Republic of the Philippines with petitioners6 began transferring all their belongings
SUPREME COURT from the house to an apartment.
Manila
SECOND DIVISION
G.R. No. 160708 October 16,
2009
PATROCINIA RAVINA AND WILFREDO
RAVINA, Petitioners,
vs.
MARY ANN P. VILLA ABRILLE, for herself and in
behalf of INGRID D'LYN P. VILLA ABRILLE,
INGREMARK D'WIGHT VILLA ABRILLE,
INGRESOLL DIELS VILLA ABRILLE AND
INGRELYN DYAN VILLA ABRILLE, Respondents.
DECISION
QUISUMBING, Acting C.J.:
For review are the Decision1 dated February 21, 2002
and the Resolution2 dated October 7, 2003 of the Court
of Appeals in CA-G.R. CV No. 54560. The appellate
court modified the Decision3 dated September 26,
1995 of the Regional Trial Court (RTC) of Davao City,
Branch 15.
Simply stated, the facts as found by the Court of
Appeals4 are as follows:
Respondent Mary Ann Pasaol Villa Abrille and Pedro
Villa Abrille are husband and wife. They have four
children, who are also parties to the instant case and
are represented by their mother, Mary Ann.
In 1982, the spouses acquired a 555-square meter
parcel of land denominated as Lot 7, located at
Kamuning Street, Juna Subdivision, Matina, Davao
City, and covered by Transfer Certificate of Title (TCT)
No. T-88674 in their names. Said lot is adjacent to a
parcel of land which Pedro acquired when he was still
single and which is registered solely in his name under
TCT No. T-26471.
Through their joint efforts and the proceeds of a loan
from the Development Bank of the Philippines (DBP),
the spouses built a house on Lot 7 and Pedro’s lot. The
house was finished in the early 1980’s but the spouses
continuously made improvements, including a poultry
house and an annex.
In 1991, Pedro got a mistress and began to neglect his
family. Mary Ann was forced to sell or mortgage their
movables to support the family and the studies of her
children. By himself, Pedro offered to sell the house
and the two lots to herein petitioners, Patrocinia and
Wilfredo Ravina. Mary Ann objected and notified the
petitioners of her objections, but Pedro nonetheless
sold the house and the two lots without Mary Ann’s
consent, as evidenced by a Deed of Sale5 dated June
21, 1991. It appears on the said deed that Mary Ann
did not sign on top of her name.
On July 5, 1991 while Mary Ann was outside the house
and the four children were in school, Pedro together
with armed members of the Civilian Armed Forces
Geographical Unit (CAFGU) and acting in connivance
When Mary Ann and her daughter Ingrid Villa Abrille
came home, they were stopped from entering it. They
waited outside the gate until evening under the rain.
They sought help from the Talomo Police Station, but
police authorities refused to intervene, saying that it
was a family matter. Mary Ann alleged that the incident
caused stress, tension and anxiety to her children, so
much so that one flunked at school. Thus, respondents
Mary Ann and her children filed a complaint for
Annulment of Sale, Specific Performance, Damages
and Attorney’s Fees with Preliminary Mandatory
Injunction7 against Pedro and herein petitioners (the
Ravinas) in the RTC of Davao City.
During the trial, Pedro declared that the house was built
with his own money. Petitioner Patrocinia Ravina
testified that they bought the house and lot from Pedro,
and that her husband, petitioner Wilfredo Ravina,
examined the titles when they bought the property.
On September 26, 1995, the trial court ruled in favor of
herein respondent Mary Ann P. Villa Abrille as follows:
WHEREFORE, judgment is rendered as follows:
1. The sale of lot 8 covered by TCT No. 26471 by
defendant Pedro Abrille appearing in the Deed of Sale
marked as Exh. "E" is void as to one half or 277.5
square meters representing the share of plaintiff Mary
Villa Abrille.
2. That sale of Lot 7 covered by TCT No. [88674] by
defendant Pedro Villa Abrille in the Deed of Sale (Exh.
"A") is valid as to one half or 277.5 square meters of
the 555 square meters as one half belongs to
defendant Pedro Abrille but it is void as to the other half
or 277.5 square meters as it belongs to plaintiff Mary
Abrille who did not sell her share nor give her consent
to the sale.
3. That sale of the house mentioned in the Deed of Sale
(Exh. "A") is valid as far as the one half of the house
representing the share of defendant Pedro Abrille is
concerned but void as to the other half which is the
share of plaintiff Mary Abrille because she did not give
her consent/sign the said sale.
4. The defendants shall jointly pay the plaintiffs.
4. A. Seventeen Thousand Pesos
(₱17,000.00) representing the value of the
movables and belonging[s] that were lost when
unknown men unceremoniously and without
their knowledge and consent removed their
movables from their house and brought them
to an apartment.
4. B. One Hundred Thousand Pesos (₱
100,000.00) to plaintiff Mary Abrille as moral
damages.
4. C. Fifty Thousand Pesos (₱50,000.00) to
each of the four children as moral damages,
namely:
a) Ingrid Villa Abrille – Fifty Thousand Pesos
(₱50,000.00), b) Ingremark Villa Abrille – Fifty
Thousand Pesos (₱50,000.00), c) Ingresoll
Page 1 of 48
 Villa Abrille – Fifty Thousand Pesos
(₱50,000.00) and d) Ingrelyn Villa Abrille – Fifty
Thousand Pesos (₱50,000.00).
5. Ten Thousand Pesos (₱10,000.00) as exemplary
damages by way of example and correction for the
public good.
6. The costs of suit.8
On appeal, the Court of Appeals modified the decision,
thus:
WHEREFORE, the appealed judgment is
hereby MODIFIED as follows:
1. The sale of lot covered by TCT No. 26471 in favor of
defendants spouses Wilfredo and Patrocinia Ravina is
declared valid.
2. The sale of lot covered by TCT No. 88674 in favor of
said defendants spouses Ravina, together with the
house thereon, is declared null and void.
3. Defendant Pedro Abrille is ordered
to return the value of the consideration for the lot
covered by TCT No. 88674 and the house thereon to
co-defendants spouses Ravina.
4. Defendants spouses Ravina [a]re ordered to
reconvey the lot and house covered by TCT No. 88674
in favor of spouses Pedro and Mary Villa Abrille and to
deliver possession to them.
5. Plaintiffs are given the option to exercise their rights
under Article [450] of the New Civil Code with respect
to the improvements introduced by defendant spouses
Ravina.
6. Defendants Pedro Villa Abrille and spouses Ravina
are ordered to pay jointly and severally the plaintiffs as
follows:
a) One Hundred Thousand Pesos
(₱100,000.00) to plaintiff Mary Villa Abrille as
moral damages.
b) Fifty Thousand Pesos (₱50,000.00) as
moral damages to each of the four children,
namely: Ingrid Villa Abrille, Ingremark Villa
Abrille, Ingresoll Villa Abrille and Ingrelyn Villa
Abrille.
c) Ten Thousand (₱10,000.00) as exemplary
damages by way of example and correction for
the public good.
SO ORDERED.9
Their Motion for Reconsideration having been denied,
petitioners filed this petition. Petitioners argue that:
I.
THE COURT OF APPEALS ERRED WHEN IT
DECLARED x x x THE SALE OF LOT COVERED BY
TCT NO. 88674 IN FAVOR OF SPOUSES RAVINA,
TOGETHER WITH THE HOUSE THEREON, AS NULL
AND VOID SINCE IT IS CLEARLY CONTRARY TO
LAW AND EVIDENCE.
II.
THE COURT OF APPEALS ERRED WHEN IT RULED
THAT PETITIONERS PATROCIN[I]A RAVINA AND
WILFREDO RAVINA ARE NOT INNOCENT
PURCHASERS FOR VALUE, THE SAME BEING
CONTRARY TO LAW AND EVIDENCE.
III.
THE COURT OF APPEALS ERRED WHEN IT RULED
THAT PETITIONERS PATROCIN[I]A RAVINA AND
WILFREDO RAVINA ARE LIABLE FOR DAMAGES,
THE SAME BEING CONTRARY TO LAW AND
EVIDENCE.10
In essence, petitioners assail the appellate court’s
declaration that the sale to them by Pedro of the lot
covered by TCT No. T-88674 is null and void. However,
in addressing this issue, it is imperative to determine:
(1) whether the subject property covered by TCT No.
T-88674 is an exclusive property of Pedro or conjugal
property, and (2) whether its sale by Pedro was valid
considering the absence of Mary Ann’s consent.
Petitioners assert that the subject lot covered by TCT
No. T-88674 was the exclusive property of Pedro
having been acquired by him through barter or
exchange.11 They allege that the subject lot was
acquired by Pedro with the proceeds of the sale of one
of his exclusive properties. Allegedly, Pedro and his
sister Carmelita initially agreed to exchange their
exclusive lots covered by TCT No. T-26479 and TCT
No. T-26472, respectively. Later, however, Pedro sold
the lot covered by TCT No. T-26472 to one Francisca
Teh Ting and purchased the property of Carmelita
using the proceeds of the sale. A new title, TCT No. T-
88674, was issued thereafter. Thus, petitioners insist
that the subject lot remains to be an exclusive property
of Pedro as it was acquired or purchased through the
exclusive funds or money of the latter.
We are not persuaded. Article 160 of the New Civil
Code provides, "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."
There is no issue with regard to the lot covered by TCT
No. T-26471, which was an exclusive property of
Pedro, having been acquired by him before his
marriage to Mary Ann. However, the lot covered by
TCT No. T-88674 was acquired in 1982 during the
marriage of Pedro and Mary Ann. No evidence was
adduced to show that the subject property was
acquired through exchange or barter. The presumption
of the conjugal nature of the property subsists in the
absence of clear, satisfactory and convincing evidence
to overcome said presumption or to prove that the
subject property is exclusively owned by
Pedro.12 Petitioners’ bare assertion would not suffice to
overcome the presumption that TCT No. T-88674,
acquired during the marriage of Pedro and Mary Ann,
is conjugal. Likewise, the house built thereon is
conjugal property, having been constructed through
the joint efforts of the spouses, who had even obtained
a loan from DBP to construct the house. 1avv phi1
Significantly, a sale or encumbrance of conjugal
property concluded after the effectivity of the Family
Code on August 3, 1988, is governed by Article 124 of
Page 2 of 48
the same Code that now treats such a disposition to be
void if done (a) without the consent of both the husband
and the wife, or (b) in case of one spouse’s inability,
the authority of the court. Article 124 of the Family
Code, the governing law at the time the assailed sale
was contracted, is explicit:
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 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.
(Emphasis supplied.)
The particular provision in the New Civil Code giving
the wife ten (10) years to annul the alienation or
encumbrance was not carried over to the Family Code.
It is thus clear that alienation or encumbrance of the
conjugal partnership property by the husband without
the consent of the wife is null and void.
Hence, just like the rule in absolute community of
property, if the husband, without knowledge and
consent of the wife, sells conjugal property, such sale
is void. If the sale was with the knowledge but without
the approval of the wife, thereby resulting in a
disagreement, such sale is annullable at the instance
of the wife who is given five (5) years from the date the
contract implementing the decision of the husband to
institute the case.13
Here, respondent Mary Ann timely filed the action for
annulment of sale within five (5) years from the date of
sale and execution of the deed. However, her action to
annul the sale pertains only to the conjugal house and
lot and does not include the lot covered by TCT No. T-
26471, a property exclusively belonging to Pedro and
which he can dispose of freely without Mary Ann’s
consent.
On the second assignment of error, petitioners contend
that they are buyers in good faith.14 Accordingly, they
need not inquire whether the lot was purchased by
money exclusively belonging to Pedro or of the
common fund of the spouses and may rely on the
certificates of title.
The contention is bereft of merit. As correctly held by
the Court of Appeals, a purchaser in good faith is one
who buys the property of another without notice that
some other person has a right to, or interest in, such
property and pays a full and fair price for the same at
the time of such purchase, or before he has notice of
the claim or interest of some other person in the
property.15 To establish his status as a buyer for value
in good faith, a person dealing with land registered in
the name of and occupied by the seller need only show
that he relied on the face of the seller’s certificate of
title. But for a person dealing with land registered in the
name of and occupied by the seller whose capacity to
sell is restricted, such as by Articles 166 and 173 of the
Civil Code or Article 124 of the Family Code, he must
show that he inquired into the latter’s capacity to sell in
order to establish himself as a buyer for value in good
faith.16
1avv phi 1
In the present case, the property is registered in the
name of Pedro and his wife, Mary Ann. Petitioners
cannot deny knowledge that during the time of the sale
in 1991, Pedro was married to Mary Ann. However,
Mary Ann’s conformity did not appear in the deed. Even
assuming that petitioners believed in good faith that the
subject property is the exclusive property of Pedro,
they were apprised by Mary Ann’s lawyer of her
objection to the sale and yet they still proceeded to
purchase the property without Mary Ann’s written
consent. Moreover, the respondents were the ones in
actual, visible and public possession of the property at
the time the transaction was being made. Thus, at the
time of sale, petitioners knew that Mary Ann has a right
to or interest in the subject properties and yet they
failed to obtain her conformity to the deed of sale.
Hence, petitioners cannot now invoke the protection
accorded to purchasers in good faith.
Now, if a voidable contract is annulled, the restoration
of what has been given is proper. The relationship
between the parties in any contract even if
subsequently annulled must always be characterized
and punctuated by good faith and fair dealing.17 Hence,
in consonance with justice and equity and the salutary
principle of non-enrichment at another’s expense, we
sustain the appellate court’s order directing Pedro to
return to petitioner spouses the value of the
consideration for the lot covered by TCT No. T-88674
and the house thereon.
However, this court rules that petitioners cannot claim
reimbursements for improvements they introduced
after their good faith had ceased. As correctly found by
the Court of Appeals, petitioner Patrocinia Ravina
made improvements and renovations on the house and
lot at the time when the complaint against them was
filed. Ravina continued introducing improvements
during the pendency of the action.18
Thus, Article 449 of the New Civil Code is applicable. It
provides that, "(h)e who builds, plants or sows in bad
faith on the land of another, loses what is built, planted
or sown without right to indemnity."19
On the last issue, petitioners claim that the decision
awarding damages to respondents is not supported by
the evidence on record.20
The claim is erroneous to say the least. The manner by
which respondent and her children were removed from
the family home deserves our condemnation. On July
5, 1991, while respondent was out and her children
were in school, Pedro Villa Abrille acting in connivance
with the petitioners21 surreptitiously transferred all their
personal belongings to another place. The
respondents then were not allowed to enter their
rightful home or family abode despite their
impassioned pleas.
Page 3 of 48
Firmly established in our civil law is the doctrine that:
"Every person must, in the exercise of his rights and in
the performance of his duties, act with justice, give
everyone his due, and observe honesty and good
faith."22 When a right is exercised in a manner that does
not conform with such norms and results in damages
to another, a legal wrong is thereby committed for
which the wrong doer must be held responsible.
Similarly, any person who willfully causes loss or injury
to another in a manner that is contrary to morals, good
customs or public policy shall compensate the latter for
the damages caused.23 It is patent in this case that
petitioners’ alleged acts fall short of these established
civil law standards.
WHEREFORE, we deny the instant petition for lack of
merit. The Decision dated February 21, 2002 and the
Resolution dated October 7, 2003 of the Court of
Appeals in CA-G.R. CV No. 54560 are AFFIRMED.
Costs against petitioners.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-20825 December 28, 1964
AMALIA PLATA, petitioner,
vs.
HON. NICASIO YATCO, Judge, Court of First
Instance of Rizal, Branch V; BENITO MACROHON,
Sheriff of Quezon City and The Spouses
CESAREA E. VILLANUEVA and GREGORIO
LEAÑO respondents.
Rosales & Montesa for petitioner.
Venida & Demonteverda Law Offices for respondents.
REYES J.B.L., J.:
Amalia Plata resorts to this Supreme Court for a writ
of certiorari against the Court of First Instance of Rizal,
Branch V, Quezon City, to annul and set aside its order
of 4 January 1963, issued in its Civil Case No. Q-6250
(Cesarea Villanueva, et al. vs. Gaudencio Begosa)
finding petitioner Plata in contempt of court for refusing
to vacate certain property, and sentencing her to pay a
fine of P100, with subsidiary imprisonment in case of
insolvency, with a warning of more drastic action
should she persist in disobeying the writ issued by said
court.
At petitioner's instance, a writ of preliminary injunction
was issued to stay enforcement of the order
complained of, and respondents required to answer.
The pleadings and other papers on record disclose that
Amalia Plata, in 1954, had purchased a parcel of land
(Lot. 23, Block 4-M, of Subdivision plan PSD-59) in
Caloocan, Rizal, for which the Provincial Register of
Deeds issued Torrens Certificate of Title (Transfer) No.
25855 in the name of Amalia Plata, single, Filipino
citizen. On 13 February 1958, she sold the property to
one Celso Saldaña who obtained TCT No. 40459
therefor; but seven months afterwards, on 24
September 1958, Saldaña resold the same property to
Amalia Plata, married to Gaudencio Begosa," (Ans.
Exh. 3) and a new certificate of Title No. 43520 was
issued to the vendee, Amalia Plata (Exh. 3a).
On the same date, 24 September 1958, "Amalia Plata
of legal age, Filipino, married to Gaudencio Begosa,"
in consideration of a loan of P3,000, mortgaged to
Cesarea Villanueva married to Gregorio Leaño, the
identical property and its improvements "of which the
mortgagor declares to be hers as the absolute owner
thereof." The mortgage was also signed by Gaudencio
Begosa, as co-mortgagor (Exh. 4).
For failure to pay the mortgage, the same was
extrajudicially foreclosed under Act 3135, and sold on
12 April 1960 to the mortgagee as the highest bidder;
on 13 May 1961, the Sheriff issued a final deed of sale
on the strength of which the Register of Deeds issued
the buyer TCT, No. 55949 (Exhs. 5, 6, 7).
Subsequently, the respondent, Villanueva, sued
Gaudencio Begosa alone for illegal detainer (Annex C.
Petition) in Case No. Q-6250, and obtained judgment
against him in the court of first instance, that became
final (Annex D, Petition). A writ of execution was duly
issued, but Amalia Plata resisted all efforts to eject her
from the property, and she filed a third party claim,
averring ownership of the property (Annex E). Upon
motion of the judgment creditors, the court below cited
both Begosa and Plata for contempt (Annex H), and,
finding her explanation (Annex I) unsatisfactory, found
her guilty and sentenced her, as stated at the beginning
of this decision.
The issue here is whether the petitioner, Amalia Plata,
is bound by the detainer judgment against Gaudencio
Begosa in Civil Case No. Q-6250. Petitioner denies it,
claiming that she was never lawfully married to
Begosa, and that she had acquired the property while
still single, and was in possession thereof when the
Sheriff of Rizal attempted to enforce the writ of
ejectment. Respondent Villanueva and her husband
maintain, on the other hand, that Plata had repeatedly
acknowledged being married to Begosa; that she had
lived with him openly as his wife, and their marriage is
presumed; that, therefore, she is to be deemed as
holding under Begosa, and is bound by the judgment
against the latter.
We are constrained to uphold as meritorious the
petitioner's stand. Granting that the evidence before us
against the marriage of petitioner Amalia Plata to
Gaudencio Begosa is weak, considering the
admissions of married status in public documents
(Answer, Exhs. 3 and 4); the well known presumption
that persons openly living together as husband and
wife are legally married to each other, and that the prior
marriage of Begosa to someone else does not
necessarily exclude the possibility of a valid
subsequent marriage to herein petitioner; still the
respondents Villanueva could not ignore the
paraphernal character of the property in question,
which had been unquestionably acquired by Plata
while still single, as shown by Transfer Certificate of
Title No. 25855 of Rizal (Art. 148 of the New Civil
Code). The subsequent conveyance thereof to Celso
Saldaña, and the reconveyance of her several months
afterward of the same property, did not transform it
from paraphernal to conjugal property, there being no
proof that the money paid to Saldaña came from
common or conjugal funds (Civ. Code, Art 153). The
deed of mortgage in favor of respondents Villanueva
Page 4 of 48
actually recites that the petitioner was the owner of the
tenement in question and so does the conveyance of it
by Saldaña to her (Ans., Exhs. 3 and 4).
It is true that Gaudencio Begosa signed the mortgage
(Exh. 4) as a co-mortgagor; but by itself alone that
circumstance would not suffice to convert the land into
conjugal property, considering that it was paraphernal
in origin. This is particularly the case where the addition
of Begosa as co-mortgagor was clearly an after
thought, the text of the deed showing that Plata was
the sole mortgagor.
Since the property was paraphernal, and the creditors
and purchasers were aware of it, the fact being clearly
spread on the land records, it is plain that Plata's
possession, therefore, was not derived from
Gaudencio Begosa. The illegal detainer judgment
against the husband alone cannot bind nor affect the
wife's possession of her paraphernal, which by law she
holds and administers independently, and which she
may even encumber or alienate without his knowledge
or consent (Civ. Code, Arts. 136. 137, 140). Hence, as
she was not made party defendant in the eviction suit,
the petitioner-wife could validly ignore the judgment of
eviction against her husband, and it was no contempt
of court for her to do so, because the writ of execution
was not lawful against her (Chanco vs. Madrilejos, 9
Phil. 356; A. Jose Realty vs. Galao, et al., 76 Phil. 201;
Segarro vs. Maronilla, L-14428, July 26, 1960; Weigall
vs. Shuster, 11 Phil. 340).
We need not decide here whether the property was
validly conveyed to respondents Villanueva, since that
issue is the subject of an independent proceeding in
the Court of First Instance of Quezon City, Civil. Case
No. Q6510 (Petition, Annex F).
The writ of certiorari prayed for is granted, and the
order of the lower court, dated 4 January 1963, is
annulled and set aside. The preliminary injunction is
made permanent, with costs against private
respondents Villanueva.
Bengzon, C.J., Bautista Angelo, Concepcion, Barrera,
Paredes, Dizon, Makalintal, Bengzon, J.P., and
Zaldivar, JJ., concur.
Regala, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-6335 July 31, 1954
GLICERIA ROSETE, plaintiff-appellee,
vs.
PROVINCIAL SHERIFF OF ZAMBALES, SIMPLICIO
YAP and CORAZON YAP, defendants-appellants.
Ricardo N. Agbunag for appellants.
Jorge A. Pascua for appellee.
BAUTISTA ANGELO, J.:
In criminal case No. 2897 for murder of the Court of
First Instance of Zambales, Epifanio Fularon was
convicted and sentenced to indemnify the heirs of the
victim in the amount of P2,000.
On February 10, 1949, to satisfy said indemnity, a writ
of execution was issued and the sheriff levied upon four
parcels of land belonging to the conjugal partnership of
Epifanio Fularon and Gliceria Rosete. These parcels of
land were sold at public auction as required by the rules
for the sum of P1,385.00, leaving an unsatisfied
balance of P739.34.
On March 8, 1950, Gliceria Rosete redeemed two of
the four parcels of land which were sold at public
auction for the sum of P879.20, the sheriff having
executed in her favor the corresponding deed of
repurchase.
On April 10, 1950, an alias execution was issued to
satisfy the balance of the indemnity and the sheriff
levied upon the two parcels of land which were
redeemed by Gliceria Rosete and set a date for their
sale. Prior to the arrival of this date, however, Gliceria
Rosete filed a case for conjunction to restrain the
sheriff from carrying out the sale praying at the same
time for a writ of preliminary injunction. This writ was
issued upon the filing of the requisite bond but was later
dissolved upon a motion filed by defendants who put
up counter-bond.
The dissolution of the injunction enabled the sheriff to
carry out the sale as originally scheduled and the
property was sold to one Raymundo de Jesus for the
sum of P970. This development prompted the plaintiff
to amend her complaint by praying therein, among
other things, that the sale carried out by the sheriff be
declared null and void. After due trial, wherein the
parties practically agreed on the material facts
pertinent to the issue, the court rendered decision
declaring the sale null and void. The defendants
appealed, and the case was certified to this court on
the plea that the appeal involves purely questions of
law.
The question to be decided is whether the sale made
by the sheriff on May 9, 1950 of the two parcels of land
which were redeemed by Gliceria Rosete in the
exercise of her right of redemption is valid it appearing
that they formed part of the four parcels of land
belonging to the conjugal partnership which were
originally sold to satisfy the same judgment of
indemnity awarded in the criminal case. The lower
court declared the sale null and void on the strength of
the ruling laid down in the case of Lichauco vs.
Olegario, 43 Phil., 540, and this finding is now disputed
by the appellants.
In the case above adverted to, Lichauco obtained a
judgment against Olegario for the sum of P72,766.37.
To satisfy this judgment, certain real estate belonging
to Olegario was levied in execution and at the sale
Lichauco bid for it for the sum of P10,000. Olegario, on
the same day, sold his right of redemption to his cousin
Dalmacio. Later, Lichauco asked for an alias writ of
execution and the sheriff proceeded with the sale of the
right of redemption of Olegario whereat Lichauco
himself bid for the sum of P10,000. As Lichauco failed
to register the sale owing to the fact that the sale
executed by Olegario in favor of his cousin was already
recorded, Lichauco brought the matter to court to test
the validity of the latter sale. One of the issues raised
was, "Whether or not Faustino Lichauco, as an
Page 5 of 48
execution creditor and purchaser at the auction in
question was entitled, after his judgment had thus been
executed but not wholly satisfied, to have it executed
again by levying upon the right of redemption over said
properties." The court ruled that this cannot be done for
it would render nugatory and means secured by law to
an execution debtor to avoid the sale of his property
made at an auction under execution. Said this Court:
We, therefore, find that the plaintiff, as a
judgment creditor, was not, and is not, entitled,
after an execution has been levied upon the
real properties in question by virtue of the
judgment in his favor, to have another
execution levied upon the same properties by
virtue of the same judgment to reach the right
of redemption which the execution debtor and
his privies retained over them.
Inasmuch as the Lichauco case refers to the levy and
sale of the right of redemption belonging to a judgment
debtor and not to the levy of the very property which
has been the subject of execution for the satisfaction of
the same judgment, it is now contended that it cannot
be considered as a precedent in the present case for
here the second levy was effected on the same
property subject of the original execution. But this
argument falls on its own weight when we consider the
following conclusion of the court, "... what we wish to
declare is that a judgment by virtue of which a property
is sold at public auction can have no further effect on
such property." (Emphasis supplied)
Nevertheless, when this case came up for discussion
some members of the Court expressed doubt as to the
applicability of the Lichauco case considering that it
does not decide squarely whether the same property
may be levied on an alias execution if it is reacquired
by the judgment debtor in the exercise of his right of
redemption and as on this matter the requisite majority
could not be obtained the injury turned to another issue
which for purposes of this case is sufficient to decide
the controversy.
The issue is: Since it appears that plaintiff redeemed
the two parcels of land in question with money obtained
by her from her father, has the property become
paraphernal and as such is beyond the reach of further
execution?
We are of the opinion that the question should be
answered in the affirmative for the following reasons:
(a) Gliceria Rosete, the wife, redeemed the property,
not in behalf of her husband, but as successor in
interest in the whole or part of the property, it being
then conjugal. The term "successor in interest"
appearing in subdivision (a), Section 25, Rule 39,
includes, according to Chief Justice Moran, "one who
succeeds to the interest of the debtor by operation of
law" or "the wife as regards her husband's homestead
by reason of the fact that some portion of her
husband's title passes to her (Comments on the Rules
of Court, 1952 ed., Vol. 1, pp. 841-842); and (b) a
property is deemed to belong exclusively to the wife (1)
when acquired by her by-right of redemption, and (2)
with money belonging exclusively to her (Article 1396,
old Civil Code).
The interest which a wife has in conjugal property in
this jurisdiction may be likened to that of a wife in a
homestead in American jurisdiction. That interest is
known as "inchoate right of dower", or a "contingent
interest." By virtue of this inchoate right, a wife has a
right of redemption of a homestead as successor in
interest of her husband. Thus, in Hepfner vs. Urton, 12
Pac., 486, it was held that by the declaration of
homestead by the husband of the property sold a
portion of his title passed to his wife, and "she had the
right of residence thereon with him and the family
during their joint lives, with some rights in case she
should survive him. She had a right of redemption as
his successor in interest." (Emphasis supplied) In
Taylor vs. Taylor, 92 So., 109, where a mortgage was
executed on a homestead and the husband refused to
pay the indebtedness, it was held that "the wife's
"inchoate right of dower", which is more than a
possibility and may well be denominated a contingent
interest, was a sufficient interest in the lands to confer
the right of equitable redemption under the mortgage."
And in Malone vs. Nelson, et al., 167 So., 714, it was
declared that "the right of the wife of redeem is rested
upon her interest — inchoate right of dower — a right
subject to a monetary valuation." These authorities
have persuasive effect considering the source of our
rule on the matter.
The property in question has therefore become the
exclusive property of the plaintiff. She has acquired it
by right of redemption as successor in interest of her
husband. It has ceased to be the property of the
judgment debtor. It can no longer therefore be the
subject of execution under a judgment exclusively
affecting the personal liability of the latter. The
conclusion reached by the lower court on this matter is
therefore not warranted by law.
Wherefore, the decision appealed from is modified as
follows: the sale of the two parcels of land executed by
the sheriff on May 9, 1950 in favor of Raymundo de
Jesus for P970 is hereby declared null and void, and
the deed of repurchase executed by the sheriff in favor
of the plaintiff on March 8, 1950 is hereby revived and
maintained. The rest of the decision is declared without
effect. No pronouncement as to costs.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A.,
Jugo, Labrador, Concepcion and Reyes, J.B.L.,
JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-16857 May 29, 1964
MARCELO CASTILLO, JR., FELICISIMO
CASTILLO, ENCARNACION CASTILLO, AMELIA
CASTILLO, JAIME CASTILLO, RONALDO
CASTILLO, VICTORIA CASTILLO, LETICIA CINCO,
LEVI CINCO and DANIEL CINCO, petitioners,
vs.
MACARIA PASCO, respondent.
Tomas Yumol for petitioners.
Mariano G. Bustos and Associates for respondent.
REYES, J.B.L., J.:
Page 6 of 48
The legitimate children and descendants of the late
Marcelo Castillo, Sr. pray for the review and reversal of
the decision of the Court of Appeals, in its Case CA
G.R. No. 19377-R, that affirmed the decision of the
Court of First Instance of Bulacan, declaring that the
fishpond in San Roque, Paombong, Bulacan (covered
by TCT No. 9928 of the Registry of Deeds of said
province), was the exclusive paraphernal property of
respondent Macaria Pasco, surviving spouse of the
deceased Marcelo Castillo, Sr., and dismissing the
complaint for partition and accounting filed by
petitioners in said Court of First Instance.
The Court of Appeals found, and the petitioner-
appellants do not dispute, that in October 1931
Marcelo Castillo, Sr., being a widower, married
Macaria Pasco, a widow who had survived two
previous husbands. Petitioners were children and
grandchildren (representing their deceased parents) of
Marcelo Castillo, Sr. by his previous marriage. On April
3, 1933, Marcelo Castillo, Sr. died, and his widow
married her fourth husband, Luis San Juan, on June 8,
1934.
On December 22, 1932, Gabriel and Purificacion
Gonzales, as co-owners of the litigated fishpond,
executed a deed of sale (Exh. 1) conveying said
property to the spouses Marcelo Castillo and Macaria
Pasco for the sum of P6,000.00 (although the deed
recited a higher amount), payable in three installments:
P1,000 upon execution of the deed (Exh. 1) ; P2,000
on January 25, 1933 without interest; and P3,000
within one year thereafter, with 11% interest from
February 1, 1933, but extendible for another year.
Against the contention of petitioners-appellants that the
fishpond thus bought should be considered conjugal
for its having been acquired during coverture, the Court
of Appeals declared it to be paraphernalia because it
was purchased with exclusive funds of the wife,
Macaria Pasco. She was admittedly a woman of
means even before she married Marcelo Castillo, Sr.
and the latter's principal source of income was only his
P80 a month salary, as provincial treasurer (as found
by the Court of First Instance), besides two small
residential lots and fishponds, which were encumbered
and later transferred to his five children by his first wife
and whom he was then supporting in medical and high
school. Actually, Marcelo Castillo, Sr. died without
enough assets to pay his debts. .
In point of fact, the Court of Appeals found that the
initial payment of P1,000 for the fishpond now in
litigation was made up of P600, that one of the vendors
(Gabriel Gonzales) owed to appellee Pasco, and P400
in cash, which the latter paid out of the proceeds of the
sale of one of her nipa lands. The second installment
of P2,000 appears to have been paid with the proceeds
of the loan from Dr. Nicanor Jacinto, to whom the
fishpond was mortgaged by both spouses. Dr. Jacinto
later assigned his interest to Dr. Antonio Pasco. The
last payment of P3,000 was derived from a loan
secured by a mortgage (Exh. 2) on 2 parcels of land
assessed in the name of Macaria Pasco, and one of
which she had inherited from a former husband, Justo
S. Pascual, while the other lot encumbered was
assessed in her exclusive name.
It was also found by the Court of Appeals that upon the
death of Marcelo Castillo, Sr., the loan and mortgage
in favor of Dr. Jacinto (later assigned by him to Dr.
Antonio Pasco) was still outstanding. Unable to collect
the loan, Dr. Pasco foreclosed the mortgaged, and the
encumbered fishpond was sold to him; but the sale was
subsequently annulled. Later, on September 7, 1949,
respondent Macaria Pasco judicially consigned
P12,300 on account of the mortgage debt and its
interest, and completed payment by a second
consignation of P752.43 made on April 24, 1950. As
the estate of Castillo had no assets adequate to pay off
the claims against it, the Court of Appeals concluded
that the amounts consigned belonged to the widow
Macaria Pasco, respondent herein. 1äwphï1.ñët
It is not gain said that under the Spanish Civil Code of
1889, that was the applicable law in 1932, the property
acquired for onerous consideration during the marriage
was deemed conjugal or separate property depending
on the source of the funds employed for its acquisition.
Thus, Article 1396 of said Code provided:
ART. 1396. The following is separate property
spouse:
1. ...
2. ...
3. ...
4. That bought with money belonging
exclusively to the wife or to the husband.
On the other hand, Article 1401, prescribed that:
ART. 1401. To the conjugal property belong:
1. Property acquired for valuable consideration
during the marriage at the expense of the
common fund, whether the acquisition is made
for the partnership or for one of the spouses
only.
The last clause in Article 1401 (par. 1) indicates that
the circumstance of the sale of the fishpond in question
being made by the original owners in favor of both
spouses, Marcelo Castillo, Sr. and Macaria Pasco, is
indifferent for the determination of whether the property
should be deemed paraphernal or conjugal. As
remarked by Manresa in his Commentaries to the Civil
Code, Vol. IX (5th Ed), p. 549, "la ley atiende no a la
persona encuyo nombre o a favor del cual se realize la
compra, sino a la procedenciadel dinero."
As above-noted, the Court of Appeals determined that
the initial payment of P1,000 for the fishpond now
disputed was made out of private funds of Macaria
Pasco. Appellants, however, argue that since there is
no express finding that the P600 debt owed by Gabriel
Gonzales came exclusively from private funds of
Pasco, they should be presumed conjugal funds, in
accordance with Article 1407 of the Civil Code of 1889.
The argument is untenable. Since the wife, under
Article 1418, can not bind the conjugal partnership
without the consent of the husband, her private
transactions are presumed to be for her own account,
and not for the account of the partnership. The finding
of the Court of Appeals is that Gabriel Gonzales owed
this particular indebtedness to Macaria Pasco alone,
and in the absence of proof that the husband
authorized her to use community funds therefor, the
appellate Court's finding can not be disturbed by us.
Page 7 of 48
Whether the evidence adverted to should be credited
is for the Court of Appeals to decide.
Appellants next assail the conclusion of the Court of
Appeals that the other two installments of the purchase
price should be, like the first one, deemed to have been
paid with exclusive funds of the wife because the
money was raised by loans guaranteed by mortgage
on paraphernalia property of the wife. The position thus
taken by appellants is meritorious, for the reason that
the deeds show the loans to have been made by Dr.
Nicanor Jacinto, and by Gabriel and Purificacion
Gonzales, to both spouses Marcelo Castillo and
Macaria Pasco, as joint borrowers. The loans thus
became obligations of the conjugal partnership of both
debtor spouses, and the money loaned is logically
conjugal property. While the securing mortgage is on
the wife's paraphernalia the mortgage is a purely
accessory obligation that the lenders could, waive if
they so chose, without affecting the principal debt
which was owned by the conjugal partnership, and
which the creditors could enforce exclusively against
the latter it they so desired.
In Palanca vs. Smith Bell & Co., 9 Phil. 131., this Court
ruled as follows (cas cit. at p. 133,) .
This P14,000, borrowed by said Emiliano
Boncan upon the credit of the property of his
wife became conjugal property (par. 3, Art.
1401, Civil Code) and when that same was
reinvented in the construction of a house, the
house became e conjugal property and was
liable for the payment of the debts of the
husband (Art 1408, Civ. Code).
If money borrowed by the husband alone on the
security of his wife's property is conjugal in character,
a fortiori should it be conjugal when borrowed by both
spouses. The reason obviously is that the loan
becomes an obligation of the conjugal partnership
which is the one primarily bound for its repayment.
The case of Lim Queco vs. Cartagena, 71 Phil. 162, is
clearly distinguishable from the Palanca case in that in
the Lim Queco case the wife alone borrowed the
money from "El Ahorro Insular" although she
guaranteed repayment with a mortgage on her
parapherna executed with her husband's consent.
Since the wife does not have the management or
representation of the conjugal partnership where the
husband is qualified therefor, the loan to her
constituted a transaction that did not involve the
community, and the creditor could seek repayment
exclusively from her properties. Logically, as this Court
then held, the money loaned to the wife, as well as the
property acquired thereby, should be deemed to be the
wife's exclusive property.
The analogy between the case now before us and
the Palanca vs. Smith Bell case is undeniable, and the
Palanca ruling applies. We, therefore, find that the two
installments, totalling P5,000, of the price of the
fishpond were paid with conjugal funds, unlike the first
installment of P1,000 that was paid exclusively with
money belonging to the wife Macaria Pasco, appellee
herein.
As the litigated fishpond was purchased partly with
paraphernal funds and partly with money of the
conjugal partnership, justice requires that the property
be held to belong to both patrimonies in common, in
proportion to the contributions of each to the total
purchase price of P6,000. An undivided one-sixth (1/6)
should be deemed paraphernalia and the remaining
five-sixths (5/6) held property of the conjugal
partnership of spouses Marcelo Castillo and Macaria
Pasco (9 Manresa, Com. al Codigo Civil [5th Ed.], p.
549).
Puesto que la ley atiende no a la persona en
cuyo nombre o a favor del cualse realize la
compra sino a la procedencia del dinero,
considerando el hecho como una verdadera
substitution o conversion del dinero en otros
objetos, debemos deduce que cuando una
finca por ejemplo, se compra con dinero del
marido y de la mujer, o de la mujer y de la
Sociedad, pertenece a aquellos de quienes
precede el precio y en la proporcion entregada
por cada cual. Si pues marido y mujer compran
una casa entregando el primero de su capital
propio 10,000 pesetas, y la segunda 5,000, la
casa pertenecera a losdos conyuges pro
indiviso, en la proportion de los terceras partes
al marido y una tercera a la mujer. (Manresa.
op. cit)
The payment by the widow, after her husband's death,
of the mortgage debt due to Dr. Pasco, the assignee of
the original mortgagee, Dr. Nicanor Jacinto, does not
result in increasing her share in the property in question
but in creating a lien in her favor over the undivided
share of the conjugal partnership, for the repayment of
the amount she has advanced, should it be ultimately
shown that the money thus delivered to the creditor
was exclusively owned by her.
It follows from the foregoing that, as the fishpond was
undivided property of the widow and the conjugal
partnership with her late husband, the heirs of the
latter, appellants herein, were entitled to ask for
partition thereof and liquidation of its proceeds. The
ultimate interest of each party must be resolved after
due hearing, taking into account (a) the widow's one-
sixth direct share; (b) her half of the community
property; (e) her successional rights to a part of the
husband's share pursuant to the governing law of
succession when the husband died; and (d) the
widow's right to reimbursement for any amounts
advanced by her in paying the mortgage debt as
aforesaid. All these details must be settled after proper
trial.
WHEREFORE, the dismissal of the original complaint
is hereby revoked and set aside, and the records are
ordered remanded to the court of origin for further
proceedings conformable to this opinion.
Bengzon, C.J., Bautista Angelo, Concepcion, Barrera,
Paredes, Regala and Makalintal, JJ., concur.
Padilla, Labrador and Dizon, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-28589 February 29, 1972
Page 8 of 48
RAFAEL ZULUETA, ET AL., plaintiffs-appellees, have a defective announcing system and I was
vs. not paged."
PAN AMERICAN WORLD AIRWAYS,
INC., defendant-appellant. I was about to make some reply when I noticed
the captain of the flight standing on the ramp,
Jose W. Diokno for plaintiffs-appellees. midway between the gate and the aircraft, and
talking with the senior maintenance supervisor
Ross, Salcedo, Del Rosario, Bito and Misa for and several other persons. The captain
defendant-appellant. motioned for me to join him which I
did, indicating to the Zulueta family that they
CONCEPCION, C.J.:p should wait for a moment at the gate.

Appeal, taken by defendant Pan American World Airways, Inc., from a -- Exh. 5 .
decision of the Court of First Instance of Rizal, sentencing said defendant to
pay herein plaintiffs — Rafael Zulueta, Telly Albert Zulueta and Carolinda
Zulueta — "the sum of P5,502.85, as actual damages; plus the further sum (2) Thereafter, one of defendant's employees
of P1,000,000.00 as moral damages; the further sum of P400,000.00 as
exemplary damages; and attorney's fees in the sum of P100,000.00" with the
— Mr. Sitton, according to plaintiffs; Mr.
costs against said defendant, hereinafter referred to as PANAM for the sake Pendleton according to defendants — asked
of brevity. plaintiffs to turn over their baggage claim
checks. Plaintiffs did so, handing him four (4)
It is not disputed that, on October 23, 1964, the spouse claim checks.
Rafael Zulueta and Telly Albert Zulueta — hereinafter
referred to as plaintiff and Mrs. Zulueta, respectively — (3) However, only three (3) bags were located
as well as their daughter, Carolinda Zulueta — and segregated from the rest of the
hereinafter referred to as Miss Zulueta — were passenger's luggage. The items hand-carried
passengers aboard a PANAM plane, on Flight No. 841- by plaintiffs, except for plaintiff's overcoat, were
23, from Honolulu to Manila, the first leg of which was also brought down. These hand-carried items,
Wake Island. As the plane landed on said Island, the however, were not opened or inspected; later,
passengers were advised that they could disembark for plaintiffs Mrs. Zulueta and Miss Zulueta were
a stopover of about 30 minutes. Shortly before permitted to reboard the plane with their hand-
reaching that place, the flight was, according to the carried luggage; and when the plane took off,
plaintiffs, "very rough." Testifying for PANAM its purser, about two and a half hours later, it carried
Miss Schmitz, asserted, however, that it was "very plaintiff's fourth bag, his overcoat and the hand-
calm"; but her notes, Exhibit 7 — prepared upon the carried luggage.
request of Captain Zentner, on account of the incident
involved in this case — state that there was "unusually (4) Once three bags had been identified, and
small amount of roughness," which His Honor, the Trial while the search was going on for the fourth
Judge, considered properly as "an admission that there bag, Mr. Sitton, defendant's airport manager,
was roughness, only the degree thereof is in dispute." demanded that plaintiffs open the bags
In any event, plaintiff testified that, having found the (actually, they were closed, but not locked) and
need to relieve himself, he went to the men's comfort allow defendant's employees to inspect them.
room at the terminal building, but found it full of Plaintiff Rafael Zulueta refused and warned
soldiers, in view of which he walked down the beach that defendant could open the bags only by
some 100 yards away. force and at its peril of a law suit.
Meanwhile, the flight was called and when the (5) Mr. Sitton, defendant's manager, then told
passengers had boarded the plane, plaintiff's absence plaintiff that he would not be allowed to proceed
was noticed. The take-off was, accordingly, delayed to Manila on board the plane and handed
and a search for him was conducted by Mrs. Zulueta, Zulueta the following letters:
Miss Zulueta and other persons. Minutes later, plaintiff
was seen walking back from the beach towards the "Mr. Zulueta:
terminal. Heading towards the ramp of the plane, Passenger aboard flight 84123
plaintiff remarked, "You people almost made me miss Honolulu/Manila .
your flight. You have a defective announcing system
and I was not paged." At this point, the decision Sir:
appealed from has the following to say:
We are forced to off-load you from flight
(1) Plaintiffs were on their way to the plane in 84123 due to the fact that you have
order to board it, but defendant's employees — refused to open your checked baggage
Kenneth Sitton, defendants airport manager, for Inspection as requested.
according to plaintiffs; Wayne Pendleton,
defendant's airport customer service During your stay on Wake Island, which
supervisor, according to defendant — stopped will be for a minimum of one week, you
them at the gate. This is what the report of will be charged $13.30 per day for each
Wayne Pendleton the airport customer service member of your party.
supervisor, says:
K. Sitton
...I made no comment to the passenger but Airport Manager, Wake Island
turned and led the group toward the ramp. Just Pan American World Airways, Inc."
as we reached the boarding gate, Mr. Zulueta
spoke to me for the first time saying, `You — Exh. D
people almost made me miss your flight. You

Page 9 of 48
 (6) All this happened in plain view and within
earshot of the other passengers on the plane,
many of whom were Filipinos who knew
plaintiffs;
The departure of the plane was delayed for
about two hours
(7) Though originally all three plaintiffs had
been off loaded, plaintiff requested that his wife
and daughter be permitted to continue with the
flight. This was allowed but they were required
to leave the three bags behind. Nevertheless,
the plane did fly with the Plaintiff's fourth bag; it
was found among all other passengers'
luggage flown to Manila upon the plane's
arrival here.
(8) Upon arrival at Manila, Mrs. Zulueta
demanded of defendant's Manila office that it
re-route plaintiff Rafael Zulueta to Manila at the
earliest possible time, by the fastest route, and
at its expense; defendant refused; so plaintiffs
were forced to pay for his ticket and to send him
money as he was without funds.
(9) On October 27, 1964, plaintiff Zulueta finally
arrived at Manila, after spending two nights at
Wake, going back to Honolulu, and from
Honolulu flying thru Tokyo to Manila.
(10) On December 21, 1964, plaintiffs
demanded that defendant reimburse them in
the sum of P1,505,502.85 for damages but
defendants refused to do so; hence this action.
In its brief, PANAM maintains that the trial court erred:
(1) "in not granting defendant additional hearing dates
(not a postponement) for the presentation of its other
witnesses"; (2) "in assuming it to be true that the
reason plaintiff Rafael Zulueta did not come aboard
when the passengers were reboarded was that he had
gone to the beach to relieve himself"; (3) "in not holding
that the real reason why plaintiff Rafael Zulueta did not
reboard the plane, when the announcement to do so
was made, was that he had a quarrel with his wife and
after he was found at the beach and his intention to be
left behind at Wake was temporarily thwarted he did
everything calculated to compel Pan American
personnel to leave him behind"; (4) "in accepting as
true plaintiff Rafael Zulueta's claim of what occurred
when; he arrived at the terminal after he was found at
the beach"; (5) "in not holding that the captain was
entitled to an explanation for Zulueta's failure to
reboard and not having received a reasonable
explanation and because of Zulueta's irrational
behavior and refusal to have his bags examined, the
captain had the right and duty to leave Zulueta behind";
(6) "in condemning the defendant to pay plaintiffs
P5,502.85 as actual damages plus the further sum of
P1,000,000.00 as moral damages, and the further sum
of P400,000.00 as exemplary damages, and attorneys'
fees in the sum of P100,000.00"; and (7) "in not
granting defendant's counterclaim of attorney's fees
and expenses of litigation." .
PANAM's first assignment of error refers to the denial
of its motion, dated October 20, 1966, that it "be
granted other hearing dates about two months from
today so as to be able to present defendant's other
witnesses or their depositions."
It appears that the complaint in this case was filed on
September 30, 1965. It was amended on December 1,
1965, and again on April 14, 1966. PANAM answered
the second amended complaint on May 6, 1966. After
a pre-trial conference, held on May 28, 1966, the case
was set for hearing on June 1, 2 and 3, 1966. By
subsequent agreement of the parties, the hearing was,
on June 3, 1966, reset for August 1, 2 and 3, 1966.
Plaintiffs rested their case on August 2, 1966,
whereupon it was agreed that PANAM's witnesses
would be presented "at a later date," months later,
because they would "come from far-flung places like
Wake Island, San Francisco, Seattle and it will take
time to arrange for their coming here." Accordingly the
case was reset for October 17, 18 and 19, 1966, at 8:30
a.m. On motion of the plaintiffs, the trial scheduled for
October 17 was cancelled, without any objection on the
part of PANAM but, to offset said action, additional
hearings were set for October 18 and 19, in the
afternoon, apart from those originally set in the morning
of these dates. Before the presentation of PANAM's
evidence, in the morning of October 18, 1966, plaintiffs'
counsel asked for the names of the former's witnesses,
so that those not on the witness stand could be
excluded from the courtroom. PANAM's counsel
announced that his witnesses were Marshall Stanley
Ho, Kenneth Sitton, Michael Thomas, Wayne S.
Pendleton, Capt. Robert Zentner and Miss Carol
Schmitz.
The defense then proceeded to introduce the
testimony of said witnesses, and consumed therefor
the morning and afternoon of October 18 and the
morning of October 19. Upon the conclusion, that
morning, of the testimony of the last witness for the
defense, its counsel asked that it "be given an
opportunity to present our other witnesses who are not
present today, at the convenience of the Court." The
motion was denied, but, said counsel sought a
reconsideration and the court gave PANAM a last
chance to present its "other witnesses" the next day,
October 20. Instead of doing so, PANAM filed a written
motion reiterating its prayer for "other hearing dates
about two months from today so as to be able to
present defendant's other witnesses or their
depositions." Upon denial of this motion, PANAM made
an offer of the testimony it expected from one Edgardo
Gavino, an unnamed meteorologist, either Sue Welby
and/or Helga Schley, and John C. Craig, Ida V.
Pomeroy, Herman Jaffe, Gerry Cowles and Col. Nilo
de Guia.
His Honor, the Trial Judge, did not commit a reversible
error in denying said motion of October 20, 1966.
PANAM knew, as early as August 2, 1966, that its turn
to present evidence would take place, as agreed upon,
about two (2) months and a half later, or on October
17, 18 and 19, 1966. PANAM has not offered any valid
excuse for its failure to bring to court the witnesses
mentioned in said motion, despite the assurance given
by its counsel, on August 2, 1966, that the defense
would "spare no effort to bring them here," or, if they
could not be brought due to circumstances beyond
PANAM's control, to "submit their deposition." The
records do not show that any such effort to bring the
aforementioned witnesses had been exerted. The
defense has not even tried to explain why the
deposition of said witnesses was not taken. What is
worse, the proffered explanation — that the six (6)
persons who testified for the defense1 were believed,
by defense counsel, to be enough for the three (3) days
Page 10 of 48
of October set for the reception of his evidence2 —
indicates that no effort whatsoever had been made
either to bring the "other witnesses"3 or to take and
submit their depositions.
Besides, the testimony allegedly expected of said other
witnesses for the defense — namely: (1) that there
was, according to official records, no turbulence in the
flight from San Francisco to Honolulu, on which the
testimony of Carol Schmitz had touched; (2) that Ida V.
Pomeroy and John C. Craig would say that the
passengers were advised not to go beyond the
terminal and that the stopover would be for about 30
minutes only, on which duration of the stopover Miss
Schmitz had, also testified, as she could have similarly
testified on said advice, had it been given; (3) that
either Helga Schley or Sue Welby would narrate the
sympathy with which Mrs. Zulueta was allegedly
treated during the flight from Wake Island to Manila,
which is not particularly relevant or material in the case
at bar; (4) that Herman Jaffe, Gerry Cowles and Nilo
de Guia were, also, expected to corroborate the
testimony of Capt. Zentner; and (5) that Edgardo
Gavino was expected to corroborate Michael Thomas
regarding the remarks made by the plaintiff to Mrs.
Zulueta and Miss Zulueta when they and other
members of the searching party found him in the early
morning of October 23, 1964 -- were merely cumulative
in nature
Then, again, PANAM did not comply with section 4 of
Rule 22 of the Rules of Court, reading:
SEC. 4. Requisites of motion to postpone trial
for absence of evidence. — A motion to
postpone a trial on the ground of absence can
be granted only upon affidavit showing the
materiality of evidence expected to be
obtained, and that due diligence has been used
to procure it. But if the adverse party admits the
facts to be given in evidence, even if he objects
or reserves the right to object to their
admissibility, the trial must not be postponed."
. — in which he said it revealed his feeling of distress at
Although this provision refers to motions "to postpone
trial," it applies with equal force to motions like the one
under consideration, there being no plausible reason to
distinguish between the same and a motion for
postponement owing to the "absence of evidence."
The second, third and fourth assignments of error are
interrelated. They refer to the question whether the
reason why plaintiff went to the beach was to relieve
himself, as testified to by him, or to remain in Wake
Island because he had quarreled with his wife, as
contended by PANAM's counsel.
The latter contention however, is utterly devoid of
merit. To begin with, plaintiff's testimony about what he
did upon reaching the beach is uncontradicted.
Secondly, other portions of his testimony — such as,
for instance, that the flight was somewhat rough,
shortly before reaching Wake Island; that there were
quite a number of soldiers in the plane and, later, in the
terminal building; that he did not voluntarily remain in
Wake Island, but was "off-loaded" by PANAM's agent
therein — are borne out by the very evidence for the
defense. Thirdly, PANAM's efforts to show that plaintiff
had decided to remain in the Island because he had
quarreled with Mrs. Zulueta — which is ridiculous —
merely underscores the artificious nature of PANAM's
contention.
Fourthly, there is absolutely no direct evidence about
said alleged quarrel. Nobody testified about
it. Counsel for the defense has, in effect, merely
concluded that there must have been such quarrel
because, when the searching party located plaintiff, he
— according to Stanley Ho — was "shouting in a loud
tone of voice" — not at his wife, but — "towards his
wife and daughter," who headed said party and to
which the words spoken were addressed, according to
plaintiff. Capt. Zentner said that plaintiff was "angry
with them" — Mrs. Zulueta and Miss Zulueta — who
Michael Thomas affirmed — were saying "I am sorry, I
am sorry"; whereas, Wayne S. Pendleton declared that
Gavino told him that this "seems to stem from a
domestic issue" between Mr. and Mrs. Zulueta. Surely,
this alleged surmise, not even by Pendleton but by
Gavino — who was not placed on the witness stand —
cannot be taken as competent evidence that plaintiff
had quarreled with his wife, apart from the
circumstance that such quarrel — if it took place
and there is absolutely no evidence or offer to prove
that anything had transpired between husband and
wife before reaching Wake Island which may suggest
a misunderstanding between them — does not warrant
jumping at the conclusion that plaintiff had decided to
remain in the Island, for he would gain nothing thereby.
Needless to say, if plaintiff's purpose in going to the
beach was to hide from Mrs. and Miss Zulueta and
PANAM's personnel, so that he may be left in the
Island, he, surely, would not have walked back from the
beach to the terminal, before the plane had resumed
its flight to Manila, thereby exposing his presence to
the full view of those who were looking for him.
Then, again, the words uttered by him as he saw the
search party and approached the plane — "You people
almost made me miss your flight. You have a defective
announcing system and I was not paged" — and the
"belligerent" manner — according to Captain Zentner
the thought that the plane could have left without him.4
The second, third and fourth assignments of error are
thus clearly untenable.
In connection with the fifth assignment of error,
PANAM's witness, Captain Zentner, testified that, while
he was outside the plane, waiting for the result of the
search, a "man" approached him and expressed
concern over the situation; that the "man" said he was
with the State Department; that he, his wife and their
children, who were on board the aircraft, would not
want to continue the flight unless the missing person
was found; that the "man" expressed fear of a "bomb,"
a word he used reluctantly, because he knew it is
violative of a Federal law when said at the wrong time;
that when plaintiff came, Zentner asked him: "why did
you not want to get on the airplane?"; that plaintiff then
became "very angry" and spoke to him "in a way I have
not been spoken to in my whole adult life"; that the
witness explained: "I am Captain of the aircraft and it is
my duty to see to the flight's safety"; that he (Zentner)
then told Wayne Pendleton — PANAM's Customer
Service Supervisor — to get plaintiff's "bags off the
plane to verify ... about the bomb"; that PANAM's
airport manager (K. Sitton) "got three bags of Mr.
Zulueta"; that his fourth bag could not be located
Page 11 of 48
despite a thorough search; that believing that it must
have been left behind, in Honolulu, "we took off"; and
that he (Zentner) would not have done so had he
thought it was still aboard.
The lower court did not err in giving no credence to this
testimony.
Indeed, Captain Zentner did not explain why he
seemingly assumed that the alleged apprehension of
his informant was justified. He did not ask the latter
whether he knew anything in particular about plaintiff
herein, although some members of the crew would
appear to have a notion that plaintiff is an impresario.
Plaintiff himself intimated to them that he was well
known to the U.S. State Department. Apparently,
Captain Zentner did not even know the informant's
name. Neither did the captain know whether the
informant was really working for or in the State
Department. In other words, there was nothing —
absolutely nothing — to justify the belief that the
luggage of the missing person should be searched, in
order to ascertain whether there was a bomb in it; that,
otherwise, his presence in the aircraft would be inimical
to its safety; and that, consequently, he should be off-
loaded.
In fact, PANAM has not given the name of that "man"
of the State Department. Neither has the defense tried
to explain such omission. Surely, PANAM's records
would have disclosed the identity of said "man," if he
were not a mere figment of the imagination. The list of
passengers has been marked as Exh. A, and yet
PANAM has not pointed out who among them is the
aforementioned "man".
The trial court did not believe the testimony of Captain
Zentner and rejected the theory of the defense, for the
following reasons:
(1) The defendant had contracted to transport
plaintiff from Honolulu to Manila. It was its legal
obligation to do so, and it could be excused
from complying with the obligation only, if the
passenger had refused to continue with the trip
or it had become legally or physically
impossible without the carrier's fault, to
transport him.
(2) In this case, it is plain that Zulueta was
desirous of continuing with the trip. Although
defendant's witnesses claim that Zulueta
refused to board the plane, its own evidence
belies this claim. The letter, Exh. "D", shows
that it was defendant who off-loaded Zulueta;
not Zulueta who resisted from continuing the
trip. In his testimony before the Court, Capt.
Zentner, defendant's pilot, said that if a
passenger voluntarily left the plane, the term
used would be `desistance' but the term "off-
load" means that it is the decision of the
Captain not to allow the passenger or luggage
to continue the flight. However, Capt. Zentner
admitted on his testimony that "his
drunkenness... was of no consequence in my
report; (it) ... had nothing to do with his being
belligerent and unfriendly in his attitude
towards me and the rest of the members of the
crew." The written report of Capt. Zentner
made in transit from Wake to Manila "intimated
he might possibly continue;" but "due to
drinking, belligerent attitude, he was off-loaded
along with his locked bags." (Exh. 10). In a later
report, Zentner admitted, "The decision to
leave Mr. Zulueta and his locked luggage in
Wake was mine and alone." (Exh. 9).
Defendant's airport customer service
supervisor, W.S. Pendleton, reported that:
"After the search for Mr. Zulueta had continued
almost 20 minutes and it was apparent that he
was not be found in the terminal building or
immediate vicinity, I proceeded to the parking
lot and picked up my jeep continue the search
in more remote areas. Just as I was getting
underway, a small group of persons approach
from the direction of the beach and a voice
called out the passenger had been found.
Having parked the jeep again, I walked toward
the group and was met by PAA fleet-
serviceman E. Gavino who was walking
somewhere ahead of the others. Mr. Gavino
remarked to me privately that the trouble
seemed to have stemmed from some domestic
difference between the Passenger and his wife
who was not at his side and returning with him
to the gate.
"On hearing Mr. Gavino's remark, I made no
comment to the passenger but turned and led
the group toward the ramp. Just as we reached
the boarding gate, Mr. Zulueta spoke to me for
the first time saying, "You people almost made
me miss your flight. You have a defective
announcing system and I was not paged."
— Exh. 5
Evidently, these could not have been the words
of a man who refused to board the plane.
(3) There was no legal or physical impossibility
for defendant to transport plaintiff Zulueta from
Wake to Manila as it had contracted to do.
Defendant claims that the safety of its craft and
of the other passengers demanded that it
inspect Zulueta's luggage and when he refused
to allow inspection that it had no recourse but
to leave him behind. The truth that, knowing
that of plaintiff's four pieces of luggage, one
could still have been — as it was — aboard,
defendant's plane still flew on to Manila. Surely,
if the defendant's pilot and employees really
believed that Zulueta had planted a bomb in
one of the bags they would not have flown on
until they had made sure that the fourth bag
had been left behind at Honolulu until enough
time had lapsed for the bomb to have been
exploded, since presumably it had to have
been set to go off before they reached Manila.
"At any rate, it was quite evident that Zulueta
had nothing to hide; for the report of
defendant's witness, Mr. Stanley E. Ho, U.S.
Marshall on Wake, has this to say: "
"About twenty minutes later while an attempt
was being made to locate another piece of Mr.
Zulueta's luggage his daughter, Carolinda
approached her father and wanted to get some
clothes from one of the suitcases. Mr. Zulueta
asked the undersigned if it was alright if he
Page 12 of 48
opened the suitcases and get the necessary
clothes. To this I stated he was free to open his
luggage and obtain whatever he needed. Mr.
Zulueta opened a suitcase and took the dress
for her then boarded the aircraft."
— Exh. 2B .
(4) What is evident to the Court is that
defendant — acted in a manner deliberately
calculated to humiliate and shame plaintiffs.
Although the plane was held up to wait for
plaintiff — for, as the Captain admitted in his
testimony, he did so because he knew that it
would be a week before another plane would
come in for Manila (t.s.n., 18 Oct. 1966, pp. 59-
62) when plaintiff did come, he was met and
treated roughly by defendant's manager Sitton.
Here is what Zulueta testified to:
"Q. — When you saw your wife and
daughter what happened? A. — Then I
started going towards the airplane. At
the ramp, I do not know what they call
it, as soon as they arrived there, there
was a man who subsequently identified
himself as Kenneth Sitton. He identified
himself as the Airport Manager of Wake
Island. He did not ask me what
happened, was I sick, he looked at me
and said, what in the hell do you think
you are? Get on that plane. Then I said,
what right have you to talk to me that
way, I am a paying passenger. Do not
treat me this way. And this started the
altercation, and then he said, do you
know you held up the plane? And I
answered, this is not my fault, I was
sick. Did it not occur to you to ask me
how I feel; then he said get on that
plane.
"Q. — What happened? A. — we
started discussing kept saying, "You
get on that plane" and then I said, "I
don't have to get on that plane." After a
prolonged discussion, he said, give me
your baggage tags and I gave him four
baggage tickets or tags. I did not
realize what he was up to until finally, I
saw people coming down the airplane
and police cars arrived and people
were coming down the ramp. I gave
him the four baggage tags and a few
minutes late, he brought three
baggages and said, open them up. I
said, to begin with, there is one
baggage missing and that missing bag
is my bag. Then I said you cannot make
me open these baggages unless you
are United States customs authorities
and when I arrive in the Philippines
they can be opened by the Philippine
Customs authorities. But an Airport
Manager cannot make me open my
bags unless you do exactly the same
thing to all the passengers. Open the
bags of all the other passengers and I
will open my bag.
"Q. — What did he say: A. — He just
kept on saying open your bag, and I
drew up my hands and said, you want,
you open yourself or give me a search
warrant I shall open this bag but give
me a search warrant and then I asked,
who is the Chief of Police, and he said,
"I am Chief of Police," then I said how
can you be the Chief Police and Airport
Manager and then he started to talk
about double compensation and by this
time we were both quarreling and he
was shouting and so with me. Then
there was a man who came around and
said `open the bag' and I said, show the
warrant of arrest and do all the
checking and the discussion kept on
going, and finally I said look, my fourth
bag is missing and he said, "I don't give
damn." People at the time were
surrounding us and staring at us and
also the passengers. My wife and
daughter all along had been made to sit
on a railing and this man screaming
and looking at my wife and daughter.
Then he said, will you pull these three
monkeys out of here? then I said, will
you send my wife and daughter up the
plane which he did. However, they
have come down in their slippers and
when they were allowed to return to the
plane none of the defendant's
personnel who had brought down the
overcoats, shoes and handcarried
items of my wife and daughter ever
offered to bring back the items to the
plane, until I demanded that one of the
defendants should help my wife and
daughter which he did. And then one
man told me, because you refused to
open your bag, "we shall hold you here
in Wake Island." then I asked, are we
under arrest? and the man answered,
no. And further stated, your wife and
daughter can continue their flight but
you will not go to this flight an we will
charge you $13.30 a day. Then I said,
who are you to tell all these things, and
he answered, I am the manager. I said,
put it in writing, then left and in few
minutes he came back and handed me
this letter (witness referring to Exhibit
D)." .
— t.s.n., August 1, 1966, pp. 15-21
Anyone in Zulueta's position would have
reached the same way if he had had a sense
of dignity. Evidently, angered by Zulueta's
reaction, irked by the delay he had caused
them, defendant's employees decided to teach
him a lesson by forcing him to open his bags
when there was no justifiable reason to do so:
(a) Defendant did not make any attempt to
inquire from any passenger or even the crew
who knew Mr. Zulueta what his character and
reputation are, before demanding that he open
the bags; if it had done so, Miss Schmitz, the
purser, and Col. Villamor would have vouched
for plaintiffs; for Miss Schmitz believed she had
Page 13 of 48
flown before with the Zulueta's and they had
been very nice people.
(b) Worse, defendant's manager Sitton admits
that Zulueta had told him who he was and his
social position in Manila; still he insisted that
the bags be opened. Moreover, some
passengers had informed the supervisor that
Zulueta was "the impresario"; but they
persisted in their demands.
(c) Defendant never identified the alleged State
Department men who reportedly approached
the Captain and expressed fear about a bomb,
nor did they confront him — if he existed with
Mr. Zulueta despite Mr. Zulueta's request.
(d) Defendant did not take any steps to put the
luggage off-loaded far from its passengers and
plane, a strange procedure if it really believed
the luggage contained a bomb;
(e) Defendant continued with the flight knowing
one bag -- Zulueta's bag himself — had not
been located and without verifying from
Honolulu if the bag had been found there, nor
even advising Honolulu that a bag possibly
containing a bomb had been left there, again
an inexplicable procedure if they sincerely
believed that Zulueta had planted a bomb;
(f) Defendant's manager himself took Zulueta
and his off-loaded bags, in his own car, from
the terminal building to the hotel, which is also
inconsistent with a serious belief that the
luggages contained a bomb;
(g) Defendant knew that while Zulueta's bags
were on the ground, he had opened one of
them with the permission and in the presence
of the U. S. Marshall in order to enable his
daughter to get a dress from the bag; nothing
suspicious was seen; still, defendant insisted
on refusing to allow Zulueta to continue unless
he opened and allowed inspection of the bags
by them; .
(h) Defendant completely changed his tone
and behavior towards the Zulueta's after the
plane had arrived at Manila and the Captain
learned that its Manila manager, Mr.
Oppenheimer, was a friend of Zulueta;
(i) Meantime, the attitude of Pan American
towards the Zulueta's caused other
passengers to resent Zulueta (See reports of
Stewardesses and of Captain Zentner, Exhs. 7,
8, 9 and 10). "Many passengers were angry
towards the `missing passenger," says Miss
Schmitz's report. "A few inquisitive PA
(passengers) — one woman quite rudely
stared once we were airborne and left Mr.
Zulueta behind ... anyway I told the woman to
sit down — so did Helga — so did the man near
her," say Miss Schmitz's personal notes. This
confirms the testimony of plain plaintiffs that, all
the while the search and discussions were
going on, they were the subject of stares,
remarks and whisper comments from the
passengers and other persons around the
plane.
(j) Defendant did not allow plaintiff Zulueta to
board the plane at all, even though it was
aware that some of his personal belongings,
such as his overcoat were on the plane.
Plaintiffs so testified; and though defendant's
witness Mr. Sitton denied it, claiming that
plaintiff was always free to board the plane, this
denial is belied by the report of defendant's
own witness, U.S. Marshall Ho, who said that:
"Ten minutes later, Mr. Zulueta asked if he
could talk to his wife who was aboard the
aircraft. I then accompanied him and as we got
to the ramp, we met Mr. Sitton who stated he
would summon Mrs. Zulueta from the aircraft.
Mr. Sitton summoned Mrs. Zulueta and she
met her husband at the foot of the ramp. Mr.
Zulueta then asked his wife and himself to
which I replied I was not concerned what he
had to say."
— Exh. 2-B
(k) Finally, to add further humiliation and heap
indignity on plaintiffs, when Mrs. Zulueta
arrived at Manila and appealed to defendant's
Manila manager, Mr. Oppenheimer, to see to it
that her husband got back as soon as possible
and was made as comfortable as possible, at
defendant's expense, Mr. Oppenheimer
refused to acknowledge any obligation to
transport Mr. Zulueta back to Manila and
forcing Mrs. Zulueta to send her husband
$100.00 for pocket money and pay for his fare
from Wake to Manila, thru Honolulu and Tokyo.
Upon a review of the record, We are satisfied that the
foregoing findings of His Honor, the Trial Judge, are
supported by a preponderance of the evidence.
The last two (2) assignments of error are mere
consequences of those already disposed of, and,
hence, need no extended discussion.
It is urged, however, that plaintiff is, at most, entitled to
actual damages only, because he was the first to
commit a breach of contract, for having gone over 200
yards away from the terminal, where he could not
expect to be paged. But, PANAM has not pointed out
what part of the contract has been violated thereby,
apart from the fact that the award for damages made
in the decision appealed from was due, not to
PANAM's failure to so page the plaintiff, but to the
former's deliberate act of leaving him at Wake Island,
and the embarrassment and humiliation caused to him
and his family in the presence of many other persons.
Then, also, considering the flat nature of the terrain in
Wake Island, and the absence of buildings and
structures, other than the terminal and a modest
"hotel," as well as plaintiff's need of relieving himself,
he had to find a place beyond the view of the people
and near enough the sea to wash himself up before
going back to the plane.
It is next argued that plaintiff was, also, guilty of
contributory negligence for failure to reboard the plane
within the 30 minutes announced before the
passengers debarked therefrom. This might have
justified a reduction of the damages, had plaintiff
been unwittingly left by the plane, owing to the
negligence of PANAM personnel, or even,
Page 14 of 48
perhaps, wittingly, if he could not be found before the
plane's departure. It does not, and cannot have such
justification in the case at bar, plaintiff having shown up
before the plane had taken off, and he having been off-
loaded intentionally and with malice aforethought, for
his "belligerent" attitude, according to Captain Zentner;
for having dared — despite his being one of "three
monkeys," — the term used by Captain Zentner to refer
to the Zulueta family — to answer him back — when
he (Captain Zentner)5 said: "what in the hell do you
think you are ?" — in a way he had "not been spoken
to" in his "whole adult life," in the presence of the
passengers and other PANAM employees; for having
responded to a command of either Zentner or Sitton to
open his (plaintiff's) bags, with a categorical refusal and
a challenge for Zentner or Sitton to open the bags
without a search warrant therefor, thereby making
manifest the lack of authority of the aforementioned
representative of PANAM to issue said command and
exposing him to ridicule before said passengers and
employees. Besides, PANAM's own witness and
employee, Wayne Pendleton, testified the plane could
not take off at 4:30, as scheduled, because "we were
still waiting for two (2) local passengers."
Article 2201 of our Civil Code reads:
In contracts and quasi-contracts, the damages
for which the obligor who acted in good faith is
liable shall be those that are the natural and
probable consequences of the breach of the
obligation, and which the parties have foreseen
or could reasonably foreseen at the time the
obligation was constituted.
In case of fraud, bad faith, malice or wanton
attitude, the obligor shall be responsible for all
damages which may be reasonably attributed
to the non-performance of the obligation.
This responsibility applies to common carriers.
Pursuant to Article 1759 of the same Code:
ART. 1759. Common carriers are liable for the
death or injuries to passengers through the
negligence or wilful acts of the former's
employees, although such employees may
have acted beyond the scope of their authority
or in violation of the orders of the common
carriers.
This liability of the common carriers does not
cease proof that they exercised all the
diligence of a good father of a family in the
selection and supervision of their employees.
Referring now to the specific amounts to damages due
to plaintiffs herein, We note that the sum of P5,502.85
awarded to them as actual damages is not seriously
disputed by PANAM.
As regards the moral and exemplary damages claimed
by the plaintiffs, our Civil Code provides:
ART. 21. Any person who wilfully causes loss
or injury to another in a manner that is contrary
to morals, good customs or public policy shall
compensate the latter for the damage.
ART. 2217. Moral damages include physical
suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded
feelings, moral shock, social humiliation, and
similar injury. Though incapable of pecuniary
computation, moral damages may be
recovered if they are the proximate result of
defendant's wrongful act or omission.
ART. 2229. Exemplary or corrective damages
are imposed, by way of example or correction
for the public good, in addition to the moral,
temperate liquidated or compensatory
damages.
ART. 2232. In contracts and quasi-contracts,
the court may award exemplary damages if the
defendant acted in a wanton, fraudulent,
reckless, oppressive, or malevolent manner.
The records amply establish plaintiffs' right to recover
both moral and exemplary damages. Indeed, the rude
and rough reception plaintiff received at the hands of
Sitton or Captain Zentner when the latter met him at
the ramp ("what in the hell do you think you are? Get
on that plane"); the menacing attitude of Zentner or
Sitton and the supercilious manner in which he had
asked plaintiff to open his bags ("open your bag," and
when told that a fourth bag was missing, "I don't give a
damn"); the abusive language and highly scornful
reference to plaintiffs as monkeys by one of PANAM's
employees (who turning to Mrs. Zulueta and Miss
Zulueta remarked, "will you pull these three monkeys
out of here?"); the unfriendly attitude, the ugly stares
and unkind remarks to which plaintiffs were subjected,
and their being cordoned by men in uniform as if they
were criminals, while plaintiff was arguing with Sitton;
the airline officials' refusal to allow plaintiff to board the
plane on the pretext that he was hiding a bomb in his
luggage and their arbitrary and high-handed decision
to leave him in Wake; Mrs. Zulueta's having suffered a
nervous breakdown for which she was hospitalized as
a result of the embarrassment, insults and humiliations
to which plaintiffs were exposed by the conduct of
PANAM's employees; Miss Zulueta's having suffered
shame, humiliation and embarrassment for the
treatment received by her parents at the airport6 — all
these justify an award for moral damages resulting
from mental anguish, serious anxiety, wounded
feelings, moral shock, and social humiliation thereby
suffered by plaintiffs.
The relation between carrier and passenger
involves special and peculiar obligations and
duties, differing in kind and degree, from those
of almost every other legal or contractual
relation. On account of the peculiar situation of
the parties the law implies a promise and
imposes upon the carrier the corresponding
duty of protection and courteous treatment.
Therefore, the carrier is under the absolute
duty of protecting his passengers from assault
or insult by himself or his servants. 7
A contract to transport passengers is quite
different in kind and degree from any other
contractual relation. And this, because of the
relation which an air-carrier sustains with the
public. Its business is mainly with the travelling
public. It invites people to avail of the comforts
and advantages it offers. The contract of air
carriage, therefore, generates a relation tended
with a public duty. Neglect or malfeasance of
Page 15 of 48
 the carrier's employees naturally could give
ground for an action for damages.
Passengers do not contract merely for
transportation. They have a right to be treated
by the carrier's employees with kindness,
respect, courtesy and due consideration. They
are titled to be protected against personal
misconduct, injurious language, indignities and
abuses from such employees. So it is, that any
rude or discourteous conduct on the part of
employees towards a passenger gives the
latter an action for damages against the
carrier. 8
A carrier of passengers is as much bound to
protect them from humiliation and insult as
from physical injury .. It is held in nearly all
jurisdictions, if not universally, that a carrier is
liable to a passenger for humiliation and mental
suffering caused by abusive or insulting
language directed at such passenger by an
employee of the carrier. 9
Where a conductor uses language to a
passenger which is calculated to insult,
humiliate, or wound the feelings of a person of
ordinary feelings and sensibilities, the carrier is
liable, because the contract of carriage
impliedly stipulates for decent, courteous, and
respectful treatment, at hands of the carrier's
employees.10
The general rule that a carrier owes to a
passenger highest degree of care has been
held to include the duty to protect the
passenger from abusive language by the
carrier's agents, or by others if under such
circumstances that the carrier's agents should
have known about it and prevented it. Some of
the courts have mentioned the implied duty of
the carrier, arising out of the contract of
carriage, not to insult the passenger, or permit
him to be insulted, and even where no mention
is made of this basis for liability, it is apparent
that it is the ground upon which recovery is
allowed. 11
The question is whether the award of P1,000,000 as
moral damages was proper and justified by the
circumstances. It has been held that the discretion in
fixing moral damages lies in the trial court. 12 Among the
factors courts take into account in assessing moral
damages are the professional, social, political and
financial standing of the offended parties on one hand,
and the business and financial position of the offender
on the other. 13
In comparatively recent cases in this jurisdiction, also
involving breach of contract of air carriage, this Court
awarded the amount of P25,000, where plaintiff, a first-
class passenger in an Air France plane from Manila to
Rome was, in Bangkok, forced by the manager of the
airline company to leave his first class accommodation
after he was already seated because there was a white
man who, the manager alleged, had a "better right" to
the seat 14 ;the amount of P200,000, where plaintiffs,
upon confirmation of their reservation in defendant
airline's flight from Tokyo to San Francisco were issued
first class tickets, but upon arrival in Tokyo were
informed that there was no accommodation for them in
the first class compartment and told they could not go
unless they took the tourist class 15 — in both of which
cases the Court found the airline companies to have
acted in bad faith, or in a wanton, reckless and
oppressive manner, justifying likewise the award of
exemplary damages.
None of the passengers involved in said cases was,
however, off-loaded, much less in a place as barren
and isolated as Wake Island, with the prospect of being
stranded there for a week. The aforementioned
passengers were merely constrained to take a tourist
or third class accommodation in lieu of the first class
passage they were entitled to. Then, also, in none of
said cases had the agents of the carrier acted with the
degree of malice or bad faith of those of PANAM in the
case at bar, or caused to the offended passengers a
mental suffering arising from injuries to feelings, fright
and shock due to abusive, rude and insulting language
used by the carrier's employees in the presence and
within the hearing of others, comparable to that caused
by PANAM's employees to plaintiffs herein
To some extent, however, plaintiff had contributed to
the gravity of the situation because of the extreme
belligerence with which he had reacted on the
occasion. We do not over-look the fact that he justly
believed he should uphold and defend his dignity and
that of the people of this country that the discomfort,
the difficulties, and, perhaps, the ordeal through which
he had gone to relieve himself — which were unknown
to PANAM's agents — were such as to put him in no
mood to be understanding of the shortcoming of
others; and that said PANAM agents should have first
inquired, with an open mind, about the cause of his
delay instead of assuming that he was at fault and of
taking an arrogant and overbearing attitude, as if they
were dealing with an inferior. Just the same, there is
every reason to believe that, in all probability, things
would not have turned out as bad as they became had
he not allowed himself, in a way, to be dragged to the
level or plane on which PANAM's personnel had placed
themselves.
In view of this circumstance, We feel that the moral and
exemplary damages collectible by the plaintiffs should
be reduced to one-half of the amounts awarded by the
lower court, that is, to P500,000 for moral damages,
and P200,000 for exemplary damages, aside from the
attorney's fees which should, likewise, be reduced to
P75,000.
On April 22, 1971, Mrs. Zulueta filed a motion alleging
that she had, for more than two (2) years, been actually
living separately from her husband, plaintiff Rafael
Zulueta, and that she had decided to settle separately
with PANAM and had reached a full and complete
settlement of all her differences with said defendant,
and praying accordingly, that this case be dismissed
insofar as she is concerned, Required to comment on
said motion, PANAM expressed no objection thereto.
Upon the other hand, plaintiff prayed that the motion be
denied, upon the ground that the case at bar is one for
damages for breach of a contract of carriage, owing to
the off-loading of plaintiff Rafael Zulueta, the husband
and administrator of the conjugal partnership, with the
funds of which the PANAM had been paid under said
contract; that the action was filed by the plaintiffs as a
family and the lower court had awarded damages to
them as such family; that, although PANAM had
Page 16 of 48
questioned the award of damages, it had not raised the
question whether the lower court should have specified
what portion of the award should go to each plaintiff;
that although Mr. and Mrs. Zulueta had, for sometime,
been living separately, this has been without judicial
approval; that Mrs. Zulueta may not, therefore, bind the
conjugal partnership or settle this case separately; and
that the sum given by PANAM to Mrs. Zulueta is
believed to be P50,000, which is less than 3-1/2% of
the award appealed from, thereby indicating the
advisability of denying her motion to dismiss, for her
own protection.
Pursuant to a resolution, dated June 10, 1971,
deferring action on said motion to dismiss until the case
is considered on the merits. We now hold that the
motion should be, as it is hereby denied. Indeed, "(t)he
wife cannot bind the conjugal partnership without the
husband's consent, except in cases provided by
law," 16 and it has not been shown that this is one of the
cases so provided. Article 113 of our Civil Code,
pursuant to which "(t)he husband must be joined in all
suits by or against the wife, except: ... (2) If they have
in fact been separated for at least one year ..." — relied
upon by PANAM — does not warrant the conclusion
drawn therefrom by the latter. Obviously the suit
contemplated in subdivision (2) of said Article 113 is
one in which the wife is the real party — either plaintiff
or defendant — in interest, and, in which, without being
so, the hush must be joined as a party, by reason only
of his relation of affinity with her. Said provision cannot
possibly apply to a case, like the one at bar, in which
the husband is the main party in interest, both as the
person principally grieved and as administrator of the
conjugal partnership. Moreover, he having acted in this
capacity in entering into the contract of carriage with
PANAM and paid the amount due to the latter, under
the contract, with funds of conjugal partnership, the
damages recoverable for breach of such contract
belongs to said partnership.
Modified, as above stated, in the sense that plaintiffs
shall recover from defendant, Pan American World
Airways, Inc., the sums of P500,000 as moral
damages, P200,000 as exemplary damages, and
P75,000 as attorney's fees, apart from P5,502.85 as
actual damages, and without prejudice to deducting the
aforementioned sum of P50,000 already paid Mrs.
Zulueta, the decision appealed from is hereby affirmed
in all other respects, with the costs against said
defendant.
Reyes, J.B.L., Makalintal, Zaldivar, Fernando,
Barredo, Villamor and Makasiar, JJ., concur.
Castro and Teehankee, JJ., took no part.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 169548 March 15, 2010
TITAN CONSTRUCTION
CORPORATION, Petitioner,
vs.
MANUEL A. DAVID, SR. and MARTHA S.
DAVID, Respondents.
DECISION
DEL CASTILLO, J.:
The review of factual matters is not the province of this
Court.1 The Supreme Court is not a trier of facts, and is
not the proper forum for the ventilation and
substantiation of factual issues.2
This Petition for Review assails the July 20, 2004
Decision3 of the Court of Appeals (CA) in CA-G.R. CV
No. 67090 which affirmed with modification the March
7, 2000 Decision4 of the Regional Trial Court (RTC) of
Quezon City, Branch 80. Also assailed is the August
31, 2005 Resolution5 of the CA denying the motion for
reconsideration.
Factual Antecedents
Manuel A. David, Sr. (Manuel) and Martha S. David
(Martha) were married on March 25, 1957. In 1970, the
spouses acquired a 602 square meter lot located at
White Plains, Quezon City, which was registered in the
name of "MARTHA S. DAVID, of legal age, Filipino,
married to Manuel A. David" and covered by Transfer
Certificate of Title (TCT) No. 156043 issued by the
Register of Deeds of Quezon City.6 In 1976, the
spouses separated de facto, and no longer
communicated with each other.7
Sometime in March 1995, Manuel discovered that
Martha had previously sold the property to Titan
Construction Corporation (Titan) for ₱1,500,000.00
through a Deed of Sale8 dated April 24, 1995, and that
TCT No. 156043 had been cancelled and replaced by
TCT No. 130129 in the name of Titan.
Thus, on March 13, 1996, Manuel filed a Complaint9 for
Annulment of Contract and Recovenyance against
Titan before the RTC of Quezon City. Manuel alleged
that the sale executed by Martha in favor of Titan was
without his knowledge and consent, and therefore void.
He prayed that the Deed of Sale and TCT No. 130129
be invalidated, that the property be reconveyed to the
spouses, and that a new title be issued in their names.
In its Answer with Counterclaim,10 Titan claimed that it
was a buyer in
good faith and for value because it relied on a Special
Power of Attorney (SPA) 11 dated January 4, 1995
signed by Manuel which authorized Martha to dispose
of the property on behalf of the spouses. Titan thus
prayed for the dismissal of the complaint.
In his unverified Reply,12 Manuel claimed that the SPA
was spurious, and that the signature purporting to be
his was a forgery; hence, Martha was wholly without
authority to sell the property.
Subsequently, Manuel filed a Motion for Leave to File
Amended Complaint13 which was granted by the trial
court. Thus, on October 15, 1996, Manuel filed an
Amended Complaint14 impleading Martha as a co-
defendant in the proceedings. However, despite
personal service of summons15 upon Martha, she failed
to file an Answer. Thus, she was declared in
default.16 Trial then ensued.
Ruling of the Regional Trial Court
Page 17 of 48
On March 7, 2000, the RTC issued a Decision which (i)
invalidated both the Deed of Sale and TCT No. 130129;
(ii) ordered Titan to reconvey the property to Martha
and Manuel; (iii) directed the Register of Deeds of
Quezon City to issue a new title in the names of Manuel
and Martha; and (iv) ordered Titan to pay ₱200,000.00
plus ₱1,000.00 per appearance as attorney’s fees, and
₱50,000.00 as costs of suit.
The RTC found that:
1) The property was conjugal in character since
it was purchased by Manuel
and Martha with conjugal funds during their
marriage. The fact that TCT No. 156043 was
registered in the name of "MARTHA S. DAVID
x x x married to Manuel A. David" did not
negate the property’s conjugal nature.
2) The SPA professing to authorize Martha to
sell the property on behalf of the spouses was
spurious, and did not bear Manuel’s genuine
signature. This was the subject of expert
testimony, which Titan failed to rebut. In
addition, despite the fact that the SPA was
notarized, the genuineness and due execution
of the SPA was placed in doubt since it did not
contain Manuel’s residence certificate, and
was not presented for registration with the
Quezon City Register of Deeds, in violation of
Section 64 of Presidential Decree No. 1529.17
3) The circumstances surrounding the
transaction with Martha should have put Titan
on notice of the SPA’s dubious veracity. The
RTC noted that aside from Martha’s failure to
register the SPA with the Register of Deeds, it
was doubtful that an SPA would have even
been necessary, since the SPA itself indicated
that Martha and Manuel lived on the same
street in Navotas.
The dispositive portion of the trial court’s Decision
reads:
Wherefore, judgment is hereby rendered:
1.) Declaring the Deed of Sale dated April 24,
1995 as void ab initio and without force and
effect.
2.) Declaring null and void TCT No. 130129
issued by the Register of Deeds of Quezon City
in the name of defendant Titan Construction
Corporation.
3.) Ordering defendant Titan Construction
Corporation to reconvey the subject property to
plaintiff and his spouse.
4.) Ordering the Register of Deeds of Quezon
City to make and issue a new title in the name
of plaintiff Manuel David and his Spouse,
Martha David.
5.) Ordering defendant to pay ₱200,000.00
plus ₱1,000.00 per appearance as attorney’s
fees and ₱50,000.00 as costs of suit.
SO ORDERED.18
Ruling of the Court of Appeals
In its Decision dated July 20, 2004, the CA affirmed the
Decision of the trial court but deleted the award of
attorney’s fees and the amount of ₱50,000.00 as costs.
The dispositive portion of the Decision reads:
WHEREFORE, with the MODIFICATION by deleting
the award of attorney’s fees in favor of plaintiff-appellee
Manuel A. David, Sr. and the amount of ₱50,000.00 as
costs, the Decision appealed from is AFFIRMED in all
other respects, with costs against defendant-appellant
Titan Construction Corporation.19
Titan moved for reconsideration but the motion was
denied on August 31, 2005.
Hence, this petition.
ISSUES
Titan raises the following assignment of errors:
A. THE COURT OF APPEALS PATENTLY ERRED IN
DECLARING THE SUBJECT DEED OF SALE NULL
AND VOID AND FAILED TO APPLY TO THIS CASE
THE PERTINENT LAW AND JURISPRUDENCE ON
THE TORRENS SYSTEM OF LAND REGISTRATION.
B. THE COURT OF APPEALS PATENTLY ERRED IN
RULING THAT TITAN WAS NOT A BUYER IN GOOD
FAITH CONTRARY TO THE STANDARDS APPLIED
BY THIS HONORABLE COURT IN CASES
INVOLVING SIMILAR FACTS.
C. THE COURT OF APPEALS PATENTLY ERRED BY
DISCARDING THE NATURE OF A NOTARIZED
SPECIAL POWER OF ATTORNEY CONTRARY TO
JURISPRUDENCE AND BY GIVING UNDUE
WEIGHT TO THE ALLEGED EXPERT TESTIMONY
VIS-À-VIS THE CONTESTED SIGNATURES AS
THEY APPEAR TO THE NAKED EYE CONTRARY
TO JURISPRUDENCE.
D. THE COURT OF APPEALS PATENTLY ERRED BY
FAILING TO DETECT BADGES OF CONNIVANCE
BETWEEN RESPONDENTS.
E. THE COURT OF APPEALS PATENTLY ERRED BY
NOT RULING THAT ASSUMING THE SPA WAS
NULL AND VOID, THE SAME IS IMMATERIAL SINCE
THE RESPONDENTS SHOULD BE CONSIDERED
ESTOPPED FROM DENYING THAT THE SUBJECT
PROPERTY WAS SOLELY THAT OF RESPONDENT
MARTHA S. DAVID.
F. THE COURT OF APPEALS PATENTLY ERRED BY
NOT RULING THAT ASSUMING THE SALE WAS
VOID, ON GROUNDS OF EQUITY MARTHA S.
DAVID SHOULD REIMBURSE PETITIONER OF HIS
PAYMENT WITH LEGAL INTEREST.20
Petitioner’s Arguments
Titan is claiming that it was a buyer in good faith and
for value, that the property was Martha’s paraphernal
property, that it properly relied on the SPA presented
by Martha, and that the RTC erred in giving weight to
the alleged expert testimony to the effect that Manuel’s
signature on the SPA was spurious. Titan also argues,
Page 18 of 48
for the first time, that the CA should have ordered
Martha to reimburse the purchase price paid by Titan.
Our Ruling
The petition is without merit.
The property is part of the spouses’ conjugal
partnership.
The Civil Code of the Philippines,21 the law in force at
the time of the celebration of the marriage between
Martha and Manuel in 1957, provides:
Article 160. 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.
Article 153 of the Civil Code also provides:
Article 153. The following are conjugal partnership
property:
(1) That which is acquired by onerous title during the
marriage at the expense of the common fund, whether
the acquisition be for the partnership, or for only one of
the spouses;
xxxx
These provisions were carried over to the Family Code.
In particular, Article 117 thereof provides:
Art. 117. The following are conjugal partnership
properties:
(1) Those acquired by onerous title during the marriage
at the expense of the common fund, whether the
acquisition be for the partnership, or for only one of the
spouses;
xxxx
Article 116 of the Family Code is even more
unequivocal in that "[a]ll 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."
We are not persuaded by Titan’s arguments that the
property was Martha’s exclusive property because
Manuel failed to present before the RTC any proof of
his income in 1970, hence he could not have had the
financial capacity to contribute to the purchase of the
property in 1970; and that Manuel admitted that it was
Martha who concluded the original purchase of the
property. In consonance with our ruling
in Spouses Castro v. Miat,22 Manuel was not required
to prove that the property was acquired with funds of
the partnership. Rather, the presumption applies even
when the manner in which the property was acquired
does not appear.23 Here, we find that Titan failed to
overturn the presumption that the property, purchased
during the spouses’ marriage, was part of the conjugal
partnership.
In the absence of Manuel’s consent, the Deed of Sale
is void.
Since the property was undoubtedly part of the
conjugal partnership, the sale to Titan required the
consent of both spouses. Article 165 of the Civil Code
expressly provides that "the husband is the
administrator of the conjugal partnership". Likewise,
Article 172 of the Civil Code ordains that "(t)he wife
cannot bind the conjugal partnership without the
husband’s consent, except in cases provided by law".
Similarly, Article 124 of the Family Code requires that
any disposition or encumbrance of conjugal property
must have the written consent of the other spouse,
otherwise, such disposition is void. Thus:
Art. 124. The administration and enjoyment of the
conjugal partnership 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 proper remedy, which must be availed of within five
years from the date of the contract implementing such
decision.
In the event that one spouse is incapacitated or
otherwise unable to participate in the administration of
the conjugal properties, the other spouse may assume
sole powers of administration. These powers do not
include disposition or encumbrance without authority of
the court or the written consent of the other spouse. In
the absence of such authority or consent, the
disposition or encumbrance shall be void. However,
the transaction shall be construed as a continuing offer
on the part of the consenting spouse and the third
person, and may be perfected as a binding contract
upon the acceptance by the other spouse or
authorization by the court before the offer is withdrawn
by either or both offerors.
The Special Power of Attorney purportedly signed by
Manuel is spurious and void.
The RTC found that the signature of Manuel appearing
on the SPA was not his genuine signature.
As to the issue of the validity or invalidity of the subject
Special Power of Attorney x x x the Court rules that the
same is invalid. As aptly demonstrated by plaintiff’s
evidence particularly the testimony of expert witness
Atty. Desiderio Pagui, which the defense failed to rebut
and impeach, the subject Special Power of Attorney
does not bear the genuine signature of plaintiff Manuel
David thus rendering the same as without legal effect.
Moreover, the genuineness and the due execution of
the Special Power of Attorney was placed in more
serious doubt as the same does not contain the
Residence Certificate of the plaintiff and most
importantly, was not presented for registration with the
Quezon City Register of Deeds which is a clear
violation of Sec. 64 of P.D. No. 1529.
As regards defendant Titan Construction Corporation’s
assertion that plaintiff’s failure to verify his Reply
(wherein the validity of the Special Power of Attorney
is put into question) is an implied admission of its
genuineness and due execution, [this] appears at first
blush a logical conclusion. However, the Court could
not yield to such an argument considering that a rigid
application of the pertinent provisions of the Rules of
Court will not be given premium when it would obstruct
rather than serve the broader interest of justice.24
Page 19 of 48
Titan claims that the RTC gave undue weight to the
testimony of Manuel’s witness, and that expert
testimony on handwriting is not conclusive.
The contention lacks merit. The RTC’s ruling was
based not only on the testimony of Manuel’s expert
witness finding that there were significant differences
between the standard handwriting of Manuel and the
signature found on the SPA, but also on Manuel’s
categorical denial that he ever signed any document
authorizing or ratifying the Deed of Sale to Titan.25
We also note that on October 12, 2004, Titan filed
before the CA a Manifestation with Motion for Re-
Examination of Another Document/ Handwriting
Expert26 alleging that there is "an extreme
necessity"27 for a conduct of another examination of the
SPA by a handwriting expert "as it will materially affect
and alter the final outcome"28 of the case. Interestingly,
however, Titan filed on January 6, 2005 a
Manifestation/Motion to Withdraw Earlier Motion for
Re-Examination of PNP Laboratory Expert29 this time
praying that its motion for re-examination be
withdrawn. Titan claimed that "after a circumspect
evaluation, deemed it wise not to pursue anymore said
request (re-examination) as there is a great possibility
that the x x x [PNP and the NBI] might come out with
two conflicting opinions and conclusions x x x that
might cause some confusion to the minds of the
Honorable Justices in resolving the issues x x x as well
as the waste of material time and resources said
motion may result".30
In any event, we reiterate the well-entrenched rule that
the factual findings of trial courts, when adopted and
confirmed by the CA, are binding and conclusive and
will generally not be reviewed on appeal.31 We are
mandated to accord great weight to the findings of the
RTC, particularly as regards its assessment of the
credibility of witnesses32 since it is the trial court judge
who is in a position to observe and examine the
witnesses first hand.33 Even after a careful and
independent scrutiny of the records, we find no cogent
reason to depart from the rulings of the courts below.34
Furthermore, settled is the rule that only errors of law
and not of fact are reviewable by this Court in a petition
for review on certiorari under Rule 45 of the Rules of
Court. This applies with even greater force here, since
the factual findings by the CA are in full agreement with
those of the trial court.35
Indeed, we cannot help but wonder why Martha was
never subpoenaed by Titan as a witness to testify on
the character of the property, or the circumstances
surrounding the transaction with Titan. Petitioner’s
claim that she could not be found is belied by the RTC
records, which show that she personally received and
signed for the summons at her address in Greenhills,
San Juan. Titan neither filed a cross claim nor made
any adverse allegation against Martha.
On the Failure to Deny the Genuineness and Due
Execution of the SPA
Titan claimed that because Manuel failed to specifically
deny the genuineness and due execution of the SPA in
his Reply, he is deemed to have admitted the veracity
of said document, in accordance with Rule 8, Sections
7 and 8,36 of the Rules of Court.
On this point, we fully concur with the findings of the
CA that:
It is true that the reply filed by Manuel alleging that the
special power of attorney is a forgery was not made
under oath. However, the complaint, which was verified
by Manuel under oath, alleged that the sale of the
subject property executed by his wife, Martha, in favor
of Titan was without his knowledge, consent, and
approval, express or implied; and that there is nothing
on the face of the deed of sale that would show that he
gave his consent thereto. In Toribio v. Bidin, it was held
that where the verified complaint alleged that the
plaintiff never sold, transferred or disposed their share
in the inheritance left by their mother to others, the
defendants were placed on adequate notice that they
would be called upon during trial to prove the
genuineness or due execution of the disputed deed of
sale. While Section 8, Rule 8 is mandatory, it is a
discovery procedure and must be reasonably
construed to attain its purpose, and in a way as not to
effect a denial of substantial justice. The interpretation
should be one which assists the parties in obtaining a
speedy, inexpensive, and most important, a just
determination of the disputed issues. 1avv phi 1
Moreover, during the pre-trial, Titan requested for
stipulation that the special power of attorney was
signed by Manuel authorizing his wife to sell the subject
property, but Manuel refused to admit the genuineness
of said special power of attorney and stated that he is
presenting an expert witness to prove that his signature
in the special power of attorney is a forgery. However,
Titan did not register any objection x x x. Furthermore,
Titan did not object to the presentation of Atty.
Desiderio Pagui, who testified as an expert witness, on
his Report finding that the signature on the special
power of attorney was not affixed by Manuel based on
his analysis of the questioned and standard signatures
of the latter, and even cross-examined said witness.
Neither did Titan object to the admission of said Report
when it was offered in evidence by Manuel on the
ground that he is barred from denying his signature on
the special power of attorney. In fact, Titan admitted
the existence of said Report and objected only to the
purpose for which it was offered. In Central Surety &
Insurance Company v. C.N. Hodges, it was held that
where a party acted in complete disregard of or wholly
overlooked Section 8, Rule 8 and did not object to the
introduction and admission of evidence questioning the
genuineness and due execution of a document, he
must be deemed to have waived the benefits of said
Rule. Consequently, Titan is deemed to have waived
the mantle of protection given [it] by Section 8, Rule 8.37
It is true that a notarial document is considered
evidence of the facts expressed therein.38 A notarized
document enjoys a prima facie presumption of
authenticity and due execution39 and only clear and
convincing evidence will overcome such legal
presumption.40 However, such clear and convincing
evidence is present here. While it is true that the SPA
1avv ph!1
was notarized, it is no less true that there were defects
in the notarization which mitigate against a finding that
the SPA was either genuine or duly executed.
Curiously, the details of Manuel’s Community Tax
Certificate are conspicuously absent, yet Martha’s are
complete. The absence of Manuel’s data supports his
claim that he did not execute the same and that his
signature thereon is a forgery. Moreover, we have
Manuel’s positive testimony that he never signed the
Page 20 of 48
SPA, in addition to the expert testimony that the
signature appearing on the SPA was not Manuel’s true
signature.
Moreover, there were circumstances which mitigate
against a finding that Titan was a buyer in good faith.
First, TCT No. 156043 was registered in the name of
"MARTHA S. DAVID, of legal age, Filipino, married to
Manuel A. David" but the Deed of Sale failed to include
Martha’s civil status, and only described the vendor as
"MARTHA S. DAVID, of legal age, Filipino citizen, with
postal address at 247 Governor Pascual, Navotas,
Rizal." And it is quite peculiar that an SPA would have
even been necessary, considering that the SPA itself
indicated that Martha and Manuel lived on the same
street (379 and 247 Governor Pascual Street,
respectively).
Second, Titan’s witness Valeriano Hernandez, the real
estate agent who brokered the sale between Martha
and Titan, testified that Jerry Yao (Yao), Titan’s Vice
President for Operations (and Titan’s signatory to the
Deed of Sale), specifically inquired why the name of
Manuel did not appear on the Deed of Sale.41 This
indicates that Titan was aware that Manuel’s consent
may be necessary. In addition, Titan purportedly sent
their representative to the Register of Deeds of Quezon
City to verify TCT No. 156043, so Titan would have
been aware that the SPA was never registered before
the Register of Deeds.
Third, Valeriano Hernandez also testified that during
the first meeting between Martha and Yao, Martha
informed Yao that the property was mortgaged to a
casino for ₱500,000.00. Without even seeing the
property, the original title, or the SPA, and without
securing an acknowledgment receipt from Martha,
Titan (through Yao) gave Martha ₱500,000.00 so she
could redeem the property from the casino.42 These are
certainly not actions typical of a prudent buyer.
Titan cannot belatedly claim that the RTC should have
ordered Martha to reimburse the purchase price.
Titan argues that the CA erred in not ruling that, even
assuming the sale was void, on grounds of equity,
Martha should reimburse petitioner its payment with
legal interest. We note that this equity argument was
raised for the first time before the CA, which disposed
of it in this manner:
Anent defendant-appellant’s claim that the court a quo
and this Court never considered the substantial
amount of money paid by it to Martha David as
consideration for the sale of the subject property,
suffice it to say that said matter is being raised for the
first time in the instant motion for reconsideration. If
well-recognized jurisprudence precludes raising an
issue only for the first time on appeal proper, with more
reason should such issue be disallowed or disregarded
when initially raised only in a motion for reconsideration
of the decision of the appellate court.
Nonetheless, record shows that only defendant-
appellant was initially sued by plaintiff-appellee in his
complaint for annulment of contract and reconveyance
upon the allegation that the sale executed by his wife,
Martha David, of their conjugal property in favor of
defendant-appellant was without his knowledge and
consent and, therefore, null and void. In its answer,
defendant-appellant claimed that it bought the property
in good faith and for value from Martha David and
prayed for the dismissal of the complaint and the
payment of his counterclaim for attorney’s fees, moral
and exemplary damages. Subsequently, plaintiff-
appellee filed a motion for leave to file amended
complaint by impleading Martha David as a defendant,
attaching the amended complaint thereto, copies of
which were furnished defendant-appellant, through
counsel. The amended complaint was admitted by the
court a quo in an Order dated October 23, 1996.
Martha David was declared in default for failure to file
an answer. The record does not show [that] a cross-
claim was filed by defendant-appellant against Martha
David for the return of the amount of PhP1,500,000.00
it paid to the latter as consideration for the sale of the
subject property. x x x Thus, to hold Martha David liable
to defendant-appellant for the return of the
consideration for the sale of the subject property,
without any claim therefore being filed against her by
the latter, would violate her right to due process. The
essence of due process is to be found in the
reasonable opportunity to be heard and submit any
evidence one may have in support of his defense. It is
elementary that before a person can be deprived of his
property, he should be first informed of the claim
against him and the theory on which such claim is
premised.43 (Emphasis supplied)
While it is true that litigation is not a game of
technicalities,44 it is equally true that elementary
considerations of due process require that a party be
duly apprised of a claim against him before judgment
may be rendered. Thus, we cannot, in these
proceedings, order the return of the amounts paid by
Titan to Martha. However, Titan is not precluded by this
Decision from instituting the appropriate action against
Martha before the proper court.
WHEREFORE, the petition is DENIED. The July 20,
2004 Decision of the Court of Appeals in CA-G.R. CV
No. 67090 which affirmed with modifications the March
7, 2000 Decision of the Regional Trial Court of Quezon
City, Branch 80, and its August 31, 2005 Resolution
denying the motion for reconsideration,
are AFFIRMED, without prejudice to the recovery by
petitioner Titan Construction Corporation of the
amounts it paid to Martha S. David in the appropriate
action before the proper court.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 100728 June 18, 1992
WILHELMINA JOVELLANOS, MERCY
JOVELLANOS-MARTINEZ and JOSE HERMILO
JOVELLANOS, petitioners,
vs.
THE COURT OF APPEALS, and ANNETTE H.
JOVELLANOS, for and in her behalf, and in
representation of her two minor daughters as
natural guardian, ANA MARIA and MA.
Page 21 of 48
JENNETTE, both surnamed
JOVELLANOS, respondents.
REGALADO, J.:
This petition for review on certiorari seeks to reverse
and set aside the decision 1 promulgated by
respondent court on June 26, 1991 in CA-G.R. CV No.
27556 affirming with some modifications the earlier
decision of the Regional Trial Court of Quezon City,
Branch 85, which, inter alia, awarded one-half (1/2) of
the property subject of Civil Case No. Q-52058 therein
to private respondent Annette H. Jovellanos and one-
sixth (1/6) each of the other half of said property to the
three private respondents. all as pro indiviso owners of
their aforesaid respective portions.
As found by respondent court, 2 on September 2,
1955, Daniel Jovellanos and Philippine American Life
Insurance Company (Philamlife) entered into a
contract denominated as a lease and conditional sale
agreement over Lot 8, Block 3 of the latter's Quezon
City Community Development Project, including a
bungalow thereon, located at and known as No. 55
South Maya Drive, Philamlife Homes, Quezon City. At
that time, Daniel Jovellanos was married to Leonor
Dizon, with whom he had three children, the petitioners
herein. Leonor Dizon died on January 2, 1959. On May
30, 1967, Daniel married private respondent Annette
H. Jovellanos with whom he begot two children, her
herein co-respondents.
On December 18, 1971, petitioner Mercy Jovellanos
married Gil Martinez and, at the behest of Daniel
Jovellanos, they built a house on the back portion of
the premises. On January 8, 1975, with the lease
amounts having been paid, Philamlife executed to
Daniel Jovellanos a deed of absolute sale and, on the
next day, the latter donated to herein petitioners all his
rights, title and interests over the lot and bungalow
thereon. On September 8, 1985, Daniel Jovellanos
died and his death spawned the present controversy,
resulting in the filing by private respondents of Civil
Case No. Q-52058 in the court below.
Private respondent Annette H. Jovellanos claimed in
the lower court that the aforestated property was
acquired by her deceased husband while their
marriage was still subsisting, by virtue of the deed of
absolute sale dated January 8, 1975 executed by
Philamlife in favor of her husband, Daniel Jovellanos.
who was issued Transfer Certificate of Title No.
212286 of the Register of Deeds of Quezon City and
which forms part of the conjugal partnership of the
second marriage. Petitioners, on the other hand,
contend that the property, specifically the lot and the
bungalow erected thereon, as well as the beneficial
and equitable title thereto, were acquired by their
parents during the existence of the first marriage under
their lease and conditional sale agreement with
Philamlife of September 2, 1955.
On December 28, 1989, the court a quo rendered
judgment 3 with the following dispositions:
WHEREFORE, premises considered,
judgment is hereby rendered as follows
1. Ordering the liquidation of the partnership of
the second marriage and directing the
reimbursement of the amount advanced by the
partnership of the first marriage as well (as) by
the late Daniel Jovellanos and the defendants
spouses Gil and Mercia * J. Martinez in the
acquisition of the lot and bungalow described
in the Lease and Conditional Sale Agreement
(Exhs. D and 1);
2. After such liquidation and reimbursement,
declaring the plaintiff Annette Jovellanos
as pro-indiviso owner of 1/2 of the property
described in TCT No. 212268 (sic) and the
bungalow erected therein;
3. Declaring the plaintiff Annette Jovellanos, as
well as the minors Anna Marie and Ma.
Jeannette (sic) both surnamed Jovellanos and
the herein defendants, as
owners pro indiviso of 1/6 each of the other
half of said property;
4. Declaring the defendants spouses Gil and
Mercia Martinez as exclusive owners of the
two-storey house erected on the property at the
back of the said bungalow, with all the rights
vested in them as builders in good faith under
Article 448 of the New Civil Code;
5. Ordering the parties to make a partition
among themselves by proper instruments of
conveyances, subject to the confirmation of
this Court, and if they are unable to agree upon
the partition, ordering that the partition should
be made by not more than three (3) competent
and disinterested persons as commissioners
who shall make the partition in accordance with
Sec. 5, Rule 69 of the Revised Rules of Court;
6. Ordering the defendant(s) to pay plaintiffs,
jointly and severally, the sum of P5,000.00 as
attorney's fees, plus costs.
SO ORDERED. 4
Respondent Court of Appeals, in its challenged
decision, held that the lease and conditional sale
agreement executed by and between Daniel
Jovellanos and Philamlife is a lease contract and, in
support of its conclusion, reproduced as its own the
following findings of the trial court:
It is therefore incumbent upon the vendee to
comply with all his obligations, i.e., the
payment of the stipulated rentals and
adherence to the limitations set forth in the
contract before the legal title over the property
is conveyed to the lessee-vendee. This, in
effect. is a pactum reservati dominii which is
common in sales on installment plan of real
estate whereby ownership is retained by the
vendor and payment of the agreed price being
a condition precedent before full ownership
could be transferred (Wells vs. Samonte,
38768-R, March 23, 1973; Perez vs. Erlanger
and Galinger Inc., CA 54 OG 6088). The
dominion or full ownership of the subject
property was only transferred to Daniel
Jovellanos upon full payment of the stipulated
price giving rise to the execution of the Deed of
Absolute Sale on January 8, 1975 (Exh. 2)
when the marriage between the plaintiff and
Daniel Jovellanos was already in existence.
Page 22 of 48
 The contention of the defendants that the jus in
re aliena or right in the property of another
person (Gabuya vs. Cruz, 38 SCRA 98) or
beneficial use and enjoyment of the property or
the equitable title has long been vested in the
vendee-lessee Daniel Jovellanos upon
execution of Exh. "1" is true, But the instant
case should be differentiated from the cited
cases of Pugeda v. Trias, et al., 4 SCRA 849;
and Alvarez vs. Espiritu, G.R. L-18833, August
14, 1965, which cannot be applied herein even
by analogy. In Pugeda. the subject property
refers solely to friar lands and is governed by
Act 1120 wherein the certificate of sale is
considered a conveyance of ownership subject
only to the resolutory condition that the sale
may be rescinded if the agreed price has not
been paid in full; in the case at bar, however,
payment of the stipulated price is a condition
precedent before ownership could be
transferred to the vendee. 5
With the modification that private respondents should
also reimburse to petitioners their proportionate shares
on the proven hospitalization and burial expenses of
the late Daniel Jovellanos, respondent Court of
Appeals affirmed the judgment of the trial court.
applying Article 118 of the Family Code which
provides:
Art. 118. Property bought on installment paid
partly from exclusive funds of either or both
spouses and partly from conjugal funds
belongs to the buyer or buyers if full ownership
was vested before the marriage and to the
conjugal partnership if such ownership was
vested during the marriage. In either case, any
amount advanced by the partnership or by
either or both spouses shall be reimbursed by
the owner or owners upon liquidation of the
partnership.
Petitioners now seek this review, invoking their
assignment of errors raised before the respondent
court and which may be capsulized into two
contentions, namely, that (1) the lower court erred in
holding that the lot and bungalow covered by the lease
and conditional sale agreement (Exhibit 1) is conjugal
property of the second marriage of the late Daniel
Jovellanos: and (2) the lower court erred in holding that
the provisions of the Family Code are applicable in
resolving the rights of the parties herein. 6
It is petitioners' position that the Family Code should
not be applied in determining the successional rights of
the party litigants to the estate of Daniel Jovellanos. for
to do so would be to impair their vested property rights
over the property in litigation which they have acquired
long before the Family Code took effect. 7
To arrive at the applicable law, it would accordingly be
best to look into the nature of the contract entered into
by the contracting parties. As appositely observed by
respondent court, the so-called lease agreement is,
therefore, very much in issue. Preliminarily, we do not
lose sight of the basic rule that a contract which is not
contrary to law, morals, good customs, public order or
public policy has the force of law between the
contracting parties and should be complied with in
good faith. 8 Its provisions are binding not only upon
them but also upon their heirs and assigns. 9
The contract entered into by the late Daniel Jovellanos
and Philamlife is specifically denominated as a "Lease
and Conditional Sale Agreement" over the property
involved with a lease period of twenty years at a
monthly rental of P288.87, by virtue of which the
former, as lessee-vendee, had only the right of
possession over the property. 10 In a lease
agreement, the lessor transfers merely the temporary
use and enjoyment of the thing leased. 11 In fact,
Daniel Jovellanos bound himself therein, among other
things, to use the property solely as a residence, take
care thereof like a good father of a family, permit
inspection thereof by representatives of Philamlife in
regard to the use and preservation of the property. 12
It is specifically provided, however, that "(i)f, at the
expiration of the lease period herein agreed upon, the
LESSEE-VENDEE shall have fully faithfully complied
with all his obligations herein stipulated, the LESSOR-
VENDOR shall immediately sell, transfer and convey
to the LESSEE-VENDEE the property which is the
subject matter of this agreement; . . . 13
The conditional sale agreement in said contract is,
therefore, also in the nature of a contract to sell, as
contrdistinguished from a contract of sale. In a contract
to sell or a conditional sale, ownership is not
transferred upon delivery of the property but upon full
payment of the purchase price. 14 Generally,
ownership is transferred upon delivery, but even if
delivered, the ownership may still be with the seller until
full payment of the price is made, if there is stipulation
to this effect. The stipulation is usually known as
a pactum reservati dominii, or contractual reservation
of title, and is common in sales on the installment
plan. 15 Compliance with the stipulated payments is a
suspensive condition. 16 the failure of which prevents
the obligation of the vendor to convey title from
acquiring binding force. 17
Hornbook lore from civilists clearly lays down the
distinctions between a contract of sale in which the title
passes to the buyer upon delivery of the thing sold, and
a contract to sell where, by agreement, the ownership
is reserved in the seller and is not to pass until full
payment of the purchase price: In the former, non-
payment of the price is a negative resolutory condition;
in the latter, full payment is a positive suspensive
condition. In the former, the vendor loses and cannot
recover the ownership of the thing sold until and unless
the contract of sale is rescinded or set aside; in the
latter, the title remains in the vendor if the vendee does
not comply with the condition precedent of making full
payment as specified in the contract.
Accordingly, viewed either as a lease contract or a
contract to sell, or as a contractual amalgam with facets
of both, what was vested by the aforestated contract in
petitioners' predecessor in interest was merely the
beneficial title to the property in question. His monthly
payments were made in the concept of rentals, but with
the agreement that if he faithfully complied with all the
stipulations in the contract the same would in effect be
considered as amortization payments to be applied to
the predetermined price of the said property. He
consequently acquired ownership thereof only upon full
payment of the said amount hence, although he had
been in possession of the premises since September
2, 1955, it was only on January 8, 1975 that Philamlife
executed the deed of absolute sale thereof in his favor.
Page 23 of 48
The conditions of the aforesaid agreement also bear
notice, considering the stipulations therein that Daniel
Jovellanos, as lessee-vendee, shall not —
xxx xxx xxx
(b) Sublease said property to a third party;
(c) Engage in business or practice any
profession within the property;
xxx xxx xxx
(f) Make any alteration or improvement on the
property without the prior written consent of the
LESSOR-VENDOR;
(g) Cut down, damage, or remove any tree or
shrub, or remove or quarry any stone, rock or
earth within the property, without the prior
written consent of the LESSOR-VENDOR;
(h) Assign to another his right, title and interest
under and by virtue of this Agreement, without
the prior written consent and approval of the
LESSOR-VENDOR. 18
The above restrictions further bolster the conclusion
that Daniel Jovellanos did not enjoy the full attributes
of ownership until the execution of the deed of sale in
his favor. The law recognizes in the owner the right to
enjoy and dispose of a thing, without other limitations
than those established by law, 19 and, under the
contract, Daniel Jovellanos evidently did not possess
or enjoy such rights of ownership.
We find no legal impediment to the application in this
case of the rule of retroactivity provided in the Family
Code to the effect that —
Art. 256. This Code shall have retroactive
effect insofar as it does not prejudice or impair
vested or acquired nights in accordance with
the Civil Code or other laws.
The right of Daniel Jovellanos to the property under the
contract with Philamlife was merely an inchoate and
expectant right which would ripen into a vested right
only upon his acquisition of ownership which, as
aforestated, was contingent upon his full payment of
the rentals and compliance with all his contractual
obligations thereunder. A vested right as an immediate
fixed right of present and future enjoyment. It is to be
distinguished from a right that is expectant or
contingent. 20 It is a right which is fixed, unalterable,
absolute, complete and unconditional to the exercise of
which no obstacle exists, 21 and which is perfect in
itself and not dependent upon a contingency. 22 Thus,
for a property right to be vested, there must be a
transition from the potential or contingent to the actual,
and the proprietary interest must have attached to a
thing; it must have become fixed or established and is
no longer open to doubt or controversy. 23
The trial court which was upheld by respondent court,
correctly ruled that the cases cited by petitioners are
inapplicable to the case at bar since said cases
involved friar lands which are governed by a special
law, Act 1120, which was specifically enacted for the
purpose. In the sale of friar lands, upon execution of
the contract to sell, a certificate of sale is delivered to
the vendee and such act is considered as a
conveyance of ownership, subject only to the
resolutory condition that the sale may be rescinded if
the agreed price shall not be paid in full. In the instant
case, no certificate of sale was delivered and full
payment of the rentals was a condition precedent
before ownership could be transferred to the
vendee. 24
We have earlier underscored that the deed of absolute
sale was executed in 1975 by Philamlife, pursuant to
the basic contract between the parties, only after full
payment of the rentals. Upon the execution of said
deed of absolute sale, full ownership was vested in
Daniel Jovellanos. Since. as early as 1967, he was
already married to Annette H. Jovellanos, this property
necessarily belonged to his conjugal partnership with
his said second wife.
As found by the trial court, the parties stipulated during
the pre-trial conference in the case below that the
rentals/installments under the lease and conditional
sale agreement were paid as follows (a) from
September 2, 1955 to January 2, 1959, by conjugal
funds of the first marriage; (b) from January 3, 1959 to
May 29, 1967, by capital of Daniel Jovellanos; (c) from
May 30, 1967 to 1971, by conjugal funds of the second
marriage; and (d) from 1972 to January 8, 1975, by
conjugal funds of the spouses Gil and Mercy
Jovellanos
Martinez. 25 Both courts, therefore, ordered that
reimbursements should be made in line with the
pertinent provision of Article 118 of the Family Code
that "any amount advanced by the partnership or by
either or both spouses shall be reimbursed by the
owner or owners upon liquidation of the partnership."
ACCORDINGLY, finding no reversible error in the
judgment of respondent court, the same is hereby
AFFIRMED.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-18833 August 14, 1965
HONESTO ALVAREZ, ET AL., plaintiffs-appellants,
vs.
PEDRO K. ESPIRITU, defendant-appellee.
Arturo Agustines for plaintiffs-appellants.
Alberto Aguilar for defendant-appellee.
REGALA, J.:
This is an appeal from the decision of the Court of First
Instance of Rizal. The resolution of the issues
presented depends on a determination of whether Lot
No. 292 of the Tala Estate was the paraphernal
property of the late Consolacion Evangelista, or
whether it was property of her conjugal partnership with
Pedro K. Espiritu.
The lot in question, with an area of 2 hectares, 76 acres
and 2 hectares, is located in Caloocan, Rizal (now
Page 24 of 48
Caloocan City). It originally formed part of the Friar
Lands administered under Act No. 1120.
On June 29, 1910, the Director of Lands issued Sales
Certificate No. 479 in favor of Consolacion Evangelista,
by virtue of which the government agreed to sell the lot
for P242.04. Under the terms of this certificate, the
amount of P60.04, which had been paid as rentals, was
credited in favor of Consolacion Evangelista and the
balance of P182 was to be paid in 18 annual
installments, the first installment of P12 to be paid on
July 1, 1910 and the rest to be paid every year
thereafter in 17 equal installments of P10 each.
On June 13, 1923, Consolacion Evangelista married
Pedro K. Espiritu. During their marriage, the
installments on the price of the lot were paid with
conjugal funds and by 1927 payment on all the
installments was completed. On November 18, of that
year, Consolacion Evangelista signed a deed entitled
"Assignment of Sales Certificate No. 279" which recites
as follows:
This agreement, made in duplicate between
Consolacion Evangelista, as ASSIGNOR, and Pedro
K. Espiritu as ASSIGNEE.
WITNESSETH: that the said ASSIGNOR, for
and in consideration of the sum of
P_______, 1 receipt whereof is acknowledged, hereby sells,
assigns, and transfers to the said ASSIGNEE all right, and interest
in and to lot 292 of the said Estate, acquired under and by the
terms of sales certificate numbered 479 dated June 29, 1910,
together with all buildings and improvements on the said lot
belonging to the said ASSIGNOR.
The said ASSIGNEE hereby accepts the said
assignment and transfer and expressly agrees
to be bound by and to keep and perform all the
covenants and condition expressed in the said
sale certificate to be kept and performed by the
VENDEE therein.
Following the approval of this assignment by the
Director of Lands, the lot was registered in the name of
the spouses and Transfer Certificate of Title No. 14527
was issued to them.
On February 7, 1946, the spouses sold a half portion
of the lot to Aniceto Martin for P3,000, reserving to
themselves the right to redeem it within 12 years.
However, before they could exercise their right of
redemption, Consolacion Evangelista died on February
21, 1949, leaving a will in which she bequeathed to her
husband her half interest in the remaining unsold
portion of Lot No. 292. She was survived by her
husband, Pedro K. Espiritu, and by plaintiffs Nicasio
and Asuncion Evangelista (her brother and sister,
respectively), Honesto and Josefina Alvarez (children
of her deceased sister Eduviges) and Arsenio
Evangelista (son of her deceased brother Rufino).
Pedro K. Espiritu filed Special Proceedings No. 502 in
the Court of First Instance of Bulacan for the settlement
of his wife's estate. The will was allowed and Pedro K.
Espiritu was appointed executor upon the filing of a
bond. Instead of filing a bond and qualifying as
executor, Espiritu asked the court to convert the
proceedings into a summary settlement of the estate
on the ground that the value of the properties did not
exceed P3,000. The court granted his motion, heard
the case and on November 15, 1954, issued an order,
the dispositive portion of which reads in part as follows:
WHEREFORE, the Court hereby distributes
summarily the estate left by the deceased
Consolacion Evangelista and hereby
adjudicates aforesaid estate in accordance
with the will, Exhibit C, of said deceased in the
following manner, to wit:
xxx xxx xxx
(2) to Pedro K. Espiritu; of legal age, Filipino,
married to Florentina Lopez, and resident of
Mabolo, Polo, Bulacan, the following
properties:
xxx xxx xxx
(b) All the one-fourth (1/4) share of the
deceased Consolacion Evangelista in the
parcel of land known as Lot No. 292 of the Tala
Estate situated in the Barrio of Llano,
Caloocan, Rizal, and described in Land Tax
Declaration No. 12913 (Exhibit B-2), of said
municipality; ... .
Meanwhile, Aniceto Martin, the vendee a retro of the
undivided other half of Lot No. 292, died. His children
executed a document on December 4, 1957, stating
that "prior to July 7, 1951" Pedro K. Espiritu had paid
P3,000 to their father but that death prevented the latter
from executing the corresponding deed of resale. For
this reason, they were reconveying to Pedro K. Espiritu
"all their rights, interest, participation and ownership of
whatever nature in said Lot No. 292 (1/2) of the Tala
Estate Subdivision described in T.C.T. No. 14527 of
the Register of Deeds of Rizal, subject matter of
the Pacto de Retro Sale."
On January 8, 1959, the plaintiffs brought this action
against Pedro K. Espiritu. While their original claim was
that the lot was conjugal and, therefore, they were
entitled to one-half (1/2) of it, plaintiffs later amended
their complaint and alleged that the lot was the
paraphernal property of Consolacion Evangelista
which she brought to her marriage with Pedro K.
Espiritu. They, therefore, contended that, as heirs of
Consolacion Espiritu, they were entitled to three
fourths (3/4) of the lot, only one-fourth (1/4) having
been disposed of in the will. On the other hand, Pedro
K. Espiritu claimed that the lot was their conjugal
property, one-half of which was his share, in addition to
one-fourth given to him in his wife's will. He
subsequently died and his second wife, Florentina
Lopez, who is also the administratrix of his estate,
substituted for him as defendant in this case.
On January 5, 1961, the lower court rendered a
decision declaring Pedro K. Espiritu the owner of the
entire lot. It explained thus:
... . It is well settled that the property becomes
conjugal if the funds paid by the husband in the
later installments were for the purpose of the
acquisition for the partnership the husband
acting in his capacity as administrator of the
same. And there is overwhelming evidence to
support this conclusion. The deceased
Consolacion Evangelista had the installments
paid by the conjugal funds and her intention to
have it paid not for her exclusive benefit but for
that of the partnership is abundantly
demonstrated in the instruments she executed.
Page 25 of 48
 The final deed of conveyance was executed in
the name of both spouses and the Torrens Title
issued in their names jointly. In the Deed
of Pacto de Retro she alluded to the land as
property owned in common by her and her
husband and not as exclusive property. The
real estate taxes were paid out of the conjugal
funds. Again, this intention is clear and
manifest with the subsequent execution of the
Deed of Assignment purportedly conveying the
lot in question in favor of the spouses jointly.
Without necessarily passing upon the validity
and effect of said deed, the same indubitably
demonstrates the intended change of the
character of the property in question. Finally, in
her last will and testament, Consolacion
expressly declared said lot to be conjugal
property.
The Court, therefore, finds and so holds that
the lot in question is conjugal property, both
spouses being entitled to an undivided half
share. So that on Feb. 7, 1946, when the same
was sold on pacto de retro, one-half thereof
was alienated, of which both spouses have an
undivided equal share (i.e., one-fourth each).
The remaining unsold half, consists of again an
undivided equal share in favor of both spouses
(i.e., one-fourth each). This explains why in the
will, Consolacion only bequeathed 1/4 of the lot
in favor of her husband, obviously because she
believed that the other remaining one-fourth is
the share of the husband in the conjugal
property.
The whole one-half portion, therefore,
remaining prior to the redemption of the lot in
1957 belongs to the defendant Pedro K.
Espiritu. On the other hand, the Court believes
that the other half portion subsequently
redeemed by Pedro K. Espiritu in 1957 with his
own exclusive money also pertains to him in full
ownership. This is the only just and equitable
conclusion considering that in 1949 when
Consolacion died, the conjugal partnership
was automatically dissolved, and considering
further that the spouses manifestly considered
the lot in question to have been absolutely
alienated without any intention to redeem the
same, and that it was only in 1947 when the
redemption period had almost expired that the
husband on second thought believed it
profitable to redeem the land with his own
money and for his own exclusive benefit. ... .
Plaintiffs have appealed to this Court. Citing the case
of Director of Lands v. Rizal, 87 Phil. 806, they contend
that ownership of Lot No. 292 vested in Consolacion
Evangelista upon the issuance to her in 1910 of a sales
certificate, with the result that the lot had become her
property long before her marriage in 1923 to Pedro K.
Espiritu.
The point is well taken. Indeed, in Director of Lands v.
Rizal, this Court ruled that under the Friar Lands Act
No. 1120, the equitable and beneficial title to the land
passes to the purchaser the moment the first
installment is paid and a certificate of sale is issued.
The reservation of the title in favor of the government,
which refers to the bare, naked title, is made merely for
the protection of its interest so that the lot may not be
disposed of by the purchaser before the price is paid in
full. But outside of this protection, the government
retains no right as an owner.
Even more in point is the case of Lorenzo v. Nicolas,
91 Phil. 686, in which this Court held that friar lands
bought by a woman before her marriage were her
paraphernal properties, although some of the
installments on their price were paid for with conjugal
funds during their marriage. The conjugal partnership
would only be entitled to reimbursement for the
expenses, (Civil Code Art. 1410)
And what of the assignment of the sale certificate which
Consolacion Evangelista made to her husband and
herself and the subsequent registration of the lot in
their names? Neither can avail the defendant any. The
assignment of the sales certificate shows very clearly
that the lot was Consolacion Evangelista's exclusive
property, else why would she have to make the
assignment? Such an assignment is void — a patent
nullity — in view of articles 1334 and 1458 which
prohibit donations and sales between spouses during
the marriage. (See e.g., Uy Coque v. Navas L. Sioca,
45 Phil. 430).
The lower court's reliance on the certificate of title
being issued in the names of the spouses is misplaced,
because sec. 70 of Land Registration Act provides that
"nothing contained in this Act shall in any way be
construed to relieve registered land or the owners
thereof from any rights incident to the relation of
husband and wife." Because of the feeling of trust
existing between spouses, certificates of title are often
secured in the names of both, or of either, regardless
of the source of the purchase money. It is thus but fair
that on liquidation of the partnership, the trust should
be recognized and enforced, so that the real ownership
of the property may be established. The principle, that
a trustee who takes a Torrens Title in his name cannot
repudiate the trust by relying on the registration, is one
of the well-known limitations upon the finality of a
decree of title. (Paterna Vda. de Padilla v. Bibby de
Padilla, 74 Phil. 377).
Nor do we agree with the lower court's reasoning that
because Pedro K. Espiritu redeemed one-half (1/2) of
the lot with his own money, after the dissolution of the
conjugal partnership of gains, he thereby became its
owner. Lot No. 292 being the paraphernal property of
Consolacion Evangelista before the sale, its
redemption must be deemed as having revested its
ownership in the heirs of Consolacion Evangelista.
(See Guinto v. Lim Bonfing, 48 Phil. 884; Santos v.
Bartolome, 44 Phil. 76) What Espiritu had on the
portion so redeemed was merely a lien for the amount
paid by him.
It is contended, however, that the probate court's order
summarily distributing the estate of Consolacion
Evangelista is conclusive on the conjugal character of
Lot No. 292.
The argument has no merit. The general rule is that
questions of title to property cannot be passed upon in
testate or intestate proceedings. The probate court can
decide only provisionally questions of title to property
for the purpose of inclusion into, or exclusion from, the
inventory, without prejudice to a final determination of
the question in a separate action. It is only when the
parties interested are all heirs and they agree to submit
Page 26 of 48
to the probate court the question as to title to property
that the probate court may definitely pass judgment
thereon. (3 Moran Comments on the Rules of
Court 427 [1963 ed.]) That is why, in Bernardo v. Court
of Appeals, G.R. No. L-18148, February 28, 1963, we
upheld the power of the probate court to adjudicate in
the testate proceedings the question as to whether the
properties therein involved belonged to the conjugal
partnership or to the deceased exclusively.
In this case, however, there is no such agreement
among the heirs to submit for determination of the
probate court the question of whether or not Lot No.
292 was conjugal partnership property. If this point was
at all considered by the probate court of Bulacan, it was
only provisionally, for inventory purposes, and certainly
without prejudice to the final determination of the
question in a separate action such as this one.
We, therefore, hold that Lot No. 292 was the
paraphernal property of Consolacion Evangelista.
Since only one-fourth (1/4) of this lot had been given
by will, there still remains undisposed three-fourths
(3/4) of the same.
Under the rules of intestacy of the Spanish Civil
Code, 2 one-half (1/2) of the portion remaining belongs
to the plaintiffs as collateral relatives and the other half
belonged in usufruct to Pedro K. Espiritu as surviving
spouse. (Art. 953 in relation to art. 837) 3 Nicasio and
Asuncion Evangelista who are the brother and sister of
the deceased, respectively, inherit per capita; while
Josefina Alvarez, Honesto Alvarez and Arsenio
Evangelista, who are her niece and nephew,
respectively, inherit per stirpes. In addition, these
collateral relatives are entitled to the corpus or capita
of the other half held in usufruct by Pedro K. Espiritu.
Upon the death of Espiritu on August 21, 1959, this
usufruct terminated. (Sp. Civil Code art. 513[1])
The usufruct of the husband during his life should be
fixed conformably with article 838 which states:
The usufructuary rights of the surviving spouse
may be satisfied by the settlement upon him or
her by the heirs of a life annuity or the income
from some specific property, or by the payment
of money, as may be determined by agreement
between the parties, or, in default of such
agreement, by judicial decision.
Until this has been done the usufructuary
interest of the surviving spouse shall constitute
a lien upon all the property of the estate.
For this reason, this case should be returned to the
lower court for the purpose of determining the
usufructuary legitime of Pedro K. Espiritu. In addition,
the lower court should determine and settle the
following: (1) the amount advanced by the conjugal
partnership for the payment of installments falling due
during the marriage. (2) the amount paid by Pedro K.
Espiritu in redeeming Lot No. 292 after it had been sold
under a deed of pacto de retro; (3) the amount of taxes
paid on the property by the conjugal partnership; and
(4) the value of the fruits received by the husband over
and above the value of his usufruct.
WHEREFORE, the decision appealed from is reversed
and the case is remanded to the court of origin for
further proceedings in conformity with this decision,
without pronouncement as to costs.
Bengzon, C.J., Bautista Angelo, Concepcion, Reyes,
J.B.L., Paredes, Dizon, Makalintal, Bengzon, J.P.,
and Zaldivar, JJ., concur.
Barrera, J., is on leave.
Republic of the Philippines
SUPREME COURT
Manila
THIRD DIVISION
G.R. No. 156125 August 25, 2010
FRANCISCO MUÑOZ, JR., Petitioner,
vs.
ERLINDA RAMIREZ and ELISEO
CARLOS, Respondents.
DECISION
BRION, J.:
We resolve the present petition for review on
certiorari1 filed by petitioner Francisco Muñoz, Jr.
(petitioner) to challenge the decision2 and the
resolution3 of the Court of Appeals (CA) in CA-G.R. CV
No. 57126.4 The CA decision set aside the decision5 of
the Regional Trial Court (RTC), Branch 166, Pasig
City, in Civil Case No. 63665. The CA resolution denied
the petitioner’s subsequent motion for reconsideration.
FACTUAL BACKGROUND
The facts of the case, gathered from the records, are
briefly summarized below.
Subject of the present case is a seventy-seven (77)-
square meter residential house and lot located at 170
A. Bonifacio Street, Mandaluyong City (subject
property), covered by Transfer Certificate of Title (TCT)
No. 7650 of the Registry of Deeds of Mandaluyong City
in the name of the petitioner.6
The residential lot in the subject property was
previously covered by TCT No. 1427, in the name of
Erlinda Ramirez, married to Eliseo Carlos
(respondents).7
On April 6, 1989, Eliseo, a Bureau of Internal Revenue
employee, mortgaged TCT No. 1427, with Erlinda’s
consent, to the Government Service Insurance System
(GSIS) to secure a ₱136,500.00 housing loan, payable
within twenty (20) years, through monthly salary
deductions of ₱1,687.66.8 The respondents then
constructed a thirty-six (36)-square meter, two-story
residential house on the lot.
On July 14, 1993, the title to the subject property was
transferred to the petitioner by virtue of a Deed of
Absolute Sale, dated April 30, 1992, executed by
Erlinda, for herself and as attorney-in-fact of Eliseo, for
a stated consideration of ₱602,000.00.9
On September 24, 1993, the respondents filed a
complaint with the RTC for the nullification of the deed
of absolute sale, claiming that there was no sale but
only a mortgage transaction, and the documents
Page 27 of 48
transferring the title to the petitioner’s name were
falsified.
The respondents alleged that in April 1992, the
petitioner granted them a ₱600,000.00 loan, to be
secured by a first mortgage on TCT No. 1427; the
petitioner gave Erlinda a ₱200,000.0010 advance to
cancel the GSIS mortgage, and made her sign a
document purporting to be the mortgage contract; the
petitioner promised to give the ₱402,000.00 balance
when Erlinda surrenders TCT No. 1427 with the GSIS
mortgage cancelled, and submits an affidavit signed by
Eliseo stating that he waives all his rights to the subject
property; with the ₱200,000.00 advance, Erlinda paid
GSIS ₱176,445.2711 to cancel the GSIS mortgage on
TCT No. 1427;12 in May 1992, Erlinda surrendered to
the petitioner the clean TCT No. 1427, but returned
Eliseo’s affidavit, unsigned; since Eliseo’s affidavit was
unsigned, the petitioner refused to give the
₱402,000.00 balance and to cancel the mortgage, and
demanded that Erlinda return the ₱200,000.00
advance; since Erlinda could not return the
₱200,000.00 advance because it had been used to pay
the GSIS loan, the petitioner kept the title; and in 1993,
they discovered that TCT No. 7650 had been issued in
the petitioner’s name, cancelling TCT No.1427 in their
name.
The petitioner countered that there was a valid contract
of sale. He alleged that the respondents sold the
subject property to him after he refused their offer to
mortgage the subject property because they lacked
paying capacity and were unwilling to pay the
incidental charges; the sale was with the implied
promise to repurchase within one year,13 during which
period (from May 1, 1992 to April 30, 1993), the
respondents would lease the subject property for a
monthly rental of ₱500.00;14 when the respondents
failed to repurchase the subject property within the
one-year period despite notice, he caused the transfer
of title in his name on July 14, 1993;15 when the
respondents failed to pay the monthly rentals despite
demand, he filed an ejectment case16 against them with
the Metropolitan Trial Court (MeTC), Branch 60,
Mandaluyong City, on September 8, 1993, or sixteen
days before the filing of the RTC case for annulment of
the deed of absolute sale.
During the pendency of the RTC case, or on March 29,
1995, the MeTC decided the ejectment case. It ordered
Erlinda and her family to vacate the subject property,
to surrender its possession to the petitioner, and to pay
the overdue rentals.17
In the RTC, the respondents presented the results of
the scientific examination18 conducted by the National
Bureau of Investigation of Eliseo’s purported
signatures in the Special Power of Attorney19 dated
April 29, 1992 and the Affidavit of waiver of rights dated
April 29, 1992,20 showing that they were forgeries.
The petitioner, on the other hand, introduced evidence
on the paraphernal nature of the subject property since
it was registered in Erlinda’s name; the residential lot
was part of a large parcel of land owned by Pedro
Ramirez and Fructuosa Urcla, Erlinda’s parents; it was
the subject of Civil Case No. 50141, a complaint for
annulment of sale, before the RTC, Branch 158, Pasig
City, filed by the surviving heirs of Pedro against
another heir, Amado Ramirez, Erlinda’s brother; and,
as a result of a compromise agreement, Amado agreed
to transfer to the other compulsory heirs of Pedro,
including Erlinda, their rightful shares of the land.21
THE RTC RULING
In a Decision dated January 23, 1997, the RTC
dismissed the complaint. It found that the subject
property was Erlinda’s exclusive paraphernal property
that was inherited from her father. It also upheld the
sale to the petitioner, even without Eliseo’s consent as
the deed of absolute sale bore the genuine signatures
of Erlinda and the petitioner as vendor and vendee,
respectively. It concluded that the NBI finding that
Eliseo’s signatures in the special power of attorney and
in the affidavit were forgeries was immaterial because
Eliseo’s consent to the sale was not necessary.22
The respondents elevated the case to the CA via an
ordinary appeal under Rule 41 of the Revised Rules of
Court.
THE CA RULING
The CA decided the appeal on June 25, 2002. Applying
the second paragraph of Article 15823 of the Civil Code
and Calimlim-Canullas v. Hon. Fortun,24 the CA held
that the subject property, originally Erlinda’s exclusive
paraphernal property, became conjugal property when
it was used as collateral for a housing loan that was
paid through conjugal funds – Eliseo’s monthly salary
deductions; the subject property, therefore, cannot be
validly sold or mortgaged without Eliseo’s consent,
pursuant to Article 12425 of the Family Code. Thus, the
CA declared void the deed of absolute sale, and set
aside the RTC decision.
When the CA denied26 the subsequent motion for
reconsideration,27 the petitioner filed the present
petition for review on certiorari under Rule 45 of the
Revised Rules of Court.
THE PETITION
The petitioner argues that the CA misapplied the
second paragraph of Article 158 of the Civil Code and
Calimlim-Canullas28 because the respondents
admitted in the complaint that it was the petitioner who
gave the money used to cancel the GSIS mortgage on
TCT No. 1427; Article 12029 of the Family Code is the
applicable rule, and since the value of the house is less
than the value of the lot, then Erlinda retained
ownership of the subject property. He also argues that
the contract between the parties was a sale, not a
mortgage, because (a) Erlinda did not deny her
signature in the document;30 (b) Erlinda agreed to sign
a contract of lease over the subject property;31 and, (c)
Erlinda executed a letter, dated April 30, 1992,
confirming the conversion of the loan application to a
deed of sale.32
THE CASE FOR THE RESPONDENTS
The respondents submit that it is unnecessary to
compare the respective values of the house and of the
lot to determine ownership of the subject property; it
was acquired during their marriage and, therefore,
considered conjugal property. They also submit that
the transaction between the parties was not a sale, but
an equitable mortgage because (a) they remained in
possession of the subject property even after the
execution of the deed of absolute sale, (b) they paid
Page 28 of 48
the 1993 real property taxes due on the subject
property, and (c) they received ₱200,000.00 only of the
total stated price of ₱602,000.00.
THE ISSUE
The issues in the present case boil down to (1) whether
the subject property is paraphernal or conjugal; and,
(2) whether the contract between the parties was a sale
or an equitable mortgage.
OUR RULING
We deny the present Petition but for reasons other than
those advanced by the CA.
This Court is not a trier of facts. However, if the
inference, drawn by the CA, from the facts is manifestly
mistaken, as in the present case, we can review the
evidence to allow us to arrive at the correct factual
conclusions based on the record.33
First Issue:
Paraphernal or Conjugal?
As a general rule, 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.34
In the present case, clear evidence that Erlinda
inherited the residential lot from her father has
sufficiently rebutted this presumption of conjugal
ownership.35 Pursuant to Articles 9236 and 10937 of the
Family Code, properties acquired by gratuitous title by
either spouse, during the marriage, shall be excluded
from the community property and be the exclusive
property of each spouse.38 The residential lot,
therefore, is Erlinda’s exclusive paraphernal property.
The CA, however, held that the residential lot became
conjugal when the house was built thereon through
conjugal funds, applying the second paragraph of
Article 158 of the Civil Code and Calimlim-
Canullas.39 Under the second paragraph of Article 158
of the Civil Code, a land that originally belonged to one
spouse becomes conjugal upon the construction of
improvements thereon at the expense of the
partnership. We applied this provision in Calimlim-
Canullas,40 where we held that when the conjugal
house is constructed on land belonging exclusively to
the husband, the land ipso facto becomes conjugal, but
the husband is entitled to reimbursement of the value
of the land at the liquidation of the conjugal partnership.
The CA misapplied Article 158 of the
Civil Code and Calimlim-Canullas
We cannot subscribe to the CA’s misplaced reliance on
Article 158 of the Civil Code and Calimlim-Canullas.
As the respondents were married during the effectivity
of the Civil Code, its provisions on conjugal partnership
of gains (Articles 142 to 189) should have governed
their property relations. However, with the enactment
of the Family Code on August 3, 1989, the Civil Code
provisions on conjugal partnership of gains, including
Article 158, have been superseded by those found in
the Family Code (Articles 105 to 133). Article 105 of the
Family Code states:
xxxx
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.
Thus, in determining the nature of the subject property,
we refer to the provisions of the Family Code, and not
the Civil Code, except with respect to rights then
already vested.
Article 120 of the Family Code, which supersedes
Article 158 of the Civil Code, provides the solution in
determining the ownership of the improvements that
are made on the separate property of the spouses, at
the expense of the partnership or through the acts or
efforts of either or both spouses. Under this provision,
when the cost of the improvement and any resulting
increase in value are more than the value of the
property at the time of the improvement, the entire
property of one of the spouses shall belong to the
conjugal partnership, subject to reimbursement of the
value of the property of the owner-spouse at the time
of the improvement; otherwise, said property shall be
retained in ownership by the owner-spouse, likewise
subject to reimbursement of the cost of the
improvement.41
In the present case, we find that Eliseo paid a portion
only of the GSIS loan through monthly salary
deductions. From April 6, 198942 to April 30,
1992,43 Eliseo paid about ₱60,755.76,44 not the entire
amount of the GSIS housing loan plus interest, since
the petitioner advanced the ₱176,445.2745 paid by
Erlinda to cancel the mortgage in 1992. Considering
the ₱136,500.00 amount of the GSIS housing loan, it
is fairly reasonable to assume that the value of the
residential lot is considerably more than the
₱60,755.76 amount paid by Eliseo through monthly
salary deductions.
Thus, the subject property remained the exclusive
paraphernal property of Erlinda at the time she
contracted with the petitioner; the written consent of
Eliseo to the transaction was not necessary. The NBI
finding that Eliseo’s signatures in the special power of
attorney and affidavit were forgeries was immaterial.
Nonetheless, the RTC and the CA apparently failed to
consider the real nature of the contract between the
parties.
Second Issue:
Sale or Equitable Mortgage?
Jurisprudence has defined an equitable mortgage "as
one which although lacking in some formality, or form
or words, or other requisites demanded by a statute,
nevertheless reveals the intention of the parties to
charge real property as security for a debt, there being
no impossibility nor anything contrary to law in this
intent."46
Page 29 of 48
Article 1602 of the Civil Code enumerates the
instances when a contract, regardless of its
nomenclature, may be presumed to be an equitable
mortgage: (a) when the price of a sale with right to
repurchase is unusually inadequate; (b) when the
vendor remains in possession as lessee or
otherwise; (c) when upon or after the expiration of the
right to repurchase another instrument extending the
period of redemption or granting a new period is
executed; (d) when the purchaser retains for
himself a part of the purchase price; (e) when the
vendor binds himself to pay the taxes on the thing
sold; and, (f) in any other case where it may be
fairly inferred that the real intention of the parties
is that the transaction shall secure the payment of
a debt or the performance of any other obligation.
These instances apply to a contract purporting to be an
absolute sale.47
For the presumption of an equitable mortgage to arise
under Article 1602 of the Civil Code, two (2) requisites
must concur: (a) that the parties entered into a contract
denominated as a contract of sale; and, (b) that their
intention was to secure an existing debt by way of a
mortgage. Any of the circumstances laid out in Article
1602 of the Civil Code, not the concurrence nor an
overwhelming number of the enumerated
circumstances, is sufficient to support the conclusion
that a contract of sale is in fact an equitable mortgage.48
Contract is an equitable mortgage
In the present case, there are four (4) telling
circumstances pointing to the existence of an equitable
mortgage.
First, the respondents remained in possession as
lessees of the subject property; the parties, in fact,
executed a one-year contract of lease, effective May 1,
1992 to April 30, 1993.49
Second, the petitioner retained part of the "purchase
price," the petitioner gave a ₱200,000.00 advance to
settle the GSIS housing loan, but refused to give the
₱402,000.00 balance when Erlinda failed to submit
Eliseo’s signed affidavit of waiver of rights.
Third, respondents paid the real property taxes on July
8, 1993, despite the alleged sale on April 30,
1992;50 payment of real property taxes is a usual
burden attaching to ownership and when, as here,
such payment is coupled with continuous possession
of the property, it constitutes evidence of great weight
that the person under whose name the realty taxes
were declared has a valid and rightful claim over the
land.51
Fourth, Erlinda secured the payment of the principal
debt owed to the petitioner with the subject property.
The records show that the petitioner, in fact, sent
Erlinda a Statement of Account showing that as of
February 20, 1993, she owed ₱384,660.00, and the
daily interest, starting February 21, 1993, was
₱641.10.52 Thus, the parties clearly intended an
equitable mortgage and not a contract of sale.
That the petitioner advanced the sum of ₱200,000.00
to Erlinda is undisputed. This advance, in fact,
prompted the latter to transfer the subject property to
the petitioner. Thus, before the respondents can
recover the subject property, they must first return the
amount of ₱200,000.00 to the petitioner, plus legal
interest of 12% per annum, computed from April 30,
1992.
We cannot sustain the ballooned obligation of
₱384,660.00, claimed in the Statement of Account sent
by the petitioner,53 sans any evidence of how this
amount was arrived at. Additionally, a daily interest of
₱641.10 or ₱19,233.00 per month for a ₱200,000.00
loan is patently unconscionable. While parties are free
to stipulate on the interest to be imposed on monetary
obligations, we can step in to temper the interest rates
if they are unconscionable.54
In Lustan v. CA,55 where we established the reciprocal
obligations of the parties under an equitable mortgage,
we ordered the reconveyance of the property to the
rightful owner therein upon the payment of the loan
within ninety (90) days from the finality of the
decision.56
WHEREFORE, in light of all the foregoing, we
hereby DENY the present petition. The assailed
decision and resolution of the Court of Appeals in CA-
G.R. CV No. 57126 are AFFIRMED with the following
MODIFICATIONS:
1. The Deed of Absolute Sale dated April 30,
1992 is hereby declared an equitable
mortgage; and
2. The petitioner is obligated to RECONVEY to
the respondents the property covered by
Transfer Certificate of Title No. 7650 of the
Register of Deeds of Mandaluyong City, UPON
THE PAYMENT OF ₱200,000.00, with 12%
legal interest from April 30, 1992, by
respondents within NINETY DAYS FROM THE
FINALITY OF THIS DECISION.
Costs against the petitioner.
SO ORDERED.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-21533 June 29, 1967
HERMOGENES MARAMBA, plaintiff-appellant,
vs.
NIEVES DE LOZANO, ET AL., defendants-appellees.
N. Tanopo, Jr. and Millora for plaintiff-appellant.
Manuel Ancheta and Bausa, Ampil and Suarez for
defendants-appellees.
MAKALINTAL., J.:
Appeal from an order of the Court of First Instance of
Dagupan City in its Civil Case No. 10485, dated June
28, 1961. This case was originally brought to the Court
of Appeals, but subsequently certified to Us on the
ground that the issues raised are purely legal.
It appears that on November 3, 1948, the plaintiff filed
an action against the defendant Nieves de Lozano and
her husband Pascual Lozano for the collection of a sum
Page 30 of 48
of money. After trial, the court a quo on June 23, 1959
rendered its decision, the dispositive part of which is as
follows:
WHEREFORE, the court hereby renders
judgment, sentencing the defendants herein,
Nieves de Lozano and Pascual Lozano, to pay
unto the herein plaintiff, Hermogenes
Maramba, the total sum of Three Thousand
Five Hundred Pesos and Seven Centavos
(P3,500.07), with legal interest thereon from
date of the filing of the instant complaint until
fully paid.
With costs against the said defendants.
Not satisfied with the judgment, the defendants
interposed an appeal to the Court of Appeals but the
appeal was dismissed on March 30, 1960 for failure of
the defendants to file their brief on time. After the
record the case was remanded to the court a quo, a
writ of execution was issued, and on August 18, 1960
levy was made upon a parcel of land covered by
transfer certificate title No. 8192 of Pangasinan in the
name of Nieves de Lozano. The notice of sale at public
auction was published in accordance with law and
scheduled for September 16, 1960.
On that date, however, defendant Nieves de Lozano
made a partial satisfaction of the judgment in the
amount P2,000.00, and requested for an adjournment
of the sale to October 26, 1960. On October 17, 1960,
she filed amended motion, dated October 14, alleging
that on November 11, 1952, during the pendency of the
case, defendant Pascual Lozano died and that the
property levied upon was her paraphernal property,
and praying that her liability be fixed at one-half (½) of
the amount awarded in the judgment and that pending
the resolution of the issue an order be issued
restraining the Sheriff from carrying out the auction
sale scheduled on October 26, 1960.
On that date the sale proceeded anyway, and the
property of Nieves de Lozano which has been levied
upon was sold to the judgment creditor, as the highest
bidder, for the amount of P4,175.12, the balance of the
judgment debt. 1äw phï1.ñët
On October 27, 1960, plaintiff filed an opposition to the
defendant's amended motion dated October 14, 1960.
And on June 28, 1961, the trial court issued the
questioned order, the dispositive part of which is as
follows:
WHEREFORE, the court hereby grants the
motion of counsel for defendant Nieves de
Lozano, dated October 5, 1960, which was
amended on October 14, 1960, and holds that
the liability of the said defendant under the
judgment of June 23, 1959, is only joint, or
P1,750.04, which is one-half (½) of the
judgment debt of P3,500.07 awarded to the
plaintiff and that the writ of execution be
accordingly modified in the sense that the
liability of defendant Nieves de Lozano be only
P1,750.04 with legal interest from the date of
the filing of the complaint on November 5, 1948
until fully paid, plus the amount of P21.28 which
is also one-half (½) of the costs taxed by the
Clerk of Court against the defendant spouses.
Let the auction sale of the above-mentioned
property of defendant Nieves de Lozano
proceed to satisfy her liability of P1,750.04 with
legal interest as above stated and the further
sum of P21.28 representing the costs, unless
she voluntarily pays the same to the judgment
creditor (herein plaintiff).
Plaintiff interposed an appeal from the above-quoted
order and assigned several errors, which present three
major issues, to wit:
(a) whether or not the decision of the lower
court dated June 23, 1959 could still be
questioned;
(b) whether or not the judgment was joint or
solidary; and
(c) whether or not the judgment debt could be
satisfied from the proceeds of the properties
sold at public auction.
Plaintiff-appellant submits that a "nunc pro tunc" order
should have been issued by the trial court dismissing,
as of November 11, 1952, the case against the late
Pascual Lozano by reason of his death, and that the
lower court should have corrected its decision of June
23, 1959, by striking out the letter "s" in the word
"defendants" and deleting the words "and Pascual
Lozano."
We do not think that the action suggested would be
legally justified. It would entail a substantial
amendment of the decision of June 23, 1959, which
has long become final and in fact partially executed. A
decision which has become final and executory can no
longer be amended or corrected by the court except for
clerical errors or mistakes,1 and however erroneous it
may be, cannot be disobeyed;2 otherwise litigations
would be endless and no questions could be
considered finally settled.3 The amendment sought by
appellee involves not merely clerical errors but the very
substance of the controversy. And it cannot be
accomplished by the issuance of a "nunc pro tunc"
order such as that sought in this case. The purpose of
an "nunc pro tunc" is to make a present record of an
which the court made at a previous term, but which not
then recorded. It can only be made when the ordered
has previously been made, but by inadvertence not
been entered. In the instant case there was no order
previously made by the court and therefore there is no
now to be recorded.
Now then, it is clear that the decision of June 23, 1959
does not specify the extent of the liability of each
defendant. The rule is that when the judgment does not
order the defendants to pay jointly and severally their
liability is merely joint, and none of them may be
compelled to satisfy the judgment in full. This is in
harmony with Articles 1137 and 1138 of the Civil Code.
Plaintiff-appellant contends that in any event the entire
judgment debt can be satisfied from the proceeds the
property sold at public auction in view of the
presumption that it is conjugal in character although in
the of only one of the spouses. The contention is
incorrect. The presumption under Article 160 of the
Civil Code to property acquired during the marriage.
But in the instant case there is no showing as to when
the property in question was acquired and hence the
fact that the title is in the wife's name alone is
Page 31 of 48
determinative. Furthermore, appellant himself admits
in his brief (p. 17) that the property in question is
paraphernal.
Appellant next points out that even if the land levied
upon were originally paraphernal, it became conjugal
property by virtue of the construction of a house
thereon at the expense of the common fund, pursuant
to Article 158 paragraph 2 of the Civil Code. However,
it has been by this Court that the construction of a
house at conjugal expense on the exclusive property of
one of the spouses doe not automatically make it
conjugal. It is true that meantime the conjugal
partnership may use both in the land and the building,
but it does so not as owner but in the exercise of the
right of usufruct. The ownership of the land remains the
same until the value thereof is paid, and this payment
can only be demanded in the liquidation of the
partnership (Coingco vs. Flores, 82 Phil. 284; Paterno
vs. Bibby Vda. de Padilla, 74 Phil. 377; Testate Estate
of Narciso Padilla, G.R.No. L-8748, Dec. 26, 1961).
The record does not show that there has already been
a liquidation of the conjugal partnership between the
late Pascual Lozano and Nieves de Lozano.
Consequently, the property levied upon, being the
separate property of defendant Nieves de Lozano,
cannot be made to answer for the liability of the other
defendant.
On May 18, 1967 counsel for defendants-appellees
filed with Us a petition alleging, inter alia; that prior to
the expiration of the redemption period and pursuant to
an order of the lower court defendants filed a surety
bond in the amount of P3,175.12 as the redemption
price, which bond was duly approved by the lower
court; that sometime last September 1966, defendants
filed a petition before the lower court praying that the
sheriff of Pangasinan be ordered to execute the
corresponding deed of redemption in favor of
defendant Nieves de Lozano represented by her
judicial administrator or that, in the alternative, the
Register of Deeds of Dagupan City be directed to
cancel Entries Nos. 19234 and 20042 at the back of
TCT No. 8192; and that said petition was denied by the
lower court. The same prayer made below is reiterated
in the said petition of May 18, 1967.
The foregoing petition of May 18, 1967 alleges facts
which occurred after the perfection of the present
appeal and which should therefore be submitted to and
passed upon by the trial court in connection with the
implementation of the order appealed from, which is
hereby affirmed, with costs.
Concepcion, C.J., Reyes, J.B.L., Dizon, Bengzon,
J.P., Zaldivar, Sanchez and Castro, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-14309 June 30, 1960
CALTEX (PHILIPPINES) INC., petitioner,
vs.
FELISA FELIAS, respondent.
A.P. Deen and Eddy A. Deen for petitioner.
Leopoldo Picazo for respondent.
MONTEMAYOR, J.:
This is a petition for certiorari to review the decision of
the Court of Appeals in CA-G.R. No. 14967-R,
modifying that of the trial court by declaring plaintiff
Felias exclusive owner of Lot No. 107, Cadastral
Survey of the City of Agusan, instead of Vicente
Dysekco; by affirming said decision in so far as it
declared Caltex (Philippines) Inc., absolute owner of
the coconut land described in paragraph 10 (b) of the
amended complaint.
The facts of the case as found by the Court of Appeals
and which we adopt for purposes of this review, are as
follows: Lot No. 107 aforementioned was originally
owned by the spouses Juliano Felias and Eulalia
Felion. On March 31, 1928, said spouses donated said
Lot No. 107 to their daughter, Felisa Felias, herein
respondent, as a result of which Original Certificate of
Title No. 645 was cancelled and Transfer Certificate of
Title No. 97 was issued in lieu thereof, in favor of Felisa
Felias, making said lot her paraphernal property.
On March 26, 1941, the trial court (Court of First
Instance of Cebu) rendered judgment in Civil Case No.
1527, entitled Texas Company (Phil.,) Inc., plaintiff, vs.
Simeon Sawamoto, defendant, (husband of
respondent Felias) ordering the latter to pay plaintiff the
sum of P661.94, with legal interest from the date
complaint was filed, plus attorney's fees equivalent to
10% of the award, and the costs. A writ of execution
was issued to the provincial sheriff who levied upon Lot
No. 107, together with the improvements thereon
described in paragraph II of the amended complaint
and a small parcel of coconut land located in Look,
Nasipit, Agusan, and on August 20, 1941, sold them at
public auction to the Texas Company, now petitioner
herein Caltex (Philippines) Inc. The corresponding
certificate of sale was annotated on the back of
Transfer Certificate of Title No. 97 on August 21, 1941.
Upon the expiration of the one year period without
judgment debtor Sawamoto making the redemption, on
January 25, 1947, the provincial sheriff executed in
favor of Caltex (Philippines) Inc., a final deed of sale
which was duly recorded on the reconstituted Transfer
Certificate of Title No. RT-65 (97) on November 26,
1947.
On February 3, 1950, Felisa Felias (herein respondent)
filed the present action to declare herself exclusive
owner of the two parcels in question; on January 4,
1955, after hearing, the trial court rendered judgment
as follows:
Considering all the foregoing, the Court
renders judgment and declares:
(1) The contract of sale with the right to
repurchase (Exhibit C) the true intention of the
parties, and Lot No. 107, now covered by
transfer certificate of title No. RT-65 (97) of the
Register of Deeds of the Province of Agusan
the exclusive property of the defendant Vicente
Dysekco;
(2) The sale at auction by the provincial sheriff
of Agusan in favor of the CALTEX of lot No. 107
null and void;
(3) The CALTEX as exclusive owner of the
small parcel of coconut land located at sitio
Page 32 of 48
 Look, municipality of Nasipit, Agusan covered
by tax declaration No. 3602 (Exhibit 14,
CALTEX); and
(4) The complaint dismissed with costs against
the plaintiff.
The register of deeds of Agusan is ordered to
cancel transfer certificate of title No. RT-63 (97)
in the name of Felisa Felias married to Simeon
Sawamoto and to issue in lieu thereof another
transfer certificate of title in the name of Vicente
Dysekco upon payment of the required fees.
Plaintiff Felisa Felias as well as defendant Caltex
(Philippines) Inc. appealed the foregoing judgment to
the Court of Appeals which court rendered the decision
sought to be reviewed, the dispositive portion of which
reads:
"In view of the foregoing, the judgment appealed from
is hereby modified; and judgment is hereby rendered—
"1. Declaring that plaintiff is the owner of Lot No. 107
of the Cadastral Survey of Nasipit; and ordering the
Register of Deeds to cancel: entry No. 234 referring to
the sale with pacto de retro; entry No. 1951, notice of
levy under attachment; entry No. 2050, notice of levy
under execution; entry No. 2147, sheriff's certificate of
sale; entry No. 114, sheriff's deed of sale in favor of
Caltex (Phil.) Inc., dated January 28, 1947; entry No.
121, affidavit of consolidation of ownership, all
appearing in the memorandum of encumbrances at the
back of Transfer Certificate of Title No. RT-65 (97) of
the land records of Agusan; and
"2. Declaring that Caltex (Phil.) Inc. is the exclusive
owner of the small parcel of coconut land located in
sitio Look, municipality of Nasipit, Agusan, described in
paragraph X (b) of the amended complaint."
Petitioner Caltex (Philippines) Inc. makes the following
assignment of errors:
ASSIGNMENT OF ERRORS
I. The Court of Appeals erred in failing to
declare that even if lot No. 107 was
paraphernal, it became conjugal ipso
facto upon construction of the conjugal house
thereon.
II. The Court of Appeals erred in failing to
declare that even if lot No. 107 is paraphernal,
it is nevertheless subject to levy of execution in
enforcing just obligation of plaintiff's husband,
Simeon Sawamoto.
III. The Court of Appeals erred by failing to
declare that estoppel thru negligence and
actuations bar the plaintiff from claiming
ownership of lot No. 107 as against defendant
CALTEX.
The only issues involved in this appeal is the status and
ownership of Lot 107 of the cadastral survey of the City
of Agusan at the time it was levied upon and later sold
by the Sheriff. As already stated, the Court of Appeals
found that it had been donated to Felisa Felias on
March 31, 1928 by her parents, so that it became her
paraphernal property. It was levied upon and sold by
the Sheriff as conjugal property of the spouses Felisa
and Simeon on the theory that under Article 1404,
paragraph 2, of the Old Civil Code, which reads as
follows:
ART. 1404. ...
Buildings constructed during the marriage on
the land belonging to one of the spouse shall
also belong to the partnership, but the value of
the land shall be paid to the spouse owning the
same.
which legal provision was embodied in Article 158,
paragraph 2, of the New Civil Code, which reads thus:
ART. 158. ...
Buildings constructed at the expense of
partnership during the marriage on land
belonging to one of the spouses, also pertain
to the partnership, but the value of the land
shall be reimbursed to the spouse who owns
the same.,
it automatically became conjugal when during the
marriage, and with conjugal partnership funds, a
building was construed on it. However, the Court of
Appeals fund as a fact that at the time the building was
constructed, the lot still belonged to the parents of
Felisa because the donation to her was not made until
March 31, 1928, whereas the building was constructed
earlier, which building was assessed as early as
September, 1927, at P12,000. Consequently, Article
1404 of the Old Civil Code is not applicable. The Court
of Appeals itself said so, but nevertheless, it proceeded
to assume that article 1404 was applicable, and
proceeded to discuss the question thus:
While it is true that the building was constructed
by the spouses Felisa and Simeon Sawamoto
on Lot No. 107 at a time when they were
already married, nevertheless, it is equally true
that then Lot No. 107 did not yet belong to
Felisa Felias, one of the spouses — that land
was still the property of the parents of Felisa
Felias. It would seem therefore, that Article
1404 of the Spanish Civil Code would not
apply. That legal percept refers to a building
constructed `on land belonging to one of the
spouses.' Rather, we would say that the
familiar rule of accessory following the principal
should apply.
But conceding, for present purposes, that after
the acquisition of the land by plaintiff, the
matter of ownership of the land (on which the
said building was erected) comes within the
coverage of Article 1404 still the question
arises: As of what time should the land be
considered the property of the spouse? On this
point, we have but to restate the jurisprudence
established by Supreme Tribunal of this
country.
We believe the assumption and the discussion to be
profitless and unnecessary. For purposes of this
appeal, we shall decide the issue on the basis of the
fact that the building was construed when the lot
belonged not to Felisa but her parents, in which case,
as the Court of Appeals itself observed, what was
Page 33 of 48
applicable was "the familiar rule of accessory following
the principal". In other words, when the lot was donated
to Felisa by her parents, as owners of the land on which
the building was constructed, the lot became her
paraphernal property. The donation transmitted to her
the rights of a landowner over a building constructed
on it. Therefore at the time of the levy and sale of the
sheriff, Lot No. 107 did not belong to the conjugal
partnership, but it was paraphernal property of Felisa.
As such, it was not answerable for the obligations of
her husband1 which resulted in the judgment against
him in favor of Caltex. It may be stated in this
connection that as further found by the Court of
Appeals, the building constructed on Lot No. 107 was
destroyed during the last war, so that "at the time the
Sheriff executed the final deed of sale in favor of Caltex
(Phil.) Inc. on the 27th day of January, 1947, that house
which was included in both deeds was no longer in
existence."
In view of the foregoing, the appealed decision of the
Court of Appeals is hereby affirmed, though on another
ground, with costs against petitioner.
Paras, C.J., Bengzon, Bautista Angelo, Labrador,
Concepcion, Reyes, J.B.L., Barrera, and Gutierrez
David, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25594 October 18, 1926
Intestate Estate of Francisco Derayunan,
deceased. ELISA DOMINADO, petitioner-appellant,
vs.
NICOMEDES DERAYUNAN, administrator-appellee.
NARCISO DERAYUNAN, appellee.
Lutero and Lutero for appellant.
Arroyo and Evangelista for appellees.
VILLAMOR, J.:
In the administration proceedings for the settlement of
the estate of Francisco Derayunan, deceased, pending
in the Court of First Instance of Iloilo, the judicial
administrator submitted a scheme of partition of the
estate of the said deceased. The widow, by the second
marriage, Elisa Dominado objected to said partition.
After a hearing of the parties the court ordered the
partition to be made upon the following basis:
In the scheme of partition there shall first be
separated the conjugal property belonging to
the widow and half of the conjugal property
belonging to the deceased which, together with
his private property, will constitute the
inheritance to be partitioned. This inheritance
shall be divided into three equal parts: Two
thirds thereof shall constitutes the legitimate of
the two children of the deceased according to
article 808 of the Civil Code, and the remaining
one-third shall be the three portion from which
shall be taken that which is to go to the widow
Elisa Dominado in usufruct. This portion, which
legally belongs to the widow in usufruct, shall
be equal to the legitimate of each of the
children has not received any betterment.
(See article 834 of the Civil Code.) The
betterment, according to article 808 of the Civil
Code, is one-third of the estate — one of the
two-thirds which constitutes the legitime, or
one-half of the legitime.
According to the law, then, two-thirds of the
inheritance must be adjudicated to the children,
one-half to the son Narciso Derayunan and the
other half to the daughter Margaritsa
Derayunan. Under the law widow Elisa
Dominado is entitled to one-sixth of the
inheritance in usufruct, which one-sixth part
shall be taken from the free portion.
Furthermore, there shall be adjudicated to
each of the children Narciso Derayunan and
Margarita Derayunan, one-half, in full
ownership of the free portion not adjudicated to
the widow Elisa Dominado and, in addition, the
naked ownership of the portion allotted in
usufruct to the widow Elisa Dominado.
This is the basis to be followed in the scheme
of partition of the estate of the deceased
Francisco Derayunan.
Upon this basis determined by the court, the
administrator of the intestate estate presented another
scheme of partition on April 24, 1925, which, after a
hearing, was approved by the court in an order dated
December 2, of the same year. The widow appealed
from this order.
One of the questions raised in the appellant's brief
refers to the manner of determining the portion of the
inheritance which pertains to the widow is usufruct, two
children of different marriages of the deceased
Francisco Derayunan inheriting with her. According to
the appellant, the widow's usufruct in the present case
constitutes one-third of the inheritance, citing in
support of her contention the opinions of the illustrious
commentators on the Civil Code, Messrs. Manresa and
Sanchez Roman. On the other hand, the appellee
maintains that said usufruct consists of one-sixth part
of the inheritance as found by the trial court.
Article 834 of the Civil Code provides that "any widower
or widow who, on the death of his or her spouse, is not
divorced, or should be so be the fault of the deceased,
shall be entitled to a portion in usufruct equal to that
corresponding by way of legitime to each of the
legitimate children or descendants who have not
received any betterment."
What is necessary, then, to determine is the legitime of
the children who have not received any betterment.
First of all, it must be noted that the legitime which
serves as a point of comparison is that of the children
or descendants who have not received any betterment,
which implies that the deceased has made use of the
right to give a betterment. But, in the present case,
there being no betterment, what is the legitime of the
two children? 1awph!l.net
Page 34 of 48
Sanchez Roman, in solving the legal problems that
might arise in the interpretation of article 834 of the Civil
Code, among other things, says:
According to article 834, the legitime that
pertains to a legitimate child or descendant not
receiving any betterment, on the legitime by
which the amount of the widow's usufruct is
regulated in order that said legitimes may be
equal in amount, is the two-thirds of the
inheritance as a maximum when there is no
betterment; as a minimum, the one-third
constituting the short legitime only when the
whole of the second third constituting the
betterment is given as such; and as a medium,
said one-third constituting the short legitime, to
which is to be added what remains of the third
constituting the betterment when only a part
and not the whole thereof is given; and fixing
within these limits, maximum, minimum and
medium, the amount which must be allotted to
the widow in each case as her share, which
must be equal to that of the child or each of the
children not receiving any betterment,
according to their number. (6 Sanchez Roman,
vol. 2, p. 878.)
Manresa fully solves the same question as follows:
What is the legitime pertaining to each of the
children not having received any betterment? It
is necessary to get the meaning of the words
"pertaining" and "not receiving betterment."
What pertains to each of the children by way of
legitime is the portion to which he is entitled
according to the law whether there is a
surviving spouse or not, for the fact that the
latter inherits with descendants cannot alter
their legitimes. The children not receiving any
betterment are those in whose favor the
testator has not expressly disposed of any part
of the one-third constituting the betterment, for
the code, as shown by articles 825 and 828
does not admit of implied betterments. The law
excludes, therefore, the amount of the express
betterments whether or not they absorb the
one-third constituting the same. The legitime,
therefore, that must be taken into account is the
two-thirds, if no betterment is given, the one-
third constituting the short legitime if the other
third was given entirely as a betterment, or said
one-third plus the residue of the other not given
as a betterment by the testator. It is this portion,
or the two-thirds, one third and the one-third
plus the residue, according to the case, that
must be divided equally by the number of the
children and will give the legitime belonging or
pertaining, by force of law, to each of the
children not receiving any betterments. (6
Manresa, p. 541.)
Perhaps Mr. Arturo Casanueva may be cited in support
of appellant's contention, said author being of the
opinion that, in order to determine the widow's usufruct,
the short legitime of the children, or, one-third of the
inheritance constituting the same must be considered
as the basis of the computation. In an article on
usufruct of the spouse published in the Revista de
Legislacion y Jurisprudencia, vol. 134, p. 532, Mr.
Casanueva, among other things, says:
Does the phrase "not receiving any betterment"
refer to express betterment? Ubi lex non
distinguit, nec nos distinguere debemus. It is
conclusive — not receiving any betterment.
And those who appear to have received
betterments impliedly are as much bettered as
those who do so expressly. In the three cases
which are possible, namely, some having
received a betterment and others not, all
having received expressly or impliedly equal
betterments, and all having received
betterments but unequal, only the latter two
give rise to doubt. But in both cases . . . Are we
going to accept a different view? From a
reading of article 834 of the Civil Code we draw
the inference that the portion in usufruct
is equal to that which pertains to each one as
his legitime, and as things equal to the same
things — portion in usufruct — are equal to
each other, it results that that part which
pertains to each of them as legitime, is equal.
Does this occur when all have received
unequal betterments? The absurdity is evident
if it is admitted that those unequal parts are real
legitimes. In a decision rendered December 2,
1893, the Supreme Court has held that "any
interpretation or construction which leds to n
absurdity must be rejected." Therefore, the
view whereby the legitime of a legitimate child
or descendant is considered as a part of the
two-thirds must be rejected.
Having established that the legitime to be taken
into account in the computation of the usufruct
of the widow is n aliquot part of the one-third, a
divisor of the said one-third still remains to be
found, which is also much debated. some are
of the opinion that it must be the number of the
children, and others that it is number of the
children plus one, because they consider the
surviving spouse as another child.
Let us admit as the divisor the number of
children plus one, and as we can give the
number of children any value whatever, let us
give it the value of one, and we will find as
divisor one plus one equals two. What will be
the result? It will be that in case a surviving
spouse inherits with a single child, one-half of
the one third constituting the betterment would
belong to him in usufruct, which is against the
conclusive provisions of the Civil Code which
precisely determine that in the case where
there is only one child he will receive the whole
third in usufruct. It is therefore an inadmissible
divisor because it leads to a manifest juridical
absurdity, manifestly contrary to the law.
In short, the portion in usufruct pertaining to the
widow is obtained by dividing one-third of the
inheritance by the number of children.
But in this jurisdiction the legal doctrine laid down in the
case of Chico vs. Viola and Reyes (40 Phil., 316), is
that under articles 825 and 828, there can be no
implied betterments; that, under article 808, the two-
thirds of the inheritance of the father or of the mother
constitute the legitime of the legitimate children and
descendants without prejudice to the right to give a
betterment; and when this right has no been made use
of, the two-thirds pertain to them as legitime, but this
Page 35 of 48
does not mean that they thereby receive a betterment.
Dividing, then, the two-thirds of the inheritance of the
deceased Francisco Derayunan between the two
children by his two marriages, one-third of the said
inheritance pertains to each one as his legitime and this
one-third is the measure of the portion that must got to
the widow-appellant in usufruct, or one-third also of the
same inheritance, which must be the one-third of free
disposal in accordance with article 839 of the Civil
Code. Therefore, we find that the trial court committed
an error of law in holding that the portion which belongs
to the widow-appellant in usufruct consists of one-sixth
part of the inheritance.
Another error assigned by the appellants as committed
by the court is that the court adjudicated to the widow
Elisa Dominado of the expenses incurred in sowing the
798 coconut trees, instead of half of the said trees.
It is admitted that the planting of these coconut trees
took place during the marriage of Domingo Derayunan
and Elisa Dominado, the land being the exclusive
property of the former. The appellant claims half of
these coconut trees as her half of the conjugal
property, invoking paragraph No. 1 of article 1407 of
the Civil Code in support of her contention. This
contention is untenable. A similar question was raised
in the case of Tabotabo vs. Molero (22 Phil., 418).
Diego Tabotabo was married the second time to
Gregorio Molero. He had a piece of land as his
exclusively property which had been planted with more
than 2,000 coconut trees during his second marriage
with Molero. The latter claimed the right to one-half of
the said coconut trees, but this court denied her claim
enunciating the following doctrine:
To the owner of realty also belongs, by right of
accession, the improvements made thereon.
Buildings, crops and other improvements upon
land belong to the owner of the realty. To this
rule there is an exception in the case of married
persons. Paragraph 2 of article 1404 of the Civil
Codes provides that buildings constructed
during the marriage, on land belonging to one
of the spouses, are conjugal property, but the
owner of the realty shall be entitled to credit for
the value of the land. This exception, however,
is limited to buildings and does not apply to
crops and other improvements, with respect to
which the general rule applies. Expenses
incurred in making such crops and
improvements are conjugal expenses, for
which the conjugal partnership must be
reimbursed.
The second error, therefore, must be overruled.
The determination of the part of the land described in
tax assessment No. 3308, the subject-matter of the
third assignment of error, lies within the sound
discretion of the court, taking into account the interests
of the parties, regarding it is not incumbent upon us to
make any pronouncement.
For the foregoing, the judgment appealed from must
be, as it is hereby, modified in that the portion
pertaining to the widow in usufruct consists of one-third
of the estate of the deceased Francisco Derayunan,
without any special findings as to costs. So ordered.
Avanceña, C.J., Johnson, Street, Ostrand, Johns and
Romualdez, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
FIRST DIVISION
G.R. No. L-57499 June 22, 1984
MERCEDES CALIMLIM- CANULLAS, petitioner,
vs.
HON. WILLELMO FORTUN, Judge, Court of First
instance of Pangasinan, Branch I, and CORAZON
DAGUINES, respondents.
Fernandez Law Offices for petitioner.
Francisco Pulido for respondents.
MELENCIO-HERRERA, J.:
Petition for Review on certiorari assailing the Decision,
dated October 6, 1980, and the Resolution on the
Motion for Reconsideration, dated November 27, 1980,
of the then Court of First Instance of Pangasinan,
Branch I, in Civil Case No. 15620 entitled "Corazon
DAGUINES vs. MERCEDES Calimlim-Canullas,"
upholding the sale of a parcel of land in favor of
DAGUINES but not of the conjugal house thereon'
The background facts may be summarized as follows:
Petitioner MERCEDES Calimlim-Canullas and
FERNANDO Canullas were married on December 19,
1962. They begot five children. They lived in a small
house on the residential land in question with an area
of approximately 891 square meters, located at
Bacabac, Bugallon, Pangasinan. After FERNANDO's
father died in 1965, FERNANDO inherited the land.
In 1978, FERNANDO abandoned his family and was
living with private respondent Corazon DAGUINES.
During the pendency of this appeal, they were
convicted of concubinage in a judgment rendered on
October 27, 1981 by the then Court of First Instance of
Pangasinan, Branch II, which judgment has become
final.
On April 15, 1980, FERNANDO sold the subject
property with the house thereon to DAGUINES for the
sum of P2,000.00. In the document of sale,
FERNANDO described the house as "also inherited by
me from my deceased parents."
Unable to take possession of the lot and house,
DAGUINES initiated a complaint on June 19, 1980 for
quieting of title and damages against MERCEDES.
The latter resisted and claimed that the house in
dispute where she and her children were residing,
including the coconut trees on the land, were built and
planted with conjugal funds and through her industry;
that the sale of the land together with the house and
improvements to DAGUINES was null and void
because they are conjugal properties and she had not
given her consent to the sale,
In its original judgment, respondent Court principally
declared DAGUINES "as the lawful owner of the land
Page 36 of 48
in question as well as the one-half () of the house
erected on said land." Upon reconsideration prayed for
by MERCEDES, however, respondent Court resolved:
WHEREFORE, the dispositive portion of the
Decision of this Court, promulgated on October
6, 1980, is hereby amended to read as follows:
(1) Declaring plaintiff as the true and lawful
owner of the land in question and the 10
coconut trees;
(2) Declaring as null and void the sale of the
conjugal house to plaintiff on April 15, 1980
(Exhibit A) including the 3 coconut trees and
other crops planted during the conjugal relation
between Fernando Canullas (vendor) and his
legitimate wife, herein defendant Mercedes
Calimlim- Canullas;
xxx xxx xxx
The issues posed for resolution are (1) whether or not
the construction of a conjugal house on the exclusive
property of the husband ipso facto gave the land the
character of conjugal property; and (2) whether or not
the sale of the lot together with the house and
improvements thereon was valid under the
circumstances surrounding the transaction.
The determination of the first issue revolves around the
interpretation to be given to the second paragraph of
Article 158 of the Civil Code, which reads:
xxx xxx xxx
Buildings constructed at the expense of the
partnership during the marriage on land
belonging to one of the spouses also pertain to
the partnership, but the value of the land shall
be reimbursed to the spouse who owns the
same.
We hold that pursuant to the foregoing provision both
the land and the building belong to the conjugal
partnership but the conjugal partnership is indebted to
the husband for the value of the land. The spouse
owning the lot becomes a creditor of the conjugal
partnership for the value of the lot, 1 which value would be
reimbursed at the liquidation of the conjugal partnership. 2
In his commentary on the corresponding provision in
the Spanish Civil Code (Art. 1404), Manresa stated:
El articulo cambia la doctrine; los edificios
construidos durante el matrimonio en suelo
propio de uno de los conjuges son
gananciales, abonandose el valor del suelo al
conj uge a quien pertenezca.
It is true that in the case of Maramba vs.
Lozano, 3 relied upon by respondent Judge, it was held
that the land belonging to one of the spouses, upon
which the spouses have built a house, becomes
conjugal property only when the conjugal partnership
is liquidated and indemnity paid to the owner of the
land. We believe that the better rule is that enunciated
by Mr. Justice J.B.L. Reyes in Padilla vs. Paterno, 3
SCRA 678, 691 (1961), where the following was
explained:
As to the above properties, their conversion
from paraphernal to conjugal assets should be
deemed to retroact to the time the conjugal
buildings were first constructed thereon or at
the very latest, to the time immediately before
the death of Narciso A. Padilla that ended the
conjugal partnership. They can not be
considered to have become conjugal property
only as of the time their values were paid to the
estate of the widow Concepcion Paterno
because by that time the conjugal partnership
no longer existed and it could not acquire the
ownership of said properties. The acquisition
by the partnership of these properties was,
under the 1943 decision, subject to the
suspensive condition that their values would be
reimbursed to the widow at the liquidation of
the conjugal partnership; once paid, the effects
of the fulfillment of the condition should be
deemed to retroact to the date the obligation
was constituted (Art. 1187, New Civil Code) ...
The foregoing premises considered, it follows that
FERNANDO could not have alienated the house and
lot to DAGUINES since MERCEDES had not given her
consent to said sale. 4
Anent the second issue, we find that the contract of
sale was null and void for being contrary to morals and
public policy. The sale was made by a husband in favor
of a concubine after he had abandoned his family and
left the conjugal home where his wife and children lived
and from whence they derived their support. That sale
was subversive of the stability of the family, a basic
social institution which public policy cherishes and
protects. 5
Article 1409 of the Civil Code states inter alia that:
contracts whose cause, object, or purpose is contrary
to law, morals, good customs, public order, or public
policy are void and inexistent from the very beginning.
Article 1352 also provides that: "Contracts without
cause, or with unlawful cause, produce no effect
whatsoever. The cause is unlawful if it is contrary to
law, morals, good customs, public order, or public
policy."
Additionally, the law emphatically prohibits the spouses
from selling property to each other subject to certain
exceptions.6 Similarly, donations between spouses
during marriage are prohibited. 7 And this is so because
if transfers or con conveyances between spouses were
allowed during marriage, that would destroy the system
of conjugal partnership, a basic policy in civil law. It was
also designed to prevent the exercise of undue
influence by one spouse over the other,8 as well as to
protect the institution of marriage, which is the
cornerstone of family law. The prohibitions apply to a
couple living as husband and wife without benefit of
marriage, otherwise, "the condition of those who
incurred guilt would turn out to be better than those in
legal union." Those provisions are dictated by public
interest and their criterion must be imposed upon the
wig of the parties. That was the ruling in Buenaventura
vs. Bautista, also penned by Justice JBL Reyes (CA)
50 O.G. 3679, and cited in Matabuena vs.
Cervantes. 9 We quote hereunder the pertinent
dissertation on this point:
Page 37 of 48
 We reach a different conclusion. While Art. 133
of the Civil Code considers as void a donation
between the spouses during the marriage,
policy considerations of the most exigent
character as wen as the dictates
of morality require that the same prohibition
should apply to a common-law relationship.
As announced in the outset of this opinion, a
1954 Court of Appeals decision, Buenaventura
vs. Bautista, 50 OG 3679, interpreting a similar
provision of the old Civil Code speaks
unequivocally. If the policy of the law is, in the
language of the opinion of the then Justice
J.B.L. Reyes of that Court, 'to prohibit
donations in favor of the other consort and his
descendants because of fear of undue
influence and improper pressure upon the
donor, a prejudice deeply rooted in our ancient
law, ..., then there is every reason to apply the
same prohibitive policy to persons living
together as husband and wife without benefit of
nuptials. For it is not to be doubted that assent
to such irregular connection for thirty years
bespeaks greater influence of one party over
the other, so that the danger that the law seeks
to avoid is correspondingly increased'.
Moreover, as pointed out by Ulpian (in his lib
32 ad Sabinum, fr. 1), "It would not be just that
such donations — should subsist, lest the
conditions of those who incurred guilt should
turn out to be better." So long as marriage
remains the cornerstone of our family law,
reason and morality alike demand that the
disabilities attached to marriage should
likewise attach to concubinage (Emphasis
supplied),
WHEREFORE, the Decision of respondent Judge,
dated October 6, 1980, and his Resolution of
November 27, 1980 on petitioner's Motion for
Reconsideration, are hereby set aside and the sale of
the lot, house and improvements in question, is hereby
declared null and void. No costs.
SO ORDERED.
Teehankee (Chairman), Plana, Relova, Gutierrez, Jr.,
and De la Fuente, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25659 October 31, 1969
LUZON SURETY CO., INC., petitioner,
vs.
JOSEFA AGUIRRE DE GARCIA, VICENTE GARCIA
and the FOURTH DIVISION OF THE COURT OF
APPEALS, respondents.
Tolentino and Garcia and D. R. Cruz for petitioner.
Rodolfo J. Herman for respondents.
FERNANDO, J.:
The crucial question in this petition for the review of a
decision of the Court of Appeals, to be passed upon for
the first time, is whether or not a conjugal partnership,
in the absence of any showing of benefits received,
could be held liable on an indemnity agreement
executed by the husband to accommodate a third party
in favor of a surety company. The Court of Appeals
held that it could not. Petitioner Luzon Surety Co., Inc.,
dissatisfied with such a judgment, which was an
affirmance of a lower court decision, would have us
reverse. We do not see it that way. The Court of
Appeals adjudicated the matter in accordance with law.
We affirm what it did.
As noted in the brief of petitioner Luzon Surety Co.,
Inc., on October 18, 1960, a suit for injunction was filed
in the Court of First Instance of Negros Occidental
against its Provincial Sheriff by respondents-spouses,
Josefa Aguirre de Garcia and Vicente Garcia "to enjoin
[such Sheriff] from selling the sugar allegedly owned by
their conjugal partnership, pursuant to a writ of
garnishment issued by virtue of a writ of execution
issued in Civil Case No. 3893 of the same Court of First
Instance ... against the respondent Vicente Garcia ...
."1
There was a stipulation of facts submitted. There is no
question as to one Ladislao Chavez, as principal, and
petitioner Luzon Surety Co., Inc., executing a surety
bond in favor of the Philippine National Bank, Victorias
Branch, to guaranty a crop loan granted by the latter to
Ladislao Chavez in the sum of P9,000.00. On or about
the same date, Vicente Garcia, together with the said
Ladislao Chavez and one Ramon B. Lacson, as
guarantors, signed an indemnity agreement wherein
they bound themselves, jointly and severally, to
indemnify now petitioner Luzon Surety Co., Inc. against
any and all damages, losses, costs, stamps, taxes,
penalties, charges and expenses of whatsoever kind
and nature which the petitioner may at any time sustain
or incur in consequence of having become guarantor
upon said bond, to pay interest at the rate of 12% per
annum, computed and compounded quarterly until fully
paid; and to pay 15% of the amount involved in any
litigation or other matters growing out of or connected
therewith for attorney's fees.
It was likewise stipulated that on or about April 27,
1956, the Philippine National Bank filed a complaint
before the Court of First Instance of Negros Occidental,
docketed as its Civil Case No. 3893, against Ladislao
Chavez and Luzon Surety Co., Inc. to recover the
amount of P4,577.95, in interest, attorney's fees, and
costs of the suit. On or about August 8, 1957, in turn, a
third-party complaint against Ladislao Chavez, Ramon
B. Lacson and Vicente Garcia, based on the indemnity
agreement, was instituted by Luzon Surety Co., Inc.
Then, as set forth by the parties, on September 17,
1958, the lower court rendered a decision condemning
Ladislao Chavez and Luzon Surety Co., Inc., to pay the
plaintiff jointly and severally the amount of P4,577.95
representing the principal and accrued interest of the
obligation at the rate of 6% per annum as of January 6,
1956, with a daily interest of P0.7119 on P4,330.91
from January 6, 1956, until fully paid, plus the sum of
P100.00 as attorney's fees, and to pay the costs. The
same decision likewise ordered the third party
defendants, Ladislao Chavez, Vicente Garcia, and
Ramon B. Lacson, to pay Luzon Surety Co., Inc., the
total amount to be paid by it to the plaintiff Philippine
National Bank.
Page 38 of 48
On July 30, 1960, pursuant to the aforesaid decision,
the Court of First Instance of Negros Occidental issued
a writ of execution against Vicente Garcia for the
satisfaction of the claim of petitioner in the sum of
P8,839.97. Thereafter, a writ of garnishment was
issued by the Provincial Sheriff of Negros Occidental
dated August 9, 1960, levying and garnishing the sugar
quedans of the now respondent-spouses, the Garcias,
from their sugar plantation, registered in the names of
both of them.2 The suit for injunction filed by the Garcia
spouses was the result.
As noted, the lower court found in their favor. In its
decision of April 30, 1962, it declared that the
garnishment in question was contrary to Article 161 of
the Civil Code and granted their petition, making the
writ of preliminary injunction permanent. Luzon Surety,
Inc. elevated the matter to the Court of Appeals, which,
as mentioned at the outset, likewise reached the same
result. Hence this petition for review.
We reiterate what was set forth at the opening of this
opinion. There is no reason for a reversal of the
judgment. The decision sought to be reviewed is in
accordance with law.
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 therefor, which may
redound to the benefit of the conjugal partnership."3
In the decision before us, the principal error assigned
is the above holding of the Court of Appeals that under
Article 161 of the Civil Code no liability was incurred by
the conjugal partnership. While fully conscious of the
express language of Article 161 of the Civil Code,
petitioner, in its well-written brief submitted by its
counsel, would impress on us that in this case it could
not be said that no benefit was received by the conjugal
partnership. It sought to lend some semblance of
plausibility to this view thus: "The present case involves
a contract of suretyship entered into by the husband,
the respondent Vicente Garcia, in behalf of a third
person. A transaction based on credit through which,
by our given definitions, respondent Vicente Garcia, by
acting as guarantor and making good his guaranty,
acquires the capacity of being trusted, adds to his
reputation or esteem, enhances his standing as a
citizen in the community in which he lives, and earns
the confidence of the business community. He can thus
secure money with which to carry on the purposes of
their conjugal partnership."4
While not entirely, without basis, such an argument
does not carry conviction. Its acceptance would negate
the plain meaning of what is expressly provided for in
Article 161. 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. Nor could there
be, considering that the benefit was clearly intended for
a third party, one Ladislao Chavez. While the husband
by thus signing the indemnity agreement may be said
to have added to his reputation or esteem and to have
earned the confidence of the business community,
such benefit, even if hypothetically accepted, is too
remote and fanciful to come within the express terms
of the provision.
Its language is clear; it does not admit of doubt. No
process of interpretation or construction need be
resorted to. It peremptorily calls for application. Where
a requirement is made in explicit and unambiguous
terms, no discretion is left to the judiciary. It must see
to it that its mandate is obeyed. So it is in this case.
That is how the Court of Appeals acted, and what it did
cannot be impugned for being contrary to law.5
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.
This particular codal provision in question rightfully
emphasizes the responsibility of the husband as
administrator.6 He is supposed to conserve and, if
possible, augment the funds of the conjugal
partnership, not dissipate them. If out of friendship or
misplaced generosity on his part the conjugal
partnership would be saddled with financial burden,
then the family stands to suffer. No objection need
arise if the obligation thus contracted by him could be
shown to be for the benefit of the wife and the progeny
if any there be. That is but fair and just. Certainly,
however, 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.7 The husband,
therefore, as is wisely thus made certain, is denied the
power to assume unnecessary and unwarranted risks
to the financial stability of the conjugal partnership.
No useful purpose would be served by petitioner
assigning as one of the errors the observation made by
the Court of Appeals as to the husband's interest in the
conjugal property being merely inchoate or a mere
expectancy in view of the conclusion thus reached as
to the absence of any liability on the part of the conjugal
partnership. Nor was it error for the Court of Appeals to
refuse to consider a question raised for the first time on
appeal. Now as to the question of jurisdiction of the
lower court to entertain this petition for injunction
against the Provincial Sheriff, to which our attention is
invited, neither the Court of Appeals nor the lower court
having been asked to pass upon it. Of course, if raised
earlier, it ought to have been seriously inquired into.
We feel, however, that under all the circumstances of
the case, substantial justice would be served if
petitioner be held as precluded from now attempting to
interpose such a barrier. The conclusion that thereby
laches had intervened is not unreasonable. Such a
Page 39 of 48
response on our part can be predicated on the
authoritative holding in Tijam v. Sibonghanoy.8
WHEREFORE, the decision of the Court of Appeals of
December 17, 1965, now under review, is affirmed with
costs against petitioner Luzon Surety Co., Inc.
Concepcion, C.J., Dizon, Makalintal, Zaldivar
Sanchez, Castro, Teehankee and Barredo,
JJ., concur.
Separate Opinions
REYES, J., concurring:
I concur in the result, but would like to make of record
that, in my opinion, the words "all debts and obligations
contracted by the husband for the benefit of the
conjugal partnership" used in Article 161 of the Civil
Code of the Philippines in describing the charges and
obligations for which the conjugal partnership is liable,
do not require that actual profit or benefit must accrue
to the conjugal partnership from the husband's
transactions; but that it suffices that the transaction
should be one that normally would produce such
benefit for the partnership. This is the ratio behind our
ruling in Javier vs. Osmeña, 34 Phil. 336, that
obligations incurred by the husband in the practice of
his profession are collectible from the conjugal
partnership.
Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 118305 February 12, 1998
AYALA INVESTMENT & DEVELOPMENT CORP.
and ABELARDO MAGSAJO, petitioners,
vs.
COURT OF APPEALS and SPOUSES ALFREDO &
ENCARNACION CHING, respondents.
MARTINEZ, J.:
Under Article 161 of the Civil Code, what debts and
obligations contracted by the husband alone are
considered "for the benefit of the conjugal partnership"
which are 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?
These are the issues which we will resolve in this
petition for review.
The petitioner assails the decision dated April 14, 1994
of the respondent Court of Appeals in "Spouses Alfredo
and Encarnacion Ching vs. Ayala Investment and
Development Corporation, et. al.," docketed as CA-
G.R. CV No. 29632,1 upholding the decision of the
Regional Trial Court of Pasig, Branch 168, which ruled
that the conjugal partnership of gains of respondents-
spouses Alfredo and Encarnacion Ching is not liable
for the payment of the debts secured by respondent-
husband Alfredo Ching.
A chronology of the essential antecedent facts is
necessary for a clear understanding of the case at bar.
Philippine Blooming Mills (hereinafter referred to as
PBM) obtained a P50,300,000.00 loan from petitioner
Ayala Investment and Development Corporation
(hereinafter referred to as AIDC). As added security for
the credit line extended to PBM, respondent Alfredo
Ching, Executive Vice President of PBM, executed
security agreements on December 10, 1980 and on
March 20, 1981 making himself jointly and severally
answerable with PBM's indebtedness to AIDC.
PBM failed to pay the loan. Thus, on July 30, 1981,
AIDC filed a case for sum of money against PBM and
respondent-husband Alfredo Ching with the then Court
of First Instance of Rizal (Pasig), Branch VIII, entitled
"Ayala Investment and Development Corporation vs.
Philippine Blooming Mills and Alfredo Ching," docketed
as Civil Case No. 42228.
After trial, the court rendered judgment ordering PBM
and respondent-husband Alfredo Ching to jointly and
severally pay AIDC the principal amount of
P50,300,000.00 with interests.
Pending appeal of the judgment in Civil Case No.
42228, upon motion of AIDC, the lower court issued a
writ of execution pending appeal. Upon AIDC's putting
up of an P8,000,000.00 bond, a writ of execution dated
May 12, 1982 was issued. Thereafter, petitioner
Abelardo Magsajo, Sr., Deputy Sheriff of Rizal and
appointed sheriff in Civil Case No. 42228, caused the
issuance and service upon respondents-spouses of a
notice of sheriff sale dated May 20, 1982 on three (3)
of their conjugal properties. Petitioner Magsajo then
scheduled the auction sale of the properties levied.
On June 9, 1982, private respondents filed a case of
injunction against petitioners with the then Court of
First Instance of Rizal (Pasig), Branch XIII, to enjoin the
auction sale alleging that petitioners cannot enforce the
judgment against the conjugal partnership levied on
the ground that, among others, the subject loan did not
redound to the benefit of the said conjugal
partnership. 2 Upon application of private respondents,
the lower court issued a temporary restraining order to
prevent petitioner Magsajo from proceeding with the
enforcement of the writ of execution and with the sale
of the said properties at public auction.
AIDC filed a petition for certiorari before the Court of
Appeals,3 questioning the order of the lower court
enjoining the sale. Respondent Court of Appeals
issued a Temporary Restraining Order on June 25,
1982, enjoining the lower court4 from enforcing its
Order of June 14, 1982, thus paving the way for the
scheduled auction sale of respondents-spouses
conjugal properties.
On June 25, 1982, the auction sale took place. AIDC
being the only bidder, was issued a Certificate of Sale
by petitioner Magsajo, which was registered on July 2,
1982. Upon expiration of the redemption period,
petitioner sheriff issued the final deed of sale on August
4, 1982 which was registered on August 9, 1983.
Page 40 of 48
In the meantime, the respondent court, on August 4,
1982, decided CA-G.R. SP No. 14404, in this manner:
WHEREFORE, the petition for certiorari in this
case is granted and the challenged order of the
respondent Judge dated June 14, 1982 in Civil
Case No. 46309 is hereby set aside and
nullified. The same petition insofar as it seeks
to enjoin the respondent Judge from
proceeding with Civil Case No. 46309 is,
however, denied. No pronouncement is here
made as to costs. . . . 5
On September 3, 1983, AIDC filed a motion to dismiss
the petition for injunction filed before Branch XIII of the
CFI of Rizal (Pasig) on the ground that the same had
become moot and academic with the consummation of
the sale. Respondents filed their opposition to the
motion arguing, among others, that where a third party
who claim is ownership of the property attached or
levied upon, a different legal situation is presented; and
that in this case, two (2) of the real properties are
actually in the name of Encarnacion Ching, a non-party
to Civil Case No. 42228.
The lower court denied the motion to dismiss. Hence,
trial on the merits proceeded. Private respondents
presented several witnesses. On the other hand,
petitioners did not present any evidence.
On September 18, 1991, the trial court promulgated its
decision declaring the sale on execution null and void.
Petitioners appealed to the respondent court, which
was docketed as CA-G.R. CV No. 29632.
On April 14, 1994, the respondent court promulgated
the assailed decision, affirming the decision of the
regional trial court. It held that:
The loan procured from respondent-appellant
AIDC was for the advancement and benefit of
Philippine Blooming Mills and not for the
benefit of the conjugal partnership of
petitioners-appellees.
xxx xxx xxx
As to the applicable law, whether it is Article
161 of the New Civil Code or Article 1211 of the
Family Code-suffice it to say that the two
provisions are substantially the same.
Nevertheless, We agree with the trial court that
the Family Code is the applicable law on the
matter . . . . . . .
Article 121 of the Family Code provides that
"The conjugal partnership shall be liable for: . .
. (2) All debts and obligations contracted during
the marriage by the designated Administrator-
Spouse for the benefit of the conjugal
partnership of gains . . . ." 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. In the
case at bar, respondent-appellant AIDC failed
to prove that the debt was contracted by
appellee-husband, for the benefit of the
conjugal partnership of gains.
The dispositive portion of the decision reads:
WHEREFORE, in view of all the foregoing,
judgment is hereby rendered DISMISSING the
appeal. The decision of the Regional Trial
Court is AFFIRMED in toto.6
Petitioner filed a Motion for Reconsideration which was
denied by the respondent court in a Resolution dated
November 28, 1994.7
Hence, this petition for review. Petitioner contends that
the "respondent court erred in ruling that the conjugal
partnership of private respondents is not liable for the
obligation by the respondent-husband."
Specifically, the errors allegedly committed by the
respondent court are as follows:
I. RESPONDENT COURT ERRED IN RULING
THAT THE OBLIGATION INCURRED
RESPONDENT HUSBAND DID NOT
REDOUND TO THE BENEFIT OF THE
CONJUGAL PARTNERSHIP OF THE
PRIVATE RESPONDENT.
II. RESPONDENT COURT ERRED IN
RULING THAT THE ACT OF RESPONDENT
HUSBAND IN SECURING THE SUBJECT
LOAN IS NOT PART OF HIS INDUSTRY,
BUSINESS OR CAREER FROM WHICH HE
SUPPORTS HIS FAMILY.
Petitioners in their appeal point out that there is no
need to prove that actual benefit redounded to the
benefit of the partnership; all that is necessary, they
say, is that the transaction was entered into for the
benefit of the conjugal partnership. Thus, petitioners
aver that:
The wordings of Article 161 of the Civil Code is
very clear: for the partnership to be held liable,
the husband must have contracted the debt "for
the benefit of the partnership, thus:
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 . . . .
There is a difference between the phrases:
"redounded to the benefit of" or "benefited
from" (on the one hand) and "for the benefit of
(on the other). The former require that actual
benefit must have been realized; the latter
requires only that the transaction should be
one which normally would produce benefit to
the partnership, regardless of whether or not
actual benefit accrued.8
We do not agree with petitioners that there is a
difference between the terms "redounded to the benefit
of" or "benefited from" on the one hand; and "for the
benefit of" on the other. They mean one and the same
thing. Article 161 (1) of the Civil Code and Article 121
(2) of the Family Code are similarly worded, i.e., both
use the term "for the benefit of." On the other hand,
Article 122 of the Family Code provides that "The
payment of personal debts by the husband or the wife
before or during the marriage shall not be charged to
the conjugal partnership except insofar as they
Page 41 of 48
redounded to the benefit of the family." As can be seen,
the terms are used interchangeably.
Petitioners further contend that the ruling of the
respondent court runs counter to the pronouncement
of this Court in the case of Cobb-Perez vs. Lantin,9 that
the husband as head of the family and as administrator
of the conjugal partnership is presumed to have
contracted obligations for the benefit of the family or
the conjugal partnership.
Contrary to the contention of the petitioners, the case
of Cobb-Perez is not applicable in the case at bar. This
Court has, on several instances, interpreted the term
"for the benefit of the conjugal partnership."
In the cases of Javier vs. Osmeña, 10 Abella de Diaz
vs. Erlanger & Galinger, Inc., 11 Cobb-Perez
vs. Lantin 12 and G-Tractors, Inc. vs. Court of
Appeals, 13 cited by the petitioners, we held that:
The debts contracted by the husband during
the marriage relation, for and in the exercise of
the industry or profession by which he
contributes toward the support of his family, are
not his personal and private debts, and the
products or income from the wife's own
property, which, like those of her husband's,
are liable for the payment of the marriage
expenses, cannot be excepted from the
payment of such debts. (Javier)
The husband, as the manager of the
partnership (Article 1412, Civil Code), has a
right to embark the partnership in an ordinary
commercial enterprise for gain, and the fact
that the wife may not approve of a venture does
not make it a private and personal one of the
husband. (Abella de Diaz)
Debts contracted by the husband for and in the
exercise of the industry or profession by which
he contributes to the support of the family,
cannot be deemed to be his exclusive and
private debts. (Cobb-Perez).
. . . if he incurs an indebtedness in the
legitimate pursuit of his career or profession or
suffers losses in a legitimate business, the
conjugal partnership must equally bear the
indebtedness and the losses, unless he
deliberately acted to the prejudice of his family.
(G-Tractors)
However, in the cases of Ansaldo vs. Sheriff of Manila,
Fidelity Insurance & Luzon Insurance Co.,14 Liberty
Insurance Corporation vs. Banuelos, 15 and Luzon
Surety Inc. vs. De Garcia, 16 cited by the respondents,
we ruled that:
The fruits of the paraphernal property which
form part of the assets of the conjugal
partnership, are subject to the payment of the
debts and expenses of the spouses, but not to
the payment of the personal obligations
(guaranty agreements) of the husband, unless
it be proved that such obligations were
productive of some benefit to the family."
(Ansaldo; parenthetical phrase ours.)
When there is no showing that the execution of
an indemnity agreement by the husband
redounded to the benefit of his family, the
undertaking is not a conjugal debt but an
obligation personal to him. (Liberty Insurance)
In the most categorical language, a conjugal
partnership under Article 161 of the new Civil
Code 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. 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.
The husband, therefore, is denied the power to
assume unnecessary and unwarranted risks to
the financial stability of the conjugal
partnership. (Luzon Surety, Inc.)
From the foregoing jurisprudential rulings of this Court,
we can derive the following conclusions:
(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.
(B) 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, that contract
cannot, by itself, alone be categorized as falling within
the context of "obligations for the benefit of the conjugal
partnership." The contract of loan or services is clearly
for the benefit of the principal debtor and not for the
surety or his family. No presumption can be inferred
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 benefit redounding to the conjugal
partnership.
Thus, the distinction between the Cobb-Perez case,
and we add, that of the three other companion cases,
on the one hand, and that of Ansaldo, Liberty Insurance
and Luzon Surety, is that in the former, the husband
contracted the obligation for his own business; while in
the latter, the husband merely acted as a surety for the
loan contracted by another for the latter's business.
The evidence of petitioner indubitably show that co-
respondent Alfredo Ching signed as surety for the
P50M loan contracted on behalf of PBM. petitioner
should have adduced evidence to prove that Alfredo
Ching's acting as surety redounded to the benefit of the
Page 42 of 48
conjugal partnership. The reason for this is as lucidly
explained by the respondent court:
The loan procured from respondent-appellant
AIDC was for the advancement and benefit of
Philippine Blooming Mills and not for the
benefit of the conjugal partnership of
petitioners-appellees. Philippine Blooming
Mills has a personality distinct and separate
from the family of petitioners-appellees — this
despite the fact that the members of the said
family happened to be stockholders of said
corporate entity.
xxx xxx xxx
. . . . 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. In the case at bar,
respondent-appellant AIDC failed to prove that
the debt was contracted by appellee-husband,
for the benefit of the conjugal partnership of
gains. What is apparent from the facts of the
case is that the judgment debt was contracted
by or in the name of the Corporation Philippine
Blooming Mills and appellee-husband only
signed as surety thereof. The debt is clearly a
corporate debt and respondent-appellant's
right of recourse against appellee-husband as
surety is only to the extent of his corporate
stockholdings. It does not extend to the
conjugal partnership of gains of the family of
petitioners-appellees. . . . . . .17
Petitioners contend that no actual benefit need accrue
to the conjugal partnership. To support this contention,
they cite Justice J.B.L. Reyes' authoritative opinion in
the Luzon Surety Company case:
I concur in the result, but would like to make of
record that, in my opinion, the words "all debts
and obligations contracted by the husband for
the benefit of the conjugal partnership" used in
Article 161 of the Civil Code of the Philippines
in describing the charges and obligations for
which the conjugal partnership is liable do not
require that actual profit or benefit must accrue
to the conjugal partnership from the husband's
transaction; but it suffices that the transaction
should be one that normally would produce
such benefit for the partnership. This is the ratio
behind our ruling in Javier vs. Osmeña, 34 Phil.
336, that obligations incurred by the husband
in the practice of his profession are collectible
from the conjugal partnership.
The aforequoted concurring opinion agreed with the
majority decision that the conjugal partnership should
not be made liable for the surety agreement which was
clearly for the benefit of a third party. Such opinion
merely registered an exception to what may be
construed as a sweeping statement that in all cases
actual profit or benefit must accrue to the conjugal
partnership. The opinion merely made it clear that no
actual benefits to the family need be proved in some
cases such as in the Javier case. There, the husband
was the principal obligor himself. Thus, said
transaction was found to be "one that would normally
produce . . . benefit for the partnership." In the later
case of G-Tractors, Inc., the husband was also the
principal obligor — not merely the surety. This latter
case, therefore, did not create any precedent. It did not
also supersede the Luzon Surety Company case, nor
any of the previous accommodation contract cases,
where this Court ruled that they were for the benefit of
third parties.
But it could be argued, as the petitioner suggests, that
even in such kind of contract of accommodation, a
benefit for the family may also result, when the
guarantee is in favor of the husband's employer.
In the case at bar, petitioner claims that the benefits the
respondent family would reasonably anticipate were
the following:
(a) The employment of co-respondent Alfredo
Ching would be prolonged and he would be
entitled to his monthly salary of P20,000.00 for
an extended length of time because of the loan
he guaranteed;
(b) The shares of stock of the members of his
family would appreciate if the PBM could be
rehabilitated through the loan obtained;
(c) His prestige in the corporation would be
enhanced and his career would be boosted
should PBM survive because of the loan.
However, these are not the benefits contemplated by
Article 161 of the Civil Code. The benefits must be one
directly resulting from the loan. It cannot merely be a
by-product or a spin-off of the loan itself.
In all our decisions involving accommodation contracts
of the husband, 18 we underscored the requirement
that: "there must be the requisite showing . . . of some
advantage which clearly accrued to the welfare of the
spouses" or "benefits to his family" or "that such
obligations are productive of some benefit to the
family." Unfortunately, the petition did not present any
proof to show: (a) Whether or not the corporate
existence of PBM was prolonged and for how many
months or years; and/or (b) Whether or not the PBM
was saved by the loan and its shares of stock
appreciated, if so, how much and how substantial was
the holdings of the Ching family.
Such benefits (prospects of longer employment and
probable increase in the value of stocks) might have
been already apparent or could be anticipated at the
time the accommodation agreement was entered into.
But would those "benefits" qualify the transaction as
one of the "obligations . . . for the benefit of the conjugal
partnership"? Are indirect and remote probable
benefits, the ones referred to in Article 161 of the Civil
Code? The Court of Appeals in denying the motion for
reconsideration, disposed of these questions in the
following manner:
No matter how one looks at it, the debt/credit
respondents-appellants is purely a corporate
debt granted to PBM, with petitioner-appellee-
husband merely signing as surety. While such
petitioner-appellee-husband, as such surety, is
solidarily liable with the principal debtor AIDC,
such liability under the Civil Code provisions is
specifically restricted by Article 122 (par. 1) of
the Family Code, so that debts for which the
husband is liable may not be charged against
Page 43 of 48
 conjugal partnership properties. Article 122 of
the Family Code is explicit — "The 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.
Respondents-appellants insist that the
corporate debt in question falls under the
exception laid down in said Article 122 (par.
one). We do not agree. The loan procured from
respondent-appellant AIDC was for the sole
advancement and benefit of Philippine
Blooming Mills and not for the benefit of the
conjugal partnership of petitioners-appellees.
. . . appellee-husband derives salaries,
dividends benefits from Philippine Blooming
Mills (the debtor corporation), only because
said husband is an employee of said PBM.
These salaries and benefits, are not the
"benefits" contemplated by Articles 121 and
122 of the Family Code. The "benefits"
contemplated by the exception in Article 122
(Family Code) is that benefit derived directly
from the use of the loan. In the case at bar, the
loan is a corporate loan extended to PBM and
used by PBM itself, not by petitioner-appellee-
husband or his family. The alleged benefit, if
any, continuously harped by respondents-
appellants, are not only incidental but also
speculative. 19
We agree with the respondent court. Indeed,
considering the odds involved in guaranteeing a large
amount (P50,000,000.00) of loan, the probable
prolongation of employment in PBM and increase in
value of its stocks, would be too small to qualify the
transaction as one "for the benefit" of the surety's
family. Verily, no one could say, with a degree of
certainty, that the said contract is even "productive of
some benefits" to the conjugal partnership.
We likewise agree with the respondent court (and this
view is not contested by the petitioners) that the
provisions of the Family Code is applicable in this case.
These provisions highlight the underlying concern of
the law for the conservation of the conjugal
partnership; for the husband's duty to protect and
safeguard, if not augment, not to dissipate it.
This is the underlying reason why the Family Code
clarifies that the obligations entered into by one of the
spouses must be those that redounded to the benefit
of the family and that the measure of the partnership's
liability is to "the extent that the family is benefited."20
These are all in keeping with the spirit and intent of the
other provisions of the Civil Code which prohibits any
of the spouses to donate or convey gratuitously any
part of the conjugal property. 21 Thus, when co-
respondent Alfredo Ching entered into a surety
agreement he, from then on, definitely put in peril the
conjugal property (in this case, including the family
home) and placed it in danger of being taken
gratuitously as in cases of donation.
In the second assignment of error, the petitioner
advances the view that acting as surety is part of the
business or profession of the respondent-husband.
This theory is new as it is novel.
The respondent court correctly observed that:
Signing as a surety is certainly not an exercise
of an industry or profession, hence the cited
cases of Cobb-Perez vs. Lantin; Abella de
Diaz vs. Erlanger & Galinger; G-Tractors,
Inc. vs. CA do not apply in the instant case.
Signing as a surety is not embarking in a
business.22
We are likewise of the view that no matter how often
an executive acted or was persuaded to act, as a
surety for his own employer, this should not be taken
to mean that he had thereby embarked in the business
of suretyship or guaranty.
This is not to say, however, that we are unaware that
executives are often asked to stand as surety for their
company's loan obligations. This is especially true if the
corporate officials have sufficient property of their own;
otherwise, their spouses' signatures are required in
order to bind the conjugal partnerships.
The fact that on several occasions the lending
institutions did not require the signature of the wife and
the husband signed alone does not mean that being a
surety became part of his profession. Neither could he
be presumed to have acted for the conjugal
partnership.
Article 121, paragraph 3, of the Family Code is
emphatic that the 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 to the extent that they redounded to
the benefit of the family.
Here, the property in dispute also involves the family
home. The loan is a corporate loan not a personal one.
Signing as a surety is certainly not an exercise of an
industry or profession nor an act of administration for
the benefit of the family.
On the basis of the facts, the rules, the law and equity,
the assailed decision should be upheld as we now
uphold it. This is, of course, without prejudice to
petitioner's right to enforce the obligation in its favor
against the PBM receiver in accordance with the
rehabilitation program and payment schedule
approved or to be approved by the Securities &
Exchange Commission.
WHEREFORE, the petition for review should be, as it
is hereby, DENIED for lack of merit.
SO ORDERED.
Regalado, Melo, Puno and Mendoza, JJ., concur.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-22320 July 29, 1968
MERCEDES RUTH COBB-PEREZ and DAMASO P.
PEREZ, petitioners,
Page 44 of 48
vs.
HON. GREGORIO LANTIN, Judge of the Court of
First Instance of Manila,
RICARDO P. HERMOSO and the CITY SHERIFF OF
MANILA, respondents.
Crispin D. Baizas and Associates for petitioners.
Isidro T. Almeda for respondents.
CASTRO, J.:
This is a motion for partial reconsideration of this
Court's decision of May 22, 1968, specifically directed
against the following observation therein made:
We feel compelled to observe that during the
protracted litigation below, the petitioners
resorted to a series of actions and petitions, at
some stages alternatingly, abetted by their
counsel, for the sole purpose of thwarting the
execution of a simple money judgment which
has long become final and executory. Some of
the actions were filed, only to be abandoned or
withdrawn. The petitioners and their counsel,
far from viewing courts as sanctuaries for those
who seek justice, have tried to use them to
subvert the very ends of justice.
Corollarily, this Court assessed treble costs against the
petitioners, to "be paid by their counsel.".
The herein movants, Attys. Crispin D. Baizas and A. N.
Bolinas, counsels for the petitioners, while submitting
to the judgment on the merits, seek reconsideration of
the decision in so far as it reflects adversely upon their
"professional conduct" and condemns them to pay the
treble costs adjudged against their clients.
At first blush, the motion for reconsideration presents a
semblance of merit. After mature deliberation and
patient reprobing into the records of the case, however,
we are of the firmer conviction that the protracted
litigation, alluded to in the above-quoted portion of our
decision, was designed to cause delay, and the active
participation of the petitioners' counsels in this
adventure is patent.
After November 15, 1962 when the Court of Appeals
rendered judgment sustaining Damaso Perez' position
with respect to the extent of the levy, the subsequent
proceedings interposed alternatingly by the petitioner
spouses were obviously quixotic maneuvers expected
to be overthrown by the courts but calculated to delay
an execution long overdue.
Had the petitioners and their counsels seriously
believed that the levied shares of stock were conjugal
property, why did they not adopt this position from the
very start, or, at the latest, in CA-G.R. 29962-R,
wherein Damaso Perez challenged the legality of the
levy's coverage, in order to end the litigation with
reasonable dispatch? They chose, however, to attack
the execution in a piecemeal fashion, causing the
postponement of the projected execution sale six
times. More than eight years after the finality of the
judgment have passed, and the same has yet to be
satisfied.
In a determined effort to prolong the litigation, the
Perez spouses, as represented by their counsels,
sought the issuance of preliminary injunctions to
restrain the execution of the final judgment in civil case
39407 from courts which did not have jurisdiction and
which would, as expected, initially or ultimately deny
their prayer. For instance, after Damaso Perez bowed
out temporarily from the scene following the rendition
of the aforementioned Court of Appeals decision, his
wife, Mercedez, Ruth Cobb-Perez, intruded into the
controversy and asked for an ex parte writ of
preliminary injunction from the Court of First Instance
of Rizal in connection with civil case 7532 which she
filed with the said court, knowing fully well that the basic
civil case 39407 was decided by the Court of First
Instance of Manila (Branch VII presided by the
respondent Judge Lantin), which latter court was the
proper forum for any action relative to the execution.
Judge Eulogio Mencias of the Court of First Instance of
Rizal, looking to Acosta vs. Alvendia (L-14598, October
31, 1960), which held that courts of first instance have
no power to restrain acts outside their territorial
jurisdictions, lifted on October 4, 1963 the ex parte writ
which he previously issued enjoining the respondent
sheriff from carrying out the execution sale. It is clear,
however, that Mrs. Perez and her counsels, the
movants, knew or ought to have known beforehand
that the Court of First Instance of Rizal did not have
jurisdiction to issue the writ which Mrs. Perez herself
sought, and, anticipating the recall of the writ
improvidently issued, on September 3, 1963, a month
before the said writ was actually lifted, filed in the basic
civil case 39407 an urgent motion to lift the writ of
execution issued on August 15, 1961, alleging as
justification the conjugal nature of the levied shares of
stock and the personal nature of Damaso Perez'
judgment debt, the very same reasons advanced in
civil case 7532 which was then still pending in the Court
of First Instance of Rizal. Incidentally, Mrs. Perez failed
to adduce any evidence in support of her aforesaid
urgent motion, as in fact neither she nor her counsels
appeared during the scheduled hearing, prompting the
respondent judge to issue the following order:
When the urgent motion to recall or lift writ of
execution was called this morning for hearing,
counsel for the movant did not appear despite
the fact that he had been duly notified of the
motion for hearing. In view thereof the court
assumes that he is waiving his right to present
evidence in support of his urgent motion to
recall or lift writ of execution. Said urgent
motion is therefore deemed submitted for
resolution.
Despite the recall of the aforementioned writ of
injunction by Judge Mencias on a disclaimer of
jurisdiction (since the execution sought to be enjoined
was ordered by another tribunal), Mrs. Perez, now
assisted by her husband who had staged a comeback,
prayed for the issuance of another injunction, this time
from Branch XXII of the Court of First Instance of
Manila (not the same Branch which issued the
controverted writ of execution), in connection with civil
case 7532, then still pending in the Court of First
Instance of Rizal. As most probably anticipated anew
by the Perez spouses and their counsels, Judge
Alikpala, presiding judge of Branch XXII, on November
8, 1963 denied the preliminary injunction sought, on
the ground, among others, that he had no power to
interfere by injunction with the judgment or decree of a
court of concurrent or coordinate jurisdiction. On the
very day the injunction was denied, Damaso Perez, as
if expecting the reversal from Judge Alikpala, was
Page 45 of 48
already prepared with another "remedy," as in fact on
that day, November 8, 1963, he filed in the basic civil
case 39407 an "Urgent Motion for Reconsideration" of
the order of October 19, 1963, which denied his wife's
above-mentioned motion to recall the controverted writ
of execution.
The foregoing motion, far from seriously seeking the
reconsideration of the order of October 19, 1963, which
in the first place Damaso Perez could not legally do for
he was not even a party to the denied "Urgent Motion
to Recall Writ of Execution" (filed by his wife alone),
was merely an offer to replace the levied stocks with
supposed cash dividends due to the Perez spouses as
stockholders in the Republic Bank.1 As a matter of fact,
when the motion was set for hearing on December 21,
1963, the counsels for Damaso Perez promised to
produce the said cash dividends within five days, but
the promise was never fulfilled.2 Consequently, the
respondent Judge on January 4, 1964, denied the said
motion for reconsideration.
The above exposition of the circumstances relative to
the protracted litigation clearly negates the avowal of
the movants that "in none of the various incidents in the
case at bar has any particular counsel of petitioners
acted with deliberate aforethought to delay the
enforcement of the judgment in Civil Case No. 39407."
From the chronology of antecedent events, the fact
becomes inescapable that the Perez spouses,
coached by their counsels, had sallied forth on a
strategem of "remedies" projected to foil the lawful
execution of a simple money judgment. It is equally
obvious that they foreshadowed their own reversals in
the "remedies" they ventured to adopt, such that even
before, one remedy had been exhausted, they
interposed another until the case reached this Court for
the second time. 3 Meanwhile, justice was delayed,
and more than one member of this Court are
persuaded that justice was practically waylaid.
The movants also contend that even this Court
sanctions the aforesaid civil cases 7532 and 55292 as
the "proper remedy" when we said that.
In reality, what they attacked is not the writ of
execution, the validity and regularity of which
are unchallenged, but the levy made by the
respondent Sheriff. In this regard, the remedy
is not the recall of the writ, but an independent
action to enjoin the Sheriff from proceeding
with the projected sale, in which action the
conjugal nature of the levied stocks should be
established as a basis for the subsequent
issuance of a permanent injunction, in the
event of a successful claim. Incidentally, in the
course of the protracted litigation, the
petitioners had already availed of this remedy
in civil cases 7532 and 55292, only to abandon
it as they incessantly sought other, and often
simultaneous, devices of thwarting satisfaction
of the judgment debt. (Emphasis supplied) .
And because of this statement, they now counter that
the said cases could not be branded as having been
instituted for delay.
The reference we made to civil cases 7532 and 55292
in the above-quoted statement must not be considered
out of context. We said that the
petitioners incidentally had already availed of the
suggested remedy only in the sense that said civil
cases 7532 and 55292 were apparently instituted to
prove the conjugal nature of the levied shares of stocks
in question. We used the word incidentally advisedly to
show that in their incessant search for devices to thwart
the controverted execution, they accidentally stumbled
on the suggested remedy. But the said civil cases were
definitely not the "proper remedy" in so far as they
sought the issuance of writs of preliminary injunction
from the Court of First Instance of Rizal and the Court
of First Instance of Manila (Branch XXII) where civil
cases 7532 and 55292 were filed respectively, for the
said courts did not have jurisdiction to restrain the
enforcement of the writ of execution issued by the
Court of First Instance of Manila (Branch VII) under the
settled doctrines that Courts are without power to
restrain acts outside of their territorial jurisdiction 4 or
interfere with the judgment or decree of a court of
concurrent or coordinate jurisdiction. 5 However, the
recall and the denial of the writs of preliminary
injunction in civil cases 7532 and 55292 did not amount
to the termination or dismissal of the principal action in
each case. Had the Perez spouses desired in earnest
to continue with the said cases they could have done
so. But the fact is that Mrs. Perez practically
abandoned civil case 7532 when she instituted the
above mentioned urgent motion to recall writ of
execution in the basic civil case 39407, anchored on
the same grounds which she advanced in the former
case, until the said civil case 7532 was dismissed on
November 9, 1963, upon her own motion. Anent civil
case 55292, the Perez spouses virtually deserted the
same when they instituted the herein petition
for certiorari with urgent writ of preliminary injunction
based on the same grounds proffered in the said civil
case — until the latter was also dismissed on March
20, 1964, with the consent of the parties because of the
pendency then of the aforesaid petition for certiorari.
The movants further contend that "If there was delay, it
was because petitioners' counsel happened to be more
assertive ... a quality of the lawyers (which) is not to be
condemned."
A counsel's assertiveness in espousing with candour
and honesty his client's cause must be encouraged
and is to be commended; what we do not and cannot
countenance is a lawyer's insistence despite the patent
futility of his client's position, as in the case at bar.
It is the duty of a counsel to advise his client, ordinarily
a layman to the intricacies and vagaries of the law, on
the merit or lack of merit of his case. If he finds that his
client's cause is defenseless, then it is his bounden
duty to advise the latter to acquiesce and submit, rather
than traverse the incontrovertible. A lawyer must resist
the whims and caprices of his client, and temper his
client's propensity to litigate. A lawyer's oath to uphold
the cause of justice is superior to his duty to his client;
its primacy is indisputable.
The movants finally state that the "Petitioners have
several counsel in this case but the participation of
each counsel was rather limited implying that the
decision of this Court ordering that "treble costs are
assessed against the petitioners, which shall be paid
by their counsel" is not clear. The word "counsel" may
be either singular or plural in construction, so that when
we said "counsel" we meant the counsels on record of
the petitioners who were responsible for the inordinate
delay in the execution of the final judgment in the basic
Page 46 of 48
civil case 39407, after the Court of Appeals had
rendered its aforementioned decision of November 15,
1962. And it is on record that the movants are such
counsels. Atty. Bolinas, upon his own admission,
"entered his appearance in the case at bar about the
time the Court of First Instance of Manila dismissed the
petitioners' Petition for Relief in Civil Case No. 39407,"
or about August 3, 1961 and even prior to the Court of
Appeals decision above-mentioned. Atty. Baizas
claims that he "became petitioners' counsel only in
October, 1963 when he filed, with Atty. A.N. Bolinao,
Jr. Civil Case No. 55292 before the Court of First
Instance of Manila presided by the Hon. Judge Alikpala
although it appears on record that the urgent motion to
recall writ of execution filed by Mrs. Perez in the basic
civil case 39407 on September 3, 1963, was over the
signature of one Ruby Zaida of the law firm of "Crispin
Baizas & Associates" as counsel for Mrs. Perez. It is to
be recalled that the said urgent motion is the same
motion discussed above, which, curiously enough,
antedated by at least one month the lifting of the writ of
preliminary injunction issued in civil case 7532.
ACCORDINGLY, the motion for partial reconsideration
is denied. Our decision of May 22, 1968 is hereby
modified in the sense that Attys. Crispin D. Baizas and
A.N. Bolinao, Jr. shall pay jointly and severally the
treble costs assessed against the petitioners.
Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez,
and Angeles, JJ., concur.
Concepcion C.J., voted for denial of the motion for
reconsideration.
Fernando, J., took no part.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-25355 August 28, 1969
THE PEOPLE OF THE PHILIPPINES, plaintiff,
vs.
FROILAN LAGRIMAS, accused,
HEIRS OF PELAGIO CAGRO, heirs-appellants,
MERCEDES AGUIRRE DE LAGRIMAS, movant-
appellee.
Socrates G. Desales for heirs-appellants.
Marciano Chitongco for movant-appellee.
FERNANDO, J.:
The Civil Code, under the conditions therein specified,
recognizes the liability of the conjugal partnership for
fines and indemnities imposed upon either husband or
wife "after the responsibilities enumerated in article 161
have been covered," in the absence of any separate
property of the offending spouse or its
insufficiency. 1 How such an obligation "may be
enforced against the partnership assets" is the
question, one of first impression, raised in this appeal
from a lower court order, based on the assumption of
the total exemption of the conjugal partnership from the
liability thus incurred, prior to the stage of liquidation.
The result was to set aside the preliminary attachment
and thereafter the writ of execution in favor of the heirs
of the murdered victim, appellants before us, the
judgment against the accused imposing not only the
penalty of reclusion perpetua but also the
indemnification to such heirs having attained the status
of finality. In view of the failure, apparent on the face of
the appealed order, to respect what the Civil Code
ordains, we reverse and remand the case for further
proceedings.
The brief of appellants, the heirs of Pelagio Cagro, the
murdered victim, discloses that on February 19, 1960
an information was filed against the accused, Froilan
Lagrimas, for the above murder committed on
February 15, 1960 in Pambujan, Samar. Thereafter,
appellants as such heirs, filed on February 27, 1960 a
motion for the issuance of a writ of preliminary
attachment on the property of the accused, such
motion being granted in an order of March 5, 1960.
After trial, the lower court found the accused guilty of
the crime charged and sentenced him to suffer the
penalty of reclusion perpetua and to indemnify the
appellants as such heirs in the sum of P6,000.00 plus
the additional sum of P10,000.00 in the concept of
damages, attorney's fees and burial expenses. An
appeal from the judgment was elevated to this Court by
the accused but thereafter withdrawn, the judgment,
therefore, becoming final on October 11, 1962.
A writ of execution to cover the civil indemnity was
issued by the lower court upon motion of appellants. A
levy was had on eleven parcels of land in the province
declared for tax purposes in the name of the accused.
The sale thereof at public auction was scheduled on
January 5, 1965 but on December 29, 1964 the wife of
the accused, Mercedes Aguirre de Lagrimas, filed a
motion to quash the writ of attachment as well as the
writ of execution with the allegation that the property
levied upon belonged to the conjugal partnership and,
therefore, could not be held liable for the pecuniary
indemnity the husband was required to pay. The then
judge of the lower court granted such motion declaring
null and void the order of attachment and the writ of
execution, in accordance with Article 161 of the new
Civil Code. Another judge of the same lower court set
aside the above order, sustaining the legality of the
preliminary attachment as well as the writ of execution.
Thereafter, upon appellee filing a motion for the
reconsideration of the above order giving due course
to the writ of execution, a third judge, then presiding
over such court, the Hon. Ignacio Mangosing, revived
the original order of March 5, 1960, declaring such
attachment and the writ of execution thereafter issued
as null and void.
This order of August 7, 1965, now on appeal, was
premised on the following considerations: "It can be
readily seen from the above-quoted provisions of law
that only debts contracted by the husband or the wife
before the marriage, and those of fines and indemnities
imposed upon them, may be enforced against the
partnership assets after the charges enumerated in
article 161 have been covered. So that as long as the
obligations mentioned in said article 161 have not been
paid, the assets of the partnership cannot be made to
answer for indemnities like the one being sought to be
enforced in the instant case. And, before the
obligations enumerated in said article 161 can be paid,
the conjugal partnership properties should first, by
necessity, be liquidated, and liquidation can take place
only after the dissolution of the partnership thru the
occurrence of any of the causes mentioned in article
175 of the same Code, one of which is death of one of
the spouses. Since both are still living there cannot be
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any dissolution, imprisonment for life of the husband
notwithstanding, in the absence of a judicial separation
of properly decreed in accordance with the provisions
of article 191 thereof. Moreover, the fines and
indemnities sought to be charged against the ganancial
properties of the accused and his wife are not such
debts and obligations contracted by said accused for
the benefit of the conjugal partnership." 2
The conclusion arrived at by Judge Mangosing follows:
"We sympathize with the predicament of the widow and
other heirs of the deceased Pelagio Cagro, but the law
is clear on the matter. The indemnities adjudged by the
Court in their favor may only be charged against the
exclusive properties of the accused if he has any, or
against his share in the partnership assets after
liquidation thereof if any still remains after the payment
of all the items enumerated in article 161 of the said
Civil Code." 3
Hence, this appeal, the heirs of Pelagio Cagro
assigning as sole error the quashing and annulling of
the writs of attachment and execution aforesaid. As
stated at the outset, we find the appeal meritorious.
The applicable Civil Code provision 4 is not lacking in
explicitness. Fines and indemnities imposed upon
either husband or wife "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; ... ." It is quite
plain, therefore, that the period during which such a
liability may be enforced presupposes that the conjugal
partnership is still existing. The law speaks of
"partnership assets." It contemplates that the
responsibilities to which enumerated in Article 161,
chargeable against such assets, must be complied with
first. It is thus obvious that the termination of the
conjugal partnership is not contemplated as a
prerequisite. Whatever doubt may still remain should
be erased by the concluding portion of this article which
provides that "at the time of the liquidation of the
partnership such spouse shall be charged for what has
been paid for the purposes above-mentioned."
What other conclusion can there be than that the
interpretation placed upon this provision in the
challenged order is at war with the plain terms thereof?
It cannot elicit our acceptance. Nor is the reason for
such a codal provision difficult to discern. It is a
fundamental postulate of our law that every person
criminally liable for felony is also civilly liable. 5 The
accused, Froilan Lagrimas, was, as noted, found guilty
of the crime of murder and sentenced to reclusion
perpetua as well as to pay the indemnification to satisfy
the civil liability incumbent upon him. If the appealed
order were to be upheld, he would be in effect exempt
therefrom, the heirs of the offended party being made
to suffer still further.
It would follow, therefore, that the Civil Code provision,
as thus worded, precisely minimizes the possibility that
such additional liability of an accused would be
rendered nugatory. In doing justice to the heirs of the
murdered victim, no injustice is committed against the
family of the offender. It is made a condition under this
article of the Civil Code that the responsibilities
enumerated in Article 161, covering primarily the
maintenance of the family and the education of the
children of the spouses or the legitimate children of one
of them as well as other obligations of a preferential
character, are first satisfied. It is thus apparent that the
legal scheme cannot be susceptible to the charge that
for a transgression of the law by either husband or wife,
the rest of the family may be made to bear burdens of
an extremely onerous character.
The next question is how practical effect would be
given this particular liability of the conjugal partnership
for the payment of fines and indemnities imposed upon
either husband or wife? In the brief for appellants, the
heirs of Pelagio Cagro, they seek the opportunity to
present evidence as to how the partnership assets
could be made to respond, this on the assumption that
the property levied upon does not belong exclusively to
the convicted spouse.
In Lacson v. Diaz, 6 which deals with the satisfaction of
the debt contracted by husband or wife before
marriage by the conjugal partnership, likewise included
in this particular article, it was held: "Considering that
the enforceability of the personal obligations of the
husband or wife, against the conjugal assets, forms the
exception to the general rule, it is incumbent upon the
one who invokes this provision or the creditor to show
that the requisites for its applicability are obtaining."
Without departing from the principle thus announced,
we make this further observation. Considering that the
obligations mentioned in Article 161 are peculiarly
within the knowledge of the husband or of the wife
whose conjugal partnership is made liable, the proof
required of the beneficiaries of the indemnity should
not be of the most exacting kind, ordinary credibility
sufficing. Otherwise, the husband or the wife, as the
case may be, representing the conjugal partnership,
may find the temptation to magnify its obligation
irresistible so as to defeat the right of recovery of the
family of the offended party. That result is to be
avoided. The lower court should be on the alert,
therefore, in the appraisal of whatever evidence may
be offered to assure compliance with this codal
provision.
WHEREFORE, the appealed order of August 7, 1965
is set aside and the case remanded to the court of
origin for the reception of evidence in accordance with
this opinion. With costs against appellee Mercedes
Aguirre de Lagrimas.
Concepcion, C.J., Dizon, Makalintal, Sanchez, Castro,
Capistrano, Teehankee and Barredo, JJ., concur.
Reyes, J.B.L. and Zaldivar, JJ., are on leave.
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