Several procedural questions have been raised by petitioner. First,
that the injunction issued by the Court of Appeals was improper In view of the foregoing, the judgment of the Court of Appeals is
since it was not in aid of its appellate jurisdiction; second, that affirmed, with costs.
respondent Trinidad Teodoro having elected to appeal from the
decision of the Court of First Instance of Rizal, she may not pursue
the remedy of injunction as she did in this case; third, that
respondent's petition for injunction in the Court of Appeals failed to
state a cause of action; fourth, that the proper remedy available to
respondent was by filing a third-party claim; and finally, that the
trial judge should have been included as party respondent in the
petition for injunction.
As to the first in second points, the fact is that respondent Trinidad
Teodoro perfected her appeal to the Court of Appeals, which found
that there were questions of fact involved therein, one of them
being whether the properties in question were acquired before or
after her void marriage to Corominas. In aid of its appellate
jurisdiction, therefore, the said Court could issue a writ of
SECOND DIVISION
G.R. No. 151967 February 16, 2005
JOSEFINA C. FRANCISCO, petitioner,
vs.
MASTER IRON WORKS & CONSTRUCTION CORPORATION and
ROBERTO V. ALEJO, Sheriff IV, Regional Trial Court of Makati City,
Branch 142, respondents.
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the Decision1 of the
Court of Appeals (CA) in CA-G.R. No. CV No. 59045, which reversed
and set aside the Decision2 of the Regional Trial Court (RTC) of
Parañaque, Metro Manila, Branch 260, in Civil Case No. 94-2260 and
the Resolution of the CA denying the petitioner’s motion for
reconsideration of the said decision.
Josefina Castillo was only 24 years old when she and Eduardo G.
Francisco were married on January 15, 1983.3Eduardo was then
employed as the vice president in a private corporation. A little
more than a year and seven months thereafter, or on August 31,
1984, the Imus Rural Bank, Inc. (Imus Bank) executed a deed of
absolute sale for ₱320,000.00 in favor of Josefina Castillo Francisco,
married to Eduardo Francisco, covering two parcels of residential
land with a house thereon located at St. Martin de Porres Street,
San Antonio Valley I, Sucat, Parañaque, Metro Manila. One of the
lots was covered by Transfer Certificate of Title (TCT) No. 36519,
with an area of 342 square meters, while the other lot, with an area
of 360 square meters, was covered by TCT No. 36518.4 The purchase
price of the property was paid to the Bank via Check No. 002334 in
the amount of ₱320,000.00 drawn and issued by the Commercial
Bank of Manila, for which the Imus Bank issued Official Receipt No.
121408 on August 31, 1984.5 On the basis of the said deed of sale,
TCT Nos. 36518 and 36519 were cancelled and, on September 4,
1984, the Register of Deeds issued TCT Nos. 87976 (60550) and
87977 (60551) in the name of "Josefina Castillo Francisco married to
Eduardo G. Francisco."6
On February 15, 1985, the Register of Deeds made of record Entry
No. 85-18003 at the dorsal portion of the said titles. This referred to
an Affidavit of Waiver executed by Eduardo where he declared that
before his marriage to Josefina, the latter purchased two parcels of
land, including the house constructed thereon, with her own
savings, and that he was waiving whatever claims he had over the
property.7 On January 13, 1986, Josefina mortgaged the said
property to Leonila Cando for a loan of ₱157,000.00.8 It appears that
Eduardo affixed his marital conformity to the deed.9
On June 11, 1990, Eduardo, who was then the General Manager and
President of Reach Out Trading International, bought 7,500 bags of
cement worth ₱768,750.00 from Master Iron Works & Construction
Corporation (MIWCC) but failed to pay for the same. On November
27, 1990, MIWCC filed a complaint against him in the RTC of Makati
City for the return of the said commodities, or the value thereof in
the amount of ₱768,750.00. The case was docketed as Civil Case No.
90-3251. On January 8, 1992, the trial court rendered judgment in
favor of MIWCC and against Eduardo. The fallo of the decision
reads:
Accordingly, the Court renders judgment in favor of the plaintiff
Master Iron Works And Construction Corporation against the
defendant [Eduardo] Francisco ordering the latter as follows:
1. To replace to plaintiff 7,500 bags at 50 kilos/bag of
Portland cement or, in the alternative, to pay the plaintiff
the amount of ₱768,750.00;
2. In either case, to pay liquidated damages by way of
interest at 12% per annum from June 21, 1990 until fully
paid;
3. To pay ₱50,000.00 as actual damages; and
4. To pay attorney’s fees of ₱153,750.00 and litigation
expenses of ₱20,000.00.
SO ORDERED.10
The decision in Civil Case No. 90-3251 became final and executory
and, on June 7, 1994, the court issued a writ of execution. 11 On June
14, 1994, Sheriff Roberto Alejo sold at a public auction one stainless,
owner-type jeep for ₱10,000.00 to MIWCC.12 Sheriff Alejo issued a
Notice of Levy on Execution/Attachment over the lots covered by
TCT No. 87976 (60550) and 87977 (60551) for the recovery of the
balance of the amount due under the decision of the trial court in
Civil Case No. 90-3251.13 On June 24, 1994, the sale of the property
at a public auction was set to August 5, 1994. 14
On July 3, 1994, Josefina executed an Affidavit of Third Party
Claim15 over the two parcels of land in which she claimed that they
were her paraphernal property, and that her husband Eduardo had
no proprietary right or interest over them as evidenced by his
affidavit of waiver, a copy of which she attached to her affidavit.
She, likewise, requested Sheriff Alejo to cause the cancellation of
the notice of levy on execution/attachment earlier issued by him.
On July 7, 1994, Josefina filed the said Affidavit of Third Party Claim
in the trial court and served a copy thereof to the sheriff. MIWCC
then submitted an indemnity bond16 in the amount of
₱1,361,500.00 issued by the Prudential Guarantee and Assurance,
Inc. The sale at public auction proceeded. MIWCC made a bid for the
property for the price of ₱1,350,000.00.17
On July 28, 1994, Josefina filed a Complaint against MIWCC and
Sheriff Alejo in the RTC of Parañaque for damages with a prayer for
a writ of preliminary injunction or temporary restraining order,
docketed as Civil Case No. 94-2260. She alleged then that she was
the sole owner of the property levied on execution by Sheriff Alejo
in Civil Case No. 90-3251; hence, the levy on execution of the
property was null and void. She reiterated that her husband, the
defendant in Civil Case No. 90-3251, had no right or proprietary
interest over the said property as evidenced by his affidavit of
waiver annotated at the dorsal portion of the said title. Josefina
prayed that the court issue a temporary restraining order/writ of
preliminary injunction to enjoin MIWCC from causing the sale of the
said property at public auction. Considering that no temporary
restraining order had as yet been issued by the trial court, the
sheriff sold the subject property at public auction to MIWCC for
₱1,350,000.00 on August 5, 1994.18 However, upon the failure of
MIWCC to remit the sheriff’s commission on the sale, the latter did
not execute a sheriff’s certificate of sale over the property. The RTC
of Parañaque, thereafter, issued a temporary restraining order 19 on
August 16, 1994.
When Josefina learned of the said sale at public auction, she filed an
amended complaint impleading MIWCC, with the following prayer:
WHEREFORE, premises considered, it is most respectfully prayed to
this Honorable Court that, after hearing, judgment be rendered in
favor of the plaintiff and against the defendants and the same be in
the following tenor:
1. Ordering the defendants, jointly and severally, to pay the
plaintiff the following amounts:
A. The sum of ₱50,000.00 representing as actual
damages;
B. The sum of ₱200,000.00 representing as moral
damages;
C. The sum of ₱50,000.00 or such amount which
this Honorable Court deems just as exemplary
damages;
D. The sum of ₱60,000.00 as and for attorney’s
fees.
2. Declaring the levying and sale at public auction of the
plaintiff’s properties null and void;
3. To issue writ of preliminary injunction and makes it
permanent;
4. Order the cancellation of whatever entries appearing at
the titles as a result of the enforcement of the writ of
execution issued in Civil Case No. 90-3251.
Plaintiff further prays for such other reliefs as may be just under the
premises.20
In its answer to the complaint, MIWCC cited Article 116 of the
Family Code of the Philippines and averred that the property was
the conjugal property of Josefina and her husband Eduardo, who
purchased the same on August 31, 1984 after their marriage on
January 14, 1983. MIWCC asserted that Eduardo executed the
affidavit of waiver to evade the satisfaction of the decision in Civil family;26 Josefina decided that he execute the affidavit of waiver
Case No. 90-3251 and to place the property beyond the reach of because her mother and sister gave the property to her.27
creditors; hence, the said affidavit was null and void.
On December 20, 1997, the trial court rendered judgment finding
Before she could commence presenting her evidence, Josefina filed the levy on the subject property and the sale thereof at public
a petition to annul her marriage to Eduardo in the RTC of auction to be null and void. The fallo of the decision reads:
Parañaque, Metro Manila, on the ground that when they were
married on January 15, 1983, Eduardo was already married to one WHEREFORE, PREMISES CONSIDERED, THIS COURT finds the Levying
Carmelita Carpio. The case was docketed as Civil Case No. 95-0169. and sale at public auction of the plaintiff’s properties null and void.
Josefina and Carmelita testified in Civil Case No. 95-0169. Josefina The court orders the defendants to, jointly and severally, pay
declared that during her marriage to Eduardo, she acquired the plaintiff the following amounts:
property covered by TCT Nos. 87976 (60550) and 87977 (60551),
through the help of her sisters and brother, and that Eduardo had a. The sum of ₱50,000.00 as actual damages;
no participation whatsoever in the said acquisition. She added that
Eduardo had five children, namely, Mary Jane, Dianne, Mary Grace
b. The sum of ₱50,000.00 representing as moral damages;
Jo, Mark Joseph and Mary Cecille, all surnamed Francisco.
c. The sum of ₱50,000.00 as exemplary damages;
On September 9, 1996, the RTC of Parañaque rendered
judgment21 in Civil Case No. 95-0169, declaring the marriage
d. The sum of ₱60,000.00 as and for attorney’s fees.
between Josefina and Eduardo as null and void for being bigamous.
The court orders the cancellation of whatever entries appearing at
In the meantime, Josefina testified in Civil Case No. 94-2260,
the Titles as a result of the enforcement of the writ of execution
declaring, inter alia, that she was able to purchase the property
issued in Civil Case No. 90-3251.
from the Bank when she was still single with her mother’s financial
assistance; she was then engaged in recruitment when Eduardo
SO ORDERED.28
executed an affidavit of waiver; she learned that he was previously
married when they already had two children; nevertheless, she
The trial court held that the property levied by Sheriff Alejo was the
continued cohabiting with him and had three more children by him;
sole and exclusive property of Josefina, applying Articles 144, 160,
and because of Eduardo’s first marriage, she decided to have him
execute the affidavit of waiver. 175 and 485 of the New Civil Code. The trial court also held that
MIWCC failed to prove that Eduardo Francisco contributed to the
acquisition of the property.
Eduardo testified that when his wife bought the property in 1984,
he was in Davao City and had no knowledge of the said purchases;
he came to know of the purchase only when Josefina informed him MIWCC appealed the decision to the CA in which it alleged that:
a week after his arrival from Davao;22 Josefina’s sister, Lolita Castillo,
told him that she would collect from him the money his wife I. THE TRIAL COURT ERRED IN RULING THAT THE REAL ESTATE
borrowed from her and their mother to buy the property; 23 when he PROPERTIES SUBJECT OF THE AUCTION SALE ARE PARAPHERNAL
told Lolita that he had no money, she said that she would no longer PROPERTIES OWNED BY PLAINTIFF-APPELLEE JOSEFINA FRANCISCO;
collect from him, on the condition that he would have no
participation over the property,24 which angered Eduardo;25 when II. THE TRIAL COURT ERRED IN ALLOWING THE RECEPTION OF
Josefina purchased the property, he had a gross monthly income of REBUTTAL EVIDENCE WITH REGARD TO THE ANNULMENT OF
₱10,000.00 and gave ₱5,000.00 to Josefina for the support of his PLAINTIFF-APPELLEE’S MARRIAGE WITH EDUARDO FRANCISCO;
III. THE TRIAL COURT ERRED IN RULING THAT THE LEVY ON
EXECUTION OF PLAINTIFF-APPELLEE’S PROPERTIES SUBJECT OF THE
PRESENT CONTROVERSY IS NULL AND VOID;
IV. THE TRIAL COURT ERRED IN ORDERING DEFENDANT-APPELLANT
TO PAY DAMAGES TO PLAINTIFF-APPELLEE FOR ALLEGED IMPROPER
LEVY ON EXECUTION.29
The CA rendered judgment setting aside and reversing the decision
of the RTC on September 20, 2001. The fallo of the decision reads:
WHEREFORE, premises considered, the Decision, dated 20
December 1997, of the Regional Trial Court of Parañaque, Branch
260, is hereby REVERSED and SETASIDE and a new one entered
dismissing Civil Case No. 94-0126.
SO ORDERED.30
The CA ruled that the property was presumed to be the conjugal
property of Eduardo and Josefina, and that the latter failed to rebut
such presumption. It also held that the affidavit of waiver executed
by Eduardo was contrary to Article 146 of the New Civil Code and, as
such, had no force and effect. Josefina filed a motion for
reconsideration of the decision, which was, likewise, denied by the
CA.
Josefina, now the petitioner, filed the present petition for review,
alleging that:
A. THE HONORABLE COURT OF APPEALS ERRED IN FINDING THAT
THERE EXISTS A CONJUGAL PARTNERSHIP BETWEEN PETITIONER
AND EDUARDO FRANCISCO;
B. THE HONORABLE COURT OF APPEALS ERRED IN DECLARING THAT
THE SUBJECT PROPERTIES WERE NOT PARAPHERNAL PROPERTIES
OF PETITIONER;
C. THE HONORABLE COURT OF APPEALS ERRED IN DISTURBING THE
FINDINGS OF FACTS AND CONCLUSION BY THE TRIAL COURT IN ITS
DECISION OF DECEMBER 20, 1997, THE SAME BEING IN
ACCORDANCE WITH LAW AND JURISPRUDENCE.31
The threshold issues for resolution are as follows: (a) whether or not
the subject property is the conjugal property of Josefina Castillo and
Eduardo Francisco; and (b) whether or not the subject properties
may be held to answer for the personal obligations of Eduardo.
We shall deal with the issues simultaneously as they are closely
related.
The petitioner asserts that inasmuch as her marriage to Eduardo is
void ab initio, there is no occasion that would give rise to a regime
of conjugal partnership of gains. The petitioner adds that to rule
otherwise would render moot and irrelevant the provisions on the
regime of special co-ownership under Articles 147 and 148 of the
Family Code of the Philippines, in relation to Article 144 of the New
Civil Code.
The petitioner avers that since Article 148 of the Family Code
governs their property relationship, the respondents must adduce
evidence to show that Eduardo actually contributed to the
acquisition of the subject properties. The petitioner asserts that she
purchased the property before her marriage to Eduardo with her
own money without any contribution from him; hence, the subject
property is her paraphernal property.l^vvphi1.net Consequently,
such property is not liable for the debts of Eduardo to private
respondent MIWCC.
The respondents, on the other hand, contend that the appellate
court was correct in ruling that the properties are conjugal in nature
because there is nothing in the records to support the petitioner’s
uncorroborated claim that the funds she used to purchase the
subject properties were her personal funds or came from her
mother and sister. The respondents point out that if, as claimed by
the petitioner, the subject properties were, indeed, not conjugal in
nature, then, there was no need for her to obtain marital
(Eduardo’s) consent when she mortgaged the properties to two
different parties sometime in the first quarter of 1986, or after
Eduardo executed the affidavit of waiver.
We note that the only questions raised in this case are questions of
facts. Under Rule 45 of the Rules of Court, only questions of law may
be raised in and resolved by the Court. The Court may, however,
determine and resolve questions of facts in cases where the findings
of facts of the trial court and those of the CA are inconsistent, where
highly meritorious circumstances are present, and where it is
necessary to give substantial justice to the parties. In the present
action, the findings of facts and the conclusions of the trial court
and those of the CA are opposite. There is thus an imperative need
for the Court to delve into and resolve the factual issues, in tandem
with the questions of law raised by the parties.
The petition has no merit.
The petitioner failed to prove that she acquired the property with
her personal funds before her cohabitation with Eduardo and that
she is the sole owner of the property. The evidence on record shows
that the Imus Bank executed a deed of absolute sale over the
property to the petitioner on August 31, 1984 and titles over the
property were, thereafter, issued to the latter as vendee on
September 4, 1984 after her marriage to Eduardo on January 15,
1983.1ªvvphi1.nét
We agree with the petitioner that Article 144 of the New Civil Code
does not apply in the present case. This Court in Tumlos v.
Fernandez32 held that Article 144 of the New Civil Code applies only
to a relationship between a man and a woman who are not
incapacitated to marry each other, or to one in which the marriage
of the parties is void from the very beginning. It does not apply to a
cohabitation that is adulterous or amounts to concubinage, for it
would be absurd to create a co-ownership where there exists a prior
conjugal partnership or absolute community between the man and
his lawful wife. In this case, the petitioner admitted that when she
and Eduardo cohabited, the latter was incapacitated to marry her.
Article 148 of the Family Code of the Philippines, on which the
petitioner anchors her claims, provides as follows:
Art. 148. In cases of cohabitation not falling under the preceding
Article, only the properties acquired by both of the parties through
their actual joint contribution of money, property, or industry shall
be owned by them in common in proportion to their respective
contributions. In the absence of proof to the contrary, their
contributions and corresponding shares are presumed to be equal.
The same rule and presumption shall apply to joint deposits of
money and evidences of credit.
If one of the parties is validly married to another, his or her share in
the co-ownership shall accrue to the absolute community or
conjugal partnership existing in such valid marriage. If the party who
acted in bad faith is not validly married to another, his or her share
shall be forfeited in the manner provided in the last paragraph of
the preceding Article.
The foregoing rules on forfeiture shall, likewise, apply even if both
parties are in bad faith.
Indeed, the Family Code has filled the hiatus in Article 144 of the
New Civil Code by expressly regulating in Article 148 the property
relations of couples living in a state of adultery or concubinage.
Under Article 256 of the Family Code, the law can be applied
retroactively if it does not prejudice vested or acquired rights. The
petitioner failed to prove that she had any vested right over the
property in question.33
Since the subject property was acquired during the subsistence of
the marriage of Eduardo and Carmelita, under normal
circumstances, the same should be presumed to be conjugal
property.34 Article 105 of the Family Code of the Philippines provides
that the Code shall apply to conjugal partnership established before
the code took effect, without prejudice to vested rights already
acquired under the New Civil Code or other laws.35 Thus, even if
Eduardo and Carmelita were married before the effectivity of the
Family Code of the Philippines, the property still cannot be
considered conjugal property because there can only be but one
valid existing marriage at any given time.36 Article 148 of the Family
Code also debilitates against the petitioner’s claim since, according
to the said article, a co-ownership may ensue in case of cohabitation
where, for instance, one party has a pre-existing valid marriage
provided that the parents prove their actual joint contribution of
money, property or industry and only to the extent of their
proportionate interest thereon.37
We agree with the findings of the appellate court that the petitioner
failed to adduce preponderance of evidence that she contributed
money, property or industry in the acquisition of the subject
property and, hence, is not a co-owner of the property:
First of all, other than plaintiff-appellee’s bare testimony, there is
nothing in the record to support her claim that the funds she used
to purchase the subject properties came from her mother and
sister. She did not, for instance, present the testimonies of her
mother and sister who could have corroborated her claim.
Furthermore, in her Affidavit of Third-Party Claim (Exh. "C"), she
stated that the subject properties "are my own paraphernal
properties, including the improvements thereon, as such are the
fruits of my own exclusive efforts …," clearly implying that she used
her own money and contradicting her later claim that the funds
were provided by her mother and sister. She also stated in her
affidavit that she acquired the subject properties before her
marriage to Eduardo Francisco on 15 January 1983, a claim later
belied by the presentation of the Deed of Absolute Sale clearly
indicating that she bought the properties from Imus Rural Bank on
31 August 1984, or one year and seven months after her marriage
(Exh. "D"). In the face of all these contradictions, plaintiff-appellee’s
uncorroborated testimony that she acquired the subject properties
with funds provided by her mother and sister should not have been
given any weight by the lower court.
It is to be noted that plaintiff-appellee got married at the age of 23.
At that age, it is doubtful if she had enough funds of her own to
purchase the subject properties as she claimed in her Affidavit of
Third Party Claim. Confronted with this reality, she later claimed
that the funds were provided by her mother and sister, clearly an
afterthought in a desperate effort to shield the subject properties
from appellant Master Iron as judgment creditor.38
Aside from her bare claims, the petitioner offered nothing to prove
her allegation that she borrowed the amount of ₱320,000.00 from
her mother and her sister, which she paid to the Imus Bank on
August 31, 1984 to purchase the subject property. The petitioner
even failed to divulge the name of her mother and the sources of
her income, if any, and that of her sister. When she testified in Civil
Case No. 95-0169, the petitioner declared that she borrowed part of
the purchase price of the property from her brother, 39 but failed to
divulge the latter’s name, let alone reveal how much money she
borrowed and when. The petitioner even failed to adduce any
evidence to prove that her mother and sister had ₱320,000.00 in
1984, which, considering the times, was then quite a substantial
amount. Moreover, the petitioner’s third-party-claim affidavit
stating that the properties "are the fruits of my own exclusive effort
before I married Eduardo Francisco" belies her testimony in the trial
court and in Civil Case No. 95-0169.1awphi1.nét
We note that, as gleaned from the receipt issued by the Imus Bank,
the payment for the subject property was drawn via Check No.
002334 and issued by the Commercial Bank of Manila in the amount
of ₱320,000.00.40 The petitioner failed to testify against whose
account the check was drawn and issued, and whether the said
account was owned by her and/or Eduardo Francisco or her mother,
sister or brother. She even failed to testify whether the check was a
manager’s check and, if so, whose money was used to purchase the
same.
We also agree with the findings of the CA that the affidavit of waiver
executed by Eduardo on February 15, 1985, stating that the
property is owned by the petitioner, is barren of probative weight.
We are convinced that he executed the said affidavit in anticipation
of claims by third parties against him and hold the property liable
for the said claims. First, the petitioner failed to prove that she had
any savings before her cohabitation with Eduardo. Second, despite
Eduardo’s affidavit of waiver, he nevertheless affixed his marital
conformity to the real estate mortgage executed by the petitioner
over the property in favor of Leonila on January 13, 1986. 41 Third,
the petitioner testified that she borrowed the funds for the
purchase of the property from her mother and sister. 42 Fourth, the
petitioner testified that Eduardo executed the affidavit of waiver
because she discovered that he had a first marriage.43 Lastly,
Eduardo belied the petitioner’s testimony when he testified that he
executed the affidavit of waiver because his mother-in-law and
sister-in-law had given the property to the petitioner.44
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of
merit. The Decision of the Court of Appeals reversing the decision of
the Regional Trial Court is AFFIRMED. No pronouncement as to
costs.
SO ORDERED.
SECOND DIVISION
G.R. No. 169698 November 29, 2006
LUPO ATIENZA, Petitioner,
vs.
YOLANDA DE CASTRO, Respondent.
DECISION
GARCIA, J.:
Assailed and sought to be set aside in this petition for review on
certiorari is the Decision1 dated April 29, 2005 of the Court of
Appeals (CA) in CA-G.R. CV No. 69797, as reiterated in its
Resolution2 of September 16, 2005, reversing an earlier decision of
the Regional Trial Court (RTC) of Makati City, Branch 61, in an action
for Judicial Partition of Real Property thereat commenced by the
herein petitioner Lupo Atienza against respondent Yolanda de
Castro.
The facts:
Sometime in 1983, petitioner Lupo Atienza, then the President and
General Manager of Enrico Shipping Corporation and Eurasian
Maritime Corporation, hired the services of respondent Yolanda U.
De Castro as accountant for the two corporations.
In the course of time, the relationship between Lupo and Yolanda
became intimate. Despite Lupo being a married man, he and
Yolanda eventually lived together in consortium beginning the later
part of 1983. Out of their union, two children were born. However,
after the birth of their second child, their relationship turned sour
until they parted ways.
On May 28, 1992, Lupo filed in the RTC of Makati City a complaint
against Yolanda for the judicial partition between them of a parcel
of land with improvements located in Bel-Air Subdivision, Makati
City and covered by Transfer Certificate of Title No. 147828 of the
Registry of Deeds of Makati City. In his complaint, docketed in said
court as Civil Case No. 92-1423, Lupo alleged that the subject
property was acquired during his union with Yolanda as common-
law husband and wife, hence the property is co-owned by them.
Elaborating, Lupo averred in his complaint that the property in
question was acquired by Yolanda sometime in 1987 using his
exclusive funds and that the title thereto was transferred by the
seller in Yolanda’s name without his knowledge and consent. He did
not interpose any objection thereto because at the time, their affair
was still thriving. It was only after their separation and his receipt of
information that Yolanda allowed her new live-in partner to live in
the disputed property, when he demanded his share thereat as a co-
owner.
In her answer, Yolanda denied Lupo’s allegations. According to her,
she acquired the same property for Two Million Six Hundred
Thousand Pesos (₱2,600,000.00) using her exclusive funds. She
insisted having bought it thru her own savings and earnings as a
businesswoman.
In a decision3 dated December 11, 2000, the trial court rendered
judgment for Lupo by declaring the contested property as owned in
common by him and Yolanda and ordering its partition between the
two in equal shares, thus:
WHEREFORE, judgment is hereby rendered declaring the property
covered by Transfer Certificate of Title No. 147828 of the Registry of
Deeds of Makati City to be owned in common by plaintiff LUPO
ATIENZA and the defendant YOLANDA U. DE CASTRO share-and-
share alike and ordering the partition of said property between
them. Upon the finality of this Decision, the parties are hereby
directed to submit for the confirmation of the Court a mutually
agreed project of partition of said property or, in case the physical
partition of said property is not feasible because of its nature, that
either the same be assigned to one of the parties who shall pay the
value corresponding to the share of the other or that the property
to be sold and the proceeds thereof be divided equally between the
parties after deducting the expenses incident to said sale.
The parties shall bear their own attorney’s fees and expenses of
litigation.
Costs against the defendant.
SO ORDERED.
From the decision of the trial court, Yolanda went on appeal to the
CA in CA-G.R. CV No. 69797, therein arguing that the evidence on
record preponderate that she purchased the disputed property in
her own name with her own money. She maintained that the
documents appertaining to her acquisition thereof are the best
evidence to prove who actually bought it, and refuted the findings
of the trial court, as well as Lupo’s assertions casting doubt as to her
financial capacity to acquire the disputed property.
As stated at the threshold hereof, the appellate court, in its
decision4 of April 29, 2005, reversed and set aside that of the trial
court and adjudged the litigated property as exclusively owned by
Yolanda, to wit:
WHEREFORE, the foregoing considered, the assailed decision is
hereby REVERSED and SET ASIDE . The subject property is hereby
declared to be exclusively owned by defendant-appellant Yolanda U.
De Castro. No costs.
SO ORDERED.
In decreeing the disputed property as exclusively owned by Yolanda,
the CA ruled that under the provisions of Article 148 of the Family
Code vis-à-vis the evidence on record and attending circumstances,
Yolanda’s claim of sole ownership is meritorious, as it has been
substantiated by competent evidence. To the CA, Lupo failed to
overcome the burden of proving his allegation that the subject
property was purchased by Yolanda thru his exclusive funds.
With his motion for reconsideration having been denied by the CA in
its Resolution of September 16, 2005, 5 Lupo is now with this Court
via the present recourse arguing that pursuant to Article 144 6 of the
Civil Code, he was in no way burdened to prove that he contributed
to the acquisition of the subject property because with or without
the contribution by either partner, he is deemed a co-owner
thereof, adding that under Article 484 7 of Civil Code, as long as the
property was acquired by either or both of them during their
extramarital union, such property would be legally owned by them
in common and governed by the rules on co-ownership, which apply
in default of contracts, or special provisions.
We DENY.
It is not disputed that the parties herein were not capacitated to
marry each other because petitioner Lupo Atienza was validly
married to another woman at the time of his cohabitation with the
respondent. Their property regime, therefore, is governed by Article
1488 of the Family Code, which applies to bigamous marriages,
adulterous relationships, relationships in a state of concubinage,
relationships where both man and woman are married to other
persons, and multiple alliances of the same married man. Under this
regime, …only the properties acquired by both of the parties
through their actual joint contribution of money, property, or
industry shall be owned by them in common in proportion to their
respective contributions ...9 Proof of actual contribution is
required.10
As it is, the regime of limited co-ownership of property governing
the union of parties who are not legally capacitated to marry each
other, but who nonetheless live together as husband and wife,
applies to properties acquired during said cohabitation in proportion
to their respective contributions. Co-ownership will only be up to
the extent of the proven actual contribution of money, property or
industry. Absent proof of the extent thereof, their contributions and
corresponding shares shall be presumed to be equal.11
Here, although the adulterous cohabitation of the parties
commenced in 1983, or way before the effectivity of the Family
Code on August 3, 1998, Article 148 thereof applies because this
provision was intended precisely to fill up the hiatus in Article 144 of
the Civil Code.12 Before Article 148 of the Family Code was enacted,
there was no provision governing property relations of couples living
in a state of adultery or concubinage. Hence, even if the
cohabitation or the acquisition of the property occurred before the
Family Code took effect, Article 148 governs.13
The applicable law being settled, we now remind the petitioner that
here, 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 party’s own evidence and not upon the weakness of the
opponent’s defense. The petitioner as plaintiff below is not
automatically entitled to the relief prayed for. The law gives the
defendant some measure of protection as the plaintiff must still
prove the allegations in the complaint. Favorable relief can be
granted only after the court is convinced that the facts proven by
the plaintiff warrant such relief. 14 Indeed, the party alleging a fact
has the burden of proving it and a mere allegation is not evidence.15
It is the petitioner’s posture that the respondent, having no financial
capacity to acquire the property in question, merely manipulated
the dollar bank accounts of his two (2) corporations to raise the
amount needed therefor. Unfortunately for petitioner, his
submissions are burdened by the fact that his claim to the property
contradicts duly written instruments, i.e., the Contract to Sell dated
March 24, 1987, the Deed of Assignment of Redemption dated
March 27, 1987 and the Deed of Transfer dated April 27, 1987, all
entered into by and between the respondent and the vendor of said
property, to the exclusion of the petitioner. As aptly pointed out by
the CA:
Contrary to the disquisition of the trial court, [Lupo] failed to
overcome this burden. Perusing the records of the case, it is evident
that the trial court committed errors of judgment in its findings of
fact and appreciation of evidence with regard to the source of the
funds used for the purchase of the disputed property and ultimately
the rightful owner thereof. Factual findings of the trial court are
indeed entitled to respect and shall not be disturbed, unless some
facts or circumstances of weight and substance have been
overlooked or misinterpreted that would otherwise materially affect
the disposition of the case.
In making proof of his case, it is paramount that the best and most
complete evidence be formally entered. Rather than presenting
proof of his actual contribution to the purchase money used as
consideration for the disputed property, [Lupo] diverted the burden
imposed upon him to [Yolanda] by painting her as a shrewd and
scheming woman without the capacity to purchase any property.
Instead of proving his ownership, or the extent thereof, over the
subject property, [Lupo] relegated his complaint to a mere attack on
the financial capacity of [Yolanda]. He presented documents
pertaining to the ins and outs of the dollar accounts of ENRICO and
EURASIAN, which unfortunately failed to prove his actual
contribution in the purchase of the said property. The fact that
[Yolanda] had a limited access to the funds of the said corporations
and had repeatedly withdrawn money from their bank accounts for
their behalf do not prove that the money she used in buying the
disputed property, or any property for that matter, came from said
withdrawals.
As it is, the disquisition of the court a quo heavily rested on the
apparent financial capacity of the parties.1âwphi1 On one side,
there is [Lupo], a retired sea captain and the President and General
Manager of two corporations and on the other is [Yolanda], a
Certified Public Accountant. Surmising that [Lupo] is financially well
heeled than [Yolanda], the court a quo concluded, sans evidence,
that [Yolanda] had taken advantage of [Lupo]. Clearly, the court a
quo is in error. (Words in brackets supplied.)
As we see it, petitioner’s claim of co-ownership in the disputed
property is without basis because not only did he fail to substantiate
his alleged contribution in the purchase thereof but likewise the
very trail of documents pertaining to its purchase as evidentiary
proof redounds to the benefit of the respondent. In contrast, aside
from his mere say so and voluminous records of bank accounts,
which sadly find no relevance in this case, the petitioner failed to
overcome his burden of proof. Allegations must be proven by
sufficient evidence. Simply stated, he who alleges a fact has the
burden of proving it; mere allegation is not evidence.
True, the mere issuance of a certificate of title in the name of any
person does not foreclose the possibility that the real property
covered thereby may be under co-ownership with persons not
named in the certificate or that the registrant may only be a trustee
or that other parties may have acquired interest subsequent to the
issuance of the certificate of title. However, as already stated,
petitioner’s evidence in support of his claim is either insufficient or
immaterial to warrant the trial court’s finding that the disputed
property falls under the purview of Article 148 of the Family Code.
In contrast to petitioner’s dismal failure to prove his cause, herein
respondent was able to present preponderant evidence of her sole
ownership. There can clearly be no co-ownership when, as here, the
respondent sufficiently established that she derived the funds used
to purchase the property from her earnings, not only as an
accountant but also as a businesswoman engaged in foreign
currency trading, money lending and jewelry retail. She presented
her clientele and the promissory notes evincing substantial dealings
with her clients. She also presented her bank account statements
and bank transactions, which reflect that she had the financial
capacity to pay the purchase price of the subject property.

All told, the Court finds and so holds that the CA committed no
reversible error in rendering the herein challenged decision and
resolution.

WHEREFORE, the instant petition is DENIED and the assailed

issuances of the CA are AFFIRMED.

Costs against the petitioner.

SO ORDERED.